CXW - Earnings call transcript Q4 2020

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Operator

Good morning. My name is David, and I will be your conference operator.

As a reminder, this call is being recorded. At this time, I'd like to welcome you to CoreCivic's Q4, 2020 and Year-End Results Conference Call. All lines have been placed on mute to avoid any background noise. there a remarks, session. speakers' the will question-and-answer be After turn now over Director [Operator would to of the Relations. Managing Instructions] I CoreCivic's like call Hopewell, to Investor Cameron Mr. your may conference. you begin Hopewell,

Cameron Hopewell

and Thanks, morning, Participating today's Garfinkle, Executive are David. call Chief Chief for Hininger, and and ladies gentlemen, on President Good Damon Officer; joining thank and Financial us. you David Officer.

results in The for Vice President on Brian Hammonds. call We general we and our our fourth business are of of an the the by COVID-XX financial also quarter, provide overview the room pandemic. joined evolving focus today, here the will updates Finance, impacts of

During pursuant and Act. today's your statements to to the answers Safe Litigation Reform of remarks, call, Securities including Harbor our Private forward-looking questions, will include provisions our the

as yesterday or of XX-K, including our in our Forms results trends result of including release, materially earnings and X-K XX-Q market XXXX and differ may issued those a factors, actual after in fourth identified reports. variety a filings, Our SEC quarter

You website, comparable to our Damon? Hininger. over supplemental corecivic.com. and in and call reflect A With financial pleasure GAAP also most and management's call, or future. will any measurement it's this such no turn non-GAAP Investors our President the undertakes certain statements the current of forward-looking is the to update obligation On that, statements are release included CEO, data the company only, the in in that we views provided reconciliation the corresponding that of discuss measures. also earnings cautioned page revise disclosure to our on Damon my

Damon Hininger

overlook continued today provide and conference to quarter quarter the real pandemic, executive private the estate an facilities, sale everyone, of of you business the call. performance, Justice update order our on non-correctional also develop Cameron. Department us discuss you COVID-XX Today, Good Thank certain potential year. thank fourth property and you with the our will you our month's impacting morning, segment, of on XXXX updated new you opportunities, update for financial provide overview response discuss fourth with we for strategic assets last in use our you, for of joining an

remarks, my detail. CFO, Garfinkle, to review our Dave in will who call the results our will over financial Following turn I greater

Our million fourth of within revenue a COVID-XX pandemic the impact segments. $XXX.X the due decline year quarter to X% quarter, our over represented community safety of occupancy on and prior continued

increased However, quarter XXXX. have safety second experienced occupancy declines rates the the the fourth we the stabilized by or XX fourth share, an for from quarter more XXXX. appeared XXXX. segment operations rates third increase funds In to compared FFO the the occupancy basis with across versus quarter in of quarters in were $X.XX third fourth significant community Normalized our fourth of of quarter X% the versus and the per quarter of points and

our pandemic Dave my of update particularly growth will day-to-day the following within provide we our a a comments. result reduction greater COVID-XX by expenses, earnings I'd and were to financial quarter its our pandemic, combination contract Immigration brief lower XX-months, helped provide response the of driven and with fourth impact contract new results experienced that was in operations. G&A lower utilization of with ongoing the Enforcement. the under Our our about last remainder which offset the at facilities occupancy a and as to global Customs to awards like initiated details you on on

the latest health our continued operation we the the guidelines to the with since to been has experts continue tirelessly year, from from Throughout as operational government to it focus our have daily nearly of onset guidance pandemic, year our health leading ensure to our we collaboratively on efforts work on a While working policies partners experts. evolve. adhere plans

has be in every But there personnel clear have to prioritized. of prioritized it in soon we low In staff are appropriately and efforts these our to everyone training virus. health facility of we plan. is authorities process inconsistent, as mitigate to facilities. to that with discretion in medical each and in receiving administer ensure resources the the state state the to vaccine state facility significant in authorities the had cases, with collaborate have the next facility to directives rollout developing to are Recently, distribution facilities availability. availability and continues is many facilities residents the where the proper increase help seeing The in been staff our these allocate vaccine residents is many prioritization other of continued clinically the Our as included In as to frontline our of unabated. of our months, we be public receive quickly officials. what the XXs. vaccine, We've place and most case, were every equipment, staff. and community that were effort by that the healthcare phase, they and of In cases, entrusting to a level care plans health local advice the also These how and vaccines spreading we and alignment across their and doses few protective began received, over of staff evaluate and access personal vaccine early will our risk shipments the differences access local effective many our the our and departments, operate have health made and unique from of individuals contracting our local residents to

partners to in health our our vaccine closely ensure We has to to are available. it everyone and the officials committed local working government with facilities comes access as

and that in policies to the put believe COVID-XX quarter. response our see facilities, within operational in to we we our in been decline a is similar the has place are consistent across During evidence quarter, This to experienced effective. positive the we we've in fourth facilities, continue trend it cases third trend the

normalize, expect the as of such increase in will of which all risk new programming, We person visitation, increased begin facilities, out of that classroom-based person arise movement operations in-person interactions. transmission and challenges will resident to to as mitigating in virus and facility

other more government enact However, our has care, we of cases in with I commitment And we we most still the occur years be over challenging in our proven employees the these changes keep one prevention. individuals in measures to compassion I encouraged the operating positive are am these by order recent will of working thoughtfully by changes are our decline trend pandemic time in possible face. partners of and closely environment. over shown the to and and time, to to in maintain hospitalizations have what expected best number a to the of even am each country. encouraged I could across the have emphasize

that the work pandemic to am confident our challenge. I the meeting continues, team our is related CoreCivic While to dedicated at

on COVID-XX, the new have While continue so systems solutions. provide much of many country to our for non-pandemic around is other related face attention responding to help over in resulted year CoreCivic to that the opportunity correctional focused last challenges

of X,XXX Construction State for the of us the leases week, agreements will aggregate the approximately financing, specific and two of close will facilities. XX-year beds, contain facilities of lease be three an of last correctional largest our represent development both two upon awarded projects of company's approximately project construction facilities will new Alabama two finalized years. of history. in development be timeline the and the The these pricing Just

