Wed Dec 13, 2017 9:00am EST
    Dec. 13, 2017 14:00 UTC

    --Double-digit revenue increase driven by Balanced Organic and Acquisition Growth--

    --Served more than 180,000 individuals with disabilities and other barriers--

    --Leveraged positive outcomes in new geographies--

    --Addition of new programs broadened Fedcap’s platform of services--

    --Acquired Single Stop USA in February 2017--

    NEW YORK--(BUSINESS WIRE)-- Fedcap, a not-for-profit organization that develops relevant, sustainable solutions for people to overcome barriers through four practice areas: Economic Development, Workforce Development, Educational Services, and Occupational Health, today reported its operating and financial results for its 2017 fiscal year ended September 30, 2017.

    Management Comment

    “This was an excellent year for Fedcap. By executing on a balanced strategy of organic and acquisition growth, we were able to provide an expanded array of services to a significantly greater number of individuals in need,” said Christine McMahon, Fedcap’s Chief Executive Officer. “The scale we have gained thanks to several years of back-to-back, double-digit revenue growth has provided Fedcap with resources to invest in program development and infrastructure improvements to support the continued growth that we see on the horizon.

    “In fiscal 2017, the addition of new programs and organizations substantially increased Fedcap’s platform of services and solutions, and brought in Seacoast Pathways in a combination with Granite Pathways - a Fedcap subsidiary - that serves as our anchor for the provision of behavioral health services in the New England region. This has put us front and center in addressing the opioid addiction epidemic, which has been particularly devastating in New Hampshire and Maine; ENABLE, a New Jersey-based program serving people with intellectual/developmental disabilities, transitioned its operations into Fedcap effective January 1, 2017. The Dixon Center, which connects our veterans and their families with programs offered in more than 20,000 communities across the country, joined us in May of this year.

    “In February of this year, we acquired Single Stop USA, which provides coordinated access that connects people living in poverty to the resources they need to obtain good jobs, attain higher education and achieve financial self-sufficiency—all through a unique one-stop-shop. SingleStop has substantially increased the number of individuals that we can assist and brings technology tools that we can leverage to further broaden its reach.

    “We have identified approximately $30 million in revenue synergies, representing contracts that neither Fedcap nor the organizations or programs we have combined with over the last several years could have won on their own. This has made a substantial, positive difference for the populations we serve and has strengthened the brands that comprise today’s Fedcap."

    2017 Financial and Operating Metrics

    Fiscal year 2017 revenues were $257.5 million, an increase of 12.8% over the $228.4 million in revenues reported for FY16. The improvement reflects both organic and acquisition growth, primarily related to the first full year of operations for Breaking the Cycle Project in Maine, and acquisition of Single Stop USA. Importantly, Fedcap has succeeded in significantly diversifying its revenue sources over the last several years, bringing a broader array of services to at-risk populations.

    • Economic Development accounted for 37% of Fedcap’s total FY17 revenues, and is comprised of business services operations that directly employ the populations we serve. Revenues were $93.9 million, exceeding $90 million for the second consecutive year. In 2017, Fedcap employed over 1,550 people in these businesses, the majority of whom have disabilities or other barriers. Within this activity, the largest revenue driver was Total Facilities Management, which includes work at such iconic sites as the Statue of Liberty, Ellis Island, New York’s Penn Station, New York City Court Houses, Federal Aviation Administration installations in New Jersey, as well as government and commercial office buildings in New York, New Jersey, Washington, D.C. and Massachusetts. Other components of Economic Development include: Manufacturing, which provides outsourced assembly and production of electronic products for our military, delivered by a workforce comprised of people with disabilities; Business Solutions, which provides all aspects of back office support to government and commercial clients; Catering, which is a growing part of our portfolio, Security Services, Staffing Solutions and Home Health Care, where over 385 Fedcap-trained and licensed professionals provide at-home care to those in need.
    • Workforce Development also accounted for 39% of total FY17 revenues, or $100.6 million, and represents the area in which Fedcap serves the largest number of individuals through a broad range of services. Workforce Development was the largest area of growth in fiscal 2017, increasing from $76.4 million in 2016 to $100.6 million in 2017, a growth rate of 31.5%. This growth was an equal split of merger and organic growth, with M&A marked by the combination with Single Stop USA in February 2017 and the full contribution of the Maine operations, where we are the sole provider of TANF services through the Breaking The Cycle contract. We provided functional capacity assessments, employment readiness training, vocational evaluations, wellness services, counseling and job placement and job retention services to a diversified group of individuals, each facing significant barriers to employment. We are pleased to report that Fedcap agencies placed over 12,000 individuals in jobs in fiscal 2017 including almost 500 “ReServists”, retired professionals age 55+ whom we place with organizations to create social impact in education, health care and poverty fighting.
    • Education and Occupational Health together accounted for over $53.2 million in revenues, or 21% of FY17 revenue. Growth was marked by the expansion of the Fedcap School in NJ, the operations of Easter Seals Rhode Island which combined September of 2016 and counseling and intervention services for people with Substance Use disorders and Recovery in New Hampshire. We provide a broad array of programs in the areas of behavioral health, evaluation & specialized training, assistance for youth transitioning from foster care, and vocational rehabilitation for individuals with disabilities. Over 2,500 individuals advanced grade level, graduated from high school, matriculated to college, graduated from college, or obtained vocational certification through our Career Design School, which offers fully certified training in Culinary Arts, Security, Facilities Management, Hospitality, Data Entry/Digital Imaging and Office Skills.

    Fiscal 2017 operating expenses were $257.2 million, 88% of which represented direct program expenses. Fedcap reported an operating profit of $265,982 for the FY 2017 compared to $398,850 in the prior year.

