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CCA Reports Second Quarter 2015 Financial Results
Second Quarter 2015 Highlights
- Revenue of
$459.3 million increased 11.8% from the prior year quarter - Diluted EPS up 14.6% to
$0.55 from$0.48 - Adjusted Diluted EPS up 12.2% to
$0.55 from$0.49 - FFO per diluted share up 8.8% to
$0.74 from$0.68 - AFFO per diluted share up 7.4% to
$0.73 from$0.68
Net income generated in the second quarter of 2015 totaled
"We are pleased with our performance in the second quarter of 2015 as we achieved double-digit growth in both revenue and adjusted earnings per share versus the comparable prior year period," said
Operating Results
Total revenue for the second quarter of 2015 was
Adjusted net income, NOI, EBITDA, Adjusted EBITDA, FFO, Normalized FFO and AFFO, and their corresponding per share amounts, are measures calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles (GAAP). Please refer to the Supplemental Financial Information and related note following the financial statements herein for further discussion and reconciliations of these measures to GAAP measures.
Partnership Development Update
South Texas Family Residential Center Update. In the second quarter of 2015, construction was completed on the 2,400-bed South Texas Family Residential Center, a facility we lease in
Trousdale Turner Correctional Center Update. Construction of the new 2,552-bed
Otay Mesa Detention Center Update. Construction of the new 1,492-bed
Amendment to Revolving Credit Facility
On
Guidance
We currently expect Adjusted Diluted EPS for the third quarter of 2015 to be in the range of
During 2015, we expect to invest approximately
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information and other data for the second quarter of 2015. We do not undertake any obligation, and disclaim any duty to update any of the information disclosed in this report. Interested parties may access this information through our website at www.cca.com under "Financial Information" of the Investors section.
Management may meet with investors from time to time during the third quarter of 2015. Written materials used in the investor presentations will also be available on our website beginning on or about
Webcast and Replay Information
We will host a webcast conference call at
About CCA
CCA, a publicly traded real estate investment trust (REIT), is the nation's largest owner of partnership correction and detention facilities and one of the largest prison operators in
Forward-Looking Statements
This press release contains statements as to our beliefs and expectations of the outcome of future events that are forward-looking statements as defined within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These include, but are not limited to, the risks and uncertainties associated with: (i) general economic and market conditions, including the impact governmental budgets can have on our per diem rates, occupancy, and overall utilization; (ii) fluctuations in our operating results because of, among other things, changes in occupancy levels, competition, increases in cost of operations, fluctuations in interest rates and risks of operations; (iii) our ability to obtain and maintain correctional facility management contracts, including, but not limited to, sufficient governmental appropriations, contract compliance and as a result of inmate disturbances; (iv) changes in the privatization of the corrections and detention industry, the public acceptance of our services, the timing of the opening of and demand for new prison facilities and the commencement of new management contracts; (v) changes in government policy and in legislation and regulation of the corrections and detention industry that affect our business, including but not limited to,
CCA takes no responsibility for updating the information contained in this press release following the date hereof to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events or for any changes or modifications made to this press release or the information contained herein by any third-parties, including, but not limited to, any wire or internet services.
| CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | ||||||||||
| ASSETS | June 30, 2015 |
December 31, 2014 |
||||||||
| Cash and cash equivalents | $ | 41,069 | $ | 74,393 | ||||||
| Restricted cash | 1,641 | - | ||||||||
| Accounts receivable, net of allowance of $1,407 and $748, respectively | 229,541 | 248,588 | ||||||||
| Current deferred tax assets | 8,884 | 13,229 | ||||||||
| Prepaid expenses and other current assets | 41,347 | 29,775 | ||||||||
| Total current assets | 322,482 | 365,985 | ||||||||
| Property and equipment, net | 2,755,292 | 2,658,628 | ||||||||
| Restricted cash | 114 | 2,858 | ||||||||
| Investment in direct financing lease | 1,992 | 3,223 | ||||||||
| Goodwill | 15,155 | 16,110 | ||||||||
| Non-current deferred tax assets | 4,035 | 2,301 | ||||||||
| Other assets | 76,096 | 78,086 | ||||||||
| Total assets | $ | 3,175,166 | $ | 3,127,191 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Accounts payable and accrued expenses | $ | 307,591 | $ | 317,566 | ||||||
| Income taxes payable | 1,086 | 1,368 | ||||||||
| Current liabilities of discontinued operations | - | 54 | ||||||||
| Total current liabilities | 308,677 | 318,988 | ||||||||
| Long-term debt | 1,238,000 | 1,200,000 | ||||||||
| Deferred revenue | 82,976 | 87,227 | ||||||||
| Other liabilities | 64,352 | 39,476 | ||||||||
| Total liabilities | 1,694,005 | 1,645,691 | ||||||||
| Commitments and contingencies | ||||||||||
| Preferred stock ― $0.01 par value; 50,000 shares authorized; none issued and outstanding at June 30, 2015 and December 31, 2014, respectively | - | - | ||||||||
| Common stock ― $0.01 par value; 300,000 shares authorized; 117,119 and 116,764 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | 1,171 | 1,168 | ||||||||
| Additional paid-in capital | 1,752,646 | 1,748,303 | ||||||||
| Accumulated deficit | (272,656 | ) | (267,971 | ) | ||||||
| Total stockholders' equity | 1,481,161 | 1,481,500 | ||||||||
| Total liabilities and stockholders' equity | $ | 3,175,166 | $ | 3,127,191 | ||||||
| CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES | |||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
| (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| REVENUE: | |||||||||||||||||||
| Owned and controlled properties | $ | 404,245 | $ | 348,557 | $ | 776,367 | $ | 687,726 | |||||||||||
| Managed only and other | 55,050 | 62,137 | 108,928 | 127,190 | |||||||||||||||
| Total revenue | 459,295 | 410,694 | 885,295 | 814,916 | |||||||||||||||
| EXPENSES: | |||||||||||||||||||
| Operating: | |||||||||||||||||||
| Owned and controlled properties | 265,296 | 229,635 | 514,002 | 454,854 | |||||||||||||||
| Managed only and other | 52,739 | 57,975 | 104,695 | 120,136 | |||||||||||||||
| Total operating expenses | 318,035 | 287,610 | 618,697 | 574,990 | |||||||||||||||
| General and administrative | 23,107 | 26,559 | 49,979 | 51,951 | |||||||||||||||
| Depreciation and amortization | 38,400 | 28,752 | 67,085 | 57,136 | |||||||||||||||
| Asset impairments | - | 2,238 | 955 | 2,238 | |||||||||||||||
| 379,542 | 345,159 | 736,716 | 686,315 | ||||||||||||||||
| OPERATING INCOME | 79,753 | 65,535 | 148,579 | 128,601 | |||||||||||||||
| OTHER (INCOME) EXPENSE: | |||||||||||||||||||
| Interest expense, net | 11,761 | 8,364 | 21,951 | 18,712 | |||||||||||||||
| Other (income) expense | 36 | (613 | ) | 10 | (1,000 | ) | |||||||||||||
| 11,797 | 7,751 | 21,961 | 17,712 | ||||||||||||||||
| INCOME BEFORE INCOME TAXES | 67,956 | 57,784 | 126,618 |
110,889 |
|||||||||||||||
| Income tax expense | (2,653 | ) | (2,052 | ) | (4,038 | ) | (3,419 | ) | |||||||||||
| NET INCOME | $ | 65,303 | $ | 55,732 | $ | 122,580 | $ | 107,470 | |||||||||||
| BASIC EARNINGS PER SHARE: | $ | 0.56 | $ | 0.48 | $ | 1.05 | $ | 0.93 | |||||||||||
| DILUTED EARNINGS PER SHARE: | $ | 0.55 | $ | 0.48 | $ | 1.04 | $ | 0.92 | |||||||||||
| DIVIDENDS DECLARED PER SHARE | $ | 0.54 | $ | 0.51 | $ | 1.08 | $ | 1.02 | |||||||||||
| CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES | |||||||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||||
| (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | |||||||||||||
| CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS | |||||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Net income | $ | 65,303 | $ | 55,732 | $ | 122,580 | $ | 107,470 | |||||
| Special items: | |||||||||||||
| Asset impairments, net | - | 2,235 | 955 | 2,235 | |||||||||
