[May 17, 2018] |
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Fedcap Reports First Half Fiscal Year 2018 Operating and Financial Results
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 the first half of its 2018 fiscal year ended March
31, 2018.
Management Comment
"In the first half of fiscal 2018, Fedcap continued to effectively
deliver a broad range of services to an increasing number of individuals
in need," said Christine McMahon, Fedcap's Chief Executive Officer. "We
leveraged complementary capabilities and qualifications across our
organization to achieve positive outcomes for clients and to win
strategically important contracts that support our future growth.
Additionally, we continued to engage with other like-minded service
providers to explore opportunities together that have the potential to
significantly strengthen our combined impact on key issues facing the
populations we serve.
"We executed on 15 contracts during the first half of 2018 through which
we trained and placed individuals with disabilities and other barriers
to employment in jobs that offered fair wages and opportunities for
advancement. At the same time, we intervened on behalf of specialized
populations who have faced difficulties in gaining meaningful
employment, including veterans and those exiting the criminal justice
system, while developing programs to encourage higher education for
those aging out of the foster care system. In all cases, we leverage
Fedcap's platform of services and solutions to develop innovative
approaches to longstanding issues, which have been increasingly
recognized by government agencies and private sector participants. This
has resulted in a growing pipeline of business development opportunities
and has positioned Fedcap to complete strategically important
combinations," Ms. McMahon noted.
First Half 2018 Financial and Operating Metrics
First half fiscal year 2018 revenues were $132.2 million, an increase of
8.1% over the $122.3 million in revenues reported for first half FY17.
The improvement reflects both organic and acquisition growth, primarily
related to the 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.
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Economic Development accounted for 37% of Fedcap's total first
half FY18 revenues and is comprised of business services operations
that directly employ the populations we serve. Economic Development
revenues totaled $48.6 million in the first half of 2018. Fedcap
employed over 1,500 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 350 Fedcap-trained
and licensed professionals provide at-home care to those in need.
-
Workforce Development accounted for 39% of first half FY18
revenues, or $51.6 million, and represents the area in which Fedcap
serves the largest number of individuals through a broad range of
services. In the first half, 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 placed over 6,047 individuals in jobs in the first half of
fiscal 2018 an increase over the prior year of 50%, with 78% earning
over $16.00 per hour. We work with 6,900 businesses across our
expanding footprint. In February of 2018, our WeCARE contract
surpassed 15,000 job placements, a major milestone in this contract.
Our
Breaking the Cycle Program in Maine - is breaking records! This
first year, on average, participants are moving to employment within
nine weeks of entering the program, the number of TANF recipients
meeting the required work hours has quadrupled and the TANF workforce
participation rate has jumped to 50 percent-a significant increase
from 16 percent in prior years.
Our ReServe
subsidiary we reached a new record - there are currently 563
ReServists placed across the country-totaling 5,800 since ReServe was
launched in 2005. "ReServists" are retired professionals age
55+ whom we place with organizations to expand capacity and create
social impact in education, health care and poverty fighting.
-
Education and Occupational Health together accounted for over
$27.2 million in revenues, or 21% of first half FY18 revenue.
Year-on-year growth was mainly due to the full contribution of the
Easter Seals Rhode Island operations and our growing body of work in
the areas of Substance Use Disorder and Recovery. 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 400 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.
First half 2018 operating expenses were $132.2 million, 88% of which
represented direct program expenses. Fedcap reported an operating profit
of $62,706 for the first half compared to $135,584 in the same period
last year.
In December 2017, Fedcap completed long term financing through a $10
million Build NYC bond to finance renovations of the state of the art
program center at 210 East 43 Street and headquarters located at 633
Third Avenue, New York, NY and the Oracle (News - Alert) HCM Cloud implementation.
At March 31, 2018, cash and marketable securities were $24.7 million, up
slightly from $24 million at the same time last year due to investment
earnings and slightly lower start-up investments.
