Corecivic, Inc. · NYSE:CXW
Corecivic — Q3 2019 Earnings Presentation
31 slides from Corecivic's earnings presentation, November 2019
Slide 1: Investor Overview Third Quarter 2019
Investor Overview Third Quarter 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements As defined within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, certain statements herein may be considered forward-looking statements that are subject to risks and uncertainties tha
Slide 3: Table of Contents
Table of Contents CoreCivic at a Glance 3-6 Investment Thesis 7 Strong Growth Fundamentals Without Near-Term Capital Needs for Growth 8-12 Conservative Balance Sheet 13 Full-Year 2019 Financial Guidance 14 Value Proposition: Mission-Critical Nature of Real Estate Assets 15-16 ESG and Rehabilitation
Slide 4: 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 11.3
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 • 85% YTD NOI through Q3 2019 • 14.7 million square feet • 73,345 correctional/detention beds • Recently activated 2 previously idle facilities, representing 2,332 beds
Slide 6: 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 + 7.9% + 42.4% + 21.3% NOI Growth(1) Growing USMS & ICE demand, stable state Government entities require purpose- States and localities p
Slide 7: Diversification Strategy Has Increased Cash Flow Stability
Diversification Strategy Has Increased Cash Flow Stability • Diversifying & Solidifying Revenue Streams • Go-Forward Strategy Based On Four Pillars • Focus on diversifying business away from reliance on partners with higher political risk and lower margin business Towards growing segments with sti
Slide 8: 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 9: Strong Fundamental Growth of CoreCivic
Strong Fundamental Growth of CoreCivic(1) • Q3 2019 revenue growth from 7 new federal and Quarterly Revenue by Segment 10% year-over- (in $ millions) state contracts awarded and activated since the $525M year revenue growth beginning of 2018 $20M $475M $19M $19M $19M $31M • Recently activated 2 prev
Slide 10: Revenue Growth Materializing in Cash Flow Growth
Revenue Growth Materializing in Cash Flow Growth(1) Q3 2019 revenue growth of 10% 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 $0.70 $0.63 $0.64 $0.45 $0.58 Q3 201
Slide 11: Recent Contract Wins
Recent Contract Wins New Contract Awards Safety & Community Portfolio Occupancy Date Details 95,000 85.0% Immigration and Customs Enforcement (ICE) enters into a new contract to house 90,000 84.0% August 2019 82.7% 82.8% 82.9% adult detainees at our 2,232-bed Adams County Correctional Center in Miss
Slide 12: Significant Market Opportunities Available…
Significant Market Opportunities Available… Strong pipeline to bolster cash flow generation SAFETY Continuing demand from USMS, ICE and states October 2019: The Governor announced plans to lease one of the two idle Kentucky facilities in Kentucky beginning Q1 2020. Previously, entered into a contrac
Slide 13: …With Capacity to Meet Government Demand
…With Capacity to Meet Government Demand As of September 30, 2019: 6 idle prison and detention facilities, including 7,482 beds Facility State Design Date Idled • Recently Activated 2 Facilities: Capacity New federal contracts awarded in May 2019 Eden Detention Center TX 1,422 Recently resulting i
Slide 14: Conservative Balance Sheet to Support Long Term Strategy
Conservative Balance Sheet to Support Long Term Strategy Debt Maturity Schedule as of September 30, 2019 Significant liquidity of $633 million as of $800M $709M September 30, 2019 $700M $600M Strong cash flow growth and very well- $500M $400M covered dividend allow for deleveraging $344M $300M $
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 $ 1.61 $ 1.63 $ 1.65 Adjusted Diluted EPS(2) $ 1.45 $ 1.74 $ 1.76 $ 1.78 Normalized FFO per diluted share(2) $ 2.31 $ 2.64 $ 2.66 $ 2.68 AFFO per diluted share(2) $ 2.19 $ 2
Slide 16: Mission-Critical Nature of Our Real Estate Assets
Mission-Critical Nature of Our Real Estate Assets CoreCivic provides tailored solutions to meet the needs of state and federal partners State Partners Federal Partners • Key State Partner Challenges: • Key Federal Partner Challenges: Prison over-crowding Limited owned infrastructure Aging and
