• Revenue: $491.6 million, a 2% increase compared to the prior year quarter.
• Normalized Funds From Operations (FFO): $47.6 million or $0.43 per share, a 23% per share increase from the previous year.
• GAAP Net Income: $0.19 per share, compared to $0.12 per share in the prior year quarter.
• Adjusted EPS: $0.20, exceeding average analyst estimates by $0.11 per share.
• Adjusted EBITDA: $83.3 million, an increase of $8.1 million or 11% from the prior year quarter.
• Operating Margin: Improved to 24.9% in the third quarter of 2024 from 21.3% in the prior year quarter.
• Occupancy Rate (OCY): Increased to 75.2% from 72% in the prior year period.
• Debt Repayment: $75.6 million repaid during the third quarter.
• Leverage: 2.2 times net debt to adjusted EBITDA.
• Cash on Hand: $108 million with total liquidity of $365 million.
• Share Repurchase: 4 million shares repurchased in 2024 at a cost of $59.5 million.
• Updated 2024 Financial Guidance: Adjusted EPS of $0.69 to $0.75 and normalized FFO per share of $1.59 to $1.65.

• Warning! GuruFocus has detected 8 Warning Signs with CXW.

Release Date: November 07, 2024

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

Positive Points

• CoreCivic Inc (NYSE:CXW) reported a 2% increase in revenue for the third quarter of 2024, reaching $491.6 million.
• Normalized funds from operations (FFO) increased by 23% per share compared to the third quarter of 2023.
• The company achieved a leverage target of 2.2 times net debt to trailing 12 months adjusted EBITDA, slightly below their long-term target.
• CoreCivic Inc (NYSE:CXW) has seen improvements in staffing levels, reaching nearly pre-pandemic levels, which has allowed for reduced spending on temporary incentives.
• The company has a strong relationship with state partners, evidenced by new contracts with Wyoming and Montana, contributing to revenue growth.

Negative Points

• Revenue from CoreCivic Inc (NYSE:CXW)'s largest partner, ICE, declined by 3.4% compared to the third quarter of 2023.
• The expiration of the lease with the state of California at the California City Correctional Center resulted in decreased lease revenue.
• Operating expenses increased due to higher general and administrative expenses and a legal settlement in the community segment.
• The termination of the contract at the South Texas Family Residential Center impacted revenue and future guidance.
• CoreCivic Inc (NYSE:CXW) anticipates leverage to increase over the next few quarters due to the termination of the South Texas contract.

Q & A Highlights

Q: Can you comment on how you would expect the margin profile to change if safety segment occupancy increases to the low 80s or mid-80s? A: David Garfinkle, CFO, explained that the current margin excluding the South Texas facility is around 22.3%. If occupancy increases to the low 80s, margins could be around 23.5% to 24%. If occupancy reaches the mid to upper 80s, margins could increase by a couple of hundred basis points.

Q: Would the removal of third-party contracting entities make the US Marshals Service more likely to use private providers like CoreCivic? A: Damon Hininger, CEO, affirmed that having multiple contracting tools would make it easier for the Marshals Service to engage with private providers, especially in certain parts of the country.

Q: Is there a standard timeline from RFIs to RFPs, given the current activity in RFIs and RFPs? A: Damon Hininger, CEO, noted that typically, it takes about six months from RFI to RFP and then to contract award and commencement. However, with the new administration, this timeline might be expedited, especially given the desire to impact immigration policies.

Q: How are you preparing for increased occupancies with staffing levels, and would new awards require additional hiring? A: Damon Hininger, CEO, stated that while they have not hired in advance for activations of idle facilities, they have pipelines ready to pull from various labor markets. They are prepared to scale up staffing as needed, and any new contracts would include startup costs associated with hiring.

Q: If ICE requires more capacity than currently available, would new construction be an option, and how do temporary centers compare to permanent facilities? A: Damon Hininger, CEO, mentioned that while they have 18,000 vacant beds, if ICE needs more capacity, they can provide temporary solutions quickly. New construction is not currently on the table, but they have the capability to execute lease agreements for additional capacity.

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