Category: Business

Kelly Reports Second-Quarter 2021 Earnings and Announces Dividend

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Kelly Reports Second-Quarter 2021 Earnings and Announces Dividend

 

Financial Highlights

  • Q2 revenue up 29.0%; 26.2% in constant currency
  • Q2 operating earnings of $13.7 million; up 24.1% from a year ago
  • Q2 earnings per share of $0.60 down from $1.04 a year ago; adjusted EPS of $0.49 compared to $0.51

TROY, Mich., Aug. 12, 2021 (GLOBE NEWSWIRE) — Kelly (Nasdaq: KELYA) (Nasdaq: KELYB), a leading specialty talent solutions provider, today announced results for the second quarter of 2021.

Peter Quigley, president and chief executive officer, announced revenue for the second quarter of 2021 totaled $1.3 billion, a 29.0% increase compared to the corresponding quarter of 2020. Revenue improved year-over-year in the quarter reflecting increased customer demand compared to the COVID-19-impacted prior year period.

Earnings from operations in the second quarter of 2021 totaled $13.7 million, compared to earnings of $11.1 million reported in the second quarter of 2020.

Diluted earnings per share in the second quarter of 2021 were $0.60 compared to $1.04 per share in the second quarter of 2020. Included in the earnings per share is a non-cash gain per share, net of tax, on Kelly’s investment in Persol Holdings common stock of $0.11 in the second quarter of 2021 and $0.52 in the second quarter of 2020. On an adjusted basis, earnings per share were $0.49 in the second quarter of 2021 compared to $0.51 in the corresponding quarter of 2020.

“All five of our operating segments—Professional & Industrial (P&I); Science, Engineering & Technology (SET); Education; OCG; and International—delivered organic year-over-year revenue growth in the second quarter as the recovery gained momentum,” said Quigley. “OCG continues to exceed pre-COVID growth rates; Education exited the quarter on track with 2019 revenue; our International and SET segments delivered solid specialty growth; and our Softworld acquisition is already delivering top- and bottom-line results for the enterprise. Demand is strong in our P&I segment, though it will take longer to fully recover. We’re encouraged by the healthy sales pipelines and new wins we’re seeing across all of our businesses. Our reinstatement of a dividend for the quarter reflects the progress we’re making with our specialization and M&A strategies, and our confidence in the economic recovery. Kelly is well-positioned for the future and ready for what’s next.”

Kelly also reported that on August 11, its board of directors declared a dividend of $0.05 per share. The dividend is payable on September 7, 2021 to stockholders of record as of the close of business on August 25, 2021.

In conjunction with its second quarter earnings release, Kelly has published a financial presentation on the Investor Relations page of its public website and will host a conference call at 9 a.m. ET on August 12 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
Kellyservices.com

Via the Telephone
(877) 692-8955 (toll free) or (234) 720-6979 (caller paid)
Enter access code 5728672
After the prompt, please enter “#”

A recording of the conference call will be available after 2:30 p.m. ET on August 12, 2021, at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 8454029#. The recording will also be available at kellyservices.com during this period.

This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, changing market and economic conditions, the recent novel coronavirus (COVID-19) outbreak, competitive market pressures including pricing and technology introductions and disruptions, disruption in the labor market and weakened demand for human capital resulting from technological advances, competition law risks, the impact of changes in laws and regulations (including federal, state and international tax laws), unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, or the risk of additional tax liabilities in excess of our estimates, our ability to achieve our business strategy, our ability to successfully develop new service offerings, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks particular to doing business with government or government contractors, the risk of damage to our brand, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, services of licensed professionals and services connecting talent to independent work, our increasing dependency on third parties for the execution of critical functions, our ability to effectively implement and manage our information technology strategy, the risks associated with past and future acquisitions, including risk of related impairment of goodwill and intangible assets, exposure to risks associated with investments in equity affiliates including PersolKelly Pte. Ltd., risks associated with conducting business in foreign countries, including foreign currency fluctuations, the exposure to potential market and currency exchange risks relating to our investment in Persol Holdings, risks associated with violations of anti-corruption, trade protection and other laws and regulations, availability of qualified full-time employees, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, our ability to sustain critical business applications through our key data centers, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyberattacks or other breaches of network or information technology security, our ability to realize value from our tax credit and net operating loss carryforwards, our ability to maintain specified financial covenants in our bank facilities to continue to access credit markets, and other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. Actual results may differ materially from any forward-looking statements contained herein, and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

About Kelly®

Kelly Services, Inc. (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 370,000 people around the world, and we connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2020 was $4.5 billion. Visit kellyservices.com and let us help with what’s next for you.


MEDIA CONTACT:     ANALYST CONTACT:
Jane Stehney     James Polehna
(248) 765-6864     (248) 244-4586
stehnja@kellyservices.com     james.polehna@kellyservices.com



KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED JULY 4, 2021 AND JUNE 28, 2020
(UNAUDITED)
(In millions of dollars except per share data)
                %   CC %  
    2021   2020   Change   Change   Change  
                       
Revenue from services $ 1,258.1   $ 975.3   $ 282.8     29.0   % 26.2   %
                       
Cost of services   1,027.1     786.1     241.0     30.7        
                       
Gross profit   231.0     189.2     41.8     22.1     19.6    
                       
Selling, general and administrative expenses   217.3     178.1     39.2     21.9     19.8    
                       
Earnings (loss) from operations   13.7     11.1     2.6     24.1        
                       
Gain (loss) on investment in Persol Holdings   6.3     29.6     (23.3 )   (78.8 )      
                       
Other income (expense), net   (0.3 )   2.6     (2.9 )   (109.0 )      
                       
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate   19.7     43.3     (23.6 )   (54.4 )      
                       
Income tax expense (benefit)   (2.6 )   0.9     (3.5 )   (406.2 )      
                       
Net earnings (loss) before equity in net earnings (loss) of affiliate   22.3     42.4     (20.1 )   (47.2 )      
                       
Equity in net earnings (loss) of affiliate   1.7     (1.3 )   3.0     NM      
                       
Net earnings (loss) $ 24.0   $ 41.1   $ (17.1 )   (41.6 )      
                       
Basic earnings (loss) per share $ 0.60   $ 1.04   $ (0.44 )   (42.3 )      
Diluted earnings (loss) per share $ 0.60   $ 1.04   $ (0.44 )   (42.3 )      
                       
                       
STATISTICS:                      
                       
Permanent placement revenue (included in revenue from services) $ 18.6   $ 7.6   $ 11.0     146.1   % 139.8   %
                       
Gross profit rate   18.4   % 19.4   % (1.0 ) pts.        
                       
Conversion rate   5.9   % 5.8   % 0.1   pts.        
                       
Adjusted EBITDA $ 22.2   $ 16.9   $ 5.3            
Adjusted EBITDA margin   1.8   % 1.7   % 0.1   pts.        
                       
Effective income tax rate   (13.5 ) % 2.0   % (15.5 ) pts.        
                       
Average number of shares outstanding (millions):                      
Basic   39.4     39.3                
Diluted   39.5     39.4                



KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JULY 4, 2021 AND JUNE 28, 2020
(UNAUDITED)
(In millions of dollars except per share data)
                %   CC %  
    2021   2020   Change   Change   Change  
                       
Revenue from services $ 2,464.0   $ 2,236.4   $ 227.6     10.2   % 8.3   %
                       
Cost of services   2,019.7     1,823.9     195.8     10.7        
                       
Gross profit   444.3     412.5     31.8     7.7     5.9    
                       
Selling, general and administrative expenses   420.0     397.6     22.4     5.6     4.0    
                       
Goodwill impairment charge   —     147.7     (147.7 )   NM      
                       
Gain on sale of assets   —     (32.1 )   32.1     NM      
                       
Earnings (loss) from operations   24.3     (100.7 )   125.0     NM      
                       
Gain (loss) on investment in Persol Holdings   36.3     (48.2 )   84.5     NM      
                       
Other income (expense), net   (3.7 )   4.3     (8.0 )   (185.8 )      
                       
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate   56.9     (144.6 )   201.5     NM      
                       
Income tax expense (benefit)   7.9     (35.3 )   43.2     122.2        
                       
Net earnings (loss) before equity in net earnings (loss) of affiliate   49.0     (109.3 )   158.3     NM      
                       
Equity in net earnings (loss) of affiliate   0.6     (2.8 )   3.4     NM      
                       
Net earnings (loss) $ 49.6   $ (112.1 ) $ 161.7     NM      
                       
Basic earnings (loss) per share $ 1.25   $ (2.86 ) $ 4.11     NM      
Diluted earnings (loss) per share $ 1.25   $ (2.86 ) $ 4.11     NM      
                       
                       
STATISTICS:                      
                       
Permanent placement revenue (included in revenue from services) $ 34.6   $ 19.8   $ 14.8     74.1   % 70.0   %
                       
Gross profit rate   18.0   % 18.4   % (0.4 ) pts.        
                       
Conversion rate   5.5   % (24.4 ) % 29.9   pts.        
                       
Adjusted EBITDA $ 39.1   $ 35.4   $ 3.7            
Adjusted EBITDA margin   1.6   % 1.6   % —   pts.        
                       
Effective income tax rate   13.8   % 24.5   % (10.7 ) pts.        
                       
Average number of shares outstanding (millions):                      
Basic   39.4     39.2                
Diluted   39.5     39.2                



KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                     
    Second Quarter
                     
              %   CC %  
    2021     2020   Change   Change  
Professional & Industrial                    
Revenue from services $ 466.5     $ 406.4     14.8   % 14.0   %
Gross profit   75.2       78.9     (4.7 )   (5.5 )  
SG&A expenses excluding restructuring charges   69.0       64.6     6.8     6.2    
Restructuring charges   —       —     NM   NM  
Total SG&A expenses   69.0       64.6     6.9     6.2    
Earnings (loss) from operations   6.2       14.3     (57.0 )      
Earnings (loss) from operations excluding restructuring charges   6.2       14.3     (56.9 )      
                     
Gross profit rate   16.1   %   19.4   % (3.3 ) pts.    
                     
Science, Engineering & Technology                    
Revenue from services $ 298.2     $ 247.3     20.6   % 20.1   %
Gross profit   66.5       50.6     31.5     31.1    
SG&A expenses excluding restructuring charges   46.9       31.3     49.7     49.3    
Restructuring charges   —       —     NM   NM  
Total SG&A expenses   46.9       31.3     49.7     49.3    
Earnings (loss) from operations   19.6       19.3     1.8        
Earnings (loss) from operations excluding restructuring charges   19.6       19.3     1.8        
                     
Gross profit rate   22.3   %   20.4   % 1.9   pts.    
                     
Education                    
Revenue from services $ 105.9     $ 25.1     322.1   % 322.1   %
Gross profit   16.8       4.3     291.1     291.1    
SG&A expenses excluding restructuring charges   15.3       9.6     60.0     60.0    
Restructuring charges   —       (0.1 )   NM   NM  
Total SG&A expenses   15.3       9.5     60.5     60.5    
Earnings (loss) from operations   1.5       (5.2 )   NM      
Earnings (loss) from operations excluding restructuring charges   1.5       (5.3 )   NM      
                     
Gross profit rate   15.8   %   17.1   % (1.3 ) pts.    
                     
Outsourcing & Consulting                    
Revenue from services $ 107.3     $ 83.6     28.2   % 26.1   %
Gross profit   34.8       29.2     19.3     15.7    
SG&A expenses excluding restructuring charges   30.1       25.1     19.8     17.0    
Restructuring charges   —       —     NM   NM  
Total SG&A expenses   30.1       25.1     19.7     17.0    
Earnings (loss) from operations   4.7       4.1     16.2        
Earnings (loss) from operations excluding restructuring charges   4.7       4.1     15.9        
                     
Gross profit rate   32.5   %   34.9   % (2.4 ) pts.    
                     
