Earnings call transcript Q4 2022

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Operator

Good morning. My name is [Latif] 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 Fourth Quarter 2022 Earnings 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 [Operator you. Instructions] Thank

you the like of to Hopewell, conference. now would call Investor begin to Mr. Director I Managing turn over your CoreCivic's Cameron Relations. may Hopewell,

Cameron Hopewell

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

we Hammonds. our will XXXX, by also our our the Vice On joined today's with Finance, of developments and are for call, We results updates. you room Brian discuss of financial general the government here President quarter business other provide in fourth partners, with

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

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

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

over Hininger. and Damon it's my to the pleasure our that, to President call With turn CEO,

Damon Hininger

with will fourth issued fourth joining discuss details XXXX contracts with got at provide for of quarter and thank our developments allocation of call, developments, Palma you our facility I performance from our newly the the the with also our partners, mission financial including XXXX Good completion earnings for and financial on to State I you, operational it's morning update our today's Cameron. year government you strategy, guidance. new of transition Thank a latest federal the and today will our you full Arizona. everyone call. on contract latest you capital La with our On us a

the Following also will who call results newly detailed our provide issued and more Garfinkle, to will CFO, Dave turn our XXXX our structure fourth I my initiatives. over a review detail. full greater guidance ongoing capital XXXX financial will He remarks, quarter update on our in year

anniversary. a to started, the celebrate services. celebrated in get I corrections milestone a a some we to I and highlight the alongside January for dedicated reentry most XXh, I CoreCivic's moment It Before XXth would take me milestone and significant got brings team field of of deep of Company. On this like to pride that people the know

and in expanded capabilities partnerships the years both through we Over of government local have governments. federal, with our the our contracts number state and

individuals home our significantly robust of programming the in reflect grown as communities. has to excitingly, scope our we our services to Most result, a to rehabilitative provide as a As workforce further to expanded. prepare services meaningfully evolved more they their to reentry approach has care and return support the

XX important is to the operations celebrating attention achievement the of XX/X call was original Company the While years is to we're founded. reason continuous

conditions to the private founders, by the sector need To the courts bring Beasley Company's the to deemed the the were therein. Hutto theme states core to due Don the XXXX, challenging The crisis in conditions, systems. in be pressing issues for provided in these in overcrowded correctional Back that cases services many XX than to solutions Tom and facing unconstitutional. and prisons were correctional more saw infrastructure, T.

care its help members ethics effectiveness, purpose in in in of justice also correctional has system. that organization still corrections of go criminal Mr. today. day since the existence the been Hutto cause leading on operational upheld to Company's American the to correctional by been Correctional approach Association and rooted service to the Association one, and standards and was course a nation's rooted day From has were our champions one. American standard is since Correctional The XXXX. These establish

XX.X%. During manage of ACA our were the XXXX, XX.X%, an by with newly reaccredited portfolio facilities average accredited XX we or the making of score average

celebrate. Our which dramatically to have all is partnerships individuals, with clearly helped should local state something incarcerated we conditions and also for federal improve that governments

four needs The service, relied a of our field a solution to correction takes work. It partners our continued the difficult and our of again profession of to circumstances. upon be an and helping very the individuals dedication commitment, focus has even dedicated CoreCivic government what can easy is and be again decades care. people Through not in to in as

I our opportunity earned of them. help day to our a the the partner the last am am the have proud work trusted a team for XX as I every We improve entire of alongside the CoreCivic team safe. shows years, reputation humbled because to incarcerated dedication individuals deeply keep up and and over community truly lives

in provide financial X.X% contract Service guidance. contract detention with results the center prior of our a of XXXX, the our County of decline at County, of the now quarter, non-renewal at year and to United January with an Merchant effective non-renewal overview In a quarter, million the XXXX fourth a XXXX. was Jail compared States Marion I'll the XX, level revenue of only and fourth Marion financial which $XXX.X we quarter of the despite generated the Indiana

per quarter in quarter. X.X% quarter share from or of or of compared the $XX.X $X.XX operation the prior FFO reduction fourth of facilities these year million revenue the dollars past normalized share million this versus two we $XX.X Collectively, accounted XXXX. In year, $XX.X or for $X.XX in to year a fourth of quarter this or million fourth generated funds in the per

the new the with transition I the populations of our pursuant Correctional November a and mentioned, by Federal was Arizona, BOP La contract Correctional decline just to challenging the our with driven the contracts labor of Prisons or market. the of at two XXXX Palma Now, expiration our non-renewal at Center of previously contract of of a our that McRae owned Bureau CSO Center in

will government detail the that, Dave these spent But financial we impose would investments are to impact recruit these amounts COVID have take us items. relaxed. once regarding restrictions during add advantage our our incentives to fully from occur partners retain increased of frontline are considerable provide while positioning of I of pandemic demand believe staff, more Oxy and that government valuable will we by partners

our that are poised existing contracts enter partners levels, unable the and also facilities. in contracts are populations manage because manifest these their accept new in own to new to believe into We needs from into staffing population could We near-term. challenges additional of residential government their

year-over-year in our did experience quarter. financial the declined, fourth improvement improved our three results a in drivers sequential of There results While financial we results. primary were

year, the completed of of contracts end at Correctional the Palma Before we transition our La the Center.

