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Devin D. Thorpe

Devin Thorpe

Fedcap Initiates Reporting of First Half Fiscal 2015 Operating and Financial Results

— A benchmark for the not-for-profit industry —

First Half Highlights

  • 2,722 clients placed in jobs
  • 2,100 students advanced in grade level, matriculated to college or obtained vocational certification up from 2,000 in the same period of 2014
  • 2,250 professionals received technical assistance/training through Fedcap’s National Center for Innovation and System Improvement
  • Revenue for the first half was $77 million, 12.4% above the prior year
  • Continued to improve operating margin in line with long term plan
  • Program expenses accounted for 92% of operating expenses
  • Further strengthened long term sustainability through the sale of real estate assets in New York City
  • Approved acquisition of Easter Seals New York on March 25, 2015

NEW YORK — (BUSINESS WIRE) — Fedcap, a not-for-profit organization that develops relevant, sustainable solutions for people to overcome barriers through four practice areas: Educational Services, Workforce Development, Occupational Health and Economic Development reported operating and financial results for the first half of 2015 ended March 31, 2015.

“By adopting a set of financial metrics and disclosing them on an interim basis, similar to that of a publicly-listed company, we believe we are engaging in an important dialogue with our key audiences and establishing a benchmark for the not-for-profit industry.”

Management Comment

“We are pleased to present our impact and financial results to our funders, donors, and stakeholders on a timely basis, enabling Fedcap’s constituents to fully assess the progress we are making in producing relevant, sustainable outcomes for the populations that we serve,” said Christine McMahon, Fedcap’s Chief Executive Officer. “By adopting a set of financial metrics and disclosing them on an interim basis, similar to that of a publicly-listed company, we believe we are engaging in an important dialogue with our key audiences and establishing a benchmark for the not-for-profit industry.”

“Our first half results demonstrated growth and stability, aligned with our strategy of increasing scale through organic and acquisition efforts. Despite headwinds in funding for the not-for-profit industry, we experienced growth in each of our practice areas: Economic Development, Workforce Development, Education and Occupational Health, expanding our footprint and importantly, we succeeded in significantly advancing the economic well-being of those served.”

“We continue to apply disciplined financial and risk management policies throughout the organization to ensure that our programs and services are meeting the requisite milestones and that we maintain the resilience and flexibility needed to address changing economic realities, while building for the future of the organization. In support of this strategy, we took advantage of strong market conditions to sell our 24,000 square foot building on West 14th Street in Manhattan in April 2014. We re-invested a portion of the net proceeds in a midtown condominium office space, using the remainder to further strengthen our balance sheet.”

First Half Financial and Operating Metrics

First half fiscal 2015 revenues were $77.0 million, an increase of 12.4% from the $68.5 million reported in the comparable period last year.

Revenues from Economic Development, which represents Fedcap’s business services operations that directly employ the populations we serve, accounted for 65% of total revenues in this year’s first half compared to 61% in last year’s first half. Total Facilities Management, which includes work at such iconic sites as the Statue of Liberty and 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 Boston, Mass. accounted for the largest percentage of Economic Development revenues. Other components of Economic Development include: Manufacturing, which provides outsourced assembly and production of electronic products delivered by a workforce comprised of people with disabilities; Business Solutions which provides all aspects of back office support to government and commercial clients; and Home Health Care, where over 352 Fedcap-trained and licensed professionals provide at-home care to those in need. In the first half of 2015, Fedcap employed 607 people with disabilities and other barriers to employment in these operations, up from 579 individuals in the similar 2014 period.

Revenues from Workforce Development, which represents our job placement and counseling services, accounted for 25% of total revenues down from 28% in last year’s first half. We placed over 2722 clients in jobs in this year’s first half, including more than 213 “ReServists”, professionals age 55+ whom we place with organizations that need their expertise.

Education and Occupational Health together accounted for 6% of first half revenues, on par with the level last year, and include a wide array of programs in the areas of behavioral health, evaluation and specialized training, help for youth in foster care or transitioning out of other child welfare and juvenile justice systems, and vocational training for youths with disabilities. Over 2100 individuals advanced grade level, graduated from high school, matriculated to college and obtained vocational certification through our Career Design School.

First half 2015 operating expenses were $76.8 million, of which 92% represented direct, program expenses. Fedcap reported an operating profit for the period of $208,450 compared to an operating loss in last year’s first half of $163,276.

At March 31, 2015, cash and marketable securities were $21.8 million, up from $8.7 million, at the same time last year, reflective of the real estate sale that was completed in April 2014.

Contract Wins and Strategic Projects

The total value of contracts awarded in the first half of fiscal 2015 was $87.1 million, which included a one-time contract assignment of NYC Human Resource Administration’s WeCARE Region 1 program for Manhattan and Bronx with a total value of $82.5 million.

Key contracts/grants awarded during the first half of FY 2015 included:

  • The NYC WeCARE Region 1 contract for $82.5 million over 2.5 years that was transitioned to Fedcap from FEGS; (Fedcap was awarded the WeCARE Region 2 contract in July 2012).
  • A Pinkerton Foundation grant for $125,000 to support expansion of efforts in NYC to help children in foster care get accepted into college and graduate.
  • A Sloan Foundation grant for $125,000 to demonstrate the efficacy of using the staffing agency model to advance the employment of older workers.
  • An Altman Foundation grant for $50,000 to establish a Dementia Care Coaching program using ReServists.
  • A contract with New York State Industries for the Disabled for $863,460 for facilities management.
  • A workforce development contract with the Department of Transitional Assistance Boston/Chelsea $150,000.

Fedcap awarded its prestigious WorkStar™ certification to FreshDirect and Plated—honoring their leadership in employing people with barriers.

Recent Development

On March 25, 2015 Fedcap reached an agreement to acquire Easter Seals New York, which has annualized revenues of $30 million, and operates programs for individuals with intellectual disabilities in New York State. The combination is scheduled to be completed by September 2015, and will add significant scale to Fedcap’s Occupational Health and Education operations.

Summary and Outlook

“First half results represent a strong start to fiscal 2015, and we are pleased with the organization’s commitment to excellent execution in delivering services that help clients overcome barriers and achieve economic well-being. Our investments in financial, technical and human resources have given Fedcap a strong infrastructure that is able to support our growth and expansion. We look forward to continuing to report progress in assisting our clients to achieve economic well-being,” Ms. McMahon concluded.

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. Each year Fedcap’s educational, evaluation, vocational training, job placement, post placement support and advocacy programs, help more than 80,000 individuals rebuild their lives, and find and maintain meaningful employment.

Financials

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