News from Fedcap

2018 Year End Financial and Programmatic Results

The Fedcap Group Reports Fiscal Year 2018 Operating and Financial Results

--Served more than 317,000 individuals with disabilities and other barriers--

--Achieved 14.4% revenue increase driven by organic and acquisition growth--

-- 88% of operating expenses were program-related--

--Significantly strengthened Fedcap’s Easterseals platform in key geographies--

--Expanded Criminal Justice Work—

--Acquired MLVE (Virginia) and Kennedy Scott (U.K.)--

December 11, 2018 09:00 AM Eastern Standard Time

NEW YORK--(BUSINESS WIRE)--The Fedcap Group, a not-for-profit organization that develops innovative, sustainable solutions and opportunities for people with barriers to achieve economic well-being, today reported operating and financial results for its 2018 fiscal year ended September 30, 2018.

Management Comment

“This was another excellent year for Fedcap. We executed on several key initiatives that significantly expanded the number of individuals we served, increased our revenues at a double-digit rate through a combination of organic and acquisition growth, and continued to invest in innovation and infrastructure to ensure the sustainability of the organization,” said Christine McMahon, Fedcap’s Chief Executive Officer.

“An important highlight of fiscal 2018 was our extended footprint in early intervention, which has proven to be so critical in helping individuals with disabilities gain self-sufficiency in adulthood. During the year, we acquired Easterseals Central and North Texas and were awarded the rights to establish Easterseals locations in Mississippi, Oklahoma and South Dakota. Together with our existing operations in New York and Rhode Island, Fedcap has established an Easterseals platform that is positioned to serve an expanded population, share best practices and grow organically and through additional acquisitions.

“At the same time, we continued to intervene on behalf of specialized populations who face difficulties in gaining meaningful employment, including veterans, people with disabilities, individuals 55 years of age and over, and those exiting the criminal justice system. Our credentials have been recognized by government agencies and funders in the City of New York, where we are working on several cutting-edge programs including delivering work-readiness services within the walls of Rikers Island prison and providing job training and job placement services to those awaiting trial. Additionally, we continued to develop programs to encourage higher education for those aging out of the foster care system.

“In all cases, we leverage The Fedcap Group’s expanded services and solutions to develop innovative approaches to longstanding issues. This strategy has enabled us to win an increasing number of contracts awards from government agencies in the 22 states in which we currently operate, and grants from private sector participants. With a growing pipeline of business development opportunities, The Fedcap Group is a growth platform for like-minded organizations seeking to strengthen their impact on key issues facing populations in need,” Ms. McMahon noted.

2018 Financial and Operating Metrics

Fiscal year 2018 revenues were $295.8 million, an increase of 14.4% over the $258.5 million in revenues reported for FY17. The improvement reflects both organic and acquisition growth, primarily related to the expansion of our workforce contracts in the District of Columbia, growth of ReServe across the country, expansion of Single Stop into more community colleges, continued growth of our Total Facilities Management initiatives, and acquisitions of MVLE, Inc., and two Easterseals affiliates in Central and North Texas. Notably, Fedcap has succeeded in significantly diversifying our revenue sources over the last several years, bringing a broader array of services to at-risk populations.

  • Economic Development accounted for 33% of Fedcap’s total FY18 revenues and is composed of business services operations that directly employ the populations we serve. Economic Development revenue totaled $98.9 million in Fiscal Year 2018. Fedcap employed more than 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 Pennsylvania Station, New York City courthouses, Federal Aviation Administration installations in New Jersey, and 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 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, InSynergy Staffing Solutions™ and Home Health Care, where over 360 Fedcap-trained and licensed professionals provide at-home care to those in need.
  • Workforce Development accounted for 40% of FY18 revenue, or $118.7 million, and represents the area in which Fedcap serves the largest number of individuals through a broad range of services. In FY 2018, 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 The Fedcap Group placed more than 13,343 individuals in jobs during fiscal 2018 -- an increase over the prior year of 58% -- with 61% earning over $16.00 per hour. We work with 9,000 businesses nationwide. In FY 2018, our WeCARE contract surpassed 17,500 job placements, a major milestone.

    Our ReServe subsidiary reached a new record: There are currently 583 ReServists placed across the country, totaling over 6,000 since ReServe was launched in 2005. “ReServists” are retired professionals age 55+ who we place with organizations to expand capacity and create social impact in education, healthcare and poverty fighting.