    At September 30, 2017, cash and marketable securities were $26.7 million, down slightly from $28.3 million in the prior year, attributable to capital and start up investments.

    Key Contract Wins in 2017

    Fedcap was awarded or is in negotiations on:

    • A $63 million, 6-year contract with Maine Department of Health and Human Services to provide assessment, training and job placement services to individuals currently on public assistance;
    • A $10 million, 5-year contract with the New York State Office of Temporary and Disability Assistance to expand Supplemental Nutritional Assistance Program outreach and enrollment, awarded to Single Stop USA subsidiary;
    • A major contract with a large Fortune 500 company to help them build an Alternative Workforce;
    • Awarded $1.2 million expansion of ReServe’s DFTA contract with NYC;
    • Awarded $11.9 million NYC Career Compass contract;
    • Wildcat was awarded $2.1 million Neighborhood Improvement Grants throughout NYC boroughs;
    • Awarded $9 million contract to provide TANF services in Washington, D.C.

    Summary and Outlook

    “Fedcap’s emphasis on achieving positive, measurable results has been a key differentiator, enabling us to continue to win large government contracts and to gain the trust of funders and donors. Today, the Fedcap family of brands provides a platform of services and solutions that can be effectively deployed to address the needs of broad-based client populations across the country. At the end of fiscal 2017, Fedcap had a business development pipeline valued at over $100 million, the highest in our history. This pipeline represents contract and funding opportunities that we are bidding on in order to put into practice those solutions that have yielded positive outcomes for at-risk populations.

    “At the same time, we have a pipeline of business combinations that promise to significantly expand the size and scope of our operations. In November 2017, we acquired a Northern Virginia-based agency that provides services to developmentally disabled individuals and employment on federal custodial and janitorial contracts, strengthening our presence in the mid-Atlantic region. We have a mutual agreement to acquire Easter Seals Central Texas, expanding our education services in the US, and a mutual agreement with Kennedy Scott, a U.K-based workforce development agency, which will represent a major step for us in expanding our international footprint.

    “These developments have set the stage for another year of growth for Fedcap in fiscal 2018, supported by Fedcap’s strong fiscal-year financial position and our commitment to disciplined risk management controls and procedures. We look forward to continuing our progress in 2018 and to keeping an open dialogue with all of our stakeholders,” Ms. McMahon noted.

    About Fedcap

    A not-for-profit founded in 1935, Fedcap develops innovative, creative and sustainable solutions that help people overcome barriers to economic well-being. In FY 2017, Fedcap’s educational, vocational training, job placement, post placement support and advocacy programs helped more than 90,000 individuals rebuild their lives and build a pathway to long term economic well-being.

    Conference Call Details:

    Date: Wednesday, December 13, 2017

    10:30 AM ET

    Phone: Toll free: 1-844-792-3735

    Link to Webcast: : https://services.choruscall.com/links/frs171213.html

    Financials:

       

    Fedcap Rehabilitation Services, Inc. and Subsidiaries

    Statement of Financial Position

     
    Twelve Months Ended September 30
      2017       2016
    Unaudited     Audited
    ASSETS
    Cash and short term investments $ 26,747,186 $ 28,314,309
    Accounts Receivable (net) 44,341,615 34,482,750
    Inventories (net) 402,670 414,939
    Prepaid Expenses   3,903,807   2,826,486
    Total Current Assets $ 75,395,278 $ 66,038,484
     
    Fixed Assets (net) 74,559,542 75,855,170
    Other Assets   2,536,349   1,172,682
    Total Assets $ 152,491,169 $ 143,066,336
     
    Liabilities
    Accounts Payable and Accrued Liabilities $ 30,335,089 $ 26,530,000
    Notes Payable 674,417 754,995
    Advance from government agency 1,500,000 -
    Other Current Liabilities   5,249,165   1,156,919
    Total Current Liabilities $ 37,758,671 $ 28,441,914
     
     
    Long Term Debt $ 60,422,573 $ 60,615,740
    Line of Credit 16,811,180 16,486,698
    Other Liabilities   1,902,626   2,191,849
    Total Liabilities $ 116,895,050 $ 107,736,201
     
    Net Assets
    Unrestricted $ 32,860,933 $ 33,176,435
    Temporarily Restricted 2,114,997 1,569,272
    Permanently Restricted   620,189   584,428
    Total Net Assets $ 35,596,119 $ 35,330,135
    Total Liabilities & Net Assets $ 152,491,169   143,066,336
     
     
     
    Current Ratio 2.00 2.32
    A/R Turnover Ratio 5.81 6.62
    A/R Average Days Outstanding 63 55
    Debt Coverage Ratio 3.58 4.73
     
           

    Consolidated Statement of Activities and Changes in Net Assets

     
    12 Months Ended
    September
      2017     2016  
    UNAUDITED   Audited
       
    REVENUE $ 257,467,948   $ 228,429,042  
     
    EXPENSES
    Salaries and benefits $ 154,908,193 $ 141,026,223
    Occupancy 15,772,810 13,642,766
    Subcontractors 32,878,842 27,191,804
    Depreciation and amortization 4,058,317 3,918,260
    Interest expense 3,091,216 3,476,490
    Other expense   46,492,587     38,774,648  
    TOTAL EXPENSES $ 257,201,966 $ 228,030,190
       
    OPER PROFIT/(LOSS) $ 265,982   $ 398,852  
     
     
    Operating Ratios
    Net operating ratio 0.10 % 0.17 %
    Program Expense Ratio 88 % 88 %
    Personnel cost ratio 60 % 56 %

    Contacts

    Fedcap
    Christine McMahon, CEO, 212-727-4300


    Source: Fedcap


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