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CoreCivic(CXW) - 2022 Q4 - Annual Report
CXWCoreCivic(CXW)2023-02-20 16:00
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Facility Operations and Capacity - CoreCivic operates 44 correctional and detention facilities with a total design capacity of approximately 66,000 beds, and 23 residential reentry centers with a capacity of approximately 5,000 beds as of December 31, 2022[24] - CoreCivic owns 8 properties leased to government agencies, totaling 1.8 million square feet[24] - CoreCivic Safety segment operated 44 facilities with a total design capacity of 66,399 beds, generating 84.1% of total segment net operating income in 2022[108] - CoreCivic Community segment had 23 residential reentry centers with a design capacity of 4,669 beds, contributing 3.9% of total segment net operating income in 2022[109] - CoreCivic Properties segment owned 8 properties totaling 1.8 million square feet, generating 12.0% of total segment net operating income in 2022[110] - CoreCivic owns or controls approximately 56% of all privately owned prison beds and manages nearly 38% of all privately managed prison beds in the United States[112] - CoreCivic has 8,459 beds at seven prison facilities that are vacant and immediately available for use[116] - CoreCivic entered into a three-year lease agreement with the state of New Mexico for the 596-bed Northwest New Mexico Correctional Center, with extension options through October 2041[121] - CoreCivic signed a 20-year lease agreement with the Kansas Department of Corrections for a 2,432-bed correctional facility in Lansing, Kansas, completed in January 2020[122] - CoreCivic's CoreCivic Safety segment has 8,699 idle beds available for growth opportunities[108] - CoreCivic's CoreCivic Community segment had 450 idle beds as of December 31, 2022, with one facility classified as held for sale[109] - CoreCivic owns or controls approximately 14.6 million square feet of real estate used by government agencies, providing steady and predictable cash flows[107] - As of December 31, 2022, the company owned or controlled 95% of its portfolio of 75 facilities, with weighted average ages of 23, 28, and 21 years for CoreCivic Safety, CoreCivic Community, and CoreCivic Properties segments, respectively[124] - Company operates 44 correctional and detention facilities with a total design capacity of approximately 66,000 beds, 40 of which are owned[24] - Company owns and operates 23 residential reentry centers with a total design capacity of approximately 5,000 beds[24] - Company owns 8 properties leased to government agencies, totaling 1.8 million square feet[24] - CoreCivic Safety segment consists of 44 correctional and detention facilities, while the Community segment includes 23 residential reentry centers[33] Financial Performance and Risks - The company faces risks from fluctuations in occupancy levels, which could decrease revenues and profitability[21] - CoreCivic is dependent on government appropriations, and its operations may be negatively affected by budgetary challenges or government shutdowns[21] - The COVID-19 pandemic has had, and may continue to have, negative effects on CoreCivic's business, potentially impacting its financial condition and cash flows[21] - CoreCivic is subject to risks related to contract terminations, non-renewals, or competitive re-bids of government contracts[21] - The company may incur significant start-up and operating costs on new contracts before receiving related revenues, impacting cash flows[21] - CoreCivic depends on a limited number of governmental customers for a significant portion of its revenues[21] - The company is subject to risks associated with technological changes or resistance to electronic monitoring products, which could render its products obsolete[21] - CoreCivic may face costly product liability claims from the use of its electronic monitoring products, potentially damaging its reputation and marketability[22] - Federal revenues decreased by 5.3% from 1,050.7millionin2021to1,050.7 million in 2021 to 994.7 million in 2022, primarily due to a decrease in detainees at the La Palma Correctional Facility and the termination of the BOP contract at the McRae Correctional Facility[73][74] - State revenues increased by 11.1% from 602.1millionin2021to602.1 million in 2021 to 669.2 million in 2022, driven by a new management contract with the state