Q1 2024 CoreCivic Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Q1 2024 CoreCivic Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Good day and thank you for standing by welcome to the Q1 'twenty 'twenty four of course, I think incorporated earnings conference call.

Operator: At this time all participants are in a listen only mode.

Operator: After the Speakers' presentation, there'll be a question and answer session.

Operator: Ask a question during this session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mike Grant, Managing Director of Investor Relations.

Mitt Grant: To withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today might grant managing director of Investor Relations. Please go ahead.

Mike Grant: Thank you, Operator. Good morning, ladies and gentlemen, and thank you for joining us today. Participating on today's call are Damon Hininger, CoreCivic's President and Chief Executive Officer, and David Garfinkle, our Chief Financial Officer. We're also joined here in the room by our Vice President of Finance, Brian Hammonds. On this call, we will discuss financial results for the first quarter of 2024, as well as updated financial guidance for the 2024 year. We'll also discuss developments with our government partners and provide you with other general business updates.

Mike Grant: Thank you operator, good morning, ladies and gentlemen, and thank you for joining us today.

Mike Grant: This pay down in today's call are Damon Heininger crucifix, President and Chief Executive Officer, and David Garfinkle, Chief Financial Officer. We're also joined here in the room by our Vice President of Finance, Brian Hammonds.

Mike Grant: On this call we will discuss financial results for the first quarter of 2024 as well as updated financial guidance for the 2024 year.

Mike Grant: We'll also discuss developments with our government partners and provide you with other general business updates.

Mike Grant: During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions 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 first quarter 2024 earnings relief issued after the market yesterday, as well as 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: During today's call our remarks, including our answers to your questions will include forward looking statements pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act.

Mike Grant: Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our first quarter 2024 earnings release issued after market yesterday as well as in our Securities and Exchange Commission filings, including forms 10-K 10-Q and.

Mike Grant: 8-K reports.

Mike Grant: You are also cautioned that any forward looking statements reflect management's current views only and.

Mike Grant: And that the company undertakes no obligation to revise or update such statements in the future.

Mike Grant: Management will also discuss certain non-gap metrics. 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 investor's page of the company's website at CoreCivic.com. With that, it is my pleasure to turn the call over to our President and CEO, Damon Hininger. Thank you, Mike.

Mike Grant: Management will also discuss certain non-GAAP metrics, a reconciliation of 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.

Damon T. Hininger: With that it is my pleasure to turn the call over to our president and CEO.

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

Damon T. Hininger: Damon Heininger.

Damon T. Hininger: Thank you Mike Good morning, and thank you for joining us for our first quarter 2024 earnings call.

Damon T. Hininger: On today's call I will provide details of our first quarter financial performance.

Damon T. Hininger: I will also discuss with you our latest operational results.

David M. Garfinkle: And update you on the latest developments with our government partners and our capital allocation strategy.

Damon T. Hininger: Following my remarks, I will turn the call over to our CFO, Dave Garfinkle, who will provide greater detail on our financial results and our updated 2024 financial guidance.

David M. Garfinkle: Dave will also provide an update on in a very active quarter for our ongoing capital structure initiatives.

David M. Garfinkle: <unk> details regarding our recently completed debt refinancing.

Damon T. Hininger: They will also provide an update on a very active quarter for our ongoing capital structure initiatives, including details regarding our recently completed debt refinancing. I'll start with a high-level overview of our first quarter financial results. In the first quarter, we generated revenue just over $500 million, a 90% increase compared with the prior year quarter.

David M. Garfinkle: I'll start with a high level overview of our first quarter financial results in the first quarter, we generated revenue of just over $500 million, a 9% increase compared with the prior year quarter.

Damon T. Hininger: This is our highest level of quarterly revenue achieved since the third quarter of 2019, 18 quarters ago, and it is also our highest rate of year-over-year revenue growth since the same quarter of 2019. The composition of our revenue growth also speaks to the current strength of our business as well as to the level of our partners' needs and their trust in us. During this quarter, we experienced revenue growth from all three of our partner groups, federal, state, and local governments. I will provide more color on each later in this call.

Damon T. Hininger: This is our highest level of quarterly revenue achieved since the third quarter of 2000 1918 quarters ago and it is also our highest rate of year over year revenue growth since the same quarter of 2019.

Damon T. Hininger: The composition of our revenue growth also speaks to the current strength of our business as well as to the level of our partners' needs and their trust in us.

Damon T. Hininger: During this quarter, we experienced revenue growth from all three of our partner groups Federal state and local governments.

Damon T. Hininger: I will provide more color on each later in this call.

Damon T. Hininger: For the first quarter of 2024, Regenerated Normalized Funds from Operations, or FFO, of $52.6 million, or $0.46 per share, compared to $38.9 million, or $0.34 per share, in the first quarter of 2023, representing a per share increase of 35%. The increase in FFO was driven by the higher federal, state, and local populations, combined with expense normalization and lower interest expense resulting from our debt reduction strategy, partly offset by higher G&A expenses.

Damon T. Hininger: For the first quarter of 2024 re generated normalized funds from operation or <unk> of $52 6 million or <unk> 46 per share compared to $38 9 million or <unk> 34 per share in the first quarter of 2023, representing a per share increase of 35%.

Damon T. Hininger: The increase in <unk> was driven by the higher federal state and local populations combined with expense normalization and lower interest expense, resulting from our debt reduction strategy, partly offset by higher G&A expenses.

Damon T. Hininger: Revenue from our federal partners, primarily Immigration and Customs Enforcement and the United States Marshal Service, increased 11% versus the first quarter of last year. Ice, in particular, was up significantly, as Title 42 was still in place in the comparable period of last year. As a reminder, Title 42, which was invoked in March of 2020 at the start of the COVID-19 response, is a law that empowers federal health authorities to deny entry into the United States to migrants in order to prevent the spread of contagious diseases.

Damon T. Hininger: Revenue from our federal partners, primarily immigration and customs enforcement and the United States Marshal service increased 11% versus the first quarter of last year.

Damon T. Hininger: Ice in particular was up significantly as titled <unk> was still in place in the comparable period of last year.

Damon T. Hininger: As a reminder, titled 42, which was invoked in March of 2020 at the start of the COVID-19 response is a law that empowers federal health authorities to deny migrants entry into the United States in order to prevent the spread of contagious diseases.

Damon T. Hininger: Title 42 officially ended on May 11th, 2023, and our populations with ICE have been consistently higher since then. As mentioned in our earnings release during the fourth quarter of 2024, revenue from ICE was $153.8 million compared to $130.7 million during the comparable quarter in 2023. After several months of deliberation, Congress passed a bipartisan funding bill in March providing for 41,500 ICE detention beds. Note that these funded beds also include a number of beds reserved at certain facilities under fixed monthly payment contracts.

Damon T. Hininger: Titled 42, officially ended May 11th of 2023, and our populations with ice have been consistently higher since then.

Damon T. Hininger: As mentioned in our earnings release during the fourth quarter of 2020 for revenue from ice was $153 8 million compared to $130 7 million during the comparable quarter in 2023.

Damon T. Hininger: After several months of deliberation Congress passed the bipartisan funding Bill in March providing for 41500 ice detention beds.

Damon T. Hininger: Note that these funded beds also include a number of beds reserved at certain facilities under a fixed monthly payment contracts. So the actual number detain will likely not achieve that 441500 level in the near term.

Damon T. Hininger: So the actual number detained will likely not achieve that full 41,500 level in the near term. Interestingly, ICE's total detainee population declined towards the end of the quarter and into the start of the second quarter, and the most recent detainee count published by ICE was 34,373 as of April 20th, down from roughly 37,000 to 39,000 during most of the first quarter of 2024.

Damon T. Hininger: Interestingly Ics total detainee population declined towards the end of the quarter and into the start of the second quarter and the most recent detainee count published by ice was 34 373 as of April 20th down from roughly 37000 to 39000 dairy mode.

Damon T. Hininger: The first quarter of 2024.

Damon T. Hininger: We believe that this was the result of an expectation of a lower number of funded detention beds following the unsuccessful passage of the Supplemental Funding Bill in the early part of the calendar year. As you know, ICE populations are rarely static, and we continue to work closely with the ICES system in their important missions. Our state revenue in the first quarter grew 5% versus the prior year based on higher per diem rates and sturdy occupancy from many of our state government partners, as well as contributions from two new state contracts signed in the fourth quarter of 2023.

Damon T. Hininger: We believe that this was the result of an expectation of lower number of funded detention beds. Following the unsuccessful passage of the supplemental funding bill in the early part of the calendar year.

Damon T. Hininger: As you know ice populations are rarely static and we continue to work closely with ice to assist them in their important mission.

Damon T. Hininger: Our state revenue in the first quarter grew 5% versus the prior year based on higher per diem rates and sturdy occupancy from many of our state government partners as well as contributions from two new state contracts signed in the fourth quarter of 2023.

Damon T. Hininger: Now in its second full year under a management contract with the state of Arizona, our La Palma Correctional Center in Eloy, Arizona, continues to show stable occupancy as well as improving operating and financial metrics. During the first quarter, we were able to discontinue the facility's reliance on temporary labor resources and incentives due to strong local hiring and management oversight.

Damon T. Hininger: Now in its second full year under our management contract with the state of Arizona.

Damon T. Hininger: Palma Correctional Center in Eloy, Arizona continues to show stable occupancy as well as improving operating.

Damon T. Hininger: And financial metrics.

Damon T. Hininger: During the first quarter, we were able to discontinue the facility's reliance on temporary labor resources and incentives due to due to strong local hiring and management oversight.

Damon T. Hininger: This is a welcomed accomplishment, as La Palma is our second-largest facility by capacity, so moving its financial performance in the right direction has been, and continues to be, a priority. To round out our revenue discussion, local revenue, which is primarily revenue generated from contracts with county governments, grew by 44%, albeit off a smaller base. This was the first full quarter with both Hines County, Mississippi, and Harris County, Texas, as partners, resulting from management contracts signed during the second half of 2023. Both populations are housed at our Tallahassee County Correctional Facility located in Tutwiler, Mississippi, and both contracts are now fully ramped.

Damon T. Hininger: This is a welcomed accomplishment as la Palma is our second largest facility by capacity so moving to the financial performance in the right direction has been and continues to be a priority.

Damon T. Hininger: To round out our revenue discussion local revenue, which is primarily revenue generated from contracts with county governments grew by 44%, albeit off a smaller base.

Damon T. Hininger: This was the first full quarter with both Hinds County, Mississippi, and Harris County, Texas as partners, resulting from management contracts signed during the second half of 2023.

Damon T. Hininger: Both populations are housed at our Tallahatchie County Correctional facility located in Tutwiler, Mississippi and both contracts are now fully ramped.

Damon T. Hininger: Our occupancy for the first quarter of 2024 was 75.2%. This is our highest occupancy rate since the first quarter of 2020, which, as you may recall, is the quarter that marked the start of the COVID-19 pandemic response. From the first quarter of 2023 to the first quarter of this year, occupancy in our safety segment increased from 71 percent to 76 percent, and occupancy in our community segment increased from 59 percent to 63 percent.

Damon T. Hininger: Our occupancy for the first quarter of 2024 was 75, 2%. This is our highest occupancy rate since the first quarter of 2020, which as you may recall is the quarter that marked the start of the COVID-19 pandemic response.

Damon T. Hininger: From the first quarter of 2023 to the first quarter of this year occupancy in our safety segment increased from 71% to 76% and occupancy in our community segment increased from 59% to 63%.

Damon T. Hininger: As we have mentioned in the past, our operating model has significant operating leverage to change the synopsis, and this was a factor in our margin improvement during the first quarter. In addition to receiving larger populations from existing contracts with ICE and state customers, our strong occupancy also reflects the successful ramp of four new contracts announced during the third and fourth quarters of 2023. These new contracts include a contract for 120 Montana inmates at our Saguaro Correctional Facility in Eloy, Arizona; a contract for 240 Wyoming inmates at our Tallahatchie County Facility in Mississippi; and the two new county contracts mentioned previously for up to 610 detainees also at our Tallahatchie Facility.

Damon T. Hininger: As we have mentioned in the past our operating model has significant operating leverage to changes in occupancy and this was a factor in our margin improvement during the first quarter.