As contract and XXXX. year, the we a at by Arizona in past facility populations in transitioning we Palma Corrections, April Reentry reminder, Arizona to to ICE Arizona commenced of are State late Rehabilitation this from of La in a new awarded Department pursuant populations populations,

in of supports the the of While normalized XX% facility caring State to inmates. was the five while XXXX, XX% facility of currently La compared the during Arizona quarter approximately the of year, Palma past fourth utilization achieve of mission we only didn't until quarter days X,XXX the third by average our utilization for

partners, experienced average by also immigration enforcement current utilization or in We and increase an our particularly customs from ICE.

populations that quarter November month last ICE call in our mentioned year we of in Our XX% in the October. early earnings facilities increased third of

start of being the had lifted. to were which year federal that meant We certainty the fiscal pandemic-related the oxy and year, new appropriations to gradually attributed more the budget increase agency restrictions government's with start

a increase reduction obviously was did occur, and modestly in final utilization cure utilization for of their the XX, noteworthy a pre-pandemic of were the which not prepared below as the in on levels detail utilization While in shortly. occurred levels a despite Title December greater which the I impact still termination positive discuss in fourth days had quarter, I'll and and

the quarter reduce registry was continuation employment compensation. various a of and fourth has performance incentive allowed in modest improvements on improved trend in us our a nursing we of That of trend driver detect forms middle of to third market, to reliance began The the XXXX.

still levels, salaries costs pre-pandemic in with modest even can expenses employment and operating remain the of elevated result but from improvements cost market their two-thirds savings. benefits These meaningful representing the approximately in

our to $X.XX, range newly issued range FFO of funds financial As from adjusted share for AFFO operations and for the $X.XX we per per $X.XX forecasting to or in are share $X.XX. year in of XXXX the guidance,

employees, as Title below fully and guidance of has transition XX. our facility we Palma yet federal staff pre-pandemic to facility reflective expectation through levels the the to local although normalize, due remain work utilization completed of La application of continued Our partners to our at the by structure the cost is to

Our continued to guidance to accuracy. staff reflects also ourselves position for increase efforts increasing

will well Dave our begin assumptions comments. remainder Enforcement. XX, developments more the Title in with included our topic fourth our financial impact quarter the guidance financial details with year as Immigration of discussion our greater full significant and as results Since following of of I about provide of the the partners financial my I government XXXX Customs brought

the and facilities needs is partners, federal impacted significant most Homeland at resident ICE were ICE continued ability partner of nationwide the by populations social utilization improve Notably, government restrictions within to Security. to our Department Of to and it is the implemented be ICE and of distance. our largest operations any COVID-XX. their for capacity Oxy

In XX significant of of close or in detention XXXX, borders capacity. and during place also and Title year. had for has administration remain nation's Oxy to has seeking asylum entry These XX restrictions fourth in Title reduces spring demand this ports the the remained the since individuals. ICE's place time quarter of a past Trump the impact that to enacted

Nationwide, up utilization as notable mentioned still I beds across well of earlier, facilities alone. ICE nearly month increase XX,XXX their which individuals in while particularly the mid a levels, of as being partners XX% than for they federal number the multiple funded. are changing of XXXX October ICE pre-pandemic by to were As more by below November was meaningfully our

case increased as increase overturned federal result of date the a use December Oxy Title year federal government's In a XXXX date of the restrictions. would November, also with was set relax terminated. beginning XX a court of utilization their coincided fiscal Title XX, on a believe XX began and continued This be the XXXX. slowly X, was We ICE pre-pandemic October to

free In the anticipation from capacity. of over released to a releasing began individuals of custody. By XX,XXX had need increase from additional custody ICE up late ICE December, individuals significant in detention capacity,

are to federal heard in remain in was waiting Supreme now is successful there which proceedings ruling, for year court be not December, ending likely March. the XX, December expected will before Court detention September XX, is fiscal this Surely XXXX. omnibus Title to passed XX until year. bill that a later in funded the courts spending Also Congress occur until beds finalized, which to an place challenge XX,XXX the now the by

we I and increase well to close until to says to at expect utilization completed. legal this pre-pandemic level Title their its levels are least utilization yet XX the challenges funding detention below to remain

As mentioned the previously, for be populations conclusion. are to to accept and pandemic restrictions legal order continue removed we well in at to additional residential levels related Oxy increase positioned proceedings each staffing

provide pursue detention as we to alternatives remain can we to with believe ICE that to ATD with ICE We unique programs. programs. opportunities engaged additional provide also nonXresidential to solutions continue We ATD provide or

provide can management to our management type we in services of know also services segment. We already case provide community we case the similar

and The which demand to should southwest governments both these positioned ATDs the border are arise nonresidential to believe the residential for continues expected are create challenges, elevated deliver we solutions increase of apprehensions capacity rates along well ICE. to detention we to

over we in the diversified the other to in Bureau Now experienced this for of is the which decade. the of are In meet business our significant two declines last Prisons Marshal solutions and BOP of The government long Department federal which their significantly Federal or trend, needs other years Justice, populations term partners. response of to our United BOP an States has partners, within update the Service.

sale we beds X,XXX a Last completed August, $XXX the State of of Georgia McRae Correctional Facility our for to million.

from day obligations was BOP X% last and of BOP XXXX, the fulfill contract. leased State McRae we less Georgia represented of Facility expiration We the the our the revenue. contractual the recruiting sale total than through the November from Our remaining of contract facility for could our so through the with of the at to

retreat through the Following Facility the revenue expect provision reentry the the of of facility BOP at accelerate XXXX, The at residential of expiration and McRae debt our November end -- sell of far contract exceeding allocation contracts. authorization. our we McRae to equity valuation share the was publicly of our a for generate sale debt strategy great opportunity capital value repurchase securities a and on of and the traded reducing at to asset executing an our only

not market While we prison expect and entities facilities values. trend, to sale to opportunity securities BOP, detention the from our recycle of the prices an of this our contracts view of government we due as capital, public the finalize to dislocation become our with the do away create and correctional a assets true or excellent diversification value growing our to

The termination November facility upon of the Georgia XXXX. lease by our the a owned State in of was to Georgia the McRae converted of operated Facility and with State of

recent years. As for their prison Marshals, have populations in the consistent very U.S. remained

due reliance detention the for capacity significant to So their capacity. country their and remains contracted unchanged, on need around

