Corecivic, Inc. · NYSE:CXW
Corecivic — Investor Presentation (August 2019)
29 slides from Corecivic's investor presentation, August 2019
Slide 1: Investor Overview Second Quarter 2019
Investor Overview Second Quarter 2019
Slide 2: Table of Contents
Table of Contents CoreCivic at a Glance 2-4 Investment Thesis 5 Strong Growth Fundamentals Without Near-Term Capital Needs for Growth 6-11 Conservative Balance Sheet 12-13 Full-Year 2019 Financial Guidance 14 Value Proposition to Federal Partners 15 ESG and Rehabilitation Focus 16-19 Appendix 20-27
Slide 3: CoreCivic Operates at the Intersection of Government and Real Estate
CoreCivic Operates at the Intersection of Government and Real Estate Prioritizes returning capital to shareholders CoreCivic is a diversified government- Dividend yield of solutions REIT with the scale and differentiated expertise to solve the tough challenges that governments Increased Q1 2019 10.6
Slide 4: CoreCivic's Business Segments are Complementary
CoreCivic's Business Segments are Complementary Safety Properties Community Government tenants Customers 2019 Business Mix(1) 85% 10% 5% (% of NOI) Year-over-Year + 8.3% + 56.4% + 28.9% NOI Growth(1) Government entities require purpose- States and localities place high value Increasing demand from U
Slide 5: Largest Private Owner of Real Estate Utilized by Government Agencies
Largest Private Owner of Real Estate Utilized by Government Agencies Own 17M+ square feet of real estate used by government SAFETY • 14.7M square feet • 72,833 correctional/detention beds • 85% NOI in the second quarter of 2019 • Currently activating 2 previously idle facilities, representing 2,332
Slide 6: Investment Thesis
Investment Thesis Leader in government real estate solutions, with differentiated deal-origination and property management capabilities Complementary segment assets and operating strategies, combined with deep industry expertise, deliver stable cash flows Strong fundamentals driving revenue and cash
Slide 7: Strong Fundamental Growth of CoreCivic
Strong Fundamental Growth of CoreCivic(1) • Q2 2019 revenue growth from 7 new federal and Quarterly Revenue by Segment 9% year-over- (in $ millions) state contracts awarded and activated since the $525M year revenue growth beginning of 2018 $475M $19M $19M $19M • Activating 2 previously idled facili
Slide 8: Revenue Growth Materializing in Cash Flow Growth
Revenue Growth Materializing in Cash Flow Growth(1) Q2 2019 revenue growth of 9% compared with Normalized FFO per diluted share $0.75 the prior year quarter has been leveraged into strong double-digit growth in Normalized FFO $0.65 and AFFO per share $0.55 $0.69 $0.63 $0.64 $0.45 $0.57 $0.58 Q2 2019
Slide 9: New Contract Awards Drive Current and Future Growth
New Contract Awards Drive Current and Future Growth Date Details August 2019 Immigration and Customs Enforcement (ICE) enters into a new contract to house adult detainees at our 2,232-bed Adams County Correctional Center The state of Kansas enters into a new contract to house up to 600 offenders ini
Slide 10: New Contracts Leading to Increased Portfolio Occupancy
New Contracts Leading to Increased Portfolio Occupancy New state and federal contracts CoreCivic Safety & Communities Portfolio: have materially improved occupancy Occupancy & Average Daily Population 95,000 85.0% since 2016, with ample additional 90,000 82.8% 84.0% capacity to meet future governmen
Slide 11: Organic Growth Opportunity from Idle Correctional Capacity
Organic Growth Opportunity from Idle Correctional Capacity As of June 30, 2019: 6 idle prison and detention facilities, including 7,482 beds Facility State Design Date Idled • Currently Activating 2 Facilities: Capacity New federal contracts awarded in May 2019 Eden Detention Center TX 1,422 ACTIV
Slide 12: Growth from Replacing Outdated Prison Infrastructure
Growth from Replacing Outdated Prison Infrastructure • Core competency: Efficient builders of essential Case Study: Lansing Correctional Facility infrastructure There is an overwhelming criminal justice infrastructure need across the country Our industry-first partnership to develop replacement
Slide 13: Conservative Balance Sheet to Support Long Term Strategy
Conservative Balance Sheet to Support Long Term Strategy Debt Maturity Schedule as of June 30, 2019 Our low cost of capital is a competitive advantage $800M $772M • Weighted average cost of debt: 4.82% $700M $600M Next significant maturity in April 2020 $500M $400M $344M Strong cash flow growt
Slide 14: Diversified Sources of Cash Flow Supports Credit Quality
Diversified Sources of Cash Flow Supports Credit Quality CoreCivic has reduced dependence on BOP, California and low-margin managed-only contracts Entity Revenue % 2010 Revenue % Q2 2019 Variance Federal Bureau of Prisons 15% 5% (10%) (correctional facilities) California 13% 1% (12%) (out-of-state p
Slide 15: 2019 Financial Guidance
