Slide 1: Third Quarter 2016 Investor Presentation
Third Quarter 2016 Investor Presentation
Slide 2: Company name change and rebranding to CoreCivic
On October 28, 2016, the Company announced that it was changing its name and rebranding its corporate enterprise from Corrections Corporation of America to CoreCivic. Rebranding as CoreCivic is the culmination of a multi-year strategy to transform the business from a singular focus on corrections an
Slide 3: 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 4: Recent Developments
Recent Developments
Slide 5: Timeline of Recent Events
Timeline of Recent Events August 18th: October 17th: Deputy Attorney General ICE amends and extends memo on private facilities contract for the STFRC August 29th: October 27th: DHS announces review of We enter into new contract private detention facilities with ICE for the Cibola County CC 6/30/16 |
Slide 6: August 18th – DOJ Announcement
August 18th – DOJ Announcement On August 18, 2016, the U.S. Deputy Attorney General (DAG) issued a memo directing the Federal Bureau of Prisons (BOP) to begin phasing out the BOP's use of private facilities to house federal inmates, claiming that private facilities are not as safe and secure. The di
Slide 7: August 18th – DOJ Announcement
August 18th – DOJ Announcement The OIG Report and data published by the BOP run counter to the claims in the DAG memo: The facility performance ratings in the OIG Report indicated private prisons are comparably safe and secure. In fact, the OIG data suggests private prisons were safer by having lo
Slide 8: Private Prisons Provide Clear Value
Private Prisons Provide Clear Value Utilizing private prisons saved the federal government over $144 million in 2015 without sacrificing safety, security or quality of operations: Federal Prison System Per Capita Costs - FY 2015 Low Security Cost Per Day Annual Cost Population Total Cost BOP $ 80.20
Slide 9: States Respond to DOJ Announcement
States Respond to DOJ Announcement Haslam says TN private prisons accountable - (8/23, Nashville Post) On the heels of a call by the Tennessee State Employee Association for the state to phase out the usage of private prisons, after the federal Department of Justice's decision last week to do so,
Slide 10: August 29th – DHS Announcement
August 29th – DHS Announcement On August 29, 2016, the Secretary of the Department of Homeland Security (DHS) directed the Homeland Security Advisory Council (HSAC) to establish a subcommittee to evaluate whether the immigration detention operations conducted by Immigration and Customs Enforcement (
Slide 11: September 27th – Corporate Restructuring
September 27th – Corporate Restructuring On September 27, 2016, we announced a restructuring of the Company's corporate operations and implemented a cost reduction strategy Recognizing the shift in long term growth strategy that has evolved post REIT conversion Realigned structure to more effect
Slide 12: October 17th – Extension of the STFRC Contract
October 17th – Extension of the STFRC Contract ICE amended and extended its agreement to utilize our 2,400-bed South Texas Family Residential Center: Provides for a new, lower fixed monthly payment Commences in November 2016 Terms are similar to our contractual terms with ICE for other facilit
Slide 13: Recent Border Apprehension Statistics
Recent Border Apprehension Statistics FY 2016 apprehensions consistently increased since February 2016, ultimately exceeding FY 2014 apprehensions by more than 13% STFRC allows ICE to process families in a safe, humane environment for a short period in order to complete background screenings, medica
Slide 14: October 27th – New ICE Contract at Cibola
October 27th – New ICE Contract at Cibola On October 27, 2016, we entered into an agreement with Cibola County whereby we agreed to operate our Cibola County Corrections Center to meet the responsibilities of an Intergovernmental Service Agreement between Cibola County and ICE regarding detention se