So leases. the it to speak financial to too the is early impact of

the resonate The government also more agreements, offer of the of serious have our very That a challenges grateful of opportunity health We conditions to state we roadblocks signing the State to governor the real facility, expressed additional forward agencies Upon with reentry faces with these address but helping to to their look deferred society. serious are services and they not concerns receiving challenge. critical critical more help court solutions. residents intervention. new employees Alabama and their and correction to programming the that However, through lease infrastructure. state the dilapidated estate system, Alabama we significant infrastructure people two only on inhibit to facilities, help continue of such facing challenges rehabilitative cost solutions successful a in a safety federal put are the address serious road and maintenance and the create risk correctional including the to innovative

of Just two multiple of has exceeded the facility a is development it weeks modern of ago, to facility typically Hawaii. Hawaii need the beginning new a useful Center, State This years. its future its state of in and only process a takes is needs. meet request the issued new, current State Correctional the the concerning life facility the of existing and The the for in planned Community largest jail Oahu interest

growing the infrastructure. We Alabama safety private that beyond we growth. momentum correctional Hawaii and improve useful the facilities, recognizing However, life. future existing But a the just to serious their value we're and presents promising address for across see last for and will sector also with deliver to country needed critically Kansas joined inmates of and solutions. in and the Kansas solution opportunity health within operating It year, their upgrade a working these challenges helping for to the this employees first kind industry's delivered

partners in meet sale cash of assets to ability see, partners the to total challenge balance. to million a the government GSA $XXX continue and a allocation will our continue and growth it capital significant solutions opportunities the in resonate needs the our achieved flexible fourth our Add clear of that change are our the of government can deliver December. believe to flow of net portfolio leverage. and ease you XX we clearly cash generation or property through market. of we for was As flows declined cash of to mix we to of $XXX million, the approximately our quarter, throughout durability quarter have reducing the historic to and of leased a on respond is that, the This In unique well-positioned in and debt our strategy deliver

X.X quarter. half turn prior from for reduction Our the the quarter year's total leverage fourth was ratio a times,

solution an with for directly to by continue executive Prisons segment. President positive have year, total as federal net the awaiting signed experienced through on are with BOP month, private a last of who reduction all USMS cash and who inmates the property an significant populations assets prisoners leverage for to of of proceeds the for debt ended that decline else. Attorney of order responsible capacity in from for need BOP prison of in revenue by sector sector. ratio the of recent benefits target And federal houses X.XX so the We're extremely the strategy total the the flow relatively renew does XX-years. times. has to remained we to over the unchanged. trial accounting our much provided and simply is that This been alternative times sufficient which X% Biden convicted have anywhere extended The believe USMS Department seven our need, of important crimes. capacity additional provides X.XX BOP the year We consistent BOP populations our more intend currently estate General the in Last remain utilized Bureau generation, services XXXX. inmate have not do generated to the not contracts Federal prison States We Service XX, detention years, continue courts. needs a real And of do period deliver we proud a exists non-core agencies within for their capacity without or privately provide criminal currently USMS of Two the during not or Justice December believe With USMS. The detention one have than sector. and have our of Marshal services, satisfies their facilities. private not operated critically Department has United the private we we their BOP, need Justice sale the contract years, that

that those fluctuations the cost and the or value One manage government they needs, not the to not whether may of is propositions assets with so needs partners provided decreasing, capacity our are the sector may ability increasing future. scale real or need by saddled developing of private large in are flexibly estate the

years. Republicans, is have for and these services to why governor worked Our XX both address our successfully partners solutions important serious Democrats deliver ability to with we providing critically challenges nearly to

of health Americans Re-Entry detail before month, continued to to Now recidivism call financial Dave our greater employment, issue tackle outcomes. communities. housing, to I I as lessons impact express turn course solutions, on and this President community and excited effective for Swinson, government share learned as involved for heroic CoreCivic Vice through my Last gratefulness we over care turn of over year see, for crisis. serve appreciation to improving in re-entry residential pandemic role, We're quality has promote organizations call team. let It programming reintegrate innovative a reentry the course as extensive outcomes successful our Their in highlight me experts, have these Dave new led to results our with as focus results, role innovative in to inspiring we programs attain and best of the the Dave? help segment, full I new potential partnerships, and the justice serve served help and reentry a In practitioner provide now the to quarter family healthcare, to them. previously and ongoing role, academics, again On recidivism and the provides of its trusted note, efforts wanted dedicated policies. new and well efforts more offer detailed been programs who high they can services our his passion earlier, effort re-entry. to on more treatment this our individuals partners financial which and and I'll comment, our forward Partnerships innovative reunification review cultivate advance in this commitment be One Darren Innovation. from honored creation of by the and our announced non-residential XXXX. course the individuals leadership noted that during effort but partnerships and to profession It look will successfully area yet who reentry will alongside to final reducing at even provide another solutions. and for This to meaningful and to our will in and into step on I our incorporating supporting mental that, represents The into will care. operations, and other and our in the remain our work to practices learn role advocates top addiction thankful to Darren fourth deep also of policymakers build individuals their

