-- Net income increased to $35.0 million from $32.6 million
-- Net income per diluted share increased to $0.28 from $0.26
-- EBITDA increased to $91.4 million from $84.1 million
-- Adjusted Free Cash Flow increased to $72.7 million from $61.5 million
-- 849 expansion beds placed into service during the first quarter of
2008
Financial results for the first quarter of 2008 were positively impacted by
an increase in average daily compensated inmate populations from both
federal and state customers. Management revenue from federal customers
increased 6.9% to $152.0 million during the first quarter of 2008 from
$142.2 million during the first quarter of 2007. The increase in federal
revenue from the first quarter of 2007 resulted from an increase in
utilization at our Stewart Detention Center under a contract with the
Immigration and Customs Enforcement ("ICE") that became effective in
October 2006, combined with the utilization by the U.S. Marshals Service
("USMS") of the 360-bed expansion at the Citrus County Detention Facility
completed during the first quarter of 2007 as well as an increase in
populations from all three federal agencies at several other facilities.
Management revenue from state customers increased 16.4% to $196.4 million
during the first quarter of 2008 from $168.7 million for the same period in
2007. The increase in state revenue from the prior year quarter primarily
resulted from contract awards resulting in additional inmates from the
state of California, which now utilizes beds in five of our facilities, as
well as the state of Arizona for which we house inmates at our Diamondback
Correctional Facility. Additionally, our inmate populations from the state
of Florida increased as a result of the expansions at Gadsden Correctional
Institution and Bay Correctional Facility, both of which were completed
during the third quarter of 2007. These increases were partially offset by
a reduction in revenue resulting from lower populations at our D.C.
Correctional Treatment Facility.
Also contributing to the improvement in federal and state revenue were
increases in per diems obtained on several management contracts.
Our average daily compensated population increased 6.1% to 75,544 during
the first quarter of 2008 from 71,206 during the first quarter of 2007.
However, total portfolio occupancy decreased to 97.0% during the first
quarter of 2008 from 98.0% during the first quarter of 2007 as a result of
placing nearly 5,000 new beds into service since the first quarter of 2007.
Adjusted Free Cash Flow increased to $72.7 million during the first quarter
of 2008 from $61.5 million generated during the same period in 2007. The
increase in Adjusted Free Cash Flow was primarily attributable to an
improvement in operating performance driven by new management contracts and
a decrease in maintenance and technology capital expenditures.
EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures. Please
refer to the Supplemental Financial Information and related note following
the financial statements herein for further discussion and reconciliations
of these measures to GAAP financial measures.
Commenting on the financial results, President and CEO John Ferguson
stated, "We delivered solid financial performance during the first quarter,
and we are optimistic about our prospects in future quarters as we deliver
new bed capacity. We continue to effectively execute our development
program and expect to bring on-line approximately 6,900 additional beds
during the remainder of 2008, preparing a foundation for future growth."
Ferguson continued, "Based on projected demand for prison beds by many of
our existing state and federal customers we continue to pursue additional
expansion and development opportunities."
Operations Highlights
For the quarters ended March 31, 2008 and 2007, key operating statistics
for the continuing operations of the Company were as follows:
Quarter Ended March 31,
Metric 2008 2007 % Change
--------- --------- ---------
Average Available Beds 77,899 72,643 7.2%
Average Compensated Occupancy 97.0% 98.0% -1.0%
Total Compensated Man-Days 6,874,470 6,408,581 7.3%
Average Daily Compensated Population 75,544 71,206 6.1%
Revenue per Compensated Man-Day $ 55.98 $ 54.01 3.6%
Operating Expense per Compensated Man-Day:
Fixed 29.70 28.55 4.0%
Variable 9.88 9.49 4.1%
--------- ---------
Total 39.58 38.04 4.0%
--------- ---------
Operating Margin per Compensated Man-Day $ 16.40 $ 15.97 2.7%
========= =========
Operating Margin 29.3% 29.6% -1.0%
Total revenue for the first quarter of 2008 increased 10.8% to $388.4
million from $350.5 million during the same period in 2007, as total
compensated man-days increased to 6.9 million from 6.4 million, and as
revenue per compensated man-day increased to $55.98 from $54.01. The
increase in revenue from the prior year period was predominately due to
higher inmate populations from the state of California at our Florence and
Tallahatchie facilities, the state of Arizona at our Diamondback facility
as well as from the USMS at the Citrus facility and from ICE at our Stewart
facility.