Key Contract Wins and Strategic Highlights in the First Half of
Fiscal 2018
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Two performance-based Temporary Assistance for Needy Families
(TANF) contracts in Washington DC totaling $9.9 million over 5 years.
-
A 6-month extension on the $31 million Human Resources
Administration (HRA) WeCARE contract for training and placement
services to over 60,000 individuals in NYC.
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Neighborhood Improvement Grants totaling $2.3 million from 28
council members focused on local projects throughout New York City.
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A 2-year, $1.9 million Jail to Jobs contract from the New York City
Mayor's Office of Criminal Justice focused on successful reentry for
previously-incarcerated individuals.
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The Rikers Women's Project, the first of its kind, to support
women's issues during incarceration.
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A series of contracts with colleges in Rhode Island, Virginia,
Louisiana, Florida and Oregon totaling $560,000 for SingleStop.
Better Together: Combinations Underway During the First Half of
Fiscal 2018
-
Fedcap welcomed MVLE, a $15 million organization, providing
workforce, economic development and vocational rehabilitation services
in Northern Virginia, effective April 2018.
-
A combination with Easter Seals affiliates in Central and Northern
Texas will be effective as of July 2018, adding $20 million in
revenues and representing the 3rd and 4th
Easter Seals acquisitions made by Fedcap.
Summary and Outlook
"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.
"Our first half fiscal 2018 results reflected strong demand for Fedcap's
high-impact services and our emphasis on achieving positive and
measurable results. Additionally, we succeeded in completing the
acquisition of MVLE and substantially expanding the geographic reach of
our operations through the pending acquisitions of Easter Seals in North
and Central Texas. Through our Single Stop USA subsidiary, we connected
over 100,000 individuals to services and life sustaining benefits to
overcome poverty and become gainfully employed. Today, the Fedcap family
of brands provides a platform of services and solutions that can be
effectively deployed to address the needs of clients in 22 states.
"We continue to be mindful of changes in government policy that could
impact our operations, and ultimately the at-risk populations we serve.
This drives us to seek out and bid on an increasing number of contract
and funding opportunities to put into practice solutions that have
proven to yield positive outcomes for those in need. Fedcap ended the
first half of fiscal 2018 in a strong financial position, and we
continue to operate with rigorous financial and risk management controls
and procedures to ensure that Fedcap remains a sustainable organization
with sufficient infrastructure and resources to effectively serve
clients, win federal, state and city-funded contracts and to secure
foundation grants. 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 the first half of FY 2018, Fedcap's educational,
vocational training, job placement, post placement support and advocacy
programs helped more than 200,000 individuals rebuild their lives and
build a pathway to long term economic well-being.
Financials:
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Fedcap Rehabilitation Services, Inc. and Subsidiaries
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Statement of Financial Position
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Six Months Ended March 31
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Fiscal year
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2018
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2017
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2017
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Unaudited
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Audited
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ASSETS
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|
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Cash and short term investments
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$
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24,664,872
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$
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24,051,625
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$
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29,077,160
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Accounts Receivable (net)
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48,269,732
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40,726,227
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45,309,399
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Inventories (net)
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489,523
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338,795
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402,669
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Prepaid Expenses
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5,209,814
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3,219,190
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5,120,104
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Total Current Assets
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$
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78,633,941
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$
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68,335,837
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$
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79,909,332
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Fixed Assets (net)
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73,772,364
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75,036,530
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74,924,787
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Other Assets
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2,695,188
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2,852,461
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758,509
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Total Assets
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$
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155,101,493
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$
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146,224,828
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|
|
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$
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155,592,628
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|
|
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Liabilities
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Accounts Payable and Accrued Liabilities
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$
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24,122,146
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$
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31,881,009
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$
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32,382,996
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Notes Payable
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272,450
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|
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8,035
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|
|
|
|
|
674,420
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Line of Credit
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|
|
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14,653,273
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|
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12,747,209
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|
|
|
|
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14,653,273
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Loan and advances from government contracts
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-
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-
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|
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1,500,000
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Other Current Liabilities
