CLOSE
CoreCivic Reports First Quarter 2019 Financial Results
Diluted EPS of
Increases Full Year 2019 Financial Guidance
First Quarter 2019 Highlights
- Total revenue of
$484.1 million , up 10% from the prior year quarter- CoreCivic Safety (portfolio of correctional and detention facilities) revenue of
$434.3 million , up 7% from the prior year quarter CoreCivic Community (portfolio of residential reentry centers) revenue of$30.6 million , up 23% from the prior year quarterCoreCivic Properties (portfolio of government-leased properties) revenue of$19.1 million , up 65% from the prior year quarter
- CoreCivic Safety (portfolio of correctional and detention facilities) revenue of
- Net income of
$49.3 million , up 31% from the prior year quarter - Diluted EPS of
$0.41 , up 28% from the prior year quarter - Normalized FFO per diluted share of
$0.64 , up 21% from the prior year quarter - Adjusted EBITDA of
$109.7 million , up 19% from the prior year quarter
“We are increasing our full year financial guidance as a result of our strong momentum and attractive outlook. In addition, we continue to evaluate market opportunities across our diversified portfolio of real estate assets that can contribute to continued earnings and cash flow growth.”
"We are also pleased to announce that we will publish CoreCivic’s first environmental, social, and governance report prior to our annual shareholder meeting next week. The report is informed by our engagement with our investors, government partners, employees, the individuals entrusted to our care and local community and industry stakeholders during a multi-year process. We believe it provides a wealth of information documenting how we responsibly and ethically manage our operations, helping our government partners better the public good,” Hininger added.
First Quarter 2019 Results
Net income generated in the first quarter of 2019 totaled
Funds From Operations (FFO) was
Per share results in the first quarter of 2019, compared with the first quarter of 2018, were positively impacted primarily by increased utilization of existing contracts with the U.S. Marshals Service (USMS) and
EBITDA was
Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, 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 net income, the most directly comparable GAAP measure.
CoreCivic Safety
Total revenue for the CoreCivic Safety portfolio in the first quarter of 2019 was
$20.5 million of additional revenue compared to the prior year quarter under new contracts with the USMS and ICE at ourLa Palma Correctional Center inArizona and ourTallahatchie County Correctional Facility inMississippi .$9.4 million of additional revenue compared to the prior year quarter under existing contracts with the USMS and ICE primarily due to higher average compensated occupancy rates across our facility portfolio.$7.6 million of additional revenue compared with the prior year quarter under new contracts with the states ofKentucky ,Ohio ,South Carolina ,Vermont , andWyoming .
Partially offsetting these increases in revenue was the continued, expected decline in inmate populations from the state of
Total revenue for the
Total revenue for the
Capital Commerce Center , a 260,867 square-foot property inTallahassee, Florida leased primarily to an agency of the state ofFlorida , completed inJanuary 2018 .- A twelve-property portfolio of single-tenant properties comprising a total of 106,881 square feet, each separately leased to the federal government, completed in
July 2018 . - SSA-
Baltimore , a 540,566 square-foot property inBaltimore, Maryland leased to theSocial Security Administration (SSA) through theGeneral Services Administration (GSA), completed inAugust 2018 . - IRS-Dayton NARA, a 217,394 square-foot steel frame property in
Dayton, Ohio leased to theNational Archives and Records Administration (NARA) through the GSA, completed inSeptember 2018 .
Business Development Update
Safety Segment
BOP Elects Not to Renew Contract at the
Properties Segment
Acquisition of
2019 Financial Guidance
Based on current business conditions the Company is providing the following financial guidance for the second quarter 2019 and the following updated guidance for the full year 2019:
| Full Year 2019 | |||
| Second Quarter 2019 |
Prior Guidance | Current Guidance |
|
| • Diluted EPS | $0.39 to $0.41 | $1.43 to $1.51 | $1.54 to $1.60 |
| • Adjusted EPS per diluted share | $0.40 to $0.42 | $1.45 to $1.54 | $1.56 to $1.62 |
| • FFO per diluted share | $0.61 to $0.63 | $2.34 to $2.42 | $2.44 to $2.50 |
| • Normalized FFO per diluted share | $0.62 to $0.64 | $2.36 to $2.44 | $2.47 to $2.53 |
During 2019, the Company expects to invest approximately
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information and other data for the first quarter of 2019. Interested parties may access this information through our website at http://ir.corecivic.com/ under “Financial Information” of the Investors section. We do not undertake any obligation, and disclaim any duties to update any of the information disclosed in this report.