Total operating expenses per compensated man-day increased 4.0% to $39.58
during the first quarter of 2008 compared with $38.04 during the same
period in 2007. In addition to general inflationary increases, our
operating expenses included incremental costs associated with ramping-up
inmate populations at a number of our facilities, primarily those
facilities where expansion projects have recently been completed or where
expansions will be completed in the near term.
Business Development Update
Today, CCA is announcing its intent to increase the total capacity of its
Adams County Correctional Center, in Adams County, Mississippi which is
currently under construction, by an additional 564-beds. The incremental
cost of construction is estimated to be $30.0 million and is anticipated to
be completed during the first quarter of 2009. Upon completion of the
additional beds, the Adams County facility will have a total design
capacity of 2,232 beds at a total estimated cost of $135.0 million.
Although we currently do not have a management contract for the Adams
County facility, CCA decided to move forward with increasing the design
capacity based on anticipated demand from federal and state agencies.
Facility Development Update
Facilities Currently Under Development or Expansion
Based upon our expectation of increased demand for bed capacity on behalf
of a number of state and federal agencies, we expect to complete the
following expansion and development projects:
Total Bed Estimated
Facilities Under Capacity Total
Expansion or Additional Following Estimated Cost (in Potential
Development Beds Expansion Completion millions) Customer(s)
--------- -------- --------- ------- -------------
Bent County
Correctional
Facility, Colorado 720 1,420 Q2 2008 $ 45.0 Colorado (1)
Leavenworth Detention
Center, Kansas 266 1,033 Q2 2008 22.0 USMS (1)
Tallahatchie County
Correctional Facility, 720 2,672 Q2 2008 53.5 California (1)
Mississippi 128 Q3 2008
Cimarron Correctional
Facility, Oklahoma 660 1,692 Q3 2008 45.0 Various States
Davis Correctional
Facility, Oklahoma 660 1,670 Q3 2008 45.0 Various States
Adams County
Correctional 1,668 2,232 Q4 2008 135.0 Federal or
Mississippi 564 Q1 2009 Various States
La Palma Correctional Q3 2008-
Center, Arizona 3,060 3,060 Q2 2009 205.0 California (1)
Trousdale Correctional Various States
Center, Tennessee 2,040 2,040 Q4 2009 143.0 and Federal
--------- -------
Total 10,486 $ 693.5
========= =======
(1) We currently have contracts in place with the stated customers to
occupy these facilities; however, the contracts do not provide a
guarantee of utilization.
In addition to the above listed projects, we continue to pursue additional
development and expansion opportunities in order to satisfy increasing
demand from existing and potential customers. We believe we have the
ability to fund our current development activity with cash on hand,
availability under our new $450.0 million revolving credit facility, and
cash generated from operations.
Expansions or New Facilities Additional
Completed Beds Completed Customer(s)
-------- -------- -------------------------
2007
Citrus County Detention
Facility, Florida 360 Q1 2007 Citrus County
Crossroads Correctional Center,
Montana 96 Q1 2007 State of Montana and USMS
Saguaro Correctional Facility,
Arizona 1,896 Q2 2007 State of Hawaii
Gadsden Correctional
Institution, Florida 384 Q3 2007 State of Florida
Bay Correctional Facility,
Florida 235 Q3 2007 State of Florida
Tallahatchie County
Correctional Facility,
Mississippi 720 Q4 2007 State of California
North Fork Correctional
Facility, Oklahoma 960 Q4 2007 State of California
--------
Total 2007 Additional Beds
Completed 4,651
--------
2008
Eden Detention Center, Texas 129 Q1 2008 BOP
--------
Kit Carson Correctional Center,
Colorado 720 Q1 2008 State of Colorado
--------
Total 2008 Additional Beds
Completed 849
--------
Total 5,500
========
Guidance
We expect diluted earnings per share ("EPS") for the second quarter of 2008
to be in the range of $0.28 to $0.30, and full year 2008 EPS to be in the
range of $1.21 to $1.28.
During 2008, we expect to invest approximately $495.4 million in capital
expenditures, consisting of approximately $450.0 million in prison
construction and expansions that have been previously announced, $31.9
million in maintenance capital expenditures and $13.5 million in
information technology. We also currently expect to pay approximately
$50.0 million to $55.0 million in federal and state income taxes during
2008.
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information
and other data for the first quarter of 2008. We do not undertake any
obligation, and disclaim any duty, to update any of the information
disclosed in this report. Interested parties may access this information
through our website at www.correctionscorp.com under "Financial
Information" of the Investor section.
Management may meet with investors from time to time during the second
quarter of 2008. Written materials used in the investor presentations will
also be available on our website beginning on or about May 13, 2008.