Damon T. Hininger: In addition to receiving larger populations from existing contracts with ice and state customers are strong occupancy also reflects the successful ramp of four new contracts announced during the third and fourth quarters of 2023.

Damon T. Hininger: These new contracts include a contract for 120, Montana inmates at our swirl Correctional facility and Eloy, Arizona.

Damon T. Hininger: Contract for 240, Wyoming inmates at our Tallahatchie County facility in Mississippi.

Damon T. Hininger: And the two new County contracts mentioned previously for up to 610 detainees.

Damon T. Hininger: Also at our Tallahatchie facility.

Damon T. Hininger: These four new contracts completed their initial intakes during the fourth quarter of 2023 and into the first quarter of 2024 and contributed to our growth in oxy and revenue. We are grateful for the high degree of trust from our partners that these existing and expanded contracts represent. And I couldn't be more proud of our dedicated employees who helped earn that trust by providing the flexibility and timely delivery of quality services our partners rely on to fulfill their mission.

Damon T. Hininger: These four new contracts completed their initial intake during the fourth quarter of 2023 and into the first quarter of 2024 and contributed to our growth in occupancy and revenue.

Damon T. Hininger: We are grateful for the high degree of trust from our partners at these existing and expanded contracts represent.

Damon T. Hininger: And I couldn't be more prouder of our dedicated employees, who helped earn that trust by providing the flexibility and timely delivery of quality services, our partners rely on to fulfill their missions.

Damon T. Hininger: Next, I want to provide an update on labor attraction and retention, an important component of our business that became unusually challenging starting with the onset of the COVID-19 pandemic. During 2022 and 2023, labor market pressures necessitated temporary incentives and related incremental operating expenses. During those two years, we designed and deployed different human capital strategies and made significant investments in our frontline employees.

Damon T. Hininger: Next I wanted to provide an update on labor attraction and retention and an important component of our business that became unusually challenging starting with the onset of the COVID-19 pandemic.

Damon T. Hininger: During 2022, and 2023 labor market pressures necessitate a temporary incentives and related incremental operating expenses.

Damon T. Hininger: During those two years, we designed and deployed different human capital strategies and made significant investments in our frontline employees.

Damon T. Hininger: Through those actions, we have increased our staffing levels through improved recruiting and retention. We are now seeing significant normalization in our labor markets, as well as greater workforce stability. Financially, as we review first quarter results, our improved staffing has allowed us to dial back the higher spending on temporary incentives and associated travel expenses and has positioned us well operationally to manage our customers' higher population needs. Turning to our community segment, which is comprised of 23 residential reentry facilities, we experienced an increase in Oxy to 63.1% in the first quarter of 2024 versus 59.4% in the prior year period.

Damon T. Hininger: Through those actions, we have increased our staffing levels through improved recruiting and retention.

Damon T. Hininger: We are now seeing significant normalization in our labor markets as well as greater workforce stability.

Damon T. Hininger: Financially as we review first quarter results, our improved staffing has allowed us to dial back the higher spending on temporary incentives.

Damon T. Hininger: In associated travel expenses and has positioned us well operationally to manage our customers higher population needs.

Damon T. Hininger: Turning to our community segment, which is comprised of 23 residential reentry facilities, we experienced an increase in occupancy to 63, 1% in the first quarter of 2024 versus 59, 4% in the prior year period.

Damon T. Hininger: Our facilities in this segment serve the Bureau of Prisons, as well as state and county governments, and the increase in occupancy in this segment was broad-based. We also provide electronic monitoring and case management services at our community site.

Damon T. Hininger: Our facilities in this segment serves the bureau of prisons, as well as state and county governments and the increase in occupancy in this segment was broad based.

Damon T. Hininger: We also provide electronic monitoring and case management services in our community segment.

Damon T. Hininger: Our community segment represents a vital part of our reentry mission and is often critical to the successful reentry of residents in our care. Net operating income in this segment increased 56% in the first quarter of 2024 from the prior year quarter due to increased occupancy as well as per diem increases obtained in connection with contract renewals. Similar to our safety segment, our community segment facilities have been able to reduce temporary staff incentives.

Damon T. Hininger: Our community segment represents a vital part of our reentry mission and is often critical to the successful reentry of residents in our care.

Damon T. Hininger: Net operating income in this segment increased 56% in the first quarter of 2024 from the prior year quarter due to increased occupancy as well as per diem increases obtained in connection with contract renewals.

Damon T. Hininger: Similar to our safety segment, our community segment facilities have been able to reduce temporary staff incentives.

Damon T. Hininger: The positive oxytrend in the community segment is likely to continue now that the pandemic-related public health policies have ended and as more of our government partners return to these important residential reentry programs that help individuals better prepare for successfully rejoining our communities. The strong financial results reflected throughout our business have enabled us to execute on our long-term capital allocation strategy with more intensity. During the first quarter of 2024, we repurchased 2.7 million shares of our common stock at a cost of nearly $40 million, surpassing the amount we repurchased during all of 2023.

Damon T. Hininger: The positive occupancy trend in the community segment is likely to continue now that pandemic related public health policies have ended and as more of our government partners return to these important residential reentry programs that help individuals better prepare for successfully rejoining our communities.

Damon T. Hininger: The strong financial results reflected throughout our business have enabled us to execute on our long term capital allocation strategy with more intensity.

Damon T. Hininger: During the first quarter of 2024, we repurchased two 7 million shares of our common stock at a cost of nearly $40 million, surpassing the amount we repurchased during all of 2023.

Damon T. Hininger: Even after these repurchases, we ended the quarter with leverage, measured as net debt to adjusted EBITDA, at 2.7 times for the trailing 12 months, placing us for the first time within our target leverage range of two and a quarter times to two and three quarters times that we established in August of 2020. This is a significant accomplishment, and we are proud of the strategy, focus, and discipline that have led us here.

Damon T. Hininger: Even after these repurchases we ended the quarter with leverage measured as net debt to adjusted EBITDA at two seven times for the trailing 12 months, placing us for their first time within our targeted leverage range of two and a quarter times to two or three quarters timed that we established in <unk>.

Damon T. Hininger: August of 2020.

Damon T. Hininger: This is a significant accomplishment and we are proud of the strategy focus and discipline that has led us here.

Damon T. Hininger: We believe maintaining a disciplined capital allocation strategy, combined with strong financial results, also contributed to the successful refinancing of a substantial proportion of our debt during the quarter, including the issuance of $500 million of eight and a quarter senior unsecured notes and the repayment of nearly $600 million of our senior unsecured notes. David will provide you further detail regarding the significant capital market activity. Looking ahead, the longer-term macro environment for our federal, state, and local businesses remains positive.

Damon T. Hininger: We believe maintaining a disciplined capital allocation strategy combined with strong financial results also contributed to the successful refinancing of a substantial portion of our debt during the quarter, including the issuance of $500 million of eight and a quarter senior unsecured notes and.

Damon T. Hininger: The repayment of nearly $600 million of our senior unsecured notes.

Damon T. Hininger: Dave will provide you further detail regarding the significant capital market activities.

Damon T. Hininger: Looking ahead, the longer term macro environment for our federal state and local business remains positive.

Damon T. Hininger: Our government partners are facing complex capacity, infrastructure, budgetary, and population challenges, and we see increased opportunities to serve their evolving needs. This demand potential is evident from looking at jail backlogs, prison forecasts, and from discussions with our government partners. In particular, we remain in discussions with federal, state, and local government agencies, including agencies we do not currently serve, to help address their various challenges in the near to long term.

Damon T. Hininger: Our government partners are facing complex capacity infrastructure budgetary and population challenges and we see increased opportunities to serve their evolving needs.

Damon T. Hininger: This demand potential is evident from looking at gel backlogs prison forecast and from discussions with our government partners.

Damon T. Hininger: In particular, we remain in discussions with federal state and local government agencies, including agencies. We do not currently serve to help address their various challenges in the near to long term.

Damon T. Hininger: In conclusion, the macroenvironment in which we operate continues to improve. Our financial results, including those published last night, reflect that improved environment, but those results also reflect the hard work, the attention to detail, and the smart decisions made by our dedicated team here at CoreCivic. Our occupancy is rebounding to its highest level in nearly four years, and our margin is beginning to illustrate the operating leverage that comes with higher occupancy and a normalized expense structure, reflecting our progress against labor-related cost pressures that rose sharply during the COVID-19 pandemic.

Damon T. Hininger: In conclusion, the macro environment in which we operate continues to improve our financial results, including those published last night reflect that improve environment, but those results also reflect the hard work the attention to detail and the smart decisions made by our dedicated team here at core civic.

Damon T. Hininger: Our occupancy is rebounding to its highest level in nearly four years and our margin is beginning to illustrate the operating leverage that comes with higher occupancy and normalized expense structure, reflecting our progress against labor related cost pressures that rose sharply during the COVID-19 pandemic.

Damon T. Hininger: Our strong financial results and disciplined capital allocation strategy have provided us with tremendous balance sheet flexibility to better maximize shareholder value. Based on our financial performance to start 2024 and positive outlook for the remainder of the year, we have updated our full-year financial guidance, including increases to our adjusted EBITDA by nearly $10 million. Adjusted EPS by 6 cents and normalized FFO per share of 8 cents. One more comment, if you don't mind, before I turn the call over to Dave.

Damon T. Hininger: Our strong financial results and disciplined capital allocation strategy has provided us with tremendous balance sheet flexibility to better maximize shareholder value.

Damon T. Hininger: Based on our financial performance to start 2024 and positive outlook for the remainder of the year, we have updated our full year financial guidance, including increases to our adjusted EBITDA by nearly $10 million.

Dave: Adjusted EPS by <unk>, <unk> and normalized <unk> per share of <unk>.

Damon T. Hininger: One more comment if you don't mind before I turn the call over to Dave.

Damon T. Hininger: This week is National Correctional Officers and Employees Week, a week started by President Ronald Reagan in the 1980s to recognize the contributions of the professionals in our field. I would like to say to our teachers, nurses, chaplains, those who wear the uniform, and all who work within our company my sincere appreciation for what you do in helping us achieve our mission each and every day.

Speaker Change: This week is national Correctional officers and employees week at week started by President Ronald Reagan in the 19 eighties to recognize the contributions of the professionals in our vocation.

Damon T. Hininger: I would like to say to our teachers nurses chaplains, those who wear the uniform and all who work within our company my sincere appreciation for what you do in helping us achieve our mission each and every day.

David M. Garfinkle: Now I will turn the call over to Dave Garfinkle, our CFO, who will provide a more detailed look at our strong first quarter financial results and assumptions included in our newly updated financial guidance, as well as further details regarding our capital market activity. Over to you, Dave. Thank you, Damon, and good morning, everyone. In the first quarter of 2024, we reported a gap net income of $0.08 per share compared with $0.11 per share in the prior year quarter.

Damon T. Hininger: Now I will turn the call over to Dave <unk>, our CFO, who will provide a more detailed look at our strong first quarter financial results.

David M. Garfinkle: Assumptions included in our newly updated financial guidance as well as further details regarding our capital market activities over to you Dave.

David M. Garfinkle: Excluding special items, adjusted EPS during the first quarter of 2024 was $0.25 compared with $0.13 per share in the prior year quarter. Special items in the first quarter include $27.2 million of expenses associated with debt repayments and refinancing transactions and a small gain on the sale of real estate assets. Normalized FFO per share was $0.46 during the first quarter of 2024 compared with $0.34 in the prior year quarter, an increase of 3

David M. Garfinkle: Thank you Damon and good morning, everyone in the first quarter of 2024, we reported GAAP net income of <unk> <unk> per share compared with <unk> 11 per share in the prior year quarter.

David M. Garfinkle: Excluding special items adjusted EPS during the first quarter of 2024 was 25.

David M. Garfinkle: Compared with <unk> 13 per share in the prior year quarter.

David M. Garfinkle: Special items in the first quarter include $27 $2 million of expenses associated with debt repayments and refinancing transactions and a small gain on sale of real estate assets.

David M. Garfinkle: Normalized <unk> per share was <unk> 46 during the first quarter of 2024 compared with 34 in the prior year quarter, an increase of 35%.