International                    
Revenue from services $ 280.4     $ 213.0     31.6   % 21.6   %
Gross profit   37.7       26.2     43.8     32.9    
SG&A expenses excluding restructuring charges   34.6       28.3     22.3     13.3    
Restructuring charges   —       —     NM   NM  
Total SG&A expenses   34.6       28.3     22.3     13.3    
Earnings (loss) from operations   3.1       (2.1 )   NM      
Earnings (loss) from operations excluding restructuring charges   3.1       (2.1 )   NM      
                     
Gross profit rate   13.4   %   12.3   % 1.1   pts.    



KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                     
    June Year to Date
                     
              %   CC %  
    2021     2020   Change   Change  
Professional & Industrial                    
Revenue from services $ 934.1     $ 900.2     3.8   % 3.2   %
Gross profit   151.1       164.0     (7.9 )   (8.4 )  
SG&A expenses excluding restructuring charges   138.4       140.7     (1.7 )   (2.1 )  
Restructuring charges   —       4.4     NM   NM  
Total SG&A expenses   138.4       145.1     (4.6 )   (5.0 )  
Earnings (loss) from operations   12.7       18.9     (32.9 )      
Earnings (loss) from operations excluding restructuring charges   12.7       23.3     (45.4 )      
                     
Gross profit rate   16.2   %   18.2   % (2.0 ) pts.    
                     
Science, Engineering & Technology                    
Revenue from services $ 552.9     $ 517.5     6.8   % 6.5   %
Gross profit   119.7       105.3     13.7     13.4    
SG&A expenses excluding restructuring charges   82.6       67.3     22.8     22.5    
Restructuring charges   —       0.5     NM   NM  
Total SG&A expenses   82.6       67.8     21.8     21.5    
Earnings (loss) from operations   37.1       37.5     (1.1 )      
Earnings (loss) from operations excluding restructuring charges   37.1       38.0     (2.5 )      
                     
Gross profit rate   21.6   %   20.3   % 1.3   pts.    
                     
Education                    
Revenue from services $ 217.5     $ 167.6     29.8   % 29.8   %
Gross profit   34.0       24.7     37.6     37.6    
SG&A expenses excluding restructuring charges   29.5       25.3     16.8     16.8    
Restructuring charges   —       0.8     NM   NM  
Total SG&A expenses   29.5       26.1     12.9     12.9    
Earnings (loss) from operations   4.5       (1.4 )   NM      
Earnings (loss) from operations excluding restructuring charges   4.5       (0.6 )   NM      
                     
Gross profit rate   15.6   %   14.7   % 0.9   pts.    
                     
Outsourcing & Consulting                    
Revenue from services $ 206.6     $ 173.1     19.3   % 17.5   %
Gross profit   66.1       58.0     14.1     11.0    
Total SG&A expenses   58.5       53.7     8.9     6.6    
Earnings (loss) from operations   7.6       4.3     78.9        
                     
Gross profit rate   32.0   %   33.5   % (1.5 ) pts.    
                     
International                    
Revenue from services $ 553.3     $ 478.2     15.7   % 9.0   %
Gross profit   73.4       60.5     21.3     13.9    
SG&A expenses excluding restructuring charges   67.7       60.4     12.0     5.1    
Restructuring charges   —       1.1     NM   NM  
Total SG&A expenses   67.7       61.5     10.1     3.3    
Earnings (loss) from operations   5.7       (1.0 )   NM      
Earnings (loss) from operations excluding restructuring charges   5.7       0.1     NM      
                     
Gross profit rate   13.3   %   12.7   % 0.6   pts.    



KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
               
    July 4, 2021   January 3, 2021   June 28, 2020  
Current Assets              
Cash and equivalents $ 64.4   $ 223.0   $ 216.2    
Trade accounts receivable, less allowances of              
 $12.5, $13.3, and $11.2, respectively   1,362.5     1,265.2     1,085.0    
Prepaid expenses and other current assets   82.4     61.4     76.0    
Total current assets   1,509.3     1,549.6     1,377.2    
               
Noncurrent Assets              
Property and equipment, net   37.7     41.0     41.6    
Operating lease right-of-use assets   83.2     83.2     85.8    
Deferred taxes   302.9     282.0     265.9    
Goodwill, net   114.8     3.5     —    
Investment in Persol Holdings   187.7     164.2     127.2    
Investment in equity affiliate   120.0     118.5     113.6    
Other assets   391.3     319.9     307.4    
Total noncurrent assets   1,237.6     1,012.3     941.5    
               
Total Assets $ 2,746.9   $ 2,561.9   $ 2,318.7    
               
Current Liabilities              
Short-term borrowings $ 0.1   $ 0.3   $ 0.3    
Accounts payable and accrued liabilities   612.6     536.8     463.6    
Operating lease liabilities   19.6     19.6     19.5    
Accrued payroll and related taxes   337.0     293.0     210.7    
Accrued workers’ compensation and other claims   22.0     22.7     25.6    
Income and other taxes   62.6     53.2     71.7    
Total current liabilities   1,053.9     925.6     791.4    
               
Noncurrent Liabilities              
Operating lease liabilities   67.1     67.5     69.9    
Accrued payroll and related taxes   58.5     58.5     38.4    
Accrued workers’ compensation and other claims   40.8     42.2     45.6    
Accrued retirement benefits   214.6     205.8     180.8    
Other long-term liabilities   68.2     59.3     47.0    
Total noncurrent liabilities   449.2     433.3     381.7    
               
Stockholders’ Equity              
Common stock   40.1     40.1     40.1    
Treasury stock   (15.3 )   (17.1 )   (17.3 )  
Paid-in capital   22.3     21.3     20.5    
Earnings invested in the business   1,212.5     1,162.9     1,122.8    
Accumulated other comprehensive income (loss)   (15.8 )   (4.2 )   (20.5 )  
Total stockholders’ equity   1,243.8     1,203.0     1,145.6    
               
Total Liabilities and Stockholders’ Equity $ 2,746.9   $ 2,561.9   $ 2,318.7    
               
STATISTICS:              
Working Capital $ 455.4   $ 624.0   $ 585.8    
Current Ratio   1.4     1.7     1.7    
Debt-to-capital %   0.0   % 0.0   % 0.0   %
Global Days Sales Outstanding   60     64     61    
Year-to-Date Free Cash Flow $ 42.7   $ 170.5   $ 170.4    


        

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JULY 4, 2021 AND JUNE 28, 2020
(UNAUDITED)
(In millions of dollars)
    2021   2020
Cash flows from operating activities:        
Net earnings (loss) $ 49.6   $ (112.1 )
Adjustments to reconcile net earnings (loss) to net cash from operating activities:        
Goodwill impairment charge   —     147.7  
Deferred income taxes on goodwill impairment charge   —     (23.0 )
Depreciation and amortization   14.1     12.0  
Operating lease asset amortization   10.7     10.5  
Provision for credit losses and sales allowances   —     0.1  
Stock-based compensation   2.8     2.4  
(Gain) loss on investment in Persol Holdings   (36.3 )   48.2  
Gain on sale of assets   —     (32.1 )
Equity in net (earnings) loss of PersolKelly Pte. Ltd.   (0.6 )   2.8  
Other, net   2.2     0.8  
Changes in operating assets and liabilities, net of acquisitions   5.1     120.8  
         
Net cash from operating activities   47.6     178.1  
         
Cash flows from investing activities:        
Capital expenditures   (4.9 )   (7.7 )
Proceeds from company-owned life insurance   10.4     2.3  
Proceeds from sale of assets   —     55.5  
Acquisition of companies, net of cash received   (219.0 )   (36.4 )
Proceeds (payments) related to loans with equity affiliate   5.8     —  
Proceeds from (investment in) equity securities   5.0     —  
Other investing activities   1.0     (0.4 )
         
Net cash (used in) from investing activities   (201.7 )   13.3  
         
Cash flows from financing activities:        
Net change in short-term borrowings   (0.1 )   (1.4 )
Financing lease payments   (0.3 )   (0.6 )
Payments of tax withholding for stock awards   (0.6 )   (1.1 )
Dividend payments   —     (3.0 )
Other financing activities   —     (0.1 )
         
Net cash used in financing activities   (1.0 )   (6.2 )
         
Effect of exchange rates on cash, cash equivalents and restricted cash   (2.3 )   5.7  
         
Net change in cash, cash equivalents and restricted cash   (157.4 )   190.9  
Cash, cash equivalents and restricted cash at beginning of period   228.1     31.0  
         
Cash, cash equivalents and restricted cash at end of period $ 70.7   $ 221.9  



KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES BY GEOGRAPHY
(UNAUDITED)
(In millions of dollars)
                   
    Second Quarter  
                   
            %   CC %  
    2021   2020   Change   Change  
                   
Americas                  
United States $ 894.6   $ 700.1     27.8   % 27.8   %
Canada   39.5     25.6     54.4     36.8    
Mexico   33.1     22.5     47.2     26.2    
Puerto Rico   26.9     20.0     34.3     34.3    
Brazil   —     6.1     NM   NM  
Total Americas Region   994.1     774.3            
                   
Europe                  
France   57.5     39.9     44.2     31.7    
Switzerland   54.0     47.4     13.8     7.5    
Portugal   40.6     23.8     70.7     55.9    
Russia   33.7     29.3     15.2     17.9    
Italy   19.4     13.3     46.1     33.6    
United Kingdom   17.7     17.8     (0.6 )   (11.8 )  
Germany   8.5     7.1     20.6     10.3    
Ireland   6.3     4.1     53.5     40.2    
Other   17.0     11.5     47.7     32.9    
Total Europe Region   254.7     194.2     31.2     22.3    
                   
Total Asia-Pacific Region   9.3     6.8     34.5     20.9    
                   
Total Kelly Services, Inc. $ 1,258.1   $ 975.3     29.0   % 26.2   %
                   



KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES BY GEOGRAPHY
(UNAUDITED)
(In millions of dollars)
                   
    June Year to Date  
                   
            %   CC %  
    2021   2020   Change   Change  
                   
Americas                  
United States $ 1,753.1   $ 1,628.6     7.6   % 7.6   %
Canada   73.6     58.4     26.0     15.1    
Mexico   67.7     51.2     32.3     25.3    
Puerto Rico   51.1     37.7     35.3     35.3    
Brazil   —     15.2     NM   NM  
Total Americas Region   1,945.5     1,791.1     8.6     8.1    
                   
Europe                  
France   111.8     92.4     21.0     10.7    
Switzerland   106.7     91.6     16.4     9.6    
Portugal   84.3     67.4     25.1     14.5    
Russia   66.3     61.4     8.1     15.9    
Italy   37.5     28.0     33.9     22.6    
United Kingdom   34.7     40.1     (13.4 )   (21.4 )  
Germany   15.6     15.1     3.6     (5.2 )  
Ireland   11.4     9.1     25.6     14.9    
Other   32.6     26.7     22.1     11.9    
Total Europe Region   500.9     431.8     16.0     9.2    
                   
Total Asia-Pacific Region   17.6     13.5     29.8     16.9    
                   
Total Kelly Services, Inc. $ 2,464.0   $ 2,236.4     10.2   % 8.3   %



KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
SECOND QUARTER
(UNAUDITED)
(In millions of dollars)
       
  2021   2020
SG&A Expenses: As Reported   Adjusted
Professional & Industrial $ 69.0     $ 64.6  
Science, Engineering & Technology 46.9     31.3  
Education 15.3     9.6  
Outsourcing & Consulting 30.1     25.1  
International 34.6     28.3  
Corporate 21.4     19.4  
Total Company $ 217.3     $ 178.3  


  2021   2020
Earnings (loss) from Operations: As Reported   Adjusted
Professional & Industrial $ 6.2     $ 14.3  
Science, Engineering & Technology 19.6     19.3  
Education 1.5     (5.3 )
Outsourcing & Consulting 4.7     4.1  
International 3.1     (2.1 )
Corporate (21.4 )   (19.4 )
Total Company $ 13.7     $ 10.9  



KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
SECOND QUARTER
(UNAUDITED)
(In millions of dollars)
           