Management may meet with investors from time to time during the second quarter of 2019. Written materials used in the investor presentations will also be available on our website beginning on or about
Webcast and Replay Information
The Company will host a webcast conference call at
About
The Company is a diversified government solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through corrections and detention management, a growing network of residential reentry centers to help address America’s recidivism crisis, and government real estate solutions. We are a publicly traded real estate investment trust (REIT) and the nation’s largest owner of partnership correctional, detention and residential reentry facilities. We also believe we are the largest private owner of real estate used by U.S. government agencies. The Company has been a flexible and dependable partner for government for more than 35 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at http://www.corecivic.com/.
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 within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and 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, but not limited to, the impact governmental budgets can have on our contract renewals and renegotiations, per diem rates, and occupancy; (ii) fluctuations in our operating results because of, among other things, changes in occupancy levels, competition, contract renegotiations or terminations, increases in costs of operations, fluctuations in interest rates and risks of operations; (iii) our ability to obtain and maintain correctional, detention, and residential reentry facility management contracts because of reasons including, but not limited to, sufficient governmental appropriations, contract compliance, negative publicity, and effects 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 new facilities and the commencement of new management contracts, as well as our ability to utilize current available beds; (v) changes in government policy regarding the utilization of the private sector for corrections, detention, and residential reentry capacity and our services; (vi) changes in government policy and in legislation and regulation of corrections and detention contractors that affect our business, including but not limited to, the continued utilization of the South Texas Family Residential Center (STFRC) by ICE under terms of the current contract, and the impact of any changes to immigration reform and sentencing laws (Our company does not, under longstanding policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an individual's incarceration or detention.); (vii) our ability to successfully identify and consummate future acquisitions and our ability to successfully integrate the operations of completed acquisitions and realize projected returns resulting therefrom; (viii) increases in costs to develop or expand real estate properties that exceed original estimates, or the inability to complete such projects on schedule as a result of various factors, many of which are beyond our control, such as weather, labor conditions, cost inflation, and material shortages, resulting in increased construction costs; (ix) our ability to meet and maintain qualification for taxation as a REIT; and (x) the availability of debt and equity financing on terms that are favorable to us, or at all. Other factors that could cause operating and financial results to differ are described in the filings we make from time to time with the
CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| ASSETS | March 31, 2019 |
December 31, 2018 |
||||||
| Cash and cash equivalents | $ | 20,499 | $ | 52,802 | ||||
| Restricted cash | 32,901 | 21,335 | ||||||
| Accounts receivable, net of allowance of $2,715 and $2,542, respectively | 273,567 | 270,597 | ||||||
