NASHVILLE, TN--(Marketwire - May 4, 2011) - CCA (NYSE: CXW) (the "Company" or
"Corrections Corporation of America"), America's leader in partnership
corrections and the nation's largest provider of corrections management
services to government agencies, announced today its financial results for
the first quarter ended March 31, 2011.
Financial Review - First Quarter 2011 Compared with First Quarter 2010
-- Diluted EPS up 23.3% to $0.37 from $0.30
-- Net income up 15.5% to $40.3 million from $34.9 million
-- EBITDA increased 13.4% to $110.5 million from $97.4 million
-- Adjusted Funds From Operations Per Diluted Share up 22.1%
to $0.83 from $0.68
For the first quarter of 2011, CCA generated net income of $40.3 million,
or $0.37 per diluted share, compared with net income of $34.9 million, or
$0.30 per diluted share, for the first quarter of 2010.
Total management revenue for the first quarter of 2011 increased 5.5% to
$426.6 million from $404.4 million during the first quarter of 2010,
primarily driven by a 5.8% increase in average daily inmate populations.
Management revenue from our federal partners increased 5.9% to $182.4
million generated during the first quarter of 2011 compared with $172.2
million generated during the prior year period. The increase in federal
revenue primarily resulted from the commencement of a new contract with the
U.S. Marshals Service (USMS) at our Nevada Southern Detention Center
combined with higher USMS populations in certain facilities predominantly
located in the southwestern region of the United States. Per diem
increases associated with certain federal contracts, which are generally
received during the fourth quarter, also contributed to the improvement in
federal revenues. These increases were partially offset by the September
30, 2010 expiration of the contract with the Federal Bureau of Prisons
(BOP) at our California City Correctional Center.
Management revenue from our state partners increased 5.7% to $216.3 million
during the first quarter of 2011 compared with $204.7 million during the
first quarter of 2010. State revenue increased primarily as a result of
higher inmate populations from the state of California and from the two
expansions in Georgia we completed in May 2010, combined with the
commencement of two new contracts during the third quarter of 2010 at
managed-only facilities in Florida. The increases in populations were
partially offset by reductions in inmate populations from the state of
Arizona.
Operating income increased 15.1% to $83.5 million during the first quarter
of 2011 compared to $72.5 million during the first quarter of 2010. The
improvement in operating income was due to an increase in revenues combined
with a $4.1 million charge incurred during the first quarter of 2010 for
bonuses paid to non-management level staff in lieu of wage increases. The
improvement in operating income was partially offset by an increase in
general and administrative expenses which was largely due to an increase in
incentive compensation in 2011 compared to the first quarter of 2010, and
an increase in depreciation and amortization resulting from the completion
of our Nevada Southern Detention Center.
EBITDA for the first quarter of 2011 increased 13.4% to $110.5 million from
$97.4 million during the first quarter of 2010. Funds From Operations
increased 12.9% to $95.5 million during the first quarter of 2011 from
$84.6 million in the prior year quarter. Adjusted Funds From Operations,
which includes maintenance and technology capital expenditures, for the
first quarter of 2011 increased to $90.7 million compared with $79.2
million during the prior year period. Adjusted Funds From Operations per
diluted share improved to $0.83 during the first quarter of 2011 from $0.68
per diluted share in the first quarter 2010. Our per share results were
favorably impacted by our share repurchase program.
Our total average daily compensated population increased 5.8% to 80,946 in
the first quarter of 2011 from 76,490 in the first quarter of 2010. Our
total portfolio occupancy decreased slightly to 89.9% during the first
quarter of 2011 from 90.5% during the first quarter of 2010. The decline
in occupancy is due to a 6.5% increase in our average number of available
beds to 90,037 during the first quarter of 2011 from 84,520 during the
prior year quarter. The increase in average available beds was due to the
completion of our Nevada Southern Detention Center in September 2010, which
began receiving detainees in October 2010, and the completed expansions in
May 2010 of our Coffee and Wheeler facilities located in Georgia.
EBITDA, Funds From Operations, Adjusted Funds From Operations, and their
corresponding per share amounts, are measures calculated and presented on
the basis of methodologies other than in accordance with generally accepted
accounting principles (GAAP). Please refer to the Supplemental Financial
Information and related note following the financial statements herein for
further discussion and reconciliations of these measures to GAAP measures.
