CoreCivic(CXW) - 2024 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION ITEM 1. – FINANCIAL STATEMENTS Presents CoreCivic's unaudited consolidated financial statements and detailed notes for periods ended Sep 30, 2024, and Dec 31, 2023 Consolidated Balance Sheets | ASSETS / LIABILITIES AND STOCKHOLDERS' EQUITY | September 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------------------------- | :-------------------------------- | :------------------------------- | | Total current assets | $416,120 | $474,914 | | Total assets | $2,913,942 | $3,105,399 | | Total current liabilities | $274,702 | $297,454 | | Total liabilities | $1,437,722 | $1,627,833 | - Total assets decreased from $3,105,399 thousand at December 31, 2023, to $2,913,942 thousand at September 30, 2024. Total liabilities also decreased from $1,627,833 thousand to $1,437,722 thousand over the same period[5] Consolidated Statements of Operations | Metric (in thousands, except per share) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | REVENUE | $491,558 | $483,705 | $1,482,353 | $1,405,389 | | NET INCOME | $21,096 | $13,892 | $49,593 | $41,122 | | BASIC EARNINGS PER SHARE | $0.19 | $0.12 | $0.45 | $0.36 | | DILUTED EARNINGS PER SHARE | $0.19 | $0.12 | $0.44 | $0.36 | - Net income for the three months ended September 30, 2024, increased by 51.8% to $21,096 thousand from $13,892 thousand in the prior year period. For the nine months, net income increased by 20.6% to $49,593 thousand from $41,122 thousand[6] Consolidated Statements of Cash Flows | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $229,880 | $209,577 | | Net cash used in investing activities | $(34,797) | $(39,214) | | Net cash used in financing activities | $(206,475) | $(214,617) | | Net decrease in cash, cash equivalents and restricted cash | $(11,392) | $(44,254) | - Net cash provided by operating activities increased by $20.3 million (9.7%) for the nine months ended September 30, 2024, compared to the same period in 2023[7] Consolidated Statement of Stockholders' Equity (2024) | Metric (in thousands) | Balance as of Dec 31, 2023 | Balance as of Sep 30, 2024 | | :-------------------- | :------------------------- | :------------------------- | | Common Shares | 112,733 | 110,271 | | Total Stockholders' Equity | $1,477,566 | $1,476,220 | - Total stockholders' equity remained relatively stable, decreasing slightly from $1,477,566 thousand at December 31, 2023, to $1,476,220 thousand at September 30, 2024, despite common stock retirements[9] Consolidated Statement of Stockholders' Equity (2023) | Metric (in thousands) | Balance as of Dec 31, 2022 | Balance as of Sep 30, 2023 | | :-------------------- | :------------------------- | :------------------------- | | Common Shares | 114,988 | 113,605 | | Total Stockholders' Equity | $1,432,408 | $1,458,302 | - Total stockholders' equity increased from $1,432,408 thousand at December 31, 2022, to $1,458,302 thousand at September 30, 2023, driven by net income and restricted stock compensation, partially offset by common stock retirements[11] Notes to Consolidated Financial Statements 1. Organization and Operations - CoreCivic operates through three segments: CoreCivic Safety (42 correctional/detention facilities, ~62,000 beds), CoreCivic Community (21 residential reentry centers, ~4,000 beds), and CoreCivic Properties (6 leased properties, ~10,000 beds)[13] - The company provides correctional, detention, and reentry services, including rehabilitation, educational programs, health care, food services, and work/recreational programs aimed at reducing recidivism[14] 2. Basis of Presentation and Summary of Significant Accounting Policies - The Private Prison Executive Order (EO) issued by President Biden in January 2021 directs the Attorney General not to renew DOJ contracts with privately operated criminal detention facilities. The USMS, a DOJ agency, accounted for 21% of CoreCivic's total revenue for the nine months ended September 30, 2024, and the twelve months ended December 31, 2023[16] - One direct USMS contract was renewed until September 2028 due to lack of alternative