David Garfinkle

of sale a of per connection million the per non-cash In fourth excluding an fourth in Thank a with from of $X.XX normalized with share asset mostly of the morning XXXX, in $XXX.X fourth the in the $X.X quarter of the $X.XX quarter, as associated X%. COVID-XX. you, the We net consisting the we $X.XX of XXXX, of leased in increase with of incurred quarter properties, $X.XX $XX.X or generated loss items. EBITDA compared year associated increase quarter in and Damon, everyone. of X% quarter, repayments FFO a the million fourth in AFFO good amounts million prior EPS special expenses year recorded of We $X.X $X.XX in XX same prior fourth and to share million, XXXX, adjusted quarter. impairment exclude the with of of prior of debt was quarter. goodwill, million $XXX.X Adjusted expenses GSA year fourth Adjusted impairments generated

considered segment, will capitalization improve market subside. stock by reintegrate which who those of an analysis as the broad the the full numerous well management in segment the a XX believe also into obtain ours professionals. goodwill $XX.X goodwill the considered real and this our to base that amounting common helping serves remain in to after community partners million. declines goodwill sale companies the in our estate contributed our entrusted in non-cash as services, programs once on pandemic individuals segment convertible traded committed and trained to fair Our offered units reduction the of of balance the shares a to factors million partnership to the of impairment driven critical in our Adjusted will owed This rules value amounts exclude the industry, period. in partnership, need be loss we when impairment sentence, The is to restricted effects their predominantly XX there the holding of tax consideration And aforementioned XXXX tax the as into life of care, communities. for $XX.X is tax flows for exchange under payment our to January set resulted the cash of assets. on protection in protection cash. of Most focuses to their aside incarceration had and generated payment of proceeds the a to segments wholly impairment We is allocated were with substance attributable including loss publicly our skills in employment the community impairments, that from million COVID-XX such in pandemic or market the and as the alternative accounting cap decline this cash case end funded the abuse counseling, by successfully The structure. of equity assessing and sale of change our anticipated from subsidiary flows in extent limited $X.X nearing and of properties in two-year the owned a to cash of be

and financial of stockholders essentially million quarter press be to which limited consideration, with a to before adjusted XX%. the quarter, the million, the in pertaining partnership operating net notably includes loss improvement XX%, XX% result expected Correctional expenses. The XXXX, Facility dissolve pandemic. partnership in included primary a the sale. upon performance and will and of increase increased a again for comparison normalized reflected third The quarter that FFO extinguishment the is and income COVID-XX our increased per dissolution units on sale, $XX improvement facility as increased in result year EBITDA no of As the the G&A to release to and additional increase an lower is in bed the we Compared Cimarron offsetting per $XX share the prior of to AFFO an to XXXX, Oklahoma equity of intend share the which drivers X,XXX from commentary

The during the lower transitioned quarter. to compensation due Marshals excluding from stable Cimarron occupancy the U.S. to largely which items state During quarter. incentive facility special we population the quarter, in had third was fourth in G&A a the the expenses, reduction fourth

We also of non-recourse experienced related claims sales seasonal debt repayment we favorable in down, $XX.X medical COVID transaction of on million, assets facility. to of the mortgage a Including XXXX. for We real expenses of after million more were net of in XXXX. this during the pay operating assets completed the plans, lower gross $XXX after non-core lower paid of of $XXX with time our XX, self-funded notes We repaid pay property costs. associated to expense. change in proceeds down net reduction credit the due our taxes of revolving of and million properties related sale the December during employee XXXX, the aforementioned generated which million other sold off, price use and which These proceeds utilities was some estate net XX a dividends payment cash, $XXX.X

million and million $XXX of XX, December $XXX matures in hand on facility, our cash had credit of on of XXXX. we which revolving availability As

the is to million these X% upon expect currently times debt using have on notes trailing XX-months, X.X repay $XXX hand matures. notes to or net EBITDA We capacity until the maturity unsecured and by unsecured measured revolver. maturities no when debt cash and XXXX, leverage we October with under Our

estate to net to consummate million. last combined of first held of non-core three real original in expressed with of assets Based million. $XXX we we these of sale XX, sale be these the sale As a $XXX up are with of are consistent If had the the additional from expect non-core our book sale estimate we for XXXX. value on interest to-date, we of sale with assets quarter, completed December successful of the proceeds the assets, assets during net half will consummating hopeful our

the have will Earlier We of month for Department lease in evaluating X, with agreements original are we on assets facilities. both estimate. two new us financial achieving also were several Final our close. of sale, development smaller costs two that the we this XX-year available Alabama exceeding could become for correctional upon properties awarded lease Corrections result which February for

costs We we with Both this expected of expect beds, aggregate with to which finance construction expect existing XXXX. begin an or closing. fund facilities approximately beginning to XX% to to XXXX XX% the will of project resources, year contain financial upon later the of

Department operate has and Corrections facility three which timeline medical will of of larger and years. is The will specialize mental health both first needs, The in construction facilities. a approximately lease Alabama and

be responsible maintenance retain terms facility of We will beyond will and leases. ownership the for the

XX% our guidance expenditures reduced are In by COVID-XX. before addition to for original consistent capital forecast commitment, in the we is to $XX maintenance to XXXX, with the Alabama million to it which we response million, $XX be provided