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4,730,961
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238,400
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6,736,368
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Total Current Liabilities
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$
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43,778,830
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$
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44,874,653
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$
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55,947,057
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Long Term Debt
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$
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69,935,760
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$
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61,535,192
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$
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57,618,269
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Line of Credit
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3,000,000
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|
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3,000,000
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|
|
|
|
|
3,000,000
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Other Liabilities
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2,761,800
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1,393,058
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|
|
|
|
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3,407,780
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Total Liabilities
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$
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119,476,390
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$
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110,802,903
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$
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119,973,106
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|
|
|
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Net Assets
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Unrestricted
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$
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32,889,913
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$
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32,686,740
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|
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$
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32,810,556
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Restricted
|
|
|
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2,114,997
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|
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2,114,997
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|
|
|
|
|
2,224,538
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Permanently Restricted
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|
620,188
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|
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620,188
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|
|
|
|
|
584,428
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Total Net Assets
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$
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35,625,098
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$
|
35,421,925
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|
|
|
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$
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35,619,522
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|
|
|
|
|
|
|
|
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Total Liabilities & Net Assets
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$
|
155,101,488
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$
|
146,224,828
|
|
|
|
|
|
155,592,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Current Ratio
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|
|
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1.8
|
|
|
1.5
|
|
|
|
|
|
1.4
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A/R Turnover Ratio
|
|
|
|
2.7
|
|
|
3.0
|
|
|
|
|
|
5.7
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A/R Average Days Outstanding
|
|
|
|
65.7
|
|
|
59.9
|
|
|
|
|
|
67.0
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Debt Coverage Ratio
|
|
|
|
2.5
|
|
|
2.8
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|
|
|
|
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2.0
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|
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|
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|
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Consolidated Statement of Activities and Changes in Net Assets
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Six Months Ended
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Fiscal Year
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March 31
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Ended September
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|
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2018
|
|
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2017
|
|
|
|
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2017
|
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UNAUDITED
|
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Audited
|
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REVENUE
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$
|
132,232,135
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$
|
122,285,460
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$
|
258,504,213
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EXPENSES
|
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Salaries and benefits
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$
|
79,455,963
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$
|
76,991,988
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|
|
|
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$
|
154,660,498
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Occupancy
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|
|
8,689,253
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|
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7,364,582
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|
|
|
|
|
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15,756,227
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Subcontractors
|
|
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10,897,723
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|
|
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12,793,420
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|
|
|
|
|
|
27,807,907
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Depreciation and amortization
|
|
|
2,009,219
|
|
|
|
2,043,673
|
|
|
|
|
|
|
4,116,985
|
|
Interest expense
|
|
|
1,675,236
|
|
|
|
1,550,634
|
|
|
|
|
|
|
3,079,150
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Other expense
|
|
|
29,442,035
|
|
|
|
21,405,579
|
|
|
|
|
|
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52,794,060
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TOTAL EXPENSES
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$
|
132,169,429
|
|
|
$
|
122,149,876
|
|
|
|
|
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$
|
258,214,826
|
|
|
|
|
|
|
|
|
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OPER PROFIT/(LOSS)
|
|
$
|
62,706
|
|
|
$
|
135,584
|
|
|
|
|
|
$
|
289,387
|
|
|
|
|
|
|
|
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|
|
|
|
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Operating Ratios
|
|
|
|
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Net operating ratio
|
|
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0.05
|
%
|
|
|
0.11
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%
|
|
|
|
|
|
0.11
|
%
|
Program Expense Ratio
|
|
|
88
|
%
|
|
|
88
|
%
|
|
|
|
|
|
88
|
%
|
Personnel cost ratio
|
|
|
60
|
%
|
|
|
63
|
%
|
|
|
|
|
|
60
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%
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180517005143/en/
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