Interested parties may access this information through our website at
www.correctionscorp.com under "Webcasts" of the Investor section.
Webcast and Replay Information
We will host a webcast conference call at 11:00 a.m. eastern time (10:00
a.m. central time) today, to discuss our first quarter 2008 financial
results. To listen to this discussion, please access "Webcasts" on the
Investor page at www.correctionscorp.com. The conference call will be
archived on our website following the completion of the call. In addition,
a telephonic replay will be available today at 2:00 p.m. eastern time
through 11:59 p.m. eastern time on May 13, 2008, by dialing 888-203-1112,
pass code 7611394.
About CCA
CCA is the nation's largest owner and operator of privatized correctional
and detention facilities and one of the largest prison operators in the
United States, behind only the federal government and three states. We
currently operate 65 facilities, including 41 company-owned facilities,
with a total design capacity of approximately 78,500 beds in 19 states and
the District of Columbia. We specialize in owning, operating and managing
prisons and other correctional facilities and providing inmate residential
and prisoner transportation services for governmental agencies. In
addition to providing the fundamental residential services relating to
inmates, our facilities offer a variety of rehabilitation and educational
programs, including basic education, religious services, life skills and
employment training and substance abuse treatment. These services are
intended to reduce recidivism and to prepare inmates for their successful
re-entry into society upon their release. We also provide health care
(including medical, dental and psychiatric services), food services and
work and recreational programs.
Forward-Looking Statements
This press release contains statements as to our beliefs and expectations
of the outcome of future events that are forward-looking statements as
defined within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from the
statements made. These include, but are not limited to, the risks and
uncertainties associated with: (i) fluctuations in our operating results
because of, among other things, changes in occupancy levels, competition,
increases in cost of operations, fluctuations in interest rates and risks
of operations; (ii) changes in the privatization of the corrections and
detention industry, the public acceptance of our services, the timing of
the opening of and demand for new prison facilities and the commencement of
new management contracts; (iii) our ability to obtain and maintain
correctional facility management contracts, including as a result of
sufficient governmental appropriations and as a result of inmate
disturbances; (iv) increases in costs to construct or expand correctional
facilities that exceed original estimates, or the inability to complete
such projects on schedule as a result of various factors, many of which are
beyond our control, such as weather, labor conditions and material
shortages, resulting in increased construction costs; (v) risks associated
with judicial challenges regarding the transfer of California inmates to
out of state private correctional facilities; and (vi) general economic and
market conditions. Other factors that could cause operating and financial
results to differ are described in the filings made from time to time by us
with the Securities and Exchange Commission.
CCA takes no responsibility for updating the information contained in this
press release following the date hereof to reflect events or circumstances
occurring after the date hereof or the occurrence of unanticipated events
or for any changes or modifications made to this press release.
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31, December 31,
ASSETS 2008 2007
----------- -----------
Cash and cash equivalents $ 50,470 $ 57,968
Accounts receivable, net of allowance of $3,998
and $3,914, respectively 231,547 241,722
Deferred tax assets 14,916 12,250
Prepaid expenses and other current assets 13,584 21,142
Assets held for sale 7,578 7,581
----------- -----------
Total current assets 318,095 340,663
Property and equipment, net 2,231,354 2,086,980
Restricted cash 6,580 6,511
Investment in direct financing lease 14,243 14,503
Goodwill 13,672 13,672
Other assets 22,781 23,411
----------- -----------
Total assets $ 2,606,725 $ 2,485,740
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 207,320 $ 213,240
Income taxes payable 11,450 964
Current portion of long-term debt 290 290
Current liabilities of discontinued operations 151 237
----------- -----------
Total current liabilities 219,211 214,731
Long-term debt, net of current portion 1,045,605 975,677
Deferred tax liabilities 39,338 34,271
Other liabilities 39,392 39,086
----------- -----------
Total liabilities 1,343,546 1,263,765
----------- -----------
Commitments and contingencies
Common stock - $0.01 par value; 300,000 shares
authorized; 124,965 and 124,472 shares issued
and outstanding at March 31, 2008 and December
31, 2007, respectively 1,250 1,245
Additional paid-in capital 1,574,937 1,568,736
Retained deficit (313,008) (348,006)
----------- -----------
Total stockholders' equity 1,263,179 1,221,975
----------- -----------
Total liabilities and stockholders' equity $ 2,606,725 $ 2,485,740
