Youth Services planning to expand in Mo., Calif.

March 24, 1994|By Joel Obermayer | Joel Obermayer,Sun Staff Writer

Youth Services International Inc., the Owings Mills-based operator of schools for troubled youths, yesterday announced a major expansion program aimed at developing facilities in two states.

The company plans to lease a 63-acre vacant college campus in Tarkio, Mo., and buy a small treatment facility for troubled young people in Mammoth, Calif.

The expansion, when completed, should increase the number of youths in the company's charge by more than 30 percent and increase its revenues by $12 million a year. The company currently operates programs in 14 states servicing about 1,000 youths.

Company spokeswoman Joan S. Stephens said the expansion is just the first part of what the company expects will result in significant growth in the next several months.

"We definitely expect growth," she said. "We have inquiries from 10 different states that want us to come. We have a team of professionals exploring and looking into other facilities."

The company expects the Tarkio campus to become the firm's FTC regional headquarters, Ms. Stephens said. The firm plans to open the site next July. By the end of the first year it should house 300 youths and employ 100 people, she said.

The Mammoth site would house only 35 to 40 students, but could provide entree into the potentially lucrative California market. California has 9,000 youths in programs operated by the state's youth authority, as well as additional youths in county and city programs, Ms. Stephens said.

The Mammoth facility's opening is planned for June or July.

The company expects to buy the Mammoth site for $376,000. It would lease the Tarkio campus on a revenue basis that should equal about 3 percent of its total revenues there, according to chief financial officer John F. Ripley.

Mr. Ripley projects profit margins at each site to be in the 15 percent to 25 percent range once they are fully operational.

He said start-up costs would not significantly drag on the company's bottom line.

"We expect to have increasing profitability even though we are expanding," he said.

The company reported its first profit ever for the quarter ended Sept. 30 after about $3 million in losses since it was founded in 1991. The company also completed an initial public offering for about one-quarter of its stock in February.

Ms. Stephens compared the growth potential for schools and rehabilitation facilities for troubled youths to that for nursing homes 30 years ago, before the industry consolidated.

"Most places out there are real mom-and-pop operations," she said. The company's stock yesterday closed at $10 a share, down 12.5 cents from Tuesday.

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