By MATT BLOIS
The private prison operator CoreCivic, which will move its headquarters to Brentwood later this year, reported strong financial results during the first quarter of 2019.
Net income was up more than 30% compared to the first quarter of 2018, and the company is increasing its earnings forecast for the year.
Later this year, the company is planning to move its headquarters from Green Hills to Virginia Way in Brentwood. According to a new release, CoreCivic expects to spend about $5.8 million on the move.
The company increased its 2019 guidance for diluted earnings per share from $1.43-$1.51 to $1.54-$1.60.
That financial success is due in part to an increasing number of people jailed by Immigration and Customs Enforcement and the U.S. Marshalls Service.
CoreCivic reported nearly $30 million in additional revenue from ICE and the Marshalls Service. The company entered into two new contracts with the agencies in 2018 that boosted revenue by about $20.5 million compared to the previous year.
Both agencies also had higher occupancy rates at their detention centers during the first three months of 2019, contributing another $9.4 million in additional revenue.
ICE is the company’s largest client. According to CEO Damon Hininger, the agency’s need for detention facilities has increased consistently since the beginning of 2018.
“We anticipate the utilization of our ICE facilities to remain consistent with that of the first quarter throughout the balance of 2019,” Hininger said during a conference call on May 9. “It is traditionally more difficult to forecast future utilization levels for ICE because its needs can change rapidly. ICE could see emerging needs as the year unfolds.”
In addition to the new federal contracts, CoreCivic also entered into contracts with Kentucky, Ohio, South Carolina, Vermont and Wyoming 2018. Those contracts contributed $7.6 in additional revenue.
Hininger said the new contracts offset a decrease in revenue from California. The inmate population in California has been decreasing and the state is moving prisoners out of CoreCivic facilities.
Earlier this month, CoreCivic announced that the federal Bureau of Prisons didn’t renew a contract worth more than $60 million a year in Mississippi. Executives said CoreCivic wouldn’t make enough money on the new contract.
Hininger estimated that in 2010 about 30% of the company’s revenue came from the federal Bureau of Prisons and California. Going forward, those clients will represent just a small fraction of overall revenue.
As revenue from those clients wind down, the company is looking to diversify. Although, the company makes most of its money by operating prisons, it also has a real estate business and a business that provides services for people transitioning out of prison.
Those parts of the business represented about 10% of total revenues, but they grew faster than the prison business. The growth in those businesses was mostly due to the acquisition last year of an electronic monitoring company and several properties.