CoreCivic(CXW) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2024, CoreCivic generated revenue of $490.1 million, a 6$46.6 million, or $0.42 per share, representing a 27$37.8 million, or $0.33 per share, in Q2 2023 [5][27] - GAAP net income was$0.17 per share compared to $0.13 per share in the prior year quarter [27] - Adjusted EBITDA increased to$83.9 million, up from $72.1 million in the prior year quarter, a 16$151 million from $136.7 million [7][29] - State revenue in the Safety and Community segments grew by 5$16.1 million, or 6.6%, while state revenue rose by $9.5 million, or 5.3$4.1 million, or 49%, reflecting new contracts signed in late 2023 [30] - The occupancy in the Safety segment improved from 70.8% to 75.1%, while the Community segment saw a slight decline from 62.8% to 62.3% [13] Company Strategy and Development Direction - CoreCivic is focusing on capital allocation strategies, including stock repurchase plans and debt repayments [4][18] - The company is actively engaging with federal, state, and local government agencies to address their capacity challenges [21][22] - The termination of the South Texas Family Residential Center contract is seen as an opportunity to reallocate resources to other facilities [20][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong macro environment for federal, state, and local business despite the contract termination [21] - The company anticipates stable federal populations for the remainder of 2024, with potential upside if national detention populations increase [35] - Management noted that labor market pressures have normalized, allowing for improved staffing and reduced operational costs [14][15] Other Important Information - The company repurchased 1.3 million shares at a cost of $20 million during Q2 2024, with total repurchases in 2024 reaching 4 million shares [17][34] - The leverage ratio was reported at 2.5 times net debt to adjusted EBITDA, within the targeted range [18][34] - The company expects adjusted EPS of$0.58 to $0.66 and normalized FFO per share of$1.48 to $1.56 for 2024 [35] Q&A Session Summary Question: Can the South Texas facility options be kept open due to potential changes in administration? - Management confirmed that they are keeping options open for the South Texas facility and have a good relationship with the owner [41][42] Question: How did state budgets and per diem increases play out this year? - Management indicated that per diem increases were in the range of 2% to 4%, reflecting a more normal year compared to previous years [44][46] Question: Is ICE budget constrained, and how does the South Texas contract termination affect capacity? - Management acknowledged budget constraints but noted that the termination allows for flexibility to increase populations in other facilities [47][48] Question: What is the outlook for margin expansion in the second half of the year? - Management expressed optimism for margin expansion due to increased occupancy and per diem increases, despite the impact of the South Texas contract termination [59] Question: What is the timeline for potential new facility openings related to recent RFIs and RFPs? - Management indicated that while new contracts may take time, the termination of the South Texas contract frees up funds for new capacity [60][62]