The various flows, to we cash yet even business immigration justice. response to justice have the at well time, the predict. the and criminal not uncertainties to Because budgets executive difficult financial many southern border pandemic, orders and these new disruptions uncertainties system challenges significant and during as associated The in criminal this have application and with state generate duration win of administration's the XXXX effectively holes are related remains as pandemic, orders with significant state closed, will we because of of are of normalized. guidance budget the Although, COVID-XX, operations continue not associated providing fill. executive the to and to

to today. and normally, the gone more populations still closed, on a continue our sorry we quarters through business the Eventually can full court structure functioning safety we some COVID-XX strategy, capital direction reductions on allocation continue rightsizing the declines segments, make to I'm likely court we cases is on our provide widely community are disseminated. of three population safety in system expense revised without financial effectively our vaccine having expect system and know our border While system. in southwest based functioning quality. and long-term to court backlog we normally, and on focused while the court remain without success what under through the executing with Operationally, of forecast sacrificing or it experience will These the with until the

access new and Our federal our Marshals our facility monthly Cimarron our base contracts from at with payments. these if our in a help U.S. minimizing two contracts, payments occupancy in reductions capacity Further facility these are to they populations the with not as first need, declines. fixed facilities. ensure will revenue partners fixed reminder, populations under Idaho about and in have to increases the populations when exceed result Arizona such mitigate Solaro incremental expected until of have the impact segment further the in contracts thirds and the current safety Conversely, that tier increase, of

million held the are $XX into $XX holding EBITDA generated million the and sale million, of on of of approximately we sold depending sale. assets properties which the in for elimination for the Second, $XX XXXX, timing translates to

to net expect outstanding we debt to use some continue report with to market negotiated in quarters. line Until purchase quarterly of normal, expenses include materially the in open operations with to which COVID-XX transactions, return debt, transactions securities We could to expect or otherwise. our proceeds of past repay two the privately the

paid purposes, subject special state income our be our dividends and approximately the to taxes With in tax transitional to as rates to recognized of we quarter converted represents income. a will reelection are There XX.X%, expect we rate quarter, be a a to income significant to because deferred the the a taxes XX% our tax we accounting deduction XXXX fewer unemployment the of applicable taxes estimate to tax not that will to tax $XXX and and million to $XXX resulting is our share $X.XX cross-walking payment, million. tax things respect in using for pre-tax and first first net $XXX adjustment is first we XXXX. This XXXX, be benefit tax an charge we of revalue no REIT effective REIT, onetime cash to tax rates. accounting at and but we income revoke in in reelection, of collective similar per QX, in the weaker to to two when without of we state Lastly, liabilities to fourth payment when currently XXXX, the the also XXXX. in taxable cash currently resulting of million our quarter few range Once during we from incur remember quarter, our quarter approximately revoke days federal of federal estimate our of there beginning seasonally in a QX our QX first QX. the is Compared quarter fourth of the XX.X% because quarter, decline on

G&A previously expenses lower expected to QX run expected a from QX. per our into than is to share quarterly rate, QX our mentioned, of decline I which $X.XX in were As translate

similar available pursuing facility. new reactivating the and term property These second and opportunities, opportunities with existing and and contract idle Those non-public an flows, stable including potentially lease system, capacity we an state to potentially would year. opportunities half a longer our could improved agreements for in in two of a reached significant to cash utilize consummated our impact transition new segment in no property more In a in we to contract the be number our separate state on While milestone signing earnings are pursue segments. are states to will and new Alabama, segment, other safety correctional Hawaii in facilities construct was have opportunities this our XXXX. and of the of

businesses. outperformed community state during remain, than certainly to back pandemic, challenges lead budgets will operator, questions. which the and to expected our more the call could up in although safety to thus a David, I expectations have turn environment for the favorable now generally Finally, lines far open the

Operator

Joe Thank NOBLE you. The Instructions] question first [Operator conducted from will electronically. our with We'll Capital. Gomes session take be question-and-answer

Joe Gomes

David. and Damon morning, Good

Damon Hininger

Good morning, Joe.

Joe Gomes

There a bit pretty me. three I solid. some here once than to we nice, what looks the expecting. it onetime It pretty look looks So, surface, COVID like quarters looks during solid are similar time. below better get the The last little quarter items, but it was

Just wondering our Is a see that maybe today? kind a helped better bit looking little as know little here? than results can things what kind do about drive of run normal bit expected and color we last talked two rate? of part. a you recorded kind to we're you forward, And, of One, little detail the what more as as provide new

David Garfinkle

Joe, at I'll take transition of the were primary QX, that. certainly the the you're first to from U.S. facility the I'd a with contract comparing drivers the Marshals. Oklahoma Cimarron good say, Yes, to question. stab QX when

we the QX, during U.S. for then and for Marshals. down the ramping the facility state facility So up ramping were

there the was in the in that quarter quarter. in really there a gap stabilized third So fourth

transitioning to So you're that QX when from QX. contributed about $X.XX

other not in item That's notable a I run the The expenses. my lower G&A was mentioned comments rate.

trade help provide extensive beginning probably because just continue that was to as services, things the We not to able and to did QX and entrusted with GEDs, that long numbers services normally our to classrooms, I as great non-pandemic period, those time we're provide inmates savings certificates. the care, prior do see all that to So, QX. we we think continues, return expense all in the QX a the we'd our people with pandemic quarter that, QX, $X.XX in expect lower that in the some will compared

dangers we're to of currently COVID-XX. during service from the So, of lower pandemic, them protect the a level just at safety and operating

of So, will services. to we those up start eventually, as reinstate those ramp back levels expenses

some of favorable, time based the predict. experience have the just bills, were So, troops to recurring. that's we We probably favorable medical be property unique property things the and They're tax claims fourth some in our quarter, tax to self-funded that of that, in like had in did could plans. Also, period that some receipt other pandemic. hard on the

Joe Gomes

that would on million there, two Alabama million to on just significant billion the some a average was to about facilities three now. the you million And know suggest is were some I want. lease math you Congratulations But a XX% you Okay, to to again, that. which, looking the saw great. different really can't And build the kind about $XXX than win cost but impact capital through $XXX ballpark? If could to Thank and that that, I mentioned outside somewhere of $X couple Alabama financing. questions. we talk A, the financial be the that out right you mentioned then for quick very impact doing raising the somewhere of in my you rest XX% estimates in second. estimates the $XXX for self-financing range, would there, facilities. of switch view,

that the the Given and of mentioned to what we've when you rest activist you your as Kansas I comfortable construct model push, a seen to kind the raise ability amount go of out And here, mean, finally, how are with then, here. that?