Commenting on the first quarter financial results, Chief Executive Officer,
Damon Hininger, stated, "We are very pleased with our first quarter
financial results, as we continue to generate meaningful growth in revenue,
earnings per share and Funds From Operations. We believe the share
repurchase program and our cost containment initiatives have benefitted our
financial results during a difficult economy."
Hininger continued, "Although budgetary challenges for our government
partners remain, we are encouraged by the opportunities that could arise as
certain states consider efficiency and savings opportunities provided by
the partnership corrections industry."
Operations Highlights
For the quarters ended March 31, 2011 and 2010, key operating statistics
for the continuing operations (i.e. excluding discontinued operations) of
CCA were as follows:
Quarter Ended March 31,
Metric 2011 2010 % Change
--------- --------- ------
Average Available Beds 90,037 84,520 6.5%
Average Compensated Occupancy 89.9% 90.5% -0.7%
Total Compensated Man-Days 7,285,140 6,884,079 5.8%
Average Daily Compensated Population 80,946 76,490 5.8%
Revenue per Compensated Man-Day $ 58.56 $ 58.74 -0.3%
Operating Expense per Compensated Man-Day:
Fixed 30.73 32.01 -4.0%
Variable 9.47 9.58 -1.1%
--------- ---------
Total 40.20 41.59 -3.3%
--------- ---------
Operating Margin per Compensated Man-Day $ 18.36 $ 17.15 7.1%
========= =========
Operating Margin 31.4% 29.2% 7.5%
Revenue per compensated man-day in the first quarter of 2011 decreased 0.3%
to $58.56 from $58.74 in the first quarter of 2010, primarily due to a
change in mix with more managed-only business combined with higher
populations in certain facilities that have tiered per diem rates.
However, operating expenses per compensated man-day decreased 3.3% to
$40.20 from $41.59. The improvement in operating expenses partially
resulted from a 4.0% decline in fixed expenses due to an improvement in
salaries and benefits attributed to the $4.1 million charge incurred during
the first quarter of 2010 for bonuses awarded to non-management level staff
in lieu of wage increases combined with lower expenses associated with cost
containment initiatives. The net result was a 7.1% increase in operating
margin per compensated man-day.
As of May 1, 2011, we had approximately 11,900 unoccupied beds at
facilities that had availability of 100 or more beds, and an additional
1,124 beds under development. This inventory of beds available is reduced
to approximately 8,700 beds after taking into consideration the beds
committed pursuant to management contracts and an Intent to Award from the
state of California.
Partnership Development Update
As previously disclosed, in January 2011, the newly elected Governor of
California proposed a state budget which called for a significant
reallocation of responsibilities between the state government and local
jurisdictions, including transferring some number of inmates from state
custody to the custody of cities and counties. The Governor has approved
the realignment of services contingent upon identifying a funding source.
At this time CCA cannot reasonably assess the opportunities or challenges
that could develop if realignment is implemented. As it relates to the
Intent to Award for the additional beds with the state of California,
negotiations have been suspended while the state finalizes its fiscal year
2012 budget.
As previously disclosed, under the renewal of our contract with the
California Department of Corrections, CCA elected not to renew the 880 beds
under contract at our Florence Detention Center. In April 2011, the CDCR
began the process of transferring those inmates out of our system and CCA
expects that the transfer will be completed by the end of the second
quarter of 2011. As of March 31, 2011, we housed approximately 10,350
inmates from the state of California.
Share Repurchase Program
In November 2008 the Board of Directors approved a program to repurchase up
to $150 million of our common stock that expired on December 31, 2009. In
February 2010, the Board of Directors approved a second program to
repurchase up to $250 million of common stock. Through April 30, 2011, we
have repurchased 20.4 million shares in total under both plans at an
average cost per share of $16.34. This represents approximately 16.2% of
the total shares outstanding prior to the initiation of the first program.
From January 1, 2011 through April 30, 2011, we have repurchased 2.5
million shares at a total cost of $61.7 million. As of April 30, 2011, we
had approximately $42.7 million left available under the program to
repurchase stock through June 30, 2011. As of April 30, 2011, we had 107.4
million shares outstanding.
Liquidity Update
At March 31, 2011, our liquidity was provided by cash on hand of $37.8
million and $286.5 million available under our revolving credit facility.
