Q4 2023 CoreCivic Inc Earnings Call

Yeah.

Operator: Standing by, and welcome to the core. Welcome to the recorded 2023 earnings call. At this time, all participants are in listen-only mode.

Thank you for standing by and welcome to the core Civic fourth quarter 2023 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone if your question.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again.

It has been answered and you'd like to remove yourself from the queue simply press Star One again as a reminder, today's program is being recorded and now I'd like to introduce your host for today's program Mr. Mike Grant managing director of Investor Relations. Thank you operator, good morning, ladies and gentlemen, and thank you for joining us today.

Operator: As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Mr. Mike Grant, Managing Director of Investor Relations. Thank you, Operator. Good morning, ladies and gentlemen, and thank you for joining us today.

Mike Grant: Participating on today's call are Damon Hininger, CoreCivic's President and Chief Executive Officer, and David Garfinkle, our Chief Financial Officer. We are also joined here in the room by our Vice President of Finance, Brian Hammond. On today's call, we will discuss our financial results for the fourth quarter of 2023, as well as financial guidance for the 2024 year. We'll also discuss developments with our government partners and provide you with other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provision of the Private Securities and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our fourth quarter 2023 earnings release issued after the market yesterday, and in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q, and 8- You are also cautioned that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future.

On today's call are Dave May hinder <unk>, President and Chief Executive Officer, and David Garfinkle, Chief Financial Officer.

Also joined here in the room by our Vice President of Finance, Brian habits.

On today's call, we will discuss our financial results for the fourth quarter of 2023, as well as financial guidance for the 2024 year.

We will also discuss developments with our government partners.

Mind, you with other general business updates.

During today's call our remarks, including our answers to your questions will include forward looking statements pursuant to the safe Harbor provision of the private Securities Litigation Reform Act.

Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our fourth quarter 2023 earnings release.

Issued after market yesterday.

And in our Securities and Exchange Commission filings, including forms 10-K, 10-Q, and 8-K reports.

You are also cautioned that any forward looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future.

Mike Grant: On this call, management will also discuss certain non-GAAP measures. A reconciliation of the most comparable gap measurement is provided in the corresponding earnings release and included in the company's quarterly supplemental financial data report posted on the investors page of the company's website at corecivic.com. With that, it's my pleasure to turn the call over to our President and CEO, Damon Hininger. Thank you, Mike.

Okay.

On this call management will also discuss certain non-GAAP measures.

A reconciliation to the most comparable GAAP measurement is provided in the corresponding earnings release.

And included in the Companys quarterly supplemental financial data report posted on the investors page of the company's website at core civic Dot com.

With that it's my pleasure to turn the call over to our President and CEO David <unk>.

Damon T. Hininger: Good morning, and thank you for joining us for our fourth quarter 2023 earnings call. On today's call, I will provide details of our fourth quarter financial performance and introduce our 2024 full year financial guidance. I will also discuss with you our latest operational developments and update you on the latest developments with our government partners. Following my remarks, I will turn the call over to our CFO, Dave Garfinkle, who will review our financial results and our 2024 financial guidance in greater detail.

Thank you Mike Good morning, and thank you for joining us for our fourth quarter 2023 earnings call.

On today's call I will provide details of our fourth quarter financial performance and introduce our 2020 for full year financial guidance.

I'll also discuss with you our latest operational developments.

And update you on the latest developments with our government partners.

Following my remarks, I'll turn the call over to our CFO, Dave Garfinkle, who will review our financial results and our 2024 financial guidance in greater detail.

Damon T. Hininger: He will also provide a more detailed update on our ongoing capital structure initiatives, including debt reduction, share buybacks, and our new bank credit facility attained in the fourth quarter. I'll now provide a brief overview of our fourth-quarter financial results. In the fourth quarter, we generated revenue of $491.2 million, which was a 4% increase compared to the prior year quarter.

He will also provide a more detailed update on our ongoing capital structure initiatives, including debt reduction share buybacks and our new bank credit facility attained in the fourth quarter.

Yes.

Now a brief overview of our fourth quarter financial results.

In the fourth quarter, we generated revenue of $491 2 million, which was a 4% increase compared to the prior year quarter.

Damon T. Hininger: This increase comes in spite of the expiration of our final prison contract with the Federal Bureau of Prisons at our previously owned McCray Correctional Facility in November of 2022 and the expiration of our lease agreement with the Oklahoma Department of Corrections at our North Fork Correctional Facility on June 30, 2023. Including these two expirations, our total revenue increased six percent, demonstrating strong organic and revenue growth from our CoreCivic safety and community portfolios. We generated normalized funds from operations, or FFO, of $51.3 million, or $0.45 per share, compared to $49.1 million, or $0.42 per share, in the fourth quarter of 2022, representing a per share increase of 7%. The increase in FFO was driven by higher federal and state populations combined with lower interest expense resulting from our debt reduction strategy.

This increase comes in spite of the exploration of our contract with the Federal Bureau of prisons at our previously owned Mcrae Correctional facility in November of 2022.

And the expiration of our lease agreement with the Oklahoma Department of Corrections at our North Fork Correctional facility.

June 32023.

Excluding these two expirations, our total revenue increased 6% demonstrating strong occupancy and revenue growth from our <unk> safety and community portfolios.

We generated normalized funds from operations or <unk> of 51.3 million or <unk> 45 per share compared to $49 1 million or <unk> 42 per share in the fourth quarter of 2022, representing a per share increase of 7%.

The increase in <unk> was driven by the higher federal and state populations combined with lower interest expense, resulting from our debt reduction strategy.

Damon T. Hininger: The increase in FSO occurred despite the sale of our McRae facility and the expiration of the lease with Oklahoma, which resulted in a combined reduction to EBITDA of $2.3 million from the prior year quarter. We have achieved significant improvements in our attraction and retention rates resulting from our staffing strategies, as well as an overall improvement in the hiring environment. That said, labor market pressures have necessitated temporary incentives and related incremental operating expense through 2023, including the fourth quarter. As we leave 2023, we believe that more favorable operating expense trends should continue as the tight labor market continues to loosen and as we continue to progress toward pre-pandemic staffing and oxy levels. As mentioned on the past several conference calls, we have made significant investments in our existing staff and have successfully increased our staffing levels through improved recruiting and retention.

The increase in <unk> occurred despite the sale of our Mcrae facility and the expiration of belief in Oklahoma, which resulted in a combined reductions to EBITDA of $2 3 million from the prior year quarter.

We have achieved significant improvement in our attraction and retention rates, resulting from staffing strategies as well as an overall improvement in the hiring environment.

That said labor market pressures have necessitated a temporary incentives and related incremental operating expense experience through 2023, including the fourth quarter.

As we leave 2023, we believe that more favorable operating expense trends should continue as a tight labor market continues to loosen.

And as we continue to progress towards pre pandemic staffing and oxy levels.

As mentioned on the past several conference calls we have made significant investments in our existing staff and have successfully increased our staffing level through improved recruiting and retention.

Damon T. Hininger: These were the right investments to make, and they have enabled us to reduce usage of temporary incentives and costs from the prior year quarter and have positioned us well to manage our customers' higher population needs. In the fourth quarter of 2023, we achieved our highest oxy rate since the second quarter of 2020, which, as you may recall, is the quarter immediately following the start of the COVID-19 pandemic response.

These words are REIT investors to make and they have enable us to reduce usage of temporary incentives and from the prior year quarter and have positioned us well to manage our customers higher population needs.

In the fourth quarter of 2023, we achieved our highest oxy rates since the second quarter of 2020, which as you may recall as the quarter immediately following the start of the COVID-19 pandemic response.

Damon T. Hininger: From the fourth quarter of 2022 to the fourth quarter of this year, Oxy in our safety segment increased from 72% to 74.7%, and Oxy in our community segment increased from 58.4% to 63.7%. The increase in oxygen in our safety segment primarily resulted from higher detention populations from our largest government partner, Immigration and Civil Customs Enforcement, or ICE. On May 11, Title 42, a temporary public health order issued by the CDC that had essentially closed our nation's border to asylum-seeking individuals since the onset of the COVID-19 pandemic, came to an end. At the same time, Oxy restrictions implemented during the pandemic at our ICE facilities also came to an end. Without the authority granted under Title 42 to deny entry to or quickly remove individuals from the United States, there has been an increase in the number of people in custody of the Department of Homeland Security, or DHS. ICE is one of the two agencies within DHS that is responsible for enforcing immigration laws, arresting, and detaining individuals who have entered the country illegally.

For the fourth quarter of 2022 to the fourth quarter of this year Oxy and our safety segment increased from 72% to $74 seven percentage and oxy in our community segment increased from $58.

<unk> to 63, 7%.

The increase in accuracy in our safety segment, primarily resulted from higher detention populations from our largest government partner immigration customs enforcement or ice.

On May 11.

<unk> 42, a temporary public health Warner issued by the CDC that had essentially closed our nation's border to asylum seeking individuals since the onset of the COVID-19 pandemic came to an N.

At the same time oxy restrictions implemented during the pandemic at our ice facilities also came to an end.

Without the authority granted under <unk> 42 to deny entry to more quickly remove individuals' from the United States. There has been an increase in the number of people constantly.

Department of Homeland security or DHS.

Ice is one of the two agencies within the DHS that is responsible for enforcing immigration laws arresting entertaining individuals who have entered the country illegally.

Damon T. Hininger: These activities have increased since the end of Title 42, and the country continues to report record numbers of people encountered at the southern border. Last quarter, we reported on the increase in demand for contingent capacity since Title 42 was lifted. From mid-May 2023 through December of 2023, the number of individuals in the custody of ICE increased 74%. Over the same period, ICE detention populations within our facilities increased 76 percent, which we believe was possible in part because of our investments in staffing.

These activities have increased since the end of title 42, and the country continues to report record numbers of people encounter at the southern border.

Last quarter, we reported on the increase in demand for any tissue capacity of 42 was lifted.

For mid May 2023 through December of 2023, the number of individuals.

Digital is in the advice increased 74%.

Over the same period ice detention populations within our facilities increased 76%, which we believe was possible in part because of our investments in staffing.

Damon T. Hininger: Because many of our federal contracts include a fixed payment component, the increase in residential populations does not result in a proportionate increase in our financial results as such facilities until the population is clear, the minimum compensated bed total associated with the fixed payment levels. However, most of our facilities are now at or above that level. The increased oxy in our safety segment also resulted from broad-based higher oxy levels from many of our state government partners, notably from the states of Arizona, Georgia, Idaho, and Colorado.

Because many of our federal contracts include a fixed payment component the increase in residential populations do not result in proportionate increase in our financial results as such facilities until collections clear that minimum compensated bad total associated with the fixed payment levels.

Most of our facilities are now at or above that level.

The increase oxy and our safety segment also resulted from a broad base higher oxy level for many of our state government partners, notably from the states of Arizona, Georgia, Idaho in Colorado.

Damon T. Hininger: Now it's in its second year under a management contract with the state of Arizona. Our La Palma Correctional Center in Eloy, Arizona, continues to show improvements in Oxy as well as operating and financial metrics. During the fourth quarter, we were able to sharply reduce the facility's reliance on temporary labor resources and incentives due to strong local hiring and oversight.

Now it's in second year under a management contract with the state of Arizona, Our La Palma Correctional Center at Eloy, Arizona continues to show improvement and oxy as well as operating and financial metrics.

During the fourth quarter, we were able to sharply reduce our facilities reliance on temporary labor resources and incentives due to strong local hiring and oversight.

