Corecivic, Inc. · NYSE:CXW
Corecivic — Investor Presentation (May 2019)
36 slides from Corecivic's investor presentation, May 2019
Slide 1: Investor Overview First Quarter 2019
Investor Overview First Quarter 2019
Slide 2: Table of Contents
Table of Contents CoreCivic at a Glance 2-5 Complementary Operating Segments & Diversification Strategy 6-20 ESG and Rehabilitation Focus 21-24 Financials 25-26 Appendix 27-34 Investment Thesis 35 c 1
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 8.0%
Slide 4: 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 Executing diversification strategy to drive
Slide 5: CoreCivic Snapshot of Segment Data
CoreCivic Snapshot of Segment Data CoreCivic Revenue & Net Operating Combined Properties and Community NOI Income by Segment Segments Revenue Trend Growth Q1 2019 Revenue Q1 2019 NOI $30.6M $7.1M $19.1M $13.5M Community NOI $107.6M CAGR: 33.5% $101.8M $74.3M $61.4M $434.3M $117.7M $20.3M $14.8M $65.
Slide 6: Significant Addressable Market Opportunity
Significant Addressable Market Opportunity Continuing demand from Targeted asset-class has a 4.5 million adults were under community USMS, ICE and BOP strong annual pipeline supervision (parole, probation or monitoring) at the end of 2016(3) 20 states and the BOP with ≈$3 billion in annual governmen
Slide 7: Complementary Business Segments
Complementary Business Segments Safety Properties Community Government tenants Customers 2020 Target Business Mix 75% 25% (% of NOI) Market existing capacity to meet federal Leverage differentiated capabilities to Expand incrementally to strengthen Strategy and state market demands expand in unique
Slide 8: 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 first quarter of 2019 • Currently activating 2 previously idle facilities, representing 2,332 b
Slide 9: Executing Diversification Strategy
Executing Diversification Strategy Continue Community Market existing corrections segment’s incremental capacity to meet urgent expansion federal & state demands for Drive sustainable FFO growth, using modern infrastructure multiple paths for organic expansion and acquisitions Expand upon innovative
Slide 10: Diversification Strategy Has Increased Cash Flow Stability
Diversification Strategy Has Increased Cash Flow Stability CoreCivic has reduced dependence on BOP, California and low-margin managed-only contracts Entity Revenue % 2010 Revenue % Q1 2019 Variance Federal Bureau of Prisons 15% 6% (9%) (correctional facilities) California 13% 2% (11%) (out-of-state
Slide 11: CoreCivic: Safety
CoreCivic: Safety • Provide high quality correctional and detention services to federal, state and local government agencies Strategy • Provide innovative, comprehensive, flexible turn-key solutions to government partners • Supply just-in-time correctional and detention capacity • Near-term goal: Ma
Slide 12: Track Record of New Contract Awards in Safety
Track Record of New Contract Awards in Safety Date Details May 2019 The U.S. Marshals Service (USMS) enters into a new contract to house inmates at our 1,422-bed Eden Detention Center May 2019 Immigration and Customs Enforcement (ICE) enters into a new contract to house adult detainees at our 910-be
Slide 13: Ability to Help Government Meet Demands for Modern Infrastructure
Ability to Help Government Meet Demands for Modern Infrastructure As of March 31, 2019: 8 idle prison and detention facilities, including 9,814 beds Facility State Design Date Idled • May 2019: Capacity 2 new federal contract awards to activate 2 Eden Detention Center – ACTIVATION IN TX 1,422 2017
Slide 14: Leverage Existing Facilities to Solve Government Partners' Challenges
Leverage Existing Facilities to Solve Government Partners' Challenges • Owned & Operated correctional North Fork Correctional Facility Tallahatchie County Cibola County Corrections Correctional Facility Center facilities can be easily converted to a leased facility, operated by a government partner
Slide 15: CoreCivic: Properties
CoreCivic: Properties • Acquire and manage government-leased real estate, with bias toward mission-critical tenants Strategy • Growth in government-leased assets supports portfolio diversification • Expand on innovative build-to-suit lessee model • Began diversification with first government-leased
Slide 16: Detail: Acquisitions of Government-Leased Real Estate
Detail: Acquisitions of Government-Leased Real Estate Acquisition Date of Acquisition # of Facilities State(s) of Operation Square Footage Acquisition Price 4 Facility RRC Portfolio August 2015 4 Pennsylvania 72,000 $13.8m Long Beach, CA June 2016 1 California 16,000 $7.7m Stockton Female Community
Slide 17: Acquire New Properties with State and Local Tenants
Acquire New Properties with State and Local Tenants to Utilize Core Competence in Management and Maintenance • Core competency: Long-standing government relationships and real estate management capabilities built over the company's 35-year history Unique strategy that leverages existing resources
Slide 18: Leverage Government Relationships to Expand Build-to-Suit Lessee Model
Leverage Strong Government Relationships to Expand Innovative Build-to-Suit Lessee Model Case Study: Lansing Correctional Facility • Core competency: Efficient builders of essential infrastructure Currently marketing solutions to address overwhelming criminal justice infrastructure needs across co
Slide 19: CoreCivic: Community
CoreCivic: Community • Reduce recidivism rates by helping offenders transition successfully to society Strategy • Continue incremental expansion through acquisitions • Expand the scope of correctional alternative solutions provided to government agencies • 27 facilities with ~5,300 beds • Second-lar
Slide 20: Detail: Consistent Growth in Community Segment
Detail: Consistent Growth in Community Segment Date of # of # of Acquisition Acquisition Acquisition Facilities State(s) of Operation Beds Price Correctional Alternatives, Inc. July 2013 2 California 603 $36.5m Avalon Correctional Services, Inc. October 2015 11 Oklahoma, Texas, Wyoming 3,157 $157.5m
Slide 21: Continue Incremental Expansion, Building on Position as Industry Consolidator
Continue Incremental Expansion, Building on Position as Industry Consolidator • Core competency: Industry consolidation; second largest residential reentry facility provider in the United States Anticipate adding capacity gradually over next 3-5 years through accretive acquisitions • Established r
Slide 22: 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 23: 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 24: 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 25: 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 26: Strong Balance Sheet with Low Cost of Capital
Strong Balance Sheet with Low Cost of Capital Debt Maturity Schedule as of March 31, 2019 Our low cost of capital is a competitive advantage $800M $734M • Weighted average cost of debt: 4.78% $700M $600M Next significant maturity in 2020 $500M $400M $344M Debt rated one notch below investment
Slide 27: 2019 Financial Guidance
2019 Financial Guidance(1) Q2 2019 Guidance Low-End High-End Diluted EPS $ 0.39 $ 0.41 Adjusted Diluted EPS(2) $ 0.40 $ 0.42 Normalized FFO per diluted share(2) $ 0.62 $ 0.64 AFFO per diluted share(2) $ 0.60 $ 0.62 Adjusted EBITDA(2) (in $ 000s) $ 107,500 $ 108,500 Full Year 2019 Guidance Low-End Hi
Slide 28: Appendix
Appendix
Slide 29: Numerous Publicly Known Opportunities in All Segments
Numerous Publicly Known Opportunities in All Segments Properties Alabama • The Governor is pursuing a plan to construct 3 new prisons, replacing up to 13 outdated and overcrowded facilities, at an estimated cost of up to $1 billion. Properties Oklahoma • We are actively marketing a potential long-te
Slide 30: Utilizing Available Capacity Drives Earnings Growth
Utilizing Available Capacity Drives Earnings Growth Total Beds Available at Average Estimated Potential Annual March 31, 2019 Margin(1) Incremental EBITDA CoreCivic Safety - Vacant Facility Capacity(2) 9,814 $ 21.64 $ 77,516,860 CoreCivic Safety - Operating Facilities with > 100 beds available(3) 3,
Slide 31: Reconciliation to Adjusted Diluted EPS
Reconciliation to Adjusted Diluted EPS ($ in thousands, except per share amounts) For the Twelve For the Quarter Ended Months Ended March 31, December 31, 2019 2018 2018 Net income $ 49,340 $ 37,777 $ 159,207 Special items: Expenses associated with debt refinancing transactions - - 1,016 Charges ass
Slide 32: Calculation of FFO, Normalized FFO and AFFO
Calculation of FFO, Normalized FFO and AFFO ($ in thousands, except per share amounts) For the Twelve For the Quarter Ended Months Ended March 31, December 31, 2019 2018 2018 Net income $ 49,340 $ 37,777 $ 159,207 Depreciation and amortization of real estate assets 26,599 24,408 101,771 Impairment o
Slide 33: Calculation of NOI
Calculation of NOI ($ in thousands) For the Quarter Ended For the Twelve Months Ended March 31, December 31, 2019 2018 2018 Revenue Safety $ 434,318 $ 404,498 $ 1,675,998 Community 30,566 24,800 101,841 Properties 19,112 11,615 57,899 Other 68 3 28 Total revenues $ 484,064 $ 440,916 $ 1,835,766 Oper
Slide 34: Calculation of EBITDA and Adjusted EBITDA
Calculation of EBITDA and Adjusted EBITDA ($ in thousands) For the Twelve For the Quarter Ended Months Ended March 31, December 31, 2019 2018 2018 Net income $ 49,340 $ 37,777 $ 159,207 Interest expense 21,910 19,275 82,129 Depreciation and amortization 35,523 38,089 156,501 Income tax expense 2,484
Slide 35: Reconciliation to 2019 Guidance
Reconciliation to 2019 Guidance ($ in thousands, except per share amounts) Second Quarter 2019 Full-Year 2019 Low High Low High Net income $ 46,500 $ 48,500 $ 183,000 $ 190,000 Expenses associated with mergers and acquisitions 1,000 1,000 3,000 3,000 Adjusted net income $ 47,500 $ 49,500 $ 186,000 $
Slide 36: 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 Executing diversification strategy to drive