Marshals in contracts not of exploration. XXXX criminal the with with Marshals Attorney had executive privately-operated now, And President only directed by the order impacted contracts and that remaining for In Department directly two of January facilities. The set with to the General have direct the direct signed we contracts by were XXXX, that Marshals. issued were no we detention Justice Biden renew

are beds extensions contracts facilities XXXX. be into believe expiration of potential the that has One to to Central Florence September we Both those challenging replace, until we the Marshals not on resolution provide path but our expiration contract in dates. Arizona significant existing closer contracts is of contract will in X,XXX likely very Complex Correctional we that Arizona would have and

to continue Marshals We order the in capacity ensure with critical being met support their closely to needs safety public the work are to mission.

the hear and the At to ongoing the market most improved sea is level, continue correctional we challenge facing. systems substantial are

extend the across and meaningfully XXXX. certainly but increase same these into have XXXX, are staffing challenges, will we Company able We during faced the to efforts

and are multiple as had to are reduce dealing a units There capacities states they such have significant staffing result. facility with that challenges that housing shutter

We address and a to near in to you in to to we updates, with conversations these discussions the are of as evolve. number help states challenges their look forward providing long-term,

to close-up continued my great in XXXX by we that will strengthen the had balance accomplishments comments I our highlighting sheet.

that company's the expand side, the under structure and us bank into supportive are involves we new May and year of we the exposure allowed reduced to new debt million. On with the through capital began our bringing XXXX process $XXX facility. credit our entering This a facility mission together of variable several to of rate banks just majority to

by or cut week, Throughout billion. to $XXX XXXX, notes, were $XXX have unsecured allocation debt announcing debt XXXX, the our $X mature the in X.XXX% our repaid XXXX. in last capital reduced we've May which of updated over on of million, we in and we total Since senior our our summer remaining overall just half strategy scheduled million by

deploy April to times or until maturities how net committed debt ratio of we We a range to of XXXX, free adjusted our leverage deal our no us great X.XX have in now a flexibility of flow. with total debt remain EBITDA targeted to X.XX will times. which We provide cash

to reducing We leverage generates the have and overall to Company time. we continue our in made expect to the all decline cash strong meaningful over leverage progress due flow

to related Understanding in and short-term our been leverage, levels contracts have policies negatively and the our federal Arizona impacted ongoing increase the debt with transition Oxy EBITDA of has Mathematically all pandemic declined. partners. that the by the recently restrictions

expect near decline. these our As leverage to headwinds completion, naturally we

authorized of continue stock our repurchase $XXX last Directors by execute repurchase to million Board of the stock authorization We program year.

an our X.X shares of total aggregate approximately stock repurchase shares outstanding. XX.X price purchase common of or at we of X% XXXX, million During million our

stock, million In repurchase additional XX% this This trading repurchased year, the equity. to our based $XX have we would our authorization. shares we an on repurchase million common of January so share of an of XXX.X remaining our recent outstanding of our additional on price us allow

to progress securities, expected remain our to has of strategy other a the as into include debt allocation and quarters capital. our and capital returns achieving and future consideration liquidity, towards of deploy repayments, share opportunities in repurchases leverage on potential price ratio, combination factors us targeted Our such enabled to flexible is taking

allocation cause We through long-term for the continue less on strategy prudent generate of our has meet the outside to stable continue and to the value a believe effect our needs with of capital structure position been Company customers capital of to reliance on capital. the government sources

results at to provide additional look in a financial fourth financial I'll provide now call financial Dave guidance, over discuss the our quarter, year the our detailed in updates. turn and Dave? to full detail XXXX more

David Garfinkle

AFFO moderated analyst's fourth good to above per quarter average share, $X.XX and per expenses $X.XX $X.XX, credit $X.XX. morning reported share In Damon, lower of XXXX, of income share share net everyone. staffing normalized or later. and per per as of are share. AFFO $X.XX estimates of results earnings the primarily FFO per adjusted Thank operating due described adjusted you, we further The from stemming incentives Normalized

our largest facility million the to $X.XX to up for the $X.X April continue to to we due as portfolio, of the pursuant State X,XXX of share amounts per in decline asset normalized included as sale exclude with included decline quarter per in FFO the and assets, an repayments compared and The to per on $X.XX metrics debt share management La year in our Center, a gain normalized share or X,XXX commenced detailed prior with transition real new to Palma contract Correctional the EBITDA from reconciliations in associated per non-GAAP Arizona on in inmates. share press earnings release. the of populations the beds estate disruption Adjusted of expenses that second impairments

facility, average X,XXX residents at with out Arizona fully of the we we this care year which of daily this end by currently an We Arizona for The over from population were this beginning prior end the December, of and ICE detainees cared process year, through the was quarter for the previously substantially September. at the of and transitioned during inmates by complete X,XXX had intake Palma approximately at a La facility for ICE facility. contract

occupancy at the occupancy incurred of quarter, Although around normalize the in which quarter Palma XXXX, fourth expenses we the we level La fourth the in transition XXXX of fourth the XXXX. quarter will the of facility substantial expect middle during surpassed