  • Education and Occupational Health together accounted for more than $67.6 million in revenues, or 23% of FY18 revenue. Year-on-year growth was mainly due to our growing body of work in the areas of Substance Use Disorder and Recovery in the Granite Pathways and Easterseals acquisitions. We provide a broad array of programs in the areas of behavioral health, evaluation and specialized training, assistance for youth transitioning from foster care, and vocational rehabilitation for individuals with disabilities. Over 6,000 individuals of all abilities advanced grade levels, 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 year 2018 operating expenses were $295.3 million, 88% of which represented direct program expenses. The Fedcap Group reported an operating profit of $501,281 for FY 2018 compared to $289,187 in the prior year.

In December 2017 The Fedcap Group 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 HCM Cloud implementation.

At September 30, 2018, cash and marketable securities were $33.4million, up from $29 million in the prior year due to investment earnings and acquisitions.

Key Contract Wins and Strategic Highlights in 2018

  • Two performance-based Temporary Assistance for Needy Families (TANF) contracts in Washington, D.C. totaling $9.9 million over 5 years.
  • Six-month extension of the $31 million Human Resources Administration (HRA) WeCARE contract for training and placement services to more than 60,000 individuals in New York City.
  • Neighborhood Improvement Grants totaling $2.3 million from 28 council members focused on local projects throughout New York City.
  • A three-year, $2.3M annual contract to ReServe through the NYC Department for the Aging.
  • A two-year, $1.9 million Jail to Jobs contract from the City of New York Mayor’s Office of Criminal Justice focused on successful reentry for previously-incarcerated individuals.
  • The Women’s Project, the first of its kind, helping women detained in Rikers Island prison because they could not make bail transition to the community with seamless care coordination.
  • A series of contracts with colleges in Rhode Island, Virginia, Louisiana, Florida and Oregon totaling $560,000 for Single Stop.

Better Together: Combinations Activity

  • During FY 2018, Fedcap welcomed three new organizations.
    • MVLE, a $15 million organization providing workforce, economic development and vocational rehabilitation services in Northern Virginia, combined effective April 2018.
    • Easterseals affiliates in Central and North Texas combined effective July 2018, adding $20 million in revenues and representing the third and fourth Easterseals acquisitions made by The Fedcap Group.
    • In December 2018, The Fedcap Group combined with Kennedy Scott, a U.K.-based workforce development agency, representing our first international operation.

Summary and Outlook

“With the completion of another year of double-digit revenue growth, The Fedcap Group has gained substantial scale as well the additional capabilities that we believe will support our ability to continue to achieve positive results for the populations we serve. As we head into fiscal 2019, we are disappointed that the New York City-funded WeCARE contract was re-designed and awarded to several new providers. We are proud of the results we achieved on this contract over the past six years, and we are equally proud that we have been asked to serve in a subcontractor capacity and technology provider by certain awardees. Our revenue comparisons for fiscal 2019 will reflect the loss of this contract, but we still expect to be able to show steady to slightly increased year-on-year revenue performance thanks to our current contract wins, our business development pipeline and the benefit of our recent acquisitions.

“The Fedcap Group’s ability to leverage complementary qualifications across our organization to win strategically important contracts provides the resources to invest in program development and infrastructure improvements to support the continued growth that we see on the horizon. In 2018 we achieved a 40% win rate for all proposal submissions. Because we are pursuing challenging and very competitive new business, we are very pleased with this result.

“We are also mindful of changes in government priorities that can limit funding for certain programs. 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. The Fedcap Group ended fiscal 2018 in a strong financial position, and we continue to operate with rigorous financial and risk management controls and procedures to ensure that The Fedcap Group remains a sustainable organization with sufficient infrastructure and resources to effectively serve clients, win federal-, state- and city-funded contracts and secure foundation grants. We look forward to continuing our progress in 2019 and to keeping an open dialogue with all of our stakeholders,” Ms. McMahon noted.

About The Fedcap Group

The Fedcap Group is a global network of top-tier nonprofit agencies dedicated to advancing the economic and social well-being of the impoverished and disadvantaged. The Fedcap Group offers a growth platform for agencies to collectively showcase the Power of Possible™, enabling them to focus on delivering proven, evidence-based services and solving significant societal problems. Continually innovating in the practice areas of Education, Workforce Development, Occupational Health and Economic Development, The Fedcap Group provides solutions that break down barriers to societal inclusion and financial well-being for more than 320,000 people each year.