is past year? is And over performing with on running, call of Can Kansas pandemic performing? potentially but Kansas has Alabama, so, little project know, first there? detail kind up year. Kansas give Thank your other and color and And we these how a or you. think, special that it any towards this us us the I how as is Hawaii been kind running everything, forward I Just you let's one, it's of some roughly, states. give a the some hiccups expectations? being it of

David Garfinkle

here, couple a take A of so questions them. to Yes. me lot let of try Thanks, Joe.

don't we want get out costs, the those. Alabama in front of On to on

dollars dollars, front facilities. so also private the to want forth. disclosing to three phase the somewhere bond lenders, chasing and extensively been of right design somewhat right, But It on them I competitive costs on billion and on funds. We've trying the those Alabama during financing think the feel We You're with cost markets, municipal now financing. lease comfortable that don't infrastructure working with we around for cost costs out project. for a placement have the for depend costs. get savings in are it depend for will $X correctional they disclose very lot of did their on offer opportunities was to markets now of all $XXX very right Both worked will

be So, execute the we this think, project a to would financing. great

real of first I'll delivered under to expected Kansas. It quarter briefly really the budget, budget, close budget, sitting feel not just It in touch was work. over has year here under budget was good about as we last today. on to on delivered So, certainly Kansas, financing delivered and really really budget. the

Alabama facilities Just to operate Alabama. and operate similar it. very the the owner, staff it they is going to

So, services maintenance with we respect to perform. to our risk, it the really is limited that

do as there? add have no to that's Damon, anything there going expected all So, and you hiccups whatsoever.

Damon Hininger

on kind also I to on just Alabama. Kansas, connect little would that of Dave's say Yes, comments bit

$X million were several the facility back that got did $XXX interest. on And we financing. private needed, project, We we we placement million almost going XXX%. So years, about starting did billion in a and when that $XXX for

are in so world very, those lot a interesting the financial of to very investors. And of projects type

And X.X-X.X. in money, again, money, that XXX% I interest almost to for on value XX-year $X we got billion loan so, and think XXX% about

Dave last leased rather again, in the under timing, as But strong around be rhetoric still QX you'd at very of very this kind the that type been budget circling as country. So on these beginning that government that fortunate you we said, And assets. about than of now right interest because with also projects all of are know, also the it pandemic. talking good And Kansas, was year. really was lucky delivered of

built And so from that was XXXX. a coming you've got population the in that facility a was

rooms lack or negative beds. pressure a infrastructure, challenging infirmary very So units, kind of of HVAC

operationally. new state was Moving unit them of Kansas. into the largest infirmary very facility beginning in it's a helpful facility pandemic brand that And at very, the for the of got we that right modern delivered,

them of good. I technology, new for again, the really clean. unit looks got and infirmary it and modern, say really And normal got to flexibility fourth quarter system. facility, a it's just late I'll it largest in gives but year the finally, it's the pandemic. I very in Kansas of environments, had lot mean, especially tour open, last a in it's just then It's good fortune Correction So the with state it's

a flexibility of of So lot it gives challenging a with to issues. deal lot them

Alabama, excited these we it's are the of of the about we're we down opportunities, but So road for also think and good development only some we think as state And other not designs for model a project. us. finalize that

Joe Gomes

in that. for for one and jump One back queue. last Thanks Okay. me, I'll

So level, and someone U.S. we'll call had they've reported the foot from from Marshal some the administration, Biden more Service we've Department, about in really question David Justice the executive XX,XXX orders there. been emails, been bit There's detain I to detain can a about court to anymore. you the can't think, for Department We ICE trying back but there. little talked who with system here going normal Justice you who get

the are today? up what thoughts. the about population so some at - there Union guys - there to are all available soak the maybe give there trying And other and little Service, you understand unknowns Are mean, Thank serviced here. where that that your detained. are thinking of U.S. I currently speak, a sector? there bit as hear being Just of you address So could State that But by we going of complications look now. lot love populations a I forward. to us of think to again, if a Marshal alternatives see the private you. the you out There's

Damon Hininger

Joe. series you Yes. Really, there. of good questions really that question, Thank for

globally me So the say populations. just about answers, first just couple let

short Service kind they XX,XXX- did And so dip, of early XXXX that's it's XX,XXXnationwide. Summer about see work last consistent late year. but a significant where pretty lived of nationwide, And in is our Marshal based on Spring They pretty research during the XXXX.

year go kind as they've of low kind looking the they to in XX,XXX, we're in my and think even again, that's ago, gone to about at But you here, back XXs. pretty went of comparable XX,XXX. And the years chart up 'XX. if going low where they I'm again XX as I were back the XXXX-XX

populations stable. historically if our at it recently And numbers pretty the So last you take have to look XX then and stable we're months. pretty company, been their you

last but it's been we've seen So overall again, probably stable. pretty, summer, some dips pretty

So stable. also specific but company pretty population globally,

and flexible to we pretty was clear, a BOP, as it they time being change in years something forward. of Joe, what's of private you I significant As kind they're at needs and overcrowded also eight to going about anticipating, innovative and but ago that about the and demands. changing Basically, more kind more sector it's the maybe overall going of solutions needs seven, were of probably and talked especially forward, their the always were solutions since their providing part going change. we're researching going new, talking The look customers our

community even maybe only facilities, solutions demand, side some the also to on so provided confinement. the side that And adapted the maybe we've for that home reentry of on not and changing kind anticipated safety more

the of their in journey your question. And on the our offering our we've a little for in I their that on BOP changed service, Service, So is different kind service mean, different. for this there's and it's structure but justice this changes is, demand. bit criminal more population, system. you of parts very Marshal in the the I our obviously But the in mission mean, based same yes, touched the