XXth of not contract Correctional November restrictions which These partially retention McRae offset were our prison also declines portion exploration Fourth during to from for were final Federal we the a the who quarter under Prisons fourth Facility, impacted employee Bureau result the had $X.XX credits results of could of as perform and quarter decline on duties Act the by at COVID-XX share of contributed retaining per with by and a XXXX. CARES their job entitled of that XXXX. of a capacity were XXXX XXX% to employees the

were of credits. fourth to reflected XXXX QX. from amounted operating notable our share $X.XX XXXX, credits per in per per increased EPS per the share of share and and to of QX These Compared per quarter a improvement related adjusted in financial the per $X.XX We produced share in third expenses, share resulting quarter expenses performance. to in from with the $X.XX increased normalized $X.XX from sequential $X.XX on as to reduction FFO QX in share $X.XX $X.XX net QX

registry staffing a incentives and we associated to attributable to as very incurred expenses during market, reduce share were we nursing third temporary were with expenses labor reduction a in These per the tight increases quarter. able

pleased higher we expenses decline. the sequential are were than with XXXX, still fourth the these of quarter Although,

expenses. to we these continues additional to market which time, will some reduce the take improve, As labor further on reliance expect

credits, federal XXXX. expense, $X.XX The facilities during mentioned quarter federal XX.X% interest includes same retention comparison increased XX.X% fourth facilities our in margin the the XXXX to of fourth from the populations after stronger that at benefit likewise, and several lower employee quarter from from quarter of safety quarter third third and the community the

operating and XXXX, credits, was margin of the benefit quarter, those primarily a third favorable margin term, operating Longer operating Excluding pre-pandemic expenses. we expect we improvement of the toward from experienced notable of the percentages retention to our trend approximately the fourth employee quarter XX.X% trend the XX%. resulting from in

our occupancy As partners into we continue remained many Despite obtaining implemented the results restrictions rates financial normalize. our higher of by the diem sequential to increasing in quarter facilities. are occupancy expected that continue to impacted the in per been translate are be largely from government increasing to COVID-XX improvement most applied margins for expenses levels financial and pandemic they during have fourth place performance, during as federal to as successful in

quarter contract to year our XXXX, the was Detention prior from the Leavenworth compared XXXX. Service to quarter. beds a safety the was December XX.X% XX, community our facilities X,XXX prior the Occupancy in and slight U.S. of of XX.X% decline fourth expiration attributable in Center in on the The Marshal and with

Our too under proper overall spread as XX. below and contain the cross effort seekers Southwest ICE has Title Border populations remain in policy historical the asylum border documentation of many levels, as COVID-XX to or closed, well southern effectively authority known detainee to the a remained attempting without adults an

On November all federal the to effect Administrative Procedure applicable XX of the that was terminate XX, the federal Title under the a to began requiring ruled which to government Title near seekers set in XX of implementation was year. law expulsions asylum violation government Act, the the by under process Therefore, end federal the prior a XX. of judge Title process XXXX,

it XXXX, appeal an cessation XX, while Supreme granted considers December group Title a on on However, of of Court XX. continue states the XX, Trial stay the by to a temporary

asylum in With of earnings Title and month. an arguments result United Whenever action occupancy is enter in next increase number Oral restrictions in by the are will ICE. depressed could a detained XX impact and people of the to significantly and Title subside. result whenever people States levels, we number undocumented of the scheduled COVID-XX permitted in apprehended XX claiming grow terminated, may positioned an to such the increase be for

balance sheet. the next Turning to

cash $XXX million of our As $XXX and liquidity on us credit facility, with of additional on total of borrowing XX, million $XXX of an hand had providing million. revolving capacity December we

During $XXX.X change our balance net $XXX.X XXXX, cash. in we reduced have million by or million debt of the

strategy, outstanding of purchased debt During XX, in of $XXX.X reducing on keeping balance hand XXXX, these of these facility. in market full open outstanding $XX.X repaid In with were scheduled revolving on X.XX% our These we senior the May notes the quarter million to notes our notes to fourth purchases, mature balance million. million the February under principal using we draw XXXX. reduction cash of a notes XXXX, and our credit $XX XX,

During our the to million. purchased measured million market fourth by months trailing notes also XX, ended outstanding XXXX. notes senior was X.Xx the the in these using quarter, XX we December of $XX.X reducing maturities net the of purchases, We no in open X.XX% mature $XXX.X XXXX. have senior Leverage debt-to-EBITDA balance until notes X.XX% now

help leverage target, In repurchases during ensure our made order toward no to we the to share progress we quarter. fourth

program $XX.X XXXX. of repurchased and in over have total will of and in authorization of Board X% shares. May, more our $XX repurchased so have we a of for million million shares a materially X.X our shares million the we leverage of continue at repurchase over remaining However, to $XXX cost without increasing far repurchasing or our shares have shares million be in Since authorized opportunistic outstanding

the of repurchase leverage to toward targeted authorized amount plan, flow as returns our operations opportunities into X.XXx our expect taking from repurchase to to our share under continue deploy of liquidity to price, we forward, achieving bonds, on Going other well combination cash factors, and our including potential stock use X.XXx and progress capital. consideration liquidity, as a number a of to

of Moving our lastly guidance. to discussion XXXX financial a

EPS share $X.XX. For to of to to share normalized the $X.XX, we per and year full $X.XX AFFO $X.XX $X.XX, per XXXX, FFO to $X.XX adjusted of expect of generate

the contemplates reliance on higher with a guidance market, less improving labor incentives, staffing levels. continuation but offset tight Our of albeit by temporary

occupancy, of improving train we increases efforts for prepare lead hire Title XX, to including sequentially the anticipate and end order staff in eventual continue in we performance of necessary and throughout time staff to the an occupancy restrictions, to hire in resulting Because year. because

more of contemplate to an in does Although, of prepared our but a occupancy, we ICE be in half a expect not increase. second for year, surge guidance the detainees the increase measured

in the expected an our Palma EBITDA from higher at XXXX ICE a are Arizona Correctional and La ICE XXXX. in average Our of occupancy nearby at as La of transition guidance the million reflects the nearly a $XX of by Palma Detention to Center Eloy Eloy facility increase total result populations facility at by during and Center

Although we predict which are to new a contract to successful. is we in does new because new difficult always with of government be of number discussions not on guidance, include guidance opportunities, actions states timing for the any our contracts awards upside our would if are

guidance reflects generated of XXth, on the which the that the Prisons of November of mentioned facility, Our expiration contract $X.X EBITDA previously million McRae Bureau Federal in XXXX.

in we California a December city contemplates Our guidance XXXX, notice termination previously received XXXX. March California date indicated our disposed facility through also the retention of the at lease with in

from because things crosswalk quarter, quarter to fourth first unemployment when XX% collective quarter during few a share resulting in of are to because the a two fewer quarter days our quarter, to There approximately QX decline per we the in in the remember $X.XX fourth of is weaker QX XXXX. first the to and incur taxes Compared XXXX the of of seasonally QX.