Damon T. Hininger: The fourth quarter was an exceptionally busy quarter for new contracts, as our best-of-class services, demonstrated outcomes, and facilities provide a flexible resource to partners requiring our financial services. During the quarter, we signed and commenced three new management contracts, each of which boosts incremental revenue at already three facilities with available capacity. As a reminder, ours is a leveraged business model, and higher utilization of our facilities is correlated with expanded margins. In November, we announced a new management contract with the state of Montana to care for up to 120 male inmates at our 1,896-bed Saguaro Correctional Facility in Eloy, Arizona. The initial term of the contract is for two years, and it may be extended by mutual agreement.

The fourth quarter was an exceptionally busy quarter for new contracts as our best of class services demonstrated outcomes and facilities provide a flexible resource to partners requiring architectural services.

During the quarter, we signed and commenced three new management contracts each of which groups incremental oxy added already 40 facilities with available capacity.

As a reminder, ours as a leveraged business model and higher utilization of our facilities is correlated with expanded margins.

In November we announced a new management contract with the state of Montana to care for up to 120 male inmates are at our 1800 96 pass Oro Correctional facility and Eloy, Arizona.

The initial term of the contract is for two years and it may be extended by mutual agreement.

Damon T. Hininger: The total term, including renewals, is up to seven years. We completed the intake process for the 120 inmates before year-end. At December 31st, 2023, we will also care for approximately 875 residents from Hawaii and nearly 600 residents from the state of Idaho at our Seward Correctional Facility. This new contract represents an expansion of our relationship with the state of Montana, as we also manage for them the fully occupied, company-owned Crossroads Correctional Center in Shelby, Montana, under a separate management contract. Also in November, we announced a new management contract with the state of Wyoming to care for up to 240 inmates at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi.

Total term, including renewals is up to seven years.

We completed the intake process for the 120 and makes it for year end.

At December 31, 2023, we also care for 870, <unk> President from Hawaii, and nearly 600 residents from the state of Idaho adverse more correctional facility.

This new contract represents an expansion of our relationship with the state of Montana. As we also manage for them are fully occupied company own Crossroads Correctional Centre in Shelby, Montana under a separate management contract.

Also in November we announced a new master contract with the state of Wyoming to care for up to 240 inmates at our 2000 and 672 bed Tallahatchie County Correctional facility in Mississippi.

Damon T. Hininger: This is not our first time partnering with Wyoming, as we previously cared for their inmates under a management contract that had not been utilized since 2019. The term of the new contract runs through June 30th, 2026. The intake process for the 240 inmates was complete as of December 31st, 2023.

This is not our first time partnering with Wyoming as we've previously care for their inmates under a management contract that had not been utilized since 2019.

The term of the new contract runs through June 32026.

Len intake process for the 240 inmates was complete as of December 31 2023.

Damon T. Hininger: Finally, we announced a third new master contract during November. This new contract is with Harris County, Texas, to care for up to 360 inmates at the Tallahatchie County Correctional Facility. The contract includes the option for the county to access an additional 360 beds at the Tallahatchie facility. The initial contract term began on December 1st, 2023 and ends on November 30th of this year. The contract may be extended at the county's option for up to four additional one-year terms. We began receiving inmates from Harris County during the fourth quarter of 2023, and we anticipate the intake process to be complete during the first quarter of this year.

Finally, we announced a third new management contract during November.

This new contract is with Harris County, Texas to care for up to 360 inmates.

Henry County Correctional facility.

The contract includes the option for the county to access an additional 360 beds at the Tallahatchie facility.

The initial contract term began on December one 2023 and ends November 30 of this year.

The contract May be extended at the counties option for up to four additional one year terms.

We began receiving inmates from Harris County during the fourth quarter of 2023, and we anticipate the intake process to be complete during the first quarter of this year.

Damon T. Hininger: Also, as an update on our county relationships, at the end of the third quarter, we signed a new management contract with Hines County, Mississippi, for up to 250 adult male pretrial detainees, also at our Tallahassee County FREXEL facility. We completed the intake of that population during the fourth quarter. While historically, we have focused more on federal and state contracts, it is interesting to note that many large counties throughout the United States have begun to experience capacity constraints as a result of both larger populations and infrastructure problems. Expanded Kennedy jail populations typically precede growth in state prison populations as the jail population is adjudicated and sentenced. Furthermore, we've remained in discussions with several additional jurisdictions to help address their challenges in the near to long term.

Also as an update on our carrier relationships at the end of the third quarter, we signed a new management contract with Hinds County, Mississippi for up to 250 adult male pre trial detainees also at our Tallahatchie County Correctional facility.

We completed the intake of that population during the fourth quarter.

While historically, we have focused more on federal and state contracts and it's interesting to note that many large counties throughout the United States have begun to experience capacity constraints as a result, both larger populations and infrastructure problems.

Expanded county jail populations typically precedes growth in state prison populations as the GL population is adjudicated 10 sentence.

Further we remain in discussions with several additional jurisdictions to help address their challenges in the near to long term.

Damon T. Hininger: Now turning to our community segment, which is comprised of 23 residential re-entry facilities, we experienced an increase in occupancy of 63.7% in the fourth quarter of 2023 from 58.4% in the prior year period. Populations continue to improve across many of our facilities serving both the Bureau of Prisons, or BOP, as well as states including Texas and Colorado. We also provide electronic monitoring and case management services in our community segment.

Now turning to our community segment, which is comprised of 23 residential reentry facilities, we experienced an increase in oxy of 63, 7% in the fourth quarter of 2023.

I'm 58, 4% in the prior year period.

Populations continued to improve across many of our facilities, serving both the bureau of prisons or P. O P as well as states, including Texas and Colorado.

We also provide electronic monitoring and case management services in our community segment.

Damon T. Hininger: Our community segment represents a vital river mission and is often critical to the successful reentry of residents in our care. Net operating income in this segment increased 66 percent in the fourth quarter of 2023 from the prior year quarter due to the increase in occupancy as well as per diem increases we have been able to attain in contract renewals. We were also able to reduce temporary staffing incentives, just as we did in our safety segment.

Our community segment, representing <unk>.

Our mission and is often critical to the successful reentry of residents in our care.

Net operating income in this segment increased 66% in the fourth quarter of 2023 from the prior year quarter due to the increase in occupancy as well as per diem increases, we have been able to attain and contract renewals.

We were also able to reduce temporary staffing ascent is just as we did in our safety segment.

Damon T. Hininger: We expect oxytrin to continue in the community segment now that pandemic-related public health policies have come to an end and as more of our government partners return to these important residential reentry programs that help individuals be better prepared for successfully transitioning back from a period of incarceration into our communities. Finally, the high performance of our colleagues and the high quality of our facilities continue to be rewarded with long-term commitments from our government partners. We never take for granted renewals of existing management contracts and continue to enjoy a contract retention rate of 95% over the five years through 2023, including the renewal of all 34 management contracts in our safety and community segments that came up for renewal during the course of the year.

We expect the oxy trend to continue in the community segment now that pandemic related public health policies that come to an end and as more of our government partners returned to these important residential reentry programs that help individuals be better prepared for successfully transitioning back from a period of incarceration.

Into our communities.

Finally, the high performance of our colleagues and the high quality of our facilities continued to be rewarded with long term commitments from our government partners.

We never take for granted renewals of existing management contracts and continue to enjoy a contract retention rate of 95% over the five years through 2023, including the renewal of all 34 management contracts in our safety and community segments that came up for renewal during the course of the year.

Damon T. Hininger: As a reminder, we entered into an agreement with the state of Oklahoma to lease our 1,670-bed Davis Correctional Facility effective October 1, 2023. We successfully transitioned operations to the state, which is now operating our facility with government employees, effectively converting the facility from one that we own and operate in our safety segment to one that we simply lease to the state. That facility is now named the Allen Gamble Correctional Center and is now reported in our property segment.

Yeah.

As a reminder, we entered into an agreement with the state of Oklahoma to lease our 1600 70 beds Davis Correctional facility effective October one 2023.

We successfully transition operations to the state, which is now operating our facility with government employees at <unk>.

Thirdly, converting the facility from one in which we own and operate in our safety segment to one that we simply lease to the state.

That facility is now named the album Gamble Correctional Center and is now reported in our property segment.

Damon T. Hininger: We remain pleased to have reached a mutually advantageous contract for this facility, and we value our ongoing relationship with the state of Oklahoma. Looking forward, we remain optimistic about the long-term macro environment for our federal, state, and local business. Our governments are facing complex capacity, infrastructure, and population challenges, and we see increased opportunities to serve their growing needs. At the federal level, although we continue to see a steady increase in attention bed utilization, the long-term impact of the end of Title 42 is still unclear, as there are other factors that impact attention utilization levels the most. The most significant factor, historically, has been funding levels approved by Congress annually. However, the country is still facing significant challenges at the southern border, and geopolitical events only enhance the need for border security.

We remain pleased to have reached a mutually advantageous contract for this facility and we value our ongoing relationship with the state of Oklahoma.

Looking forward, we remain optimistic in the long term macro environment for our federal state and local business.

Our governments are facing complex capacity infrastructure and population challenges and we see increased opportunities to serve their growing needs.

At the federal level, although we continue to see a steady increase in attention better utilization.

A long term impact of the end of title 42 is still unclear as there are other factors that impact attention utilization levels by ice.

The most significant factor historically has been funding levels approved by Congress annually.

However, the country is still facing significant challenges at the southern border and geopolitical events only enhance the need for border security.

Damon T. Hininger: Although we are over a quarter of the way into the federal fiscal year, which ends September 30, 2024, the appropriations process for funding the remaining fiscal year remains in flux. Further, a supplemental funding bill proposed by the administration that includes significant funding for DHS and ICE has not been acted upon by Congress. While there is bipartisan recognition of the need to fund DHS and ICE more robustly to address challenges at the southern border, a funding resolution has not been reached. The outcome of the appropriations process is expected to have a significant impact on the overall population levels in our ICE facilities moving forward. And even though detention funding and related services are just part of the overall solution, we are positioned well to serve their needs.

Although we are over it another way into the federal fiscal year, which ends September 32024, the appropriations process for funding the remaining fiscal year remains in flux.

Further a supplemental funding bill proposed by the administration that include significant funding for DHS and ice has not been acted upon by Congress.

While there is bipartisan recognition of the need to find DHS and ice more robustly to address challenges at the southern border.

Funding resolution has not been reached.

Okay.

The outcome of the appropriations process is expect to have significant impact on the overall population levels.

And our ice facilities moving forward.

And even though it attention finding and related services are just part of the overall solution, we are positioned well to serve their needs.

Damon T. Hininger: Another part of the overall management of the border that could potentially expand the scope of services includes alternatives to detention. Earlier last year, ICE issued a Request for Information, or RFI, for Release and Reporting Management Services. This RFI is seeking information about monitoring technology, participant coordination services, including physical space, participant engagement and interactions, and program management and community service to help people comply with their immigration obligations. Though not yet funded by Congress and only in the early stages, the RFI is intended to apply to non-citizens released from DHS custody, and according to the RFI, involves engaging with a large portion of the 5.7 million individuals on the current non-detained dock At the state level, overall state budgets are in very good shape.

Another part of the overall management of the border that could potentially expand the scope of services includes alternatives to detention.

Earlier last year ice issued a request for information or RFID for release and reporting management services.

This RFID is seeking information about monitoring technology participant coordination services, including physical space participant engagement and interactions and program management and community service to help people comply with their immigration obligations.

