CoreCivic, Inc. — FY 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report; quarterly results are not clearly provided in the supplied filing text.
Business context
CoreCivic operates correctional and detention facilities, residential reentry centers, electronic monitoring and related services, and government-leased real estate through its Safety, Community, and Properties segments. At year-end, it operated 46 Safety facilities with approximately 69,400 beds, owned and operated 26 Community centers with approximately 5,000 beds, and owned 10 Properties-segment assets totaling 1.8 million square feet.
Key financial and operating metrics
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Revenue | $1.863 billion | $1.905 billion |
| Net income (loss) attributable to common stockholders | $(51.9) million; $(0.43) per diluted share | $54.2 million; $0.45 per diluted share |
| Cash from operating activities | $263.2 million | $355.5 million |
| Average compensated occupancy, operated facilities | 72%; 71.5% for the man-day metric | 74%; 74.1% for the man-day metric |
- Revenue declined 2.3%. Facility net operating income, a company-defined measure of facility revenue less operating expenses, was $525.6 million, down from $499.4 million in 2020? The filing reports $525.6 million for 2021 and $499.4 million for 2020, an increase of $26.3 million.
- Operating expenses were $1.337 billion, down 4.9%; general and administrative expense was $135.8 million, up from $124.3 million. Revenue per compensated man-day rose 6.1% to $89.86, while operating expenses per man-day rose to $65.67; reported operating margin per man-day increased to 26.9% from 24.4%.
- Segment facility net operating income: Safety $457.0 million (2020: $417.3 million); Community $17.8 million (2020: $17.1 million); Properties $50.8 million (2020: $65.0 million). Safety generated 85.5% of total segment net operating income.
- Year-end cash and cash equivalents were $299.6 million. The company reported $786.1 million available under its $800 million revolving facility and no revolver borrowings at year-end.
- Total debt was $1.552 billion, down from $1.810 billion. Weighted-average effective interest rate was 6.5%, weighted-average maturity 5.1 years, debt leverage ratio 2.9x versus 3.7x in 2020, and fixed-charge coverage ratio 3.6x.
- Normalized FFO, a non-GAAP measure, was $225.5 million versus $271.8 million. The company cautions that FFO is not a substitute for GAAP earnings or operating cash flow.
Material changes and unusual items
- Revenue fell mainly because average compensated population declined 6.6% to 53,613, reflecting COVID-related restrictions and reduced state, local, and reentry populations. Higher per-diem rates and federal revenue partly offset the decline. Federal revenue rose 5.2% to $1.051 billion; state revenue fell 5.4% to $602.1 million; local revenue fell 37.0% to $51.5 million.
- The net loss included $138.0 million of income tax expense, including $114.2 million primarily from revaluing deferred tax liabilities after the company revoked its REIT election effective January 1, 2021. Other significant items included $54.3 million of shareholder-litigation expense, $56.3 million of debt repayment and refinancing expense, $11.4 million of asset impairments, and a $38.8 million gain on real estate sales.
- CoreCivic issued $675 million of 8.25% senior notes due 2026, redeemed $250 million of 5.0% notes due 2022, repurchased part of its 4.625% notes, and repaid $90 million of Term Loan B. It reported repaying approximately $444 million of indebtedness, net of the change in cash, during 2021.
- Real estate sales generated $320.8 million in net proceeds from asset sales in investing activities. Property dispositions reduced Properties-segment revenue and earnings.
- The company discontinued its quarterly dividend as part of its shift from REIT status to a taxable C corporation. No common-stock dividend was declared for 2021.
Outlook, commentary, and risks
- Management said it expects liquidity to be sufficient for cash requirements over the next year and beyond, using cash, operating cash flow, and revolving-credit availability. Debt reduction remains the first capital-allocation priority; shareholder returns and growth investment are planned afterward. No specific company-wide earnings or revenue guidance is provided in the supplied text.
- A new Arizona contract provides for up to 2,706 inmates at La Palma Correctional Center. Population transfers were expected to begin in late Q1 or early Q2 2022 and finish in Q4 2022; management estimated annualized revenue of $75–$85 million at full utilization, while warning of a transition-related earnings and cash-flow interruption.
- Federal customer exposure is substantial: ICE generated 30% of 2021 revenue ($552.2 million), USMS 23% ($433.6 million), and BOP 3% ($64.7 million). The Private Prison Executive Order applies to DOJ agencies BOP and USMS, not ICE; several USMS contracts were not renewed, and BOP contract renewal and future utilization remain uncertain.
- COVID-19, changing immigration and criminal-justice policies, occupancy, government appropriations, contract renewals, and public opposition to privatization may affect demand and revenue. The company also cites labor shortages, wage and inflation pressures, self-insurance exposure, litigation, facility impairment risk, and reliance on a limited set of government customers.
- The Bank Credit Facility and Term Loan A mature in April 2023; the $173.7 million 4.625% notes mature in May 2023, and Term Loan B matures in December 2024. The company expected to pursue a new or amended credit facility and noted that some banks have announced restrictions on financing private correctional and detention operators.
Important facts for investors to verify
- Whether the Arizona La Palma contract reaches planned occupancy on schedule and achieves the stated $75–$85 million annualized revenue estimate.
- Replacement utilization and contract outcomes for idled West Tennessee and Leavenworth facilities, and renewal or utilization decisions for BOP, USMS, and other near-term expiring contracts.
- Progress refinancing or replacing credit facilities maturing in 2023, related borrowing costs, covenant headroom, and continued debt reduction.
- How much of the 2021 GAAP loss reflects one-time tax and other charges, and how cash generation and occupancy perform after those items and pandemic disruptions.
- Potential additional legal, insurance, or asset-impairment exposure; management states some claims cannot yet be reasonably estimated.