David M. Garfinkle: Adjusted EBITDA was $89.5 million during the first quarter of 2024, compared with $73.7 million in the prior year quarter, an increase of $15.8 million, or 21%. The increase in adjusted EBITDA resulted from higher occupancy from federal, state, and local populations and the continued normalization of our operating expense structure, partially offset by an increase in G&A expenses. These factors, along with a lower normalized effective income tax rate in the current year quarter, also contributed to the increase in adjusted EPS and normalized FFO per share. The lower normalized effective income tax rate resulted from an income tax benefit associated with stock-based compensation vesting, contributing to a favorable impact of two cents per share.

David M. Garfinkle: Adjusted EBITDA was $89 5 million during the first quarter of 2024, compared with $73 $7 million in the prior year quarter, an increase of $15 8 million or 21%.

David M. Garfinkle: The increase in adjusted EBITDA resulted from higher occupancy from federal state and local populations and the continued normalization of our operating expense structure, partially offset by an increase in G&A expenses.

David M. Garfinkle: These factors along with a lower normalized effective income tax rate in the current year quarter also contributed to the increase in adjusted EPS and normalized <unk> per share.

David M. Garfinkle: The lower normalized effective income tax rate resulted from an income tax benefit associated with stock based compensation vesting contributing to a favorable impact of <unk> <unk> per share.

David M. Garfinkle: While this tax consequence occurs every year, the benefit was amplified by a rise in our stock price since the grant date, resulting in a higher tax deduction. In our safety segment, our largest segment, facility net operating income increased $18.4 million, or 21%, to $107.6 million in the current year quarter from $89.3 million in the prior year quarter. The increase in NOI was driven by an increase in occupancy in this segment from 70.9% to 76.1%, primarily resulting from higher populations from ICE due to the expiration of Title 42 on May 11, 2023.

David M. Garfinkle: While this tax consequence occurs every year that benefit was amplified by a rise in our stock price since the grant date, resulting in a higher tax deduction.

David M. Garfinkle: And our safety segment, our largest segment facility net operating income increased $18 4 million or 21% to $107 $6 million in the current year quarter from $89 3 million in the prior year quarter the.

David M. Garfinkle: The increase in NOI was driven by an increase in occupancy in this segment from 79% to 76, 1%, primarily resulting from higher populations from ice due to the expiration of title 42 on May 11 2023.

David M. Garfinkle: 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.

David M. Garfinkle: Titled 42 is a 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 in an effort to contain the spread of COVID-19.

David M. Garfinkle: Since Title 42 expired, ICE detention populations have grown nationwide. Occupancy also increased due to new contracts signed in the second half of 2023, including two new state contracts with the states of Montana and Wyoming and two new county contracts with Hines County, Mississippi, and Harris County, Texas. In our community segment, facility net operating income increased $2.1 million, or 56%, to $5.8 million in the current year quarter from $3.7 million in the prior year quarter.

David M. Garfinkle: Since titled 42 expired ice detention populations have grown nationwide.

David M. Garfinkle: Occupancy also increased due to new contracts signed in the second half of 2023, including two new state contracts with the state of Montana, and Wyoming, and two new County contracts with Hinds County, Mississippi, and Harris County, Texas.

David M. Garfinkle: In our community segment facility net operating income increased $2 1 million or 56% to $5 $8 million in the current year quarter from $3 7 million in the prior year quarter.

David M. Garfinkle: Occupancy in the community segment increased from 59.4% to 63.1% and was broad-based as more of our government partners are returning to these important residential reentry programs that help individuals to be better prepared for successfully transitioning from a period of incarceration into our communities following systemic disruptions during the COVID-19 pandemic. Operating margins in our safety and community facilities combined improved to 23.7% in the first quarter of 2024, compared to 21.2% in the prior year quarter. The increase in our operating margins was due to an increase in occupancy from 70.1% to 75.2% for our safety and community segments combined.

David M. Garfinkle: Occupancy in the community segment increased from 59, 4% to 63, 1% and was broad based as more of our government partners are returning to these important residential reentry programs that help individuals to be better prepared for successfully transitioning from a period of incarceration into our communities following systemic disruptions during.

David M. Garfinkle: The COVID-19 pandemic.

David M. Garfinkle: Operating margins in our safety and community facilities combined improved to 23, 7% in the first quarter of 2024 compared to 21, 2% in the prior year quarter.

David M. Garfinkle: The increase in our operating margins was due to the increase in occupancy from 71% to 75, 2% for our safety and community segments combined.

David M. Garfinkle: Per diem increases we have been successful in obtaining, which served to increase revenue per mandate by 4.1% over the prior quarter, and the normalization of operating expense trends we have experienced over the past several quarters, continuing into the first quarter of 2024. During the first 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 have been steadily easing over the past several quarters. These three expense categories declined by $6.1 million from the first quarter of 2023.

David M. Garfinkle: Per diem increases we have been successful in obtaining which serve to increase revenue per mandate by four 1% over the prior year quarter.

David M. Garfinkle: And the normalization of operating expense trends, we have experienced over the past several quarters continuing into the first quarter of 2024.

David M. Garfinkle: During the first 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 have been steadily easing over the past several quarters. These.

David M. Garfinkle: These three expense categories declined by $6 $1 million from the first quarter of 2023.

David M. Garfinkle: In our property segment, facility net operating income declined $1.3 million due to the expiration of the lease with the state of Oklahoma at our North Fork Correctional Facility, effective June 30, 2023, partially offset by the transition of the Allen Gamble Correctional Center from a facility we operated in our safety segment to a facility we leased to the state of Oklahoma in the property segment, effective October 1, 2023. Turning next to the balance sheet, during the first quarter, we completed the issuance of $500 million of unsecured notes at an interest rate of 8.25%.

David M. Garfinkle: In our property segment facility net operating income declined $1 $3 million due to the expiration of the lease with the state of Oklahoma at our North Fork Correctional facility effective June 32023, partially offset by the transition of the Allen Gamble Correctional Center from our facilities operated in our safety segment.

David M. Garfinkle: To our facility, we lease to the state of Oklahoma in the property segment effective October one 2023.

David M. Garfinkle: Turning next to the balance sheet during the first quarter, we completed the issuance of $500 million of unsecured notes at an interest rate of eight 5%.

David M. Garfinkle: The proceeds of these notes, which have a maturity date of April 15, 2029, were used to tender for our then outstanding 8.25% unsecured notes with a maturity date of April 15, 2026. Note holders with an aggregate principal amount of $494.3 million, or 83.3% of the aggregate principal amount of the old 8.25% unsecured notes outstanding, tendered their notes by the expiration date on March 11th, and on April 15th, we redeemed the remaining $98.8 million balance outstanding. In addition to the net proceeds received from the issuance of these notes, we used borrowings under our revolving credit facility and cash on hand to fund the tender and redemption of the old 8.25% unsecured notes.

David M. Garfinkle: The proceeds of these notes, which have a maturity date of April 15th 2029 were used to tender for our then outstanding 8.25% unsecured notes with a maturity date of April 15th 2026.

David M. Garfinkle: Note holders with an aggregate principal amount of $494 3 million or 83, 3% of the aggregate principal amount of the old eight a quarter percent unsecured notes outstanding tendered their notes by the exploration date on March 11th and on April 15th we redeemed the remaining $98 $8 million balance.

David M. Garfinkle: Outstanding.

David M. Garfinkle: In addition to the net proceeds received from the issuance of these notes we used borrowings under our revolving credit facility and cash on hand to fund the tender and redemption of the old 8.25% unsecured notes the.

David M. Garfinkle: The old 8.25% unsecured notes were originally issued in 2021, and we were very pleased to be able to issue the new notes with the same coupon as the old notes, even though treasury rates have risen by approximately 325 basis points since then, which we believe is a testament to our disciplined capital allocation strategy and ongoing strength of our business. During the first quarter, we also repurchased 2.7 million shares of our common stock at an aggregate purchase price of $39.4 million, or $14.52 per share, exceeding the $38.1 million of shares we repurchased throughout all of 2023.

David M. Garfinkle: The old 8.25% unsecured notes were originally issued in 2021, and we were very pleased to be able to issue. The new notes with the same coupon as the old notes, even though treasury rates have risen by approximately 325 basis points. Since then.

David M. Garfinkle: Which we believe is a testament to our disciplined capital allocation strategy and ongoing strength of our business.

David M. Garfinkle: During the first quarter, we also repurchased two 7 million shares of our common stock at an aggregate purchase price of $39 4 million or $14 52 per share exceeding the $38 $1 million of shares we repurchased throughout all of 2023.

David M. Garfinkle: Since our share repurchase program was announced in May 2022 through March 31, we have repurchased 12.8 million shares of our stock at a total cost of $152 million, or an average price of $11.87 per share, leaving $73 million available under our $225 million board authorization. Our leverage, measured by Net Debt to Adjusted EBITDA, was 2.7x using the trailing 12 months ended March 31, 2024, down from 2.8x at December 31, 2023 and reaching our targeted leverage of between 2.25x and 2.75x.

David M. Garfinkle: Since our share repurchase program was announced in May 2022 through March 31, we have repurchased 12 8 million shares of our stock at a total cost of $152 million or an average price of $11 87 per share, leaving $73 million available under our 225 million.

David M. Garfinkle: Board authorization.

David M. Garfinkle: Our leverage measured by net debt to adjusted EBITDA was two seven times using the trailing 12 months ended March 31, 2024 down from two eight times at December 31, 2023, and reaching our targeted leverage of between two and a quarter times and two and three quarters times.

David M. Garfinkle: We achieved our targeted leverage in the first quarter despite using $32 million of cash for costs associated with the debt repayments and issuance of the new notes and despite repurchasing shares of our stock at an accelerated pace during the quarter. Following the repayment of the old 8.25% unsecured notes, we have no debt maturities until 2027 when a modest $243.1 million of unsecured notes at a rate of 4.75% mature. As of March 31st, we had $111.4 million of cash on hand and an additional $257 million of borrowing capacity on our revolving credit facility, providing us with total liquidity of $368.4 million.

David M. Garfinkle: We achieved our targeted leverage in the first quarter, despite using $32 million of cash for costs associated with the debt repayments and issuance of the new notes and despite repurchasing shares of our stock at an accelerated pace during the quarter.

David M. Garfinkle: Following the repayment of the old eight in a quarter percent unsecured notes, we have no debt maturities until 2027, when a modest $243 $1 million of unsecured notes at a rate of four and three quarter percent mature.

David M. Garfinkle: As of March 31, we had $111 $4 million of cash on hand, and an additional $257 million of borrowing capacity on our revolving credit facility, providing us with total liquidity of $368 4 million.

David M. Garfinkle: We used $106.9 million of this liquidity to fund the aforementioned final redemption of the old 8.25% unsecured notes in April, including the redemption premium and accrued interest on these notes. Moving lastly to a discussion of our 2024 financial guidance, we expect to generate adjusted EPS of $0.66 to $0.76, up from our previous guidance of $0.58 to $0.72 and normalize FFO per share of $1.56 to $1.66, up from our previous guidance of $1.46 to $1.61.

David M. Garfinkle: We used a $106 9 million of this liquidity to fund the aforementioned final redemption of the old 8.25% unsecured notes in April, including the redemption premium and accrued interest on these notes.

David M. Garfinkle: Moving lastly to a discussion of our 2024 financial guidance, we expect to generate adjusted EPS of <unk> 66 to 76.

David M. Garfinkle: Up from our previous guidance of 58 to <unk> 70 <unk>.

David M. Garfinkle: And normalized <unk> per share of $1 56 to $1 66 up from our previous guidance of $1 46 to $1 61.

David M. Garfinkle: Our guidance reflects our outperformance in Q1 relative to our internal forecast, leaving the remainder of our forecast essentially unchanged from our previous guidance. Relative to 2023, our guidance continues to reflect growth in state and local residential populations, largely attributable to the new contract awards obtained during the second half of 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. As with our previous guidance, we expect federal populations to remain within a stable range throughout 2024.

David M. Garfinkle: Our guidance reflects our outperformance in Q1 relative to our internal forecast, leaving the remainder of our forecast essentially unchanged from our previous guidance.

David M. Garfinkle: Relative to 2023, our guidance continues to reflect growth in state and local residential populations largely attributable to the new contract awards obtained during the second half of 2023 or.

David M. Garfinkle: 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.

