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01/10 20:09
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights several positive aspects: strong financial guidance, increased demand for CoreCivic's services, and potential for significant revenue growth from activating idle facilities. The Q&A session reveals high confidence in resolving legal issues and meeting demand shifts, although some management responses were unclear. Overall, the anticipation of new contracts, strategic investments in transportation, and the potential for substantial revenue from idle beds contribute to a positive outlook. Given the company's market cap, a positive stock price movement of 2% to 8% is likely over the next two weeks.
Total Revenue Increased by 9.8% from the second quarter of 2024 to the second quarter of 2025. This growth was driven by higher federal and state populations, new contracting activity, and higher average per diem rates.
Adjusted EBITDA Increased to $103.3 million, up $19.5 million or 23.2% from the prior year quarter. This increase was attributed to higher federal and state populations, higher per diem rates, and employee retention credits under the CARES Act amounting to $8.3 million.
GAAP EPS $0.35 per share in Q2 2025, compared to $0.20 in Q2 2024, an increase of $0.15 per share or 75%. This was driven by higher federal and state populations and improved operating margins.
Normalized FFO per share $0.59 per share in Q2 2025, compared to $0.42 per share in Q2 2024, an increase of $0.17 per share or 40.5%. This was due to higher occupancy and improved financial performance.
Operating Margin 26.2% in Q2 2025, compared to 23.7% in Q2 2024. The increase was due to higher occupancy and employee retention credits.
Federal Revenue Increased by 11% in Q2 2025 compared to Q2 2024. Revenue from ICE increased by $25.9 million or 17%, and revenue from the U.S. Marshals Service increased by $2.7 million or 3%. This was driven by higher populations and new contracts.
State Revenue Increased by $9.9 million or 5% in Q2 2025 compared to Q2 2024. This was driven by new contracts with the State of Montana and higher per diem rates.
Average Daily Population 54,026 in Q2 2025, compared to 51,541 in Q2 2024, an increase driven by higher demand and new contracts.
Dilley Immigration Processing Center: Resumed operations in Q1 2025 under a new 5-year agreement. Facility is ramping towards full activation by Q3 2025.
California City Immigration Processing Center: Reactivated in Q2 2025 under a Letter Contract with ICE. Facility is preparing to receive detainees in Q3 2025.
Farmville Detention Center: Acquired for $67 million in July 2025. Facility has been operational since 2010 and is integrated into CoreCivic's portfolio.
ICE Detention Population: Nationwide ICE detention populations reached a record high of 57,861 at the end of June 2025, with CoreCivic's ICE populations increasing by 28% year-over-year.
State Contracts: New contracts with the State of Montana contributed to a 3.5% increase in state populations year-over-year.
Revenue Growth: Total revenue increased by 9.8% year-over-year in Q2 2025, driven by higher federal and state populations and new contracts.
Adjusted EBITDA: Increased to $103.3 million in Q2 2025, up 23.2% from the prior year.
Share Repurchases: Repurchased 2 million shares in Q2 2025 at a cost of $43.2 million, bringing year-to-date repurchases to 3.9 million shares.
One Big Beautiful Bill Act: Historic $75 billion funding for ICE and $23 billion for DHS, significantly increasing detention capacity and border security funding through 2029.
Idle Facility Activations: Advanced negotiations to activate additional idle facilities, with potential for increased capacity and revenue.
Legal Challenges: The intake process at the Midwest Regional Reception Center has been delayed due to a lawsuit filed by the city of Leavenworth, alleging that a Special Use Permit is required to operate the facility. This legal dispute creates uncertainty in the timing of operations and revenue generation.
Operational Risks: The activation of idle facilities involves significant start-up expenses, including hiring, training, and preparing facilities to accept residential populations. These costs may negatively impact financial performance before revenue generation begins.
Regulatory and Compliance Risks: The company faces challenges in meeting comprehensive national detention standards and other regulatory requirements, which could impact operations and contract renewals.
Economic and Financial Risks: The company has incurred substantial capital expenditures for facility activations and transportation vehicles, which could strain financial resources if revenue projections are not met. Additionally, the company is exposed to risks related to fluctuating occupancy rates and per diem rates.
Dependence on Government Funding: The company’s operations are heavily reliant on government funding, particularly from ICE and other federal agencies. Any delays or changes in funding allocations could adversely affect operations and financial performance.