2019 Financial Guidance(1) 2018 Actual Full-Year 2019 Financial Guidance Results Low-End Mid-Point High-End Diluted EPS $ 1.34 $ 1.56 $ 1.58 $ 1.60 Adjusted Diluted EPS(2) $ 1.45 $ 1.68 $ 1.70 $ 1.72 Normalized FFO per diluted share(2) $ 2.31 $ 2.58 $ 2.60 $ 2.62 AFFO per diluted share(2) $ 2.19 $ 2
Slide 16: Value Proposition to Federal Partners – Mission-Critical Infrastructure
Value Proposition to Federal Partners – Mission-Critical Infrastructure Value Proposition to Immigration and Customs Enforcement (ICE) and the U.S. Marshals Service (USMS) Essential Infrastructure to carry out mission of ICE and USMS: • ICE cares for approximately 55,000 detainees daily and govern
Slide 17: Unprecedented Commitment to ESG within the Corrections Industry
Unprecedented Commitment to ESG within the Corrections Industry • CoreCivic released its first Environmental, Social and Governance (ESG) report in May 2019 • We are the first company in our industry to release an ESG Report, demonstrating an unprecedented commitment to transparency and accountabili
Slide 18: Industry-Leading Commitment to Rehabilitation and Combating Recidivism
Industry-Leading Commitment to Rehabilitation and Combating Recidivism • Board and management committed to leadership in all stages of the rehabilitation cycle • Documented success in combatting recidivism • Governance: Board has the right expertise and diverse set of experiences to execute long-ter
Slide 19: Highly Qualified, Proven Management Team
Highly Qualified, Proven Management Team Damon T. Hininger David Garfinkle Tony Grande President and Chief Executive Officer EVP and Chief Financial Officer EVP and Chief Development Officer • 25+ years of corrections experience • Began at CoreCivic in 2001 • Began at CoreCivic in 2003 • Began at Co
Slide 20: Diverse Board of Directors with Relevant Expertise
Diverse Board of Directors with Relevant Expertise Mark A. Emkes Donna M. Alvarado Robert J. Dennis Damon T. Hininger Stacia Hylton Harley G. Lappin • Chairman of the Board • Founder and President, • Chairman and CEO, • President and CEO, • Principal, LS Advisory • Previous EVP, CoreCivic • Former E
Slide 21: Appendix
Appendix
Slide 22: Utilizing Available Capacity Drives Earnings Growth
Utilizing Available Capacity Drives Earnings Growth Total Beds Available at Average Estimated Potential Annual June 30, 2019 Margin(1) Incremental EBITDA CoreCivic Safety - Vacant Facility Capacity(2) 9,814 $ 22.01 $ 78,842,241 CoreCivic Safety - Operating Facilities with > 100 beds available(3) 2,5
Slide 23: Reconciliation to Adjusted Diluted EPS
Reconciliation to Adjusted Diluted EPS ($ in thousands, except per share amounts) For the Quarter Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Net income $ 48,578 $ 39,197 $ 97,918 $ 76,974 Special items: Expenses associated with debt refinancing transactions - 1,016 - 1,016
Slide 24: Calculation of FFO, Normalized FFO and AFFO
Calculation of FFO, Normalized FFO and AFFO ($ in thousands, except per share amounts) For the Quarter Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Net income $ 48,578 $ 39,197 $ 97,918 $ 76,974 Depreciation and amortization of real estate assets 26,503 24,921 53,102 49,329 I
Slide 25: Calculation of FFO, Normalized FFO and AFFO – Quarter Trend
Calculation of FFO, Normalized FFO and AFFO – 5 Quarter Trend ($ in thousands, except per share amounts) For the Quarter Ended 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018 Net income $ 48,578 $ 49,340 $ 41,239 $ 40,994 $ 39,197 Depreciation and amortization of real estate assets 26,503 26,599
Slide 26: Calculation of NOI
Calculation of NOI ($ in thousands) For the Quarter Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Revenue Safety $ 440,410 $ 413,208 $ 874,728 $ 817,706 Community 30,706 24,718 61,272 49,518 Properties 19,143 12,001 38,255 23,616 Other 35 2 103 5 Total revenues $ 490,294 $ 449
Slide 27: Calculation of EBITDA and Adjusted EBITDA
Calculation of EBITDA and Adjusted EBITDA ($ in thousands) For the Quarter Ended For the Six Months Ended June 30, June 30, 2019 2018 2019 2018 Net income $ 48,578 $ 39,197 $ 97,918 $ 76,974 Interest expense 21,316 19,455 43,226 38,730 Depreciation and amortization 35,591 38,560 71,114 76,649 Income
Slide 28: Reconciliation to 2019 Guidance
Reconciliation to 2019 Guidance ($ in thousands, except per share amounts) Third Quarter 2019 Full-Year 2019 Full-Year 2018 Low High Low High Actual Net income $ 39,500 $ 41,500 $ 186,350 $ 191,100 $ 159,207 Expenses associated with debt refinancing transactions - - - - 1,016 Charges associated with
Slide 29: Investment Thesis
Investment Thesis Leader in government real estate solutions, with differentiated deal-origination and property management capabilities Complementary segment assets and operating strategies, combined with deep industry expertise, deliver stable cash flows Strong fundamentals driving revenue and cash