The benefit to results of in the in retention $X.XX decline employee credits additional an QX QX.

steadily contribute create utilization in through per to is termination and the expected although December, to in final populations have discussed January, recovering, of its with share of a QX. decline reduction been extended $X.XX Title XX. anticipation ICE Damon to of to The days $X.XX those approximately reduced capacity of compared the As when

with press XX% XX% and tax our to year total depreciation effective expense. rate the our release EBITDA guidance be in XXXX to and estimate expect We our normalized of provides interest full you

to expenses We be expect in XXXX to G&A XXXX. comparable

roughly $XX investments, several line expenditures, XXXX, XXXX, incur million to $XX other when During in with to $X to $X capital and substantially were renovation of million capital of expect completing than maintenance XXXX projects. we we is million million which lower

sculpt managing target, focused on and levels our repurchase leverage to will remain performance. EBITDA stock We to

be to continue will without materially opportunistic and flexible remain will we in leverage. reiterate, increasing for shares repurchasing However,

turn I back open to questions. the operator for will lines the to the now up call

Operator

Joe Our from first question Instructions] [Operator line Capital Markets. the NOBLE comes Gomes of

Joe. Your open, line is

Joe Gomes

a Good know morning, been may to you David, an those diving of contracts, get called you let's mind, receive, some there could of out ICE. the you I a you quarter. those. on facilities? guaranteed the Damon do know, that into just were some contracts that the ballpark the the facilities do with mean congrats minimum previously on progress financials if give I you you kind to of don't call discussions with in that idea end? start have do mentioned your a them you kind what a you've it relief? so of relief, with wanted receive types if Is not us on and don't be bit figure, on if of have those more had What can I And timeframe little maybe in

Damon Hininger

really keep discussions obviously, the for thank with from public talk you say about world me probably ICE and it some that about we've Yes, day We in script, pretty the see Title need the question. [indiscernible] didn't XX, how and our they perspective. here to I had for I days, XX in last after guess will but XXX meaningful near-term

conversations. couple of payment You pretty the contract. a interestingly, story, doesn't And or part have on provisions monthly we in have the been also that to know maybe these other your receptive fixed that they've but of a point, facilities

or of had improvement that or or some either of maybe some pricing the good with on renegotiation tweaked both. maybe pretty we've combination changed provision So, a contracts

we've out I So, it those don't behavior pretty Title think XX and pretty need likely the to of go indicative the pulling as the necessarily by facility, But that Dave? kind facility months, but that we of going those they anything And we in next out that that, will to back encouraged is by and look can of, X, conversation. and want to been beds XX that say add they're need you'd capacity. parse

David Garfinkle

things. couple Yes, of I add

particular to also in does fruition, reflect of much as previously, levels. historic ICE mentioned our historically, guidance I'd populations coming we some Our but those are lower than negotiations say,

those when what ICE to conversations to occupancy populations a want so levels do, are consolidate lot with into have And the they facilities so, want low facilities. individual we about of other do about fewer they mission,

I to so reluctant they they that future which been want have to is an maintain indication need. And far, capacity, that think do of

with good tried are eventually continue just a that his them. expect those have fewer about to needs on facilities. partner, that there, based they'll work we And So in there or will the consolidations conversations

Damon Hininger

add Title got back the, then we've facilities, been going leaning been we've for increased staffing they for again, and that, anticipation quarters Joe, forward on the XX. also full a couple saying this to competency in Whenever

estimated what are kind we guy's we've that perspective XXXX. probably so, was to what estimates close of today from the pretty Oxy if of versus were would street to lean kind staffing And a we forward, be for

keeping closing those various forward a it today's So, gives kind the again, on a point leaning ICEs that kind or that units. on notable, again, gives us about, getting perspective. I of pretty little bit a their indication, of and We're within feedback needs again the think facilities hopefully, that's are facilities open what conversation staffing from the within for little a we're facility consolidating of

again, know we pretty or we with we are. estimates. close then come obviously a guidance calibrate what staffing year probably to of to analyst current the appropriately that But impacts this again, little would darn estimates if that kind guidance So the the actually bit analyst populations close to be and

Joe Gomes

Thanks for Much that insight. appreciated.

much XXth May the those removed, And to part the of administration's latest how part all occupancy be restriction are that? be COVID part have On lately? be will occupancy ICE you health restrictions, be flexibility and that the seen -- at of those would would restrictions

Damon Hininger

never pandemic there of a the in with can definitive is parts moving because on lot we statements ongoing any XX. think here again court with We make case. XXth of the emergency Title the that's and environment, this kind also Again, activity terminated being May

on me, think on because Title emergency confusing we be know and of just also us court the that's proclamation little the back maybe terminated been will case. So, XXth. a case pandemic the for let guess, then that May up XX, I the a I all tag But it's

at at make the ahead take color let go shot it. So, but this Again a statements, and least can on let that. little me any environment never give me a maybe more in in

expire May So as noted, the you administration on XXth. to allow emergency just pandemic plans

end its in automatically well. Supreme at on XX that, prior So be said, litigation in is again, termination moment. that's it's Title the administration they CDC the faith there about a has litigation Whether administration Title restrictions. XX efforts to also that XX, from in the also been would the that its terminate another while and reported Title when the court federal in suggested of Court The as order It's isn't border press. correct end that about will it Title emergency with clear pandemic or XX But the happens order is.

or by know, border to to obviously, rule to Title efforts but be court keep No afraid in place various longer. way I'd restrictions XX the states out

probably So decision that June on arguments will the first, I you we I July. Joe, quarter, won't think spring know, probably mean, March issue until in but hear or

are themselves being ICE and outcome amendments with or payment. had is appears XX have continuing be uncertainty, So that, goes we but on our away had possibly And in on for conversations date. it whether again, have Again, later on forward or contracts our of backs Title again, the May some July likely goal that monthly and some with ready, of March to of plenty in to we fixed prepared some goal the based or June XX getting activity, is they Title kind pricing rescinded.