We believe we have the ability to fund our capital expenditure
requirements, stock repurchase program, working capital and debt service
requirements with cash on hand, net cash provided by operations, and
borrowings available under our revolving credit facility. None of our
outstanding debt requires scheduled principal repayments, and we have no
debt maturities until December 2012.
Guidance
We expect EPS for the second quarter of 2011 to be in the range of $0.36 to
$0.37 and have raised our full year 2011 EPS to be in the range of $1.43 to
$1.49, with full year Adjusted Funds From Operations Per Diluted Share to
be in the range of $2.32 to $2.44.
We believe the long-term growth opportunities of our business remain
attractive as our partners seek cost effective corrections solutions and as
insufficient bed development by our partners should result in a return to
the supply and demand imbalance that has benefitted the partnership
corrections industry.
During 2011, we expect to invest approximately $100.0 million to $115.0
million in capital expenditures, consisting of approximately $52.0 million
to $62.0 million in on-going prison construction and expenditures related
to potential land acquisitions and $48.0 million to $53.0 million in
maintenance and information technology. We also expect an effective income
tax rate of approximately 38.0%, with payments for income taxes expected to
approximate $70.2 million to $73.2 million for the full year.
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information
and other data for the first quarter of 2011. We do not undertake any
obligation, and disclaim any duty to update any of the information
disclosed in this report. Interested parties may access this information
through our website at www.cca.com under "Financial Information" of the
Investors section.
Management may meet with investors from time to time during the second
quarter of 2011. Written materials used in the investor presentations will
also be available on our website beginning on or about May 24, 2011.
Interested parties may access this information through our website at
www.cca.com under "Webcasts" of the Investors section.
Webcast and Replay Information
We will host a webcast conference call at 10:00 a.m. central time (11:00
a.m. eastern time) on May 5, 2011, to discuss our first quarter 2011
financial results. To listen to this discussion, please access "Webcasts"
on the Investors page at www.cca.com. The conference call will be archived
on our website following the completion of the call. In addition, a
telephonic replay will be available at 6:00 p.m. eastern time on May 5,
2011 through 11:59 p.m. eastern time on May 12, 2011, by dialing (888)
203-1112 or (719) 457-0820, pass code 2269858.
About CCA
CCA is the nation's largest owner and operator of partnership correction
and detention facilities and one of the largest prison operators in the
United States, behind only the federal government and three states. We
currently operate 66 facilities, including 45 company-owned facilities,
with a total design capacity of approximately 90,000 beds in 19 states and
the District of Columbia. We specialize in owning, operating and managing
prisons and other correctional facilities and providing inmate residential
and prisoner transportation services for governmental agencies. In
addition to providing the fundamental residential services relating to
inmates, our facilities offer a variety of rehabilitation and educational
programs, including basic education, religious services, life skills and
employment training and substance abuse treatment. These services are
intended to reduce recidivism and to prepare inmates for their successful
re-entry into society upon their release. We also provide health care
(including medical, dental and psychiatric services), food services and
work and recreational programs.
Forward-Looking Statements
This press release contains statements as to our beliefs and expectations
of the outcome of future events that are forward-looking statements as
defined within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from the
statements made. These include, but are not limited to, the risks and
uncertainties associated with: (i) general economic and market conditions,
including the impact governmental budgets can have on our per diem rates,
occupancy and overall utilization; (ii) fluctuations in our operating
results because of, among other things, changes in occupancy levels,
competition, increases in cost of operations, fluctuations in interest
rates and risks of operations; (iii) our ability to obtain and maintain
correctional facility management contracts, including as a result of
sufficient governmental appropriations and as a result of inmate
disturbances; (iv) changes in the privatization of the corrections and
detention industry, the public acceptance of our services, the timing of
the opening of and demand for new prison facilities and the commencement of
new management contracts; (v) judicial challenges and the outcome of budget
proposals regarding California's utilization of out of state private
correctional facilities; and (vi) increases in costs to construct or expand
correctional facilities that exceed original estimates, or the inability to
complete such projects on schedule as a result of various factors, many of
which are beyond our control, such as weather, labor conditions and
material shortages, resulting in increased construction costs. Other
factors that could cause operating and financial results to differ are
described in the filings made from time to time by us with the Securities
and Exchange Commission.
