Financial Update

• CCAM financial health continues to trend in a positive direction. While managed risks are still ahead, Commonwealth support has helped enable increased revenue in both federal awards and new programs with existing industry members. A key focus for FY25 will be to maintain our federal award trajectory while driving a new membership model that will grow the industry base.

• CCAM is in the process of completing its annual audit for Fiscal Year 2024. Final audit results are expected later this calendar year with an expected designation of an unqualified opinion. Audited financial statements for FY 2024 can be provided once received by CCAM.

• As of September 30, 2024, CCAM’s unrestricted cash position is approximately improvement from this time last year.

• CCAM revenue increased YOY by 21% to $10.4M in FY 2024.

• All trade debt is current as of September 30, 2024.

• The Department of General Service’s (DGS) acquisition of the CCAM building has not yet been finalized.

• As previously reported in 2023, Chmura Economics & Analytics concluded that each dollar of state funding to CCAM generated $17.3 in economic activity within the Commonwealth. Assuming linear projections with CCAM growth since 2022, an additional economic impact of $42.3M and support for 199 high-paying jobs would be realized.

Business Development

• CCAM completed its benchmarking work of other research institutions, collecting significant data that has informed the establishment of a new industry membership model aimed at increased member recruitment. The long-standing membership model hindered member recruitment, with elements such as a 5-year commitment and a large fee structure that are difficult to get approval at the highest corporate levels. This new model is in line with other communities like CCAM, e.g. AMRC and OMIC, which incorporate much more reasonable fee and term structures. This should improve CCAM’s ability to recruit new industry members.

• Documentation reflecting the structure of the new membership model was finalized in Q2 and Q3. Test reviews of the new structure were extremely favorable.

• In early September, the new CCAM Member Agreement was formally sent for approval to all Industry, University, and Government Members. The target date for full ratification and implementation of the new structure is 01 January 2025.

Federal Funding: Momentum continues with significant future impact

• Commonwealth support continues to provide traction for CCAM as it pursues federally funded programs.

• FY24 Federal Award levels rose to $3.2M, a YOY increase of 146% and an 8.4x increase over FY20.

• Revenue from (i.e., CCAM expenditures against) these federal grants has increased YOY by 163% in FY24 to $2.9M.

• The pipeline of CCAM campaigns and proposals remains strong with near-term (12-24 months) projected value of awards at approximately $5.3M (probability weighted).

• CCAM secured a $962K NIST Community Add Award that will provide additional additive manufacturing capability to CCAM that may be used to attract industrial and federal R&D funding to the Commonwealth.

• CCAM, on behalf of the Alliance for Building Better Medicine (ABBM), was the lead organization for the Advanced Pharmaceutical Manufacturing (APM) Tech Hub, which was awarded to be one of 31 nationally Designated Tech Hubs by the EDA and was well-recognized by our two US Senators and others -  https://www.warner.senate.gov/public/index.cfm/2023/10/warner-and-kaine-announce-major-regional-tech-hub-wins-for-virginia. CCAM also led the submission of eight proposals for Tech Hubs funding, valued at $70M. Proposals centered on growth of the APM hub in the Richmond and Petersburg Region. While the Hub proposals were not selected for funding at this time, $500K was granted to our hub in September to continue momentum for development and future resubmission of proposals.

Workforce Development: Establish a Talent Pipeline

• The Central Virginia Chapter of the Federation of Advanced Manufacturing Education (FAME) has expanded to serve a total of seventeen manufacturing companies in the region as Core Members. The second cohort of students who entered the program in 2022 have now graduated, and all were offered full-time employment by their sponsoring companies. Despite these successes and progressively increasing cohort sizes, FAME is facing a significant challenge with the withdrawal of Richard Bland College as the Chapter’s educational partner. CCAM is working with Brightpoint Community College in the hope that they will assume a leadership role in FAME to continue this good work.

• CCAM’s role as the In-Region Coordinating Entity for GO TEC® (short for Great Opportunities in Technology and Engineering Careers) kicked into high-gear this year. With GO Virginia grant funding and private-sector support from The Cameron Foundation and The John Randolph Foundation, our Region has established GO TEC Career Connections labs in the middle schools of Colonial Heights, Dinwiddie, Hopewell, Petersburg, and Surry. Students in all these schools are already getting instruction that will help spark their interest to pursue STEM careers. In September, GO Virginia approved a no-cost expansion of our grant to include Sussex Central Middle School. This new lab will open in January 2025.

• CCAM was recognized for the third straight year by Virginia’s Talent + Opportunity Partnership as a 2024 “Top Employer for Interns".

• Last year, CCAM began developing and deploying a structured Talent Development model to accelerate development of highly skilled students so they’re ready to impact manufacturing immediately upon entering the workforce. CCAM’s successful collaboration with Virginia State University faculty delivered a new course this year which addressed a key technical skill gap in students’ working familiarity with Industrial Internet of Things (IIOT) technology.

• CCAM has brought on a Talent Development Program Manager to support the talent development ecosystem. This role will work directly with industry, university and government stakeholders to ensure programs meet workforce needs.

Operational Risks

• Economy – The threat of an economic slowdown and/or potential recession remains and could impact corporate spending on research and development in FY25. As CCAM rolls out its new membership model in early 2025, we may experience pressure on existing membership status. Some prospective members have already delayed engagement until 2025. CCAM will continue to look at Federal programs to diversify revenue sources.

• Membership Model Transition – CCAM has assessed its tiered membership levels among other best-in-class research organizations to align with the needs of a changing market. As a result of this effort, a new membership model has been designed, reviewed, and submitted to members for signature. The new model is designed to address industry feedback and improve member recruitment and retention, which has been well received so far. One feature of this new model is the elimination of an “escrow" account that members pay up front as part of their dues. Instead, members will pay dues without additional escrow funds and pay for research on an as-needed basis. Given that several members still have a balance in their escrow account, we expect reduced member income in FY25 as existing balances are depleted by the members on projects. We will aim to offset this revenue risk through targeted use of Commonwealth incentives to attract new members and additional revenue.

• Federal Program Growth – As previously noted, a single federal proposal is a probability weighted activity which could result in zero dollars awarded. CCAM continues to grow the federal pipeline of business and proposal development activities, including working with our US House and Senate representatives in the pursuit of Congressional funding. Our approach is to remain conservative on our probability projections, however, the large potential awards in our pipeline remain binary in terms of win/loss. This could result in a large fluctuation in expected awarded contracts and could be exacerbated by the following risk.

• Federal Government Shutdown – With an upcoming election and new leadership in the White House, and possibly Congress, an extended government shutdown or budget curtailment could result. In FY24, CCAM’s federal funding was 25% of total revenue. A significant reduction in these funds could require proactive management actions. Leadership is currently outlining management strategies to offset this risk. Initial indications are that our largest federal program has FY24 funding allocated already, so we may already have some tailwind on this risk.