Market and Competitive Risks: The company faces competitive pressures from alternative detention solutions, such as soft-sided facilities and other private or public sector options, which could impact its market share and profitability.
Revenue Expectations: Updated full year 2025 financial guidance reflects favorable financial results, with adjusted diluted EPS expected to range from $1.07 to $1.14, normalized FFO per share from $1.99 to $2.07, and adjusted EBITDA from $365 million to $371 million. Revenue from federal partners increased 11% during Q2 2025, with ICE revenue up 17% and U.S. Marshals Service revenue up 3%. State partner revenue increased 5%.
Occupancy Projections: Occupancy for the Safety and Community segments is projected to increase, with total occupancy for Q2 2025 at 76.8%, up 2.5 points from the prior year. Excluding additional capacity, occupancy would have been 79.7%. Average daily population across all facilities increased to 54,026 during Q2 2025, compared to 51,541 in the prior year.
Facility Activations: Reactivation of the Dilley Immigration Processing Center is expected to be fully operational by the end of Q3 2025. The California City Immigration Processing Center is expected to begin receiving detainees in Q3 2025, with a longer-term contract anticipated by the end of Q3. The Midwest Regional Reception Center's intake process is delayed due to a lawsuit, but negotiations for a longer-term contract are ongoing. Advanced negotiations are underway to activate a fourth idle facility, with discussions for a fifth idle facility also initiated.
Capital Expenditures: Capital expenditures for 2025 are projected at $60 million to $65 million for maintenance, $9 million to $10 million for other expenditures, and $70 million to $75 million for potential idle facility activations and additional transportation vehicles. Over $30 million has already been incurred for activations and new vehicles through June 30, 2025.
Government Funding Impact: The One Big Beautiful Bill Act provides $75 billion in mandatory funding to ICE for immigration enforcement and detention capacity, with $45 billion allocated for detention capacity and $30 billion for other expenditures. This funding is expected to drive demand for detention solutions, with ICE contracting activity accelerating. The act also appropriates $23 billion to DHS, $65 billion to CBP, and $12 billion to DOJ for border security and immigration enforcement activities.
State Budget Impacts: State budgets approved for 2025 include mid-single-digit per diem increases across the state portfolio, approximately double the increases obtained last year. Active dialogue with state partners may result in additional populations and use of idle facilities.
Share Repurchase Program: During the second quarter, CoreCivic repurchased 2 million shares of its common stock at an aggregate cost of $43.2 million, increasing year-to-date repurchases to 3.9 million shares at an aggregate cost of $81 million. Since the share repurchase program was announced in May 2022, the company has repurchased 18.5 million shares at a total cost of $262.1 million, with an average price of $14.19 per share. As of June 30, 2025, $237.9 million remained available under the updated Board authorization for share repurchases.
The earnings call summary shows strong revenue growth, increased occupancy, and multiple facility activations, supported by significant government funding. The Q&A section highlights positive hiring conditions, strong capital allocation strategies, and optimistic guidance for future revenue and EBITDA growth. Despite some uncertainties in legal matters and vague management responses, the overall sentiment is positive, with favorable financial metrics and strategic initiatives likely to boost the stock price.
The earnings call highlights several positive aspects: strong financial guidance, increased demand for CoreCivic's services, and potential for significant revenue growth from activating idle facilities. The Q&A session reveals high confidence in resolving legal issues and meeting demand shifts, although some management responses were unclear. Overall, the anticipation of new contracts, strategic investments in transportation, and the potential for substantial revenue from idle beds contribute to a positive outlook. Given the company's market cap, a positive stock price movement of 2% to 8% is likely over the next two weeks.
The earnings call presents a mixed picture: positive financial results with revenue growth and exceeding analyst estimates, but there are concerns about operational risks, supply chain challenges, and reliance on short-term contracts. The share repurchase program is a positive signal, but the lack of long-term contract stability with ICE and unclear management responses in the Q&A section temper the overall sentiment. Given the company's market cap and the balance of positive and negative factors, the stock price reaction is likely to remain neutral in the short term.
The earnings report showed strong financial performance with revenue and net income exceeding expectations, and a successful share repurchase program. The Q&A revealed management's optimism about future opportunities, though some uncertainty remains regarding facility activations and revenue from ICE contracts. The market cap suggests a moderate reaction, so a positive prediction is appropriate.
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