David M. Garfinkle: As with our previous guidance, we expect federal populations to remain within a stable range throughout 2024.

David M. Garfinkle: Even though Congress appropriated additional funds for 41,500 detention beds, ICE detention populations nationwide have yet to approach this higher funded level. If federal populations increase toward the higher levels funded for detention beds, there could be upside to our guidance. Consistent with our last guidance, our updated guidance contemplates the continuation of a normalized hiring market for labor with less reliance on temporary incentives but resulting in higher staffing costs as we continue to increase staffing levels in response to the higher occupancy we are experiencing post-COVID.

David M. Garfinkle: Even though congress appropriated additional funds for 41500 detention beds ice detention populations nationwide have yet to approach. This higher funded level of federal populations increased towards the higher levels funded for detention beds, there could be upside to our guidance.

David M. Garfinkle: Consistent with our last guidance, our updated guidance contemplates the continuation of a normal normalized hiring market for labor with less reliance on temporary incentives, but resulting in higher staffing costs. As we continued to increase staffing levels in response to the higher occupancy we are experiencing post COVID-19.

David M. Garfinkle: Our guidance continues to contemplate the expiration of the lease with the State of California at our California City Correctional Center, effective March 31, 2024. This facility generated EBITDA of $7.2 million and $25.5 million for the three months ended March 31, 2024 and the 12 months ended December 31, 2023, respectively, and is therefore expected to result in a per share reduction of $0.06 from Q1 to Q2 and $0.15 to $0.16 from 2023 to 2024. 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: Our guidance continues to contemplate the expiration of the lease with the state of California at our California City Correctional Center effective March 31, 2020 for this facility generated EBITDA of $7 2 million and $25 5 million for the three months ended March 31, 2024, and the 12 months ended December 31.

David M. Garfinkle: 2023, respectively and is therefore expected to result in a per share reduction of <unk> <unk> from Q1 to Q2 and 15% to 16.

David M. Garfinkle: 22023 to 2024.

David M. Garfinkle: 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: With respect to our capital allocation strategy, we expect to repurchase additional shares of our common stock, taking into consideration our leverage, earnings trajectory, stock price, liquidity, and alternative opportunities to deploy capital. Our guidance includes a range of free purchase scenarios at various amounts and at various assumed prices, but we will not likely sustain the pace in Q1 unless we experience a larger increase in populations than we have forecasted, maintaining discipline on our targeted leverage ratio.

David M. Garfinkle: With respect to our capital allocation strategy, we expect to repurchase additional shares of our common stock taking into consideration our leverage earnings trajectory stock price liquidity and alternative opportunities to deploy capital.

David M. Garfinkle: Our guidance includes a range of free purchase scenarios at various amounts and at various assume prices, but we will not likely sustain that pace in Q1, unless we experienced a larger increase in populations than we have forecasted maintaining discipline on our targeted leverage ratio.

David M. Garfinkle: We also expect to use our cash on hand and cash flow from operations to continue paying down debt, prioritizing debt repayments on our revolving credit facility, which we utilized to redeem the remaining balance of our old 8.25% unsecured notes in April.

David M. Garfinkle: We also expect to use our cash on hand, and cash flow from operations to continue paying down debt prioritizing debt repayments on our revolving credit facility, which we utilized to redeem the remaining balance of our old 8.25% unsecured notes in April.

David M. Garfinkle: Given the strength of both our balance sheet and cash flows and newly extended debt maturities, we have considerable flexibility in how we deploy our liquidity and free cash flow, as well as how we balance our capital allocation strategy between debt repayments and share repurchase. As a result, our guidance contemplates a range of scenarios associated with debt reduction and share repurchase. We expect AFFO, which we consider a proxy for our cash flow available for capital allocation decisions, to range from $172.8 million to $185.3 million, or $1.55 to $1.66 per share, up from our previous guidance of $158.3 million to $175.3 million, or $1.42 to $1.57 per share.

David M. Garfinkle: Given the strength of both our balance sheet and cash flows and newly extended debt maturities, we have considerable flexibility in how we deploy our liquidity and free cash flow as well as how we balance our capital allocation strategy between debt repayments and share repurchases.

David M. Garfinkle: Again, our guidance contemplates a range of scenarios associated with debt reduction and share repurchases.

David M. Garfinkle: We expect <unk>, which we consider a proxy for our cash flow available for capital allocation decisions to range from $172 8 million to 185.3.

David M. Garfinkle: $3 million or $1 55 to $1 66 per share up from our previous guidance of $158 3 million to $175 $3 million or $1 42 to $1 57 per share.

David M. Garfinkle: We expect our normalized effective tax rate to be approximately 29% for the remainder of the year, which, after considering the lower effective tax rate for the first quarter, equates to an annual effective tax rate of approximately 27%. 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 slightly higher than 2023. We plan to spend $62 to $66 million on maintenance capital expenditures in 2024, unchanged from our previous guidance, and $8 to $10 million for other capital investments, up $1 million from our previous guidance.

David M. Garfinkle: We expect that our normalized effective tax rate to be approximately 29% for the remainder of the year, which after considering the lower effective tax rate for the first quarter equates to an annual effective tax rate of approximately 27%.

David M. Garfinkle: Full year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense.

David M. Garfinkle: We are forecasting G&A expenses in 2024 to be slightly higher than 2023.

David M. Garfinkle: We plan to spend $62 million to $66 million on maintenance capital expenditures during 2024 unchanged from our previous guidance and $8 million to $10 million for other capital investments up $1 million from our previous guidance.

David M. Garfinkle: I will now turn the call back to our operator to open up the lines for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: I will now turn the call back to our operator to open up the lines for questions.

Operator: To withdraw your question, please press star 11 again. Please stand by while we compile a Q&A roster. Our first question comes from the line of Joe Gomes of Noble Capital. Your line is now open. Good morning, Damon and David. Hey, good morning, Joe.

Speaker Change: Thank you.

Operator: At this time, we will conduct a question and answer session.

Operator: Reminder, to ask a question you will need to press star one on your telephone.

Operator: We will now.

Operator: To withdraw your question. Please press star one again.

Operator: Please standby, while we compile the Q&A roster.

Operator: Our first question comes from the line of Joe Gomes of Noble capital. Your line is now open.

Joseph Anthony Gomes: Good morning, Damien and David Congrats on good quarter.

Joseph Anthony Gomes: Good morning, Thank you so much.

Joseph Anthony Gomes: Good morning, thank you. Thank you so much. The one at the start, you talked a little bit about the ice populations, especially as you mentioned, somewhat coming down at the end of the first quarter, second quarter, you know, they rebounded. What kind of rebound have you seen in them since they bottomed out?

Operator: So wanted to start you talked about.

Joseph Anthony Gomes: The ice populations.

Joseph Anthony Gomes: From the overall level, just maybe give us a little more color and detail on what you saw in Europe populations.

Joseph Anthony Gomes: Especially as you mentioned somewhat coming down.

Joseph Anthony Gomes: And the first quarter into the second quarter Rebuy.

Joseph Anthony Gomes: Rebounded with kind of rebound that we've seen in them since they bottomed out.

Damon T. Hininger: Yes, sir. This is Damon. Let me give you a couple of numbers. So, as of yesterday, our system-wide population was 10,310.

Joseph Anthony Gomes: Yes, Sir so this is Damon let me give you a couple of numbers so as of yesterday our system wide population was 10 310.

Damon T. Hininger: So 10,310 was our system-wide population as of yesterday. In April, let me give you two numbers. In April, on April 1st, we were at 9,772.

Damon: So 10310 with our system wide population as of yesterday.

Damon T. Hininger: In April and let me give you two numbers in April on April 1st we are at 9772, and then April 20th and I say, the 20th because Thats. The last publicly available report for ice nationwide populations. So on April 20th our assistant population was 9208, so coming into the month of April.

Damon T. Hininger: And then April 20th, and I say the 20th because that's the last publicly available report for ICE nationwide populations. So on April 20th, our system population was 9,208. So coming into the month of April, we are almost at 10,000. We went as low as 9,200 on April 20th, and as of today, or I should say yesterday, we're at 10,310. So as you know, and as I said in my comments, again, the last publicly available report for ICE was 34,000, about 600 or 500. And so we don't know what the new numbers are nationally, but our sense is if our populations are going up, the nationwide number's going up too. Thanks for that detail. It is much, much appreciated.

Damon T. Hininger: We're almost at 10000, we win as low as 9200 on April 20th and as of today or I should say yesterday, we were at 10310 so.

Damon T. Hininger: As you know and as I said in my comments.

Damon T. Hininger: Again, the last publicly available report for ice was 34000.

Damon T. Hininger: About 600 or 500.

Damon T. Hininger: And so we don't know what the new numbers are nationally, but our sense is if our populations are going up and likely the nationwide numbers going up too.

Damon T. Hininger: And just, you know, I was looking through the supplemental and, you know, if you look at the safety segment, the revenue per compensated band day is now $102, which is up from the $90 level a couple of years ago. You know, how much more increase can you get out of that?

Speaker Change: Okay, great. Thanks for that detail much much appreciated and just looking through the supplemental and.

Damon T. Hininger: Have you looked at the safety segment the revenue per compensated mandate is now $102.

Damon T. Hininger: Which is up from the $90 level a couple of years ago.

Damon T. Hininger: How much more increase do you think you can get out of that are you seeing any pushback from your part government partners.

Damon T. Hininger: Are you seeing any pushback from your part government partners on, you know, the steady? in the Revenue Per Compensated Mandate? Yeah, good question. And I'll probably tag team with Dave on this a little bit.

Damon T. Hininger: The steady increase in the revenue per compensated mandate.

Speaker Change: Yes, good question and I'll, probably tag team, Dave on this a little bit, but I'd say a couple of things. One is as you know and we've talked a lot about last couple of years I mean, we have needed to do some big investments in our employees. So we're really thankful for especially our state partners.

Damon T. Hininger: But I'd say a couple things. One is, as you know, we've talked a lot about the last couple of years. I mean, we have needed to make some big investments in our employees. So we're really thankful for, especially our state partners, through the appropriation process through various state legislatures around the country to get, you know, increases in salaries and in turn-offs to get reimbursed through per diem increases with our contract, either through the renewal process or new contract.

Damon T. Hininger: Through the appropriation process through various state legislatures around the country to get increases in salaries and in turn off to get reimbursed through per diem increases with our contracts either through the renewal process or new contracts.

Damon T. Hininger: You know, generally, it's not part of your question, but generally, the labor market feels like it's stabilized, not only just because the vacancy rate went down dramatically, but also because the need for major adjustments to salaries feels like we're stabilized and somewhat getting into a kind of normal yield increase on that front. And then, as you know, on our federal contracts, wage terminations are required by contract, which, in turn, we have to pay those rates to our employees under those contracts.

Damon T. Hininger: Generally it is not part of your question, but generally the labor market feels like it's stabilized not only just on the vacancy rate going down dramatically, but also the need for major adjustments. This hour. It feels like we're stabilizing somewhat getting it into a kind of a normal year over year increase on that front and then as you know on our federal contracts waste terminations are.

Damon T. Hininger: Feared by contract, which in turn we have to pay those rates with our employees under those contracts. So if those wages go up.

Damon T. Hininger: So if those wages go up, and they go up, you know, regardless if they go up modestly or meaningfully, we get reimbursed dollar for dollar through our contracts. And so, and also that's a great feature in those contracts. So if those wages continue to go up, which typically they are a little slower to see adjustments year over year versus our state contracts, we could see some meaningful increases in salaries through the wage termination process here in a couple of years.

Damon T. Hininger: And rigor.

Damon T. Hininger: Regardless, if they go up modestly or meaningfully we get reimbursed dollar for dollar through our contracts and so and obviously thats a great feature in those contracts. So if those wages continuing to go up which typically those are a little slower.

Damon T. Hininger: To see adjustments year over year versus our state contracts. So.

Damon T. Hininger: So we could see some meaningful increases in salaries through the ways termination process here next couple of years and in turn to get reimbursed for that analysis that could adjust our <unk> for in a pretty meaningful way. So so that's a long way of saying, yes, maybe not so much on the state business, but I think maybe on the federal business next year or two as wage terminations continue to kind of keep up with the labor market.

