CoreCivic Inc

Previous wording

On January 26, 2021, President Biden issued the Private Prison EO. The Private Prison EO directs the Attorney General to not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of the DOJ, the BOP and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is generally responsible for detainees who are awaiting trial. The Private Prison EO only applies to agencies that are part of the DOJ, which includes the BOP and USMS. U.S. Immigration and Customs Enforcement, or ICE, facilities are not covered by the Private Prison EO, as ICE is an agency of the Department of Homeland Security, or DHS, not the DOJ. For the three months ended March 31, 2024, USMS and ICE accounted for 20% ($101.1 million) and 31% ($153.8 million), respectively, of our total revenue. For the twelve months ended December 31, 2023, USMS and ICE accounted for 21% ($400.4 million) and 30% ($565.5 million), respectively, of our total revenue.

Current wording

On January 26, 2021, President Biden issued the Private Prison EO. The Private Prison EO directs the Attorney General to not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of the DOJ, the BOP and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is generally responsible for detainees who are awaiting trial. The Private Prison EO only applies to agencies that are part of the DOJ, which includes the BOP and USMS. U.S. Immigration and Customs Enforcement, or ICE, facilities are not covered by the Private Prison EO, as ICE is an agency of the Department of Homeland Security, or DHS, not the DOJ. For the six months ended June 30, 2024, USMS and ICE accounted for 20% ($201.2 million) and 31% ($304.9 million), respectively, of our total revenue. For the twelve months ended December 31, 2023, USMS and ICE accounted for 21% ($400.4 million) and 30% ($565.5 million), respectively, of our total revenue.

Previous wording

This policy resulted in a reduction to the number of people ICE detained, including in our detention facilities. The financial impact was somewhat mitigated by fixed monthly payments from ICE at certain of our facilities, to ensure ICE has adequate bed capacity in the event of a surge in the future. Based on COVID-19 trends, the DHS allowed Title 42 to expire on May 11, 2023, which has resulted in an increase in the number of undocumented people permitted to enter the United States claiming asylum, and has resulted in an increase in the number of people apprehended and detained by ICE. During 2023, revenue from ICE was $565.5 million compared to $579.5 million during 2019, prior to the implementation of Title 42. During the three months ended March 31, 2024, revenue from ICE was $153.8 million compared to $130.7 million during the three months ended March 31, 2023.

Current wording

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic. As a result, in the first quarter of 2020, the federal government decided to deny 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, a policy known as Title 42. This policy resulted in a reduction to the number of people ICE detained, including in our detention facilities. The financial impact was somewhat mitigated by fixed monthly payments from ICE at certain of our facilities, to ensure ICE has adequate bed capacity in the event of a surge in the future. Based on COVID-19 trends, the DHS allowed Title 42 to expire on May 11, 2023, which has resulted in an increase in the number of undocumented people permitted to enter the United States claiming asylum, and has resulted in an increase in the number of people apprehended and detained by ICE. During 2023, revenue from ICE was $565.5 million compared to $579.5 million during 2019, prior to the implementation of Title 42. During the three and six months ended June 30, 2024, revenue from ICE was $151.0 million and $304.9 million, respectively, compared to $136.7 million and $267.4 million during the three and six months ended June 30, 2023, respectively. However, our revenue from ICE will be negatively impacted immediately following the termination of an inter-governmental service agreement, or IGSA, for the 2,400-bed South Texas Family Residential Center, or STFRC, effective August 9, 2024.

Previous wording

We believe the long-term growth opportunities of our business remain attractive as government agencies consider their emergent needs, as well as the efficiency and offender programming opportunities we provide as flexible solutions to satisfy our partners' needs. We have also been in discussions with several state and county government agencies that have experienced challenges in staffing their public-sector facilities and are seeking solutions from the private sector. Further, several of our existing government partners, as well as prospective government partners, have been experiencing growth in offender populations and overcrowded conditions, as well as an increase in violent crime. Governments are continuing to assess their need for correctional space, and several are continuing to consider alternative correctional capacity for their aged or inefficient infrastructure, or are seeking cost savings by utilizing the private sector, which could result in increased future demand for the solutions we provide. For example, on September 25, 2023, we announced that we signed a new management contract with Hinds County, Mississippi to care for up to 250 adult male pre-trial detainees at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi. The initial contract term is for two years, which may be extended for an additional year upon mutual agreement. In addition, on November 16, 2023, we announced that we signed a new management contract with the state of Wyoming to care for up to 240 male inmates at the Tallahatchie facility. The term of the new contract runs through June 30, 2026. Also on November 16, 2023, we announced that we signed a new contract with Harris County, Texas, to care for up to 360 male inmates at the Tallahatchie facility. Upon mutual agreement, Harris County may access an additional 360 beds at the facility. The initial contract term began on December 1, 2023, and is scheduled to expire on November 30, 2024. However, the contract may be extended at Harris County's option for up to four additional one-year terms. In addition to the recent contracts with Hinds County, the state of Wyoming, and Harris County, we currently care for residents from the USMS, the state of Vermont, the U.S. Virgin Islands, and Tallahatchie County at the Tallahatchie facility, which demonstrates the flexible solutions that we provide. On November 14, 2023, we announced that we signed a new management contract with the state of Montana to care for up to 120 inmates at our 1,896-bed Saguaro Correctional Facility in Eloy, Arizona. The new contract is scheduled to expire on October 31, 2025, and may be extended by mutual agreement for a total term of up to seven years. We currently care for residents from the state of Hawaii and the state of Idaho at the Saguaro facility. We also manage the fully occupied company-owned Crossroads Correctional Center in Shelby, Montana for the state of Montana pursuant to a separate management contract.

Current wording

We believe the long-term growth opportunities of our business remain attractive as government agencies consider their emergent needs, as well as the efficiency and offender programming opportunities we provide as flexible solutions to satisfy our partners' needs. We have been in discussions with ICE to utilize additional bed capacity in our portfolio, and have responded to their requests for proposals. We have also been in discussions with several state and county government agencies that have experienced challenges in staffing their public-sector facilities and are seeking solutions from the private sector. Further, several of our existing government partners, as well as prospective government partners, have been experiencing growth in offender populations and overcrowded conditions. Governments are continuing to assess their need for correctional space, and several are continuing to consider alternative correctional capacity for their aged or inefficient infrastructure, or are seeking cost savings by utilizing the private sector, which could result in increased future demand for the solutions we provide. For example, on September 25, 2023, we announced that we signed a new management contract with Hinds County, Mississippi to care for up to 250 adult male pre-trial detainees at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi. The initial contract term is for two years, which may be extended for an additional year upon mutual agreement. In addition, on November 16, 2023, we announced that we signed a new management contract with the state of Wyoming to care for up to 240 male inmates at the Tallahatchie facility. The term of the new contract runs through June 30, 2026. Also on November 16, 2023, we announced that we signed a new contract with Harris County, Texas, to care for up to 360 male inmates at the Tallahatchie facility. Upon mutual agreement, Harris County may access an additional 360 beds at the facility. The initial contract term began on December 1, 2023, and was recently renewed for an additional one-year term commencing December 1, 2024. The contract may be extended at Harris County's option for up to three additional one-year terms. In addition to the recent contracts with Hinds County, the state of Wyoming, and Harris County, we currently care for residents from the USMS, the state of Vermont, the U.S. Virgin Islands, and Tallahatchie County at the Tallahatchie facility, which demonstrates the flexible solutions that we provide. On November 14, 2023, we announced that we signed a new management contract with the state of Montana to care for up to 120 inmates at our 1,896-bed Saguaro Correctional Facility in Eloy, Arizona. The new contract is scheduled to expire on October 31, 2025, and may be extended by mutual agreement for a total term of up to seven years. We currently care for residents from the state of Hawaii and the state of Idaho at the Saguaro facility. We also manage the fully occupied co…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The consolidated financial statements in this Quarterly Report are prepared in conformity with U.S. generally accepted accounting principles, or GAAP. As such, we are required to make certain estimates, judgments, and assumptions that we believe are reasonable based upon the information available which, by their nature, are subject to an inherent degree of uncertainty. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from our estimates. A summary of our significant accounting policies is described in our 2023 Form 10-K. The significant accounting policies and estimates which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include those related to idle facilities and asset impairments, self-funded insurance reserves, and legal reserves. For a discussion of our critical accounting policies and estimates, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Notes to Consolidated Financial Statements" presented in our 2023 Form 10-K. There were no newly identified critical accounting policies during the first three months of 2024, nor were there any material changes to the critical accounting policies and estimates discussed in our 2023 Form 10-K.

