CoreCivic, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing, not a standalone fourth-quarter report; the supplied filing text does not provide a clear set of Q4-only financial results.
Business context
CoreCivic provides correctional and detention management, residential reentry services, electronic monitoring, and government real estate solutions through CoreCivic Safety, Community, and Properties. At year-end, it operated 44 correctional and detention facilities, owned and operated 23 residential reentry centers, and owned 8 government-leased properties. Federal customers generated 54% of revenue; ICE alone generated 29% and the U.S. Marshals Service 22%.
Financial results and liquidity
| Metric | FY 2022 | FY 2021 | Change |
|---|---|---|---|
| Revenue | $1,845.3 million | $1,862.6 million | Down 0.9% |
| Net income (loss) attributable to common stockholders | $122.3 million | $(51.9) million | Returned to profitability |
| Diluted earnings (loss) per share | $1.03 | $(0.43) | Improved |
| Cash from operating activities | $153.6 million | $263.2 million | Down $109.6 million |
| Operating expenses | $1,413.8 million | $1,337.1 million | Up 5.7% |
- Revenue was supported by state management revenue growth of 11.1% to $669.2 million, largely from Arizona’s La Palma contract and higher state populations and per-diem rates. Federal management revenue fell 5.3% to $994.7 million; local revenue fell 31.1% to $35.5 million.
- Average compensated occupancy across operating correctional, detention, and reentry facilities was 70.3%, versus 71.5% in 2021. Revenue per compensated man-day increased to $93.26 from $89.86, but operating expenses per man-day rose faster, to $72.72 from $65.67. Operating margin declined to 22.0% from 26.9%.
- Segment net operating income was $370.5 million for Safety (down from $457.0 million), $17.2 million for Community (down from $17.8 million), and $44.2 million for Properties (down from $50.8 million). Safety remained the largest contributor.
- Net income included an $87.7 million gain on real estate sales, $8.1 million in debt repayment/refinancing expenses, $4.4 million in impairments, $1.9 million in shareholder litigation expense, and $43.0 million in income tax expense. The 2021 loss included $54.3 million of shareholder litigation expense, $56.3 million of debt-related expenses, and a $138.0 million tax expense, including a substantial charge associated with the REIT-to-C-corporation conversion.
- Operating cash flow decreased principally because facility net operating income declined and working-capital movements were less favorable. Investing activities provided $73.0 million, including $157.7 million of net asset-sale proceeds; financing activities used $375.2 million, including debt repayment and share repurchases.
- Year-end cash and cash equivalents were $149.4 million, with $233.2 million available on the $250 million revolving facility. Current assets were $513.7 million and current liabilities $450.8 million. Total debt was $1,264.5 million; weighted-average effective interest rate was 7.1%, weighted-average maturity 4.9 years, and reported leverage ratio 3.2x.
Changes, outlook, and key risks
- Operations and contracts: The Arizona contract at La Palma began in April 2022 and the population transfer was substantially completed by year-end. At full utilization, management expected annualized revenue of approximately $75–$85 million at La Palma. The McRae BOP contract expired without renewal after the facility was sold; the sale generated $129.7 million in net proceeds and a $77.5 million gain. Management renewed 8 of 9 Safety contracts and all 13 Community contracts scheduled to expire during 2022.
- Debt and capital allocation: CoreCivic refinanced its bank facility in May 2022, extending maturity to May 2026 and reducing facility capacity from $1.0 billion to $350 million, including a $250 million revolver. It repaid the $124.1 million Term Loan B and repurchased $80.8 million principal amount of senior notes during 2022. After year-end, it redeemed the remaining $153.8 million of 4.625% notes on February 1, 2023; management stated this left no debt maturities until 2026. The company repurchased 6.6 million shares for $74.5 million in 2022 under a $225 million authorization. Debt reduction remains the stated first priority, followed by shareholder returns and growth opportunities; no specific earnings guidance was provided.
- Demand and policy uncertainty: Management cited potential demand from overcrowding, aging public facilities, and government staffing difficulties, but occupancy remained below pre-pandemic levels. Title 42 litigation and immigration policy could affect ICE populations and facility utilization. The 2021 federal executive order restricts DOJ contracts with privately operated criminal detention facilities; the company noted uncertainty around USMS contract renewals, including a direct contract expiring in September 2023.
- Contract concentration and property exposure: The California Department of Corrections and Rehabilitation notified the company of its intent to terminate the lease at California City by March 31, 2024, citing declining inmate populations. The lease generated $34.0 million in 2022 revenue; funding beyond June 30, 2023 depended on the state budget process. Management also identified 38 contracts with scheduled maturity dates on or before year-end 2023, representing $645.8 million, or 35%, of 2022 revenue, notwithstanding renewal options.
- Costs and other risks: Labor shortages, higher wages, temporary staffing incentives, registry nursing, travel, and inflation pressured margins. Management expected to continue staffing investment in 2023, with benefits uncertain. Other material risks include government appropriations and termination rights, litigation, self-insurance claims, regulatory and operational compliance, cyber/privacy incidents, and impairment risk on idle facilities. The company reported $195.6 million of net book value in seven idle Safety facilities.
- Tax and distributions: The company has operated as a taxable C corporation since January 1, 2021 and no longer pays a regular common dividend; future dividends remain subject to board decisions and debt covenants.
Important facts for investors to verify
- Whether La Palma reaches expected utilization and annualized revenue, and whether resulting margins offset staffing and transition costs.
- Renewal, replacement, or termination outcomes for the September 2023 USMS contract, California City lease, and other near-term contract expirations.
- Current debt balances, refinancing terms, covenant headroom, interest-rate exposure, and cash available after the February 2023 note redemption and share repurchases.
- Whether operating cash flow stabilizes as occupancy recovers and labor, insurance, and other operating costs evolve.
- Potential impairment charges or additional carrying costs for idle facilities, and the completion and proceeds of properties classified as held for sale.
Audit: Ernst & Young issued an unqualified opinion on the consolidated financial statements and reported effective internal control over financial reporting as of December 31, 2022.