Joe Gomes

think the you of sounds, XXXX Switching improvements the I year. aging EBITDA the that generates made, comment revenue California that you some that might million that, I of $XXX have in facilities does mentioned is could you facility about you It this the facility What got what in that annually. think first mean, is press although read produce? Thanks. funded release through And where that Okay. currently, you reversed. I hope termination it's half California you of when kind in the also facility decision notice, other all have on lease which only your of then gears, that?

Damon Hininger

team on again but mean, us state indicated, they Damon conversations say, in I've And Dave with just the I'll for facility, CDCR where from plenty with to to give reaffirmed in with that we Well, when again. last leadership Joe. This this the state direct want the the operations this the also XXXX, they and one, late community. runway I got communication here in actually is tag not of also the had within was for some XX days. first

in Even year, you rest know, around as with it'll place July fiscal that, So not we're confidence coming year. that in the that this next March facility. in next that be gives year us of the Xst, though through through

with had feel So say communications we this likely state like case. I on can't that's directly officials, indefinitely, but the based I've

a also obviously on be of fulfilled parallel working could and but needs facility. assessing with the path, kind So opportunities that with we're a state, long-term that

today, not kind on So nothing that to those so it are one I'll just it's ongoing but conversations there. And several of different disclose just leave with fronts. agency,

Second tackle part of your question, that I'll let Dave one.

David Garfinkle

of just is supplemental It's revenue. of could the sell of do you of the on segment. It's segments component disclosure amount our our disclose City property the significant each margins a report, Cal and we

which property XX%. the is very segment, around XX%, the comparable So margins that we disclose its margin is to in

Operator

Thank you.

Zacks. from comes the Marin next Our M. of line question of

Your line open, is M.

M. Marin

a couple I questions. So, have of

little on remarks. prepared were again, XX. what a on And to your after deeper recent dig Title you saying questions Just two just during

that past. that As terminated timeline has noted, expected the we've you There's be been litigation the Title in impacted there. XX to

in a view of So COVID really Is to May really of regulations? the is Title XXth see how should lot we're you of end hearing? XX saying do this from these what XXXX we going

Damon Hininger

minds more Damon. are shows terminating they've said, if a than administration been on emergency A action talk What to definitive cable know, again, able every by are on This this smart is night trying legal of just don't XXth. interesting very the lot May question. I provide. anything pandemic I answer really that to to I've on got

very on piece. So that again, very, that's, definitive at least

they're the through of XX is Supreme I XX also actions hard is with lower argument proceeding obviously, impact it's that to the linked Court pandemic And administration know the emergency, same these at court courts how but that to should since say it's the Title and trying impacts to timing. Title one kind the make linked. the

estimate, what also on I clarity Dave. is truck but that to any front. So, I don't think add shared to our elect earlier best riders that

David Garfinkle

I correlated the reduction. by couple down terms of actual the of of terms weeks in be as December, last capacity question that if impact, go timing indication end took detention December, timing, to populations think answered you in of in was about it In the Damon the ICE back our nationwide, that with could an XX% when

would the imminent, at when what a for So while happen end the imminent. obviously give could XX I would it it I us year, which think didn't the of is playbook happen think termination that Title of be does

measured it's year. mentioned remarks, crystal guidance that's difficult June, could more surge my a I our whether it's does a I ball, anticipate as that prepared to of Whether the a increase of of but not or date, May, in but will July lot happen, in tell other you, second some half really, predict, the

before early expect nothing certainly wouldn't happen anything XXth. in we May year, to So the

that lawsuits us could that for think given be kind very But have happen. difficult how of pinpoint. the the something earliest many would be around timing I would just day, arisen to

Damon Hininger

really from of just relative are guidance points These perspective conservative the important because, is increasing our noted to occupancy. when Dave

So from anticipating today. perspective, served said we staffer, But I earlier. a we've set customer guidance. huge looked that by as always, at we're again, is as And, and always being by not are on guidance build the But we what the the surge. portfolio side, other customer into on a leases,

our anticipation I staffing up, guidance pretty were increased as close needs, said for consensus. to if be today, would not again, like in earlier, So probably are we we

in, accuracy. in the built little how to least you look gives that we've got necessarily the at and that a at of of So expenses increase year the the rest sense not

on hopefully, and more get So the spring summer we months. that get as we'll closer to

M. Marin

maybe nobody for a we that but I this this sense have again real understand do And sure, all Okay. time. really you time, think the that time is knows,

Northeast the were half So ago, under the facilities, in state and you you a Correctional one introduced I and then And it's question. of your about the a county. operating have year had Ohio I different with other Facility, one that think, one a one where that two about contracts, with model

other to might contract where it to that dual near-term kind would facilities and now, As think you beneficial you of are any same continue there with model? different have discussions, entities that discussions, be introduce

Damon Hininger

solely either higher great absolutely. we've I fill looking underutilized or with if existing vacant And partners at activate that's got the facility Yes, short the where or question. answer we prospects either could or or mean, either new we're are occupancy. where always is a increase

and, complexity have absolutely, only also multiple but that customers, couple decades last you I can of So, over if they're we levels. different especially the the when not manage think shown we've

that as with a state facilities Northeast contract, we've got federal So as noted, a you Ohio have and partner. also

one's So, longer in medical and population, health a one's a and term has another very program different very short-term population that mental needs. unique a mission,

short is those at we're looking always absolutely, So opportunities. answer

Operator

Thank you.