bed capacity, while another expires in October 2025, with its outcome uncertain[17] - CoreCivic is evaluating the impact of new FASB ASUs (2023-07 on segment disclosures, 2023-09 on income tax disclosures) and SEC Climate Disclosure Rules, with expected adoption in 2024/2025[19][20][21] 3. Real Estate and Other Transactions - CoreCivic completed the sale of an idled 390-bed facility in Oklahoma for $3.4 million (gain of $1.2 million) and a facility in Colorado for $8.0 million (gain of $0.5 million) in 2024, along with an unused land parcel for $0.2 million (gain of $0.1 million)[25] - As of September 30, 2024, CoreCivic had nine idle correctional facilities with a total design capacity of 13,419 beds and a net carrying value of $317.6 million, incurring $4.0 million in operating expenses during Q3 2024 while idle[27][28] - ICE terminated the inter-governmental service agreement (IGSA) for the 2,400-bed South Texas Family Residential Center (STFRC) effective August 9, 2024, leading to a $57.0 million lease liability remeasurement and a $3.1 million asset impairment charge[31][33] 4. Debt | Debt Instrument (in thousands) | September 30, 2024 | December 31, 2023 | | :----------------------------- | :----------------- | :---------------- | | Term Loan | $120,312 | $125,000 | | 4.75% Senior Notes | $243,068 | $243,068 | | 8.25% Senior Notes (Old) | — | $593,113 | | 8.25% Senior Notes (New) | $500,000 | — | | Lansing Mortgage Note | $141,536 | $145,510 | | Total debt | $1,004,916 | $1,106,691 | - CoreCivic refinanced its debt by tendering and redeeming $593.1 million of Old 8.25% Senior Notes and issuing $500.0 million of New 8.25% Senior Notes due 2029, incurring $31.3 million in associated charges[41][43] - The Bank Credit Facility was amended in October 2023, increasing the Revolving Credit Facility to $275.0 million and the Term Loan to $125.0 million, with interest rate spreads declining based on the company's leverage ratio[36][38] 5. Stockholders' Equity - The Board of Directors increased the share repurchase program authorization by an additional $125.0 million in May 2024, bringing the total authorized amount to $350.0 million[49] | Share Repurchase Program | Through Dec 31, 2023 | Nine Months Ended Sep 30, 2024 | As of Sep 30, 2024 | | :----------------------- | :------------------- | :----------------------------- | :----------------- | | Shares Repurchased | 10.1 million | 4.0 million | 14.1 million | | Total Cost | $112.6 million | $59.5 million | $172.1 million | | Average Price Per Share | $11.16 | $14.80 | $12.20 | | Authorization Available | - | - | $177.9 million | - During the nine months ended September 30, 2024, CoreCivic issued approximately 1.6 million restricted common stock units (RSUs) with an aggregate value of $23.5 million and expensed $18.7 million (net of forfeitures) related to RSUs[50][54] 6. Earnings Per Share | EPS Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic EPS | $0.19 | $0.12 | $0.45 | $0.36 | | Diluted EPS| $0.19 | $0.12 | $0.44 | $0.36 | | Weighted Average Common Shares Outstanding (Basic) | 110,271 | 113,605 | 111,174 | 113,919 | | Weighted Average Shares and Assumed Conversions (Diluted) | 110,971 | 114,407 | 111,994 | 114,605 | 7. Commitments and Contingencies - CoreCivic faces various legal claims, including those related to employee/offender misconduct, medical malpractice, and contractual compliance, maintaining insurance to mitigate risk[58] - A class action lawsuit regarding ICE detainee labor at the Otay Mesa Detention Center is ongoing, with the company unable to reasonably predict the outcome or estimate potential loss at this stage[61][62] - The U.S. Department of Justice commenced an investigation into conditions at the Trousdale Turner Correctional Center in August 2024, with CoreCivic cooperating[63] 8. Income Taxes | Income Tax Expense (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income tax expense | $(9,084) | $(5,635) | $(17,209) | $(17,957) | - The company recognized an excise tax of $0.4 million and $0.1 million during the nine months ended September 30, 2024 and 2023, respectively, associated