• Revenue: $479.3 million for Q4 2024, a 2% reduction compared to the prior-year quarter. Full-year 2024 revenue was $2 billion.
• Adjusted EBITDA: $74.2 million for Q4 2024, down from $90 million in Q4 2023. Full-year adjusted EBITDA increased to $330.8 million from $311 million.
• Net Income: GAAP net income of $0.17 per share for Q4 2024, including a $0.01 per share gain on sale of real estate assets. Adjusted EPS was $0.16.
• Normalized FFO per Share: $0.39 for Q4 2024, exceeding analyst estimates by $0.05 per share.
• Occupancy Rate: 75.5% for Q4 2024, the highest since Q1 2020.
• Federal Revenue: Declined 12% in Q4 2024 compared to Q4 2023. Revenue from ICE declined 22%, but excluding South Texas, ICE revenue increased 5%.
• State Revenue: Increased 6.4% in Q4 2024 compared to Q4 2023, driven by higher per diem rates and new contracts with Wyoming and Montana.
• Local Revenue: Increased 26% in Q4 2024 compared to Q4 2023, due to new contracts with Hinds County, Mississippi, and Harris County, Texas.
• Operating Margin: 23.6% for safety and community facilities in Q4 2024, compared to 24.4% in the prior-year quarter.
• Debt Repayment: $95 million repaid in 2024, including $7.2 million in Q4.
• Share Repurchase: $68.5 million repurchased in 2024, including $9 million in December.
• Leverage Ratio: Net debt to adjusted EBITDA was 2.3 times as of December 31, 2024.
• 2025 Financial Guidance: Diluted EPS of $0.48 to $0.61 and FFO per share of $1.37 to $1.50.

• Warning! GuruFocus has detected 5 Warning Signs with CXW.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CoreCivic Inc (NYSE:CXW) anticipates significant growth opportunities, particularly with federal partners such as ICE and the United States Marshal Service, due to recent policy changes.
• The company reported a strong occupancy rate of 75.5% for the fourth quarter, the highest since the start of the COVID-19 pandemic.
• CoreCivic Inc (NYSE:CXW) has submitted proposals for 28,000 beds to ICE, which could potentially generate $1.5 billion in revenue.
• The company has been proactive in preparing for potential new contracts by investing $40 million to $45 million in capital expenditures for facility readiness.
• CoreCivic Inc (NYSE:CXW) has improved staffing levels to nearly pre-pandemic levels, reducing reliance on temporary labor and enhancing operational efficiency.

Negative Points

• Revenue from federal partners, particularly ICE, declined by 12% in the fourth quarter compared to the previous year, primarily due to contract terminations.
• Adjusted EBITDA for the fourth quarter decreased to $74.2 million from $90 million in the prior-year quarter, impacted by contract terminations and lease expirations.
• The company faces uncertainty regarding the timing and structure of new contracts with ICE, which could affect financial projections.
• CoreCivic Inc (NYSE:CXW) anticipates start-up expenses for activating idle facilities, which could negatively impact financial guidance unless offset by new contracts.
• The company is exposed to potential risks from policy changes and funding decisions by the federal government, which could impact demand for detention facilities.

Q & A Highlights

Q: What is the total capacity ICE might need, and how does CoreCivic plan to meet this demand? A: Damon Hininger, CEO, stated that ICE might need between 150,000 to 200,000 beds due to recent legislative changes. CoreCivic has proposed 28,000 beds to ICE, which includes existing facilities, vacant facilities, and potential expansions. The company is prepared to meet this demand with its current resources and potential expansions.

Q: How quickly can the South Texas Family Residential Center be reopened, and are there alternatives? A: Damon Hininger, CEO, mentioned that the South Texas facility could be reopened quickly due to its recent deactivation. CoreCivic is in discussions with Target Hospitality for potential expansions at this site or other locations. The reopening process could be expedited without a formal RFP due to the facility's recent operational status.

Q: Can CoreCivic operate facilities above 100% capacity, and how is this managed? A: Patrick Swindle, COO, explained that each facility is uniquely designed, allowing for some flexibility in capacity. Facilities can repurpose space to increase capacity beyond rated levels, typically on a short-term basis. Long-term capacity increases would require more permanent changes.

Q: How does CoreCivic plan to manage potential inflationary pressures on costs? A: Patrick Swindle, COO, stated that CoreCivic has strong vendor relationships and has made preemptive purchases to mitigate inflation impacts. The company is well-positioned to manage staffing and benefits costs, which constitute the majority of their expenses. Federal contracts also allow for reimbursement of wage increases due to inflation.

Q: What are CoreCivic's plans regarding acquisitions and new facility builds? A: Damon Hininger, CEO, indicated that CoreCivic is exploring acquisitions of idle facilities and potential expansions within existing properties. While new builds are a possibility, the current focus is on utilizing and expanding existing resources to meet demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.