Our Wedbush. next question comes Jay McCanless from of the line of

please, question Your Jay.

Jay McCanless

and occupancy affected by XX, in Title you If what we fiscal think the might of facilities be guidance not about in embedding that the trends 'XX? type are for

Damon Hininger

the notable And the other see little outside nothing Yes, to this to. bit, country. too immigration like so but year. tag custom are stable I'll through But increases course attention is pretty around of -- We service some partner we I Marshals only may the from is a various think feel federal the great contracts we the team draw there enforcement, with and on Dave question.

are the existing So from pretty partners other state we state and opportunities on the or state partners. either side then new engagement actually state really seeing robust partners

people perspective, of residential for programming office know, from November, a to just around is and only see that, I've new country, a encouraged them you come Criminal election housing improving fair As this there in from reform Justice amount with of also governors priority a high the perspective, been but not perspective the and and correctional with it's past also office. a systems, the into the conditions

be already we have maybe us to we needs long-term. their a so can And few for that and would had questions relative states meet out states to how new answering short-term us, reached

forward opioids that very provide we I'll that, crisis. we and the of I going the that's growing week country. President and talking earlier a from for, solution coupling, are that a being the with I'm been thing issue kind a and think especially also administration to same dealing priority thing about was by State hearing a is big this the Another and just this trend of the his is in governors Union positioned say for fentanyl but with uniquely around encouraged big

would we this help programs. treatment a a looking program that's are actually that So and year and do do to called with assisted or prison also community in MAP medically base program these addiction programs are

be solution could community so with help an addiction, And that imprisonment to dealing both the these and interesting individuals that based. are

general And the with in that core again, just forward only but and something the But deal new we what you gone to addiction Dave. add community. from as this the challenges them governors don't governors, also we especially to not I hearing a that interest system, in think are just is of of real

David Garfinkle

Yes.

to which any we of guidance. our have in don't respect the with guidance, that Just

that So could startup are of MAP programs, were like I'm in to that. some at Nichols, a a there talking implement it's some of programs, activate start-up not if we looking we and be couple expenses which expenses program pennies pilot to

have we that be contracts continue our I the are in for though revenue the back year. in the described. that my And we conversations state would as just prepared not Likewise, probably contemplating remarks, mentioned end in Damon loaded guidance, any new to

upside or line. if to one more are able across could the get to that those guidance of we be the contracts So finish

stable speaking, fairly I the same towards rest tail the are the half second even Marshall's throughout of say would been relatively have XXXX. pandemic of here and our guidance stable in end year, populations populations generally But of the that,

forecasting XXXX guidance pretty So well. we stable be are in those to the as

Jay McCanless

all And for you great. -- then my Okay, thank that.

diem you 'XX how federal rates may think think about been and So state there have increases my But the in second some should question, has we for level? additional uptick both earlier. per but I at it addressed

Damon Hininger

Yes. Good question.

had around have multi-payment, changes diem the partner the earlier, got fixed engagement to with where have high capacity but we alluded we contracts that rate. per maybe also on our at front again question I to facilities with again making the As good some pretty

alluded I that think the -- we've built have earlier, into as that to this Dave of some So, we potentially for -- year. guidance

spring. The there is in flurry a as the of you state always, is side, activity know,

staff if in we've let's engaging per So diem salary my and only not but got say, all at the that increases, adjustment. legislators, needs state where are operate we with not states most, appropriate actively maybe to the also some for get we're back and session, currently perspective and and all, stakeholders looking

will record feeling our So are the increases a our We amount encouraged too state support tell diem that year to last we with partners. early per I we're partners. on had engagement but of by state from tell, you, year a

can I year but the feel feel I I it to very encouraging. is this So like be does going know say if don't same,

Other thing labor just lot just and economic there a say, and information how industries. markets of generally, I'd it's recession to out and relative impacting employers various

may We a are the not somewhat like encouraged be decade impacted they that state budgets were recession. ago with great dramatically,

they dramatically impacted that budgets, then pressure puts get potentially So, state if pricing. some on

built rainy nice couple years. relatively up in and say good environment, day I feel country. most not or their same seeing economic every state I'd funds speaking, know, that, every in it's At revenues, that last things the have think But some think pretty of case in about not we're the states I speaking, the moment, relatively I exactly the their again XX feeling state, with pretty

Jay McCanless

operating margins And in think quarter should fourth the XXXX you turning guys that the through last that 'XX? put actually we dovetails fiscal about into strength my up How given question. net

David Garfinkle

have 'XX. we that in would going say, forward I'd compare QX did I Dave. margins be from credits is quarter gave the number inflated the excluding XX.X%. those a margins the bit. This the credits probably fourth to employee the quarter That's retention fourth

leveraged pre-pandemic into XX%. margins back don't margins that occupancies as say or as goes stable around model, pre-pandemic we'll are optimistic, we in get our to up, levels to go I'd in And it's of occupancy 'XX be expect though, fairly as a we up, forecast 'XX. though, don't get

quarters of QX, of possibility XXXX, expect the levels the occupancy them certainly we as around QX, right to stable, and in say increasing a sequential two during increase. in would would higher with I first QX number But

Operator

Thank you.

next line Our Financial. comes question from Ben Briggs the of of StoneX

question please, Ben. Your

Ben Briggs

scripted of in on the or do Q&A, couple have mine answered I left. the previous but You've a most portion

of Palma La normalized the ramping anticipate fully to and you being and a relates reach facility normalized staffed level? its really still do having know cost that I Facility, it as structure So, costs guys there. When kind haven't that