of Arizona for up to 2,706 inmates at the La Palma facility[75] - The BOP contract at the McRae Correctional Facility, which accounted for 2% (37.8million)oftotalrevenuein2022,expiredonNovember30,2022,andwasnotrenewed[67]−USMSandICEaccountedfor2237.8 million) of total revenue in 2022, expired on November 30, 2022, and was not renewed[67] - USMS and ICE accounted for 22% (403.9 million) and 29% (527.3million)oftotalrevenuein2022,respectively[67]−TheLaPalmaCorrectionalFacilitytransitionedfromanICEpopulationtoastateofArizonapopulation,reducingICEdetaineesfromapproximately1,800tozero[73]−ThecompanycompletedthesaleoftheMcRaeCorrectionalFacilityinAugust2022andleaseditthroughNovember2022tofulfillBOPobligations[67][73]−TwoUSMScontractsaresettoexpireinSeptember2023andSeptember2025,withuncertaintyaroundrenewalorreplacement[69]−ThestateofTennesseegenerated10527.3 million) of total revenue in 2022, respectively[67] - The La Palma Correctional Facility transitioned from an ICE population to a state of Arizona population, reducing ICE detainees from approximately 1,800 to zero[73] - The company completed the sale of the McRae Correctional Facility in August 2022 and leased it through November 2022 to fulfill BOP obligations[67][73] - Two USMS contracts are set to expire in September 2023 and September 2025, with uncertainty around renewal or replacement[69] - The state of Tennessee generated 10% of total revenue in 2022, reflecting growth in state inmate populations and per diem increases[75] - Occupancy in correctional and detention facilities remains depressed due to COVID-19, Title 42, and other government-imposed restrictions[76] - The company secured a new contract with the state of Arizona for up to 2,706 inmates at the La Palma Correctional Center, the largest state prison contract awarded to the private sector in over a decade[77] - Sold the 1,978-bed McRae Correctional Facility for a gross sales price of 130.0 million, generating net proceeds of 129.7millionandagainonsaleof129.7 million and a gain on sale of 77.5 million[82] - Transitioned populations at the 3,060-bed La Palma Correctional Center from ICE to Arizona state residents, with a new contract for up to 2,706 inmates[82] - Renewed 8 out of 9 management contracts scheduled to expire in 2022[82] - Completed the sale of two idled facilities and an under-utilized facility, generating aggregate net sales proceeds of 10.2million[82]−EnteredintoaThirdAmendedandRestatedCreditAgreementwithanaggregateprincipalamountof10.2 million[82] - Entered into a Third Amended and Restated Credit Agreement with an aggregate principal amount of 350.0 million, extending maturity to May 2026[85] - Repurchased 6.6 million common shares at an aggregate cost of approximately 74.5millionundera74.5 million under a 225.0 million share repurchase program[85] - As of December 31, 2022, the company had cash on hand of 149.4millionand149.4 million and 233.2 million available under its New Revolving Credit Facility, with a total weighted average effective interest rate on all outstanding debt of 7.1%[128] - The company generated 153.6millionincashthroughoperatingactivitiesfortheyearendedDecember31,2022[128]−Thecompany′stotalweightedaveragematurityonalloutstandingdebtwas4.9yearsasofDecember31,2022[128]−Thecompany′sfixedchargecoverageratioanddebtleverageratiowereboth3.2xfortheyearendedDecember31,2022[128]−CoreCivic′stotalsegmentnetoperatingincomefor2022wasdividedasfollows:Safety(84.1153.6 million in cash through operating activities for the year ended December 31, 2022[128] - The company's total weighted average maturity on all outstanding debt was 4.9 years as of December 31, 2022[128] - The company's fixed charge coverage ratio and debt leverage ratio were both 3.2x for the year ended December 31, 2022[128] - CoreCivic's total segment net operating income for 2022 was divided as follows: Safety (84.1%), Community (3.9%), and Properties (12.0%)[31] - Federal correctional and detention authorities accounted for 54% of CoreCivic's total revenue in 2022, down from 56% in 2021 and 52% in 2020[31] - The contract renewal rate for CoreCivic's owned or controlled facilities was 95% over the five years ended December 31, 2022[32] - Average compensated occupancy rates for CoreCivic Safety facilities were 71% in 2022, down from 73% in 2021 and 75% in 2020[34] - CoreCivic Properties segment's average occupancy was 100% in 2022, consistent with 2021 and up