Though not yet funded by Congress and only in the early stages. The RFA is intended to apply to non citizens released from DHS custody and according to the RFA involves engaging with a large portion of that $5 7 million individuals on a current now entertain docket.

At the state level overall state budgets are in very good shape.

Damon T. Hininger: Most of our state partners are reporting increases in their prison populations, and many states are also projecting further increases in their prison populations. Jail backlogs, which are a leading indicator of state prison populations, remain significant. Additionally, courts continue to normalize operations, and as cases are adjudicated, state correctional agencies will clearly be impacted. In summary, while challenges and uncertainties remain, the general macro environment in which we operate continues to improve, and our financial results have begun to reflect that improvement. Our occupancy is at a multi-year high, our margin has begun to reflect the operating leverage that comes with higher occupancy, and we are making solid progress against labor-related cost pressures that rose sharply during the COVID-19 period. In our press release, we introduced our 2024 full-year financial guidance. It includes a normalized FFO per share forecast, a range of $1.46 to $1.61, and even a range of $300 to $313 million. As we have been sharing on these calls for over a year, our lease with the state of California for our California City Correctional Center ends March 31st of this year.

Most of our Si partners are reporting increases in their prison populations and many states are also projecting further increases in their prison populations.

Joe backlogs, which are a leading indicator for state prison populations remains significant.

Additionally, sports continued to normalize operations and as cases or adjudicated state Correctional agencies will certainly be impacted.

In summary, while challenges and uncertainties remain the general macro environment in which we operate continues to improve and our financial results have begun to reflect that improvement.

Our oxy is at multiyear high our margin has begun to reflect the operating leverage that comes with higher occupancy and we are making solid progress against labor related cost pressures that rose sharply during the COVID-19 period.

In our press release, we introduced our 2020 for full year financial guidance any clues normalized <unk> per share forecast a range of $1 46 to $1 61, and EBITDA range of 300 to figuring $13 million.

As we have been sharing on these calls for over a year our lease with the state of California for our California City Correctional Center ends March 31 of this year.

David M. Garfinkle: That facility has generated slightly over $25 million in EBITDA, so the anticipated absence of that lease for the final three quarters of 2024 negatively impacts EBITDA and is reflected in our guidance. Obviously, we are focused on a solution to the pending lease expiration with the state of California at California City. Finding a positive solution for this facility, which is in a great location and is comprised of larger replica beds, is a top priority for CoreCivic. Now, I'll turn the call over to Dave Garfinkle, our CFO, who will provide a more detailed look at our financial results for the fourth quarter. He will also discuss in detail our financial guidance for 2024, as well as progress on our capital markets activities and further details about our new bank credit facility and capital allocation strategy, including debt reduction and share buybacks. Now, Dave, I'm looking forward to hearing from you.

That facility has generated slightly over $25 million in EBITDA. So the anticipated absence. So that leaves for the final three quarters of 2024 negatively impacts EBITDA.

And as reflected in our guidance.

Obviously, we are focused on a solution to the pending lease expiration with the state of California at California City.

Finding a positive solution for this facility, which is in a great location and is comprised of larger replicate beds is a top priority for core civic.

I'll now turn the call over to Dave Garfinkle, our CFO, who will provide a more detailed look at our financial results in the fourth quarter.

He will also discuss in detail our financial guidance for 2024, as well as progress on our capital markets activities.

And further details about our new bank credit facility and capital allocation strategy, including debt reduction and share buybacks.

Over to you Dave.

David M. Garfinkle: Thank you, Damon, and good morning, everyone. In the fourth quarter of 2023, we reported a net income of $0.23 per share compared to $0.21 per share in the prior quarter. Adjusting for special items, adjusted EPS during the fourth quarter of 2023 was 23 cents compared to 22 cents per share in the prior quarter; normalized FFO per share was $0.45 during the fourth quarter of 2023, compared to $0.42 in the prior quarter. As we disclosed last year, adjusted and normalized figures in the fourth quarter of 2022 included the impact of certain tax credits we were entitled to under the CARES Act. These credits were reflected as a reduction in operating expenses and favorably impacted per share results by two cents in the prior year quarter, net of related expenses resulting from the credits.

Thank you Damon and good morning, everyone in the fourth quarter of 2023, we reported GAAP net income of 23 per share compared to 21 cents per share in the prior year quarter.

Adjusting for special items adjusted EPS during the fourth quarter of 2023 was 23.

Paired with <unk> 22 per share in the prior year quarter.

Normalized <unk> per share was 45.

During the fourth quarter of 2023, compared with 42 cents in there.

Prior year quarter.

As we disclosed last year adjusted or normalized figures in the fourth quarter of 2022 included the impact of certain tax credits, we were entitled to under the Cares Act.

These credits were reflected as a reduction to operating expenses and.

And favorably impacted per share results by <unk> <unk>.

In the prior year quarter net of related expenses, resulting from the credits.

David M. Garfinkle: The increase in adjusted EPS and normalized FFO per share resulted from higher occupancy from federal and state populations, the continued normalization of our operating expense structure, and lower interest expense, partially offset by an increase in G&A expenses. The trend of increasing ICE detention populations nationwide continued during the fourth quarter, albeit at a slower pace than the second and third quarters following the expiration of Title 42 on May 11, 2023. Title 42 is a policy that has been used since March 2020 that denies entry at the U.S. border to asylum seekers and anyone crossing the border without proper documentation or authority in an effort to contain the spread of COVID-19.

The increase in adjusted EPS and normalized <unk> per share resulted from higher occupancy from federal and state populations. The continued normalization of our operating expense structure.

Our interest expense, partially offset by an increase in G&A expenses.

The trend of increasing ice detention populations nationwide continue during the fourth quarter, albeit at a slower pace than the second and third quarters. Following the exploration of title 42 on May 11 2023.

Total 42 of the policy that had been used since March 2020 that denied entry at the U S border to asylum seekers and anyone crossing the border without proper documentation or authority.

To contain the spread of COVID-19.

David M. Garfinkle: At December 31st, 2023, ICE detention populations nationwide were up to 37,131, a 5.2% increase from September 30th. Average daily ICE detention populations within our facilities increased by 2023 residents, or 23 percent, during the fourth quarter of 2023 compared with the third quarter. Note that due to fixed payments at certain of our facilities, increases in populations do not always result in incremental revenue and compensated occupancy because increases can occur at facilities where population levels were already included in our compensated population. Our average daily compensated population from ICE was up 7.5% from Q3 to Q4. Higher sequential ice populations combined with new contract awards and a continuing normalization of operating expenses contributed to the increase in normalized FFO per share from Q3 of 35 cents Operating margins in our safety and community facilities improved to 24.4% in the fourth quarter of 2023 compared to 24.1% in the prior year quarter and 21.3% in the third quarter of 2023; excluding the impact of the aforementioned tax credits, margins were 22.6% in the prior quarter.

At December 31, 2023 ice detention populations nationwide, we're up to 37131 or five 2% increase from September 30th.

Average daily ice detention populations within our facilities increased by 2023 residents or 23% during the fourth quarter of 2023 compared with the third quarter.

Note that due to fixed payments at certain of our facilities increases in populations do not always result in incremental revenue and compensated occupancy because increases kind of current facilities, where population levels were already included in our compensated population.

Our average daily compensated populations from ice was up seven 5% from Q3 to Q4.

Sequential ice populations combined with new contract awards and a continuing normalization of operating expenses contributed to the increase in normalized <unk> per share from Q3 of 35 to 45 in Q4, an increase of 29%.

And adjusted EPS from Q3 of 14 cents to <unk> 23 in Q4, an increase of 64%.

Operating margins in our safety and community facilities improved to 24, 4% in the fourth quarter of 2023 compared to 24, 1% in the prior year quarter and 21, 3% in the third quarter of 2023.

Excluding the impact of the aforementioned tax credits margins were 22, 6% in the prior year quarter.

David M. Garfinkle: The increase in our operating margins was due to the increases in occupancy, per diem increases we have been successful in obtaining, the continued normalization of operating expenses, and the successful transition of the Allen Gamble Correctional Center to a lease in our property segment. Compensated occupancy in our safety and community facilities was 74% in the fourth quarter of 2023 compared to 71.1% in the prior year quarter and up from 72% in the third quarter of 20 The increases in occupancy enabled us to leverage incremental revenue over our fixed operating expenses. The increase in revenue resulting from the increases in occupancy was amplified by the per diem increases we have been able to obtain, which increased 5.5% in the fourth quarter of 2022. During the fourth quarter, we were able to continue reducing certain incremental labor-related expenses, such as registry nursing, temporary wage incentives, and travel, despite inflation and labor market pressures that had been steadily easing over the past several quarters.

The increase in our operating margins was due to the increases in occupancy per diem increases we have been successful in obtaining the continued normalization of operating expenses and a successful transition of the Allen Gamble Correctional Center to a lease in our property segment segment.

Compensated occupancy and our safety and community facilities was 74% in the fourth quarter of 2023 compared to 71, 1% in the prior year quarter and up from 72% in the third quarter of 2023.

The increases in occupancy enabled us to leverage incremental revenue over our fixed operating expenses.

The increase in revenue, resulting from the increases in occupancy was amplified by per diem increases, we've been able to obtain which increased five 5% over the fourth quarter of 2022.

During the fourth quarter, we were able to continue reducing certain incremental labor related expenses, such as registry nursing temporary wage incentives travel despite inflation of labor market pressures that had been steadily easing over the past several quarters.

David M. Garfinkle: These three expense categories declined by $6.3 million from the fourth quarter of 2022 and $1.8 million from the third quarter of 2023. The successful transition of the Allen Gamble facility effective October 1st, 2023, improved operating margins in the fourth quarter of 2023, and will continue to provide a stable return in our property segment going forward. Turning next to the balance sheet, as previously disclosed, during the fourth quarter, we completed an amendment and extension of our bank credit facility, effectively replacing our previous bank credit facility, increasing the total size from $350 million to $400 million. The new bank credit facility increases available borrowings under the revolving credit facility, which remains undrawn, from $250 million to $275 million and increases the size of the term loan from an initial balance under the previous facility of $100 million to $125 million, extended the maturity date to October 2028 from May 2026, and relaxed certain covenants while maintaining a similar pricing structure. We remain focused on paying down debt and continue to make progress on our debt reduction strategy. Our debt reduction strategy resulted in a decrease in interest expense of $1.9 million in the fourth quarter of 2022 and a decrease in interest expense of $12 million for the full year of 2022.

These three expense categories declined by $6 $3 million from the fourth quarter of 2022, and $1 $8 million from the third quarter of 2023.

The successful transition of the Ellen Gamble facility effective October one 2023 improved operating margins in the fourth quarter of 2023 and will continue to provide a stable return in our property segment going forward.

Turning next to the balance sheet as previously disclosed during the fourth quarter, we completed an amendment and extension of our bank credit facility effectively replacing our previous bank credit facility, increasing the total size from 350 million to $400 million.

The new bank credit facility increases available borrowings under the revolving credit facility, which remains undrawn from 250 million to $275 million and increases the size of the term loan from an initial balance under the previous facility of $100 million to $125 million extended the maturity date to October 2020.

Eight from May 2026, and relaxed certain covenants, while maintaining a similar pricing structure.

We remain focused on paying down debt and continue to make progress on our debt reduction strategy. Our debt reduction strategy resulted in a decrease to interest expense of $1 9 million from the fourth quarter of 2022, and a decrease in interest expense of $12 million from the full year of 2022.