with net stock repurchases under the Inflation Reduction Act[65] - CoreCivic had no liabilities recorded for uncertain tax positions as of September 30, 2024, and December 31, 2023[68] 9. Segment Reporting | Segment Performance (in thousands) | Q3 2024 Revenue | Q3 2023 Revenue | YTD 2024 Revenue | YTD 2023 Revenue | | :--------------------------------- | :-------------- | :-------------- | :--------------- | :--------------- | | Safety | $459,270 | $443,324 | $1,372,389 | $1,282,717 | | Community | $28,203 | $29,791 | $88,405 | $84,569 | | Properties | $4,085 | $10,477 | $21,540 | $37,888 | | Total Segment Revenue | $491,558 | $483,592 | $1,482,334 | $1,405,174 | | Segment Net Operating Income (in thousands) | Q3 2024 NOI | Q3 2023 NOI | YTD 2024 NOI | YTD 2023 NOI | | :------------------------------------------ | :---------- | :---------- | :----------- | :----------- | | Safety | $115,847 | $92,378 | $330,747 | $267,647 | | Community | $3,590 | $6,523 | $15,514 | $15,681 | | Properties | $1,322 | $7,410 | $11,480 | $28,136 | | Total Facility Net Operating Income | $120,759 | $106,311 | $357,741 | $311,464 | | Segment Capital Expenditures (in thousands) | YTD 2024 | YTD 2023 | | :------------------------------------------ | :------- | :------- | | Safety | $35,099 | $30,227 | | Community | $3,286 | $1,097 | | Properties | $2,063 | $1,122 | | Corporate and other | $6,714 | $7,797 | | Total Capital Expenditures | $47,162 | $40,243 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses CoreCivic's financial condition and operational results, covering segment analysis, liquidity, and non-GAAP measures Overview - CoreCivic is a diversified government solutions company operating through CoreCivic Safety, Community, and Properties segments, managing correctional, detention, and residential reentry facilities[77] - For the nine months ended September 30, 2024, USMS and ICE accounted for 21% ($303.9 million) and 30% ($444.5 million) of total revenue, respectively[82] - The expiration of Title 42 on May 11, 2023, led to an increase in ICE detainees, but revenue from ICE was negatively impacted in Q3 and YTD 2024 by the termination of the STFRC contract[85] - CoreCivic secured new management contracts in late 2023 and 2024 with Hinds County, Mississippi, the state of Wyoming, Harris County, Texas, and the state of Montana, utilizing facilities like Tallahatchie and Saguaro[86] Critical Accounting Policies and Estimates - No newly identified critical accounting policies or material changes to existing policies were reported during the first nine months of 2024[88] - Key critical accounting policies include those related to idle facilities and asset impairments, self-funded insurance reserves, and legal reserves[88] Results of Operations Overall Financial Performance | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :----- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $21.1 million | $13.9 million | $49.6 million | $41.1 million | | Diluted EPS| $0.19 | $0.12 | $0.44 | $0.36 | - Financial results for Q3 and YTD 2024 include gains on real estate sales ($1.2 million and $1.7 million, respectively) and asset impairments ($3.1 million). YTD 2024 also reflects $31.3 million in debt repayment/refinancing expenses[91] Current Operations by Segment | Segment Net Operating Income Distribution | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :---------------------------------------- | :------ | :------ | :------- | :------- | | Safety | 94.3% | 85.2% | 90.9% | 84.2% | | Community | 2.9% | 6.0% | 4.2% | 4.9% | | Properties | 2.8% | 8.8% | 4.9% | 10.9% | - CoreCivic Safety significantly increased its contribution to total segment net operating income, rising from 85.2% in Q3 2023 to 94.3% in Q3 2024[94] Facility Operations Metrics | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :----- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue per compensated man-day | $102.56 | $98.66 | $101.69 | $97.52 | | Operating expenses per compensated man-day | $77.02 | $77.67 | $77.16 | $77.01 | | Operating income per compensated man-day | $25.54 | $20.99 | $24.53 | $20.51 | | Operating margin | 24.9% | 21.3% | 24.1% | 21.0% | | Average compensated occupancy | 75.2% | 72.0% | 74.9% | 70.8% | - Operating margin improved from 21.3% to 24.9% in Q3 YoY and from 21.0% to 24.1% YTD YoY, driven by increased revenue per compensated man-day and stable operating expenses[96] Revenue Analysis | Revenue Source (in millions) | Q3 2024 | Q3 2023 | % Change Q3 | YTD 2024 | YTD 2023 | % Change YTD | | :--------------------------- | :------ | :------ | :---------- | :------- | :------- | :----------- | | Total management revenue | $487.5 | $473.1 | 3.0% | $1,460.8 | $1,367.3 | 6.8% | | Lease revenue | $4.1 | $10.5 | (61.0%) | $21.5 | $37.9 | (43.3%) | | Total revenue | $491.6 | $483.7 | 1.6% | $1,482.4 | $1,405.4 | 5.5% | - Total management revenue increased due to a 4.0% (Q3) and 4.3% (YTD) increase in average revenue per compensated man-day, primarily from per diem increases[102] - Lease revenue decreased significantly due to the termination of the California City Correctional Center lease (March 2024) and North Fork Correctional Facility lease (June 2023), partially offset by the new Allen Gamble Correctional Center lease (October 2023)[110] Operating Expenses Analysis | Operating Expenses (in millions) | Q3 2024 | Q3 2023 | % Change Q3 | YTD 2024 | YTD 2023 | % Change YTD | | :------------------------------- | :------ | :------ | :---------- | :------- | :------- | :----------- | | Total Operating Expenses | $370.8 | $377.3 | (1.7%) | $1,124.7 | $1,093.9 | 2.8% | - Q3 2024 operating expenses decreased primarily due to the new lease of Allen Gamble Correctional Center and the termination of the STFRC IGSA, allowing for reduced operating expenses[112] - YTD 2024 operating expenses increased due to wage increases from labor shortages and pressures, partially offset by a $9.2 million reduction in temporary incentives[114] - Variable expenses per compensated man-day decreased by 8.8% in Q3 and 6.7% YTD, mainly due to reductions in registry nursing, recruiting, and travel expenses[117] Facility Management Contracts - Facility management contracts typically range from three to five years with renewal options, but government partners can terminate for non-appropriation of funds or convenience[121] - The Private Prison EO impacts DOJ agencies like USMS, which accounted for 21% of total revenue. One USMS contract was renewed until 2028, while another expires in October 2025[122][123] - The management contract for the Elizabeth Detention Center (300 beds) is scheduled to expire November 30, 2024, with three one-month extension options, generating $14.6 million in revenue YTD 2024[124] CoreCivic Safety Segment Performance | CoreCivic Safety Performance (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----------------------------------------- | :------ | :------ | :------- | :------- | | Total Revenue | $459.3 | $443.3 | $1,372.4 | $1,282.7 | | Facility Net Operating Income | $115.8 | $92.4 | $330.7 | $267.6 | | Operating Margin | 25.2% | 20.8% | 24.1% | 20.9% | - Operating margins in CoreCivic Safety improved due to a 4.1% (Q3) and 4.0% (YTD) increase in average revenue per compensated man-day and decreased variable operating expenses[127] - The termination of the STFRC contract negatively impacts future operating margins, despite a temporary positive impact in Q3 2024 due to accelerated deferred revenue recognition and rapid expense reduction[128][129] - New management contracts at Tallahatchie and Saguaro facilities with Hinds County, Wyoming, Harris County, and Montana contributed to increased occupancy and revenue[131][132] CoreCivic Community Segment Performance | CoreCivic Community Performance (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :-------------------------------------------- | :------ | :------ | :------- | :------- | | Total Revenue | $28.2 | $29.8 | $88.4 | $84.6 | | Facility Net Operating Income | $3.6 | $6.5 | $15.5 | $15.7 | | Operating Margin | 17.3% | 30.5% | 24.5% | 24.8% | - Operating margins in CoreCivic Community were negatively impacted by increased operating expenses per compensated man-day, driven