Current wording

The consolidated financial statements in this Quarterly Report are prepared in conformity with U.S. generally accepted accounting principles, or GAAP. As such, we are required to make certain estimates, judgments, and assumptions that we believe are reasonable based upon the information available which, by their nature, are subject to an inherent degree of uncertainty. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from our estimates. A summary of our significant accounting policies is described in our 2023 Form 10-K. The significant accounting policies and estimates which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include those related to idle facilities and asset impairments, self-funded insurance reserves, and legal reserves. For a discussion of our critical accounting policies and estimates, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Notes to Consolidated Financial Statements" presented in our 2023 Form 10-K. There were no newly identified critical accounting policies during the first six months of 2024, nor were there any material changes to the critical accounting policies and estimates discussed in our 2023 Form 10-K.

Previous wording

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Current wording

Three and Six Months Ended June 30, 2024 Compared to the Three and Six Months Ended June 30, 2023

Previous wording

Net income was $9.5 million, or $0.08 per diluted share, for the three months ended March 31, 2024, compared with net income of $12.4 million, or $0.11 per diluted share, for the three months ended March 31, 2023. Financial results for the three months ended March 31, 2024 reflect a $0.6 million gain on the sale of real estate assets and $27.2 million of expenses associated with debt repayments and refinancing transactions. For the three months ended March 31, 2024, the income tax benefit reflects a net benefit of $8.4 million associated with these special items. For the three months ended March 31, 2023, income tax expense includes $2.3 million associated with a change in our corporate tax structure.

Current wording

Net income was $19.0 million, or $0.17 per diluted share, for the three months ended June 30, 2024, compared with net income of $14.8 million, or $0.13 per diluted share, for the three months ended June 30, 2023. Net income was $28.5 million, or $0.25 per diluted share, for the six months ended June 30, 2024, compared with net income of $27.2 million, or $0.24 per diluted share, for the six months ended June 30, 2023. Financial results for the three and six months ended June 30, 2024 reflect $4.1 million and $31.3 million, respectively, of expenses associated with debt repayments and refinancing transactions. Financial results for the six months ended June 30, 2024 also reflect a $0.6 million gain on the sale of real estate assets. For the three and six months ended June 30, 2024, income tax expense reflects a net benefit of $1.3 million and $9.6 million, respectively, associated with these special items. Financial results for the three months ended June 30, 2023 reflect $0.2 million of expenses associated with debt repayments and refinancing transactions. This special item was offset by an income tax benefit of $1.5 million during the three months ended June 30, 2023 associated with this special item and a change in our corporate tax structure in 2023. For the six months ended June 30, 2023, income tax expense reflects a net charge of $0.9 million for the change in corporate tax structure and the aforementioned special item.

Previous wording

For the three months ended March 31, 2024 and 2023, our total segment net operating income, which we define as facility revenue (including interest income associated with finance leases) less operating expenses, was divided among our three business segments as follows:

Current wording

For the three and six months ended June 30, 2024 and 2023, our total segment net operating income, which we define as facility revenue (including interest income associated with finance leases) less operating expenses, was divided among our three business segments as follows:

Previous wording

A key performance indicator we use to measure the revenue and expenses associated with the operation of the correctional, detention, and residential reentry facilities we own or manage is expressed in terms of a compensated man-day, which represents the revenue we generate and expenses we incur for one offender for one calendar day. Revenue and expenses per compensated man-day are computed by dividing facility revenue and expenses by the total number of compensated man-days during the period. A compensated man-day represents a calendar day for which we are paid for the occupancy of an offender. We believe the measurement is useful because we are compensated for operating and managing facilities at an offender per diem rate based upon actual or minimum guaranteed occupancy levels. We also measure our costs on a per compensated man-day basis, which are largely dependent upon the number of offenders we accommodate. Further, per compensated man-day measurements are also used to estimate our potential profitability based on certain occupancy levels relative to design capacity. Revenue and expenses per compensated man-day for all of the correctional, detention, and residential reentry facilities placed into service that we owned or managed, exclusive of those held for lease, and for TransCor were as follows for the three months ended March 31, 2024 and 2023:

Current wording

A key performance indicator we use to measure the revenue and expenses associated with the operation of the correctional, detention, and residential reentry facilities we own or manage is expressed in terms of a compensated man-day, which represents the revenue we generate and expenses we incur for one offender for one calendar day. Revenue and expenses per compensated man-day are computed by dividing facility revenue and expenses by the total number of compensated man-days during the period. A compensated man-day represents a calendar day for which we are paid for the occupancy of an offender. We believe the measurement is useful because we are compensated for operating and managing facilities at an offender per diem rate based upon actual or minimum guaranteed occupancy levels. We also measure our costs on a per compensated man-day basis, which are largely dependent upon the number of offenders we accommodate. Further, per compensated man-day measurements are also used to estimate our potential profitability based on certain occupancy levels relative to design capacity. Revenue and expenses per compensated man-day for all of the correctional, detention, and residential reentry facilities placed into service that we owned or managed, exclusive of those held for lease, and for TransCor were as follows for the three and six months ended June 30, 2024 and 2023:

Previous wording

Total revenue consists of management revenue we generate through CoreCivic Safety and CoreCivic Community in the operation of correctional, detention, and residential reentry facilities, as well as the revenue we generate from TransCor and our electronic monitoring and case management services. Total revenue also consists of lease revenue we generate through CoreCivic Properties from facilities we lease to third-party operators. The following table reflects the components of revenue for the three months ended March 31, 2024 and 2023 (in millions):

Current wording

Total revenue consists of management revenue we generate through CoreCivic Safety and CoreCivic Community in the operation of correctional, detention, and residential reentry facilities, as well as the revenue we generate from TransCor and our electronic monitoring and case management services. Total revenue also consists of lease revenue we generate through CoreCivic Properties from facilities we lease to third-party operators. The following table reflects the components of revenue for the three and six months ended June 30, 2024 and 2023 (in millions):

Previous wording

The $43.5 million, or 9.8%, increase in total management revenue for the three months ended March 31, 2024 as compared with the same period in 2023 was primarily a result of an increase in revenue of $26.4 million driven primarily by an increase in average daily compensated population from 2023 to 2024, including the revenue generated by one additional day of operations due to a leap year in 2024. The increase in management revenue was also a result of an increase in revenue of approximately $17.8 million driven primarily by an increase of 4.1% in average revenue per compensated man-day. The increase in average revenue per compensated man-day primarily resulted from the effect of per diem increases at many of our facilities. We believe the positive impact of the increase in average revenue per compensated man-day will provide further benefit to our operating margins as residential populations continue to recover from the impact of COVID-19 and will help offset the wage and employee benefit increases we have been incurring, as further discussed hereinafter. Revenue generated from our electronic monitoring and case management services during the three months ended March 31, 2024 decreased $0.7 million (from $9.5 million during the three months ended March 31, 2023 to $8.8 million during the three months ended March 31, 2024).

Current wording

Total management revenue increased $35.6 million, or 7.9%, and $79.1 million, or 8.8%, for the three and six months ended June 30, 2024, respectively, as compared with the same periods in 2023. The increase in total management revenue in both the three- and six-month periods was primarily a result of an increase in revenue of $15.0 million and $41.4 million, respectively, driven primarily by an increase in average daily compensated population from 2023 to 2024, including, in the six-month period, the revenue generated by one additional day of operations due to a leap year in 2024. The increase in management revenue during both the three- and six-month periods was also a result of an increase in revenue of approximately $21.3 million and $39.0 million, respectively, driven primarily by an increase of 4.8% and 4.5%, respectively, in average revenue per compensated man-day. The increase in average revenue per compensated man-day primarily resulted from the effect of per diem increases at many of our facilities. Notwithstanding the termination of an IGSA with respect to the STFRC, effective as of August 9, 2024, which generates operating margins higher than the portfolio average, we believe the positive impact of the increase in average revenue per compensated man-day at our other facilities will provide further benefit to our operating margins as residential populations continue to recover from the impact of COVID-19 and will help offset the wage and employee benefit increases we have been incurring, as further discussed hereinafter. Revenue generated from our electronic monitoring and case management services during the three months ended June 30, 2024 decreased $0.7 million (from $9.5 million during the three months ended June 30, 2023 to $8.8 million during the three months ended June 30, 2024). Revenue generated from our electronic monitoring and case management services during the six months ended June 30, 2024 decreased $1.3 million (from $19.0 million during the six months ended June 30, 2023 to $17.7 million during the six months ended June 30, 2024).