| Prepaid expenses and other current assets | 28,364 | 28,791 | ||||||
| Total current assets | 355,331 | 373,525 | ||||||
| Real estate and related assets: | ||||||||
| Property and equipment, net of accumulated depreciation of $1,442,844 and $1,516,664, respectively | 2,794,767 | 2,830,589 | ||||||
| Other real estate assets | 244,479 | 247,223 | ||||||
| Goodwill | 48,169 | 48,169 | ||||||
| Non-current deferred tax assets | 13,807 | 14,947 | ||||||
| Other assets | 213,827 | 141,207 | ||||||
| Total assets | $ | 3,670,380 | $ | 3,655,660 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued expenses | $ | 330,617 | $ | 352,275 | ||||
| Current portion of long-term debt | 15,448 | 14,121 | ||||||
| Total current liabilities | 346,065 | 366,396 | ||||||
| Long-term debt, net | 1,828,114 | 1,787,555 | ||||||
| Deferred revenue | 22,694 | 26,102 | ||||||
| Other liabilities | 91,093 | 60,548 | ||||||
| Total liabilities | 2,287,966 | 2,240,601 | ||||||
| Commitments and contingencies | ||||||||
| Preferred stock ― $0.01 par value; 50,000 shares authorized; none | ||||||||
| issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
- | - | ||||||
| Common stock ― $0.01 par value; 300,000 shares authorized; 119,068 | ||||||||
| and 118,674 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
1,191 | 1,187 | ||||||
| Additional paid-in capital | 1,808,147 | 1,807,202 | ||||||
| Accumulated deficit | (426,924 | ) | (393,330 | ) | ||||
| Total stockholders’ equity | 1,382,414 | 1,415,059 | ||||||
| Total liabilities and stockholders’ equity | $ | 3,670,380 | $ | 3,655,660 | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| For the Three Months Ended March 31, |
||||||||
| 2019 | 2018 | |||||||
| REVENUES: | ||||||||
| Safety | 434,318 | 404,498 | ||||||
| Community | 30,566 | 24,800 | ||||||
| Properties | 19,112 | 11,615 | ||||||
| Other | 68 | 3 | ||||||
| 484,064 | 440,916 | |||||||
| EXPENSES: | ||||||||
| Operating | ||||||||
| Safety | 316,595 | 296,503 | ||||||
| Community | 23,496 | 19,367 | ||||||
| Properties | 5,652 | 3,114 | ||||||
| Other | 89 | 167 | ||||||
| Total operating expenses | 345,832 | 319,151 | ||||||
| General and administrative | 29,445 | 24,971 | ||||||
| Depreciation and amortization | 35,523 | 38,089 | ||||||
| 410,800 | 382,211 | |||||||
| OPERATING INCOME | 73,264 | 58,705 | ||||||
| OTHER (INCOME) EXPENSE: | ||||||||
| Interest expense, net | 21,436 | 19,036 | ||||||
| Other (income) expense | 4 | (43 | ) | |||||
| 21,440 | 18,993 | |||||||
| INCOME BEFORE INCOME TAXES | 51,824 | 39,712 | ||||||
| Income tax expense | (2,484 | ) | (1,935 | ) | ||||
| NET INCOME | $ | 49,340 | $ | 37,777 | ||||
| BASIC EARNINGS PER SHARE | $ | 0.42 | $ | 0.32 | ||||
| DILUTED EARNINGS PER SHARE | $ | 0.41 | $ | 0.32 | ||||
| DIVIDENDS DECLARED PER SHARE | $ | 0.44 | $ | 0.43 | ||||
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 March 31, |
|||||
| 2019 | 2018 | ||||
| Net income | $ | 49,340 | $ | 37,777 | |
| Special items: | |||||
| Expenses associated with mergers and acquisitions | 436 | 518 | |||
| Adjusted net income | $ | 49,776 | $ | 38,295 | |
| Weighted average common shares outstanding – basic | 118,836 | 118,359 | |||
| Effect of dilutive securities: | |||||
| Stock options | 36 | 101 | |||
| Restricted stock-based awards | 46 | 49 | |||
| Weighted average shares and assumed conversions - diluted | 118,918 | 118,509 | |||
| Adjusted Diluted Earnings Per Share | $ | 0.42 | $ | 0.32 | |
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF FUNDS FROM OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS
| For the Three Months Ended March 31, |
|||||
| 2019 | 2018 | ||||
| Net income | $ | 49,340 | $ | 37,777 | |
| Depreciation and amortization of real estate assets | 26,599 | 24,408 | |||
