CoreCivic, Inc. — FY 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This filing reports annual results; it does not provide a clear standalone fourth-quarter income statement summary. Amounts below are in U.S. dollars.
Business context
CoreCivic provides correctional and detention management, residential reentry services, and government real estate solutions through CoreCivic Safety, Community, and Properties. At year-end it operated 47 correctional and detention facilities, owned and operated 27 reentry centers, and owned 15 properties leased to government agencies. Federal correctional and detention authorities accounted for 52% of FY 2020 revenue.
Financial performance and liquidity
| Metric | FY 2020 | FY 2019 | Change |
|---|---|---|---|
| Revenue | $1,905.5 million | $1,980.7 million | Down 3.8% |
| Operating income | $162.7 million | $281.6 million | Down 42.2% |
| Net income attributable to common stockholders | $54.2 million | $188.9 million | Down 71.3% |
| Diluted EPS | $0.45 | $1.59 | Down 71.7% |
| Cash from operating activities | $355.5 million | $354.4 million | Up $1.1 million |
- Revenue drivers: Management revenue fell 4.8% to $1,812.2 million, primarily due to lower populations. Average compensated population declined 10.5% to 57,392. Lease revenue rose 20.4% to $93.1 million, reflecting property acquisitions and new leases.
- Occupancy and margins: Average compensated occupancy across Safety and Community was 74.1%, versus 81.9% in 2019. Revenue per compensated man-day rose to $84.71 from $79.72, but operating margin declined to 24.4% from 26.9%; operating income per compensated man-day fell to $20.65 from $21.41.
- Segment results: Safety facility net operating income was $417.3 million, down from $475.8 million; Community was $17.1 million, down from $28.1 million; Properties was $65.0 million, up from $54.5 million.
- Cash flow and capital spending: Operating cash flow was $355.5 million. Investing activities provided $13.0 million, including asset-sale proceeds, while financing activities used $350.8 million. Capital expenditures were $159.5 million.
- Debt and liquidity: Total debt was $1.810 billion at year-end, compared with $1.987 billion a year earlier. Cash was $113.2 million, with $566.2 million available on the revolving facility. Weighted-average effective interest rate was 4.5%; debt leverage was 3.7x and fixed-charge coverage was 3.9x. The company reported compliance with debt covenants.
Material changes and unusual items
- The Board suspended the quarterly dividend in June 2020 and discontinued it, effective with the decision announced in August. The last declared quarterly dividend was $0.44 per share, payable in April 2020.
- CoreCivic ended its REIT election and became a taxable C corporation effective January 1, 2021. Management expects greater cash-flow flexibility and prioritizes debt reduction, followed by shareholder returns and growth opportunities. The filing estimates a one-time deferred-tax charge of $100–$135 million in the first quarter of 2021; ongoing federal and state income taxes will also apply.
- FY 2020 included $60.6 million of asset impairments, including a $42.6 million write-off of all Community-segment goodwill; a $13.0 million net loss on real estate sales; $7.1 million of debt-repayment and refinancing costs; $13.8 million of COVID-related expenses; and $5.2 million of costs related to the tax-structure change. FY 2019 included a $4.1 million after-tax contractual-dispute settlement gain, $4.7 million of impairments, and $9.5 million of start-up expenses.
- The company sold 42 non-core government-leased properties for $106.5 million, receiving net proceeds of $27.8 million after debt repayment and transaction costs. Three additional properties, with a reported net book value of $279.4 million, were held for sale at year-end.
- The company repaid approximately $200 million of debt, net of the change in cash, during 2020. Cash dividends paid during the year totaled $106.0 million, reflecting the earlier dividend declarations.
Outlook, risks, and contingencies
- Management expects pandemic-related effects—including reduced immigration detention populations, court activity, referrals, and government budgets—to continue, but cannot quantify their duration or financial impact. It described long-term demand for flexible capacity and modernization solutions as an opportunity, while stating it prefers stronger customer visibility before speculative development.
- President Biden’s January 2021 executive order directs the Attorney General not to renew DOJ contracts with privately operated criminal detention facilities. In FY 2020, USMS represented 21% of revenue ($396.3 million) and ICE 28% ($541.9 million); the company identified one BOP prison contract as 2% of revenue ($39.2 million), recently renewed through November 2022. The filing warns that non-renewal of USMS contracts could materially affect results.
- California’s AB32 and related litigation may restrict certain future federal contracts and renewals in California; the filing identifies possible exposure for the Otay Mesa contract, scheduled to expire in December 2024.
- Risks include contract termination or non-renewal, government appropriations, occupancy declines, customer concentration, staffing and insurance costs, litigation, regulation, and substantial debt with restrictive covenants. Several facility contracts representing $541.1 million, or 28% of FY 2020 revenue, were scheduled to expire by the end of 2021, notwithstanding renewal options.
- Contingencies include certified class claims concerning detainee labor practices and a securities class action scheduled for trial in May 2021. Management stated it could not reasonably predict the outcomes or estimate potential losses for those lawsuits; it intends to defend them.
- Management said it expected to meet cash expenditure requirements for the following year using cash and revolving-credit availability. It also noted that some banks have announced they do not expect to continue financing private correctional and detention operators; existing facility commitments were stated to run through April 2023.
Important facts for investors to verify
- Clarify the standalone fourth-quarter 2020 results: this annual filing does not provide a clear Q4 income statement summary.
- Track occupancy, federal and state populations, per-diem rates, and renewals—especially USMS and ICE exposure and contracts expiring in 2021.
- Confirm actual timing and amount of the estimated $100–$135 million tax-transition charge, and the effect of C-corporation taxes on earnings and free cash flow.
- Assess debt repayment progress, refinancing needs, covenant headroom, and the availability of revolving-credit commitments.
- Monitor proposed asset sales, the Alabama development projects’ financing and final lease costs, and the outcomes of the cited litigation and California AB32 proceedings.