CoreCivic(US:CXW)2023-02-09 20:40Financial Data and Key Metrics Changes - In Q4 2022, the company generated revenue of $471.4 million, a decline of only 0.1% compared to the prior year quarter [44] - Normalized funds from operations (FFO) were $49.1 million or $0.42 per share, down from $57.8 million or $0.48 per share in Q4 2021 [14] - The company reported net income of $0.21 per share and adjusted earnings per share of $0.22 [64] - The average utilization of facilities in Q4 was 66%, up from 50% in Q3 2022 [17] Business Line Data and Key Metrics Changes - The La Palma facility transitioned from federal to state contracts, resulting in a significant increase in workforce and service scope [5] - The transition at La Palma contributed to a $13.1 million or 2.7% reduction in revenue in Q4 compared to the prior year [14] - Occupancy in safety and community facilities was 71.1% in Q4 2022, slightly down from 72.5% in the prior quarter [36] Market Data and Key Metrics Changes - Utilization by federal partners, particularly ICE, increased nearly 26% in October 2022 [22] - Despite improvements, overall ICE detainee populations remain well below historical levels due to ongoing Title 42 restrictions [93] Company Strategy and Development Direction - The company aims to diversify away from prison contracts with the Bureau of Prisons (BOP) and is exploring new contracts with various government partners [27][56] - The capital allocation strategy focuses on reducing debt and executing share repurchase programs, with a commitment to maintaining a targeted leverage ratio of 2.25 to 2.75 times [31][63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about increased demand from government partners as COVID-19 restrictions are lifted [15] - The company anticipates a gradual recovery in occupancy levels and financial performance throughout 2023, despite not expecting a surge in ICE detainees [97] Other Important Information - The company celebrated its 40th anniversary, highlighting its long-standing commitment to the correctional system [11] - The company reduced its debt balance by $287.4 million during 2022, with no debt maturities until April 2026 [31][61] Q&A Session Summary Question: Can you provide an update on guaranteed minimum contracts with ICE? - Management indicated meaningful discussions with ICE regarding future needs and potential contract adjustments, emphasizing the importance of maintaining capacity [78][79] Question: What is the status of the California facility lease termination? - Management expressed confidence in the potential reversal of the lease termination decision based on ongoing communications with state officials [84] Question: How should Title 42 be viewed in 2023? - Management acknowledged uncertainty surrounding Title 42 but indicated readiness for potential changes, emphasizing ongoing discussions with ICE [82][108] Question: What are the expectations for net operating margins in 2023? - Management expects margins to improve as occupancy increases but does not anticipate reaching pre-pandemic levels in 2023 [126]