CoreCivic Inc

Previous wording

changes in government policy, legislation and regulations that affect utilization of the private sector for corrections, detention, and residential reentry services, in general, or our business, in particular, including, but not limited to, the continued utilization of our correctional and detention facilities by the federal government, including as a consequence of the United States Department of Justice, or DOJ, not renewing contracts as a result of President Biden's Executive Order on Reforming Our Incarceration System to Eliminate the Use of Privately Operated Criminal Detention Facilities, or the Private Prison EO, impacting utilization primarily by the United States Federal Bureau of Prisons, or BOP, and the United States Marshals Service, or USMS, and the impact of any changes to immigration reform and sentencing laws (we do not, under longstanding policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an individual's incarceration or detention);

Current wording

changes in government policy, legislation and regulations that affect utilization of the private sector for corrections, detention, and residential reentry services, in general, or our business, in particular, including, but not limited to, the continued utilization of our correctional and detention facilities by the federal government as a consequence of presidential executive orders, and the impact of any changes to immigration reform and sentencing laws (we do not, under longstanding policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an individual's incarceration or detention);

Previous wording

our ability to successfully identify and consummate future development and acquisition opportunities and realize projected returns resulting therefrom;

Current wording

our ability to successfully identify and consummate future development and acquisition opportunities and realize projected returns resulting therefrom; and

Previous wording

Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. Our statements can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties and assumptions, including the risks, uncertainties, and assumptions described in our Annual Report on Form 10-K for the year ended December 31, 2023 (including those risks and uncertainties described under Part I, Item 1A. Risk Factors) filed with the Securities and Exchange Commission, or the SEC, on February 20, 2024, or the 2023 Form 10-K, and in other reports, documents, and other information we file with the SEC from time to time. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We undertake no obligation to publicly update or revise any forward-looking statements made in this Quarterly Report, except as may be required by law.

Current wording

Any or all of our forward-looking statements in this Quarterly Report may turn out to be inaccurate. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. Our statements can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties and assumptions, including the risks, uncertainties, and assumptions described in our Annual Report on Form 10-K for the year ended December 31, 2024 (including those risks and uncertainties described under Part I, Item 1A. Risk Factors) filed with the Securities and Exchange Commission, or the SEC, on February 21, 2025, or the 2024 Form 10-K, and in other reports, documents, and other information we file with the SEC from time to time. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We undertake no obligation to publicly update or revise any forward-looking statements made in this Quarterly Report, except as may be required by law. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements.

Previous wording

We are the nation's largest owner of partnership correctional, detention, and residential reentry facilities and one of the largest prison operators in the United States. As of September 30, 2024, through our CoreCivic Safety segment, we operated 42 correctional and detention facilities, 38 of which we owned or controlled via a long-term lease, with a total design capacity of approximately 62,000 beds. Through our CoreCivic Community segment, we operated 21 residential reentry centers, which we owned or controlled via a long-term lease, with a total design capacity of approximately 4,000 beds. In addition, through our CoreCivic Properties segment, we owned 6 properties, with a total design capacity of approximately 10,000 beds.

Current wording

We are the nation's largest owner of partnership correctional, detention, and residential reentry facilities and one of the largest operators of such facilities in the United States. As of March 31, 2025, through our CoreCivic Safety segment, we operated 43 correctional and detention facilities, 39 of which we owned or controlled via a long-term lease, with a total design capacity of approximately 65,000 beds. Through our CoreCivic Community segment, we operated 21 residential reentry centers, which we owned or controlled via a long-term lease, with a total design capacity of approximately 4,000 beds. In addition, through our CoreCivic Properties segment, we owned 6 properties, with a total design capacity of approximately 10,000 beds.

Previous wording

We are a Maryland corporation formed in 1983. Our principal executive offices are located at 5501 Virginia Way, Brentwood, Tennessee, 37027, and our telephone number at that location is (615) 263-3000. Our website address is www.corecivic.com. We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such reports include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and our definitive proxy statement. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC. In addition, we routinely post on the “Investors” page of our website news releases, announcements and other statements about our business and results of operations, some of which may contain information that may be deemed material to investors. Therefore, we encourage investors to monitor the “Investors” page of our website and review the information we post on that page. Information contained on our website is not incorporated by reference herein and is not part of this Quarterly Report.

Current wording

We are a Maryland corporation formed in 1983. Our principal executive offices are located at 5501 Virginia Way, Brentwood, Tennessee, 37027, and our telephone number at that location is (615) 263-3000. Our website address is www.corecivic.com. We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such reports include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and our definitive proxy statement. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC. In addition, we routinely post on the “Investors” page of our website news releases, announcements and other statements about our business and results of operations, some of which may contain information that may be deemed material to investors. Therefore, we encourage investors to monitor the “Investors” page of our website and review the information we post on that page. Information contained on our website is not incorporated by reference herein and is not part of this Quarterly Report. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at the following address: www.sec.gov.

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 been in discussions with ICE to utilize additional bed capacity in our portfolio, and have responded to their requests for information and requests for proposals, or RFPs. 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. Following the recent renewal, 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. In addition, on August 1, 2024, we entered into a second new management c…

Excerpt shortened here; the source contains the full paragraph.

