CoreCivic(CXW) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights The company reported strong Q2 2025 results driven by increased government demand, leading to raised full-year guidance and continued capital deployment Second Quarter 2025 Overview CoreCivic's strong Q2 2025 results were driven by rising demand from government partners, prompting raised guidance and strategic capital allocation - CEO Damon T Hininger noted increasing demand from U.S. Immigration and Customs Enforcement (ICE) contributed to a strong second quarter, with nationwide ICE detention populations reaching an all-time high[4] - The company expects substantial increases in utilization of existing capacity due to government funding approved in July and is increasing its 2025 financial guidance[4] - CoreCivic repurchased 2.0 million shares for $43.2 million during Q2 and acquired the Farmville Detention Center for $67 million in Q3[4][5] - COO Patrick Swindle reported substantial progress in re-activating three previously idled facilities to meet additional contracting activity[4] Key Financial Highlights – Second Quarter 2025 | Metric | Q2 2025 Value | YoY Change | | :----------------------------- | :------------ | :--------- | | Total revenue | $538.2 million | +9.8% | | Net income | $38.5 million | +103.4% | | Diluted earnings per share | $0.35 | +105.9% | | Adjusted diluted earnings per share | $0.36 | +80.0% | | Normalized FFO per diluted share | $0.59 | +40.5% | | Adjusted EBITDA | $103.3 million | +23.2% | Second Quarter 2025 Financial Performance The company achieved significant year-over-year growth in revenue and net income, with strong performance across key non-GAAP financial measures Q2 2025 vs Q2 2024 Financial Results Q2 2025 saw significant year-over-year growth in net income and EPS, driven by higher residential populations and employee retention credits Net Income and EPS Comparison | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Net income | $38.5 million | $19.0 million | +102.6% | | Diluted EPS | $0.35 | $0.17 | +105.9% | | Adjusted Net Income | $39.7 million | $21.8 million | +82.1% | | Adjusted Diluted EPS | $0.36 | $0.20 | +80.0% | - The increase in Diluted EPS and Adjusted Diluted EPS was driven by higher federal and state populations, increased per diem rates, and $0.08 per share from employee retention credits (ERCs)[7] - The Dilley Immigration Processing Center contract termination and reactivation resulted in a net revenue reduction of $12.8 million and a $0.07 per share reduction compared to Q2 2024[7][9] - Average daily residential population increased to 54,026 in Q2 2025 from 51,541 in Q2 2024, with average occupancy rising to 76.8%[8] - Revenue from ICE, the largest government partner, increased 17.2% to $176.9 million, while revenue from state customers and the U.S. Marshals Service also grew[9] Non-GAAP Financial Measures Non-GAAP measures like EBITDA and FFO showed strong growth, driven by higher residential populations, ERCs, and lower interest expense EBITDA and Adjusted EBITDA Comparison | Metric | Q2 2025 | Q2 2024 | | :-------------- | :-------- | :-------- | | EBITDA | $101.8 million | $79.8 million | | Adjusted EBITDA | $103.3 million | $83.9 million | FFO and Normalized FFO Comparison | Metric | Q2 2025 | Q2 2024 | | :----------------------------- | :-------- | :-------- | | FFO | $63.5 million | $43.8 million | | FFO per share | $0.58 | $0.39 | | Normalized FFO | $64.6 million | $46.6 million | | Normalized FFO per diluted share | $0.59 | $0.42 | - Increases in EBITDA and Adjusted EBITDA were primarily due to higher residential populations and included $8.3 million of ERCs and $3.2 million of related interest[10] - Normalized FFO benefited from reduced gross interest expense and a 2.1% reduction in weighted average shares outstanding due to repurchases[11] Capital Strategy & Business Development The company expanded its share repurchase program, acquired a new facility, and is actively reactivating several idled centers to meet demand Capital Strategy The company increased its share repurchase authorization, executed significant buybacks, and acquired the Farmville Detention Center - The Board of Directors increased the share repurchase program authorization by $150.0 million, bringing the total to $500.0 million[13] - In the first half of 2025, CoreCivic repurchased 3.9 million shares for $81.0 million, with $237.9 million of authorization remaining as of June 30, 2025[13][14] - On July 1, 2025, the company acquired the 736-bed Farmville Detention Center for $67.0 million[15] - The Farmville acquisition is expected to generate approximately $40.0 million in annual incremental revenue[15] Business Development Updates The company is reactivating key facilities to meet increasing demand, though one facility faces a temporary legal delay - Reactivation of the 2,400-bed Dilley Immigration Processing Center is underway, with full operational capacity expected by