CoreCivic Raises Profit Outlook as Facility Sales Reshape Finances
Expected net proceeds from four facility sales increased to about $1.6 billion.
CoreCivic Inc. (CXW), the correctional-facility operator, reported second-quarter revenue growth that outpaced profit growth as facility activations expanded the business while margins narrowed.
Revenue rose 27.3% from a year earlier to $684.9 million, accelerating from 25.8% growth in the first quarter. Diluted earnings increased 5.7% to $0.37 a share, while net income fell 3.6% to $37.1 million. Both measures also slipped sequentially despite an 8.9% reduction in diluted shares from a year earlier.
Adjusted EBITDA increased 5.9% to $109.4 million, slowing from 36.0% growth in the first quarter. Adjusted diluted earnings rose 5.6% to $0.38 a share, compared with first-quarter growth of 73.9%. The year-earlier period included an $11.6 million employee-retention-credit and interest benefit that weighed on the reported comparison with 2024.
Federal Residential revenue, which accounted for about 53% of total revenue, increased $78.2 million on higher occupancy at certain facilities and per-diem increases. Overall residential occupancy rose to 78.4% from 76.8% a year earlier, though it declined from the comparable first-quarter rate of 79.6%.
Residential operating margin narrowed to 22.4% from 26.1%, reflecting the prior-year employee-retention credits and lower Immigration and Customs Enforcement populations outside recently activated sites. Four facilities undergoing activation produced $80.1 million of revenue and $21.1 million of operating income. CoreCivic expects higher occupancy at those sites to support future margins, while start-up costs at the Prairie facility are expected to pressure second-half results.
CoreCivic raised its 2024 adjusted-net-income outlook to between $161.5 million and $169.5 million and its adjusted diluted earnings forecast to between $1.62 and $1.70 a share. It lowered adjusted EBITDA guidance to between $440.5 million and $445.5 million, reflecting the effect of the facility sales, while higher interest income and modestly stronger residential-population expectations supported other adjusted measures.
The company expanded an agreement to sell detention facilities from two properties for $1.5 billion to four for $2.2 billion. The transactions are expected to produce a third-quarter gain of about $1.8 billion, lifting full-year GAAP earnings guidance to between $15.00 and $15.20 a share.
CoreCivic repaid or scheduled repayment of $608.5 million of debt following the sales and expects total debt to fall to about $739.1 million. The board also added $500 million to its repurchase authorization, leaving $755.8 million available. A new five-year ICE contract is expected to reactivate the 1,600-bed Prairie facility and generate about $75 million of annual revenue at full activation in 2027, with little earnings contribution expected this year.