Slide 15: October 28th – CCA Rebrands as CoreCivic
October 28th – CCA Rebrands as CoreCivic On October 28, 2016, we announced our intention to rebrand the corporate enterprise as CoreCivic Culmination of a multi-year strategy to transform the company from largely corrections and detention services to a diversified government solutions provider The
Slide 16: October 28th – CCA Rebrands as CoreCivic
October 28th – CCA Rebrands as CoreCivic CoreCivic Safety Corrections and detention management CoreCivic Properties Comprehensive real estate solutions and ancillary services Mission-critical real estate assets for various governmental organizations CoreCivic Community Community corrections
Slide 17: Business Development Update
Business Development Update
Slide 18: Recent Contract Awards
Recent Contract Awards 10/27/16 – ICE enters into new five-year contract for up to 1,116 beds at our Cibola County Corrections Center 10/17/16 – ICE extends contract at 2,400-bed South Texas Family Residential Center for five years 7/18/16 – California Department of Corrections and Rehabilitat
Slide 19: Recent Development Opportunities
Recent Development Opportunities Red Rock Correctional Center (AZ) – Expansion of existing facility from 1,596 beds to 2,024 beds is scheduled to be complete late in the fourth quarter 2016 for a total cost of $37.0 million to $38.0 million, although CCA began receiving inmates under the new 1,000-b
Slide 20: Recent Strategic Acquisitions
Recent Strategic Acquisitions In the last twelve months CCA completed four acquisitions in the residential reentry market, adding 4,479 beds to our portfolio In August 2015, acquired four residential reentry facilities for $13.8 million • Acquired 605 beds located in the greater Philadelphia area
Slide 21: Residential Reentry Acquisition Summary
Residential Reentry Acquisition Summary State(s) of Acquisition Acquisition Date of Acquisition # of Facilities Operation # of Beds Price Correctional July 2013 2 California 603 $36.5m Alternatives, Inc. Pennsylvania Portfolio August 2015 4 Pennsylvania 605 $13.8m Avalon Correctional Oklahoma, Octob
Slide 22: Actively Marketing Available Capacity
Actively Marketing Available Capacity We currently have 8 idle facilities, totaling 8,538 beds, that we are actively marketing to potential government partners: Leo Chesney Correctional Center (California)—240 beds Huerfano County Correctional Center (Colorado)—752 beds Kit Carson Correctional
Slide 23: Customer-Specific Value Proposition for Federal Partners
Customer-Specific Value Proposition for Federal Partners
Slide 24: Customer-Specific Value Proposition - ICE
Customer-Specific Value Proposition - ICE ICE Mission Statement(1) ICE enforces federal laws governing border control, customs, trade and immigration to promote homeland security and public safety. Value Proposition to ICE Essential Infrastructure to carry out mission of ICE: • Approximately two
Slide 25: Customer-Specific Value Proposition - USMS
Customer-Specific Value Proposition - USMS U.S. Marshal Service (USMS) Vision Statement(1) A world class law enforcement agency – unified in our mission and workforce… Value Proposition to the USMS Mission-critical, Location-based infrastructure: • Housing individuals accused of breaking federal
Slide 26: Customer-Specific Value Proposition - BOP
Customer-Specific Value Proposition - BOP BOP Mission Statement(1) It is the mission of the BOP to protect society by confining offenders in the controlled environments of prisons and community-based facilities that are safe, humane, cost-efficient, and appropriately secure… • Only federal custome
Slide 27: About CoreCivic
About CoreCivic
Slide 28: Who We Are
Who We Are Established in 1983, CoreCivic is a diversified government solutions company with the scale and experience needed to solve tough government challenges in cost-effective ways We provide a broad range of solutions to government partners that serve the public good through high- quality c
