CoreCivic ((CXW)) has held its Q1 earnings call. Read on for the main highlights of the call.
CoreCivic’s recent earnings call conveyed a generally positive sentiment, underscored by strong financial performance and significant contract activity, particularly with ICE. While there were some revenue declines from terminated contracts, the growth in facility utilization and successful reactivations suggest a promising outlook for the company.
Record Revenue and Facility Utilization
CoreCivic reported a first-quarter revenue of $488.6 million, surpassing expectations. The company also saw an improvement in facility utilization, which increased to 77% from 75.2% in the previous year. This improvement reflects the company’s strategic efforts to enhance operational efficiency and maximize resource utilization.
Significant Contracting Activity
The earnings call highlighted CoreCivic’s substantial contracting activity, including modifications for multiple facilities such as the Northeast Ohio Correctional Center and the Dilley Immigration Processing Center. These modifications could potentially add up to 7,000 beds under contract, indicating a robust demand for CoreCivic’s services.
ICE Facility Activations
CoreCivic successfully reactivated the Dilley Immigration Processing Center and entered into letter contracts with ICE for two additional facilities: the Midwest Regional Reception Center and the California City Immigration Processing Center. These activations are expected to bolster the company’s operational capacity and revenue streams.
Financial Performance Exceeding Expectations
The company’s first-quarter net income and funds from operations (FFO) per share exceeded analyst estimates, prompting an increase in full-year financial guidance. This performance underscores CoreCivic’s ability to navigate challenges and capitalize on opportunities in the market.
Revenue Declines from Terminated Contracts
Despite the overall positive performance, CoreCivic experienced revenue declines due to the termination of the ICE contract at the South Texas Family Residential Center and a lease expiration with the State of California. These factors contributed to a $22.6 million decrease in facility net operating income.
Challenges in Federal Revenue
CoreCivic faced challenges in federal revenue, with a decrease of $21.1 million in its safety and community segments compared to the previous year. This decline highlights the ongoing challenges in securing federal contracts and maintaining revenue streams in these segments.
Forward-Looking Guidance
During the earnings call, CoreCivic provided updated financial guidance for 2025, reflecting optimism about future growth. The company exceeded expectations with first-quarter revenue of $488.6 million and an EBITDA of $81 million. Facility utilization improved significantly, and the company reported an increase in adjusted funds from operations (AFFO) ranging from $187.5 million to $200.5 million for 2025. CoreCivic also revised its full-year financial guidance, projecting diluted EPS between $0.83 to $0.92 and FFO per share of $1.72 to $1.82.
In summary, CoreCivic’s earnings call painted a generally positive picture, with strong financial performance and significant contract activity driving optimism. Despite some revenue challenges from terminated contracts, the company’s strategic initiatives in facility utilization and ICE facility activations suggest a promising outlook. Investors and stakeholders can look forward to continued growth and improved financial metrics in the coming year.