from 99% in 2020[35] - Competition in the correctional and detention industry is based on bed availability, cost, quality of services, and reputation, with competitors including The GEO Group, Inc. and Management and Training Corporation[171] - Revenue from facilities is affected by demand for beds, general economic conditions, and population age[171] - Company faces risks from government policy changes, including potential non-renewal of contracts due to executive orders impacting private prison operations[15] - Occupancy fluctuations and competition may adversely affect operating revenue[171] - Company is subject to risks from government budget constraints, contract terminations, and inflation, which could impact per diem rates and occupancy[15] - COVID-19-related policies, such as Title 42, may impact operations and revenue due to ongoing litigation and government actions[15] - Company's ability to secure new contracts and manage facilities depends on factors such as government appropriations, contract compliance, and public perception[21] Educational and Reentry Programs - The company introduced MaxxContent, a custom online Learning Management System, as a pilot program in 2022 at multiple facilities[42] - Inmates participating in correctional education programs were 28% less likely to recidivate compared to those who did not participate[40] - The company partnered with Felon Education Project in 2022 to introduce a business startup course for inmates[42] - Inmates who completed addiction treatment in prison had significantly lower recidivism levels, according to a 2016 study[43] - In 2022, the company partnered with Pivot Technology School to pilot a five-month technology career program at Jenkins Correctional Center in Georgia, focusing on computer coding and data analytics[45] - The company expanded its post-secondary educational offerings with Ashland University, enabling offenders to obtain Associate's or Bachelor's degrees in General Studies, Communication Studies, or Interdisciplinary Studies at no cost through Pell Grant funding[45] - Since 2016, the company has operated state-of-the-art Diesel Maintenance and Welding programs at Coffee and Wheeler facilities in Georgia, allowing students to earn trade certificates from nearby community colleges[45] - In 2021, the company launched the "Go Further Release" program in Denver, Colorado, providing stabilization services and reentry coaching to individuals being released from facilities[47] - In 2022, the company received approval from the GDOC to implement the Go Further Release program at Coffee, Jenkins, and Wheeler facilities, partnering with Life Empowerment Enterprises[47] - The company's community corrections facilities offer housing and programs focused on employment, job readiness, life skills, and substance abuse treatment, aiming to reduce recidivism[49] - The company provides non-residential correctional alternative services, including electronic monitoring and case management, under its CoreCivic Community segment[51] - Introduced MaxxContent as a pilot program at five correctional centers, offering online learning management system with life skills, mental health, financial literacy, GED preparation, communications, workforce skills, and reentry preparation[81] - Partnered with Felon Education Project and Pivot Technology School to introduce pilot programs focused on business education and technology career training at correctional facilities[82] - CoreCivic introduced MaxxContent, a custom online Learning Management System, as a pilot program in 2022 at five facilities[42] - CoreCivic partnered with Felon Education Project in 2022 to introduce a business startup course at Wheeler Correctional Facility[42] - CoreCivic's Residential Drug Abuse Program aims to reduce recidivism, with studies showing lower recidivism levels for inmates completing addiction treatment[43] - CoreCivic's Victim Impact Programs educate offenders about the negative effects of their criminal conduct on others[44] - Partnered with Persevere to offer software coding and job readiness programs at Trousdale Turner, Red Rock, and Saguaro facilities, with Red Rock and Saguaro in Arizona[45] - Expanded programming in 2022 by partnering with Pivot Technology School to pilot Pivot Tech, a 5-month boot camp-style course at Jenkins Correctional Center in Georgia[45] - Increased post-secondary educational offerings with Ashland