Slide 29: National Portfolio with Geographic Diversity
National Portfolio with Geographic Diversity As of September 30, 2016, we owned 74 real estate assets and provided correctional management services at 11 facilities owned by government partners CoreCivic Safety • 46 owned facilities, 65,136 beds • 11 managed-only facilities, 13,898 beds CoreCivi
Slide 30: High Quality, Diverse Customer Base
High Quality, Diverse Customer Base As of September 30, 2016, CoreCivic had more than 100 agreements with federal, state and local agencies Further diversification within federal agency customers: • > 100 potential customers within federal agencies: 94 U.S. Marshals districts; 24 ICE field offices
Slide 31: Financial Highlights
Financial Highlights For the Three Months For the Nine Months Ended September 30, Ended September 30, 2016 2015 2016 2015 Adjusted Diluted EPS (1) $0.49 $0.45 $1.38 $1.50 Normalized FFO per share (1) $0.69 $0.64 $1.98 $2.06 AFFO per share (1) $0.68 $0.63 $1.94 $2.04 Debt leverage (1) 3.3x 3.3x 3.4x
Slide 32: CoreCivic Solutions
CoreCivic Solutions
Slide 33: CoreCivic Safety – A National Leader
CoreCivic Safety – A National Leader CoreCivic is the largest non-government owner of correctional and detention real estate in the United States Nearly 58% of all privately owned beds More than 40% larger than nearest competitor Owned Correctional and Detention Facility Beds 80,000 70,000 60,00
Slide 34: CoreCivic Properties – Real Estate Solutions
CoreCivic Properties – Real Estate Solutions CoreCivic Properties offers a wide range of innovative, cost-saving government real estate solutions Deep expertise and experience • Largest developer of mission-critical, criminal justice center real estate projects over the past 15 years • Track recor
Slide 35: CoreCivic Community – A Growing Network
CoreCivic Community – A Growing Network CoreCivic Community is a rapidly growing network of residential reentry centers whose mission is to help tackle America's recidivism crisis. In just 3 years, CoreCivic Community has grown to be the second largest provider in the market 3 Largest U.S. Residen
Slide 36: Focus on Real Estate Solutions
Focus on Real Estate Solutions The consistent theme across all three CoreCivic platforms is that real estate is a core component of the offering Cash flow generation is driven by ownership of real estate assets Over 98%(1) of facility-level net operating income is derived from facilities owned by
Slide 37: Strong Balance Sheet and Cash Flow
Strong Balance Sheet and Cash Flow
Slide 38: Strong Balance Sheet and Simple Capital Structure
Strong Balance Sheet and Simple Capital Structure Our low cost of capital is a competitive advantage Debt Maturity Schedule $325M Sr. Notes @ 4.125%, due Apr. 2020 $1,000M $250M Sr. Notes @ 5.000%, due Oct. 2022 $803M $800M $350M Sr. Notes @ 4.625%, due May 2023 $900M Revolver @ LIBOR + 1.50
Slide 39: Balance Sheet Flexibility
Balance Sheet Flexibility Current dividend policy pegged to ~80% of AFFO, or 77% of Normalized FFO Median FFO payout ratio for all equity REITs is ~65%(1) Abundant opportunities to deploy capital to grow and diversify cash flows, and to create shareholder value CoreCivic Community acquisitions of
Slide 40: Proven Strategy for Growth
Proven Strategy for Growth CCA has consistently grown our owned and managed real estate portfolio through various market cycles Traditional owned & managed model for correctional and detention facilities Expanded portfolio to RRCs beginning in 2013–now representing over 5,000 beds Recent real
Slide 41: Historical Growth Driven by Real Estate Assets
Historical Growth Driven by Real Estate Assets Today, more than 98% of facility net operating income is derived from CCA-owned real estate assets Owned and Managed facility net operating income increased from $155M in 2001 to $467M in 2015 Facility Net Operating Income By Contract Type(1) 100% 9