David M. Garfinkle: During 2023, we repaid $157.8 million of debt, or $130.3 million net of the change in cash. Additionally, during 2023, we repurchased $27.9 million of our unsecured notes in the open market, including $6.9 million in the fourth quarter, with clear visibility of reaching our targeted leverage ratio of two and a quarter to two and three quarters times. During the fourth quarter, we repurchased 872,000 shares of our common stock under our share repurchase program at an aggregate cost of $12.5 million, bringing our 2023 totals to 3.5 million shares at an aggregate cost of $38.1 million, or an average price of $10.97 per share.

During 2023, we repaid $157 $8 million of debt or $133 million net of the change in cash.

During 2023, we repurchased $27 $9 million of our unsecured notes in the open market, including $6 9 million in the fourth quarter.

With clear visibility of reaching our targeted leverage ratio of two of the quarters, two and three quarters times during the fourth quarter, we repurchased 872000 shares of our common stock under our share repurchase program at an aggregate cost of $12 $5 million, bringing our 2023 total to $3 5 million shares at.

In aggregate cost of $38 1 million or an average price of $10 97 per share.

David M. Garfinkle: Going forward, we expect to allocate our free cash flow toward both paying down debt and repurchasing shares, maintaining discipline on our targeted leverage ratio. Our leverage, measured by net debt to EBITDA, was 2.8 times using the trailing 12 months ended December 31st, 2023. As of December 31st, we had $122 million of cash on hand and an additional $257 million of borrowing capacity on our evolving credit facility, providing us with total liquidity of $379 million.

Going forward, we expect to allocate our free cash flow towards both paying down debt and repurchasing shares maintaining discipline on our targeted leverage ratio.

Our leverage measured by net debt to EBITDA was two eight times using the trailing 12 months ended December 31 2023.

As of December 31, we had $122 million of cash on hand, and an additional $257 million of borrowing capacity on our revolving credit facility, providing us with total liquidity of $379 million.

David M. Garfinkle: Moving lastly to a discussion of our 2024 financial guidance, we expect to generate EPS of 58 to 72 cents and FFO per share of $1.46 to $1.61. Our guidance reflects growth in state and local residential populations, largely attributable to the new contract awards obtained during the second half of 2023, when intakes under those contracts are substantially complete. Our state populations also reflect higher utilization expected under existing contracts that we began to experience in 2023. Our guidance further reflects an increase in our average daily federal population in 2024 compared with 2023, mainly due to the expiration of Title 42 in May. We expect these federal populations to remain stable throughout 2024.

Moving lastly to a discussion of our 2024 financial guidance, we expect to generate EPS of <unk> 58 to 72 and <unk> per share of $1 46 to $1 61.

Our guidance reflects growth in state and local residential populations largely attributable to the new contract awards obtained during the second half of 2023.

And takes under those contracts are substantially complete.

Our state populations also reflect higher utilization expected under existing contracts that we began to experience in 2023.

Our guidance further reflects an increase in our average daily federal populations in 2024, compared with 2023, mainly due to the exploration of title 42 in May.

We expect these federal populations to remain stable throughout 2024.

David M. Garfinkle: The most significant factor impacting detention utilization by our federal partners has historically been funding levels approved by Congress for ICE, as detention capacity is insufficient to meet the demand at the southern border. Funding under a continuing resolution for the Department of Homeland Security, including ICE, expires March 8. If Congress provides higher funding levels for detention beds or if the highly publicized supplemental funding bill is approved to include additional funding for border security, there could be upside to our guidance. Our guidance contemplates the continuation of an improving hiring market for labor with less reliance on temporary incentives, but resulting in higher staffing costs as we continue to progress toward pre-COVID staffing levels. Our guidance contemplates the expiration of the lease with the state of California at our California City Correctional Center, effective March 31st, 2024.

The most significant factor impacting detention utilization by our federal partners has historically been funding levels approved by Congress for ice as detention capacity is insufficient to meet the demand at the southern border.

Funding under a continuing resolution for the department of Homeland security, including ice expires March eight <unk>.

Congress provides higher funding levels for detention beds or at the highly publicized supplemental funding Bill is approved to include additional funding for border security there could be upside to our guidance.

Our guidance contemplates the continuation of an improving hiring market for labor with less reliance on temporary incentives, but resulting in higher staffing costs as we continue to progress towards pre COVID-19 staffing levels.

Our guidance contemplates the expiration of the lease with the state of California at our California City Correctional Center effective March 31 2024.

David M. Garfinkle: This facility generated $31.1 million in revenue and $25.5 million in EBITDA during 2023 and is expected to result in a reduction to EBITDA of approximately $23 to $24 million in 2024, including carrying costs such as maintenance, property taxes, and insurance that we will continue to incur after the lease expiration. Our guidance does not include any other contract losses or any new contract awards not previously announced because the timing of government actions on new contracts is always difficult to predict.

This facility generated $31 $1 million in revenue and $25 5 million in EBITDA. During 2023 and is expected to result in a reduction to EBITDA of approximately 23% to $24 million in 2024, including carrying costs, such as maintenance property taxes and insurance that we will continue.

To incur after the lease exploration.

Our guidance does not include any other contract losses or any new contract awards, not previously announced because the timing of government actions on new contracts is always difficult to predict.

David M. Garfinkle: While we are encouraged by the strength of our margins in the fourth quarter, sustained margins at this quarter's level are likely to require higher populations as our staffing continues to return to pre-COVID levels. For modeling our quarterly results, as a reminder, compared to the fourth quarter, Q1 is seasonally weaker because of one fewer day in the quarter, higher utilities, and because we incur approximately 75% of our unemployment taxes during the first quarter, resulting in a collective $0.04 per share decline from Q4 to Q1, and negatively impacting our operating margins. Moving now to our capital allocation strategy. Since our board authorized the share repurchase program in May 2022 through December 31, 2023, we have repurchased 10.1 million shares of our common stock at an aggregate cost of $112.6 million, leaving $112.4 million under the board authorization.

While we are encouraged by the strength of our margins in the fourth quarter sustain margins at this quarter's level are likely to require higher populations as our staffing continues to return to pre COVID-19 levels.

For modeling our quarterly results as a reminder, compared to the fourth quarter Q1 is seasonally weaker because of one fewer day in the quarter higher utilities, and because we incur approximately 75% of our unemployment taxes during the first quarter, resulting in a collective <unk> <unk> per share decline from Q4 to Q1 and negatively.

Impacting our operating margins.

Moving now to our capital allocation strategy since our board authorized a share repurchase program in May 2022 through December 31, 2023, we repurchased $10 1 million shares of our common stock at an aggregate cost of $112 $6 million, leaving a $112 4 million under the board authorization.

David M. Garfinkle: We will remain opportunistic in repurchasing shares of our common stock and expect to repurchase additional shares in 2024, taking into consideration our leverage, earnings trajectory, stock price, liquidity, and alternative opportunities to deploy capital. Our guidance includes a range of repurchase scenarios at various amounts and at various assumed prices. We also expect to use our cash on hand and cash flow from operations to continue paying down debt, which could include additional open market purchases or partial redemptions of our 8.25% senior notes, which are scheduled to mature in 2026 and become redeemable at 104.125% of par on April 15, 2024.

Yeah.

We will remain opportunistic in repurchasing shares of our common stock and expect to repurchase additional shares in 2024, taking into consideration our leverage earnings trajectory stock price liquidity and alternative opportunities to book to deploy capital.

Our guidance includes a range of repurchase scenarios at various amounts and at various assumed prices.

We also expect to use our cash on hand, and cash flow from operations to continue paying down debt, which could include additional open market purchases or partial redemptions of our 8.25% senior notes, which are scheduled to mature in 2026 and become redeemable at $104, 125% of par on.

<unk> 2024.

David M. Garfinkle: We continue to monitor the debt capital markets and could issue additional debt securities to refinance portions of our existing debt to extend our weighted average debt maturities if and when we determine that market conditions and the opportunity to utilize the proceeds are favorable. Given the strengths of both our balance sheet and cash flows, we have tremendous flexibility in how we deploy our liquidity and free cash flow and balance our capital allocation strategy between debt repayments and share repurchases. Again, our guidance contemplates a range of scenarios associated with debt reduction and share repurchases. We expect AFFO, which we consider a proxy for our cash flow available for capital allocation decisions, to range from $158.3 million to $175.3 million, or $1.42 to $1.57 per share.

We continue to monitor the debt capital markets and issue additional debt securities to refinance portions of our existing debt to extend our weighted average debt maturities, if and when we determined that market conditions and the opportunity to utilize the proceeds are favorable.

Given the strength of both our balance sheet and cash flows we have tremendous flexibility in how we deploy our liquidity and free cash flow and balance our capital allocation strategy between debt repayments and share repurchases again, our guidance contemplates a range of scenarios associated with debt reduction and share repurchases.

We expect <unk>, which we consider a proxy for our cash flow available for capital allocation decisions to range from $158 3 million to $175 3 million or $1 42 to $1 57 per share.

Operator: We expect our normalized effective tax rate to be 27 to 29 percent, and the full year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense. We are forecasting G&A expenses in 2024 to be consistent with 2023. We plan to spend $62 to $66 million on maintenance capital expenditures in 2024, in line with $64 million incurred during 2023, and $7 to $9 million for other capital investments, compared to $4 million in 2023. I will now turn the call back to the operator to open up the lines for questions. Once again, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. Our first question comes from the line of Joe Gomes from Noble Capital. Your question, please. Good morning, David and David.

We expect our normalized effective tax rate to be 27% to 29% and our full year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense.

We are forecasting G&A expenses in 2024 to be consistent with 2023.

We plan to spend $62 million to $66 million on maintenance capital expenditures during 2024 in line with $64 million incurred during 2023 and $7 million to $9 million for other capital investments compared with $4 million in 2023.

I will now turn the call back to the operator to open up the lines for questions.

Certainly once again, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone one moment for our first question before.

Our first question comes from the line of Joe Gomes from Noble capital. Your question. Please.

Good morning, David David Nice quarter.

Joe Gomes: Nice quarter. Hey, good morning, Joe. Good morning, Joe. Thank you so much.

Hey, Good morning, Joe morning, Joe. Thank you so much.

So I wanted to start with the ice populations in the quarter. It sounds like you had some good growth sequentially there.

Damon T. Hininger: So I wanted to start with the ice populations in the quarter. It sounds like you had some good growth, www.corecivic.com, but we're not yet at 75% occupancy in ICE facilities at the end of the year. You know, where are they today, and how do we get those up and above that 75% occupancy level? Yeah. So, Joe, let me tag team with Dave on that one.

I'm kind of like where where are we today.

And then kind of in conjunction with that going through the supplemental it looks like you had two facilities that were not yet to 75% occupancy to ice facilities at the end of the year, where are they today and how do we get those up and above that 75% occupancy level.

Yes, So Joe let me tag team with Dave on that one.

Damon T. Hininger: First part of your question, as of yesterday, our total population in our facilities from ICE was at 11,334. So, I can give you a real-time number on current utilization. And I think that's, I think we did see a little bit of, which is pretty typical that time of year with the holidays. I think we saw the lowest climb between Thanksgiving and Christmas. Again, that's pretty typical based on seasonality. And then maybe, yeah, just a quick comment. Obviously, you probably know as much as I do.

First part of your question.

Yesterday, our total population in our facilities from ice was at 11334, So I'll give you a real time number on current utilization and I think that.

So I think we did see a little bit.

Which is pretty typical that time of year with the holidays I think Mrs. Although the decline between Thanksgiving and Christmas again, that's pretty typical based on seasonality.

