On November 6, 2024, CoreCivic Inc (CXW, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. CoreCivic Inc, a leading owner and operator of private prisons and detention centers in the United States, operates through three segments: Safety, Community, and Properties. The majority of its revenue is derived from the Safety segment, which includes correctional and detention facilities.
Financial Performance and Challenges
CoreCivic Inc reported a net income of $21.1 million, or $0.19 per diluted share, for Q3 2024, surpassing the analyst estimate of $0.13 per share. This represents a significant increase from the $13.9 million, or $0.12 per diluted share, reported in Q3 2023. The company's adjusted net income also rose to $22.4 million, or $0.20 per diluted share, compared to $15.6 million, or $0.14 per diluted share, in the same period last year.
The company's performance was bolstered by higher occupancy rates, which increased to 75.2% from 72.0% in the previous year, and effective cost management strategies. However, challenges such as the expiration of a lease with the California Department of Corrections and Rehabilitation and the early termination of a contract with U.S. Immigration & Customs Enforcement (ICE) at the South Texas Family Residential Center posed potential setbacks.
Key Financial Achievements
CoreCivic's financial achievements are noteworthy, particularly in the context of the business services industry. The company reported an EBITDA of $81.4 million, up from $72.8 million in Q3 2023, and an adjusted EBITDA of $83.3 million, compared to $75.2 million in the prior year. These improvements were driven by increased occupancy and reduced labor costs.
Funds From Operations (FFO) also saw a rise, reaching $47.1 million, with normalized FFO at $47.6 million, or $0.43 per diluted share, marking a 23% increase from the previous year. These metrics are crucial for evaluating the company's operational efficiency and financial health, especially given its extensive real estate holdings.
Income Statement and Balance Sheet Insights
CoreCivic's revenue for Q3 2024 was $491.6 million, slightly above the analyst estimate of $481.87 million. The Safety segment contributed $459.3 million, while the Community and Properties segments added $28.2 million and $4.1 million, respectively. Operating expenses totaled $370.8 million, reflecting a decrease from $377.3 million in Q3 2023, highlighting effective cost control measures.
The balance sheet showed total assets of $2.91 billion, with cash and cash equivalents at $107.9 million. Long-term debt was reduced to $979.8 million from $1.08 billion at the end of 2023, aligning with the company's strategy to strengthen its financial position.
Commentary and Future Outlook
Damon T. Hininger, CoreCivic’s President and CEO, stated, “CoreCivic’s financial results for the third quarter of 2024 demonstrate our continued strong operating momentum. We achieved notable improvement in our operating margin compared with the prior year quarter through our continued cost management diligence and the strong demand for our essential services.”
Looking ahead, CoreCivic has raised its full-year financial guidance, projecting net income between $55.5 million and $61.5 million, and adjusted net income between $78.0 million and $84.0 million. The company plans to invest $70.0 million to $76.0 million in capital expenditures, maintaining its focus on operational efficiency and strategic growth.
CoreCivic's ability to navigate challenges and capitalize on opportunities in the corrections and detention industry positions it well for future growth. Investors and stakeholders will be keenly watching how the company leverages its strong balance sheet and operational capabilities to meet evolving governmental needs.
Explore the complete 8-K earnings release (here) from CoreCivic Inc for further details.