Previous wording

Average daily compensated population increased 2,332, or 4.7%, to 52,176 during the three months ended March 31, 2024 compared to 49,844 during the three months ended March 31, 2023. The increase in average daily compensated population was primarily a result of an increase in occupancy at facilities where ICE is our federal partner, as further discussed hereinafter. The increase in average daily compensated population was also a result of the three new local and state contracts we entered into in late 2023 at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi and the new management contract with the state of Montana at our 1,896-bed Saguaro Correctional Facility in Eloy, Arizona, all as previously described herein.

Current wording

Average daily compensated population increased 1,615, or 3.2%, to 51,541 during the three months ended June 30, 2024 compared to 49,926 during the three months ended June 30, 2023. Average daily compensated population increased 1,974, or 4.0%, to 51,859 during the six months ended June 30, 2024 compared to 49,885 during the six months ended June 30, 2023. The increase in average daily compensated population in both periods was primarily a result of an increase in occupancy at facilities where ICE is our federal partner, as further discussed hereinafter. The increase in average daily compensated population was also a result of the three new local and state contracts we entered into in late 2023 at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi and the new management contract with the state of Montana at our 1,896-bed Saguaro Correctional Facility in Eloy, Arizona. These increases were partially offset by a reduction in compensated populations at our Allen Gamble Correctional Center, which transitioned to a lease in our

Previous wording

The solutions we provide to our federal customers, including primarily ICE and the USMS, continue to be a significant component of our business. The federal customers in our Safety and Community segments generated approximately 52% of our total revenue for each of the three months ended March 31, 2024 and 2023, increasing $25.2 million, or 10.6%, during the three months ended March 31, 2024 as compared with the same period in 2023. The increase in federal revenue was primarily a result of increased occupancy and per diem increases at certain facilities and as a result of one additional day of operations due to a leap year in 2024.

Current wording

The solutions we provide to our federal customers, including primarily ICE and the USMS, continue to be a significant component of our business. The federal customers in our Safety and Community segments generated approximately 53% and 52% of our total revenue for the three months ended June 30, 2024 and 2023, respectively, increasing $16.1 million, or 6.6%, during the three months ended June 30, 2024 as compared with the same period in 2023. The federal customers in our Safety and Community segments generated approximately 53% and 52% of our total revenue for the six months ended June 30, 2024 and 2023, respectively, increasing $41.3 million, or 8.6%, during the six months ended June 30, 2024 as compared with the same period in 2023. The increase in federal revenue in both periods was primarily a result of increased occupancy and per diem increases at certain facilities and, in the six-month period, as a result of one additional day of operations due to a leap year in 2024.

Previous wording

As previously described herein, Title 42, which was implemented in the first quarter of 2020, resulted in a reduction to the number of people ICE detained, including in our detention facilities. The financial impact of Title 42 was somewhat mitigated by fixed monthly payments from ICE at certain of our facilities, to ensure ICE has adequate bed capacity in the event of a surge in the future. The expiration of Title 42 on May 11, 2023 has resulted in an increase in the number of undocumented people permitted to enter the United States claiming asylum, and has also resulted in an increase in the number of people apprehended and detained by ICE. During the three months ended March 31, 2024, revenue from ICE was $153.8 million compared to $130.7 million during the three months ended March 31, 2023.

Current wording

As previously described herein, Title 42, which was implemented in the first quarter of 2020, resulted in a reduction to the number of people ICE detained, including in our detention facilities. The financial impact of Title 42 was somewhat mitigated by fixed monthly payments from ICE at certain of our facilities, to ensure ICE has adequate bed capacity in the event of a surge in the future. The expiration of Title 42 on May 11, 2023 has resulted in an increase in the number of undocumented people permitted to enter the United States claiming asylum, and has also resulted in an increase in the number of people apprehended and detained by ICE. During the three and six months ended June 30, 2024, revenue from ICE was $151.0 million and $304.9 million, respectively, compared to $136.7 million and $267.4 million, respectively, during the three and six months ended June 30, 2023. Given the termination of an IGSA with ICE with respect to the STFRC, total management revenues are expected to be negatively impacted immediately following the August 9, 2024 termination date.

Previous wording

State revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $9.7 million, or 5.4%, from the first quarter of 2023 to the first quarter of 2024. State revenues increased as a result of per diem increases under a number of our state contracts, as certain states have recognized the need to provide additional funding to address increases in the wages of our employees. State revenues also increased due to higher utilization from the states of Montana and Wyoming due to new management contracts executed during 2023, as previously described herein, as well as higher utilization from other states under existing management contracts. State revenues generated during the three months ended March 31, 2024 also benefited from one additional day of operations due to 2024 being a leap year. The increase in state revenues was partially offset by a decrease in state revenues at our Allen Gamble Correctional Center that resulted from a new lease agreement effective October 1, 2023, as further described hereinafter, and is now reported in our Properties segment.

Current wording

State revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $9.5 million, or 5.3%, from the second quarter of 2023 to the second quarter of 2024. State revenues increased $19.2 million, or 5.3%, from the six months ended June 30, 2023 to the comparable period in 2024. State revenues in both periods increased as a result of per diem increases under a number of our state contracts, as certain states have recognized the need to provide additional funding to address increases in the wages of our employees. State revenues also increased due to higher utilization from the states of Montana and Wyoming due to new management contracts executed during 2023, as previously described herein, as well as higher utilization from other states under existing management contracts. State revenues generated during the six months ended June 30, 2024 also benefited from one additional day of operations due to 2024 being a leap year. The increase in state revenues in both the three- and six-month periods was partially offset by a decrease in state revenues at our Allen Gamble Correctional Center that resulted from a new lease agreement effective October 1, 2023, as further described hereinafter, and is now reported in our Properties segment.

Previous wording

Local revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $3.8 million, or 44.2%, from the first quarter of 2023 to the first quarter of 2024. The new contracts with Harris County, Texas and Hinds County,

Current wording

Local revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $4.1 million, or 48.8%, from the second quarter of 2023 to the second quarter of 2024. Local revenues increased $7.9 million, or 46.5%, from the six months ended June 30, 2023 to the six months ended June 30, 2024. The new contracts with Harris County, Texas and Hinds County, Mississippi at our Tallahatchie County Correctional Facility, as previously described herein, contributed to the increase in local revenues in both the three- and six-month periods. Local revenues in the six-month period also benefited from the one additional day of operations due to a leap year in 2024.

Previous wording

The $0.8 million, or 5.8%, decrease in lease revenue from the first quarter of 2023 to the first quarter of 2024 primarily resulted from the termination of the lease at our North Fork Correctional Facility effective June 30, 2023, and the sale of the Augusta Transitional Center in December 2023, partially offset by the lease revenue at our Allen Gamble Correctional Center from a new lease agreement that became effective October 1, 2023, all as further described hereinafter.

Current wording

The $9.2 million, or 67.6%, decrease in lease revenue from the second quarter of 2023 to the second quarter of 2024, and the $10.0 million, or 36.5%, decrease in lease revenue from the six months ended June 30, 2023 to the comparable period in 2024 primarily resulted from the termination of the lease at our North Fork Correctional Facility effective June 30, 2023, the termination of the lease agreement at our California City Correctional Center effective March 31, 2024, and the sale of the Augusta Transitional Center in December 2023, partially offset by the lease revenue at our Allen Gamble Correctional Center from a new lease agreement that became effective October 1, 2023, all as further described hereinafter.

Previous wording

Operating expenses totaled $378.1 million and $354.5 million for the three months ended March 31, 2024 and 2023, respectively. Operating expenses consist of those expenses incurred in the operation and management of correctional, detention, and residential reentry facilities, as well as those expenses incurred in the operations of TransCor and our electronic monitoring and case management services. Operating expenses also consist of those expenses incurred in the operation of facilities we lease to third-party operators.

Current wording

Operating expenses totaled $375.7 million and $362.0 million for the three months ended June 30, 2024 and 2023, respectively, while operating expenses for the six months ended June 30, 2024 and 2023 totaled $753.8 million and $716.5 million, respectively. Operating expenses consist of those expenses incurred in the operation and management of correctional, detention, and residential reentry facilities, as well as those expenses incurred in the operations of TransCor and our electronic monitoring and case management services. Operating expenses also consist of those expenses incurred in the operation of facilities we lease to third-party operators.

Previous wording

Operating expenses incurred by CoreCivic Safety and CoreCivic Community in connection with the operation and management of our correctional, detention, and residential reentry facilities, as well as those incurred in the operations of TransCor and our electronic monitoring and case management services, increased $23.1 million, or 6.6%, during the first quarter of 2024 when compared with the same period in 2023. Operating expenses increased primarily as a result of wage increases resulting from labor shortages and wage pressures, as further described hereinafter. We achieved higher staffing levels during the first quarter of 2024 when compared to the same period in 2023, and correspondingly, we were able to reduce our use of temporary incentives by $1.9 million during the first quarter of 2024 as we continued to see improvement in our attraction and retention of facility staff in this challenging labor market. Additionally, operating expenses increased as a result of the new contracts at our Tallahatchie and Saguaro facilities, and as a result of the additional day of operations during the three months ended March 31, 2024 due to 2024 being a leap year. The increase in operating expenses incurred by CoreCivic Safety and Community was partially offset by the new lease of our Allen Gamble Correctional Center effective October 1, 2023, which is now reported in our Properties segment.

Current wording

2024, when compared to the same period in 2023. Operating expenses in both the three- and six-month periods increased primarily as a result of wage increases resulting from labor shortages and wage pressures, as further described hereinafter. We achieved higher staffing levels during the first six months of 2024 when compared to the same period in 2023, and correspondingly, we were able to reduce our use of temporary incentives by $2.7 million and $4.6 million during the three- and six-month periods, respectively, as we continued to see improvement in our attraction and retention of facility staff in this challenging labor market. Additionally, operating expenses in both periods increased as a result of the new contracts at our Tallahatchie and Saguaro facilities and, in the six-month period, as a result of the additional day of operations due to 2024 being a leap year. The increase in operating expenses incurred by CoreCivic Safety and Community in both the three- and six-month periods was partially offset by the new lease of our Allen Gamble Correctional Center effective October 1, 2023, which is now reported in our Properties segment.

Previous wording

Total expenses per compensated man-day increased to $76.94 during the three months ended March 31, 2024 from $76.35 during the three months ended March 31, 2023. We continue to experience labor shortages and wage pressures in several markets across the country, and have provided customary inflationary wage increases to remain competitive. Recruiting has been particularly challenging since the start of the pandemic due to the front-line nature of the services we provide and the shortage of nursing staff across the country intensified as a result of the COVID-19 pandemic and the challenging labor market. The challenges of recruiting and retaining staff, including nursing, have been and could continue to be exacerbated by the current labor market. Further, we have incurred incremental expenses to help ensure sufficient staffing levels under unique and challenging working conditions. While, as mentioned in the preceding paragraph, we were able to reduce the use of these temporary incentives by $1.9 million during the first quarter of 2024 when compared to the same period in 2023, we expect to continue to incur a certain level of incremental expenses in future quarters. Incremental expenses include, but may not be limited to, incentive payments to our front-line and field staff, temporary employee housing expenses and other travel related reimbursements, additional paid time off, off-cycle wage increases in certain markets to remain competitive, and registry nursing expenses. These incremental investments have enabled us to increase overall staffing levels, as described in the preceding paragraph, which has contributed to the increase in total expenses per compensated man-day.

Current wording

Total expenses per compensated man-day increased to $77.53 during the three months ended June 30, 2024 from $76.97 during the three months ended June 30, 2023, and increased to $77.23 during the six months ended June 30, 2024 from $76.66 during the same period in the prior year, increases of 0.7% during each period. We continue to experience labor shortages and wage pressures in several markets across the country, and have provided customary inflationary wage increases to remain competitive. Although the hiring environment has been progressively improving, recruiting has been particularly challenging since the start of the pandemic due to the front-line nature of the services we provide and the shortage of nursing staff across the country intensified as a result of the COVID-19 pandemic and the challenging labor market. Further, we have incurred incremental expenses to help ensure sufficient staffing levels under unique and challenging working conditions. While we were able to reduce the use of these temporary incentives by $2.7 million and $4.6 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023 due to the improving hiring environment, we expect to continue to incur a certain level of incremental expenses in future quarters. Incremental expenses include, but may not be limited to, incentive payments to our front-line and field staff, temporary employee housing expenses and other travel related reimbursements, additional paid time off, off-cycle wage increases in certain markets to remain competitive, and registry nursing expenses. These incremental investments have enabled us to increase overall staffing levels, which has contributed to the increase in total expenses per compensated man-day.

Previous wording

We continually monitor compensation levels very closely along with overall economic conditions and will adjust wage levels necessary to help ensure the long-term success of our business. Further, we continually evaluate the structure of our employee benefits package and training programs to ensure we are better able to attract and retain our employees. Salaries and benefits represent the most significant component of our operating expenses, representing approximately 62% and 60% of our total operating expenses during the three months ended March 31, 2024 and 2023, respectively. As previously mentioned, recruiting and retaining staff has been particularly challenging for us and for the corrections and detention industry as a whole. An inability to attract and retain sufficient personnel could prevent us from caring for additional residential populations for government agencies in need of additional capacity due to an increase in inmate populations or an inability to adequately staff their facilities. An inability to attract and retain sufficient personnel in our existing facilities could also cause our government partners to assess liquidated damages, reduce our residential populations, or in certain circumstances, cancel our contracts. We have also been subjected to staff vacancy deductions as a result of the labor shortages, which are reflected as reductions to other management revenue. Estimating vacancy deduction amounts can be complex and subject to management judgment and estimations. Some of our government partners have granted waivers for vacancy deductions in recognition of the unique and challenging labor market, while others have discretionarily adjusted such deductions based on our extraordinary costs, efforts and incentive programs implemented to attract and retain staff.

Current wording

We continually monitor compensation levels very closely along with overall economic conditions and will adjust wage levels necessary to help ensure the long-term success of our business. Further, we continually evaluate the structure of our employee benefits package and training programs to ensure we are better able to attract and retain our employees. Salaries and benefits represent the most significant component of our operating expenses, representing approximately 61% and 60% of our total operating expenses during the six months ended June 30, 2024 and 2023, respectively. As previously mentioned, recruiting and retaining staff has been particularly challenging for us and for the corrections and detention industry as a whole. An inability to attract and retain sufficient personnel could prevent us from caring for additional residential populations for government agencies in need of additional capacity due to an increase in inmate populations or an inability to adequately staff their facilities. An inability to attract and retain sufficient personnel in our existing facilities could also cause our government partners to assess liquidated damages, reduce our residential populations, or in certain circumstances, cancel our contracts. We have also been subjected to staff vacancy deductions as a result of the labor shortages, which are reflected as reductions to other management revenue. Estimating vacancy deduction amounts can be complex and subject to management judgment and estimations. Some of our government partners have granted waivers for vacancy deductions in recognition of the unique and challenging labor market, while others have discretionarily adjusted such deductions based on our extraordinary costs, efforts and incentive programs implemented to attract and retain staff.

Previous wording

Variable expenses per compensated man-day decreased to $20.21 during the three months ended March 31, 2024, from $21.13 during the same period in the prior year, a decline of 4.4%. The decrease in variable expenses per compensated man-day during the first quarter of 2024 was primarily a result of a decrease in registry nursing expense of $2.5 million, or $0.59 per compensated man-day, during the first quarter of 2024 when compared to the same period in 2023, and as a result of decreases in recruiting and travel expenses. During the first quarter of 2023, recruiting expenses and travel expenses were higher as we supported our staff who were temporarily deployed across the Company to help address the labor shortages we experienced in certain regions, most notably at our La Palma facility in Arizona. While the shortage of nursing staff across the country continues to be challenging, we have seen, and continue to see, improvement in our recruiting and retention of facility staff, including nursing staff, as we have made investments in higher wages and increased our use of part-time positions, which helped us achieve higher staffing levels. The hiring environment for these positions has also improved. The decreases in registry nursing expenses and recruiting and travel expenses was partially offset by the effect of an elevated inflation rate applicable to all of our variable expenses.

Current wording

Variable expenses per compensated man-day decreased to $20.64 during the three months ended June 30, 2024, from $22.18 during the same period in the prior year, or 6.9%, and decreased to $20.42 during the six months ended June 30, 2024 from $21.66 during the same period in the prior year, or 5.7%. The decrease in variable expenses per compensated man-day during the three and six months ended June 30, 2024 was primarily a result of a decrease in registry nursing expense of $2.4 million, or $0.54 per compensated man-day, and $4.9 million, or $0.57 per compensated man-day, respectively, when compared to the same periods in 2023. The decrease in variable expenses in both periods was also a result of decreases in recruiting and travel expenses. During the first six months of 2023, recruiting expenses and travel expenses were higher as we supported our staff who were temporarily deployed across the Company to help address the labor shortages we experienced in certain regions, most notably at our La Palma facility in Arizona. While the shortage of nursing staff across the country continues to be challenging, we have seen, and continue to see, improvement in our recruiting and retention of facility staff, including nursing staff, as we have made investments in higher wages and increased our use of part-time positions, which helped us achieve higher staffing levels. The hiring environment for these positions has also improved. The decreases in registry nursing expenses and recruiting and travel expenses in both the three- and six-month periods was partially offset by the effect of an elevated inflation rate applicable to all of our variable expenses.

Previous wording

Operating expenses incurred by CoreCivic Properties in connection with facilities we lease to third-party operators increased $0.5 million, or 14.1%, during the first quarter of 2024 when compared with the same period in 2023. The increase was primarily a result of the new lease at our Allen Gamble Correctional Center effective October 1, 2023.

Current wording

Operating expenses incurred by CoreCivic Properties in connection with facilities we lease to third-party operators increased $0.1 million, or 4.2%, and $0.6 million, or 9.2%, during the three and six months ended June 30, 2024, respectively, when compared with the same periods in 2023. The increase in both periods was primarily a result of an increase in operating expenses at our Allen Gamble Correctional Center resulting from a new lease agreement with the ODC effective October 1, 2023, partially offset by a decrease in operating expense resulting from the expiration of the lease agreement with the California Department of Corrections and Rehabilitation, or CDCR, at our California City Correctional Center effective March 31, 2024, and the expiration of the lease agreement with the Oklahoma Department of Corrections, or ODC, at our North Fork Correctional Facility effective June 30, 2023, each as further described hereinafter.

Previous wording

Additionally, on January 26, 2021, President Biden issued the Private Prison EO. The Private Prison EO directs the Attorney General to not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of the DOJ, the BOP and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is generally responsible for detainees who are awaiting trial. The BOP has experienced a steady decline in inmate populations over the last decade, a trend that was accelerated by the COVID-19 pandemic. The Private Prison EO only applies to agencies that are part of the DOJ, which includes the BOP and USMS. ICE facilities are not covered by the Private Prison EO, as ICE is an agency of the Department of Homeland Security, or DHS, not the DOJ. For the three months ended March 31, 2024, USMS and ICE accounted for 20% ($101.1 million) and 31% ($153.8 million), respectively, of our total revenue. For the twelve months ended December 31, 2023, USMS and ICE accounted for 21% ($400.4 million) and 30% ($565.5 million), respectively, of our total revenue.

Current wording

Additionally, on January 26, 2021, President Biden issued the Private Prison EO. The Private Prison EO directs the Attorney General to not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of the DOJ, the BOP and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is generally responsible for detainees who are awaiting trial. The BOP has experienced a steady decline in inmate populations over the last decade, a trend that was accelerated by the COVID-19 pandemic. The Private Prison EO only applies to agencies that are part of the DOJ, which includes the BOP and USMS. ICE facilities are not covered by the Private Prison EO, as ICE is an agency of the Department of Homeland Security, or DHS, not the DOJ. For the six months ended June 30, 2024, USMS and ICE accounted for 20% ($201.2 million) and 31% ($304.9 million), respectively, of our total revenue. For the twelve months ended December 31, 2023, USMS and ICE accounted for 21% ($400.4 million) and 30% ($565.5 million), respectively, of our total revenue.

Previous wording

Based on information available as of the date of this Quarterly Report, other than the previously mentioned lease agreement with the CDCR for our California City facility, we believe we will renew all other contracts with our government partners that have expired or are scheduled to expire within the next twelve months that could have a material adverse impact on our financial statements. We believe our renewal rate on existing contracts remains high due to a variety of reasons including, but not limited to, the constrained supply of available beds within the U.S. correctional system, our ownership of the majority of the beds we operate, and the cost effectiveness of the services we provide. However, we can provide no assurance that we will continue to achieve high renewal rates in the future.

Current wording

Based on information available as of the date of this Quarterly Report, other than the previously mentioned facility management contract with ICE at the STFRC, we believe we will renew all other contracts with our government partners that have expired or are scheduled to expire within the next twelve months that could have a material adverse impact on our financial statements. We believe our renewal rate on existing contracts remains high due to a variety of reasons including, but not limited to, the constrained supply of available beds within the U.S. correctional system, our ownership of the majority of the beds we operate, and the cost effectiveness of the services we provide. However, we can provide no assurance that we will continue to achieve high renewal rates in the future.

Previous wording

CoreCivic Safety includes the operating results of the correctional and detention facilities that we operated during each period. Total revenue generated by CoreCivic Safety increased $40.1 million, or 9.6%, from $417.7 million during the three months ended March 31, 2023 to $457.7 million during the three months ended March 31, 2024. CoreCivic Safety's facility net operating income increased $18.4 million, or 20.6%, from $89.3 million during the three months ended March 31, 2023 to $107.6 million during the three months ended March 31, 2024. During the three months ended March 31, 2024, CoreCivic Safety generated 86.3% of our total segment net operating income, compared with 84.5% during the three months ended March 31, 2023.

Current wording

CoreCivic Safety includes the operating results of the correctional and detention facilities that we operated during each period. Total revenue generated by CoreCivic Safety increased $33.6 million, or 8.0%, from $421.7 million during the three months ended June 30, 2023 to $455.4 million during the three months ended June 30, 2024, and increased $73.7 million, or 8.8%, from $839.4 million during the six months ended June 30, 2023 to $913.1 million during the six months ended June 30, 2024. CoreCivic Safety's facility net operating income increased $21.2 million, or 24.7%, from $86.0 million during the three months ended June 30, 2023 to $107.3 million during the three months ended June 30, 2024, and increased $39.6 million or 22.6% from $175.3 million during the six months ended June 30, 2023 to $214.9 million during the six months ended June 30, 2024. During the three and six months ended June 30, 2024,

Previous wording

Operating margins in the CoreCivic Safety segment have been positively impacted by a 3.6% increase in average revenue per compensated man-day during the first quarter of 2024 when compared to the same period in 2023. The increase in average revenue per compensated man-day resulted from the effect of per diem increases at many of our facilities, as we have received per diem increases resulting from additional government appropriations funding to address increases in the wages of our employees. The positive impact on operating margins resulting from the increase in average revenue per compensated man-day was partially offset by increased operating expenses per man-day, which was driven primarily by incremental staffing levels, higher wage rates and other related expenses. As previously described herein, we have experienced labor shortages and wage pressures in many markets across the country, and have provided inflationary wage increases above historical averages to remain competitive. Further, we have incurred incremental expenses to help ensure sufficient staffing levels under unique and challenging working conditions, including but not limited to, shift incentive bonuses, recruiting and retention bonuses, temporary employee housing expenses and travel reimbursements, off-cycle wage increases, as well as relocation incentives. While, as previously described herein, we were able to reduce the use of these temporary incentives during the first quarter of 2024 when compared to the same period in 2023, we expect to continue to incur a certain level of additional incremental expenses in future quarters as we expect to continue to invest in staffing resources. We believe the significant investments we have made in our workforce have positioned us to meet the emerging needs of our government partners, as certain government agencies are experiencing an increase in the need for correctional and detention capacity in a post-pandemic environment, including as a result of the expiration of Title 42.

Current wording

Operating margins in the CoreCivic Safety segment have been positively impacted by a 4.3% and 4.0% increase in average revenue per compensated man-day during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023. The increase in average revenue per compensated man-day in both periods resulted from the effect of per diem increases at many of our facilities, as we have received per diem increases resulting from additional government appropriations funding to address increases in the wages of our employees. The positive impact on operating margins resulting from the increase in average revenue per compensated man-day was partially offset by increased operating expenses per man-day, which was driven primarily by incremental staffing levels, higher wage rates and other related expenses. As previously described herein, we have experienced labor shortages and wage pressures in many markets across the country, and have provided inflationary wage increases above historical averages to remain competitive. Further, we have incurred incremental expenses to help ensure sufficient staffing levels under unique and challenging working conditions, including but not limited to, shift incentive bonuses, recruiting and retention bonuses, temporary employee housing expenses and travel reimbursements, off-cycle wage increases, as well as relocation incentives. While we were able to reduce the use of these temporary incentives during the three and six months ended June 30, 2024 when compared to the same periods in 2023, we expect to continue to incur a certain level of additional incremental expenses in future quarters as we expect to continue to invest in staffing resources. We believe the significant investments we have made in our workforce have positioned us to meet the emerging needs of our government partners, as certain government agencies are experiencing an increase in the need for correctional and detention capacity in a post-pandemic environment, including as a result of the expiration of Title 42.

Previous wording

On June 14, 2023, we announced that we entered into a lease agreement with the Oklahoma Department of Corrections, or ODC, for our 1,670-bed Allen Gamble Correctional Center which, until October 1, 2023, we reported in our CoreCivic Safety segment and operated under a management contract with the ODC. The management contract was scheduled to expire on June 30, 2023. However, effective July 1, 2023, we entered into a 90-day contract extension for the management contract, after which time, operations of the Allen Gamble facility transferred from us to the ODC in accordance with the new lease agreement. Management revenue generated from the ODC at the Allen Gamble facility was $23.0 million for 2023 during the period it was reported in the Safety segment, including management revenue of $6.9 million during the first quarter of 2023. The Allen Gamble facility incurred a net operating loss of $1.2 million during the period it was reported in the Safety segment during 2023, including a net operating loss of $0.6 million during the first quarter of 2023. Upon commencement of the new lease agreement, the Allen Gamble facility has been reported in our CoreCivic Properties segment.

Current wording

On June 14, 2023, we announced that we entered into a lease agreement with the ODC for our 1,670-bed Allen Gamble Correctional Center which, until October 1, 2023, we reported in our CoreCivic Safety segment and operated under a management contract with the ODC. The management contract was scheduled to expire on June 30, 2023. However, effective July 1, 2023, we entered into a 90-day contract extension for the management contract, after which time, operations of the Allen Gamble facility transferred from us to the ODC in accordance with the new lease agreement. Management revenue generated from the ODC at the Allen Gamble facility was $23.0 million for 2023 during the period it was reported in the Safety segment, including management revenue of $7.5 million and $14.4 million during the three and six months ended June 30, 2023, respectively. The Allen Gamble facility incurred a net operating loss of $1.2 million during the period it was reported in the Safety segment during 2023, including a net operating loss of $0.9 million and $1.5 million during the three and six months ended June 30, 2023, respectively. Upon commencement of the new lease agreement, the Allen Gamble facility has been reported in our CoreCivic Properties segment.

Previous wording

On September 25, 2023, we announced that we signed a new management contract with Hinds County, Mississippi to care for up to 250 adult male pre-trial detainees at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi. The initial contract term is for two years, which may be extended for an additional year upon mutual agreement. We began receiving inmates from Hinds County during October 2023. In addition, on November 16, 2023, we announced that we signed a new management contract with the state of Wyoming to care for up to 240 male inmates at the Tallahatchie facility. The term of the new contract runs through June 30, 2026. We began receiving inmates from Wyoming in November 2023. Also on November 16, 2023, we announced that we signed a new contract with Harris County, Texas, to care for up to 360 male inmates at the Tallahatchie facility. Upon mutual agreement, Harris County may access an additional 360 beds at the facility. The initial contract term began on December 1, 2023, and is scheduled to expire on November 30, 2024. However, the contract may be extended at Harris County's option for up to four additional one-year terms. We began receiving inmates from Harris County in December 2023. As a result of the new contracts, the occupancy percentage at the Tallahatchie facility increased to 54% for the first quarter of 2024 from 26% in the first quarter of 2023.

Current wording

On September 25, 2023, we announced that we signed a new management contract with Hinds County, Mississippi to care for up to 250 adult male pre-trial detainees at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi. The initial contract term is for two years, which may be extended for an additional year upon mutual agreement. We began receiving inmates from Hinds County during October 2023. In addition, on November 16, 2023, we announced that we signed a new management contract with the state of Wyoming to care for up to 240 male inmates at the Tallahatchie facility. The term of the new contract runs through June 30, 2026. We began receiving inmates from Wyoming in November 2023. Also on November 16, 2023, we announced that we signed a new contract with Harris County, Texas, to care for up to 360 male inmates at the Tallahatchie facility. Upon mutual agreement, Harris County may access an additional 360 beds at the facility. The initial contract term began on December 1, 2023, and was recently renewed for an additional one-year term commencing December 1, 2024. The contract may be extended at Harris County's option for up to three additional one-year terms. We began receiving inmates from Harris County in December 2023. As a result of the new contracts, the occupancy percentage at the Tallahatchie facility increased to 53% for the second quarter of 2024 from 27% in the second quarter of 2023.

Previous wording

CoreCivic Community includes the operating results of the residential reentry centers that we operated during each period, along with the operating results of our electronic monitoring and case management services. Total revenue generated by CoreCivic Community increased $3.5 million, or 13.2%, from $26.4 million during the three months ended March 31, 2023 to $29.9 million during the three months ended March 31, 2024. CoreCivic Community's facility net operating income increased $2.1 million, or 55.6%, from $3.7 million during the three months ended March 31, 2023 to $5.8 million during the three months ended March 31, 2024. During the three months ended March 31, 2024, CoreCivic Community generated 4.6% of our total segment net operating income, compared with 3.5% during the three months ended March 31, 2023.

Current wording

CoreCivic Community includes the operating results of the residential reentry centers that we operated during each period, along with the operating results of our electronic monitoring and case management services. Total revenue generated by CoreCivic Community increased $1.9 million, or 6.8%, from $28.4 million during the three months ended June 30, 2023 to $30.3 million during the three months ended June 30, 2024, and increased $5.4 million, or 9.9%, from $54.8 million during the six months ended June 30, 2023 to $60.2 million during the six months ended June 30, 2024. CoreCivic Community's facility net operating income increased $0.7 million, or 13.0%, from $5.5 million during the three months ended June 30, 2023 to $6.2 million during the three months ended June 30, 2024, and increased $2.8 million, or 30.2%, from $9.2 million during the six months ended June 30, 2023 to $11.9 million during the six months ended June 30, 2024. During the three and six months ended June 30, 2024, CoreCivic Community generated 5.3% and 5.0%, respectively, of our total segment net operating income, compared with 5.3% and 4.4%, respectively, during the three and six months ended June 30, 2023.

Previous wording

Similar to our CoreCivic Safety segment, operating margins in our CoreCivic Community segment were positively impacted during the first quarter of 2024 by an increase in average revenue per compensated man-day, which increased from the first quarter of 2023 primarily as a result of per diem increases at several of our facilities. The effect of the increased average revenue per compensated man-day was partially offset by increased operating expenses per man-day, which were driven primarily by higher wage rates. Also, like our CoreCivic Safety segment, occupancy in our CoreCivic Community facilities has not yet returned to pre-pandemic occupancy levels due to a variety of factors being evaluated by our government partners, including appropriated funding for non-secure residential contracts. Because facilities in our Community segment are typically smaller in size than those in our Safety segment, occupancy fluctuations have a larger impact on operating margin per compensated man-day. Accordingly, modest changes in occupancy can have a notable impact in our Community segment.

Current wording

Similar to our CoreCivic Safety segment, operating margins in our CoreCivic Community segment were positively impacted during the three and six months ended June 30, 2024 by an increase in average revenue per compensated man-day, which increased from the same periods in 2023 primarily as a result of per diem increases at several of our facilities. The effect of the increased average revenue per compensated man-day in both periods was partially offset by increased operating expenses per man-day, which were driven primarily by higher wage rates. Also, like our CoreCivic Safety segment, occupancy in our CoreCivic Community facilities has not yet returned to pre-pandemic occupancy levels due to a variety of factors being evaluated by our government partners, including appropriated funding for non-secure residential contracts. Because facilities in our Community segment are typically smaller in size than those in our Safety segment, occupancy fluctuations have a larger impact on operating margin per compensated man-day. Accordingly, modest changes in occupancy can have a notable impact in our Community segment.

Previous wording

In January 2024, we completed the sale of our 120-bed Dahlia Facility, a residential reentry center in Denver, Colorado. The Dahlia facility was reported as an asset held for sale as of December 31, 2023. We received gross sales proceeds of $8.0 million on the sale of the Dahlia facility compared to the carrying value of $7.5 million, resulting in a $0.5 million net gain on the sale after transaction related expenses, which was recognized in the first quarter of 2024. We will continue to operate the Dahlia facility through the expiration of the current management contract in June 2024.

Current wording

In January 2024, we completed the sale of our 120-bed Dahlia Facility, a residential reentry center in Denver, Colorado. The Dahlia facility was reported as an asset held for sale as of December 31, 2023. We received gross sales proceeds of $8.0 million on the sale of the Dahlia facility compared to the carrying value of $7.5 million, resulting in a $0.5 million net gain on the sale after transaction related expenses, which was recognized in the first quarter of 2024. We continued to operate the Dahlia facility through the expiration of the management contract in June 2024. During the three months ended June 30, 2024 and 2023, the Dahlia facility generated facility net operating income of $38,000 and $0.1 million, respectively. During the six months ended June 30, 2024 and 2023, this facility generated facility net operating income of $0.2 million and $0.3 million, respectively.

Previous wording

CoreCivic Properties includes the operating results of the properties we leased to government agencies during each period. Total revenue generated by CoreCivic Properties decreased $0.8 million, or 5.8%, from $13.8 million during the three months ended March 31, 2023 to $13.0 million during the three months ended March 31, 2024. CoreCivic Properties' facility net operating income decreased $1.3 million, or 12.1%, from $10.5 million during the three months ended March 31, 2023 to $9.2 million during the three months ended March 31, 2024. CoreCivic Properties generated operating margins of 71% and 76% for the three months ended March 31, 2024 and 2023, respectively. The decreases in total revenue and net operating income were primarily the result of the termination of the lease at our North Fork Correctional Facility effective June 30, 2023, and the sale of two actively leased properties in the second quarter of 2023, both as further described hereinafter. These decreases in total revenue and net operating income were net of increases due to the aforementioned new lease agreement at our Allen Gamble Correctional Center effective October 1, 2023, which generated revenue and net operating income of $1.9 million and $0.9 million, respectively, during the first quarter of 2024. During the three months ended March 31, 2024, CoreCivic Properties generated 9.1% of our total segment net operating income, compared with 12.0% during the three months ended March 31, 2023.

Current wording

CoreCivic Properties includes the operating results of the properties we leased to government agencies during each period. Total revenue generated by CoreCivic Properties decreased $9.2 million, from $13.6 million during the three months ended June 30, 2023 to $4.4 million during the three months ended June 30, 2024, and decreased $10.0 million, from $27.4 million during the six months ended June 30, 2023 to $17.5 million during the six months ended June 30, 2024. CoreCivic Properties' facility net operating income decreased $9.3 million, from $10.3 million during the three months ended June 30, 2023 to $1.0 million during the three months ended June 30, 2024, and decreased $10.6 million, from $20.7 million during the six months ended June 30, 2023 to $10.2 million during the six months ended June 30, 2024. The decreases in total revenue and net operating income were primarily the result of the termination of the lease at our California City Correctional Center effective March 31, 2024, the termination of the lease at our North Fork Correctional Facility effective June 30, 2023, and the sale of two actively leased properties in the second quarter of 2023, all as further described hereinafter. Net operating income generated by CoreCivic Properties was negatively impacted by the ongoing operating expenses incurred at the currently idle North Fork and California City facilities. The decreases in total revenue and net operating income were net of increases due to the new lease agreement at our Allen Gamble Correctional Center effective October 1, 2023. During the three and six months ended June 30, 2024, CoreCivic Properties generated 2.6% and 5.9% of our total segment net operating income, respectively, compared with 11.9% during the three and six months ended June 30, 2023.

Previous wording

The Roth Hall Residential Reentry Center and the Walker Hall Residential Reentry Center, both located in Philadelphia, Pennsylvania, were sold on May 2, 2023, generating net sales proceeds of $5.8 million, resulting in a loss on sale of $25,000, which was reported in the second quarter of 2023. During our period of ownership in 2023, these two properties generated facility net operating income of $0.3 million, including $0.1 million in the first quarter of 2023.

Current wording

The Roth Hall Residential Reentry Center and the Walker Hall Residential Reentry Center, both located in Philadelphia, Pennsylvania, were sold on May 2, 2023, generating net sales proceeds of $5.8 million, resulting in a loss on sale of $25,000, which was reported in the second quarter of 2023. During our period of ownership in 2023, these two properties generated facility net operating income of $0.3 million, including $0.1 million in the second quarter of 2023.

Previous wording

On April 25, 2023, we announced that we received notice from the ODC of its intent to terminate the lease agreement for our 2,400-bed North Fork Correctional Facility upon the lease expiration on June 30, 2023. Rental revenue generated from the ODC while the lease was active at the North Fork facility was $6.1 million for 2023, including $3.1 million during the first quarter of 2023. Facility net operating income at this facility was $4.7 million for the period the lease was active in 2023, including $2.3 million during the first quarter of 2023. Upon expiration of the lease, the North Fork facility was idled in the third quarter of 2023. We are marketing the facility to potential customers.

Current wording

On April 25, 2023, we announced that we received notice from the ODC of its intent to terminate the lease agreement for our 2,400-bed North Fork Correctional Facility upon the lease expiration on June 30, 2023. Rental revenue generated from the ODC while the lease was active at the North Fork facility was $6.1 million for 2023, including $3.1 million during the three months ended June 30, 2023. Facility net operating income at this facility was $4.7 million for the period the lease was active in 2023, including $2.3 million during the three months ended June 30, 2023. Upon expiration of the lease, the North Fork facility was idled in the third quarter of 2023. We are marketing the facility to potential customers.

Previous wording

As previously described herein, beginning in the fourth quarter of 2023, a new lease agreement with the ODC for the Allen Gamble Correctional Center commenced, at which time we began reporting the financial results in the CoreCivic Properties segment. The new lease agreement includes a base term that commenced on October 1, 2023, with a scheduled expiration date of June 30, 2029, and unlimited two-year renewal options. Annual lease revenue to be generated from the ODC at the Allen Gamble facility under the new lease agreement will be $7.5 million during the base term. The annual rent during any renewal option term shall be mutually agreed upon by the parties.

Current wording

As previously described herein, beginning in the fourth quarter of 2023, a new lease agreement with the ODC for the Allen Gamble Correctional Center commenced, at which time we began reporting the financial results in the CoreCivic Properties segment. The new lease agreement includes a base term that commenced on October 1, 2023, with a scheduled expiration date of June 30, 2029, and unlimited two-year renewal options. Annual lease revenue to be generated from the ODC at the Allen Gamble facility under the new lease agreement will be $7.5 million during the base term. The annual rent during any renewal option term shall be mutually agreed upon by the parties. Revenue and net operating income from the ODC at Allen Gamble was $1.9 million and $1.1 million, respectively, during the second quarter of 2024, and $3.8 million and $2.0 million, respectively, during the six months ended June 30, 2024.

Previous wording

On December 6, 2022, we received notice from the CDCR, of its intent to terminate the lease agreement for our 2,560-bed California City Correctional Center by March 31, 2024, due to the state's declining inmate population. The California City facility was idled effective April 1, 2024, and the Company is marketing the facility to potential customers. Rental revenue generated from the CDCR at the California City facility was $8.5 million and $31.1 million for the three months ended March 31, 2024 and the twelve months ended December 31, 2023, respectively. Facility net operating income at this facility was $7.2 million and $25.5 million for the three months ended March 31, 2024 and the twelve months ended December 31, 2023, respectively.

Current wording

On December 6, 2022, we received notice from the CDCR of its intent to terminate the lease agreement for our 2,560-bed California City Correctional Center by March 31, 2024, due to the state's declining inmate population. The California City facility was idled effective April 1, 2024, and the Company is marketing the facility to potential customers. Rental revenue generated from the CDCR at the California City facility was $8.6 million and $31.1 million during the period the lease was active in 2024 and the twelve months ended December 31, 2023, respectively. Facility net operating income at this facility was $7.2 million and $25.5 million during the period the lease was active in 2024 and the twelve months ended December 31, 2023, respectively.

Previous wording

For the three months ended March 31, 2024 and 2023, general and administrative expenses totaled $36.5 million and $32.7 million, respectively. General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees, and other administrative expenses. General and administrative expenses increased from the prior year period primarily as a result of an increase in corporate salaries and benefits, which was largely related to higher incentive-based compensation.

Current wording

For the three months ended June 30, 2024 and 2023, general and administrative expenses totaled $33.9 million and $32.6 million, respectively, while general and administrative expenses totaled $70.4 million and $65.3 million during the six months ended June 30, 2024 and 2023, respectively. General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees, and other administrative expenses. General and administrative expenses increased during the six months ended June 30, 2024 when compared to the same period in 2023 primarily as a result of an increase in corporate salaries and benefits, which was largely related to higher incentive-based compensation.

Previous wording

For the three months ended March 31, 2024 and 2023, depreciation and amortization expense totaled $31.7 million and $31.0 million, respectively. Depreciation and amortization expense increased primarily as a result of renovations completed at several facilities during 2023.

Current wording

For the three months ended June 30, 2024 and 2023, depreciation and amortization expense totaled $32.1 million and $31.6 million, respectively, while depreciation and amortization expense totaled $63.9 million and $62.7 million during the six months ended June 30, 2024 and 2023, respectively. Depreciation and amortization expense increased in both periods primarily as a result of renovations completed at several facilities during 2023, partially offset by facilities sold during 2023.

Previous wording

Interest expense is reported net of interest income and capitalized interest for the three months ended March 31, 2024 and 2023. Gross interest expense, net of capitalized interest, was $22.1 million for each of the three months ended March 31, 2024 and 2023. Gross interest expense was based on outstanding borrowings under our revolving credit facility, or Revolving Credit Facility, our outstanding term loan, or Term Loan, our outstanding senior unsecured notes, and our outstanding non-recourse mortgage note, as well as the amortization of loan costs and unused facility fees. Gross interest income was $3.4 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively. Gross interest income is earned on notes receivable, investments, cash and cash equivalents, and restricted cash. Interest income also includes interest income associated with the 20-year finance receivable associated with the Lansing Correctional Facility lease to the Kansas Department of Corrections, which commenced in January 2020, and amounted to $2.1 million for each of the three months ended March 31, 2024 and 2023. Net interest expense during the first quarter of 2024 decreased when compared to the first quarter of 2023 primarily as a result of the repurchase in the open market of $27.9 million principal amount of senior unsecured notes during 2023. Net interest expense also decreased due to an increase in interest income. The decrease in net interest expense was partially offset by an increase in the size of our Term Loan and an increase in the interest rates associated with our variable rate debt, as further described hereinafter.

Current wording

Interest expense is reported net of interest income for the three and six months ended June 30, 2024 and 2023. Gross interest expense was $20.1 million and $21.2 million for the three months ended June 30, 2024 and 2023, respectively, and was $42.1 million and $43.3 million for the six months ended June 30, 2024 or 2023, respectively. Gross interest expense was based on outstanding borrowings under our revolving credit facility, or Revolving Credit Facility, our outstanding term loan, or Term Loan, our outstanding senior unsecured notes, and our outstanding non-recourse mortgage note, as well as the amortization of loan costs and unused facility fees. Gross interest income was $3.0 million and $2.9 million for the three months ended June 30, 2024 and 2023, respectively, and was $6.4 million and $5.9 million, for the six months ended June 30, 2024 or 2023, respectively. Gross interest income is earned on notes receivable, investments, cash and cash equivalents, and restricted cash. Interest income also includes interest income associated with the 20-year finance receivable associated with the Lansing Correctional Facility lease to the Kansas Department of Corrections, which commenced in January 2020, and amounted to $2.1 million for both the three months ended June 30, 2024 and 2023 and $4.2 million and $4.3 million for the six months ended June 30, 2024 and 2023, respectively. Net interest expense during the three and six months ended June 30, 2024 decreased when compared to same periods in 2023 primarily as a result of debt repayments netting $51.4 million since June 30, 2023, including the repurchase in the open market of $27.9 million principal amount of senior unsecured notes during 2023. Net interest expense also decreased due to an increase in interest income. The decrease in net interest expense was partially offset by an increase in the size of our Term Loan, borrowings under our Revolving Credit Facility during the second quarter of 2024, and an increase in the interest rates associated with our variable rate debt, as further described hereinafter.

Previous wording

On October 11, 2023, we entered into a Fourth Amended and Restated Credit Agreement, or the Bank Credit Facility, that, among other things, increased the available borrowings under the Revolving Credit Facility from $250.0 million to $275.0 million, increased the size of the Term Loan from an initial balance of $100.0 million under the previous bank credit facility to $125.0 million, extended the maturity date to October 11, 2028 and made conforming changes to replace the Bloomberg Short-Term Bank Yield, or BSBY, index with a forward-looking term index based on the Secured Overnight Financing Rate, or Term SOFR. At the closing of the Bank Credit Facility, we received approximately $33.8 million of net borrowings before transaction costs as a result of the increased size of the Term Loan, and our Revolving Credit Facility remained unused as of March 31, 2024, except for $18.0 million in outstanding letters of credit. During the full year 2023, we incurred charges of $0.7 million primarily associated with the Bank Credit Facility and for the write-off of loan costs associated with the purchase of $21.0 million of our Old 8.25% Senior Notes (as defined below) and $6.9 million of our 4.75% senior unsecured notes due 2027, or the 4.75% Senior Notes, through open market purchases, net of discounts to the principal balance of the notes repurchased.

Current wording

On October 11, 2023, we entered into a Fourth Amended and Restated Credit Agreement, or the Bank Credit Facility, that, among other things, increased the available borrowings under the Revolving Credit Facility from $250.0 million to $275.0 million, increased the size of the Term Loan from an initial balance of $100.0 million under the previous bank credit facility to $125.0 million, extended the maturity date to October 11, 2028 and made conforming changes to replace the Bloomberg Short-Term Bank Yield, or BSBY, index with a forward-looking term index based on the Secured Overnight Financing Rate, or Term SOFR. At the closing of the Bank Credit Facility, we received approximately $33.8 million of net borrowings before transaction costs as a result of the increased size of the Term Loan. During the full year 2023, we incurred charges of $0.7 million primarily associated with the Bank Credit Facility and for the write-off of loan costs associated with the purchase of $21.0 million of our Old 8.25% Senior Notes (as defined below) and $6.9 million of our 4.75% senior unsecured notes due 2027, or the 4.75% Senior Notes, through open market purchases, net of discounts to the principal balance of the notes repurchased.