by higher staffing levels, wage rates, and a legal matter settlement[135] - The company completed the sale of the 120-bed Dahlia Facility in January 2024 for $8.0 million (gain of $0.5 million) and the idled 390-bed Tulsa Transitional Center in July 2024 for $3.4 million (gain of $1.2 million)[136][137] CoreCivic Properties Segment Performance | CoreCivic Properties Performance (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--------------------------------------------- | :------ | :------ | :------- | :------- | | Total Revenue | $4.1 | $10.5 | $21.5 | $37.9 | | Facility Net Operating Income | $1.3 | $7.4 | $11.5 | $28.1 | | Segment Net Operating Income Contribution | 2.8% | 8.8% | 4.9% | 10.9% | - Revenue and net operating income decreased significantly due to the termination of the California City Correctional Center lease (March 2024) and North Fork Correctional Facility lease (June 2023), and the sale of three leased properties in 2023[138][139][140][142] - The new lease agreement for the Allen Gamble Correctional Center, effective October 1, 2023, contributed $1.9 million in revenue and $1.4 million in net operating income in Q3 2024[141] General and Administrative Expenses | G&A Expenses (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :------------------------- | :------ | :------ | :------- | :------- | | General and administrative expenses | $41.2 | $33.9 | $111.5 | $99.2 | - G&A expenses increased primarily due to higher corporate salaries and incentive-based compensation[143] Depreciation and Amortization | D&A Expenses (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :------------------------- | :------ | :------ | :------- | :------- | | Depreciation and amortization | $32.2 | $32.5 | $96.1 | $95.2 | - Depreciation and amortization expense increased in the nine-month period due to renovations completed in 2023, partially offset by facility sales[144] Asset Impairments - A $3.1 million impairment charge was recognized in Q3 2024 due to the termination of the STFRC IGSA and lease agreement[145] - A $2.7 million contract acquisition asset impairment was recognized in Q3 2023 due to the termination of an agreement with a technology vendor[145] Interest Expense, Net and Debt Repayments and Refinancing Transactions - Net interest expense decreased in Q3 and YTD 2024 primarily due to $76.2 million in debt repayments since September 30, 2023, and an increase in interest income[148] - The company incurred $31.3 million in charges during the nine months ended September 30, 2024, related to the Tender Offer and redemption of Old 8.25% Senior Notes[151] - Interest rate spreads on the Bank Credit Facility declined in Q2 and Q3 2024 based on the company's total leverage ratio[152] Gain on Sale of Real Estate Assets, Net - Q3 2024 gain includes $1.2 million from the sale of the Tulsa Transitional Center. YTD 2024 gain includes $0.5 million from the sale of the Dahlia Facility and $0.1 million from unused land[153] - Q3 2023 gain includes $0.4 million from the sale of a vacant parcel of land[154] Income Tax Expense | Income Tax Expense (in millions) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :------------------------------- | :------ | :------ | :------- | :------- | | Income tax expense | $9.1 | $5.6 | $17.2 | $18.0 | - YTD 2024 income tax expense includes a $10.2 million benefit for special items (asset impairments, debt refinancing, net of asset sales) and a benefit from stock-based compensation vesting[155] - The effective tax rate can fluctuate based on estimates of taxable income, tax planning, federal/state tax rates, deductible expenses, uncertain tax positions, and state apportionment factors[156] Liquidity and Capital Resources Capital Requirements and Strategy - Post-REIT conversion (effective Jan 1, 2021), CoreCivic prioritizes free cash flow for debt repayment and discretionary capital returns (share repurchases/dividends)[157] - The share repurchase program was increased to $350.0 million in May 2024. As of September 30, 2024, $172.1 million had been used to repurchase 14.1 million shares, with $177.9 million