Damon T. Hininger: In turn, I'll have to get reimbursed for that, and now I'll say that could adjust our per diems in a pretty meaningful way. So that's a long way of saying, yeah, maybe not so much on the state business, but I think maybe on the federal business next year or two, as wage terminations continue to kind of keep up with the labor market data, we could see adjustments there. But what would you add to that, Dave? Yeah, I think 22 was a decent year; 23 was a better year.

Damon T. Hininger: <unk>.

Damon T. Hininger: We could see adjustments there, but what would you add to that Dave I think 22 with a decent year 23 was a better year. So im speaking specifically for our state government partners where per Diem is typically go up July one.

David M. Garfinkle: So I'm speaking specifically for our state government partners, where per diems typically go up July 1 in connection with the renewal of their fiscal years. And so 23 was a good year, and as Damon mentioned, we were recovering a lot of the salaries that we had been providing to our staff. Our customers, in this unique industry, our customers do what we do, so they experience what we do. And they saw the demand for their salaries increase within the public sector system. So those conversations are never easy.

David M. Garfinkle: Connection with the renewal of their fiscal years, and so 23 was a good year and as Damon mentioned, we are recovering a lot of the salaries that we had been providing to our staff.

David M. Garfinkle: Our customers a unique industry our customers do what we do so they experience what we do so they saw their demand.

David M. Garfinkle: The demand for their salaries, increasing within the public sector system. So those conversations they are never easy I mean trying to get budget.

David M. Garfinkle: I mean, trying to get budget dollars appropriated is always difficult, but they were at least a little more sympathetic when they understood the labor market. So I think we've been really good at getting those per diem increases the past couple years. Most states are in legislative session right now, so it's hard to say what is going to happen July 1 of 24, but we continue to have those conversations, particularly in states where we didn't necessarily get a per diem increase that fully compensated us for the wages that we provided the past year or two. Thank you. Thanks for that!

David M. Garfinkle: Budget dollars appropriated is always difficult, but they were at least a little more sympathetic when they understood. The labor market. So I think we've been really good at getting those per diem increases the past couple of years.

David M. Garfinkle: In most states are in legislative session right now so hard to say what is going to happen July one of 'twenty four but we continue to have those conversations, particularly in states, where we didn't necessarily get a per diem increase that fully compensated us for the wages that we provided the past year or two.

Damon T. Hininger: And you mentioned CalCity has expired here now. Maybe give us a little more update or color on what you're doing there. You know, who you think could be a potential partner there and taking that facility if you can come up with some type of who are your target customers, I guess, for that? Yeah, we thank you for that question on CalCity. I mean, we think it's a great solution for even though the lease ran out, you know, think it could be a good solution long term or even midterm for the state as their needs change. Obviously, their populations got impacted probably more dramatically than any other state with COVID and the populations went down.

Speaker Change: Okay. Thank you thanks for that and you mentioned Cal City has expired here now.

Damon T. Hininger: Maybe give us a little more update or color on what youre doing there.

Damon T. Hininger: We think could be a potential.

Damon T. Hininger: Partner, there and taking that facility. If you can come to some type of agreements there.

Damon T. Hininger: Target customers I guess to that facility.

Damon T. Hininger: We thank you for that question on Cal City I mean, we think it's a great solution for even though the lease ran out I think it could be a good solution long term or even midterm for the state as their needs change is obviously their populations got impacted.

Damon T. Hininger: Really more dramatically than any other state with with Covid and the population is going down. So also will continue to keep lines of communication open with the with the states, but as we've said before being in southern California being in the southwest knowing that ice and their needs are very fluid and very dynamic and obviously a lot of discussion going.

Damon T. Hininger: So also, we'll continue to keep the lines of communication open with the state. But you know, as we've said before, being in Southern California, being in the southwest, knowing that ICE and their needs are very fluid and very dynamic. And obviously, a lot of discussion going on both nationally and regionally in that part of the country about border security and the needs for ICE, maybe more decision capacity. We think that'd be a natural fit for that agency, if and when they need more capacity, period, not just in that part of the country. Anything you'd add to that, I think we've mentioned before, both ICE and marshals have used that facility before California was So they're very familiar with it.

Damon T. Hininger: On both nationally and regionally in that part of the country about border security and the need for for is maybe more decision capacity, we think that would be a natural fit for for that agency, if and when they need more capacity period, not just in that part of the country, but anything you'd add to that David I think we've mentioned before both ice and marshals have used that facility before Cal.

Damon T. Hininger: They've toured it, so we think it would be a good solution for them as well. Okay, thanks. And then. I'm the, uh...

Damon T. Hininger: <unk> was in it so they are familiar with it.

Damon T. Hininger: I've toured it so we think it would be a good solution for them as well.

Speaker Change: Okay. Thanks.

Damon T. Hininger: And then.

Damon T. Hininger: The monitoring, you know, the ISAP contract comes up in about, I guess, 15 months. Any color you can provide on what your thoughts are on the monitoring ISAP contract, and if you're, that's something that you're going to go back in and look to potentially win. Yeah, absolutely. So, you know, as you know, that contract's up for rebid. I think the contract expires in July of next year in 2025.

Damon T. Hininger: On the.

Damon T. Hininger: The monitoring.

Damon T. Hininger: <unk> contract comes up in about I guess 15 months here.

Speaker Change: Any color you can provide on.

Damon T. Hininger: What your thoughts are on the monitoring.

Damon T. Hininger: ICF contract and if Youre, if thats something that youre going to go back in and look to potentially win.

Speaker Change: Yeah, absolutely so that as you know that contracts up for rebid I think the contract expires July of next year in 2025, obviously, we've got the capability.

Damon T. Hininger: Obviously, we've got the capability, you know; our community division has been doing monitoring underneath that. We've been doing it for decades within that division. So we've got the capability and the qualifications for it. And probably more importantly, I mean, no one's been working with ICE longer than we have. So we know that agency really well. We've done some really complex and big solutions for them over the years. You know, I think about our South Texas facility in Dilley, Texas, as one example.

Damon T. Hininger: Our community Division, it's got monitoring underneath that we've been doing it for decades within that division. So we've got the capability and the qualification for it and.

Damon T. Hininger: And probably more importantly, I mean, no one's been worked with ice longer than we have so obviously, we know that agency really well we've done some really complex and large.

Damon T. Hininger: So something of that size and that complexity is right in our wheelhouse because we've done it many times over the years with ICE. So we're getting ourselves prepared. Also, we've participated in that procurement in years past. And again, I think we're well qualified not only just because of our relationship with the agency but also because we have experience working on complex projects. And also, I think we've got a really good track record of being very innovative and showing great outcomes.

Damon T. Hininger: Solutions for them over the years I think about our south Texas facility in Dilley, Texas, Vietnam being one example, so something of that size and that complexity, it's right in our wheelhouse, because we've done that many times over the years with with ISO were getting ourselves prepared obviously, we participated in that procurement in years past and again I think we're well qualified now just with the relationship with.

Damon T. Hininger: So as they think about kind of the future of that program and maybe some changes they want relative to not only outcomes but performance metrics and show, you know, that it's a very effective program, we think we bring a lot to the table. But anything to add to that, Dave?

Damon T. Hininger: The agency, but also working through complex projects and also I think we've got a really good track record of being very innovative and showing great outcomes. So as they think about kind of the future of that program.

Dave: Maybe some changes they want relative to an OE outcomes performance metrics and show.

Damon T. Hininger: That's a very effective program, we think we bring a lot to the table, but anything you'd add to that Dave. The only thing I'd add there was that reporting and release management RFS last year I think.

David M. Garfinkle: The only thing I'd add is that there was that reporting and release management RFI last year. I think, you know, we don't know what it's going to look like, whether they want the same services that are currently provided under ISAP, or whether they're going to expand them like they contemplated under the RRM RFI. You know, we have not seen an RFP, and it's not come out yet. I expect that it will come out sometime during the second half of 2024.

David M. Garfinkle: We don't know what it's going to look like whether they want the same services that are currently provided.

David M. Garfinkle: This app or whether theyre going to expand it like they contemplated under the RM RFID.

David M. Garfinkle: So, you know, they're probably still compiling the data from the responses to that RFI. And it could, you know; it depends on how much money gets appropriated for that type of monitoring case management program as well. And there could be multiple vendors, both profit and nonprofit, depending on what it looks like. So we're standing ready to see what that RFP looks like that we'd expect in the second half of this year, and we'll respond accordingly. Great, and one last one for me; I'll get back in queue.

Speaker Change: We have not seen an RFP it has not.

David M. Garfinkle: Come out yet I expect that would come out sometime during the second half of 2024.

David M. Garfinkle: So they are probably still compiling the data from that from the responses to that RFP.

David M. Garfinkle: And it could it depends on how much money gets appropriated towards that type of monitoring case management program as well and there could be multiple vendors.

David M. Garfinkle: Both profit and nonprofit depending on what it looks like so.

David M. Garfinkle: We're standing ready to see what that RFP looks like that we'd expect in the second half of this year and we'll respond accordingly.

Speaker Change: Great and one last one for me I'll get back in queue.

Damon T. Hininger: Anything new on state and local opportunities? Yeah, great, great question. So, as you know, we've been on a great run.

David M. Garfinkle: Anything new on state and local opportunities.

Damon T. Hininger: I mean, we go into the last half of last year, I mean, a lot of great new relationships, you know. Wyoming comes to mind. Hines County comes to mind. Harris County comes to mind. And it's probably important to note, I know, there's always a question about, you know, kind of public procurements; a lot of these opportunities that we have secured here for the last, you know, six, eight, you know, 10 months have been through just, you know, shoe leather and engaging these partners to understand their complex issues and challenges they have to lead to these opportunities.

Damon T. Hininger: Yes, great Great question. So as you know we've been on a great run I mean, we go go into the last half of last year I mean, a lot of great new relationships. While may comes to mind Hinds County comes in mind Harris County comes to mind, and it's probably important to note I know, there's always a question about kind of public available.

Damon T. Hininger: <unk> a lot of these opportunities that we have secured year to last you know six 810 months.

Damon T. Hininger: <unk> been through just shoe leather engage these partners understand their complex issues a challenge they have to lead to these opportunities. So we're excited about having a lot of these new partners now on the roster with with core civic.

Damon T. Hininger: So we're excited about having a lot of these new partners now on the roster with CoreCivic. But I guess I'd point to a couple things. You know, we obviously closely at the prison forecast for the next five years. We've talked about some of those numbers here for the next five years. But if you look at our existing customer base, just the last two years in population growth, and if you exclude the Federal Bureau of Prisons, which we don't work with them now on the safety side, we just work with them a little bit on the community side.

Damon T. Hininger: I guess I'd point to a couple of things we look obviously closely at first and forecast next five years, we've talked about some of those numbers here in the next five years, but if you look at our existing customer base just last two years in population growth and if you exclude the federal Bureau of prisons, which we don't work with them now on the safety side, we just work with them a little bit.

Damon T. Hininger: And also, the state of California, that collective portfolio of state customers we've worked with, they've increased by 30,000 inmates here in the last two years. And that's, again, existing state partners working with CoreCivic. So you look at a state like Georgia, they've gone up 3600. You look at a state of Florida, they've gone up 5000 the last two years.

Damon T. Hininger: On the community side and also the state of California that collective portfolio state customers. We worked with <unk> increased by 30000 inmates here. The last two years and Thats again existing state partners working with with core civic. So you look at a state like Georgia, They've gone up 3600, you looked at our state of Florida that kind of 5000, Alaska.

Damon T. Hininger: Last two years, so states are dealing with a lot of challenges continue to deal with not only the issues coming out of Covid. It may be facilities, they took offline because of staffing issues or capital or physical plant issues.

Damon T. Hininger: So states are dealing with a lot of challenges and will continue to deal with not only the issues coming out of COVID and maybe facilities they took offline because of staffing issues or capital or physical plan issues. You know, they're looking at the next three to five years seeing some increases in population, too, especially if there's been some changes within the state legislatures on sentencing reform. So that's a long way of saying, yeah, we're hearing a lot of engagement from our partners, our state partners on needs that they may have not only just in the near term, again, not only just with physical plans or or labor issues, but also growth here in the next couple of years. But anything to add to that, Dave? No, I think you covered that, Dave.