  2020
SG&A Expenses: As Reported   Restructuring(4)   Adjusted
Professional & Industrial $ 64.6     $ —     $ 64.6  
Science, Engineering & Technology 31.3     —     31.3  
Education 9.5     0.1     9.6  
Outsourcing & Consulting 25.1     —     25.1  
International 28.3     —     28.3  
Corporate 19.3     0.1     19.4  
Total Company $ 178.1     $ 0.2     $ 178.3  


  2020
Earnings (loss) from Operations: As Reported   Restructuring(4)   Adjusted
Professional & Industrial $ 14.3     $ —     $ 14.3  
Science, Engineering & Technology 19.3     —     19.3  
Education (5.2 )   (0.1 )   (5.3 )
Outsourcing & Consulting 4.1     —     4.1  
International (2.1 )   —     (2.1 )
Corporate (19.3 )   (0.1 )   (19.4 )
Total Company $ 11.1     $ (0.2 )   $ 10.9  



KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
JUNE YEAR TO DATE
(UNAUDITED)
(In millions of dollars)
       
  2021   2020
SG&A Expenses: As Reported   Adjusted
Professional & Industrial $ 138.4     $ 140.7  
Science, Engineering & Technology 82.6     67.3  
Education 29.5     25.3  
Outsourcing & Consulting 58.5     53.7  
International 67.7     60.4  
Corporate 43.3     41.7  
Total Company $ 420.0     $ 389.1  


  2021   2020
Earnings (loss) from Operations: As Reported   Adjusted
Professional & Industrial $ 12.7     $ 23.3  
Science, Engineering & Technology 37.1     38.0  
Education 4.5     (0.6 )
Outsourcing & Consulting 7.6     4.3  
International 5.7     0.1  
Corporate (43.3 )   (41.7 )
Total Company $ 24.3     $ 23.4  



KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
JUNE YEAR TO DATE
(UNAUDITED)
(In millions of dollars)
           
  2020
SG&A Expenses: As Reported   Restructuring(4)   Adjusted
Professional & Industrial $ 145.1     $ (4.4 )   $ 140.7  
Science, Engineering & Technology 67.8     (0.5 )   67.3  
Education 26.1     (0.8 )   25.3  
Outsourcing & Consulting 53.7     —     53.7  
International 61.5     (1.1 )   60.4  
Corporate 43.4     (1.7 )   41.7  
Total Company $ 397.6     $ (8.5 )   $ 389.1  


  2020
Earnings (loss) from Operations: As Reported   Goodwill
impairment(1)		   Gain on sale
of assets(3)		   Restructuring(4)   Adjusted
Professional & Industrial $ 18.9     $ —     $ —     $ 4.4     $ 23.3  
Science, Engineering & Technology 37.5     —     —     0.5     38.0  
Education (1.4 )   —     —     0.8     (0.6 )
Outsourcing & Consulting 4.3     —     —     —     4.3  
International (1.0 )   —     —     1.1     0.1  
Corporate (159.0 )   147.7     (32.1 )   1.7     (41.7 )
Total Company $ (100.7 )   $ 147.7     $ (32.1 )   $ 8.5     $ 23.4  



KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES (continued)
(UNAUDITED)
(In millions of dollars except per share data)
                 
                 
    Second Quarter   June Year to Date
    2021   2020   2021   2020
Income tax expense (benefit)   $ (2.6 )   $ 0.9     $ 7.9     $ (35.3 )
Taxes on goodwill impairment charge(1)   —     —     —     23.0  
Taxes on investment in Persol Holdings(2)   (1.9 )   (9.0 )   (11.1 )   14.8  
Taxes on gain on sale of assets(3)   —     —     —     (8.1 )
Taxes on restructuring charges(4)   —     —     —     2.2  
Adjusted income tax expense (benefit)   $ (4.5 )   $ (8.1 )   $ (3.2 )   $ (3.4 )
                 
    Second Quarter   June Year to Date
    2021   2020   2021   2020
Net earnings (loss)   $ 24.0     $ 41.1     $ 49.6     $ (112.1 )
Goodwill impairment charge, net of taxes(1)   —     —     —     124.7  
(Gain) loss on investment in Persol Holdings, net of taxes(2)   (4.4 )   (20.6 )   (25.2 )   33.4  
Gain on sale of assets, net of taxes(3)   —     —     —     (24.0 )
Restructuring charges, net of taxes(4)   —     (0.2 )   —     6.3  
Adjusted net earnings   $ 19.6     $ 20.3     $ 24.4     $ 28.3  
                 
    Second Quarter   June Year to Date
    2021   2020   2021   2020
    Per Share   Per Share
Net earnings (loss)   $ 0.60     $ 1.04     $ 1.25     $ (2.86 )
Goodwill impairment charge, net of taxes(1)   —     —     —     3.18  
(Gain) loss on investment in Persol Holdings, net of taxes(2)   (0.11 )   (0.52 )   (0.63 )   0.85  
Gain on sale of assets, net of taxes(3)   —     —     —     (0.61 )
Restructuring charges, net of taxes(4)   —     —     —     0.16  
Adjusted net earnings   $ 0.49     $ 0.51     $ 0.61     $ 0.72  

Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.



KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES (continued)
(UNAUDITED)
(In millions of dollars)
               
  Second Quarter   June Year to Date
  2021   2020   2021   2020
Net earnings (loss) $ 24.0       $ 41.1       $ 49.6       $ (112.1 )  
Other (income) expense, net 0.3       (2.6 )     3.7       (4.3 )  
Income tax expense (benefit) (2.6 )     0.9       7.9       (35.3 )  
Depreciation and amortization 8.5       6.0       14.8       12.0    
EBITDA 30.2       45.4       76.0       (139.7 )  
Equity in net (earnings) loss of affiliate (1.7 )     1.3       (0.6 )     2.8    
Goodwill impairment charge(1) —       —       —       147.7    
(Gain) loss on investment in Persol Holdings(2) (6.3 )     (29.6 )     (36.3 )     48.2    
Gain on sale of assets(3) —       —       —       (32.1 )  
Restructuring(4) —       (0.2 )     —       8.5    
Adjusted EBITDA $ 22.2       $ 16.9       $ 39.1       $ 35.4    
Adjusted EBITDA margin 1.8   %   1.7   %   1.6   %   1.6   %



KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2020 goodwill impairment charge, the 2021 and 2020 gains and losses on the investment in Persol Holdings, the 2020 gain on sale of assets and the 2020 restructuring charges, are useful to understand the Company’s fiscal 2021 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a meaningful comparison of current period operating performance with the operating results of prior periods. Management also believes that such measures are used by those analyzing performance of companies in the staffing industry to compare current performance to prior periods and to assess future performance.

Management uses Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA Margin (percent of total GAAP revenue) which Management believes is useful to compare operating performance compared to prior periods and uses it in conjunction with GAAP measures to assess performance. Our calculation of Adjusted EBITDA may not be consistent with similarly titled measures of other companies and should be used in conjunction with GAAP measurements.

These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company’s financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company’s financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

(1) The goodwill impairment charge is the result of an interim impairment test the Company performed during the first quarter of 2020, due to a triggering event caused by a decline in the Company’s common stock price.

(2) The gains and losses on the investment in Persol Holdings represent the change in fair value of the investment during the period presented and the related tax expense and benefit.

(3) Gain on sale of assets in 2020 primarily represents the excess of the proceeds over the cost of the headquarters properties sold during the first quarter of 2020.

(4) Restructuring charges in 2020 represent severance costs and lease terminations in preparation for the new operating model adopted in the third quarter of 2020.

CoreCivic Inc. (CXW) – Post Call Follow Up and Updated Models

Posted on by Admin

Wednesday, August 11, 2021

CoreCivic, Inc. (CXW)
Post Call Follow Up and Updated Models

CoreCivic is a diversified government solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through corrections and detention management, a growing network of residential reentry centers to help address America’s recidivism crisis, and government real estate solutions. We are a publicly traded real estate investment trust and the nation’s largest owner of partnership correctional, detention and residential reentry facilities. We also believe we are the largest private owner of real estate used by U.S. government agencies. The Company has been a flexible and dependable partner for government for more than 35 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    ICE Populations and Revenue Climbing. ICE populations at CoreCivic have roughly doubled since the beginning of the year. We would note that revenue derived from ICE in the second quarter was $139.6 million, up from $135.7 million in the same period last year, and up from $131.5 million in the first quarter. Management stated that ICE populations overall remained about 2,200 below the contract minimums, although this is down from 3,200 at the end of the first quarter.

    Safety Segment Improving.  Safety segment revenue declined modestly to $419.9 million from $424.1 million. Safety’s facility net operating income, however, increased to $112.6 million from $100.4 million during the second quarter of 2020. Increased per diem rates and lower COVID related operating expenses drove the improvement. Revenue per compensated man day rose to $90.88 in the quarter, up from …



This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

CoreCivic, Inc. (CXW) – Post Call Follow Up and Updated Models

Posted on by Admin

Wednesday, August 11, 2021

CoreCivic, Inc. (CXW)
Post Call Follow Up and Updated Models

CoreCivic is a diversified government solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through corrections and detention management, a growing network of residential reentry centers to help address America’s recidivism crisis, and government real estate solutions. We are a publicly traded real estate investment trust and the nation’s largest owner of partnership correctional, detention and residential reentry facilities. We also believe we are the largest private owner of real estate used by U.S. government agencies. The Company has been a flexible and dependable partner for government for more than 35 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    ICE Populations and Revenue Climbing. ICE populations at CoreCivic have roughly doubled since the beginning of the year. We would note that revenue derived from ICE in the second quarter was $139.6 million, up from $135.7 million in the same period last year, and up from $131.5 million in the first quarter. Management stated that ICE populations overall remained about 2,200 below the contract minimums, although this is down from 3,200 at the end of the first quarter.

    Safety Segment Improving.  Safety segment revenue declined modestly to $419.9 million from $424.1 million. Safety’s facility net operating income, however, increased to $112.6 million from $100.4 million during the second quarter of 2020. Increased per diem rates and lower COVID related operating expenses drove the improvement. Revenue per compensated man day rose to $90.88 in the quarter, up from …



This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

CoreCivic Inc. (CXW) – Solid Second Quarter Results

Posted on by Admin

Tuesday, August 10, 2021

CoreCivic, Inc. (CXW)
Solid Second Quarter Results

CoreCivic is a diversified government solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through corrections and detention management, a growing network of residential reentry centers to help address America’s recidivism crisis, and government real estate solutions. We are a publicly traded real estate investment trust and the nation’s largest owner of partnership correctional, detention and residential reentry facilities. We also believe we are the largest private owner of real estate used by U.S. government agencies. The Company has been a flexible and dependable partner for government for more than 35 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    2Q21 Results. CoreCivic reported solid second quarter results after the market closed yesterday. Revenue came in at $464.6 million, just below the $472.6 million in the same period last year, which was before populations were significantly reduced due to COVID. The Company reported net income of $15.6 million, or $0.13 per share, compared to $22.2 million, or $0.18 per share last year. Adjusted EPS was $0.25 compared to $0.33 last year. On a proforma basis to reflect the adoption of a C-corp structure EPS was $0.25 versus $0.23 last year. We had projected revenue of $445 million and EPS of $0.07.

    Noise, Again.  There was significant noise in the quarter. For example, special items included a charge of $52.2 million in expenses associated with debt repayments and refinancing transactions, $2.9 million in asset impairments, $2.6 million in shareholder litigation expense, $0.8 million in expenses associated with COVID-19, and a $38.8 million gain on the sale of non-core real estate assets, net …



This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Release – CoreCivic Reports Second Quarter 2021 Financial Results

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CoreCivic Reports Second Quarter 2021 Financial Results

 

BRENTWOOD, Tenn., Aug. 09, 2021 (GLOBE NEWSWIRE) — CoreCivic, Inc. (NYSE: CXW) (the Company) announced today its financial results for the second quarter of 2021.