the end of Q3 2025[16] - An ICE contract with initial funding up to $10.0 million is in place to activate the 2,560-bed California City Immigration Processing Center, with detainee intake expected soon[17] - An ICE contract with initial funding up to $5.0 million is effective for the activation of the 1,033-bed Midwest Regional Reception Center[18] - Intake at the Midwest facility is delayed by a lawsuit from the City of Leavenworth regarding a Special Use Permit, which CoreCivic is appealing[18] 2025 Financial Guidance & Outlook The company raised its full-year 2025 guidance across all key metrics, reflecting strong performance and strategic acquisitions Full Year 2025 Guidance Full-year 2025 guidance was raised across all key metrics, reflecting strong results and strategic facility activations Revised Full Year 2025 Guidance | Metric | Revised Guidance (Full Year 2025) | Prior Guidance (Full Year 2025) | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $116.4 million to $124.4 million | $91.3 million to $101.3 million | | Adjusted Net Income | $115.5 million to $123.5 million | $91.3 million to $101.3 million | | Diluted EPS | $1.08 to $1.15 | $0.83 to $0.92 | | Adjusted Diluted EPS | $1.07 to $1.14 | $0.83 to $0.92 | | FFO per diluted share | $1.98 to $2.06 | $1.72 to $1.82 | | Normalized FFO per diluted share | $1.99 to $2.07 | $1.72 to $1.82 | | EBITDA | $366.3 million to $372.3 million | $331.0 million to $339.0 million | | Adjusted EBITDA | $365.0 million to $371.0 million | $331.0 million to $339.0 million | - The revised guidance reflects favorable Q2 results, updated occupancy projections, the Farmville acquisition, and the California City facility reactivation[19] - The company expects new contracts to require activation of more idle facilities, with full year benefits likely more impactful to 2026 results[20] Expected 2025 Capital Expenditures | Category | Expected Investment | | :------------------------------------------------ | :-------------------------- | | Maintenance capital expenditures on real estate | $29.0 million to $31.0 million | | Maintenance capital expenditures on other assets & IT | $31.0 million to $34.0 million | | Other capital investments | $9.0 million to $10.0 million | | Capital expenditures for previously idled facilities | $70.0 million to $75.0 million | Company Information & Disclosures This section provides investor resources, company background, and important forward-looking statement disclaimers Supplemental Information & Investor Relations The company provides supplemental financial data online and will host a conference call to discuss Q2 2025 results - Supplemental financial information for Q2 2025 is available on the company's investor relations website[22] - Written materials for investor presentations will be available on the website on or about August 29, 2025[23] - A webcast conference call for Q2 2025 results will be hosted on Thursday, August 7, 2025, at 10:00 a.m. CT[24] About CoreCivic CoreCivic is a diversified government-solutions company and the nation's largest owner of partnership correctional facilities - CoreCivic provides solutions to government partners through corrections and detention management, alternatives to incarceration, and real estate solutions[25] - The company is the nation's largest owner of partnership correctional, detention, and residential reentry facilities, with over 40 years of experience[25] Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties that could cause results to differ materially - The press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[26] - Key risks include changes in government policy, the ability to obtain and maintain contracts, and the timing of new facility activations[26][27] - Additional risks include economic conditions, occupancy levels, competition, inflation, and the availability of financing[27] - The company disclaims any responsibility to update forward-looking statements, except as may be required by law[28] Consolidated Financial Statements The consolidated financial statements detail the company's balance sheet and statements of operations for the period Consolidated Balance Sheets The balance sheet shows an increase in total assets and liabilities as of June 30, 2025, compared to year-end 2024 Consolidated Balance Sheet (Amounts in Thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total current assets | $487,411 | $449,818 | | Total assets | $3,071,657 | $2,931,891 | | Total current liabilities | $303,955 | $285,797 | | Total liabilities | $1,594,125 | $1,438,540 | | Total stockholders' equity | $1,477,532 | $1,493,351 | - Cash and cash equivalents increased to $130,524 thousand at June 30, 2025, from $107,487 thousand at December 31, 2024[31] - Long-term debt, net, increased to $1,006,584 thousand at June 30, 2025, from $973,073 thousand at December 31, 2024[31] Consolidated Statements of Operations The statements of operations show significant