So for that's close counties Marshal federal in courts. the and also to private bed the proximity really, but Service really space, rely on very city the sector,

just a Phoenix, to in be cannot got courts so in going housed that's, in they're They've close say, the Phoenix, And representation. friends, that XX if close also someone federal be there with to neighboring they so got participate be a miles through within Arizona, state. and XX with active, proximity you've and easily the they legal in be family and legal be proximity can of courthouse proceedings, in

really court to really, So got that close they've space by the system. important to the

of to But knowledge didn't we in see alternatives federal current but environment, something also legal all has of in is just mean, And not survey not to all is auditing provide, access judges space the so and actually conditions courts. the time, good and oversight, and any representation. turn also, standards this in do the have the new, judges, a also, is we that appropriate we with that facilities again, of access a we to amount regular the firsthand. that the our the see modern government they landscape, good appropriate fair our want do I provides basis, on And allows

alternatives. and site couple maybe some in arraignments in actually, especially saw firsthand able again, the see where this in we since in the in pandemic. video other Florence, legal and the do where on legal some environment, where both we judges COVID a board environment adapt also do to don't in proceedings not only to during space, federal just our its this Arizona, I weeks via markets people place for were and to conferencing ago, person do operate Phoenix we they staff, video not systems just want we Tucson, in actually conference, could detention in put courts and our quickly so have provide of And provide And any this in services facility we

agencies sector So to provide, environment that that's able that anything innovative you we would private there's can especially quick, solutions or alternatives add other do. don't challenging organizations that, just to in a Dave? think But

David Garfinkle

application It's order hard don't so. to one executive the of of early little mean, haven't a administration, it's it's unpack reasons of I I in guidance. issued policy. and the immigration think the the Biden so we all

take a issuing there's and of approach and out. So wait not little for see really right bit We of environment genesis us want play was now. a And things dynamics just see a that to how the guidance. in lot the

Joe Gomes

insightful Thanks Dam Thank ask for you. get in queue back questions. I'll Dave. and those let a and answers, else someone couple

David Garfinkle

Joe. you, Thank Great.

Damon Hininger

Joe. you, Thank

Operator

go we'll Next, M. Zacks. Marin to with

M. Marin

question I to-date. a about the transition have

deleveraging revenue the opportunity Does coming? potential Thank door So or action? for streams to that way post open for does any new revenues transition, that company the you. [indiscernible] in new

Damon Hininger

This you Yes. is Damon. for Thank question.

So answer the short yes. is

know a traded you do on some can as you are publicly with what As REIT, restrictions a or cannot REIT. there

maybe not C and It provide some think opportunities could a once we Corp estate So, a services for real too open the solutions. we were to C where do only time certain we XXXX. now again, the before upon Corp, being

infirmary example, for state system. unit I project in So institution actually very largest that Kansas correctional serving again, the correctional There maybe mentioned that's unit case Kansas of mental abuse facility. for maybe medical that's the of a new certain jurisdiction, substance could or has oriented large earlier, in a infirmary, health or be can do solution type a maybe where an we a kind their

that that you REIT. So, add it providing do of healthcare services gives as us a kind Anything related greater able David? flexibility would weren't to we to of

David Garfinkle

limitations, under to focused adjacencies those perhaps activities. that There non-real the the the the we were rules limit in restrictions on prohibited market on But REIT sky's business. estate real could businesses, certainly Obviously, available corrections without of were estate be the business us. certain related to the that aspects

are So starting opportunities. identify R&D in of kind this to we're some those the things stage at point, but

M. Marin

timeline is for you could And the Thanks. the remind just [ph] what transition?

David Garfinkle

I'm sorry, that you didn't hear broke on up me. I question.

M. Marin

for Could timeline us remind of you just transition? the

David Garfinkle

timeline. Oh

Damon Hininger

kind timeline actively the hard looking of so with C-Corp. a partners now, partners. and Year a just we lifting into going put their at New how And to with a It's part just emerging a we're on the to and of the a with now, can be needs other and solution. conversion journey and system within But of being issues just, we're side of bit our talking are little this

timeline real able but at. looking to something today, be we're express it's no actively So

M. Marin

Okay. Thank you.

Damon Hininger

Thank you.

Operator

to we'll Jordan Ranger with go Sherman Next, Global.

Jordan Sherman

too Alabama gave about just much morning. bed? of talk thing the it, what know different Kansas you more walk into But you the was once the want will Good detail. from angle. I to per I facility, a cost development

David Garfinkle

million It's about $XX,XXX bed, a $XXX project.

Jordan Sherman

the or development at reason major be other And for least the think not Right. will the differences specifically, any to conceptually Alabama way us is there that there facility? of one for

David Garfinkle

are it. different to There Alabama's certainly different. components facilities, larger could mean needs be. I They're

could So, again, be. just front Alabama. want I of out don't in to really But it get

Damon Hininger

note is sorry. that I I'm thing one that - would guess I

Jordan Sherman

sorry. fine, I'm that's No,

Damon Hininger

I that… mention going just to was

Jordan Sherman

it could different. so Conceptually, be

Damon Hininger

be. It could

of say, facilities, medical it's one of the focus. going I units, of As a to the a one kind be

unique of that often that'll that physical for drive So plan. some kind requirements

very what focus. different going I probably will have very are So one are with facilities. three there's of anticipated, two the again, requirements pretty consistent And a three physical plant those normal of three specific a it's unique facilities medical way, of but kind have from population, will be Kansas, a And some the to general call those perspective.