Financial Highlights – Second Quarter 2021

  • Total revenue of $464.6 million
    • CoreCivic Safety revenue of $419.9 million
    • CoreCivic Community revenue of $24.9 million
    • CoreCivic Properties revenue of $19.7 million
  • Diluted earnings per share of $0.13
  • Adjusted diluted EPS of $0.25
  • Normalized FFO per diluted share of $0.46
  • Adjusted EBITDA of $101.7 million
  • Sale of five non-core real estate assets for gross proceeds of $328.7 million
  • Issuance of $450.0 million of Unsecured Senior Notes

Damon T. Hininger, CoreCivic’s President and Chief Executive Officer, said, “We had a strong quarter as our business remains resilient and our cash flows are stable. Adjusted EBITDA generated in the second quarter of 2021 slightly exceeded Adjusted EBITDA for the same period in the prior year despite the continuing impact of COVID-19. During the quarter we continued to make meaningful progress on our capital allocation strategy to extend debt maturities, reduce overall debt leverage and improve our credit profile through the sale of our non-core real estate assets and our issuance of unsecured bonds in April. We are confident in the stability of our cash flows and believe our capital allocation strategy best positions the company to generate long-term value.”

Second Quarter 2021 Financial Results Compared With Second Quarter 2020

Net income attributable to common stockholders in the second quarter of 2021 totaled $15.6 million, or $0.13 per diluted share, compared with net income attributable to common stockholders generated in the second quarter of 2020 of $22.2 million, or $0.18 per diluted share. Adjusted for special items, net income in the second quarter of 2021 was $31.1 million, or $0.25 per diluted share (Adjusted Diluted EPS), compared with adjusted net income in the second quarter of 2020 of $39.6 million, or $0.33 per diluted share. Special items in the second quarter of 2021 included a charge of $52.2 million in expenses associated with debt repayments and refinancing transactions, $2.9 million in asset impairments, $2.6 million in shareholder litigation expense, $0.8 million in expenses associated with COVID-19, and a $38.8 million gain on the sale of non-core real estate assets, net of $4.2 million of income tax benefits for such items. Special items in the second quarter of 2020 included $11.7 million in asset impairments, $8.2 million in expenses associated with COVID-19 (including hero bonuses of $6.3 million to facility staff), $0.3 million of expenses associated with the evaluation of our change in corporate tax structure, and a $2.8 million gain on the sale of non-core real estate assets.

EBITDA was $82.1 million in the second quarter of 2021, compared with $83.7 million in the second quarter of 2020. Adjusted EBITDA, which excludes the special items described above, was $101.7 million in the second quarter of 2021, compared with $101.1 million in the second quarter of 2020. Adjusted EBITDA increased from the prior year quarter despite a $3.2 million reduction in facility EBITDA attributable to the operations in the second quarter of 2020 of the 42 properties sold in the fourth quarter of 2020 and the five additional non-core real estate assets sold in the second quarter of 2021.  

Funds From Operations (FFO) was $11.4 million, or $0.09 per diluted share, in the second quarter of 2021, compared to $57.4 million, or $0.47 per diluted share, in the second quarter of 2020. Normalized FFO, which excludes the special items described above, was $56.0 million, or $0.46 per diluted share, in the second quarter of 2021, compared with $67.8 million, or $0.56 per diluted share, in the second quarter of 2020. FFO and Normalized FFO were also impacted by our new corporate tax structure.

Adjusted financial results in the second quarter of 2021, compared with the second quarter of 2020, declined primarily because 2021 financial results reflect an income tax provision under our new corporate tax structure effective January 1, 2021, compared with the prior year when we were entitled to a deduction for dividends paid as a real estate investment trust (REIT), which significantly reduced our income tax expense.

Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share amounts, are measures calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles (GAAP). Please refer to the Supplemental Financial Information and related note following the financial statements herein for further discussion and reconciliations of these measures to net income, the most directly comparable GAAP measure.

Business Development Updates

New Contract Award with Mahoning County at the Northeast Ohio Correctional Center. On May 28, 2021, we entered into a new three-year contract with Mahoning County, Ohio to utilize up to 990 beds at our 2,016-bed Northeast Ohio Correctional Center. Mahoning County is responsible for County inmates and federal detainees, and the County is using the Northeast Ohio facility to address its population needs. The management contract with Mahoning County replaces a contract we had with U.S. Marshals Service (USMS) for up to 992 beds at the Northeast Ohio facility. In addition to providing much needed capacity for Mahoning County, the Company also cares for approximately 800 inmates under a management contract with the state of Ohio at the Northeast Ohio Correctional Center.

Contract Expansion with the State of Montana at the Crossroads Correctional Center. On July 27, 2021, we entered into an amendment to our contract with the state of Montana to utilize all of the capacity at the 664-bed Crossroads Correctional Center, including approximately 96 beds recently vacated by the USMS due to a contract expiration, and to extend the existing contract to June 30, 2023, with additional renewal options by mutual agreement through August 31, 2029.

Contract Renewal with the State of Hawaii at the Saguaro Correctional Facility. On July 1, 2021, we received a Notice of Award from the State of Hawaii for the rebid of our contract at the 1,896-bed Saguaro Correctional Facility in Eloy, Arizona. We expect to enter into a new three-year contract with Hawaii, and currently care for approximately 1,100 inmates from Hawaii, along with approximately 375 inmates from the state of Idaho, at this facility.

Contract Renewal with ICE at the Elizabeth Detention Center. ICE has notified the Company of its intent to exercise its renewal option to extend our contract at the 300-bed Elizabeth Detention Center through August 31, 2023.

Sale of Five Non-Core Properties for $328.7 Million. On June 29, 2021, the Company announced it had completed the sale of 100% of the membership interests of SSA Baltimore Holdings, LLC, a wholly-owned unrestricted subsidiary of ours and the owner of the approximately 541,000 square-foot Social Security Administration office building in Baltimore, Maryland (SSA-Baltimore). Earlier in the second quarter of 2021, we completed the sale of two additional properties, our approximately 277,000 square-foot office property in Tallahassee, Florida (Capital Commerce Center) and our approximately 217,000 square-foot warehouse property in Dayton, Ohio (NARA-Dayton) in a single transaction. These three properties were sold for an aggregate gross sales price of $326.0 million. The Company had purchased all three properties in 2018 in separate transactions for an aggregate gross purchase price of $293.6 million. Concurrent with the sale of these three properties, the Company used $194.4 million of the aggregate sales proceeds to fully repay two non-recourse mortgage notes associated with SSA-Baltimore and Capital Commerce Center, including prepayment premiums of an aggregate of $32.5 million. The total outstanding balances of the non-recourse mortgage notes, both of which had interest rates of 4.5%, were $161.9 million in the aggregate on the dates sold. The sale of these three non-core government-leased properties generated net proceeds of nearly $122.5 million after repayment of the non-recourse mortgage notes and other transaction-related costs.  

During the second quarter of 2021, we also sold two idled non-core real estate properties located in St. Louis, Missouri and Philadelphia, Pennsylvania, in separate transactions for gross proceeds of $2.7 million, generating net proceeds of $2.5 million after transaction-related costs.

Recent Developments

Balance Sheet and Debt Reduction Update

On April 14, 2021, we completed the offering of $450.0 million aggregate principal amount of 8.25% senior unsecured notes, due April 2026. We used net proceeds from the offering of the new notes of approximately $435.1 million, after deducting the original issuance and underwriting discounts, and estimated offering expenses, to redeem all $250.0 million principal amount of our outstanding 5.0% senior unsecured notes due 2022. We used additional net proceeds from the offering to repay $149.0 million of the $350.0 million principal amount of our outstanding 4.625% senior unsecured notes due 2023 (the 2023 notes) at an aggregate purchase price of $151.2 million in privately negotiated transactions, reducing the outstanding balance of the 2023 notes to $201.0 million.

On June 21, 2021, we purchased an additional $27.0 million of the 2023 notes at par in a privately negotiated transaction, further reducing the outstanding balance of the 2023 notes to $174.0 million. Following these transactions, the 2023 notes are the Company’s nearest-term unsecured note maturity.

As of June 30, 2021, we had $162.9 million in cash and only $112.0 million drawn on our $800 million revolving credit facility, which matures in April 2023. We have made substantial progress in reducing debt toward our targeted total leverage ratio, or net debt to Adjusted EBITDA, of 2.25x to 2.75x. Using the trailing twelve months ended June 30, 2021, our total leverage ratio was 3.3x, compared with 3.9x using the trailing twelve months ended June 30, 2020. Including repayments of the mortgage notes associated with the sale of non-core assets, we have reduced our net debt balance by almost $550.0 million during the last twelve months.   

Termination of Leases by the State of Alabama

In February 2021, we entered into two 30-year lease agreements with the Alabama Department of Corrections (ADOC) for the development of two correctional facilities in Alabama, which was subject to the successful completion of financing we were pursuing on behalf of the state of Alabama. Subsequent to quarter-end, we received notice from the ADOC of its decision to terminate the leases effective August 6, 2021. We continue to engage in discussions with the ADOC regarding our potential involvement in their pursuit of construction and financing of the facilities. As a result of the lease terminations, during the third quarter of 2021, we expect to report asset impairment charges of $4.0 million to $6.0 million for pre-development activities, subject to certain vendor negotiations.

Update on Contracts with the United States Marshals Service.

Pursuant to President Biden’s Executive Order on Reforming Our Incarceration System to Eliminate the Use of Privately Operated Criminal Detention Facilities (the Private Prison EO), the USMS has indicated that it has been advised by the Office of the Deputy Attorney General not to renew existing contracts, or enter into new contracts for private detention facilities. We currently have two remaining contracts with the USMS that expire in 2021.

The USMS has full access to our 600-bed West Tennessee Detention Facility and our 1,033-bed Leavenworth Detention Center under direct contracts with the USMS that expire in September 2021 and December 2021, respectively. We do not yet know if the USMS will relocate the detainees at our West Tennessee and Leavenworth facilities. We continue to work with the USMS to enable it to fulfill its mission, including at the West Tennessee and Leavenworth facilities. However, we can provide no assurance that we will be able to provide a solution that is acceptable to all parties that would be involved in such a solution.

Financial Guidance

At this time we are not providing 2021 financial guidance because of uncertainties associated with COVID-19, including a resurgence caused by the Delta variant, as well as uncertainties associated with the application of the administration’s various executive actions and policies related to immigration and criminal justice. We do not expect to provide financial guidance until we have further clarity around these uncertainties. Our business is very durable, and continues to generate cash flow even during these unprecedented disruptions to the economy and criminal justice system. This resiliency is due to the essential nature of our facilities and services in our Safety and Community segments, further enhanced by the stability of our Properties segment, all supported by payments from highly rated federal, state, and local government agencies.  

Supplemental Financial Information and Investor Presentations

We have made available on our website supplemental financial information and other data for the second quarter of 2021.   Interested parties may access this information through our website at http://ir.corecivic.com/ under “Financial Information” of the Investors section.   We do not undertake any obligation, and disclaim any duties to update any of the information disclosed in this report.  

Management may meet with investors from time to time during the third quarter of 2021.   Written materials used in the investor presentations will also be available on our website beginning on or about August 30, 2021.   Interested parties may access this information through our website at http://ir.corecivic.com/ under “Events & Presentations” of the Investors section.

Conference Call, Webcast and Replay Information

We will host a webcast conference call at 10:00 a.m. central time (11:00 a.m. eastern time) on Tuesday, August 10, 2021, which will be accessible through the Company’s website at www.corecivic.com under the “Events & Presentations” section of the “Investors” page. The live broadcast can also be accessed by dialing 800-353-6461 in the U.S. and Canada, including the confirmation passcode 7244786. An online replay of the call will be archived on our website promptly following the conference call. In addition, there will be a telephonic replay available beginning at 1:00 p.m. central time (2:00 p.m. eastern time) on August 10, 2021, through 1:00 p.m. central time (2:00 p.m. eastern time) on August 18, 2021. To access the telephonic replay, dial 888-203-1112 in the U.S. and Canada. International callers may dial +1 719-457-0820 and enter passcode 7244786.