year-over-year growth in revenue and net income for Q2 and the first half of 2025 Consolidated Statements of Operations (Amounts in Thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenue | $538,165 | $490,109 | $1,026,792 | $990,795 | | Net Income | $38,543 | $18,954 | $63,656 | $28,497 | | Diluted EPS | $0.35 | $0.17 | $0.58 | $0.25 | - Safety segment revenue for Q2 2025 was $503,339 thousand, up from $455,373 thousand in the prior year, indicating strong core business performance[32] - Interest expense, net, decreased to $12,539 thousand for Q2 2025 from $17,110 thousand in the prior year[32] Supplemental Financial Information & Non-GAAP Reconciliations This section provides detailed reconciliations of GAAP measures to non-GAAP measures like Adjusted Net Income, FFO, and EBITDA Calculation of Adjusted Net Income and Adjusted Diluted EPS This section reconciles GAAP Net Income to Adjusted Net Income and Adjusted Diluted EPS, detailing special item adjustments Calculation of Adjusted Net Income and Adjusted Diluted EPS (Amounts in Thousands) | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :-------- | :-------- | :---------- | :---------- | | Net income | $38,543 | $18,954 | $63,656 | $28,497 | | Special items (net of tax) | $1,111 | $2,797 | $1,111 | $21,113 | | Adjusted net income | $39,654 | $21,751 | $64,767 | $49,610 | | Adjusted Diluted EPS | $0.36 | $0.20 | $0.59 | $0.44 | - Special items in Q2 2025 included $1,538 thousand for M&A expenses, offset by an income tax benefit of $427 thousand[33] Calculation of Funds From Operations and Normalized Funds From Operations This section reconciles Net Income to FFO and Normalized FFO, adjusting for depreciation and other special items Calculation of FFO and Normalized FFO (Amounts in Thousands) | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :-------- | :-------- | :---------- | :---------- | | Net income | $38,543 | $18,954 | $63,656 | $28,497 | | Depreciation & amortization of real estate assets | $24,920 | $24,843 | $49,518 | $49,627 | | Funds From Operations | $63,463 | $43,797 | $113,174 | $77,734 | | Normalized Funds From Operations | $64,574 | $46,594 | $114,285 | $99,237 | | Normalized FFO Per Diluted Share | $0.59 | $0.42 | $1.04 | $0.88 | - Normalized FFO adjusts FFO for special items, including expenses associated with mergers and acquisitions and related income tax benefits[35] Calculation of EBITDA and Adjusted EBITDA This section details the calculation of EBITDA and Adjusted EBITDA from Net Income, adjusting for interest, taxes, and D&A Calculation of EBITDA and Adjusted EBITDA (Amounts in Thousands) | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :-------------------- | :-------- | :-------- | :---------- | :---------- | | Net income | $38,543 | $18,954 | $63,656 | $28,497 | | Interest expense | $18,428 | $20,060 | $36,809 | $42,118 | | Depreciation & amortization | $31,108 | $32,145 | $61,626 | $63,875 | | Income tax expense | $13,716 | $8,625 | $20,693 | $8,125 | | EBITDA | $101,795 | $79,784 | $182,784 | $142,615 | | Adjusted EBITDA | $103,333 | $83,858 | $184,322 | $173,363 | - Adjusted EBITDA excludes expenses associated with debt repayments, refinancing transactions, and mergers and acquisitions[36] Guidance — Calculation of Adjusted Net Income, FFO, Normalized FFO, EBITDA and Adjusted EBITDA This section provides a detailed reconciliation for the company's full-year 2025 non-GAAP financial guidance Full Year 2025 Guidance for Non-GAAP Measures (Amounts in Thousands) | Metric | Low End of Guidance | High End of Guidance | | :------------------------------------ | :------------------ | :------------------- | | Net income | $116,432 | $124,432 | | Adjusted net income | $115,500 | $123,500 | | Funds From Operations | $213,376 | $222,376 | | Normalized Funds From Operations | $215,000 | $224,000 | | Diluted EPS | $1.08 | $1.15 | | Adjusted Diluted EPS | $1.07 | $1.14 | | FFO per diluted share | $1.98 | $2.06 | | Normalized FFO per diluted share | $1.99 | $2.07 | | EBITDA | $366,299 | $372,299 | | Adjusted EBITDA | $365,000 | $371,000 | - Adjustments in the guidance calculation include expenses for M&A, gain on sale of real estate assets, and income tax expense for special items[37] Note to Supplemental Financial Information This note clarifies the purpose of non-GAAP measures and cautions that they should be used to supplement GAAP results - Non-GAAP financial measures are used by management to assess operating performance and are provided to investors for consistent analysis[38] - FFO is a widely accepted non-GAAP supplemental measure for real estate companies and is important for evaluating performance[39] - These non-GAAP measures are useful for assessing performance without the impact of depreciation, tax provisions, and financing strategies[39] - The company cautions that these measures may not be comparable to those of other companies and should not be considered alternatives to GAAP measures[40]