Dave: They're looking at the next three to five year seeing some increases in population too, especially if theres been some changes within the state legislators on sentencing reform so as a long way of saying, yes. We are hearing a lot of engagement from our partners. Our state partners on needs that they may have not only just in the near term again now just with physical plan or our labor.

Damon T. Hininger: <unk>, but also growth year in the next couple of years, but anything you'd add to that Dave I think you covered it Damon.

David M. Garfinkle: Great, thanks again for taking my questions and congratulations on the quarter. Thank you, sir. One moment for our next question. Thank you. Our next question comes from the line of M. Marin of Zacks. Your line is now open.

Speaker Change: Great. Thanks, again for taking my questions and congrats on the quarter. Thanks Heather.

Marla Marin: One moment for our next question.

Marla Marin: Thank you.

Marla Marin: Our next question comes from the line of Anne Martin of Zacks. Your line is now open.

Marla Marin: Thank you. So, um, I was hoping to get a little bit more color on the Cal City facility. On the supplement, I think it says that the facility was built in 1999.

Marla Marin: Thank you.

Marla Marin: Hello.

Marla Marin: I was hoping to get a little bit more color on the Cal City facility.

Marla Marin: So on the supplement.

Marla Marin: Sure.

Marla Marin: This facility was built.

Marla Marin: And so, in other words, where I'm going with this question is, do you see this as a long-term solution for ICE because of, you know, the location and the relationship you have? Would you, in order to, you know, start a new contract, would you need to do any kind of upgrades to the facility? Or do you think it's, you know, ready to go for a new project? Yeah, thank you for that question. That's a good one.

Marla Marin: 1999 has there been any spending on upgrades and so in other words.

Speaker Change: Where I'm going with this question is.

Speaker Change: You see this as a long term solution price because of the law.

Speaker Change: Completion and the relationship you have.

Speaker Change: Would you in order to start a new contract would you need to.

Speaker Change: Do any kind of upgrades to the facility or do you think.

Speaker Change: Ready to go for a new contract yes. Thank you for that question that's a good one.

Damon T. Hininger: I would say there's probably some modest improvement we would need to make to it. And again, we've been working with ICE for 40 years. So we know kind of their MO on how they think about, you know, the physical plant and maybe some modifications you want.

Damon T. Hininger: I would say, there's probably some modest improvement we would need to make to it and again, we've been working with ice or 40 years. So we know kind of their ml on how they think about physical plant and maybe some modifications you want so for example.

Damon T. Hininger: Those modifications could be additional office space for government staff.

Damon T. Hininger: Lawyers that are helping to support the residents and their legal cases, there are some cases, where we do court rooms were actually have physical space or judges and court staff to come on site. Obviously, the world's changed here in last couple of years on that front with Covid and so a lot of that stuff's being done virtually even with the pandemic behind us so it could be the key.

Damon T. Hininger: So, for example, those modifications could be additional office space for government staff and lawyers that are helping support the residents in their legal cases. There are some cases where we have courtrooms, where we actually have physical space for judges and court staff to come on site. You know, obviously, the world has changed here in the last couple of years on that front with COVID. And so a lot of stuff's being done virtually, even with the pandemic behind us. So it could be the case that it's a little bit of knowledge space for courtrooms, but also maybe, you know, space for technology where they could do virtual hearings or whatnot. So, pretty, pretty modest investment.

Damon T. Hininger: This where it's a little bit of knowledge space for court room, but also maybe space for technology, where they can do virtual hearings or whatnot, so pretty pretty modest investment, but again, we've been doing this for a long time for ISO we kind of know what they would widen up so we can be flexible if they've got some very unique needs they've got a certain location and they give you. Another example, it could be a name you want to more of a very intense.

Damon T. Hininger: But again, we've been doing this for a long time for ICE, so we kind of know what they want. And also, we could be flexible if they've got some very unique needs; they've got a certain location. And to give you another example, it could be an email on a more of a very intensive medical component for chronic care, or maybe some infirmary beds. Those could be some adjustments to make to the medical unit. But anything you'd add to that, Dave, on CalCity?

Damon T. Hininger: Medical component for chronic care or maybe some are firmly beds those could be some adjustments to make into the medical unit, but anything you'd add to that David on calculating I mean, California was just using it. They just left the facility in March. So obviously everything all the systems are up to date. So you don't have to put any capex in for those things I think like David said it depends on who the user would be.

David M. Garfinkle: Yeah, I mean, California was just using it. They just left the facility in March. So obviously, everything, all the systems are up to date. So they don't have to put any CapEx in for those things.

Dave: And every user is a little unique in their needs and Damon outlined details for ice.

Marla Marin: I think, like Damon said, it depends on who the user would be, and every user is a little unique in their needs. And Damon outlined the details for ICE. So, you know, I estimate, it's hard to tell without a real opportunity in front of us, but it could range from very minimal to, I don't know, 15, $20 million, maybe higher than that. But I think that'd be a lot, depending on the customer.

David M. Garfinkle: So.

Marla Marin: I estimate it's hard to tell without.

Marla Marin: A real opportunity in front of us, but it could range from very minimal to I don't know $15 million to $20 million may be higher than that but I think that'd be that'd be a lot depending on depending on the customer.

Marla Marin: But it also sounds to me, from what you're saying, that if some of those modifications were made, they would also have a positive impact on your per diem allowance in the facility. Is that the right way to think about it? Oh, absolutely. We build that into our pricing model and make sure that, you know, we get an adequate return for any capex that we'd have to put into it. Thank you very much.

Marla Marin: But it also Thompson.

Marla Marin: Some of those modifications were made it would also have a positive impact on your part Dan from the facility is that the right way to think about Oh, absolutely, yes, I mean, we build that into our pricing model and make sure that we get an adequate return for any capex that we'd have to put into it.

Speaker Change: Okay. Thank you very much.

Speaker Change: Thank you for your question.

David M. Garfinkle: You're welcome. Thank you. One moment for our next question. Thank you. Our next question comes to the line of James Godwin of Stonex Group, Incorporated. Your line is now open. Yeah, hi, this is actually Ben Briggs from StoneX.

Speaker Change: One moment for our next question.

Ben Briggs: Thank you. Our next question your line of James <unk> of <unk> Group incorporated.

James Godwin: Your line is now open.

Ben Briggs: So thank you. Hey, guys, how are you? So first of all, congratulations on the quarter. Thank you. Really, really a strong show.

Ben Briggs: Yes, hi this.

Ben Briggs: This is actually Ben Briggs from stone ex.

Ben Briggs: So yes.

Ben Briggs: Hey, guys how are you.

Ben Briggs: First of all.

Ben Briggs: First of all congratulations on the quarter and grab.

Ben Briggs: Relations on being able to raise the guidance.

Ben Briggs: Really.

Ben Briggs: So, most of my questions, frankly, were answered. But one that I wanted to dive in a little bit on is obviously a lot of the federal government's increase in revenue came from ICE, and that was driven by some of the Unknown Attendee, Marla Marin, Kirk Ludtke, Cameron Hopewell, Brian Hammonds, Edwin Groshans, prior to these new ones being added. Thank you for that question. I make sure I understand kind of the gist of your question. So you just know some of the macro drivers that are driving state populations. Is that kind of the gist of your conversation?

Ben Briggs: Really a strong showing here. So most of my questions frankly got addressed but one that I wanted to dive in a little bit on is obviously a lot of the a lot of the federal government.

Ben Briggs: Increase in revenue came from ice and that was driven by.

Ben Briggs: Some of the from the immigration issues, we've seen in the changes in policy. During the year. You also saw a pretty significant increase in state and local revenue I know that.

Speaker Change: I know that some of that was driven by new contracts that you won over the course of the last year or so but could you give any insight into if there is any macro drivers.

Speaker Change: Having that increased demand by states and localities and is any of that additional revenue due to increased head count at contracts that already existed.

Ben Briggs: Prior to these new <unk> added during the year.

Damon T. Hininger: What's driving that? Precisely, yes. Very good. Well, so I point to two things. The first is kind of everything related to COVID.

Speaker Change: Thank you for that question make sure I understand kind of the gist of your question. So you just some of the macro drivers that are driving state populations is that kind of the just your conversation what's was driving that.

Damon T. Hininger: So what we saw during COVID in the state populations is that, you know, they had the usual behavior of discharges, people getting sentences, so they would get released from prison. But people coming into prison, that slowed down pretty dramatically because people that were maybe arrested for a crime and were held in a local jail, say a city or county facility, their cases were not getting adjudicated because the courts were closed during the pandemic.

Speaker Change: Yes got you very good well.

Damon T. Hininger: I point.

Speaker Change: Two things the first is.

Damon T. Hininger: Kind of everything related to Covid.

Damon T. Hininger: So what we saw during COVID-19 onto state populations is that.

Damon T. Hininger: They had the usual behavior of discharge is people getting into <unk>. So they would get released from prison, but people coming into prison that slow down pretty dramatically because people that were maybe a rest of a crime and were held at a local jail I'll say at a city or county facility. There are cases, where not get adjudicated because of course were closed during the <unk>.

Damon T. Hininger: And so what we saw, you know, kind of 2021, 22, and even a little bit into 23, is that jail populations were increasing dramatically around the country. In fact, I think the last quarter, or maybe two quarters ago, I shared the metric of a two-year trend of 22% increase in jail populations nationally. So that's every city or county that operates a jail.

Damon T. Hininger: <unk> and so what we saw kind of 2021 'twenty, two and even a little bit into 'twenty. Three is that Joe populations are increasing dramatically around the country. In fact, I think on the last quarter or maybe two quarters ago I shared that metric of two year trend of 22% increase in jail populations nationally. So that's every city or county.

Damon T. Hininger: And that's, we think that's a record; we don't think we've ever seen a percentage increase like that in a short, short period of time. And again, what the data indicate, but also what we hear anecdotally, is that courts were closed, people were arrested, and cases were not getting adjudicated. So populations were swelling at the local level, which meant that they were not getting ultimately convicted as a sentence of a crime once their case got adjudicated and they went into prison.

Damon T. Hininger: Operator to operate the jail and Thats, we think Thats a record we don't think we've ever seen a percentage increase like that in the short short period of time and again, what the data indicated but also what we hear anecdotally is that core to our closed people were arrested cases were not get adjudicated. So populations were swelling at the local level, which.

Damon T. Hininger: Meant that they were not getting ultimate convicted in the sense of a crime once their case got adjudicated and go into a prison. So now what we're seeing is quarter back to natural kind of a regular order people are going through the process getting their cases adjudicated and now the populations coming.

Damon T. Hininger: So now what we're seeing is courts are back to a kind of regular order. People are going through the process, getting their cases adjudicated, and now the population's coming, pretty dramatically, pretty quickly into the state level. What the states had done during COVID, since populations went down, they took either units in some cases, or some states took actual prisons offline, so they closed them because they maybe were old, antiquated, hard to staff, maybe all of the above.

Damon T. Hininger: Pretty dramatically pretty quickly into that to the state level.

Damon T. Hininger: The states had done during COVID-19 since populations were down they took either units in some cases, some states took actual prisons offline. So they close them because they may be are old antiquated hard to staff, maybe all of the above.

Damon T. Hininger: And we're hearing anecdotally from a lot of jurisdictions that they don't want to reopen those units or facilities for all the reasons I just said. So their footprint, basically, the size of the capacity in their system has shrunk. And so we think that's again, number one, why we're getting a lot of quick engagement from our partners, either existing or new partners, that they need help and they need it quickly. Again, I'd point to Montana and Idaho and a couple other jurisdictions for that.

Damon T. Hininger: And we're hearing anecdotally from a lot of jurisdictions, they don't want to reopen those units or facilities for all the reasons I just said so their footprint basically the size of the capacity in our system shrunk and so we think Thats again number one why were getting a lighting quick engagement from our partners either existing or new partners that they need help and they need it quickly.

Damon T. Hininger: Again, I'd point to Montana, and Idaho, It's a couple of other jurisdictions for that.

Damon T. Hininger: The second piece, which is kind of this point going forward, is that there has been a fair amount of activity both this year and, really, probably the last two years within state legislatures on adjustments to sentencing reform. And so most states do a five-year forecast.

Damon T. Hininger: The second piece, which is kind of kind of this point going forward is that there has been a fair amount of activity. Both this year and really probably the last two years within state legislatures on adjustments to.