About CoreCivic

CoreCivic is a diversified government-solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. CoreCivic provides a broad range of solutions to government partners that serve the public good through corrections and detention management, a network of residential reentry centers to help address America’s recidivism crisis, and government real estate solutions. CoreCivic is the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and believes it is the largest private owner of real estate used by government agencies in the U.S. CoreCivic has been a flexible and dependable partner for government for more than 35 years. CoreCivic’s employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good.

Forward-Looking Statements

This press release contains statements as to our beliefs and expectations of the outcome of future events that are “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These include, but are not limited to, the risks and uncertainties associated with: (i) changes in government policy (including the United States Department of Justice, or DOJ, not renewing contracts as a result of the Private Prison EO) (two agencies of the DOJ, the United States Federal Bureau of Prisons and the USMS utilize our services), legislation and regulations that affect utilization of the private sector for corrections, detention, and residential reentry services, in general, or our business, in particular, including, but not limited to, the continued utilization of our correctional and detention facilities by the federal government, and the impact of any changes to immigration reform and sentencing laws (our company does not, under longstanding policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an individual’s incarceration or detention); (ii) our ability to obtain and maintain correctional, detention, and residential reentry facility management contracts because of reasons including, but not limited to, sufficient governmental appropriations, contract compliance, negative publicity and effects of inmate disturbances; (iii) changes in the privatization of the corrections and detention industry, the acceptance of our services, the timing of the opening of new facilities and the commencement of new management contracts (including the extent and pace at which new contracts are utilized), as well as our ability to utilize available beds; (iv) general economic and market conditions, including, but not limited to, the impact governmental budgets can have on our contract renewals and renegotiations, per diem rates, and occupancy; (v) fluctuations in our operating results because of, among other things, changes in occupancy levels, competition, contract renegotiations or terminations, increases in costs of operations, fluctuations in interest rates and risks of operations; (vi) the duration of the federal government’s denial of entry at the United States southern border to asylum-seekers and anyone crossing the southern border without proper documentation or authority in an effort to contain the spread of COVID-19; (vii) government and staff responses to staff or residents testing positive for COVID-19 within public and private correctional, detention and reentry facilities, including the facilities we operate; (viii)  restrictions associated with COVID-19 that disrupt the criminal justice system, along with government policies on prosecutions and newly ordered legal restrictions that affect the number of people placed in correctional, detention, and reentry facilities; (ix) whether revoking our REIT election, effective January 1, 2021, and our revised capital allocation strategy can be implemented in a cost effective manner that provides the expected benefits, including facilitating our planned debt reduction initiative and planned return of capital to shareholders; (x) our ability to successfully identify and consummate future development and acquisition opportunities and our ability to successfully integrate the operations of our completed acquisitions and realize projected returns resulting therefrom; (xi) our ability to have met and maintained qualification for taxation as a REIT for the years we elected REIT status; and (xii) the availability of debt and equity financing on terms that are favorable to us, or at all. Other factors that could cause operating and financial results to differ are described in the filings we make from time to time with the Securities and Exchange Commission.

CoreCivic takes no responsibility for updating the information contained in this press release following the date hereof to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events or for any changes or modifications made to this press release or the information contained herein by any third-parties, including, but not limited to, any wire or internet services.



CORECIVIC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

ASSETS   June 30,
2021		   December 31,
2020
         
Cash and cash equivalents   $ 162,891     $ 113,219  
Restricted cash     8,864       23,549  
Accounts receivable, net of credit loss reserve of $6,777 and $6,103, respectively     282,227       267,705  
Prepaid expenses and other current assets     37,267       33,243  
Assets held for sale     –       279,406  
Total current assets     491,249       717,122  
Real estate and related assets:        
Property and equipment, net of accumulated depreciation of $1,602,276 and $1,559,388, respectively     2,318,161       2,350,272  
Other real estate assets     223,293       228,243  
Goodwill     4,844       5,902  
Non-current deferred tax assets     –       11,113  
Other assets     386,649       396,663  
         
Total assets   $ 3,424,196     $ 3,709,315  
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Accounts payable and accrued expenses   $ 284,604     $ 274,318  
Current portion of long-term debt     31,999       39,087  
Total current liabilities     316,603       313,405  
         
Long-term debt, net     1,480,293       1,747,664  
Deferred revenue     27,336       18,336  
Non-current deferred tax liabilities     86,323       –  
Other liabilities     203,411       216,468  
         
Total liabilities     2,113,966       2,295,873  
         
Commitments and contingencies        
         
Preferred stock ? $0.01 par value; 50,000 shares authorized; none issued and outstanding at June 30, 2021, and December 31, 2020, respectively     –       –  
Common stock ? $0.01 par value; 300,000 shares authorized; 120,285 and 119,638 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively     1,203       1,196  
Additional paid-in capital     1,842,395       1,835,494  
Accumulated deficit     (556,639 )     (446,519 )
Total stockholders’ equity     1,286,959       1,390,171  
Non-controlling interest – operating partnership     23,271       23,271  
Total equity     1,310,230       1,413,442  
         
Total liabilities and equity   $ 3,424,196     $ 3,709,315  
                 

CORECIVIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

    For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,
      2021       2020       2021       2020  
                 
REVENUES:                
Safety   $ 419,880     $ 424,117     $ 829,649     $ 861,882  
Community     24,929       26,004       48,587       56,603  
Properties     19,732       22,483       40,987       45,162  
Other     30       37       66       95  
      464,571       472,641       919,289       963,742  
                 
EXPENSES:                
Operating                
Safety     307,280       323,739       612,707       654,476  
Community     20,024       22,201       41,124       46,650  
Properties     5,668       6,906       11,942       13,860  
Other     98       81       181       256  
Total operating expenses     333,070       352,927       665,954       715,242  
General and administrative     33,228       30,145       62,758       61,424  
Depreciation and amortization     34,084       38,619       66,796       76,571  
Shareholder litigation expense     2,550       –       54,295       –  
Asset impairments     2,866       11,717       4,174       12,253  
      405,798       433,408       853,977       865,490  
                 
OTHER INCOME (EXPENSE):                
Interest expense, net     (23,222 )     (20,996 )     (41,650 )     (43,534 )
Expenses associated with debt repayments and refinancing transactions     (52,167 )     –       (52,167 )     –  
Gain on sale of real estate assets, net     38,766       2,818       38,766       2,818  
Other income (expense)     (8 )     169       (156 )     702  
                 
INCOME (LOSS) BEFORE INCOME TAXES     22,142       21,224       10,105       58,238  
                 
Income tax benefit (expense)     (6,519 )     962       (120,050 )     (2,814 )


NET INCOME (LOSS)		     15,623       22,186       (109,945 )    

55,424		  
                 
Net income attributable to non-controlling interest     –       –       –       (1,181 )
                 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS   $ 15,623     $ 22,186     $ (109,945 )   $ 54,243  
                 
                 
BASIC EARNINGS (LOSS) PER SHARE   $ 0.13     $ 0.19     $ (0.92 )   $ 0.45  
                 
DILUTED EARNINGS (LOSS) PER SHARE   $ 0.13     $ 0.18     $ (0.92 )   $ 0.45  
                                 

CORECIVIC, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS

  For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,
    2021       2020       2021       2020  
               
Net income (loss) attributable to common stockholders $ 15,623     $ 22,186     $ (109,945 )   $ 54,243  
Non-controlling interest   –       –       –       1,181  
Diluted net income (loss) attributable to common stockholders $ 15,623     $ 22,186     $ (109,945 )   $ 55,424  
               
Special items:              
Expenses associated with debt repayments and refinancing transactions   52,167       –       52,167       –  
Expenses associated with mergers and acquisitions   –       –       –       338  
Expenses associated with COVID-19   836       8,165       2,434       8,165  
Expenses associated with changes in corporate tax structure   –       347       –       347  
Income taxes associated with change in corporate tax structure and other special tax items   –       –       114,249       3,085  
Gain on sale of real estate assets, net   (38,766 )     (2,818 )     (38,766 )     (2,818 )
Shareholder litigation expense   2,550       –       54,295       –  
Asset impairments   2,866       11,717       4,174       12,253  
Income tax expense (benefit) for special items   (4,185 )     –       (18,245 )     –  
Adjusted net income $ 31,091     $ 39,597     $ 60,363     $ 76,794  
Weighted average common shares outstanding – basic   120,283       119,630       120,098       119,483  
Effect of dilutive securities:              
Restricted stock-based awards   434       2       275       25  
Non-controlling interest – operating partnership units   1,342       1,342       1,342       1,342  
Weighted average shares and assumed conversions – diluted   122,059       120,974       121,715       120,850  
Adjusted Earnings Per Diluted Share $ 0.25     $ 0.33     $ 0.50     $ 0.63  
                               

CORECIVIC, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CALCULATION OF FUNDS FROM OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS

  For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,
    2021       2020       2021       2020  
               
Net income (loss) $ 15,623     $ 22,186     $ (109,945 )   $ 55,424  
Depreciation and amortization of real estate assets   24,926       28,244       48,685       56,350  
Impairment of real estate assets   –       9,750       1,308       10,155  
Gain on sale of real estate assets, net   (38,766 )     (2,818 )     (38,766 )     (2,818 )
Income tax expense (benefit) for special items   9,641       –       9,291       –  
Funds From Operations $ 11,424     $ 57,362     $ (89,427 )   $ 119,111  
               
Expenses associated with debt repayments and refinancing transactions   52,167       –       52,167       –  
Expenses associated with mergers and acquisitions   –       –       –       338  
Expenses associated with COVID-19   836       8,165       2,434       8,165  
Expenses associated with changes in corporate tax structure   –       347       –       347  
Income taxes associated with change in corporate tax structure and other special tax items   –       –       114,249       3,085  
Shareholder litigation expense   2,550       –       54,295       –  
Goodwill and other impairments   2,866       1,967       2,866       2,098  
Income tax benefit for special items   (13,826 )     –       (27,536 )     –  
Normalized Funds From Operations $ 56,017     $ 67,841     $ 109,048     $ 133,144  
               
Funds From Operations Per Diluted Share $ 0.09     $ 0.47     $ (0.73 )   $ 0.99  
Normalized Funds From Operations Per Diluted Share $ 0.46     $ 0.56     $ 0.90     $ 1.10  
                               

CORECIVIC, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CALCULATION OF EBITDA AND ADJUSTED EBITDA

  For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,
    2021       2020       2021       2020  
               
Net income (loss) $ 15,623     $ 22,186     $ (109,945 )   $ 55,424  
Interest expense   25,843       23,873       46,768       48,428  
Depreciation and amortization   34,084       38,619       66,796       76,571  
Income tax expense (benefit)   6,519       (962 )     120,050       2,814  
EBITDA $ 82,069     $ 83,716     $ 123,669     $ 183,237  
Expenses associated with debt repayments and refinancing transactions   52,167       –       52,167       –  
Expenses associated with mergers and acquisitions   –       –       –       338  
Expenses associated with COVID-19   836       8,165       2,434       8,165  
Expenses associated with changes in corporate tax structure   –       347       –       347  
Gain on sale of real estate assets, net   (38,766 )     (2,818 )     (38,766 )     (2,818 )
Shareholder litigation expense   2,550       –       54,295       –  
Asset impairments   2,866       11,717       4,174       12,253  
Adjusted EBITDA $ 101,722     $ 101,127     $ 197,973     $ 201,522  
                               

NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION

Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share metrics are non-GAAP financial measures. The Company believes that these measures are important operating measures that supplement discussion and analysis of the Company’s results of operations and are used to review and assess operating performance of the Company and its properties and their management teams. The Company believes that it is useful to provide investors, lenders and security analysts disclosures of its results of operations on the same basis that is used by management.   FFO, in particular, is a widely accepted non-GAAP supplemental measure of performance of real estate companies, grounded in the standards for FFO established by the National Association of Real Estate Investment Trusts (NAREIT).

NAREIT defines FFO as net income computed in accordance with GAAP, excluding gains (or losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures calculated to reflect funds from operations on the same basis.   EBITDA, Adjusted EBITDA, and Normalized FFO are useful as supplemental measures of performance of the Company’s properties because such measures do not take into account depreciation and amortization, or with respect to EBITDA, the impact of the Company’s tax provisions and financing strategies. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), this accounting presentation assumes that the value of real estate assets diminishes at a level rate over time.   Because of the unique structure, design and use of the Company’s properties, management believes that assessing performance of the Company’s properties without the impact of depreciation or amortization is useful. The Company may make adjustments to FFO from time to time for certain other income and expenses that it considers non-recurring, infrequent or unusual, even though such items may require cash settlement, because such items do not reflect a necessary or ordinary component of the ongoing operations of the Company.   Normalized FFO excludes the effects of such items. The Company calculates Adjusted Net Income by adding to GAAP Net Income expenses associated with the Company’s debt repayments and refinancing transactions, M&A activity, and certain impairments and other charges that the Company believes are unusual or non-recurring to provide an alternative measure of comparing operating performance for the periods presented. Even though expenses associated with mergers and acquisitions may be recurring, the magnitude and timing fluctuate based on the timing and scope of M&A activity, and therefore, such expenses, which are not a necessary component of the ongoing operations of the Company, may not be comparable from period to period.

Other companies may calculate Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO differently than the Company does, or adjust for other items, and therefore comparability may be limited.   Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO and, where appropriate, their corresponding per share measures are not measures of performance under GAAP, and should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an alternative to net income as indicators of the Company’s operating performance or any other measure of performance derived in accordance with GAAP.   This data should be read in conjunction with the Company’s consolidated financial statements and related notes included in its filings with the Securities and Exchange Commission.

Contact: Investors: Cameron Hopewell – Managing Director, Investor Relations – (615) 263-3024
Financial Media: David Gutierrez, Dresner Corporate Services – (312) 780-7204

CoreCivic Reports Second Quarter 2021 Financial Results

Posted on by Admin


CoreCivic Reports Second Quarter 2021 Financial Results

 

BRENTWOOD, Tenn., Aug. 09, 2021 (GLOBE NEWSWIRE) — CoreCivic, Inc. (NYSE: CXW) (the Company) announced today its financial results for the second quarter of 2021.

Financial Highlights – Second Quarter 2021

  • Total revenue of $464.6 million
    • CoreCivic Safety revenue of $419.9 million
    • CoreCivic Community revenue of $24.9 million
    • CoreCivic Properties revenue of $19.7 million
  • Diluted earnings per share of $0.13
  • Adjusted diluted EPS of $0.25
  • Normalized FFO per diluted share of $0.46
  • Adjusted EBITDA of $101.7 million
  • Sale of five non-core real estate assets for gross proceeds of $328.7 million
  • Issuance of $450.0 million of Unsecured Senior Notes

Damon T. Hininger, CoreCivic’s President and Chief Executive Officer, said, “We had a strong quarter as our business remains resilient and our cash flows are stable. Adjusted EBITDA generated in the second quarter of 2021 slightly exceeded Adjusted EBITDA for the same period in the prior year despite the continuing impact of COVID-19. During the quarter we continued to make meaningful progress on our capital allocation strategy to extend debt maturities, reduce overall debt leverage and improve our credit profile through the sale of our non-core real estate assets and our issuance of unsecured bonds in April. We are confident in the stability of our cash flows and believe our capital allocation strategy best positions the company to generate long-term value.”

Second Quarter 2021 Financial Results Compared With Second Quarter 2020

Net income attributable to common stockholders in the second quarter of 2021 totaled $15.6 million, or $0.13 per diluted share, compared with net income attributable to common stockholders generated in the second quarter of 2020 of $22.2 million, or $0.18 per diluted share. Adjusted for special items, net income in the second quarter of 2021 was $31.1 million, or $0.25 per diluted share (Adjusted Diluted EPS), compared with adjusted net income in the second quarter of 2020 of $39.6 million, or $0.33 per diluted share. Special items in the second quarter of 2021 included a charge of $52.2 million in expenses associated with debt repayments and refinancing transactions, $2.9 million in asset impairments, $2.6 million in shareholder litigation expense, $0.8 million in expenses associated with COVID-19, and a $38.8 million gain on the sale of non-core real estate assets, net of $4.2 million of income tax benefits for such items. Special items in the second quarter of 2020 included $11.7 million in asset impairments, $8.2 million in expenses associated with COVID-19 (including hero bonuses of $6.3 million to facility staff), $0.3 million of expenses associated with the evaluation of our change in corporate tax structure, and a $2.8 million gain on the sale of non-core real estate assets.

EBITDA was $82.1 million in the second quarter of 2021, compared with $83.7 million in the second quarter of 2020. Adjusted EBITDA, which excludes the special items described above, was $101.7 million in the second quarter of 2021, compared with $101.1 million in the second quarter of 2020. Adjusted EBITDA increased from the prior year quarter despite a $3.2 million reduction in facility EBITDA attributable to the operations in the second quarter of 2020 of the 42 properties sold in the fourth quarter of 2020 and the five additional non-core real estate assets sold in the second quarter of 2021.  

Funds From Operations (FFO) was $11.4 million, or $0.09 per diluted share, in the second quarter of 2021, compared to $57.4 million, or $0.47 per diluted share, in the second quarter of 2020. Normalized FFO, which excludes the special items described above, was $56.0 million, or $0.46 per diluted share, in the second quarter of 2021, compared with $67.8 million, or $0.56 per diluted share, in the second quarter of 2020. FFO and Normalized FFO were also impacted by our new corporate tax structure.

Adjusted financial results in the second quarter of 2021, compared with the second quarter of 2020, declined primarily because 2021 financial results reflect an income tax provision under our new corporate tax structure effective January 1, 2021, compared with the prior year when we were entitled to a deduction for dividends paid as a real estate investment trust (REIT), which significantly reduced our income tax expense.

Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share amounts, are measures calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles (GAAP). Please refer to the Supplemental Financial Information and related note following the financial statements herein for further discussion and reconciliations of these measures to net income, the most directly comparable GAAP measure.

Business Development Updates

New Contract Award with Mahoning County at the Northeast Ohio Correctional Center. On May 28, 2021, we entered into a new three-year contract with Mahoning County, Ohio to utilize up to 990 beds at our 2,016-bed Northeast Ohio Correctional Center. Mahoning County is responsible for County inmates and federal detainees, and the County is using the Northeast Ohio facility to address its population needs. The management contract with Mahoning County replaces a contract we had with U.S. Marshals Service (USMS) for up to 992 beds at the Northeast Ohio facility. In addition to providing much needed capacity for Mahoning County, the Company also cares for approximately 800 inmates under a management contract with the state of Ohio at the Northeast Ohio Correctional Center.

Contract Expansion with the State of Montana at the Crossroads Correctional Center. On July 27, 2021, we entered into an amendment to our contract with the state of Montana to utilize all of the capacity at the 664-bed Crossroads Correctional Center, including approximately 96 beds recently vacated by the USMS due to a contract expiration, and to extend the existing contract to June 30, 2023, with additional renewal options by mutual agreement through August 31, 2029.

Contract Renewal with the State of Hawaii at the Saguaro Correctional Facility. On July 1, 2021, we received a Notice of Award from the State of Hawaii for the rebid of our contract at the 1,896-bed Saguaro Correctional Facility in Eloy, Arizona. We expect to enter into a new three-year contract with Hawaii, and currently care for approximately 1,100 inmates from Hawaii, along with approximately 375 inmates from the state of Idaho, at this facility.

Contract Renewal with ICE at the Elizabeth Detention Center. ICE has notified the Company of its intent to exercise its renewal option to extend our contract at the 300-bed Elizabeth Detention Center through August 31, 2023.

Sale of Five Non-Core Properties for $328.7 Million. On June 29, 2021, the Company announced it had completed the sale of 100% of the membership interests of SSA Baltimore Holdings, LLC, a wholly-owned unrestricted subsidiary of ours and the owner of the approximately 541,000 square-foot Social Security Administration office building in Baltimore, Maryland (SSA-Baltimore). Earlier in the second quarter of 2021, we completed the sale of two additional properties, our approximately 277,000 square-foot office property in Tallahassee, Florida (Capital Commerce Center) and our approximately 217,000 square-foot warehouse property in Dayton, Ohio (NARA-Dayton) in a single transaction. These three properties were sold for an aggregate gross sales price of $326.0 million. The Company had purchased all three properties in 2018 in separate transactions for an aggregate gross purchase price of $293.6 million. Concurrent with the sale of these three properties, the Company used $194.4 million of the aggregate sales proceeds to fully repay two non-recourse mortgage notes associated with SSA-Baltimore and Capital Commerce Center, including prepayment premiums of an aggregate of $32.5 million. The total outstanding balances of the non-recourse mortgage notes, both of which had interest rates of 4.5%, were $161.9 million in the aggregate on the dates sold. The sale of these three non-core government-leased properties generated net proceeds of nearly $122.5 million after repayment of the non-recourse mortgage notes and other transaction-related costs.  

During the second quarter of 2021, we also sold two idled non-core real estate properties located in St. Louis, Missouri and Philadelphia, Pennsylvania, in separate transactions for gross proceeds of $2.7 million, generating net proceeds of $2.5 million after transaction-related costs.

Recent Developments

Balance Sheet and Debt Reduction Update

On April 14, 2021, we completed the offering of $450.0 million aggregate principal amount of 8.25% senior unsecured notes, due April 2026. We used net proceeds from the offering of the new notes of approximately $435.1 million, after deducting the original issuance and underwriting discounts, and estimated offering expenses, to redeem all $250.0 million principal amount of our outstanding 5.0% senior unsecured notes due 2022. We used additional net proceeds from the offering to repay $149.0 million of the $350.0 million principal amount of our outstanding 4.625% senior unsecured notes due 2023 (the 2023 notes) at an aggregate purchase price of $151.2 million in privately negotiated transactions, reducing the outstanding balance of the 2023 notes to $201.0 million.

On June 21, 2021, we purchased an additional $27.0 million of the 2023 notes at par in a privately negotiated transaction, further reducing the outstanding balance of the 2023 notes to $174.0 million. Following these transactions, the 2023 notes are the Company’s nearest-term unsecured note maturity.

As of June 30, 2021, we had $162.9 million in cash and only $112.0 million drawn on our $800 million revolving credit facility, which matures in April 2023. We have made substantial progress in reducing debt toward our targeted total leverage ratio, or net debt to Adjusted EBITDA, of 2.25x to 2.75x. Using the trailing twelve months ended June 30, 2021, our total leverage ratio was 3.3x, compared with 3.9x using the trailing twelve months ended June 30, 2020. Including repayments of the mortgage notes associated with the sale of non-core assets, we have reduced our net debt balance by almost $550.0 million during the last twelve months.   

Termination of Leases by the State of Alabama

In February 2021, we entered into two 30-year lease agreements with the Alabama Department of Corrections (ADOC) for the development of two correctional facilities in Alabama, which was subject to the successful completion of financing we were pursuing on behalf of the state of Alabama. Subsequent to quarter-end, we received notice from the ADOC of its decision to terminate the leases effective August 6, 2021. We continue to engage in discussions with the ADOC regarding our potential involvement in their pursuit of construction and financing of the facilities. As a result of the lease terminations, during the third quarter of 2021, we expect to report asset impairment charges of $4.0 million to $6.0 million for pre-development activities, subject to certain vendor negotiations.

Update on Contracts with the United States Marshals Service.

Pursuant to President Biden’s Executive Order on Reforming Our Incarceration System to Eliminate the Use of Privately Operated Criminal Detention Facilities (the Private Prison EO), the USMS has indicated that it has been advised by the Office of the Deputy Attorney General not to renew existing contracts, or enter into new contracts for private detention facilities. We currently have two remaining contracts with the USMS that expire in 2021.

The USMS has full access to our 600-bed West Tennessee Detention Facility and our 1,033-bed Leavenworth Detention Center under direct contracts with the USMS that expire in September 2021 and December 2021, respectively. We do not yet know if the USMS will relocate the detainees at our West Tennessee and Leavenworth facilities. We continue to work with the USMS to enable it to fulfill its mission, including at the West Tennessee and Leavenworth facilities. However, we can provide no assurance that we will be able to provide a solution that is acceptable to all parties that would be involved in such a solution.