And then maybe just a quick comment obviously, you probably know as much as I do I'm just kind of following the discussions within Congress between the Senate leadership in house leadership, and where that all ends up I know theres a lot of people that don't know if thats going to be the path forward on finding for additional resources with ice, but thats kind of bigger bill with Ukraine and <unk>.

Damon T. Hininger: I'm just kind of following the discussions within Congress between the Senate leadership and House leadership and where that all ends up. I know there are a lot of people that don't know if that's going to be the path forward on the funding for additional resources with ICE, with that kind of bigger bill with Ukraine and Taiwan and Israel funding. So, again, we'll see what happens there in the coming days and weeks. And, on a parallel path, we'll watch closely. The current fiscal year, as you know, runs through early March.

Taiwan.

Israel five minutes. So again, we'll see what happens there to come in coming days and weeks.

So on a parallel path, we'll watch it closely the current fiscal year as you know is funded through.

Damon T. Hininger: And we'll be watching closely on kind of what appropriations and adjustments are done there, especially for DHS and ICE and Border Patrol. But on your facilities, let me pass that over to Dave. Yeah, I think, Jeremy, you may be asking kind of where the facilities stand relative to fixed payments because not all of our facilities have those fixed payments. So, I'm not sure, you know, which facilities you're referring to that are below 75%. They may or may not have fixed payments.

Early March and we'll be watching closely on kind of what what appropriations adjustments are done there, especially for DHS and ice and border patrol, but on your facility.

Let me pass that over to Dave.

You may be asking kind of where the soldiers stand relative to fixed payments because not all of our just always have those fixed payments, so I'm not sure which facilities youre, referring to that are below the 75%. They may or may not have fixed payments, but in total we're really clearing those fixed payment hurdles at this point there are probably in aggregate.

David M. Garfinkle: But in total, we're really clearing those fixed payment hurdles at this point. There are probably, in aggregate across the portfolio, a few hundred below the fixed payment level. So, they're not thousands.

Across the.

Portfolio.

A few hundred below.

The fixed payment level, so theyre not thousands so any incremental.

David M. Garfinkle: So, any incremental population at this point would translate into incremental revenues for the most part. Okay. Great. Thanks for that.

Populations at this point would translate into incremental revenues for the most part.

Okay, great. Thanks, Ed.

Damon T. Hininger: And then, you know, in the guidance, you talk about assuming, you know, kind of the flat ice populations, as we all know the funding for last year was 34,000 beds. We're at 38,500. I think was the most recent ice population number, you know, when you look at your guidance, are you expecting to be at that 34 level for funding? Or do you think it stays more in that 38?

On the guidance.

Talked about Youre, assuming kind of flat.

Its population.

We all know the funding for last year was 34000 beds were at 38, five I think was the most recent.

Ice population number.

When you look at your guidance.

Back to you to be at that 34 level.

For funding or do you think it stays more in at 38 is trying to get a little more detail there.

Damon T. Hininger: Just trying to get a little more detail there. Yeah, that's, we'll let Dave talk a little bit about our actual guidance. But I just, you know, at the bigger number for ICE, so all populations, not just CoreCivic, it's kind of hard to say, you know. They've been working, as you know, since October 1, under continued resolutions. And so basically, that's taking the funding load from last year by 34,000 this year. So they clearly feel like they're in a position to go a little higher than that, as we've gotten into a couple months into the fiscal year. So could they, could they go ahead and maybe fund that for the rest of the year at 34,000 but still run at 38,000? That's possible,

Yes.

Ill, let Dave talk a little bit about our actual guidance, but I'll just at the bigger number for ice so all populations not just core civic.

It's kind of hard to say they've been working as you know since October one under continued resolutions and so basically thats taken the funding level from last year of 34000 this year. So.

They clearly feel like they are in a position to go a little higher than that as we've gotten into a couple of months into the fiscal year.

So today. They go ahead and maybe find that for the rest of the year at 34000, but still run at 38000, that's possible as you know last year they did.

Damon T. Hininger: You know, as you know, last year, they did, I think, some reprogramming, I think, during the middle of the fiscal year. That may be part of the strategy. That may be, maybe Plan B.

The Mercury programming I think during the middle of our fiscal year that may be part of the strategy that maybe maybe plan B don't know, but again I think next couple of weeks will be pretty critical in determining obviously what happens for the rest of the year.

Damon T. Hininger: I don't know. But again, I think the next couple weeks will be pretty critical in determining, obviously, what happens for the rest of the year. I will say, though, that and maybe a little more to your second part of your question about the guidance, the national number, obviously, that'll go up and down. It doesn't necessarily go in proportion with our populations.

I will say, though that and maybe a little more to your second part of your question about the guidance.

National <unk> that will go up and down it doesn't necessarily go in proportion with our populations. So the national number maybe go downhaul a bit but our population is pretty flat.

Damon T. Hininger: So the, you know, the national number might go down a little bit, but our population is pretty flat. And, you know, based on utilization and what we're hearing, kind of on the ground with our various stakeholders from ICE and the different parts of the country where we operate, it gives us some comfort that we've got a pretty good number for the rest of the year. But let me add, Dave, add to that.

Based on utilization and what we're hearing kind of on the ground with our various.

Stakeholders from ice in the different parts of the country, where we operate.

<unk> gives us some comfort that we've got a pretty good number for the rest of the year, but let me add Dave add to that I think probably at a high level. Joe the guidance would reflect population is consistent with what we saw in the fourth quarter.

David M. Garfinkle: I think probably, at a high level, Joe, the guidance would reflect populations consistent with what we saw in the fourth quarter. So we're not anticipating supplemental funding going through, or even when funding gets refreshed on March 8th, whether that's a continuing resolution or a full budget for the rest of the year. We're not anticipating significant increases.

So we're not anticipating a supplemental funding going through or even when funding gets refreshed on March eight.

Whether that's a continuing resolution or a full budget for the rest of the year, we're not anticipating significant increases and as I mentioned in my prepared remarks, if they do see increases in funding for detention beds that could be upside to our guidance and like flight. Likewise, we're not assuming a decline in those populations are populations like I said probably from.

David M. Garfinkle: And as I mentioned in my prepared remarks, if they do see increases in funding for detention beds, that could be upside to our guidance. And likewise, we're not assuming a decline in those populations. Our population, like I said, probably from the fourth quarter. So pretty stable populations, at least at the federal level throughout 2024. Okay, thanks. Damon, you didn't really mention anything about the U.S. Marshals Service.

The fourth quarter so.

So pretty stable populations at least at the federal level throughout 2024.

Okay. Thanks, David you Didnt mentioned anything really on the U S. Marshals service I'm wondering if you might give us a little update on that client.

Damon T. Hininger: I'm wondering if you might give us a little update on that client. Yeah, I appreciate that question. Yeah, we're basically just kind of seeing it go.

Yes, I appreciate that question Yeah, we're basically just kind of steady as it goes the populations have been up or down a little bit nationally our populations also a bit up or down little bit I think the national population right now for the more services around 50, 758000, thats been pretty stable over the last probably six to eight months.

Damon T. Hininger: The populations have been up and down a little bit nationally. Our populations, also, have been up and down a little bit. I think the national population right now for the marsh services is around 57,000-58,000.

David M. Garfinkle: And that's been pretty stable over the last, you know, probably six, eight months, down a little bit over the last two, three years, but the last, you know, again, six, eight, 10 months, been pretty stable. So we're kind of forecasting that for the rest of the year. I don't see any big real changes with that customer for the rest of the year. I don't know if there is anything you would add to that. Yeah, our marsh populations were very consistent in Q4 with Q3. In fact, they were up slightly.

Download that over the last two or three years, but.

Again six eight.

10 months pretty stable. So we're kind of forecasting that for the for the rest of the year don't see any big real changes.

With that customer for the rest of Europe anything you'd add.

So those populations were very consistent in Q4 with Q3 in fact, they were up slightly.

David M. Garfinkle: Okay, great. And in the community segment, you kind of touched on this a little bit, David. There was a large increase in revenue per compensated mandate. I think, year over year, it's up about $12. You mentioned a little bit about some contract renewals you got. Is there anything else I should describe in that? Should we kind of expect that as more of a high watermark, or do you think there's more potential upside in that revenue per compensated mandate? Yeah, Joe. Actually, I'll tackle that one.

Okay, Great and then.

On the <unk>.

Community segment.

Kind of touched on this a little bit David.

There was a large increase in the revenue per compensated mandate I think year over year, it's up about $12.

You mentioned, a little bit about some contract renewals you got.

Is there anything else, that's driving that should we kind of expect that.

More of a high watermark or do you think there's more potential upside in that revenue per compensated mandate on the community side.

Yes, Joe actually I'll tackle that one yes, we've seen a couple of quarters in a row of really strong growth on the community side. So as you note.

Damon T. Hininger: Yeah, we've seen a couple quarters in a row of really strong growth on the community side. So, as you know, both, you know, I can see growing, but also, we've had some really good renewals where we've gotten kind of a reset on the pricing on the compensated for the contract, I should say. So we continue to see good support to increase populations there. Again, that was part of the population that was easy to go ahead and release with social distancing and everything going on with COVID.

<unk>.

Occupancy growing but also we've had some really good renewals, where we've gotten kind of had a reset.

The pricing on the.

Compensated for.

For the contract I should say so.

We continue to see good support to increase.

Populations. There again that was part of the population that was easy to go ahead and release with social distancing and everything going on with that with Covid. So we really think of the big the big kind of bounce back is because.

Damon T. Hininger: So we really think the big kind of bounce back is because now that the pandemic's over and some of those concerns have been alleviated from a health perspective, we continue to see populations go up. So again, really, really pleased with that and continue to see good growth there. Okay, one more for me, and I'll step aside here.

Now that the pandemics over and some of those concerns or alleviate it from a health perspective, we continue to see populations to go up so again really really pleased with that and continue to see good growth there.

Okay, and one more for me and I'll step aside here.

Damon T. Hininger: Just, you mentioned Cal City and you're looking for alternatives there. Whenever there's anything significant you can tell us in terms of who you're talking to for that and any other types of new business that might be, Yeah, so CalCity is a new business. So I'm not here to discuss any specific client for that facility. But you know, as noted in my script, I mean, it is a great location, you know, Southwest. It's, you know, not far from Los Angeles.

You mentioned Cal city, and Youre looking for alternatives there I'm wondering if there's anything.

<unk> you can you can tell us in terms of who you're talking to for that and any other types of new business that might be here in the near term.

Yes, so Cal city and the new business so.

Not here to.

Discuss any specific client for that facility, but as noted in my script I mean, it is a great location southwest it's not far from Los Angeles. So we think a state partner or a federal partner would be a good solution a facility. So I think you know Joe in the past March.

Damon T. Hininger: So we think a state partner or, you know, a federal partner would be a good solution for building this. I think, you know, Joe, in the past, Marshall Service and I have used that facility in the past. So it's a great facility for their mission. So we're continuing to have conversations and see that again it's a great solution, not only just the location but also its capabilities within the actual facility. To your second question about just generally new business, I'll tell you, I've met with a lot of governors and secretaries and directors of corrections here in the last probably six or eight months.

Service and ice have used that facility in the past so it's a great facility for from their mission. So we are continuing to have conversations.

And see that again is a great solution, knowing dislocation, but also has capabilities within the actual facility.

To your second question about just generally about new business I'll tell you I have met with a lot of governors and secretaries and directors of corrections here in the last probably six or eight months and the message just continues to be the same really challenging infrastructure issues within their system facilities are becoming more and more overcrowded.