| Adjusted net income | $ | 65,303 | $ | 57,967 | $ | 123,535 | $ | 109,705 | |||||
| Weighted average common shares outstanding - basic | 116,962 | 116,114 | 116,799 | 115,944 | |||||||||
| Effect of dilutive securities: | |||||||||||||
| Stock options | 720 | 835 | 794 | 899 | |||||||||
| Restricted stock-based compensation | 130 | 247 | 197 | 236 | |||||||||
| Weighted average shares and assumed conversions - diluted | 117,812 | 117,196 | 117,790 | 117,079 | |||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.55 | $ | 0.49 | $ | 1.05 | $ | 0.94 | |||||
| CALCULATION OF NORMALIZED FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS | ||||||||||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| Net income | $ | 65,303 | $ | 55,732 | $ | 122,580 | $ | 107,470 | ||||||||||
| Depreciation of real estate assets | 22,175 | 21,431 | 43,447 | 42,508 | ||||||||||||||
| Impairment of real estate assets, net | - | 2,235 | - | 2,235 | ||||||||||||||
| Funds From Operations | $ | 87,478 | $ | 79,398 | $ | 166,027 | $ | 152,213 | ||||||||||
| Goodwill and other impairments, net | - | - | 955 | - | ||||||||||||||
| Normalized Funds From Operations | $ | 87,478 | $ | 79,398 | $ | 166,982 | $ | 152,213 | ||||||||||
| Maintenance capital expenditures on real estate assets | (6,176 |
) | (4,221 |
) | (10,414 |
) | (12,949 |
) | ||||||||||
| Stock-based compensation | 3,910 | 3,631 | 7,708 | 6,924 | ||||||||||||||
| Amortization of debt costs and other non-cash interest | 776 |
777 |
1,552 |
1,548 |
||||||||||||||
| Other non-cash revenue and expenses | (16 | ) | (16 | ) | (32 | ) | (32 | ) | ||||||||||
| Adjusted Funds From Operations | $ | 85,972 | $ | 79,569 | $ | 165,796 | $ | 147,704 | ||||||||||
| Normalized Funds From Operations Per Diluted Share | $ | 0.74 |
$ | 0.68 |
$ | 1.42 |
$ | 1.30 |
||||||||||
| Adjusted Funds From Operations Per Diluted Share | $ | 0.73 | $ | 0.68 | $ | 1.41 | $ | 1.26 | ||||||||||
| CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES | ||||||||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION | ||||||||||||||
| (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | ||||||||||||||
| CALCULATION OF NET OPERATING INCOME | ||||||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| Net income | $ | 65,303 | $ | 55,732 | $ | 122,580 | $ | 107,470 | ||||||
| Income tax expense | 2,653 | 2,052 | 4,038 | 3,419 | ||||||||||
| Other (income) expense | 36 | (613 | ) | 10 | (1,000 | ) | ||||||||
| Interest expense, net | 11,761 | 8,364 | 21,951 | 18,712 | ||||||||||
| General and administrative | 23,107 | 26,559 | 49,979 | 51,951 | ||||||||||
| Depreciation and amortization | 38,400 | 28,752 | 67,085 | 57,136 | ||||||||||
| Asset impairments | - | 2,238 | 955 | 2,238 | ||||||||||
| Net operating income | $ | 141,260 | $ | 123,084 | $ | 266,598 | $ | 239,926 | ||||||
| CALCULATION OF ADJUSTED FUNDS FROM OPERATIONS PER SHARE & ADJUSTED EBITDA GUIDANCE | ||||||||||||||||
| For the Quarter Ending September 30, 2015 |
For the Year Ending December 31, 2015 |
|||||||||||||||
| Low End of Guidance | High End of Guidance | Low End of Guidance | High End of Guidance | |||||||||||||
| Net income | $ | 50,300 | $ | 52,300 | $ | 223,345 | $ | 230,345 | ||||||||
| Asset impairment, net | - | - | 955 | 955 | ||||||||||||
| Expenses associated with refinancing activities | 700 | 700 | 700 | 700 | ||||||||||||
| Adjusted net income | $ | 51,000 | $ | 53,000 | $ | 225,000 | $ | 232,000 | ||||||||
| Depreciation on real estate assets | 22,000 | 22,000 | 87,000 | 88,000 | ||||||||||||
| Normalized Funds From Operations | $ | 73,000 | $ | 75,000 | $ | 312,000 | $ | 320,000 | ||||||||
| Other non-cash revenue and expenses | 5,000 | 5,000 | 19,000 | 19,000 | ||||||||||||
| Maintenance capital expenditures on real estate assets | (7,500 |
) | (7,500 |
) | (25,000 |
) | (26,000 |
) | ||||||||
| Adjusted Funds From Operations | $ | 70,500 | $ | 72,500 | $ | 306,000 | $ | 313,000 | ||||||||
| Adjusted EPS per diluted share | $ | 0.43 | $ | 0.45 | $ | 1.91 | $ | 1.97 | ||||||||
| Normalized FFO per diluted share | $ | 0.62 | $ | 0.64 | $ | 2.64 | $ | 2.71 | ||||||||
| AFFO per diluted share | $ | 0.60 | $ | 0.61 | $ | 2.59 | $ | 2.65 | ||||||||
| Adjusted net Income | $ | 51,000 | $ | 53,000 | $ | 225,000 | $ | 232,000 | ||||||||
| Interest expense, net | 13,000 | 13,000 | 48,000 | 50,000 | ||||||||||||
| Depreciation and amortization | 43,000 | 44,000 | 154,000 | 156,000 | ||||||||||||