Slide 17: Case Study: Replacement Facility for the State of Kansas
Case Study: Replacement Facility for the State of Kansas • In 2017, the State of Kansas released a procurement for the Design-Build-Finance-Lease of a replacement prison for its Lansing Correctional Facility, the state's oldest and largest facility. The Lansing Facility was originally constructed in
Slide 18: Unprecedented Commitment to ESG within the Corrections Industry
Unprecedented Commitment to ESG within the Corrections Industry • CoreCivic released the industry’s first Environmental, Social and Governance (ESG) report in May 2019, demonstrating an unprecedented commitment to transparency and accountability and providing more robust disclosures to show how we b
Slide 19: Company's ESG Focus Benefits All Stakeholders
Company's ESG Focus Benefits All Stakeholders Holistic Approach Toward Preparing Inmates for Successful Reentry… More Humane Conditions Focus on Rehabilitation & Reentry • Reduced Overcrowding • Ban the Box • Modern Real Estate Amenities • Education & Vocational Training • Improved Medical Programs
Slide 20: CoreCivic is Delivering Evidence Based Programs with Measurable Goals
CoreCivic is Delivering Evidence Based Programs with Measurable Goals Treatment and Chaplaincy and Victim Impact Educational Services Reentry Services Behavioral Programs Religious Services Programs 5-Year Goals: High school equivalency 8,040 75% 2018: 930 and 10% 5-Year Goals: Goal By the end of 20
Slide 21: Transparent Government Oversight and Commitment to Quality
Transparent Government Oversight and Commitment to Quality • Hundreds of full time federal and state employees report to our facilities daily, overseeing contract compliance at correctional and detention facilities • Compliance with extensive standards and certifications, subject to independent oper
Slide 22: 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 23: 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 24: Appendix
Appendix
Slide 25: Utilizing Available Capacity Drives Earnings Growth
Utilizing Available Capacity Drives Earnings Growth Total Beds Available at Average Estimated Potential Annual September 30, 2019 Margin(1) Incremental EBITDA CoreCivic Safety - Vacant Facility Capacity(2) 7,482 $ 21.80 $ 59,534,274 CoreCivic Safety - Operating Facilities with > 100 beds available(3
Slide 26: Reconciliation to Adjusted Diluted EPS
Reconciliation to Adjusted Diluted EPS ($ in thousands, except per share amounts) For the Quarter Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income $ 48,994 $ 40,994 $ 146,912 $ 117,968 Special items: Expenses associated with debt refinancing transactions - -
Slide 27: 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 Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income $ 48,994 $ 40,994 $ 146,912 $ 117,968 Depreciation and amortization of real estate assets 27,264 25,460 80
Slide 28: 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 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018 Net income $ 48,994 $ 48,578 $ 49,340 $ 41,239 $ 40,994 Depreciation and amortization of real estate assets 27,264 26,503
Slide 29: Calculation of NOI
Calculation of NOI ($ in thousands) For the Quarter Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue Safety $ 457,817 $ 422,313 $ 1,332,545 $ 1,240,019 Community 30,848 25,133 92,120 74,651 Properties 19,828 15,281 58,083 38,897 Other 29 1 132 6 Total revenues
Slide 30: Calculation of EBITDA and Adjusted EBITDA
Calculation of EBITDA and Adjusted EBITDA ($ in thousands) For the Quarter Ended For the Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net income $ 48,994 $ 40,994 $ 146,912 $ 117,968 Interest expense 21,402 20,881 64,628 59,611 Depreciation and amortization 36,654 39,465 107,768
Slide 31: Reconciliation to 2019 Guidance
Reconciliation to 2019 Guidance ($ in thousands, except per share amounts) Fourth Quarter 2019 Full-Year 2019 Full-Year 2018 Low High Low High Actual Net income $ 44,500 $ 49,000 $ 191,500 $ 196,000 $ 159,207 Expenses associated with debt refinancing transactions - - - - 1,016 Charges associated wit