Financial Guidance

At this time we are not providing 2021 financial guidance because of uncertainties associated with COVID-19, including a resurgence caused by the Delta variant, as well as uncertainties associated with the application of the administration’s various executive actions and policies related to immigration and criminal justice. We do not expect to provide financial guidance until we have further clarity around these uncertainties. Our business is very durable, and continues to generate cash flow even during these unprecedented disruptions to the economy and criminal justice system. This resiliency is due to the essential nature of our facilities and services in our Safety and Community segments, further enhanced by the stability of our Properties segment, all supported by payments from highly rated federal, state, and local government agencies.  

Supplemental Financial Information and Investor Presentations

We have made available on our website supplemental financial information and other data for the second quarter of 2021.   Interested parties may access this information through our website at http://ir.corecivic.com/ under “Financial Information” of the Investors section.   We do not undertake any obligation, and disclaim any duties to update any of the information disclosed in this report.  

Management may meet with investors from time to time during the third quarter of 2021.   Written materials used in the investor presentations will also be available on our website beginning on or about August 30, 2021.   Interested parties may access this information through our website at http://ir.corecivic.com/ under “Events & Presentations” of the Investors section.

Conference Call, Webcast and Replay Information

We will host a webcast conference call at 10:00 a.m. central time (11:00 a.m. eastern time) on Tuesday, August 10, 2021, which will be accessible through the Company’s website at www.corecivic.com under the “Events & Presentations” section of the “Investors” page. The live broadcast can also be accessed by dialing 800-353-6461 in the U.S. and Canada, including the confirmation passcode 7244786. An online replay of the call will be archived on our website promptly following the conference call. In addition, there will be a telephonic replay available beginning at 1:00 p.m. central time (2:00 p.m. eastern time) on August 10, 2021, through 1:00 p.m. central time (2:00 p.m. eastern time) on August 18, 2021. To access the telephonic replay, dial 888-203-1112 in the U.S. and Canada. International callers may dial +1 719-457-0820 and enter passcode 7244786.

About CoreCivic

CoreCivic is a diversified government-solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. CoreCivic provides a broad range of solutions to government partners that serve the public good through corrections and detention management, a network of residential reentry centers to help address America’s recidivism crisis, and government real estate solutions. CoreCivic is the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and believes it is the largest private owner of real estate used by government agencies in the U.S. CoreCivic has been a flexible and dependable partner for government for more than 35 years. CoreCivic’s employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good.

Forward-Looking Statements

This press release contains statements as to our beliefs and expectations of the outcome of future events that are “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These include, but are not limited to, the risks and uncertainties associated with: (i) changes in government policy (including the United States Department of Justice, or DOJ, not renewing contracts as a result of the Private Prison EO) (two agencies of the DOJ, the United States Federal Bureau of Prisons and the USMS utilize our services), legislation and regulations that affect utilization of the private sector for corrections, detention, and residential reentry services, in general, or our business, in particular, including, but not limited to, the continued utilization of our correctional and detention facilities by the federal government, and the impact of any changes to immigration reform and sentencing laws (our company does not, under longstanding policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an individual’s incarceration or detention); (ii) our ability to obtain and maintain correctional, detention, and residential reentry facility management contracts because of reasons including, but not limited to, sufficient governmental appropriations, contract compliance, negative publicity and effects of inmate disturbances; (iii) changes in the privatization of the corrections and detention industry, the acceptance of our services, the timing of the opening of new facilities and the commencement of new management contracts (including the extent and pace at which new contracts are utilized), as well as our ability to utilize available beds; (iv) general economic and market conditions, including, but not limited to, the impact governmental budgets can have on our contract renewals and renegotiations, per diem rates, and occupancy; (v) fluctuations in our operating results because of, among other things, changes in occupancy levels, competition, contract renegotiations or terminations, increases in costs of operations, fluctuations in interest rates and risks of operations; (vi) the duration of the federal government’s denial of entry at the United States southern border to asylum-seekers and anyone crossing the southern border without proper documentation or authority in an effort to contain the spread of COVID-19; (vii) government and staff responses to staff or residents testing positive for COVID-19 within public and private correctional, detention and reentry facilities, including the facilities we operate; (viii)  restrictions associated with COVID-19 that disrupt the criminal justice system, along with government policies on prosecutions and newly ordered legal restrictions that affect the number of people placed in correctional, detention, and reentry facilities; (ix) whether revoking our REIT election, effective January 1, 2021, and our revised capital allocation strategy can be implemented in a cost effective manner that provides the expected benefits, including facilitating our planned debt reduction initiative and planned return of capital to shareholders; (x) our ability to successfully identify and consummate future development and acquisition opportunities and our ability to successfully integrate the operations of our completed acquisitions and realize projected returns resulting therefrom; (xi) our ability to have met and maintained qualification for taxation as a REIT for the years we elected REIT status; and (xii) the availability of debt and equity financing on terms that are favorable to us, or at all. Other factors that could cause operating and financial results to differ are described in the filings we make from time to time with the Securities and Exchange Commission.

CoreCivic takes no responsibility for updating the information contained in this press release following the date hereof to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events or for any changes or modifications made to this press release or the information contained herein by any third-parties, including, but not limited to, any wire or internet services.



CORECIVIC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

ASSETS   June 30,
2021		   December 31,
2020
         
Cash and cash equivalents   $ 162,891     $ 113,219  
Restricted cash     8,864       23,549  
Accounts receivable, net of credit loss reserve of $6,777 and $6,103, respectively     282,227       267,705  
Prepaid expenses and other current assets     37,267       33,243  
Assets held for sale     –       279,406  
Total current assets     491,249       717,122  
Real estate and related assets:        
Property and equipment, net of accumulated depreciation of $1,602,276 and $1,559,388, respectively     2,318,161       2,350,272  
Other real estate assets     223,293       228,243  
Goodwill     4,844       5,902  
Non-current deferred tax assets     –       11,113  
Other assets     386,649       396,663  
         
Total assets   $ 3,424,196     $ 3,709,315  
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Accounts payable and accrued expenses   $ 284,604     $ 274,318  
Current portion of long-term debt     31,999       39,087  
Total current liabilities     316,603       313,405  
         
Long-term debt, net     1,480,293       1,747,664  
Deferred revenue     27,336       18,336  
Non-current deferred tax liabilities     86,323       –  
Other liabilities     203,411       216,468  
         
Total liabilities     2,113,966       2,295,873  
         
Commitments and contingencies        
         
Preferred stock ? $0.01 par value; 50,000 shares authorized; none issued and outstanding at June 30, 2021, and December 31, 2020, respectively     –       –  
Common stock ? $0.01 par value; 300,000 shares authorized; 120,285 and 119,638 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively     1,203       1,196  
Additional paid-in capital     1,842,395       1,835,494  
Accumulated deficit     (556,639 )     (446,519 )
Total stockholders’ equity     1,286,959       1,390,171  
Non-controlling interest – operating partnership     23,271       23,271  
Total equity     1,310,230       1,413,442  
         
Total liabilities and equity   $ 3,424,196     $ 3,709,315  
                 

CORECIVIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

    For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,
      2021       2020       2021       2020  
                 
REVENUES:                
Safety   $ 419,880     $ 424,117     $ 829,649     $ 861,882  
Community     24,929       26,004       48,587       56,603  
Properties     19,732       22,483       40,987       45,162  
Other     30       37       66       95  
      464,571       472,641       919,289       963,742  
                 
EXPENSES:                
Operating                
Safety     307,280       323,739       612,707       654,476  
Community     20,024       22,201       41,124       46,650  
Properties     5,668       6,906       11,942       13,860  
Other     98       81       181       256  
Total operating expenses     333,070       352,927       665,954       715,242  
General and administrative     33,228       30,145       62,758       61,424  
Depreciation and amortization     34,084       38,619       66,796       76,571  
Shareholder litigation expense     2,550       –       54,295       –  
Asset impairments     2,866       11,717       4,174       12,253  
      405,798       433,408       853,977       865,490  
                 
OTHER INCOME (EXPENSE):                
Interest expense, net     (23,222 )     (20,996 )     (41,650 )     (43,534 )
Expenses associated with debt repayments and refinancing transactions     (52,167 )     –       (52,167 )     –  
Gain on sale of real estate assets, net     38,766       2,818       38,766       2,818  
Other income (expense)     (8 )     169       (156 )     702  
                 
INCOME (LOSS) BEFORE INCOME TAXES     22,142       21,224       10,105       58,238  
                 
Income tax benefit (expense)     (6,519 )     962       (120,050 )     (2,814 )


NET INCOME (LOSS)		     15,623       22,186       (109,945 )    

55,424		  
                 
Net income attributable to non-controlling interest     –       –       –       (1,181 )
                 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS   $ 15,623     $ 22,186     $ (109,945 )   $ 54,243  
                 
                 
BASIC EARNINGS (LOSS) PER SHARE   $ 0.13     $ 0.19     $ (0.92 )   $ 0.45  
                 
DILUTED EARNINGS (LOSS) PER SHARE   $ 0.13     $ 0.18     $ (0.92 )   $ 0.45  
                                 

CORECIVIC, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS

  For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,
    2021       2020       2021       2020  
               
Net income (loss) attributable to common stockholders $ 15,623     $ 22,186     $ (109,945 )   $ 54,243  
Non-controlling interest   –       –       –       1,181  
Diluted net income (loss) attributable to common stockholders $ 15,623     $ 22,186     $ (109,945 )   $ 55,424  
               
Special items:              
Expenses associated with debt repayments and refinancing transactions   52,167       –       52,167       –  
Expenses associated with mergers and acquisitions   –       –       –       338  
Expenses associated with COVID-19   836       8,165       2,434       8,165  
Expenses associated with changes in corporate tax structure   –       347       –       347  
Income taxes associated with change in corporate tax structure and other special tax items   –       –       114,249       3,085  
Gain on sale of real estate assets, net   (38,766 )     (2,818 )     (38,766 )     (2,818 )
Shareholder litigation expense   2,550       –       54,295       –  
Asset impairments   2,866       11,717       4,174       12,253  
Income tax expense (benefit) for special items   (4,185 )     –       (18,245 )     –  
Adjusted net income $ 31,091     $ 39,597     $ 60,363     $ 76,794  
Weighted average common shares outstanding – basic   120,283       119,630       120,098       119,483  
Effect of dilutive securities:              
Restricted stock-based awards   434       2       275       25  
Non-controlling interest – operating partnership units   1,342       1,342       1,342       1,342  
Weighted average shares and assumed conversions – diluted   122,059       120,974       121,715       120,850  
Adjusted Earnings Per Diluted Share $ 0.25     $ 0.33     $ 0.50     $ 0.63  
                               

CORECIVIC, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CALCULATION OF FUNDS FROM OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS

  For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,
    2021       2020       2021       2020  
               
Net income (loss) $ 15,623     $ 22,186     $ (109,945 )   $ 55,424  
Depreciation and amortization of real estate assets   24,926       28,244       48,685       56,350  
Impairment of real estate assets   –       9,750       1,308       10,155  
Gain on sale of real estate assets, net   (38,766 )     (2,818 )     (38,766 )     (2,818 )
Income tax expense (benefit) for special items   9,641       –       9,291       –  
Funds From Operations $ 11,424     $ 57,362     $ (89,427 )   $ 119,111  
               
Expenses associated with debt repayments and refinancing transactions   52,167       –       52,167       –  
Expenses associated with mergers and acquisitions   –       –       –       338  
Expenses associated with COVID-19   836       8,165       2,434       8,165  
Expenses associated with changes in corporate tax structure   –       347       –       347  
Income taxes associated with change in corporate tax structure and other special tax items   –       –       114,249       3,085  
Shareholder litigation expense   2,550       –       54,295       –  
Goodwill and other impairments   2,866       1,967       2,866       2,098  
Income tax benefit for special items   (13,826 )     –       (27,536 )     –  
Normalized Funds From Operations $ 56,017     $ 67,841     $ 109,048     $ 133,144  
               