| Income tax expense | 3,000 | 3,000 | 11,000 | 13,000 | ||||||||||||
| EBITDA | $ | 110,000 | $ | 113,000 | $ | 438,000 | $ | 451,000 | ||||||||
| Depreciation associated with STFRC lease | (10,800 | ) | (10,800 | ) | (29,500 | ) | (29,500 | ) | ||||||||
| Interest expense associated with STFRC lease | (3,200 | ) | (3,200 | ) | (8,200 | ) | (8,200 | ) | ||||||||
| Adjusted EBITDA | $ | 96,000 | $ | 99,000 | $ | 400,300 | $ | 413,300 | ||||||||
NOTES TO SUPPLEMENTAL FINANCIAL INFORMATION
Note A: Adjusted Net Income, Net Operating Income (NOI), EBITDA, Adjusted EBITDA, Funds From Operations (FFO), Normalized FFO and Adjusted Funds From Operations (AFFO), and, where appropriate, their corresponding per share metrics are non-GAAP financial measures. CCA believes that these measures are important operating measures that supplement discussion and analysis of the Company's results of operations and are used to review and assess operating performance of the Company and its correctional facilities and their management teams. CCA believes that it is useful to provide investors, lenders and security analysts' disclosures of its results of operations on the same basis that is used by management. FFO and AFFO, in particular, are widely accepted non-GAAP supplemental measures of REIT performance, each grounded in the standards for FFO established by the
NAREIT defines FFO as net income computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate. EBITDA, Adjusted EBITDA, NOI, FFO and AFFO are useful as supplemental measures of performance of the Company's corrections facilities because they don't take into account depreciation and amortization, or with respect to EBITDA, the impact of the Company's tax provisions and financing strategies. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), this accounting presentation assumes that the value of real estate assets diminishes at a level rate over time. Because of the unique structure, design and use of the Company's properties, management believes that assessing performance of the Company's properties without the impact of depreciation or amortization is useful. Adjusted EBITDA includes depreciation and interest expense in order to more properly reflect the cash flows associated with the lease at the South Texas Family Residential Center. CCA may make adjustments to FFO from time to time for certain other income and expenses that it considers non-recurring, infrequent or unusual, even though such items may require cash settlement, because such items do not reflect a necessary component of the ongoing operations of the Company. Normalized FFO excludes the effects of such items. CCA calculates AFFO by adding to Normalized FFO non-cash expenses such as the amortization of deferred financing costs and stock-based compensation, and by subtracting from Normalized FFO recurring real estate expenditures that are capitalized and then amortized, but which are necessary to maintain a REIT's properties and its revenue stream. Some of these capital expenditures contain a discretionary element with respect to when they are incurred, while others may be more urgent. Therefore, these capital expenditures may fluctuate from quarter to quarter, depending on the nature of the expenditures required, seasonal factors such as weather, and budgetary conditions. CCA calculates Adjusted Net Income by adding or deducting from GAAP Net Income amounts associated with the Company's debt refinancing, mergers and acquisitions activity and certain impairments that the Company believes are unusual or nonrecurring to provide an alternative measure of comparing operating performance for the periods presented.
Other companies may calculate Adjusted Net Income, NOI, EBITDA, Adjusted EBITDA, FFO, Normalized FFO, and AFFO differently than the Company does, or adjust for other items, and therefore comparability may be limited. Adjusted Net Income, NOI, EBITDA, Adjusted EBITDA, FFO, Normalized FFO, and AFFO and their corresponding per share measures are not measures of performance under GAAP, and should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an alternative to net income as indicators of the Company's operating performance or any other measure of performance derived in accordance with GAAP. This data should be read in conjunction with the Company's consolidated financial statements and related notes included in its filings with the
Contact:
Investors and Analysts:
CCA
(615) 263-3024
Financial Media:
(312) 780-7204
Source: