Breaking Down CoreCivic, Inc. (CXW) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and looking for a comprehensive analysis of a company's financial standing? What if you could gain key insights into CoreCivic, Inc. (CXW), a prominent player in the correctional and detention management industry? In 2024, the company reported a total revenue of $2.0 billion and a net income of $68.9 million. But how does this translate to the company's overall financial health, considering its total assets of $2.93 billion and a total debt of $1.01 billion as of December 31, 2024? Dive in to uncover critical details about CoreCivic's financial performance and strategic positioning, empowering you to make well-informed investment decisions.

CoreCivic, Inc. (CXW) Revenue Analysis

CoreCivic, Inc. (CXW) primarily generates revenue through providing correctional, detention, and residential reentry services to government agencies. These services are delivered through a variety of contract types, including management contracts, where CoreCivic operates facilities owned by governmental entities, and direct contracts, where CoreCivic owns and operates the facilities.

Analyzing CoreCivic's revenue involves understanding the performance of its different business segments. These segments include:

• Safety: This segment encompasses correctional and detention facilities.
• Community: Focused on residential reentry centers.
• CoreCivic Properties: Includes the leasing of properties to government agencies and other entities.

To provide a clear picture of CoreCivic's revenue streams, it's essential to consider a breakdown that includes year-over-year growth rates and the contribution of each segment to the overall revenue. The most recent data available is for the fiscal year 2024. Keep in mind that financial data can vary depending on the source and reporting period.

Here's an example of how revenue streams might be broken down based on available information:

The 'Safety' segment, involving correctional and detention facilities, typically makes up the largest portion of CoreCivic's revenue. Contracts with government agencies at the federal, state, and local levels drive this revenue. Any changes in government policies, contract renewals, or occupancy rates can significantly impact this segment.

Year-over-year revenue growth rates are crucial for investors to gauge the company's financial trajectory. Economic factors, legislative changes, and shifts in government outsourcing policies can influence these rates. It is also important to consider any significant changes in revenue streams, such as the acquisition or disposition of facilities or business segments, as these can lead to notable fluctuations in revenue.

Explore further insights on CoreCivic, Inc.'s financial health: Breaking Down CoreCivic, Inc. (CXW) Financial Health: Key Insights for Investors

CoreCivic, Inc. (CXW) Profitability Metrics

Analyzing CoreCivic, Inc. (CXW)'s profitability involves examining several key metrics that provide insights into the company's financial health and operational efficiency. These metrics include gross profit, operating profit, and net profit margins. By assessing these figures and their trends over time, along with comparisons to industry averages, a comprehensive understanding of CoreCivic's profitability can be achieved.

Here's a breakdown of CoreCivic's profitability, incorporating available data and analyses:

• Gross Profit: Gross profit is calculated by subtracting the cost of goods sold (COGS) from revenue. It indicates how efficiently a company uses its resources to produce its products or services.
• Operating Profit: Operating profit, also known as earnings before interest and taxes (EBIT), is calculated by subtracting operating expenses from gross profit. It reflects the profitability of a company's core operations before considering the effects of financing and taxes.
• Net Profit: Net profit is the profit remaining after all expenses, including interest, taxes, and other deductions, have been subtracted from revenue. It represents the bottom-line profitability of a company.

CoreCivic's financial performance can be further illuminated by examining specific profitability ratios:

• Gross Margin: Gross Margin is a profitability ratio that compares the gross margin to revenue. It shows how much profit a company makes after paying off its cost of goods sold. In 2023 CoreCivic's gross profit margin was 30.81%
• Operating Margin: Operating Margin is a profitability ratio that compares the operating income to revenue. CoreCivic's operating margin for 2023 was 14.79%.
• Net Profit Margin: Net profit margin is a profitability ratio that compares the net profit to revenue. CoreCivic's net profit margin for 2023 was 7.35%.

Here is a table presenting key profitability data for CoreCivic, Inc. (CXW) based on the 2023 fiscal year:

Evaluating the trends in profitability over time provides valuable insights into CoreCivic's ability to sustain and improve its financial performance. Analyzing historical data helps identify patterns, assess the impact of strategic decisions, and understand how external factors influence profitability. For example, examining the gross margin trend can reveal the effectiveness of cost management strategies and pricing policies.

A comparison of CoreCivic's profitability ratios with industry averages is essential for benchmarking its performance and identifying areas for improvement. This involves comparing metrics such as gross profit margin, operating profit margin, and net profit margin against the averages of similar companies in the same industry. If CoreCivic's profitability ratios are consistently lower than industry averages, it may indicate operational inefficiencies, higher costs, or pricing challenges.

Operational efficiency plays a crucial role in driving profitability. Effective cost management practices, such as optimizing supply chain operations, controlling labor costs, and reducing overhead expenses, can significantly improve profit margins. Monitoring gross margin trends helps assess the effectiveness of these cost management efforts. A rising gross margin indicates that the company is becoming more efficient in managing its production costs, while a declining gross margin may signal the need for cost-cutting measures.

For more insights into the investors of CoreCivic, Inc. (CXW), check out: Exploring CoreCivic, Inc. (CXW) Investor Profile: Who’s Buying and Why?

CoreCivic, Inc. (CXW) Debt vs. Equity Structure

Understanding how CoreCivic, Inc. (CXW) finances its operations and growth is crucial for investors. This involves examining the company's debt levels, its debt-to-equity ratio, and any recent financing activities.

Here's a breakdown of CoreCivic's debt and equity structure:

Overview of Debt Levels

As of December 31, 2024, CoreCivic's financial obligations include:

• Current portion of long-term debt: $12.07 million
• Long-term debt, net: $973.07 million

In total, CoreCivic's long-term debt was $973.07 million at the end of 2024, compared to $1.08 billion at the end of 2023.

Debt-to-Equity Ratio

The debt-to-equity ratio is a key metric for assessing a company's financial leverage. For CoreCivic, the debt-to-equity ratio as of December 31, 2024, was approximately 0.6597.

Historically, CoreCivic's debt-to-equity ratio has varied. Over the past 13 years, the highest ratio was 1.49, the lowest was 0.68, and the median was 1.02. As of December 2024, CoreCivic's debt-to-equity ratio is worse than 64.51% of companies in the Business Services industry, where the industry median is 0.37.

Recent Debt Issuances, Credit Ratings, or Refinancing Activity

CoreCivic has been actively managing its debt through various transactions. Recent activities include:

• In March 2024, CoreCivic announced a cash tender offer for any and all of its outstanding 8.25% senior notes due 2026, totaling $593.1 million.
• To finance this, CoreCivic proposed issuing senior unsecured notes. S&P Global Ratings assigned a 'BB-' issue-level rating and a '3' recovery rating, indicating an expected recovery of 50%-70% in the event of a payment default.
• S&P Global Ratings affirmed CoreCivic's 'BB-' Foreign Currency LT credit rating with a positive outlook in January 2024.

CoreCivic's debt capitalization includes:

• A $275 million revolving credit facility due October 2028 ($102.8 million outstanding pro forma for the transaction).
• A $125 million term loan due October 2028.
• $250 million of senior unsecured notes due October 2027 ($243.1 million outstanding).
• A proposed $450 million senior unsecured notes due 2029.
• About $145.5 million of structurally senior nonrecourse debt.

Balance Between Debt Financing and Equity Funding

CoreCivic strategically balances debt and equity to fund its operations and growth. As of September 30, 2024, CoreCivic had repurchased a total of 14.1 million shares at an aggregate price of $172.1 million, or $12.20 per share, since the share repurchase program was authorized in May 2022. As of that date, $177.9 million remained under the share repurchase program.

In 2024, CoreCivic repurchased 4.4 million shares of common stock for $68.5 million. As of December 31, 2024, $168.9 million was still available under the share repurchase program. These repurchases reflect a strategy of returning value to shareholders while managing the company's capital structure.

The following table summarizes CoreCivic's material cash requirements related to borrowings, contracts, and leases as of December 31, 2024 (in thousands):

For more insights into CoreCivic's financial health, you can explore: Breaking Down CoreCivic, Inc. (CXW) Financial Health: Key Insights for Investors

CoreCivic, Inc. (CXW) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For CoreCivic, Inc. (CXW), a detailed assessment of these metrics provides valuable insights for investors.

Assessing CoreCivic, Inc.'s Liquidity:

Analyzing CoreCivic's liquidity involves examining key ratios and cash flow trends to gauge its ability to cover its immediate liabilities. Here’s a breakdown:

• Current and Quick Ratios: These ratios measure a company's ability to pay off short-term liabilities with its current assets. The current ratio is calculated by dividing current assets by current liabilities, while the quick ratio excludes inventories from current assets to provide a more conservative measure.
• Analysis of Working Capital Trends: Working capital, the difference between current assets and current liabilities, indicates a company's operational liquidity. Monitoring trends in working capital helps to identify potential liquidity issues.
• Cash Flow Statements Overview: A review of CoreCivic's cash flow statements, specifically focusing on operating, investing, and financing activities, offers insights into how the company generates and uses cash.

Liquidity Positions: Current and Quick Ratios

As of the fiscal year 2024, CoreCivic's liquidity positions can be understood through these ratios:

• Current Ratio: As of December 31, 2024, CoreCivic reported a current ratio of 1.51. This indicates that the company has $1.51 in current assets for every $1.00 of current liabilities.
• Quick Ratio: The quick ratio for the same period was 1.46. This slightly lower value, compared to the current ratio, suggests that CoreCivic maintains a strong, liquid position even when excluding inventories.

Working Capital Trends

An analysis of CoreCivic’s working capital trends reveals:

• Working Capital: As of December 31, 2024, CoreCivic's working capital stood at $192.8 million.

Cash Flow Statements Overview

CoreCivic's cash flow activities for the year ending December 31, 2024, are detailed as follows:

• Net Cash provided by Operating Activities: $329.3 million. This indicates the cash generated from CoreCivic's core business operations.
• Net Cash used in Investing Activities: $75.4 million. This reflects investments made by CoreCivic, such as capital expenditures.
• Net Cash used in Financing Activities: $233.4 million. This includes activities related to debt and equity, such as repayments and dividends.
• Net Decrease in Cash, Cash Equivalents, and Restricted Cash: $20.5 million. This represents the net change in CoreCivic's cash position over the year.

Potential Liquidity Concerns or Strengths

Based on the 2024 financial data:

• Strengths: CoreCivic exhibits robust liquidity, supported by a current ratio of 1.51 and a quick ratio of 1.46. The company's ability to generate substantial cash from operating activities, amounting to $329.3 million, further underscores its financial stability.
• Considerations: While CoreCivic demonstrates strong liquidity, it is important to monitor the trends in investing and financing activities. The net decrease in cash, cash equivalents, and restricted cash of $20.5 million indicates a need for continued vigilance in cash management.

For more insights into CoreCivic, Inc. (CXW) and its investors, explore: Exploring CoreCivic, Inc. (CXW) Investor Profile: Who’s Buying and Why?

CoreCivic, Inc. (CXW) Valuation Analysis

Determining whether CoreCivic, Inc. (CXW) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. Let's delve into these aspects to provide a clearer picture for investors. For additional insights, you might find this resource helpful: Breaking Down CoreCivic, Inc. (CXW) Financial Health: Key Insights for Investors.

Price-to-Earnings (P/E) Ratio: The P/E ratio is a fundamental metric used to assess whether a stock's price is high relative to its earnings. As of the latest data, CoreCivic's P/E ratio stands at 13.88. This indicates how much investors are willing to pay for each dollar of CoreCivic's earnings. A lower P/E ratio might suggest undervaluation, while a higher P/E ratio could indicate overvaluation, relative to industry peers or historical averages.

Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. CoreCivic's most recent P/B ratio is 1.02. This ratio can help investors determine if they are paying a reasonable price for the company's net assets. A P/B ratio close to 1 may imply fair valuation.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is used to assess a company's total value relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA). This ratio provides a more comprehensive valuation measure because it takes into account a company's debt and cash. CoreCivic's current EV/EBITDA ratio is 9.97. A lower EV/EBITDA ratio can suggest that a company is undervalued compared to its peers.

Stock Price Trends: Analyzing the stock price trends over the past year provides insights into market sentiment and company performance. Over the last 12 months, CoreCivic (CXW) has shown a price increase of 33.78%. This increase indicates growing investor confidence, potentially driven by improved financial performance or positive market conditions.

Dividend Yield and Payout Ratios: For income-focused investors, dividend yield and payout ratios are crucial. CoreCivic's current dividend yield is approximately 4.70%. The dividend payout ratio, which indicates the percentage of earnings paid out as dividends, is 64.95%. These figures suggest a solid return for dividend investors, though the payout ratio should be monitored for sustainability.

Analyst Consensus: Analyst ratings offer a summarized view of professional opinions on a stock. The consensus among analysts is to Hold CoreCivic's stock, with a price target of $14.83. These ratings and price targets reflect expectations for the company's future performance, providing additional context for investors.

Here's a summarized table of the valuation metrics discussed:

Based on these metrics, CoreCivic appears to be fairly valued. The P/E and EV/EBITDA ratios suggest potential undervaluation, while the P/B ratio is close to indicating fair value. The positive stock price trend and dividend yield are attractive, but investors should consider the analyst consensus and payout ratio when making investment decisions.

CoreCivic, Inc. (CXW) Risk Factors

CoreCivic, Inc. (CXW) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges.

Industry Competition: The correctional and detention services industry is competitive. CoreCivic competes with other private operators, as well as governmental entities that operate their own facilities. Increased competition could lead to lower occupancy rates and reduced revenues.

Regulatory Changes: CoreCivic's operations are heavily regulated. Changes in laws, regulations, or government policies could adversely affect the demand for the company's services and its profitability. For example, decisions to reduce or eliminate the use of private correctional facilities by government agencies could have a material negative impact.

Market Conditions: Shifts in public opinion and political sentiment regarding the use of private correctional facilities can influence government contracts and the overall business environment. Negative publicity or a decline in the perceived need for private detention services could harm CoreCivic's financial performance.

Operational Risks: CoreCivic faces several operational risks, including:

• Occupancy Rates: Maintaining high occupancy rates in its facilities is crucial for profitability. Fluctuations in inmate populations, driven by changes in crime rates, sentencing policies, or immigration enforcement, can impact occupancy rates and revenues.
• Contract Renewals: A significant portion of CoreCivic's revenue comes from contracts with government agencies. The failure to renew or extend these contracts on favorable terms could adversely affect the company's financial results.
• Cost Management: Effectively managing operating costs, including labor, healthcare, and security expenses, is essential for maintaining profitability. Increases in these costs, without corresponding increases in contract rates, could squeeze margins.

Financial Risks: Financial risks include:

• Debt Levels: CoreCivic has a significant amount of debt, which could impact its financial flexibility and ability to invest in growth opportunities.
• Interest Rate Risk: Changes in interest rates could increase the company's borrowing costs and reduce its earnings.

Strategic Risks: Strategic risks for CoreCivic involve:

• Diversification: Over-reliance on government contracts exposes CoreCivic to risks associated with changes in government policies and priorities. Diversifying its revenue streams could mitigate this risk.
• Innovation: Failing to adapt to changing industry trends and technological advancements could weaken CoreCivic's competitive position.

Mitigation Strategies: CoreCivic employs several strategies to mitigate these risks. These include:

• Contract Diversification: Seeking contracts with a variety of government agencies at the federal, state, and local levels to reduce reliance on any single customer.
• Cost Control Measures: Implementing measures to control operating costs and improve efficiency.
• Relationship Building: Maintaining strong relationships with government partners to enhance contract renewal prospects.

Recent earnings reports and filings provide detailed discussions of these and other risks. Investors should carefully review these documents to gain a comprehensive understanding of the challenges facing CoreCivic and its strategies for addressing them.

For more insights, check out: Breaking Down CoreCivic, Inc. (CXW) Financial Health: Key Insights for Investors

CoreCivic, Inc. (CXW) Growth Opportunities

CoreCivic, Inc. (CXW) is positioned for future growth through several key strategies. These include focusing on innovative solutions, strategic partnerships, and leveraging its unique competitive advantages within the corrections and detention management industry. The company's emphasis on providing enhanced services and technology-driven solutions is expected to drive revenue growth and improve operational efficiency.

Analysis of key growth drivers:

• Service Innovations: CoreCivic is investing in innovative programs focused on rehabilitation and community reintegration. These initiatives not only address societal needs but also create additional revenue streams.
• Market Expansion: The company is exploring opportunities to expand its service offerings beyond traditional corrections, including government solutions and real estate ventures.
• Strategic Acquisitions and Partnerships: CoreCivic may pursue strategic acquisitions or partnerships to enhance its capabilities and market reach.

Future revenue growth projections and earnings estimates will likely depend on the successful execution of these strategies. While specific figures are subject to market conditions and company performance, analysts' estimates provide a general outlook. Keep in mind that these projections are based on various assumptions and are subject to change.

Strategic initiatives and partnerships that may drive future growth:

• Government Contracts: Securing and renewing contracts with government agencies at the federal, state, and local levels remains a crucial growth driver.
• Technology Integration: Implementing advanced technologies to improve security, efficiency, and program effectiveness can attract new contracts and enhance existing relationships.
• Real Estate Development: Leveraging its real estate expertise to develop or manage government facilities can open new avenues for growth.

CoreCivic's competitive advantages that position the company for growth:

• Industry Experience: With decades of experience in the corrections and detention management industry, CoreCivic possesses valuable expertise and operational know-how.
• Infrastructure and Resources: The company's extensive network of facilities and resources provides a solid foundation for expansion and service delivery.
• Strong Relationships: CoreCivic has established long-standing relationships with government agencies, which can provide a competitive edge in securing contracts and partnerships.

For more insights into CoreCivic, Inc. (CXW)'s financial health, refer to: Breaking Down CoreCivic, Inc. (CXW) Financial Health: Key Insights for Investors