CoreCivic's Q4 2024: Conflicting Signals on ICE Capacity, Demand, and Revenue Potential
Earnings DecryptTuesday, Feb 11, 2025 8:02 pm ET
3min read
These are the key contradictions discussed in CoreCivic's latest 2024Q4 earnings call, specifically including: Capacity and Demand Assessment, ICE Detention Capacity, ICE detention capacity and budget constraints, South Texas facility's contract termination and ICE's response, ICE population trends and capacity requirements, and Federal Contract Revenue per Compensated Mandate:
Strong Financial Performance Despite Challenges:
- CoreCivic generated $479.3 million in revenue for Q4 2024, a 2% reduction compared to the prior year quarter.
- However, excluding the South Texas Family Residential Center closure and California City Correctional Center lease expiration, underlying revenue growth increased 8% against the prior year quarter.
- The decrease in Q4 revenue was primarily due to the contract termination at the South Texas facility and the lease expiration in California, offset by increased occupancy across other facilities.
ICE and Federal Partner Demand:
- Revenue from ICE, CoreCivic's largest partner, declined 22% year-over-year in Q4 2024.
- Excluding the South Texas facility, revenue increased 5% year-over-year, indicating continued detention capacity needs despite a political transition.
- The decline was due to the contract termination at the South Texas facility, while the increase in ICE capacity usage was supported by existing contracts.
State and Local Government Contracts:
- CoreCivic's state revenue from safety and community segments grew 6.4% in Q4 2024 compared to the prior year quarter.
- This increase was driven by higher per diem rates and higher occupancy, as well as contributions from new contracts with Wyoming and Montana.
- The growth reflects successful contract awards and increased utilization from new partners, including a recent contract expansion with Montana.
Capital Structure and Share Repurchase:
- CoreCivic repaid $95 million of debt in 2024 and repurchased $68.5 million of shares under its $350 million share repurchase program.
- The company expects adjusted funds from operations to range from $148.5 million to $165.5 million for 2025, supporting continued capital allocation decisions.
- These actions are part of CoreCivic's focus on reducing leverage and maintaining financial flexibility in anticipation of growth opportunities.
Strong Financial Performance Despite Challenges:
- CoreCivic generated $479.3 million in revenue for Q4 2024, a 2% reduction compared to the prior year quarter.
- However, excluding the South Texas Family Residential Center closure and California City Correctional Center lease expiration, underlying revenue growth increased 8% against the prior year quarter.
- The decrease in Q4 revenue was primarily due to the contract termination at the South Texas facility and the lease expiration in California, offset by increased occupancy across other facilities.
ICE and Federal Partner Demand:
- Revenue from ICE, CoreCivic's largest partner, declined 22% year-over-year in Q4 2024.
- Excluding the South Texas facility, revenue increased 5% year-over-year, indicating continued detention capacity needs despite a political transition.
- The decline was due to the contract termination at the South Texas facility, while the increase in ICE capacity usage was supported by existing contracts.
State and Local Government Contracts:
- CoreCivic's state revenue from safety and community segments grew 6.4% in Q4 2024 compared to the prior year quarter.
- This increase was driven by higher per diem rates and higher occupancy, as well as contributions from new contracts with Wyoming and Montana.
- The growth reflects successful contract awards and increased utilization from new partners, including a recent contract expansion with Montana.
Capital Structure and Share Repurchase:
- CoreCivic repaid $95 million of debt in 2024 and repurchased $68.5 million of shares under its $350 million share repurchase program.
- The company expects adjusted funds from operations to range from $148.5 million to $165.5 million for 2025, supporting continued capital allocation decisions.
- These actions are part of CoreCivic's focus on reducing leverage and maintaining financial flexibility in anticipation of growth opportunities.
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