University, enabling offenders to earn Associate's or Bachelor's degrees at no cost through Pell Grant funding[45] - Offered an online Information Support and Services computer program at Lee Adjustment Center in Kentucky since 2018, with students earning NOCTI credentials[45] - Operated state-of-the-art Diesel Maintenance and Welding programs at Coffee and Wheeler facilities in Georgia since 2016, enabling trade certifications[45] - Introduced the "Go Further" reentry strategy in 2017, incorporating cognitive/behavioral curriculum and collaborative reentry preparation[46] - Reentry and Life Skills programs focus on job search, financial management, parenting, and relationship skills[46] - Cognitive behavioral programs aim to reduce anti-social attitudes and criminal thinking in offenders[46] Employee Training and Development - The company delivered human rights training to more than 90% of continuing employees and incorporated human rights elements in over 20 pre-service training courses[135] - In 2022, the company had a total of 10,653 employees, with 53% female and 60% people of color or underrepresented minorities (URM)[139] - CoreCivic has graduated 4,365 employees from CoreCivic University programs, with new employees receiving an average of 200 hours of pre-service and on-the-job training[145] - The company saw a 31% increase in Core Values, a 24% increase in Team Orientation, and a 35% increase in Empowerment at facilities that completed 75% or more of their action plans[147] - CoreCivic invested approximately 30.9 million in talent attraction efforts in 2022, resulting in over 66,400 job applications, a 30% increase from 2021[155] - The company employed 11,144 full- and part-time employees as of December 31, 2022, with approximately 12.7% represented by labor unions[158] - CoreCivic provided wage increases to nearly all facility staff not covered by the McNamara-O'Hara Service Contract Act in Q3 2022 to remain competitive[156] - The company achieved a 97% completion rate for two new DE&I e-learnings in 2022, with 17 new enterprise leaders completing Conscious Inclusion Training[153] - CoreCivic launched pilot BRGs (Business Resource Groups) for women, military, and multicultural interests in 2022 based on DE&I Advisory Council recommendations[152] - The company maintained COVID-19 pandemic measures, including provisions of PPE, paid leave for COVID-19 related needs, and specialized education and training[159] - CoreCivic is subject to extensive federal, state, and local regulations, including staffing requirements, reporting, and on-site monitoring by government agencies[160] - The company is significantly self-insured for employee health, workers' compensation, and general liability, with insurance expenses dependent on claims experience[170] Facility Contracts and Occupancy - Federal correctional and detention authorities accounted for 54%, 56%, and 52% of total revenue in 2022, 2021, and 2020, respectively[31] - The contract renewal rate for properties owned or controlled via long-term lease was 95% over the five years ended December 31, 2022[32] - Average compensated occupancy rates for CoreCivic Safety facilities were 71%, 73%, and 75% in 2022, 2021, and 2020, respectively[34] - CoreCivic Properties segment achieved 100% occupancy for 2022 and 2021, and 99% for 2020[35] - Trousdale Turner Correctional Center has a capacity of 2,552 and is contracted until Jun-26[93] - South Texas Family Residential Center has a capacity of 2,400 and is contracted until Sep-26[94] - Lake Erie Correctional Institution has a capacity of 1,798 and is contracted until Jun-32[92] - Northeast Ohio Correctional Center has a capacity of 2,016 and is contracted until Jun-32[92] - Houston Processing Center has a capacity of 1,000 and is contracted until Aug-23[94] - Laredo Processing Center has a capacity of 258 and is contracted until Jun-23[94] - T. Don Hutto Residential Center has a capacity of 512 and is contracted until Jul-23[94] - Webb County Detention Center has a capacity of 480 and is contracted until Feb-23[94] - The company experienced customer retention of approximately 95% at facilities it owned or controlled via long-term lease over the previous five years[125] - The company was awarded a new management contract from the state of Arizona for up to 2,706 inmates at its 3,060-bed La Palma Correctional Center, with the transfer of inmates completed in Q4 2022[123]