Damon T. Hininger: And the message just continues to be the same really challenging infrastructure issues within their system, facilities are becoming more and more overcrowded as populations are starting to come out of jails that have been backed up because, of course, they were closed. And then also seeing significant population increases over the next three to five years. So that that message continues to be conveyed to us from our partners. The other thing I'll just say that maybe it's a little bit of a surprise for folks is that, you know, some of our customers closed either units or maybe entire facilities during COVID. And what facilities they targeted for closure, usually the ones that are, you know, maybe older, maybe more difficult to operate, but maybe really challenging for the staff.

Populations are starting to come out of the <unk> that have been backed up because of course being closed and then also seeing significant population increases over the next next three to five years or so.

That that message continues to.

Be conveyed to us from Mark from our partners. The other thing I would just say that maybe is a little bit surprise for folks that.

Some of our customers they closed either units or maybe an entire facility during COVID-19 and.

What facilities they targeted for closure are usually the ones again that are maybe older may be more difficult to operate but maybe really challenging the staff and so some of this I think kind of more immediate opportunities for us are coming from customers, who say you know we closed X Y Z facility in certain part of our jurisdiction.

Damon T. Hininger: And so some of these, I think, kind of more immediate opportunities for us are coming from customers to say, you know, we closed XYZ facility in a certain part of our jurisdiction, and it just doesn't make operational sense for us to reactivate it. So basically, what I'm saying is, you may have a system or systems whose operational capacity has declined a little bit because they've got units or facilities that just didn't make sense to reactivate. So that's created a little more demand from them to use the capacity in our system. But I guess you'd add to that, Dave.

And it just didn't make operational sense for us to reactivate it.

So basically what I'm, saying is that you may have a system or systems that they're operational capacity has declined a little bit because they've got unit term facilities that just didn't make sense to reactivate and so that's created a little more demand from them to use our capacity in our system and then I guess, you would add to that Dave.

Damon T. Hininger: Yeah, just reemphasizing that the underlying drivers of the new contracts that we signed in the second half of 2023 are still there, and as Damon just mentioned, getting more urgent. So we feel really good about prospects moving into 2024 and have good momentum, having signed 3 new contracts in the 4th quarter and another contract in the 3rd quarter that's both with state and county governments. So good momentum as we're going into 2024

We emphasize that the underlying drivers.

The new contracts that we signed in the second half of 2023 are still there and as David just mentioned.

Getting getting more urgent so.

We feel we feel really good about prospects moving into 2024 and have good momentum having signed three in three new contracts in the fourth quarter and another contract in the third quarter.

With state and county governments.

So good momentum as we're going into 'twenty four.

Damon T. Hininger: Yeah, I appreciate that. One other thing I just say, Joe, and we mentioned our script, but I want to reinforce it. And that is, as you know, we leaned a little forward on staffing around the enterprise about a year ago, and that also impacted margins a little. And I know we had some good conversations about that along the way.

I appreciate that one other thing I would just say, Joe and we mentioned in our script.

We are fortunate in that is as you know we leaned a little forward on staffing around the enterprise.

A year ago, and also that impact a little bit margins and I know we had some good conversations about that along the way, but we think some of those investments are really now.

Damon T. Hininger: But we think some of those investments are really now paying off now with some of these new contracts. Again, obviously, we're watching closely what happens with ICE, you know, with the supplemental. There was some discussion about, you know, funding there for 50,000 beds nationwide. Again, who knows how likely that is with the supplemental.

We're getting the benefits of that now with some of these new contracts again, obviously, we're watching closely what happens with ice you know with the supplemental there was some discussion about.

Funding there for 50000 beds nationwide again, who knows how likelihood that is with the supplemental but thats a long way of saying we continue to be very thoughtful on our staff and front, Matt just on what the needs are today, but trying to anticipate a little bit what customer need is either with existing customers or new customers.

Damon T. Hininger: But along the way of saying, you know, we continue to be very thoughtful on the staffing front, not just on what the needs are today but, you know, trying to probably anticipate a little bit what customer needs are either with existing customers or new customers. Great, thanks again for taking my questions and congrats on the quarter. Thank you, sir.

Great. Thanks, again for taking my questions and congrats on the quarter.

Sure.

Operator: Thank you. One moment for our next question, and our next question comes from the line of Amir and from Zacks.

Thank you one moment for our next question.

And our next question comes from the line of Ami <unk> from Zacks. Your question. Please.

Amir: Your question, please. Thank you. During COVID, the courts were obviously, you know, in a band, and now they're back up and running.

Thank you.

Given COVID-19 the courts.

Obviously.

Dan.

Now that they're back up and running.

Damon T. Hininger: It seems that we're still seeing a backlog, and it seems like, rather than getting smaller, Peer Improvement is going to grow. So, if that's... How do you think that might impact some of your, you know, utilization rates and some of your, you know, post-COVID facilities? Yeah, it's a good question.

It seems that we're still seeing a backlog.

Like rather than getting smaller.

Appearing.

To grow.

So if that's the case, how do you think that might impact some of the.

You are.

Yes.

Utilization rate.

Some of you are.

Post Covid facility.

Okay.

Damon T. Hininger: And yeah, it's a little bit of, you know, a couple different catalysts, you alluded to it with the, of course, kind of getting back to where they were operationally pre-pre COVID. And the backlog that is, we've seen the numbers in jail populations nationwide. So again, we're seeing that now, I think, again, with contracts like with Montana, increased utilization, Idaho, Wyoming, as we talked about, I mean, I think that's part of the reason. I think, again, I think another part of the reason is, again, some of these systems took some capacity offline and just said, okay, it's just it makes sense for us to reactivate it, it's more cost effective, and probably going to get a lot better outcomes by using capacity within within CoreCivic.

Yes, it's a good question and yes, it's a little bit of.

A couple of different catalyst you alluded to it with the of course kind of get back.

So where they were operationally pre pre COVID-19 and this backlog that as we've seen the numbers in jail populations.

<unk>. So again, we're seeing that now I think again with contracts like with Montana increased utilization Idaho.

As we've talked about I mean, I think that's part of the reason I think again I think another part of the reason is again to some of these systems took some capacity offline.

And just said okay. It's just it makes sense for us to reactivate it to more cost effective you're probably going to get bought better outcomes to by using capacity within within core civic.

Damon T. Hininger: And I guess the third thing I just said is that you're looking at, you know, another lead indicator, which is crime rates around the country and some of the actions that are happening at the state and local level. I think that's also going to have some material impact on populations on top of what we're seeing today because of the backlog with COVID. But anything you'd add to that, Dave? No, I don't have anything to add.

And I guess the third thing I would just say is that you are looking at.

Another leading indicator, which is kind of crime rates around around the country and some of the actions that are happening at the state and local level. I think that's also going to have some material impact up populations on top of what we're seeing today because of the backlog with COVID-19 or anything you'd add to that Dave.

Damon T. Hininger: You covered it. Okay, you also talked about remarks. You mentioned alternatives to detention, and I'm guessing that, you know, that would include your electronic monitoring services, maybe community service operations. Do you see, and you talked before about how you've had some good quarters in community services operations? Do you see that as potentially, you know, benefiting from some of the changes we're seeing in the courts and in, you know, prison views about prison detention? Yeah, I mean, and keep me honest here, Dave, you know, say on the community. Again, the big driver there has been just increased utilization from a population perspective in our facilities and also some favorable renegotiation of contract terms, again, where we've had some improvements on the per diem and the compensated per day rates. But we also are seeing, you know, again, good use and good attraction for our monitoring, our case management services, and other support services we can do within the community segment.

No I don't have anything to add.

Covered it.

Okay. So you also talked about in your prepared remarks, you mentioned alternative.

And I'm guessing that that would include your electronic monitoring.

Monitoring.

Services maybe.

Further cooperations do you talked before about how you've had some good quarters on community services operations can you see that as potentially.

Potentially.

Coming from some of the changes we're seeing in the courts.

Prison.

Of use about prison.

Tom.

Yes.

And keep me honest here David.

Unity again, the big driver there has been just increased utilization from a population perspective in our facilities and also some favorable renegotiation of contract terms again, where we've had some improvements on the <unk> and the compensated for day rates.

But we also are seeing you again due to good use and good.

<unk> two are monitoring our key standard services and other support services, we can do within the community segment, but I'll also say and this I think may be a part of your question do we remain really bullish on that part of the community business and so we continue to make investments in both people and technology to meet the need either with existing partner.

Damon T. Hininger: But I'll also say, and this, I think, may be a part of your question, too, we remain really bullish on that part of the community business, and so we continue to make investments in both people and technology to meet the needs either of existing partners or potentially new partners. Again, going back to the least proposed supplemental from Congress on Sunday night of this week, again, who knows how much of this will carry on either through a supplemental being put on the stand or, you know, moved on to a full funding year, but there was almost over a billion dollars, I think, that was earmarked for additional expansion of alternatives to detention under ICE. So, again, I think the continued investment, not only just for that opportunity, but also what we're seeing with cities and counties and even the Bureau of Prisons, I think, are good investments, and again, we continue to be really bullish on the business. Anything you'd add to that, Dave?

Or potentially new partners again going back to them at least proposed supplemental from Congress on Sunday Night. This week again, who knows how much is this will carry on either through a supplemental <unk> moved onto a full funded year, but there was almost up over $1 billion I think that was earmarked for.

For additional.

Expansion of alternatives to detention under under ISO again, I think the continued investment knowledge as to that opportunity, but also what we're seeing in with cities and counties and even given the.

Europe prisons, I think are good investments and again, we continue to be really bullish on our business, but anything you'd add to that David Yes. I think there is some inertia from the federal Bureau of prisons as well.

Damon T. Hininger: Yeah, I think there's some inertia from the Federal Bureau of Prisons as well to expand the utilization of residential reentry centers, whether that's due to, you know, infrastructure, trying to get more people out of prison into the communities and helping them assimilate. So, I think there could be some more funding there that kind of began during the last administration, and it seems to be getting some legs now. So, I wouldn't be surprised if we saw the BOP expand its utilization of RRCs through early release programs, alternatives to detention, and things like that. So, I agree that there's a lot of upside there, and we have a lot of capacity within our community portfolio to accommodate that need. Okay, thank you. Thank you, M. Thank you.

And the utilization of residential reentry centers.

Whether that due to.

Infrastructure trying to give more people out of president of the communities and helping them assimilate.

So I think there could be some more funding there.

Got it.

Began during the last administration and it seems to be getting some some legs now so I wouldn't be surprised if we saw them expand its utilization of our Rcs bye.

Early release programs alternatives to detention and things like that so I agree that there is a lot of upside there and we have a lot of capacity within our.

Community portfolio to accommodate that need.

Okay. Thank you.

Thank you Ms <unk>.

Operator: One moment for our next question. And our next question comes from the line of Kirk Ludtke from Imperial Capital. Your question. Hello, Damon, David, Brian, and Mike.

One moment for our next question.

And our next question comes from the law.

From Imperial capital your question please.

Hello, David David Brian Mike Thanks for the call.

Kirk Ludtke: Thanks for the call. Good morning. Morning, Kirk. Congratulations on the quarter. Uh, did I hear that the immigration Bill included funding for 50,000 vets? Did I hear that correctly? Yes. The bill that came out Sunday night, and as you know, this was out of the Senate.

Good morning, good morning, Kurt.

Congratulations on the quarter.

Just to just a couple of follow ups on the ice population.

Did I hear that.