Damon T. Hininger: Cynthia and reform and so most states do a five year forecast I am sure. We will get another set of reef new forecasts. After all these sessions are adjourned around various state legislatures around the country.

Damon T. Hininger: I'm sure we'll get another set of new forecasts after all these sessions are adjourned in various state legislatures around the country. But what the data indicates is that the next three to five years are looking at pretty meaningful increases in most, if not all, states. And so part of it, so to answer your question again, part of it is going back during COVID and how that created some real constraints in the system because of courts being closed.

Damon T. Hininger: What the data indicate that the next three to five years, we're looking at pretty meaningful increases in most if not all all states and so part of it so to answer your question again and part of it is going back during Covid and how that created some real constraints in the system.

Damon T. Hininger: And then the second part is that going forward, the next three to five years, a lot of states are looking at pretty significant increases because, again, of changes, maybe in sentencing reform. Anything you'd add to that, David?

Damon T. Hininger: Because of course being closed and then the second part is that going forward. The next three to five years a lot of states are looking at pretty significant increase because again of changes maybe in sentencing reform anything you'd add to that Dave.

David M. Garfinkle: Yeah, no, I think at a macro level, our state populations, if you back out the facility in Oklahoma that transitioned from one that we operated to one that we leased, if you back that one out, our populations were up a few percent from Q1'23 to Q1'24. And then going back to the discussion we had earlier about wage increases and getting reimbursed through per diem increases, it's the combination of those that's driving the revenue. But certainly, as Damon mentioned more thoroughly, the demand and the challenges that our state customers are facing are getting more intense. I got it.

David M. Garfinkle: At a macro level.

David M. Garfinkle: Populations, if you back out the.

David M. Garfinkle: <unk> facility in Oklahoma that transition from one that we operated to one that we leased if you back that went out our populations. We're up a few percent from Q1 2003 to Q1 'twenty four and then going back to the discussion we had earlier about wage increases and getting reimbursed through per diem increases.

David M. Garfinkle: It's a combination of those thats driving the revenue, but certainly as Damon mentioned more thoroughly the demand and the challenges that our state customers are facing are getting more intense.

Ben Briggs: That's incredibly helpful. Thank you. So one follow-up question to that is that as these states and localities utilize and have demand for more and more space, I know that historically the U.S. Marshals Service has used, in addition to you guys, some state and local space to house their detainees. Are states and localities going to be faced with a situation where they don't have enough space to lease to the U.S. Marshal Service?

Speaker Change: Got it that's incredibly helpful. Thank you. So one one follow up question to that.

Ben Briggs: As the state as these states and localities are utilizing and have demand for more and more space I know that historically the U S Marshals service.

Ben Briggs: Is used.

Ben Briggs: In addition to you guys.

Ben Briggs: Some state and local space.

Ben Briggs: They're detainees are states and localities going to be faced with a situation where they don't have enough space to lease to the U S Marshal service and could that create opportunities for you guys.

Ben Briggs: In the future.

Damon T. Hininger: And could that create opportunities for you guys, you know, in the future? Yeah, that's a great question. And I think the short answer is absolutely. I mean, we're hearing a little bit of that, not only anecdotally, but also a little bit in our system where maybe a jurisdiction, yeah, it's either out of space. Another part of it is that, to their credit, and they've seen this for ICE too, they're raising the bar on operational standards and requirements.

Ben Briggs: Yes, that's a great question and I think the short answer is absolutely I mean, we're hearing a little bit of that or anecdotally, but also a little bit in our system, where maybe a jurisdiction, yes, either out of space. Another part of it is that I mean, the federal government to their credit and its leanest for ice to I mean, they are raising the bar on operational standards and requirements.

Damon T. Hininger: <unk> and so we are hearing.

Damon T. Hininger: Through our through those two partners Marshal service and ice is that to some local agencies now they don't have capacity for all the reasons. We just talked about but also maybe they've kind of throwing up their hands of theaters, which in a way we can comply with the standards that.

Damon T. Hininger: And so we're hearing through those two partners, Marfa's Service and ICE, that some local agencies not only don't have capacity for all the reasons we just talked about, but maybe they've kind of thrown up their hands and said, there's just no way we can comply with these standards that these agencies are requiring in the cities or counties where they house populations.

Damon T. Hininger: These agencies are requiring that the city, they're counties that the house populations. So I think kind of both of those factors are drawing are driving a little bit of opportunity and demand for us to use capacity in our system. Because we were at as a badge of honor these requirements.

Damon T. Hininger: Standards that we have to comply with.

Damon T. Hininger: We've been doing that for years and it is a we think that's the right thing to do to improve the quality.

Damon T. Hininger: So I think kind of both those factors are drawing, driving a little bit of opportunity and demand for us to use capacity in our system because we wear it as a badge of honor. These requirements and standards that we have to comply with, you know, we've been doing that for years. And at the end of the day, we think that's the right thing to do to improve quality. Within our facility, but also, we're very supportive of on-site monitors, contract monitors, and whatnot, and I know a lot of local jurisdictions are not too keen on that type of oversight.

Damon T. Hininger: Within our facilities, but also we are very supportive of onsite monitors contract monitors and whatnot and I know a lot of local jurisdictions are not too keen to that type of oversight. So so yes, I think thats exactly right.

Ben Briggs: So, yeah, I think that's exactly right. Okay, great. Very, that's very helpful. And then the last one for me is just regarding labor.

Speaker Change: Okay great.

Speaker Change: That's fair.

Speaker Change: Very helpful and then last one from me.

Damon T. Hininger: I know that temporary labor usage has been an issue, but it seems like it's less of an issue now, as you guys are getting more staffed up. Would you say that we're back to a run rate as far as temporary labor is concerned? And would you consider yourself fully staffed as far as permanent labor is concerned? Or is there potentially a little bit more? Good, good question. Again, I'll tag team a little bit with Dave on this one.

Ben Briggs: Regarding labor temp.

Damon T. Hininger: Temporary labor usage has been an issue it seems like it's less of an issue now.

Dave: As you as you guys are getting more staffed up would you say that we're back to a run rate as far as temporary labor is concerned and would you consider yourself fully staffed.

Damon T. Hininger: Far as permanent labor is concerned or is there potentially a little bit more hiring to do.

Damon T. Hininger: I would say we're close on the second part of your question. Not quite there, but we really have gotten pretty darn close on permanent staff. So yeah, we've seen a lot of improvement on that in probably the last, you know, 12 to 18 months. On the temporary staff, we've had, you know, said in our remarks, I mean, a lot of improvement on that front, but probably not quite, keep me honest here, Dave, probably not quite where we were pre-COVID. Yeah, there are a few facilities where we're still deploying temporary staff, but it's certainly not the magnitude it was throughout 2023, or even 22.

Dave: Good question again, I'll tag team a little bit of data on this one I would say we're close on the second part of your question.

Damon T. Hininger: Not quite there, but we really have gotten pretty pretty darn close on permanent permanent staff.

Damon T. Hininger: So yes, we've seen a lot of improvement on that front in the last 12 to 18 months on the temporary staff. We've had said in our remarks, I mean, a lot of improvement on that front, but <unk>.

Dave: Probably not quite keep me honest here today, probably not quite where we were pre COVID-19.

Damon T. Hininger: As a few facilities, where we're still deploying temporary staff, but certainly not the magnitude it was throughout 2023 or even in 'twenty two.

David M. Garfinkle: And we still do continue to incur some of those temporary incentives for that staff. So I would expect, as the year goes by, we will have higher staffing levels but less reliance on temporary staff. So it's a continuation of that trend that we've been seeing over the past several quarters. All right, great. That's extraordinarily helpful.

David M. Garfinkle: We still do continue to incur some of those temporary.

David M. Garfinkle: Incentives.

David M. Garfinkle: For that staff, so I would expect as the year goes by we will have.

David M. Garfinkle: Staffing levels.

David M. Garfinkle: About less reliance on temporary staff. So it's a continuation of that trend that we've been seeing over the past several quarters.

Speaker Change: Alright, great. That's extraordinarily helpful. Congratulations again on the quarter and thank you for taking the questions.

Ben Briggs: Congratulations again on the quarter. And thank you for taking the questions. Thank you, sir. Thank you so much.

Speaker Change: Sir Thank you so much.

Operator: One moment for our next question. Thank you. Our next question comes from the line of Kirk Ludtke of Imperial Capital. Your line is now open. Hello, Damon, David, and Mike.

Speaker Change: One moment for our next question.

Kirk Ludtke: Thank you.

Kirk Ludtke: Our next question comes from the line of Kurt Ludtke of Imperial Capital. Your line is now open.

Kirk Ludtke: Congratulations on the quarter. Congratulations on the refi. Thank y'all very much. [inaudible] With just a follow-up, a couple of follow-ups on California City. You mentioned that this used to be an ice hockey facility.

Kirk Ludtke: Hello, David David Mike.

Kirk Ludtke: Congratulations on the quarter.

Kirk Ludtke: Congratulations on the refi.

Kirk Ludtke: Okay.

Kirk Ludtke: With just a follow up a couple of follow ups on California City.

Kirk Ludtke: You mentioned that this used to be a nice.

Kirk Ludtke: Marshalls facility.

Damon T. Hininger: What you know, and that the current, or the population, the ice population was 34,500. It's probably higher now. At what level, what national ice population would you think it would have to be before they would reopen an idle facility? Yeah, good, good question. I think it's probably, well, the short answer is probably gonna be higher than it is today.

Kirk Ludtke: What.

Damon T. Hininger: In the current or the population the ice population was 34500.

Damon T. Hininger: Higher now.

Damon T. Hininger: What level, what national popular ice population would you would you think.

Damon T. Hininger: Ice would have to be before they would reopen and idle.

Damon T. Hininger: So as you know, again, they've got funding for the rest of this year of 41,500. That is obviously a meaningful increase on last year's funding, which was 34,000. Now last year, as you know, they were able to go to an elevated number of population just because they did some reprogramming that was mentioned by the Secretary of Homeland Security last summer. But nonetheless, very notable that there are 41,500 41,500 today. It's our sense, you know, they populations again, before this recent dip, were at 38 to 39,000.

Damon T. Hininger: <unk> facility.

Damon T. Hininger: Yes. Good good question I think it probably well short answer is probably going to be higher than it is today. So as you know again <unk> got the funding for the rest of this year 41500 that is obviously a meaningful increase on last year's funding, which is 34000 now last year as you know they were able to go to elevated number on population just.

Damon T. Hininger: They did some re programming that was.

Damon T. Hininger: Mentioned by the sector home security last last summer, but nonetheless, very notable that they're at 41 41500 today.

Damon T. Hininger: You know, we got a sense, as you know, not just, really not with us, but I think other jurisdictions did have some guaranteed minimum beds that were not occupied. And so once you factor in the kind of actual population with maybe some beds that are under contract but currently not utilized for whatever reason, because I think they always have a little bit of slack in the system, they're pretty much at full utilization at that kind of $41,000. So I think the shorter answer is they're probably going to need additional funding. And that could happen again, possibly this year.

Damon T. Hininger: It's our sense populations again before this recent dip populations were at 38% to 39000, we got to Seth as you know not just.

Damon T. Hininger: Really not with us, but I think other jurisdictions. They do had they did have some.

Damon T. Hininger: Guarantee minimum beds that were not occupied and so once you factor kind of actual population with maybe some beds that are under contract, but currently not utilized for other reasons, because I think they always have a little bit of slack in the system, they're pretty much at full utilization at that kind of a 41000. So I think the short answer is it probably going to need additional funding and that could happen.

Damon T. Hininger: <unk>.

Damon T. Hininger: Obviously, we don't know of anything that's underway, but, you know, in years past, they have done some reprogramming for specific needs on the southwest border, and then, obviously, we'll be watching closely what happens going into the next fiscal year for funding numbers. I guess I will also note, I mean, there is very broad bipartisan support for a higher population number, and the reason I say that is because the supplemental that, you know, obviously didn't pass the House but did pass the Senate in February, you know, had a number of, I think, 50 or 55,000 beds, and so there is support for additional capacity, but, obviously, we'll just have to watch closely what happens for the rest of But anything to add to that? Yeah, I still think there is a chance.