CCA takes no responsibility for updating the information contained in this
press release following the date hereof to reflect events or circumstances
occurring after the date hereof or the occurrence of unanticipated events
or for any changes or modifications made to this press release.
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31, December
ASSETS 2011 31, 2010
----------- -----------
Cash and cash equivalents $ 37,792 $ 25,505
Accounts receivable, net of allowance of $1,531 and
$1,568, respectively 277,616 305,305
Deferred tax assets 10,920 14,132
Prepaid expenses and other current assets 13,934 31,196
Current assets of discontinued operations 2,135 2,155
----------- -----------
Total current assets 342,397 378,293
Property and equipment, net 2,534,839 2,549,295
Restricted cash 6,758 6,756
Investment in direct financing lease 10,425 10,798
Goodwill 11,988 11,988
Other assets 25,622 26,092
Non-current assets of discontinued operations - 6
----------- -----------
Total assets $ 2,932,029 $ 2,983,228
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 184,796 $ 203,796
Income taxes payable 9,903 476
Current liabilities of discontinued operations 1,392 1,583
----------- -----------
Total current liabilities 196,091 205,855
Long-term debt 1,112,744 1,156,568
Deferred tax liabilities 121,477 118,245
Other liabilities 32,428 31,689
----------- -----------
Total liabilities 1,462,740 1,512,357
----------- -----------
Commitments and contingencies
Common stock - $0.01 par value; 300,000 shares
authorized; 108,094 and 109,754 shares issued
and outstanding at March 31, 2011 and December
31, 2010, respectively 1,081 1,098
Additional paid-in capital 1,312,796 1,354,691
Retained earnings 155,412 115,082
----------- -----------
Total stockholders' equity 1,469,289 1,470,871
----------- -----------
Total liabilities and stockholders' equity $ 2,932,029 $ 2,983,228
=========== ===========
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For the Three Months
Ended March 31,
--------------------
2011 2010
--------- ---------
REVENUE:
Management and other $ 427,523 $ 404,989
Rental 551 793
--------- ---------
428,074 405,782
--------- ---------
EXPENSES:
Operating 296,105 289,673
General and administrative 21,447 18,614
Depreciation and amortization 27,055 24,964
--------- ---------
344,607 333,251
--------- ---------
OPERATING INCOME 83,467 72,531
--------- ---------
OTHER EXPENSES:
Interest expense, net 18,402 17,271
Other expenses 71 72
--------- ---------
18,473 17,343
--------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 64,994 55,188
Income tax expense (24,664) (21,016)
--------- ---------
INCOME FROM CONTINUING OPERATIONS 40,330 34,172
Income from discontinued operations, net of taxes - 734
--------- ---------
NET INCOME $ 40,330 $ 34,906
========= =========
BASIC EARNINGS PER SHARE:
Income from continuing operations $ 0.37 $ 0.29
Income from discontinued operations, net of taxes - 0.01
--------- ---------
Net income $ 0.37 $ 0.30
========= =========
DILUTED EARNINGS PER SHARE:
Income from continuing operations $ 0.37 $ 0.29
Income from discontinued operations, net of taxes - 0.01
--------- ---------
Net income $ 0.37 $ 0.30
========= =========
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF EBITDA
For the Three Months
Ended March 31,
--------------------
2011 2010
---------- ---------
Net income $ 40,330 $ 34,906
Interest expense, net 18,402 17,271
Depreciation and amortization 27,055 24,964
Income tax expense 24,664 21,016
Income from discontinued operations, net of taxes - (734)
---------- ---------
EBITDA 110,451 97,423
========== =========
CALCULATION OF FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
For the Three Months
Ended March 31,
--------------------
2011 2010
--------- ---------
Net income $ 40,330 $ 34,906
Income tax expense 24,664 21,016
Income tax refund (paid), net 4 (52)
Depreciation and amortization 27,055 24,964
Depreciation and amortization for discontinued
operations - 234
Income tax expense for discontinued operations - 451
Stock-based compensation reflected in G&A expense 2,377 2,006
Amortization of debt costs and other non-cash
interest 1,066 1,074
--------- ---------
Funds From Operations $ 95,496 $ 84,599
Maintenance and technology capital expenditures (4,830) (5,401)
--------- ---------
Adjusted Funds From Operations $ 90,666 $ 79,198
========= =========
Funds From Operations Per Diluted Share $ 0.87 $ 0.73
========= =========
Adjusted Funds From Operations Per Diluted Share $ 0.83 $ 0.68
========= =========
CALCULATION OF ADJUSTED FUNDS FROM OPERATIONS PER SHARE GUIDANCE
For the Year Ending
December 31, 2011
--------------------
Low End High End
of of
Guidance Guidance
--------- ---------
Net income $ 155,497 $ 162,021
