Thursday, June 15, 2023
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 high-quality corrections and detention management, a network of residential and non-residential alternatives to incarceration to help address America’s recidivism crisis, and government real estate solutions. We are the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and believe we are the largest private owner of real estate used by government agencies in the United States. We have been a flexible and dependable partner for government for nearly 40 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. Learn more at www.corecivic.com.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
A Renewal. CoreCivic entered into a lease agreement with the Oklahoma Department of Corrections (ODOC) for the company-owned, 1,670-bed Davis Correctional Facility (DCF), which the Company currently operates under a management contract with ODOC that is currently scheduled to expire on June 30, 2023. The new lease agreement includes a base term commencing October 1, 2023, with a scheduled expiration date of June 30, 2029, and unlimited two-year renewal options.
But. While CoreCivic retained a client, it went from a management contract to a lease. Previously, under the May 2021 management contract terms, we estimate the facility was generating north of $30 million in annual revenue (assuming full occupancy), while the under the lease agreement this declines to $7.5 million. However, gross margins on Properties segment agreements run in the high 70% range, compared to gross margins in the low 20% range for Safety segment managed locations.
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