Companies of The Fedcap Group deliver measurable shifts in academic advancement and economic self-sufficiency for individuals in need, in partnership with business, government, the philanthropic community, academia and local nonprofit agencies. The Fedcap Group transforms lives and helps businesses, insurers, governments and educational institutions meet their critical objectives and Corporate Social Responsibility goals. The Fedcap Group is committed to solving problems through effective programming and continual innovation.

Conference Call Details:

 

Date:

 

 

Tuesday, December 11, 2018, 11:00 a.m. ET

 

Phone:

   

1 (844) 792-3735

 

Link to Webcast:

   

Fedcap.org/results

 
       

 

Financials:

 

 

Fedcap Rehabilitation Services, Inc. and Subsidiaries

Consolidated Statement of Financial Position

     

 

 

 
         

Twelve Months Ended September 30

         

2018

 

 

2017

         

Unaudited

 

 

Audited

   

ASSETS

           
   

Cash and short term investments

   

$

33,358,254

   

$

29,077,160

   

Accounts Receivable (net)

     

49,571,684

     

45,309,399

   

Inventories (net)

     

244,690

     

402,670

   

Bond Proceeds Receivable

     

3,032,052

     

-

   

Prepaid Expenses

   

 

6,021,975

   

 

5,120,104

   

Total Current Assets

   

$

92,228,655

   

$

79,909,333

               

 

   

Fixed Assets (net)

     

82,150,825

     

74,924,787

   

Other Assets

   

 

3,397,952

   

 

758,509

   

Total Assets

   

$

177,777,432

   

$

155,592,629

               

 

   

Liabilities

           
   

Accounts Payable and Accrued Liabilities

   

$

40,259,024

   

$

32,382,996

   

Notes Payable

     

1,223,778

     

674,420

   

Advance from government agency

     

1,485,361

     

1,500,000

   

Current Portion of Line of Credit

     

14,653,273

     

14,653,273

   

Other Current Liabilities

   

 

4,129,907

   

 

6,736,368

   

Total Current Liabilities

   

$

61,751,343

   

$

55,947,057

               

 

               

 

   

Long Term Debt

   

$

69,778,634

   

$

57,618,269

   

Line of Credit

     

3,200,000

     

3,000,000

   

Other Liabilities

   

 

6,926,654

   

 

3,407,780

   

Total Liabilities

   

$

141,656,631

   

$

119,973,106

               

 

   

Net Assets

           
   

Unrestricted

   

$

33,385,617

   

$

32,810,556

   

Temporarily Restricted

     

2,114,997

     

2,224,538

   

Permanently Restricted

   

 

620,189

   

 

584,428

   

Total Net Assets

   

$

36,120,803

   

$

35,619,522

         

 

   

 

   

Total Liabilities & Net Assets

   

$

177,777,432

   

$

155,592,628

               

 

               

 

   

Current Ratio

     

1.49

     

1.43

   

A/R Turnover Ratio

     

5.97

     

5.71

   

A/R Average Days Outstanding

     

61

     

64

   

Debt Coverage Ratio

     

3.03

     

3.58

 

 

 

 
   

 

   

Consolidated Statement of Activities and Changes in Net Assets

     

 

 

 

 

 

 

 
           

12 Months Ended

           

September

           

2018

   

2017

           

UNAUDITED

 

 

Audited

           

 

   

 

   

REVENUE

     

$

295,847,344

   

$

258,504,213

                 

 

   

EXPENSES

             
   

Salaries and benefits

     

$

170,506,341

   

$

155,891,035

   

Occupancy

       

19,019,710

     

15,756,227

   

Subcontractors

       

46,331,327

     

31,683,374

   

Depreciation and amortization

       

4,402,357

     

4,116,984

   

Interest expense

       

3,634,078

     

3,079,150

   

Other expense

     

 

51,452,250

   

 

47,688,256

   

TOTAL EXPENSES

     

$

295,346,063

   

$

258,215,026

           

 

   

 

   

OPER PROFIT/(LOSS)

     

$

501,281

   

$

289,187

                 

 

                 

 

   

Operating Ratios

             
   

Net operating ratio

       

0.17%

     

0.11%

   

Program Expense Ratio

       

88%

     

88%

   

Personnel cost ratio

       

58%

     

60%

Contacts

Judith Czelusniak
jczelusniak@fedcap.org