=========== ===========
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For the Three Months
Ended March 31,
------------------------
2008 2007
----------- -----------
REVENUE:
Management and other $ 387,567 $ 349,838
Rental 793 698
----------- -----------
388,360 350,536
----------- -----------
EXPENSES:
Operating 277,294 249,130
General and administrative 19,553 17,318
Depreciation and amortization 21,412 18,225
----------- -----------
318,259 284,673
----------- -----------
OPERATING INCOME 70,101 65,863
----------- -----------
OTHER EXPENSES (INCOME):
Interest expense, net 13,650 13,934
Other (income) expenses 93 (11)
----------- -----------
13,743 13,923
----------- -----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES 56,358 51,940
Income tax expense (21,601) (19,578)
----------- -----------
INCOME FROM CONTINUING OPERATIONS 34,757 32,362
Income from discontinued operations, net of
taxes 241 208
----------- -----------
NET INCOME $ 34,998 $ 32,570
=========== ===========
BASIC EARNINGS PER SHARE:
Income from continuing operations $ 0.28 $ 0.27
Income from discontinued operations, net of
taxes - -
----------- -----------
Net income $ 0.28 $ 0.27
=========== ===========
DILUTED EARNINGS PER SHARE:
Income from continuing operations $ 0.28 $ 0.26
Income from discontinued operations, net of
taxes - -
----------- -----------
Net income $ 0.28 $ 0.26
=========== ===========
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS)
CALCULATION OF ADJUSTED FREE CASH FLOW
For the Three Months
Ended March 31,
------------------------
2008 2007
----------- -----------
Income from continuing operations before income
taxes $ 56,358 $ 51,940
Income taxes paid (376) (798)
Depreciation and amortization 21,412 18,225
Depreciation and amortization for discontinued
operations - 45
Income from discontinued operations, net of taxes 241 208
Income tax expense for discontinued operations 149 126
Stock-based compensation reflected in G&A
expenses 2,020 1,230
Amortization of debt costs and other non-cash
interest 993 1,015
Maintenance and technology capital expenditures (8,138) (10,456)
----------- -----------
Adjusted Free Cash Flow $ 72,659 $ 61,535
=========== ===========
CALCULATION OF EBITDA
For the Three Months
Ended March 31,
------------------------
2008 2007
----------- -----------
Net income $ 34,998 $ 32,570
Interest expense, net 13,650 13,934
Depreciation and amortization 21,412 18,225
Income tax expense 21,601 19,578
Income from discontinued operations, net of taxes (241) (208)
----------- -----------
EBITDA $ 91,420 $ 84,099
=========== ===========
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures. The
Company believes that these measures are important operating measures that
supplement discussion and analysis of the Company's results of operations
and are used to review and assess operating performance of the Company and
its correctional facilities and their management teams. The Company
believes that it is useful to provide investors, lenders and security
analysts disclosures of its results of operations on the same basis as that
used by management.
Management and investors review both the Company's overall performance
(including GAAP EPS, net income, and Adjusted Free Cash Flow) and the
operating performance of the Company's correctional facilities (EBITDA).
EBITDA is a useful supplemental measure of the performance of the Company's
correctional facilities because it does not take into account depreciation
and amortization and tax provisions. Because the historical cost accounting
convention used for real estate assets requires depreciation (except on
land), this accounting presentation assumes that the value of real estate
assets diminishes at a level rate over time. Because of the unique
structure, design and use of the Company's correctional facilities,
management believes that assessing performance of the Company's
correctional facilities without the impact of depreciation or amortization
is useful. The calculation of Adjusted Free Cash Flow substitutes capital
expenditures incurred to maintain the functionality and condition of the
Company's correctional facilities in lieu of a provision for depreciation;
Adjusted Free Cash Flow also excludes certain other non-cash expenses that
do not affect the Company's ability to service debt.
The Company may make adjustments to GAAP net income, EBITDA and Adjusted
Free Cash Flow from time to time for certain other income and expenses that
it considers non-recurring, infrequent or unusual and because such items do
not reflect a necessary component of the ongoing operations of the Company.
Other companies may calculate EBITDA and Adjusted Free Cash Flow
differently than the Company does, or adjust for other items, and therefore
comparability may be limited. EBITDA and Adjusted Free Cash Flow are not
measures of performance under GAAP, and should not be considered as an
alternative to cash flows from operating activities, a measure of liquidity
or an alternative to net income as indicators of the Company's operating
performance or any other measure of performance derived in accordance with
GAAP. This data should be read in conjunction with the Company's
consolidated financial statements and related notes included in its filings
with the Securities and Exchange Commission.
Contact Information: Contact: Karin Demler (615) 263-3005