remaining[159] - Due to the STFRC contract termination, the company intends to prioritize debt reduction, though share repurchases remain discretionary[159] - Growth opportunities include new developments in the Properties segment, expansion of non-residential correctional alternatives in the Community segment, and potential acquisitions[160] Cash Position and Debt Maturities - As of September 30, 2024, CoreCivic had $107.9 million cash on hand and $257.0 million available under its Revolving Credit Facility[162] - The company has no debt maturities until October 2027, with a total weighted average effective interest rate of 7.4% and weighted average maturity of 5.6 years as of September 30, 2024[164][165] Operating Activities Cash Flow - Net cash provided by operating activities was $229.9 million for the nine months ended September 30, 2024, up from $209.6 million in the prior year[168] - The increase was favorably impacted by a $46.3 million increase in facility net operating income, partially offset by an $8.1 million decline in working capital and a $5.4 million increase in non-cash revenue[168] Investing Activities Cash Flow - Net cash used in investing activities was $34.8 million for the nine months ended September 30, 2024, compared to $39.2 million in the prior year[169] - This includes $7.3 million for facility development/expansions and $41.6 million for capital improvements, partially offset by $11.9 million in net proceeds from asset sales[169] Financing Activities Cash Flow - Net cash used in financing activities was $206.5 million for the nine months ended September 30, 2024, primarily due to $593.1 million in debt repayments (Old 8.25% Senior Notes tender/redemption) and $34.9 million in debt-related costs[170] - Financing activities were partially offset by $500.0 million in gross proceeds from the issuance of New 8.25% Senior Notes[170] - The company also used $69.2 million for its share repurchase program and common stock retirement for equity-based compensation[170] Supplemental Guarantor Information - All domestic subsidiaries of CoreCivic that guarantee the Bank Credit Facility also provide full and unconditional guarantees for the Senior Notes[173] - As of September 30, 2024, there were no material restrictions on CoreCivic's ability to obtain funds or transfer assets from its subsidiaries[174] | Summarized Financial Information (in thousands) | December 31, 2023 | | :---------------------------------------------- | :---------------- | | Current assets | $460,475 | | Total non-current assets | $2,498,975 | | Current liabilities | $284,886 | | Total long-term liabilities | $1,192,852 | | Summarized Financial Information (in thousands) | Nine Months Ended Sep 30, 2024 | | :---------------------------------------------- | :----------------------------- | | Revenue | $1,480,277 | | Total expenses | $1,331,282 | | Net income | $46,013 | Funds from Operations - Funds From Operations (FFO) and Normalized FFO are non-GAAP measures used to evaluate the operating performance of real estate companies[181][182] | FFO & Normalized FFO (in thousands) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :---------------------------------- | :------ | :------ | :------- | :------- | | Net income | $21,096 | $13,892 | $49,593 | $41,122 | | Funds From Operations | $47,122 | $38,468 | $124,856 | $114,085 | | Normalized Funds From Operations | $47,602 | $40,462 | $146,839 | $117,167 | Material Cash Requirements | Contractual Cash Obligations (in thousands) | 2024 (remainder) | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | | :---------------------------------------- | :--------------- | :------ | :------ | :-------- | :------ | :--------- | :---------- | | Long-term debt | $2,936 | $12,073 | $15,701 | $262,423 | $97,995 | $613,788 | $1,004,916 | | Interest on senior and mortgage notes | $27,965 | $58,910 | $58,644 | $58,355 | $46,497 | $52,796 | $303,167 | | Contractual facility developments and other commitments | $1,018 | $3,155 | — | — | — | — | $4,173 | | Leases | $1,390 | $5,388 | $4,954 | $4,270 | $3,832 | $11,811 | $31,645 | | Total contractual cash