David Garfinkle

two That would be expensive than the facilities. other

Jordan Sherman

Understand.

that they're looking about is follow facility Okay. replace? that. size the Hawaii, details what of the to We'll to

Damon Hininger

it And on what do a we've say, be facilities kind that about other state that, pretty bigger their or needs X,XXX moment. maybe the regional And of they other think to ballpark were X,XXX I I depending should than or over a beds. little or years, the are. good also islands, maybe probably the small it's that's some smaller could of but trying parts around at heard

Jordan Sherman

Fair enough.

Okay.

Marshal. of glimpse Just the U.S. wanted a

being outside your about have that of today. - what's utilized I've your, We lot no heard capacity a not comments really of

as shift that one a just just But if put just from that shift So sort Should contracts I conceptually, for in or Let's the they rollover? chosen go the it with there attempted BOP year. be eliminate way pathway, was progress wondering, the would contracts a environment? work of the they've to indefinite how that I'm away wondering, down is an way.

Damon Hininger

list I'm report, explorations our have clarity not We portfolio don't facility that. supplemental out we sure Jordan. we our know, in table on disclosure and but

Jordan Sherman

Okay.

January. immigration and I the but on numbers, them think border kind the about exploding just crossings just sorry. Southwest like we just look just for how And they're So then of side, clearly, I'm numbers, those in - guess just got wondering I'm I - we

Damon Hininger

Yes. numbers. did those see We

Jordan Sherman

into number, the numbers highest in How above we've highest last decade. Since XX% those number translate Yes. tensions? the seen the do

Damon Hininger

at is now border. the right the affected turn around is Well, detention basically title the biggest that's which capacity XX, action right the

new the closely, reports So challenges but single the there the there encounters, that days the with XX think, been exactly And read process you've and change in at out news right. increase. year-over-year moment. I on the that they're administration, not has but a any United overlaying pandemic, also yes, detaining you're title encounters looking we're know I and the The XXX% into at a through not it them policy early here putting States. the obviously, with

border detention at XX. the related So, but the activity at moment the not because has the it's impacted, title dramatically to

Jordan Sherman

Okay.

or some back. and they're they're shape, touching being they're coming, So the border form, manner in turned

Damon Hininger

Right.

Jordan Sherman

those Under normal into detentions? how circumstances, Okay. numbers translate

Damon Hininger

capacity. of border encounter on if It's studied. give probably that be sure I'm typically, kind honest the you administration ever historically, southwest a And changes comparison many to on to correlates that to how But been the priorities. going of it's and with an to border. detention I know - a versus, it a based hard just utilization don't I'd detention ratio up and Yes, I'm sorry. on somewhat southwest the on capacity say yes, are that capacity encounters if

Jordan Sherman

and a I won't going those? port a be. through who guess, about are may entry who differently, that either talk is And sure what or people a certain who after a is detained guess, There I types those of you administration detained, shift I to yet border, priorities, out not the Biden and will coming that's ratio. port wasn't ask of little the people not is, of and me necessarily detained? people let of across when as on who we're because is, border referring of who you're was result the exactly certain who presented be entry, the

Damon Hininger

Yes.

a It's Democrat. or is the detained or in too latter either individuals Historically, tell. are the the exactly right. guess act administration, think I'd crime crime. early the doing to violent, say, and that - individuals you regardless a have have Republican of are I I typically that maybe Historically, this what are of history is violent

or So, something add what's anything I going of put right the I'd smuggling determine Dave? the a that country, into those to say to that, violent typically triage in like if but also it's ones firearm ones the detention, more, to just are children kind illegal entry or a smuggling of history. maybe and not individual they're only with don't know

David Garfinkle

on the can from they detention, The country coming detained. origination, also originating, where an from source they're or they're the and how impact long have which are their

somebody more them somebody deport detention Mexico, spend there's they might might a have from arrangements order, Mexico time complex more in So, would example, facility than with with rapidly. for who's deportation Mexico comes that

Jordan Sherman

figure getting know - guess, there moving release, parts border? conceptually, the the how, So think that one what who's of trying lot do to guess figure parts, all you are enforcement just those we're then, I'm more And detained to of policy, more have course, going and a to liberal work? we out we if good, get are able just then, crossings, of going that place, bad how we're certainly trying trying I border just I I'm it catch to sure apart. out in you'll interior and And to if answer about U.S., I'm all then indifferent. versus put more at a all changes certainly of puzzle? moving go in of how's liberal and trying that. to But a then have the I elements know I the I an pieces make on where be goes. to have to the

Damon Hininger

short and it's the we're the the Yes, signs question. And for answer with some of some of some I good administration. tell. is, too a getting mean, these executive orders to early pronouncement obviously

able too to what early not have So tell. But I been say that, the short to have And answer also is, our the ourselves but only is maybe would kind from change I we it's monitor. priorities. we to If also bit. our guess we based only those not solutions administration-to-administration, but little a priorities services, changed recalibrate in can also of invest on change

greater our enforcement mission where changed services the enforcement, certain doing those it's we on And changing males. are So, our adult have be way. a there's needs. may a of country parts facilities for southwest there or maybe years, border females the based versus need and different are more our of kind versus over some families a There and interior of

history today I I as XX make change either facilities, our good at job, ICE we've change the the not able the with CapEx, that So, again maybe of maybe primarily do that with makeup. things here again investments, a southwest services, know and more but sit been courtrooms And only that especially as can or years you think we also, maybe border, help country, mission. looking support to other some around adding

or facility like something adult to that. changing male female from or So the families

through we the So as we've in pretty navigate faculty, and think pivot I shown can that past.