Immigration Bill included funding for 50000 beds did I hear that correctly.

That's correct.

It came out.

Sunday night.

As you know this was.

Damon T. Hininger: And you heard this a couple of times during the course of the week where the negotiators of that bill noted that they were looking at funding for taking up the population of 50,000 beds. So that's been part of the talking points with the unveiling of this bill on Sunday. So again, you probably know as well as I, there's obviously some strong views about that bill in the House. So again, not here to handicap it, but at least just want to indicate, you know, that's at least what the Senate was thinking relative to that supplemental. I got it.

Out of the Senate.

And you heard this a couple of times during the course of the week where the.

The negotiators that Bill noted that they were looking at funding.

Digging up the population of 50000 beds. So that's been part of the talking points with the unveiling of this bill on Sunday. So again, you probably know as well.

There is obviously with some strong views about that bill on the house. So again not here to handicap that at least as Juan indicated that's at least what the thin. It was thank you rolled up so that supplemental.

Okay.

Got it that's helpful. Thank you and where did your ice population peak pre pandemic.

Damon T. Hininger: Well, that's helpful. Thank you. And where did your ice population peak pre-pandemic?

Damon T. Hininger: Pre-pandemic, keep me honest here Dave, I think in the summer of 19 we got near 15,000, from 11,300 today. Yes. Thank you, and do you remember how many beds were funded back then? I know that nationwide populations are around 55,000.

Pre pandemic keep me honest you, Dave I think in the suburb 19, we got near 15000.

From 11300 today.

Yes.

Got it thank.

Thank you and do you remember what the.

How many beds were funded back then.

No that nationwide populations around 55000, I don't know if I missed this from a funded at that level.

David M. Garfinkle: I don't know if they were necessarily funded at that level. It was probably less. I know it was less than that. Yeah, actually, yeah, I think it was pretty meaningful less than that now. Think about it. Yeah.

It was probably less I know it was less than that actually I think it was.

Pretty meaningful lesson that thinking about it now.

Damon T. Hininger: Interesting. Okay, thank you. That's helpful. And then on California City, so now the lease expires in just a couple months.

Interesting okay. Thank you.

That's helpful and then.

On California City. So now the lease expires in just a couple of months as has the states started to ramp that facility down.

Damon T. Hininger: Has the state started to ramp that facility down? They have, yep, they've been going through the steps for kind of deactivation, I think, both population and staffing. Okay, got it. And... Are there any legal limitations as to what you can use that facility for? There are a couple.

They have been going through the steps or kind of the activation I think both population and staffing.

Okay got it and.

Are there any legal limitations as to what you can use that facility for.

Damon T. Hininger: I don't know right off the top of my head. I think there's a few, but obviously, yeah, we're, obviously, California was in there, and then, yeah, we've had no issues with the housing, so they're in ice in the past, so. It would be the type of inmate that you're... Yeah, maybe that's right. It's probably a type of prison, and I don't know off the top of my head.

They're already.

Sure.

I don't know right off top my head I think there's a few.

But obviously, yes.

Obviously, California was in there and then we've had no issues on the housing there and highest in the past so.

Type of inmates.

Maybe that's right yes.

I don't know off top my head, we can follow up with you offline on that but I suspect there is probably some limitations on maybe classification or something like that.

Damon T. Hininger: We could follow up with you offline on that, but I suspect there's probably some limitations on maybe classification or something like that. Got it. Got it. Thank you. And then, on Harris County, that's a nice win, um, can you just expand on that and how that came about and why they did it because, if my google maps is working correctly, that's over 500 miles between Harris County and Tallahatchie. So I'm just curious, you know what, maybe expand on how that came about and why Tallahatchie.

Got it got it. Thank you and then on Harris County, that's a nice win.

Can you just expand on that and how that came about and why they because if my Google maps is working correctly, that's over 500 miles.

Between Harris County in Tallahatchie, So I'm, just curious what maybe expand on.

On on how that came about and why tallahatchie.

Damon T. Hininger: Yeah, yes, sir. So, you know, part of the playbook is that, you know, obviously, we're always monitoring not only existing needs with needs with existing partners, I should say, but also, you know, partners like Harris County or potential partners, you know, what their system utilization capacity is, maybe some challenges that they're experiencing. And Houston is, I think, you know, that's where the company really got started. Our very first contract was in Houston almost 40 years ago.

Yes, sure so we.

Part of the playbook is that you know obviously, we're always monitoring not only the existing needs.

Needs with existing partners, but also partners like Harris County, or potential partners, you know whats their system utilization and capacity, maybe some challenges that they're experiencing and Houston I think that's where the company really got started our very first contract wasn't used in almost 40 years ago, So either that county in that city really really.

Damon T. Hininger: So we know that county and that city really, really well. And so I think they just expressed that they had some issues with the physical plant. They had some, I think, some really difficult outcomes here in the last couple of years because of overcrowding. I think there were some staffing issues. And it's a pretty big system. Obviously, metropolitan Houston and Harris County, that's a big system.

Well.

And so I think they just expressed that he had some issues with physical plant. They had some I think some really difficult outcomes here in the last couple of years because of overcrowding I think there were some staffing issues and it's a pretty big system off the Metropolitan Houston in Harris County, that's a big system don't hold me to this but I think they have almost 10000 people in there.

Damon T. Hininger: Don't hold me to this, but I think they have almost 10,000 people in their jail system. So what that allowed us to do to kind of your last part of the question about the distance is to say, okay, look at your entire population. And is there part of the population that would be well suited, and this is individuals that don't have to go to jail or go to court every day, that could be in a setting such as Tallahatchie County?

And Theyre gel system, so what that allowed us to do to kind of your last part of your question about the distance is to say, okay look at your entire population and as a part of the population that would be well suited in this as individuals and they don't have to go to jail or go to court everyday that could.

Damon T. Hininger: And of course, we'll work with them on transportation, video conferencing, and whatnot to keep them connected as appropriate with the courts and the sheriff's office there in Harris County. So we've got a lot of plays in the playbook for helping them deal with some of the distance issues. But again, with a system that large, there's parts of the population that would be well suited from a distance of, again, as you said, 500 miles from Houston. I mean, Tallahatchie is a great facility.

B in a setting of Tallahatchie County, and of course, we'll work with them on transportation and video conferencing and whatnot.

The cracks as appropriate with the courts and the Sheriff's office, Aaron Harris County, So we've got a lot of players in the playbook on helping them deal with come some of the distance issues, but again with the system that will emerge.

There's parts of the population that would be well suited again from a distance of you at the beginning you said 500 miles from used to be anything you'd add to that too yes.

Macau actually it was a great facility is about 25% occupied so it was a location where we could immediately satisfy the need and bring that bring the detainees.

Damon T. Hininger: It's about 25% occupied. So with a location where we could immediately satisfy the need and bring the detainees in quickly, we could probably, I mean, there are about seven or eight different customers at that facility. So they're doing a fantastic job there. But with the exception of probably a handful of locations where we could accommodate a new customer, like what we did at our Saguaro facility in Montana, the Saguaro facilities in Arizona. So Montana moved 120 inmates there.

Quickly.

We could probably I mean, there's about seven or eight different customers facilities, so they're doing a fantastic job there.

But.

With the exception, probably a handful of locations, where we could accommodate a new customer.

What we did in our <unk> facility.

With Montana facilities in Arizona.

Montana moved 120 inmates there we do have it's like a 120 and probably a half dozen facilities Butler is getting to the point now where we may have to look at.

Damon T. Hininger: We do have, it's like 120, and we have a dozen facilities, but it's getting to the point now where we may have to look at, www.corecivicinc.com. Well, that's interesting. I appreciate it. Thank you. Yes, sir.

Activating a new facility to accommodate new contract a new contract awards, if we see that kind of demand. Obviously, we wouldn't do that speculatively, it's expensive to open up a staff of facility in advance of.

Visibility on a customer but.

Tallahatchie was a great location, where we can we can accommodate Harris county, and there are many of those left.

Well that's interesting I appreciate it thank you.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Brian Vialino from Webush. Great. Good morning. Thanks for taking my question. Morning, Brian.

Kirk.

Thank you one moment for our next question.

And our next question comes from the line of Brian <unk> from Wedbush. Your question. Please.

Yeah.

Great. Good morning, Thanks for taking my question.

Good morning, Brian.

Brian Vialino: Morning. Good morning. Just quickly, you talked quite a bit about the three state and local contract wins you had in the fourth quarter. Could you give us how much EBITDA you anticipate those contracts will contribute in 2024? Uh, we haven't disclosed that, but yeah, you know, they're probably different profiles. One was a facility that was largely occupied, the one in Arizona, and then Tallahassee, as I just mentioned, was like 25% occupied. So, it's probably a few million dollars in EBITDA between the two of them over a year, maybe a little bit north of that. Got it.

Good morning.

Just quickly you talked quite a bit about the three state and local contract wins during the fourth quarter could you give us how much EBITDA you anticipate those contracts will contribute in 2024.

We haven't disclosed that.

They are they are probably different profile one was a facility that was largely occupied.

The one in Arizona, and then tallahatchie La as I, just mentioned was like 25%.

Occupancy so it's probably a few million dollars in EBITDA between the two of them over a year, maybe a little bit north of that.

Damon T. Hininger: Okay, thank you. And then, maybe hard for you to answer from your seat, but you know, it seems like DHS has been reallocating funds to ICE for additional bed funding given that we're over the 34K number. I guess, from your perspective, do you anticipate that there are additional dollars that could be reallocated within DHS, or do we really need supplemental funding to see bed counts rise much more than they are today? Well, the first part of your question, you're exactly right. That's really hard to answer. You know, again, they had that play in the playbook last year.

Got it okay. Thank you.

And then.

Maybe hard for you to answer from your seat, but it seems like DHS has been reallocating funds too.

Two ice for additional debt funding given that we're over the 34 K number I guess from your perspective do you anticipate that theres additional dollars that can be reallocated within DHS or do we really need supplemental funding bed counts rise much more than they are today.

Well first of all the first part of your question you're exactly right, that's really hard to answer.

Again, they had debt.

They had that play in our playbook last year as you know I think the sector came out may or June of last year and indicated they were doing a reallocation.

Damon T. Hininger: I think the Secretary came out in May or June of last year and indicated they were doing a reallocation of funding. So can they do that again? And do they have the ability?

Funding so.

Can they do that again and didn't have the ability to really be hard for me to say I don't know if they even said publicly what the amount was I think the sector. It just came out saying we're doing it but I don't think I've ever heard an actual number.

Damon T. Hininger: It'd really be hard for me to say. I don't know if they even said publicly what the amount was. I think that Secretary just came out saying we're doing it, but I don't think I ever heard an actual number. I think, you know, population, again, a little bit to the question earlier about, you know, they're currently at 37, 38,000. Again, they're officially funded at 34. Again, that number, as Dave said, was pretty consistent during the fourth quarter.

I think youll population again, a little bit to the question earlier about Youre currently at the 30 738000 again Theyre officially funded 34.

Again that number is they said that was pretty consistent during the fourth quarter.

Damon T. Hininger: You know, had a little bit up and down because, again, seasonality. So do they feel like they could do that the rest of the year if they come to the end of February and March and do the full funding to the end of the fiscal year at $34,000? Maybe.

But up and down because again seasonality so do they feel like they can do that rest of the year. If they come to end of February and March and due to the full funding.

Until the end of the fiscal year at 34000.