Income tax expense 95,304 99,303
Income taxes paid (70,224) (73,171)
Depreciation and amortization 111,199 111,199
Other non-cash items 13,500 13,700
--------- ---------
Funds From Operations $ 305,276 $ 313,052
Maintenance and technology capital expenditures (53,000) (48,000)
--------- ---------
Adjusted Funds From Operations $ 252,276 $ 265,052
========= =========
Funds From Operations Per Diluted Share $ 2.81 $ 2.88
========= =========
Adjusted Funds From Operations Per Diluted Share $ 2.32 $ 2.44
========= =========
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
EBITDA, Funds From Operations and Adjusted Funds From Operations, and their
corresponding per share metrics are non-GAAP financial measures. The
Company believes that these measures are important operating measures that
supplement discussion and analysis of the Company's results of operations
and are used to review and assess operating performance of the Company and
its correctional facilities and their management teams. The Company
believes that it is useful to provide investors, lenders and security
analysts disclosures of its results of operations on the same basis as that
used by management.
Management and investors review both the Company's overall performance
using GAAP and non-GAAP measures including EPS, net income, Funds From
Operations and Adjusted Funds From Operations, and their corresponding per
share metrics, as well as EBITDA to assess the operating performance of the
Company's correctional facilities. EBITDA, Funds From Operations and
Adjusted Funds From Operations are useful as supplemental measures of the
performance of the Company's correctional facilities because they do not
take into account depreciation and amortization, or with respect to EBITDA,
the impact of the Company's tax provisions and financing strategies.
Because the historical cost accounting convention used for real estate
assets requires depreciation (except on land), this accounting presentation
assumes that the value of real estate assets diminishes at a level rate
over time. Because of the unique structure, design and use of the
Company's correctional facilities, management believes that assessing
performance of the Company's correctional facilities without the impact of
depreciation or amortization is useful. The calculation of Adjusted Funds
From Operations substitutes capital expenditures incurred to maintain the
functionality and condition of the Company's correctional facilities in
lieu of a provision for depreciation. Some of these capital expenditures
contain a discretionary element with respect to when they are incurred,
while others may be more urgent. Therefore, maintenance capital
expenditures may fluctuate from quarter to quarter, depending on the nature
of the expenditures required, seasonal factors such as weather, and
budgetary conditions. The calculation of Funds From Operations and
Adjusted Funds From Operations also reflect the amount of income taxes
paid. We continuously evaluate tax planning strategies to reduce the
effective tax rate for financial reporting purposes as well as strategies
to reduce the amount of taxes we pay. As a result, the amount of taxes we
pay may fluctuate from period to period depending on the effectiveness of
our strategies. The amount of taxes we pay may also result from many
factors beyond our control, such as changes in tax law. Finally, income
taxes paid fluctuate significantly from quarter to quarter based on
statutory methods of computing inter-period payment requirements and the
date such taxes are due.
The Company may make adjustments to GAAP net income, EBITDA, Funds From
Operations and Adjusted Funds From Operations from time to time for certain
other income and expenses that it considers non-recurring, infrequent or
unusual, even though such items may require cash settlement, because such
items do not reflect a necessary component of the ongoing operations of the
Company. Other companies may calculate EBITDA, Funds From Operations and
Adjusted Funds From Operations differently than the Company does, or adjust
for other items, and therefore comparability may be limited. EBITDA, Funds
From Operations and Adjusted Funds From Operations, and their corresponding
per share measures are not measures of performance under GAAP, and should
not be considered as an alternative to cash flows from operating
activities, a measure of liquidity or an alternative to net income as
indicators of the Company's operating performance or any other measure of
performance derived in accordance with GAAP. This data should be read in
conjunction with the Company's consolidated financial statements and
related notes included in its filings with the Securities and Exchange
Commission.