Damon T. Hininger: Again, possibly this year, obviously, we don't know of anything Thats.

Damon T. Hininger: Underway, but again years passed they have done some reprogramming for specific needs on the southwest border and then obviously, we'll be watching closely what happens going into next fiscal year for funding numbers I guess I will also note I mean, there is a very broad.

Damon T. Hininger: Bipartisan support on a higher population number in.

Damon T. Hininger: And the reason I say that it was the supplemental that obviously didn't pass the house that did pass the Senate in February.

Damon T. Hininger: I had a number of I think 50 to 55000 beds and so there is support for additional capacity, but obviously, we'll just have to watch closely what happens to the rest of this year go into next year, but anything is it.

David M. Garfinkle: We have one facility where they could consolidate populations from public sector facilities and move them to a private sector facility, and that would not require new funding because it's really, you know, they're already using that funding at multiple facilities. So I think there's a chance that happens this year. It's not in our guidance but something we continue to discuss with ICE and continue to monitor. That's a good point. I probably should highlight that because, you know, a little bit back to the earlier question about the marshal service, I mean, ICE, again, is still under that same pressure where local jurisdictions, for whatever reason, just can't support the agency's mission either with capacity or standards.

Damon T. Hininger: I still think there is a chance we have one facility, where they could consolidate populations from public sector facilities and move it to a private sector facility and that would not require new funding because its really theyre already using that funding at multiple facilities.

David M. Garfinkle: I think theres a chance that happens this year, it's not in our guidance but.

David M. Garfinkle: We continue to discuss with ice and continue to monitor that's a good point and I, probably should highlight that because.

David M. Garfinkle: But back to the earlier question about the Marshal service ice again is feeling that same pressure where local jurisdictions for whatever reason just can't support the agency's mission either with capacity <unk> standards.

David M. Garfinkle: So, yeah, I guess that is an important caveat that, I mean, it could be the case, and we've seen this in years past, where they say, hey, let's just consolidate a population at a facility and back out and vacate local facilities that maybe are very fragmented and very diverse regionally located long distances from the agency's office.

David M. Garfinkle: So I guess that is an important caveat that it could be the case and we've seen this in years past, where they say hey, Alicia consolidated population at a at a facility and back out and vacate local facilities that may be are very fragmented and very diverse regionally located long distances from the agency office.

Kirk Ludtke: Thank you. That's helpful. I guess the other, the other. Unknown Attendee, Marla Marin, Kirk Ludtke, Cameron Hopewell, Brian Hammonds, Gregory, Well, again, they were there for a decade.

Speaker Change: Got it. Thank you that's helpful.

Kirk Ludtke: I guess the other the other.

Kirk Ludtke: Option, maybe to the California might want it for their own purposes.

Kirk Ludtke: I know the population there is coming down.

Kirk Ludtke: What is the what is the likelihood of them having in the state of California.

Damon T. Hininger: And we know they really, really liked the facility. I mean, it was one of the newest, most modern facilities in the state and continues to be. And we did some pretty meaningful improvements to the physical plant during that period of time. So I think based on not only just their populations but maybe some of the uniqueness they want rolled up into the environment with programs and other services.

Kirk Ludtke: Well again, they were there for a decade and we know they really really like the facility. It was the newest most one of the newest most modern facilities in the state and continues to be and we did some pretty meaningful improvement over the physical plant during that period of time. So I think based on not just their populations, but maybe some uniqueness.

Damon T. Hininger: Relative to the environment with programs and other services.

Damon T. Hininger: Obviously, the private sector can deliver on that faster than any state agency can so I think if there is continued kind of innovation and therefore, where they want a unique mission, especially for unique programs or services that could be a good location for them.

Damon T. Hininger: I mean, obviously, the private sector can deliver on that faster than any state agency can. So I think if there's any kind of innovation on their part where they want a unique mission, especially for unique programs or services, that could be a good location for them. Because I know they've done some work on their St. Quentin facility, which is primarily servicing the needs of the northern part of the state, Cal State to be in the southern part of the state could be another complementary facility for some of that programming improvement.

Damon T. Hininger: Because I know they've done some work on their St Clinton soda, which is primarily servicing the needs of the northern part of the state.

Damon T. Hininger: So it would be in the southern part of the state could be another complementary facility for some of that programming improvements.

David M. Garfinkle: And it may take a better budget situation in the state, because that may be an impediment right now, too. Right, yeah, got it. I appreciate that. Yeah, I would think this is materially younger than the average age of the facilities in California.

Damon T. Hininger: And it may take a better budget situation in the state because that may be an impediment right now too.

Speaker Change: Alright got it.

Speaker Change: I appreciate that yes, I would think this is materially younger than the average age of the facilities in California is that fair to say that's super fair to say.

Speaker Change: Got it.

Kirk Ludtke: Is that fair to say? That's super fair to say. Got it. That's, that's helpful. And you mentioned the border security bill that didn't pass but had a lot of support. What do you have at a high level?

David M. Garfinkle: Okay.

Kirk Ludtke: That's helpful and then.

Kirk Ludtke: Mentioned.

Kirk Ludtke: That.

Kirk Ludtke: Border security Bill that didn't past, but had a lot of support.

Kirk Ludtke: So any thoughts on what that would mean for alternatives to dissension? What would that bill have meant for ATD? A good question. I don't keep myself honest here.

Kirk Ludtke: What do you have a.

Kirk Ludtke: High level.

Kirk Ludtke: Any thoughts on what that would mean for alternatives to detention what that bill if it had passed.

Kirk Ludtke: That would have meant for ATT.

Damon T. Hininger: I don't remember any meaningful adjustment on ATD under that bill. Again, it seemed like most of the focus was on additional detention capacity. So again, to say, you know, there may be some movement there. But I think, at least for now, it seems like the focus has really shifted here in the last year or so on more detention capacity. Anything to add to that, Dave? I don't. I mean, we saw an article yesterday about potential action on bringing back the supplemental and I think that would be focused more on detention than it would ATD, right?

Kirk Ludtke: Good question I don't keep me honest here I don't remember any meaningful adjustment and HED under that Bill again, it seemed like most of the focus was on additional detention capacity.

David M. Garfinkle: Got it. I appreciate it. Thank you. One moment for our next question. Thank you. Our next question comes from the line of Brian Violino of Wedbush. Your line is now open.

David M. Garfinkle: So again to say it.

David M. Garfinkle: It may be there may be some movement, there, but I think.

David M. Garfinkle: At least for now I mean, it seems like the focus has really shifted here in the last year year, or so and more detention capacity, but anything to add to that Dave.

David M. Garfinkle: We saw an article yesterday about potential action.

David M. Garfinkle: Bringing back the supplemental.

David M. Garfinkle: And I think that would be focused more on retention then HED right.

Brian J. Violino: Got it I appreciate it thank you.

David M. Garfinkle: Sure.

Brian J. Violino: One moment for our next question.

Brian J. Violino: Great, thanks for taking my question. Just to kind of ask the expense question in a different way, I think in the past you've talked about 25% NOI margin in the safety and community segments. You're just under 24% this quarter. It seems like you're seeing some positive trends, you know, on the expense side. Just wondering if you have any views on when we might be able to get to that level on a sustainable basis and if there's possible upside given the relief in the labor market. Yeah, I'll take that one, Brian.

Brian J. Violino: Thank you.

Brian J. Violino: Our next question comes from the line of Brian <unk> of Wedbush. Your line is now open.

Speaker Change: Great. Thanks for taking my question.

Speaker Change: Just to kind of as the expense question in different way I think in the past you've talked about.

Speaker Change: 25% NOI margin in the safety and community segments, combined being sort of a target range.

Speaker Change: Going back to pre pandemic.

Speaker Change: Just under 24% this quarter it seems like Youre seeing some positive trends on.

Speaker Change: On the expense side, just wondering if you haven't updated views on when we might be able to get to that level on a sustainable basis.

Speaker Change: And if there's possible upside given the relief on the labor market that you're seeing.

David M. Garfinkle: Thanks for the question. Yeah, we have made a lot of good progress. And, in fact, Q1 is typically, seasonally, one of our worst quarters because of the reset of unemployment taxes.

Brian J. Violino: Yes, I'll take that one Brian thanks for the question.

Speaker Change: Yes, yes, we have made a lot of good progress in fact Q1 is typically seasonally one of our.

David M. Garfinkle: So that actually was a headwind for the margin in Q1. So as we look forward, I am going back to the statement I made earlier. I think we still have some hiring to do to get back to pre-pandemic staffing levels. But again, that will be offset somewhat by the temporary incentives that we would incur. So, you know, it's certainly. We've never wavered from getting back to 25% margins on the safety and community segments. Whether that's achievable in 2024, I think, will be dependent on occupancy. Since that's the primary driver, you get so much leverage over the model when you're increasing your occupancy.

David M. Garfinkle: Worst quarters because of the reset of unemployment taxes, so that actually is.

David M. Garfinkle: Headwind for margin in Q1, so as we look forward I do going back to the statement I made earlier I think we still have some hiring to do to get back to pre pandemic staffing levels, but again that will be offset somewhat by the temporary incentives.

David M. Garfinkle: That we would incur so.

David M. Garfinkle: Certainly.

David M. Garfinkle: We've never wavered from getting back to 25% margins on the safety and community.

David M. Garfinkle: <unk>, whether thats achievable in 2024, I think will be dependent on occupancy since that's the primary driver you get so much leverage over over the model when you're increasing your occupancy so that's going to be the key and the closer we get to that 80% occupancy the faster we will get to that 25%. So I wouldn't rule it out.

Brian J. Violino: So that's going to be the key. And the closer we get to that 80% occupancy, the faster we'll get to that 25%. So I wouldn't rule it out this year. I'm not sure we'll hit that, but it's a possibility.

Brian J. Violino: This year not sure well hit that but it's.

Brian J. Violino: It's a possibility.

David M. Garfinkle: Okay, great. Thanks for taking my question. Sure.

Speaker Change: Okay, great. Thanks for taking my questions sure.

Operator: Thank you, Brian. I'm showing no further questions at this time. I would now like to turn it back to Damon Hininger, Chief Executive Officer, for closing remarks. Thank you so much. And before we adjourn, let me also do a public service announcement and note on CoreCivic.com about our newest ESG report. We just released that here in the last couple weeks.

Speaker Change: Sure. Thank you Brian.

Damon T. Hininger: I'm showing no further questions at this time I would now like to turn it back to Damon Heininger, Chief Executive Officer for closing remarks.

Damon T. Hininger: Thank you so much and before we adjourn let me just also do a public service announcement and note on <unk> Dot Com is our newest ESG report, we just released that here in the last couple of weeks, it's our sixth consecutive year of doing ESG report take a few minutes and check it out we've completely reformat it but.

Damon T. Hininger: It's our sixth consecutive year of doing this ESG report. Take a few minutes and check it out. We've completely restructured. But more importantly, it just shows a great window into our organization on what we're doing on the human rights front within our facilities and how we're working on talent acquisition. But most notably, the outcomes that we're producing for the people in our care through programs, through academic and vocational programs. Take a few minutes; thumb through it.

Damon T. Hininger: Importantly, it just shows a great window into our organization on what we're doing on the.

Damon T. Hininger: Human rights fronts front within our facilities to how we're working on talent acquisition, but most notably the outcomes that we're producing for the people on our care through program through academic and vocational programs take a few minutes. Some through it shows again, a great window in our organization and the great work our team does each and every day so with that.

Damon T. Hininger: It shows, again, a great window into our organization, the great work our team does each and every day. So with that, thank you so much for your time and attention on our call today. Thank you also, our investors, for your trust and support of the company. And with that, we're adjourned. Thanks, everyone. This does conclude the program. You may now disconnect.

Damon T. Hininger: Thank you so much for your time and attention on our call today. Thank you also our investors for your trust and support of the company and with that we're adjourned thanks, everyone.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Damon T. Hininger: Yes.

Damon T. Hininger: Okay.

Damon T. Hininger: Okay.

Damon T. Hininger: Okay.

Damon T. Hininger: Okay.

Damon T. Hininger: Okay.

Damon T. Hininger: Okay.

Damon T. Hininger: Okay.

Damon T. Hininger: Okay.

Damon T. Hininger: Okay.