Damon Hininger

I our globally favorite on question been second To the maybe quarter. your your months with is I But question. here about by but probably keeping eight probably kind that. first turned Arizona maybe of to your exception staffing Again, six to and guess the part to mean in second normalizes into no last encouraged labor the day, midyear. we've market, of

David Garfinkle

in as say, the now. really we're substantially shape, of completed I'd And so good ramp, it's

So, really systems. staff staffing have as we X,XXX from with I think our prepared about remarks, mentioned supplemented today. parts we in there our The is been other of people

travel Facility. facilities We've Arizona. got be nursing got in expenses. Palma Arizona. La the at premiums work in to and Registry expenses incremental for the work away shift to driving from challenge We've what's really that's home and So, their people continues a

good until But those to are incur. those shape. don't as the expenses goes, we're just And in It's we're expenses to shape permanent ramp types middle away far good we there. So the we we're the part go staff incurring that really because have continue local really don't the outside in the of year. expect of and staffing, as

Ben Briggs

I make was, that one to want my here. I've right next the then And got sure math just

scripting know in I discussed the down and you paid guys So, you you portion. and

about That of and said was cash You you XXXX. and have four outstanding five cash. We're $XXX down. that did down Do $XX And draw? a them million due paid million draw revolver paid and $XXX eights in right? that when I revolver your of you you those that notes million

David Garfinkle

That'd be correct, yes.

Ben Briggs

Okay, great.

sure to And thank I math right, you on want taking going Just getting me. the the make wanted to there question. for that's for it that was quarter. Congratulations be to

David Garfinkle

Sure, you. thank

Operator

you. Thank

Imperial Capital. Our comes Ludtke the Kirk of of next from question line

Your is open, Kirk. line

Kirk Ludtke

of the ups had quarter. Congratulations a follow morning. I Good here. couple on just

to fourth like if you adjusted think million mid get quarter annualized EBITDA. XXX you the I of million XXX EBITDA,

tailwind, annual guidance? talked would What headwinds what pricing, the are -- we've below directionally -- and So the about La the Palma is the what year-over-year the other than number a right, what in apply. are guidance is almost are the everything population McRae,

Damon Hininger

you would talking this that guess I'll about day but Dave I and is and just team I Yes, with the only say tag question. approaching to thing know, staffing. again

increased late consensus were with have to so you as again, mean, ICE staff that portfolio increased to to year So ramping we in would as try is of up staffing that last continue easily we within be be to this for to add year, ramping little a note labor anything Dave? this going year throughout of and provide of not on that needs, that. I If I I be anticipation bit range significant of up the kind into going the Do be costs. to going without think clarity we on

David Garfinkle

want definitely it's we're we to be again, where mean, I yet. not Yes, and thriving, labor that's

retention, see We drag we and credits. there I'd shift say, so decline included referral though normalized, the relocation our bit staffing bonuses a to QX. and registered increasing did in the XXXX. we So QX, retention continue That's we guidance, are that's QX levels a have employee from incentives throughout incur those to we did nursing. even In the and of hope

and for in that basis be take of to that's run out Since got you rate recording going 'XX. that's XXXX. So not a to

Damon Hininger

we've to might I work in it post to don't they two to an I on employee time a while, about a for actually the And be if hired to almost are mean, talked good hire don't probably time be in but from it know three the a this could know us facility. months. they

we make want to academies get again, appropriate. the them sure part of is so the And -- training we anticipation as through

process contracts comprehensive All those not and have weeks, could days. take background very of our screening

we to I it demand. have just and meet that, we demand three So, summer, make during manifesting that if staff want got spring, is the that's that sure have part wait to to to there of fall months

Ben Briggs

Got it. get the spring then year and budget when the wait Is whole set mechanism to helpful. shot? only you in have get the a pricing to It's That's that you another? such one

David Garfinkle

fiscal our July year, I in are states to typically, June mean, which state most the Typically, Xst majority to of are tied contracts XXth.

the legislature we what the are yes, ultimately within and of negotiated the making so, And with Department usually case spring. the of Corrections, in then it's

some, been mean, that cycle have And call, Notably, I within where real the changed has can fluid. we in the shoot have market, what the years, services go all labor then adjustments. facilities which need time. couple of had, conditions had have also and last and in unique they But have we we of do I a programs,

The many good facilities. state our that news them if about our of their states, not business all operate is own of

to if changes some challenges, But we some in likely and so going that are that? we can facilities same could their build off know do they add there feel adjustments So to the maybe cycle. can you anything would

Damon Hininger

a rates cycle they a we I were that Last question. were received I to was year, Kirk, going off off wage prior couple say diem mind of wouldn't per asking, because from increases. there you because cycle providing were

the getting Here half don't first we February. in middle that happening see year. of are the towards this of I

we the the into So, diem baked first that half into year. haven't per of higher

you the We implement by would if X. say costs 'XX to and annual if we that amount new a out I'd budgets July and one you're it annualization Kirk, going that's just time million to them budgets I those probably employee retention multiplying associated get their QX back credits with the the back credits, QX had of taking $XX.X net their And with of on part as other middle guess thing, year, the budgets state effective through in Xst.

Ben Briggs

Interesting.

the a so assumes the appreciate to just then. That's that, And of clarify, Okay. it, big pretty it. I'm number Central then guessing Arizona? renewal I guidance Got

Damon Hininger

yes. Absolutely,

Ben Briggs

But Got between elaborate lastly, it. has And everyone that press then comment of coverage deal to I how to there on? is you can that rumors. been Mexico, some and interpret. sure want the you not on on I'm don't Administration ask or potential comment Biden something But to which a

Damon Hininger

cannot. we Unfortunately,

Ben Briggs

it. really it. appreciate I Thank for you. That's it me. got Okay,

Operator

you That time. call. Thank your today's this participating. Please conclude Thank you. for at conference does disconnect lines

CoreCivic (CXW) 9 Feb 232022 Q4 Earnings call transcript