Slide 42: Market Dynamics
Market Dynamics
Slide 43: Public Prisons are Aging, Costly and Unsafe
Public Prisons are Aging, Costly and Unsafe Replacing old public prisons provides operational cost savings & improves safety and living conditions States have shuttered old public facilities, saving taxpayer money, by using the private sector: Georgia (shuttered 7 facilities), Colorado and Oklahom
Slide 44: Public Prisons are Aging, Costly and Unsafe
Public Prisons are Aging, Costly and Unsafe > 200,000 public prison beds are > 75 years old(1) 150,000 120,659 beds 100,000 94,956 beds Beds 50,000 - 75 - 100 years 100 or more years Outdated prison infrastructure creates unnecessary taxpayer costs Inefficient design for staffing leads to high
Slide 45: Public Prisons are Overcrowded
Public Prisons are Overcrowded At December 31, 2014, 28 states and the federal government were operating at 100% or more of capacity(1) Overcrowding produces unsafe conditions; poor inmate quality of life • No meaningful public sector prison development in recent years Reduced rehabilitation opp
Slide 46: Appendix
Appendix
Slide 47: Utilizing Available Capacity Drives Earnings Growth
Utilizing Available Capacity Drives Earnings Growth Total Beds Available at Average Estimated Potential Annual September 30, 2016 Margin(2) Incremental EBITDA Owned and Controlled Vacant Facility Capacity(1) 8,298 $ 25.00 $ 75,719,250 Owned and Controlled beds at Facilities with > 100 beds available
Slide 48: 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, 2016 2015 2016 2015 Net income $ 55,340 $ 50,676 $ 159,230 $ 173,256 Special items: Expenses associated with debt refinancing transactions - 7
Slide 49: 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, 2016 2015 2016 2015 Net income $ 55,340 $ 50,676 $ 159,230 $ 173,256 Depreciation of real estate assets 23,684 22,577 70,409 66,024 Funds
Slide 50: Calculation of NOI
Calculation of NOI ($ in thousands) For the Quarter Ended For the Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Revenue owned and controlled properties $ 422,089 $ 404,200 $ 1,230,418 $ 1,180,567 Operating expenses owned and controlled properties (275,539) (272,330) (809,094) (78
Slide 51: Calculation of Historic Facility NOI
Calculation of Historic Facility NOI ($ in thousands) 2001 2002 2003 2004 2005 2006 2007 2008 Owned & Managed (O&M) Facilities $ 155,260 $ 159,768 $ 209,263 $ 224,339 $ 242,014 $ 307,803 $ 373,078 $ 431,192 Managed Only Facilities 51,880 53,896 51,307 54,024 54,401 50,612 48,593 50,122 Leased Facili
Slide 52: 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, 2016 2015 2016 2015 Net income $ 55,340 $ 50,676 $ 159,230 $ 173,256 Interest expense, net 16,937 11,764 51,277 33,715 Depreciation and amortization 42,924 41,230 12
Slide 53: Reconciliation to 2016 Guidance EPS, FFO and AFFO
Reconciliation to 2016 Guidance EPS, FFO and AFFO ($ in thousands, except per share amounts) Fourth Quarter 2016 Full-Year 2016 Low High Low High Net income $ 49,000 $ 50,000 $ 208,205 $ 209,205 Expenses associated with mergers and acquisitions 400 400 2,000 2,000 Gain on settlement of contingent co
Slide 54: Reconciliation to 2016 Guidance EBITDA and Adjusted EBITDA
Reconciliation to 2016 Guidance EBITDA and Adjusted EBITDA ($ in thousands, except per share amounts) Fourth Quarter 2016 Full-Year 2016 Low High Low High Net income $ 49,000 $ 50,000 $ 208,205 $ 209,205 Interest expense, net 16,000 16,500 67,000 67,500 Depreciation and amortization 40,000 40,000 16
Slide 55: Reconciliation to 2017 Guidance
Reconciliation to 2017 Guidance ($ in thousands, except per share amounts) Full-Year 2017 Low High Net income $ 164,000 $ 176,000 Expenses associated with mergers and acquisitions 2,000 2,000 Adjusted Net Income $ 166,000 $ 178,000 Net income $ 164,000 $ 176,000 Depreciation of real estate assets 90
Slide 56: CoreCivic
& coreCivic