Damon T. Hininger: Again, we'll just have to wait and see. And again, I think for them to go meaningfully above that, and this is the last part of your question, it will require additional funding. And again, that could potentially be the supplemental we just talked about. Or, you know, they could, obviously, they've got the ability to go ahead and do additional funding through the full funding year, the full budget for the full year. So, that's still an option, too. Again, we'll be watching, obviously, all these different discussions about these different vehicles where they could increase funding or anything you add to that. No, that's not right.

Maybe.

Again, we'll just have to go we'll just have to have to wait and wait and see and again I think for them to go up meaningfully above that and I think there is the last part of your question. It will require additional funding in <unk>.

It could potentially be the supplemental we just talked about or they could also they've got the ability to go ahead and do additional funding through the full funded year full budget for the full year. So that's still an option to begin we will be watching obviously all these different discussions for a different vehicles, where they can increase funding or anything yet.

Brian Vialino: Great. Great, thanks. And then just one last one, if I could, kind of on a similar note.

That's right.

Right.

Great. Thanks, and then just one last one if I could kind of on a similar note.

Damon T. Hininger: In terms of ICE looking at idle facilities, is that something that you think that, you know, they can be involved with without supplemental funding, potentially looking at some of your own facilities, maybe even outside of Cal State? Well, I guess I'll say this way. I mean, we have been in this last, I guess, year, and it relates a little bit to the discussion we had on staffing. Obviously, we've worked with ICE for 40 years, so we have daily conversations about what their needs are. And obviously, we're getting direction from DHS administration and somewhat from members of Congress. So we're always having a constant conversation about our capabilities, where we've got capacity, whether that's in spring facilities or vacant facilities. And then with that, you know, we make certain decisions based on that information on investments we need to make in either CapEx or on staffing. And again, that's a little bit of what we did last year. We felt like, you know, before Title 42 went away, as you know, we were at 5,000.

In terms of ice looking at idled facilities.

Is that something that you think that they can be involved with without supplemental funding.

Potentially looking at somebody go idle facilities.

Outside of Cal City.

Well.

I guess I'll say it this way I mean, we have been in the last I guess year and it's a little bit to the discussion we had on staffing I mean, obviously, we've not we've worked through by some 40 years. So we are in daily conversations about what their needs are and obviously, we're getting direction from from DHS and administration and to somewhat from.

Members of Congress, So we're always having a constant conversation of our capabilities, where we've got capacity thats in for any facilities or bacon facilities, and then with that we make certain decisions based on that information on investments, we need to do on either capex, nor on staffing and again Thats a.

A little bit of what we did last year, we we felt like before titled 42 went away as you know we were at 5000, and we felt like we needed to make some steps to get staffing in place.

Damon T. Hininger: We felt like we needed to make some steps to get staffing in place for if and when the ICE population does go up. We would prepare for that. So we're continuing to have those discussions internally, but also with our customers. That's just part of the kind of normal behavior and working with them.

For if and when ice populations do go up.

We will prepare for that so so we're continuing to have those discussions internally, but also with our customer and that's just part of the.

It's kind of a normal behavior, and we're working with them and again, we know that there.

Damon T. Hininger: And again, we know that there are obviously a lot of eyes on them, and they get a lot of direction from a lot of different stakeholders. But we do our best to not only just hear what they're saying but also make some proactive steps, as appropriate. I also want to be prudent on that, as appropriate, to prepare for any future demand. But I guess, Andy, you'd add to that.

Obviously, a lot of eyes on them and.

They get a lot of direction from a lot of different stakeholders, but we do our best knowledge as to hear what they're saying, but also make it make some proactive steps as appropriate and also wanted to be prudent and appropriate to prepare for any future demand, but I guess anything you'd add to that Dave.

David M. Garfinkle: Yeah, I'd say if they wanted to consolidate populations from a number of local jails, for example, and then consolidate them into one of our facilities, that would not require incremental funding because you're just transferring dollars from multiple facilities into one facility. So we have had conversations with ICE at a particular facility about that. I haven't taken action on it yet, but that could be a potential where you could activate an auto facility without incremental funding. That's a good point.

I would tell you if they consolidate they wanted to consolidate populations from a number of local jails. For example, and then consolidate them into one of our facilities that would not require incremental funding because you're just transferring dollars from multiple facilities into one facility. So we have had conversations with ice and in particular.

Facility on that they haven't taken action on it yet but that could be a potential where you can activate an idle facility without incremental funding that's a good point.

Brian Vialino: Okay, great. Thank you. I appreciate it. Yes, sir.

Yeah.

Okay, great. Thank you I appreciate it.

Operator: We'll give you one moment for our next question. Our next question comes from the line of Greg Gibbous from Northland Securities. Your question, please. Hey, Damon and Dave, thanks for taking the question. Congratulations on the results.

Yes sure.

Thank you one moment for our next question.

Right.

Okay.

And our next question comes from the line of Greg give us from Northland Securities. Your question. Please.

Hey, David and Dave Thanks for taking the question congrats on the results.

Greg Gibbous: Thank you, guys. I was wondering if you could maybe elaborate a little bit more on the assumptions for occupancy and compensation per bed that are implicit in your guidance. You know, it sounds like ICE is not really forecasting a change in population size there. But, you know, just if you could talk about any changing dynamics with respect to, you know, the split between occupancy changes. The Bulletproof Executive 2013, It's in the occupancy front.

Thank you Greg wondering if you could maybe elaborate a little bit more on the assumptions for occupancy and compensation per person.

Bad debt is implicit in your guidance.

It sounds like is not really forecasting a change of population size there, but just if you could talk about kind of any changing dynamics with respect to the split between.

Occupancy changes versus increased revenue per bed.

Yes, so on the occupancy front.

David M. Garfinkle: The forecast is fairly stable, so not much higher than 74%. You know, we've talked in past calls about getting to that magical pre-pandemic occupancy just north of 80%. But the guidance certainly does not include that.

The forecast is fairly stable, so not much higher than 74% we've talked in past calls about getting to that magical pre pandemic occupancy of just north of 80%. So the guidance certainly does not include that it's probably stable or maybe a slight increase from the 74% occupancy we achieved in the fourth.

David M. Garfinkle: It's probably stable, but maybe a slight increase from the 74% occupancy we achieved in the fourth quarter. With respect to, and that would include, you know, the populations that we're bringing in under the, or have actually already brought in under the four new contracts that we executed during the second half of 2023, as well as some population increases that we saw from a number of states under existing contracts. So those will contribute to increases in occupancy. On the per diem rate, most of our per diem rate increases take effect in July, particularly for our state customers since that's when their fiscal years begin. So we'll be beginning those conversations, if we haven't already, engaging with our partners, talking about our needs for, you know, per diem increases related to staffing and other inflationary costs. So hard to get that visibility now.

Quarter.

Respect to and that would include.

The populations.

We're bringing in under the bar have actually already brought in under the four new contracts that we executed during the second half of 2023.

As well as some population increases that we saw from a number of states under existing contracts. So those those will contribute to increases in occupancy.

Per diem rate most of our per diem increases take effect in July.

Particularly from our state customers since that's when their fiscal years begin. So we are we will be beginning those conversations if we haven't already.

Engaging with our partners talking about our needs for.

Per diem increases related to staffing and other inflationary costs.

So hard to get that visibility now we take a pretty conservative.

David M. Garfinkle: We take a pretty conservative approach when we talk about per diem increases that we include. Some of our contracts have stipulated per diem increases in them, in which case, obviously, we're going to put those per diem increases in the forecast. Others are dependent on appropriations.

<unk> approach when we talk about per diem increases that we include some of our contracts have stipulated per diem increases in them.

Which case, obviously, we're going to put those per diem increases in the forecast others are dependent on appropriations. So depending on the history with a particular customer we may or may not include that our federal federal contracts on the other hand most of them have.

David M. Garfinkle: So depending on the history with a particular customer, we may or may not include that. Our federal contracts, on the other hand, most of them have per diem increases built into those contracts, and so they would be built in to the guidance as well. So I'd say, you know, probably a pretty average year.

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Per diem increases built into those contracts and so they would be built in to the guidance as well. So I'd say, probably a pretty average year last year 2023, we were quite successful in per diem increases, particularly from states that hadn't provided per diem increases during the pandemic.

David M. Garfinkle: Last year, 2023, we were quite successful in getting per diem increases, particularly from states that hadn't provided per diem increases during the pandemic, and we continued to provide wage increases and said, you know, we really need to get a per diem increase to maintain our margins and pay our staff appropriately. So, you know, I wouldn't say we're forecasting as good a year in 2024 as we had in 2023 because, in 2023, we were making up for some lost ground during the pandemic. Great, makes sense; that's very helpful. And I wanted to follow up on, you know, it seemed like there was some nice profitability upside just from the normalization of expenses, particularly, you know, reducing temporary staffing and more so, you know, going to a higher percentage of local-based, more permanent. And, you know, just wanted to ask if you see that as kind of a tailwind for continued margin improvement in 2024, or do you kind of see that mostly normalized? That's a great question. I'd say a little bit of both.

And we continued to provide wage increases.

We really need to get a per diem increases to maintain our margins and pay our staff appropriately so.

I wouldn't say, we're forecasting as good a year in 2024 as we had in 'twenty three 'twenty three we're making up for some lost ground.

During the pandemic.

Great makes sense, that's very helpful.

And I wanted to follow up to it seemed like there were some nice profitability upside just from the normalization of expenses, particularly.

Reducing temporary staffing and more so going to.

A higher percentage of local based more permanent and just wanted to ask if you see that as kind of a tailwind for continued margin improvement in 2024 or do you kind of see that mostly already normalized.

That's a great question.

I'd say, it's a little bit of both there are some facilities, where we still have some opportunities.

David M. Garfinkle: There are some facilities where we still have some opportunities to normalize the expense structure, but we've made a lot of progress. And so if you go back to, you know, the fourth quarter of 2022 compared with the fourth quarter of 2023, you can see significant reductions, as I pointed out in my prepared remarks. But I wouldn't say it's totally complete.

Normalized expense structure.

But we've made.

A lot of progress since so if you go back to the fourth quarter of 2022 compared with the fourth quarter of 2023 significant reductions as I pointed out in my prepared remarks.

But I wouldn't say, it's totally complete.

David M. Garfinkle: There's still some opportunities where we could reduce those travel expenses a bit further. We will also be hiring some additional staff, too. So there's the puts and takes on that. But overall, I'd say there are still some opportunities to normalize expenses.

Still some opportunities where we can reduce those travel expenses a bit further.

We will also be higher.

Hiring some additional staff to so there's the.

Put and takes on that but overall I would say, there's still some opportunities to normalized expenses.

Greg Gibbous: Okay, good to hear. Thanks, guys. Thank you. Thank you. Thank you. Once again, if you have a question at this time, please press star 11. This does conclude the question and answer session for today's program. I'd like to hand the program back to Damon Hininger for any further remarks.

Okay. Good to hear thanks, guys.

Thank you. Thank you.

Once again, if you have a question at this time, please press star one one.

And this does conclude the question and answer session of today's program I'd like to hand, the program back to David <unk> for any further remarks.

Damon T. Hininger: Thank you so very much. And thank you all for joining us our call today. And especially to our investors, thank you for your trust and confidence and your investment in the company. We look forward to talking to you in May as we talk about our first quarter results. Have a great day, everyone. Thank you ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. ? upset tunes ?

Thank you so very much and thank you all for joining us our call today, and especially to our investors. Thank you for your trust and confidence and your investment in the company. We look forward to talk to you in May as we talk about our first our first quarter results have a great day everyone.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

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