Corrections and detention management company, CoreCivic (CXW, Financial), recently revised its 2025 annual guidance. The updated forecast takes into account the actual results from the first quarter, alongside new projections for occupancy levels, aligning with the present trends. Furthermore, it incorporates expectations regarding the reopening of the Dilley Immigration Processing Center. Originally announced on February 10, 2025, the revised outlook now projects earnings to align with a consensus estimate of $1.59 per share.
CXW Key Business Developments
Release Date: February 11, 2025
- Revenue: $479.3 million for Q4 2024, a 2% reduction compared to the prior-year quarter. Full-year 2024 revenue was $2 billion.
- Adjusted EBITDA: $74.2 million for Q4 2024, down from $90 million in Q4 2023. Full-year adjusted EBITDA increased to $330.8 million from $311 million.
- Net Income: GAAP net income of $0.17 per share for Q4 2024, including a $0.01 per share gain on sale of real estate assets. Adjusted EPS was $0.16.
- Normalized FFO per Share: $0.39 for Q4 2024, exceeding analyst estimates by $0.05 per share.
- Occupancy Rate: 75.5% for Q4 2024, the highest since Q1 2020.
- Federal Revenue: Declined 12% in Q4 2024 compared to Q4 2023. Revenue from ICE declined 22%, but excluding South Texas, ICE revenue increased 5%.
- State Revenue: Increased 6.4% in Q4 2024 compared to Q4 2023, driven by higher per diem rates and new contracts with Wyoming and Montana.
- Local Revenue: Increased 26% in Q4 2024 compared to Q4 2023, due to new contracts with Hinds County, Mississippi, and Harris County, Texas.
- Operating Margin: 23.6% for safety and community facilities in Q4 2024, compared to 24.4% in the prior-year quarter.
- Debt Repayment: $95 million repaid in 2024, including $7.2 million in Q4.
- Share Repurchase: $68.5 million repurchased in 2024, including $9 million in December.
- Leverage Ratio: Net debt to adjusted EBITDA was 2.3 times as of December 31, 2024.
- 2025 Financial Guidance: Diluted EPS of $0.48 to $0.61 and FFO per share of $1.37 to $1.50.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CoreCivic Inc (CXW, Financial) anticipates significant growth opportunities, particularly with federal partners such as ICE and the United States Marshal Service, due to recent policy changes.
- The company reported a strong occupancy rate of 75.5% for the fourth quarter, the highest since the start of the COVID-19 pandemic.
- CoreCivic Inc (CXW) has submitted proposals for 28,000 beds to ICE, which could potentially generate $1.5 billion in revenue.
- The company has been proactive in preparing for potential new contracts by investing $40 million to $45 million in capital expenditures for facility readiness.
- CoreCivic Inc (CXW) has improved staffing levels to nearly pre-pandemic levels, reducing reliance on temporary labor and enhancing operational efficiency.
Negative Points
- Revenue from federal partners, particularly ICE, declined by 12% in the fourth quarter compared to the previous year, primarily due to contract terminations.
- Adjusted EBITDA for the fourth quarter decreased to $74.2 million from $90 million in the prior-year quarter, impacted by contract terminations and lease expirations.
- The company faces uncertainty regarding the timing and structure of new contracts with ICE, which could affect financial projections.
- CoreCivic Inc (CXW) anticipates start-up expenses for activating idle facilities, which could negatively impact financial guidance unless offset by new contracts.
- The company is exposed to potential risks from policy changes and funding decisions by the federal government, which could impact demand for detention facilities.