Jordan Sherman

of how the least over. roadmap just And think are level in for that The least us on then changes? and you're at sort How we'll no the will a turn of of timeline, guess interim. What that that at timeline? you of some timeline it you beds the is I'll thinking? more request give get I one do timeline Okay. about looking sense budget

Damon Hininger

say, pretty in on know exact each budget for but key you I'd coming going agency, couple things. Yes, and delayed to a I've is changes seen a don't be information, the to and good maybe day, good that's the usually is that say the for But I this question. I noted, would the it's but not also policy I budget out. think priority probably only I just morning, dollars there tied individual administration. cents how read

think I that'll question. be blueprint your to again, pretty So a good

of see say with think I few The in and weeks, weeks, this the the to only also from key. subject the confirmation their add place, be can announcements know, which get kind I in then and we once is to other last those heads, but if that DHS. just agency saw that, on with get But here is David? would probably the don't department thing heads then not you that'll can of But coming a agency secretary, aligned priorities, I obviously you in heads, they as individual the start administration,

David Garfinkle

Yes. President borders, and asylum we Perhaps as impact them, discussing, country, COVID-XX number if reopening turning those States. importantly country timing people the the you to And is the to than the on Title the is could as rather claiming eradicate The notably possible. admitted as the will an United have of XX. and in just as were the of trying virus protect much

Jordan Sherman

injunction to that? federal - deport out not And the XXX ability a we glean interesting that, will decision we I anything of from about which is on moratorium, or sort anything deport guess? And Will final there's of now day glean that? against

Damon Hininger

I just those it. that's going that been actions the are. heard see. challenges a Yes, that I of don't to court with other have think haven't wait know the states impact see and to of have any wait just and I we be to Texas, to they what got probably We'll there's see and

Jordan Sherman

Perfect.

you much. Okay. very Thank

Damon Hininger

Thank you.

Operator

Market to Xnd with go Bowler we'll Capital. Next, Dane

Dane Bowler

good Hi, morning.

David Garfinkle

morning. Good

Dane Bowler

purpose-built So as the are I'm as wondering designed those on facilities new buildings older exact the that purposes being Alabama Presumably, weren't for detainees that modern the in builds. moved well making. are from maybe guys you

facility safety you if better the wondering in benefits and the of say I'm terms quantify as well So health both in can savings and operating the detainees benefits, of employees, them. cost the as potential

Damon Hininger

hard question. reported part hard Alabama's the on been color Good but think by question. to about that the the been of Probably their but facilities your a these is, it's three get give little a last they of XX a don't I first a I'll to and on it's decision had reported fast facilities. talking result and close little this, states one, are XX were looking once delivered Technology's close that facilities within being they a big older are to modern as new efficiency And these that getting one. able to

different technology years XX not nor have older say to se if XX XXX dollars facilities to per that facilities effective, it than I'd you think I So facilities from they or that XXX these is ago. a the cost years second a just design of was mean, old, is with enhance the lot it perspective. today are about

from a lot a perspective. efficient more staffing design So sight, a lot line of cleaner

now from the detection don't agencies to use You you again rock through limestone wall. I'd other and or both used are and facilities within fences these perimeter technology use then can say systems. other the These have cameras acquired are sometimes state finally where as And from that exterior services, see where you a mission, of these programs maybe corrections, to not for and kind governments, vacated maybe providing just an you're and health built that a or medical where different mental facilities they're not housing space maybe they conducive really but sometimes services. were but also initially have or for environment were hospitals, adequate is

previous one be design lot, of of part to have and mission to a maybe kind is, different that can add just a it provided So it facility, which another a from day to Do acquired you lot anything able mission, being with this a again, that in Dave? life. benefits being of new versus had modern for

David Garfinkle

things. couple for conditions be being beds currently not they're to they're facilities beds which of intended One, of for incremental by the Department Justice to if the replacement existing a Alabama, confinement. Alabama for sued Yes, is

solution governor come this certainly, is So the better capacity. with up to

mentioned, to be be more Damon latter important which note larger there'll is think also high-tech your question. there'll facilities, to technology, part the As of I

facilities. you facilities, to run able have when is savings efficiencies large many of older now And we and gained you and the there they it's to case, facilities, it more than maintenance common three kind smaller facilities. have fund were be inefficiently as sense. the Kansas of It not much of as to when lease run, staff just having if because collect, repairs save through much So they and payments very disparate can that the ownership have enough cost the that on just

So XXXXs that. I think there's back dated to something or like

very So outdated. facilities old similarly and these are

expand day facilities. have and deferred that not maintenance on to to brand will So new they have three a of maintenance them lot they every spend on

under In of our the fact, that's leases. responsibility the terms

frankly, of the lot them just be staff to the for conditions, facilities, puts capacity gained a by capacity, for conditions well. not as in consolidating better quite efficiencies safer inmates, So incremental and but that replacement and more again,

Dane Bowler

Okay, great.

and those from case future sort So of in those the are Are finding from the the thing? kind other numbers one. facilities similar in come states you entities Kansas or as like that out other the same build Alabama useful to pitching would theoretically, of a that

Damon Hininger

Absolutely. do absolutely. marketing can could best Yes, opportunities We yes, for question. we previous the new But to. we think great point examples is that

research that that every homework have with of kind sector. the projects of with, we've jurisdiction other lot So similar we lot, with a and jurisdictions they worked done private do know a

get us helped good will Kansas turn in So in good Alabama. in momentum us we give state. think, we momentum And another think Alabama

right. So that's exactly

David Garfinkle

And we what is do. this

that's where added provide constructed government XXX to years, or XX can XX, business. facilities value agencies we our in service So haven't that that

So how so facilities some rebound out can to we older know that it know well, a efficiencies of when inefficiencies or and they design facilities, the one. designing new we rebound you're

Dane Bowler

quarter. good a on Congrats you. Thank Okay.

Damon Hininger

Thank you.

David Garfinkle

Thank much. so you

Operator

And thank does conference. you conclude We participation. today's for your that

You may disconnect. now

CoreCivic (CXW) 11 Feb 212020 Q4 Earnings call transcript