obligations | $33,309 | $79,526 | $79,299 | $325,048 | $148,324| $678,395 | $1,343,901 | - The company had $18.0 million in letters of credit outstanding as of September 30, 2024, primarily for workers' compensation and debt service reserves[187] Inflation - Many contracts include inflationary indexing provisions to mitigate the impact of inflation on net income[188] - Substantial increases in personnel, workers' compensation, utilities, food, and medical expenses could adversely impact results if they outpace per diem or fixed rates[188] Seasonality and Quarterly Results - Financial results are impacted by the number of calendar days in a quarter, with Q3 and Q4 typically having more days than Q1 and Q2[189] - Quarterly results are also affected by government funding, acquisitions, new facility openings, and start-up expenses[189] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company's primary market risk is exposure to U.S. interest rate changes, particularly affecting its variable-rate Bank Credit Facility - Primary market risk exposure is to changes in U.S. interest rates, affecting the variable-rate Bank Credit Facility[190] - A hypothetical 100 basis point increase or decrease in interest rates would change net interest expense by $0.3 million for the three months and $1.0 million for the nine months ended September 30, 2024[190] - Fixed-rate debt (4.75% Senior Notes, New 8.25% Senior Notes, Kansas Notes) is not materially impacted by changes in market interest rates[191] ITEM 4. CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of September 30, 2024[193] - No material changes in internal control over financial reporting occurred during the period covered by the report[193] PART II – OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Detailed information on legal proceedings, including ongoing litigation and investigations, is incorporated by reference from Note 7 - Information on legal proceedings is incorporated by reference from Note 7 to the financial statements[195] ITEM 1A. RISK FACTORS No material changes to risk factors were reported compared to those disclosed in the 2023 Form 10-K - No material changes in risk factors were reported compared to those disclosed in the 2023 Form 10-K[196] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Details the company's share repurchase program, including shares repurchased, total cost, and remaining authorization, with a focus on debt reduction | Share Repurchase Program | Total as of Sep 30, 2024 | | :----------------------- | :----------------------- | | Shares Repurchased | 14.1 million | | Aggregate Cost | $172.1 million | | Authorization Available | $177.9 million | - The Board of Directors increased the share repurchase program authorization to $350.0 million on May 16, 2024[197] - No shares were repurchased during the third quarter of 2024. The company plans to prioritize debt reduction due to the impact of the STFRC contract termination on leverage ratios[197] ITEM 3. DEFAULTS UPON SENIOR SECURITIES CoreCivic reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[198] ITEM 4. MINE SAFETY DISCLOSURES CoreCivic reported no mine safety disclosures - No mine safety disclosures were reported[198] ITEM 5. OTHER INFORMATION No other material information was reported, including no Rule 10b5-1 trading arrangements by directors or officers - No other material information was reported, including no Rule 10b5-1 trading arrangement adoptions or terminations by directors or officers[199] ITEM 6. EXHIBITS Lists all exhibits filed with the Form 10-Q, including guarantor subsidiaries, CEO/CFO certifications, and Inline XBRL documents - Exhibits include a list of Guarantor Subsidiaries, CEO and CFO certifications (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL documents[200][201] SIGNATURES The report is duly signed by the President and CEO, and the Executive Vice President, CFO, and Secretary of CoreCivic, Inc - The report is signed by Damon T. Hininger, President and Chief Executive Officer, and David M. Garfinkle, Executive Vice President, Chief Financial Officer, and Secretary[202][203]