CoreCivic ((CXW)) has held its Q4 earnings call. Read on for the main highlights of the call.
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CoreCivic’s latest earnings call reflects a sentiment of cautious optimism, as the company reports strong occupancy rates and successful new contracts. Despite these positive developments, CoreCivic faces challenges due to declines in federal revenue and impacts from contract terminations.
Strong Occupancy and Revenue Growth
CoreCivic’s occupancy for the fourth quarter of 2024 reached 75.5%, the highest level since early 2020. Excluding certain closed facilities, the company saw underlying revenue growth of 8% year-over-year. This marks a significant recovery and growth trajectory for the company.
Positive Guidance and Potential Growth
The company anticipates significant growth opportunities fueled by policy changes and new contracts with federal partners. For 2025, CoreCivic’s financial guidance suggests a potential increase in both occupancy and revenue, signaling a positive outlook for future operations.
Operational and Staffing Improvements
Investments in staffing have led to improved facility performance, which in turn reduced temporary labor costs and bolstered audit compliance scores. These enhancements are expected to support further operational efficiency and cost-effectiveness.
Successful New Contracts with State Partners
CoreCivic secured new management contracts with the state of Montana and renewed contracts with Wyoming and other states. These agreements have contributed to increased occupancy rates and revenue, demonstrating the company’s strategic expansion with state partners.
Decline in Federal Revenue
Federal revenue from the Immigration and Customs Enforcement (ICE) and the U.S. Marshals Service declined by 12% in Q4 2024 compared to the previous year, with ICE revenue alone decreasing by 22%. This decline poses a challenge to CoreCivic’s revenue streams.
Contract Terminations Impact
The termination of the South Texas Family Residential Center contract and the expiration of a lease with California have negatively impacted CoreCivic’s adjusted EBITDA and earnings per share, illustrating the financial repercussions of contract losses.
Financial Challenges from Idle Facilities
Idle facilities present financial challenges as they require significant expenses for potential activations. This situation affects CoreCivic’s overall financial outlook and necessitates strategic planning to mitigate associated costs.
Forward-Looking Guidance
During the fourth quarter earnings call, CoreCivic provided financial guidance for 2025, highlighting anticipated growth opportunities from changes in federal immigration policies. The company expects diluted EPS to range between $0.48 to $0.61, with FFO per share between $1.37 to $1.50. CoreCivic projects an increase in federal populations, driven by potential new contracts, particularly with ICE and the U.S. Marshals Service. The proposed expansion of capacity by 28,000 beds could generate up to $1.5 billion in revenue if fully activated, with capital expenditures forecasted to support these expansions.
In summary, CoreCivic’s earnings call highlights a period of cautious optimism with a focus on strong occupancy and strategic growth through new contracts. However, challenges remain due to declining federal revenue and the financial impact of contract terminations. Looking forward, CoreCivic’s guidance suggests potential growth from federal policy changes and expanded capacity, which could significantly bolster the company’s revenue and operational capabilities.