| Funds From Operations | $ | 75,939 | $ | 62,185 | |
| Expenses associated with mergers and acquisitions | 436 | 518 | |||
| Normalized Funds From Operations | $ | 76,375 | $ | 62,703 | |
| Funds From Operations Per Diluted Share | $ | 0.64 | $ | 0.52 | |
| Normalized Funds From Operations Per Diluted Share | $ | 0.64 | $ | 0.53 | |
CALCULATION OF EBITDA AND ADJUSTED EBITDA
| For the Three Months Ended March 31, |
||||||
| 2019 | 2018 | |||||
| Net income | $ | 49,340 | $ | 37,777 | ||
| Interest expense | 21,910 | 19,275 | ||||
| Depreciation and amortization | 35,523 | 38,089 | ||||
| Income tax expense | 2,484 | 1,935 | ||||
| EBITDA | $ | 109,257 | $ | 97,076 | ||
| Expenses associated with mergers and acquisitions | 436 | 518 | ||||
| Depreciation expense associated with STFRC lease | - | (4,057 | ) | |||
| Interest expense associated with STFRC lease | - | (1,482 | ) | |||
| Adjusted EBITDA | $ | 109,693 | $ | 92,055 | ||
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF ADJUSTED NET INCOME, NORMALIZED FUNDS FROM OPERATIONS, EBITDA & ADJUSTED EBITDA GUIDANCE
| For the Quarter Ending June 30, 2019 |
For the Year Ending December 31, 2019 |
||||||||||
| Low End of Guidance |
High End of Guidance |
Low End of Guidance |
High End of Guidance |
||||||||
| Net income | $ | 46,500 | $ | 48,500 | $ | 183,000 | $ | 190,000 | |||
| Expenses associated with mergers and acquisitions | 1,000 | 1,000 | 3,000 | 3,000 | |||||||
| Adjusted net income | $ | 47,500 | $ | 49,500 | $ | 186,000 | $ | 193,000 | |||
| Net income | $ | 46,500 | $ | 48,500 | $ | 183,000 | $ | 190,000 | |||
| Depreciation and amortization of real estate assets | 26,500 | 26,500 | 108,000 | 108,000 | |||||||
| Funds From Operations | $ | 73,000 | $ | 75,000 | $ | 291,000 | $ | 298,000 | |||
| Expenses associated with mergers and acquisitions | 1,000 | 1,000 | 3,000 | 3,000 | |||||||
| Normalized Funds From Operations | $ | 74,000 | $ | 76,000 | $ | 294,000 | $ | 301,000 | |||
| Diluted EPS | $ | 0.39 | $ | 0.41 | $ | 1.54 | $ | 1.60 | |||
| Adjusted EPS | $ | 0.40 | $ | 0.42 | $ | 1.56 | $ | 1.62 | |||
| FFO per diluted share | $ | 0.61 | $ | 0.63 | $ | 2.44 | $ | 2.50 | |||
| Normalized FFO per diluted share | $ | 0.62 | $ | 0.64 | $ | 2.47 | $ | 2.53 | |||
| Net income | $ | 46,500 | $ | 48,500 | $ | 183,000 | $ | 190,000 | |||
| Interest expense | 21,500 | 21,000 | 88,000 | 87,500 | |||||||
| Depreciation and amortization | 36,000 | 36,000 | 144,500 | 144,500 | |||||||
| Income tax expense | 2,500 | 2,000 | 9,500 | 9,000 | |||||||
| EBITDA | $ | 106,500 | $ | 107,500 | $ | 425,000 | $ | 431,000 | |||
| Expenses associated with mergers and acquisitions | 1,000 | 1,000 | 3,000 | 3,000 | |||||||
| Adjusted EBITDA | $ | 107,500 | $ | 108,500 | $ | 428,000 | $ | 434,000 | |||
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share metrics are non-GAAP financial measures.
NAREIT defines FFO as net income computed in accordance with GAAP, excluding gains (or losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures calculated to reflect funds from operations on the same basis. EBITDA, Adjusted EBITDA, and Normalized FFO are useful as supplemental measures of performance of the Company's facilities because such measures do not 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. However, prior to the adoption of ASC 842 on
Other companies may calculate Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO differently than the Company does, or adjust for other items, and therefore comparability may be limited. Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO and, where appropriate, 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: Cameron Hopewell - Managing Director, Investor Relations - (615) 263-3024 |
| Financial Media: David Gutierrez, Dresner Corporate Services – (312) 780-7204 |
Source: CoreCivic, Inc.