Funds From Operations Per Diluted Share $ 0.09     $ 0.47     $ (0.73 )   $ 0.99  
Normalized Funds From Operations Per Diluted Share $ 0.46     $ 0.56     $ 0.90     $ 1.10  
                               

CORECIVIC, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

CALCULATION OF EBITDA AND ADJUSTED EBITDA

  For the Three Months Ended
June 30,		   For the Six Months Ended
June 30,
    2021       2020       2021       2020  
               
Net income (loss) $ 15,623     $ 22,186     $ (109,945 )   $ 55,424  
Interest expense   25,843       23,873       46,768       48,428  
Depreciation and amortization   34,084       38,619       66,796       76,571  
Income tax expense (benefit)   6,519       (962 )     120,050       2,814  
EBITDA $ 82,069     $ 83,716     $ 123,669     $ 183,237  
Expenses associated with debt repayments and refinancing transactions   52,167       –       52,167       –  
Expenses associated with mergers and acquisitions   –       –       –       338  
Expenses associated with COVID-19   836       8,165       2,434       8,165  
Expenses associated with changes in corporate tax structure   –       347       –       347  
Gain on sale of real estate assets, net   (38,766 )     (2,818 )     (38,766 )     (2,818 )
Shareholder litigation expense   2,550       –       54,295       –  
Asset impairments   2,866       11,717       4,174       12,253  
Adjusted EBITDA $ 101,722     $ 101,127     $ 197,973     $ 201,522  
                               

NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION

Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share metrics are non-GAAP financial measures. The Company believes that these measures are important operating measures that supplement discussion and analysis of the Company’s results of operations and are used to review and assess operating performance of the Company and its properties and their management teams. The Company believes that it is useful to provide investors, lenders and security analysts disclosures of its results of operations on the same basis that is used by management.   FFO, in particular, is a widely accepted non-GAAP supplemental measure of performance of real estate companies, grounded in the standards for FFO established by the National Association of Real Estate Investment Trusts (NAREIT).

NAREIT defines FFO as net income computed in accordance with GAAP, excluding gains (or losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures calculated to reflect funds from operations on the same basis.   EBITDA, Adjusted EBITDA, and Normalized FFO are useful as supplemental measures of performance of the Company’s properties because such measures do not take into account depreciation and amortization, or with respect to EBITDA, the impact of the Company’s tax provisions and financing strategies. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), this accounting presentation assumes that the value of real estate assets diminishes at a level rate over time.   Because of the unique structure, design and use of the Company’s properties, management believes that assessing performance of the Company’s properties without the impact of depreciation or amortization is useful. The Company may make adjustments to FFO from time to time for certain other income and expenses that it considers non-recurring, infrequent or unusual, even though such items may require cash settlement, because such items do not reflect a necessary or ordinary component of the ongoing operations of the Company.   Normalized FFO excludes the effects of such items. The Company calculates Adjusted Net Income by adding to GAAP Net Income expenses associated with the Company’s debt repayments and refinancing transactions, M&A activity, and certain impairments and other charges that the Company believes are unusual or non-recurring to provide an alternative measure of comparing operating performance for the periods presented. Even though expenses associated with mergers and acquisitions may be recurring, the magnitude and timing fluctuate based on the timing and scope of M&A activity, and therefore, such expenses, which are not a necessary component of the ongoing operations of the Company, may not be comparable from period to period.

Other companies may calculate Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO differently than the Company does, or adjust for other items, and therefore comparability may be limited.   Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO and, where appropriate, their corresponding per share measures are not measures of performance under GAAP, and should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an alternative to net income as indicators of the Company’s operating performance or any other measure of performance derived in accordance with GAAP.   This data should be read in conjunction with the Company’s consolidated financial statements and related notes included in its filings with the Securities and Exchange Commission.

Contact: Investors: Cameron Hopewell – Managing Director, Investor Relations – (615) 263-3024
Financial Media: David Gutierrez, Dresner Corporate Services – (312) 780-7204

The GEO Group, Inc. (GEO) – A 10-Q Review

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Monday, August 09, 2021

The GEO Group, Inc. (GEO)
A 10-Q Review

With over 94,000 beds owned, leased or managed across its business lines and serving over 260,000 people daily, GEO is a leading provider of mission critical real estate to its governmental partners. The Company is the first fully integrated equity REIT specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the U.S., Australia, South Africa, and the U.K.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    10-Q Overview. We were able to perform a deep dive into The GEO Group’s 10-Q over the weekend. And while nothing in the 10-Q changes our assessment of GEO and its business prospects, the 10-Q does provide some enhanced details we want to share.

    ICE — 1.  While the following are from news reports and we have not confirmed, it is being reported July border encounters topped 210,000, up from 188,000 in June. If accurate, this would be the highest monthly total in over 20 years. Significantly, summer months tend to see a drop off in encounters as weather conditions worsen. Since this is not the case suggests numbers for August and September …



This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

DLH Holdings Corp. (DLHC) – In-line Fiscal Third Quarter

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Thursday, August 05, 2021

DLH Holdings Corp. (DLHC)
In-line Fiscal Third Quarter

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offers services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of Defense and other government agencies. It operates primarily through prime contracts and also derives its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    3QFY21 Results. Revenue totaled $61.6 million, up from $51.4 million in 3Q20. Irving Burton contributed $7.3 million to revenue, while organic revenue grew as work increased across other DLH programs. Earnings were $2.9 million, or $0.21 per diluted share, compared to $2.1 million, or $0.16 per diluted share last year. We had projected revenue of $62 million and EPS of $0.20.

    Backlog.  Quarter-end backlog was $566.2 million, down from $688.4 million as of September 30, 2020. Funded backlog was $76.4 million. Given the expansion of its capabilities, we expect DLH to be aggressive on bidding for a wider range of opportunities than historically. We view this positively …



This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

The GEO Group Inc. (GEO) – A Second Quarter Beat

Posted on by Admin

Thursday, August 05, 2021

The GEO Group, Inc. (GEO)
A Second Quarter Beat

With over 94,000 beds owned, leased or managed across its business lines and serving over 260,000 people daily, GEO is a leading provider of mission critical real estate to its governmental partners. The Company is the first fully integrated equity REIT specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the U.S., Australia, South Africa, and the U.K.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    2Q21 Results. The GEO Group reported better-than-expected second quarter 2021 results. Total revenue for the quarter was $565.4 million compared to guidance of $558-$563 million and consensus of $561 million. We were at $563 million. GEO reported net income of $42 million, or $0.29 per diluted share, compared to guidance of $35-$38 million. Consensus was $0.28 and we were at $0.30. Adjusted earnings was $50.8 million or $0.42 per share.

    Favorable Cost Trends.  As with the first quarter, the earnings beat was driven by favorable cost trends, especially in the Secure Services business. Operating expenses as a percentage of revenue dropped to 71.6% from 74.3% in the first quarter. G&A as a percent of revenue rose to 9.7% sequentially from 8.41% due to $7.5 million of one-time restructuring charges. AFFO in the second quarter was $0.70 …



This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

The GEO Group, Inc. (GEO) A Second Quarter Beat

Posted on by Admin

Thursday, August 05, 2021

The GEO Group, Inc. (GEO)
A Second Quarter Beat

With over 94,000 beds owned, leased or managed across its business lines and serving over 260,000 people daily, GEO is a leading provider of mission critical real estate to its governmental partners. The Company is the first fully integrated equity REIT specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the U.S., Australia, South Africa, and the U.K.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    2Q21 Results. The GEO Group reported better-than-expected second quarter 2021 results. Total revenue for the quarter was $565.4 million compared to guidance of $558-$563 million and consensus of $561 million. We were at $563 million. GEO reported net income of $42 million, or $0.29 per diluted share, compared to guidance of $35-$38 million. Consensus was $0.28 and we were at $0.30. Adjusted earnings was $50.8 million or $0.42 per share.

    Favorable Cost Trends.  As with the first quarter, the earnings beat was driven by favorable cost trends, especially in the Secure Services business. Operating expenses as a percentage of revenue dropped to 71.6% from 74.3% in the first quarter. G&A as a percent of revenue rose to 9.7% sequentially from 8.41% due to $7.5 million of one-time restructuring charges. AFFO in the second quarter was $0.70 …



This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Virtual Roadshow with DLH Corp. (DLHC) CEO Zachary Parker and CFO Kathryn JohnBull

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DLH CEO Zachary Parker and CFO Kathryn JohnBull make a formal corporate presentation. Afterwards, they are joined by Noble Capital Markets Senior Research Analyst Joe Gomes for a Q & A session.

Research, News, and Advanced Market Data on DLHC


Information on upcoming live virtual roadshows

About DLH

DLH (NASDAQ: DLHC) serves clients throughout the United States as a healthcare and human services provider to the Federal Government. The company’s core competencies include assessment and compliance monitoring, business process outsourcing, health information technology systems integration and management, readiness and medical logistics, and pharmacy solutions.

Heres How the 100 Most Recognizable Companies Compare in Terms of Brand Reputation

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	I


Here’s How the 100 Most Recognizable Companies Compare in Terms of Brand Reputation

 

How was Brand Reputation Measured?

Nearly 43,000 Americans were polled nationally to find out which 100 companies emerge as top of mind—both positive and negative.

The polling was conducted by Axios Harris and asked
which two companies the respondent felt excelled or faltered in the U.S.—in other words, which companies were the most “visible” in their eyes.

The top 100 brands that emerged from this framework were then judged by poll respondents across seven dimensions, over three key pillars:

  • Character
    Includes a company’s culture, ethics, and citizenship (whether a consumer shares a company’s values or the company supports good causes)
  • Trajectory
    Includes a company’s growth prospects, vision for the future, and product and service offerings (whether they are innovative, and of high quality)
  • Trust
    Does a consumer trust the brand in the first place?

Once these dimensions are taken into account, the final scores portray how these “visible brands” rank in terms of their reputation among a representative sample of Americans:

  • Score range: 80.0 and above

    Reputation: Excellent
  • Score range: 75.0-79.9
    Reputation: Very Good
  • Score range: 70.0-74.9
    Reputation: Good
  • Score range: 65.0-69.9
    Reputation: Fair
  • Score range: 64.9 and below

    Reputation: Poor

Companies with a Very Poor reputation (a score below 50) didn’t make it on the list. Here’s how the 100 most visible companies stack up in terms of brand reputation:

 

 

Source:

The Visual Capitalist

Here’s How the 100 Most Recognizable Companies Compare in Terms of Brand Reputation

Posted on by Admin 


	I


Here’s How the 100 Most Recognizable Companies Compare in Terms of Brand Reputation

 

How was Brand Reputation Measured?

Nearly 43,000 Americans were polled nationally to find out which 100 companies emerge as top of mind—both positive and negative.

The polling was conducted by Axios Harris and asked
which two companies the respondent felt excelled or faltered in the U.S.—in other words, which companies were the most “visible” in their eyes.

The top 100 brands that emerged from this framework were then judged by poll respondents across seven dimensions, over three key pillars:

  • Character
    Includes a company’s culture, ethics, and citizenship (whether a consumer shares a company’s values or the company supports good causes)
  • Trajectory
    Includes a company’s growth prospects, vision for the future, and product and service offerings (whether they are innovative, and of high quality)
  • Trust
    Does a consumer trust the brand in the first place?

Once these dimensions are taken into account, the final scores portray how these “visible brands” rank in terms of their reputation among a representative sample of Americans:

  • Score range: 80.0 and above

    Reputation: Excellent
  • Score range: 75.0-79.9
    Reputation: Very Good
  • Score range: 70.0-74.9
    Reputation: Good
  • Score range: 65.0-69.9
    Reputation: Fair
  • Score range: 64.9 and below

    Reputation: Poor

Companies with a Very Poor reputation (a score below 50) didn’t make it on the list. Here’s how the 100 most visible companies stack up in terms of brand reputation:

 

 

Source:

The Visual Capitalist