Current wording

While we believe the legislative and executive actions mentioned above will create long-term needs from our federal partners, we also believe the long-term growth opportunities of our business remain attractive as state and county government agencies consider the efficiency and offender programming opportunities we provide as flexible solutions to satisfy their needs. We have 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, during the second half of 2023, we signed new management contracts with Hinds County (MS), the state of Wyoming, and Harris County (TX) for up to 850 offenders at our 2,672-bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi. In addition to the 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. In addition, during the fourth quarter of 2023, we announced that we signed a 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. On August 1, 2024, we entered into a second new management contract with the state of Montana to care for an unspecified number of inmates at facilities we operate. As of March 31, 2025, we cared for 365 inmates from the state of Montana at our Saguaro facility. We also care for residents from the state of Hawaii and the state of Idaho at the Saguaro facility. On January 16, 2025, we announced that we were awarded another new management contract with the state of Montana to care for additional inmates outside the state of Montana and further expanding the geographic area of facilities we can provide to the State, with 240 inmates arriving at our Tallahatchie facility during the first quarter of 2025. 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.

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 nine 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 2024 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 2024 Form 10-K. There were no newly identified critical accounting policies during the first three months of 2025, nor were there any material changes to the critical accounting policies and estimates discussed in our 2024 Form 10-K.

Previous wording

Our results of operations are impacted by the number of correctional and detention facilities we operated, including 38 we owned or controlled via a long-term lease and four owned by our government partners (CoreCivic Safety), the number of residential reentry centers we owned or controlled via a long-term lease (CoreCivic Community), the number of facilities we leased to government agencies (CoreCivic Properties), and the facilities we owned that were not in operation. The following table sets forth the changes in the number of facilities in operation for the periods presented:

Current wording

Our results of operations are impacted by the number of correctional and detention facilities we operated, including 39 we owned or controlled via a long-term lease and four owned by our government partners (CoreCivic Safety), the number of residential reentry centers we owned or controlled via a long-term lease (CoreCivic Community), the number of facilities we leased to government agencies (CoreCivic Properties), and the facilities we owned that were not in operation. The following table sets forth the changes in the number of facilities in operation for the periods presented:

Previous wording

Three and Nine Months Ended September 30, 2024 Compared to the Three and Nine Months Ended September 30, 2023

Current wording

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Previous wording

Net income was $21.1 million, or $0.19 per diluted share, for the three months ended September 30, 2024, compared with net income of $13.9 million, or $0.12 per diluted share, for the three months ended September 30, 2023. Net income was $49.6 million, or $0.44 per diluted share, for the nine months ended September 30, 2024, compared with net income of $41.1 million, or $0.36 per diluted share, for the nine months ended September 30, 2023. Financial results for the three and nine months ended September 30, 2024 reflect a gain on the sale of real estate assets of $1.2 million and $1.7 million, respectively, and $3.1 million of asset impairments. Financial results for the nine months ended September 30, 2024 also reflect $31.3 million of expenses associated with debt repayments and refinancing transactions. For the three and nine months ended September 30, 2024, income tax expense reflects a net benefit of $0.6 million and $10.2 million, respectively, associated with these special items. Financial results for the three and nine months ended September 30, 2023 reflect a $0.4 million gain on the sale of real estate assets and $2.7 million of asset impairments. Financial results for the three and nine months ended September 30, 2023 also reflect $0.1 million and $0.3 million, respectively, of expenses associated with debt repayments and refinancing transactions. For the three months ended September 30, 2023, income tax expense reflects a net benefit of $0.7 million associated with these special items. For the nine months ended September 30, 2023, income tax expense reflects a net expense of $0.1 million associated with these special items and a change in our corporate tax structure in 2023.

Current wording

Net income was $25.1 million, or $0.23 per diluted share, for the three months ended March 31, 2025, compared with net income of $9.5 million, or $0.08 per diluted share, for the three months ended March 31, 2024. 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.

Previous wording

CoreCivic Safety segment, consisting of the 42 correctional and detention facilities that are owned or controlled via a long-term lease and managed by CoreCivic, as well as those correctional and detention facilities owned by third parties but managed by CoreCivic. CoreCivic Safety also includes the operating results of our subsidiary that provides transportation services to governmental agencies, TransCor America, LLC, or TransCor.

Current wording

CoreCivic Safety segment, consisting of the 43 correctional and detention facilities that are owned or controlled via a long-term lease and managed by CoreCivic, as well as those correctional and detention facilities owned by third parties but managed by CoreCivic. CoreCivic Safety also includes the operating results of our subsidiary that provides transportation services to governmental agencies, TransCor America, LLC, or TransCor.

Previous wording

For the three and nine months ended September 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:

Current wording

For the three months ended March 31, 2025 and 2024, 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 and nine months ended September 30, 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 months ended March 31, 2025 and 2024:

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 and nine months ended September 30, 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 months ended March 31, 2025 and 2024 (in millions):

Previous wording

Total management revenue increased $14.4 million, or 3.0%, and $93.5 million, or 6.8%, for the three and nine months ended September 30, 2024, respectively, as compared with the same periods in 2023. The increase in total management revenue in both the three- and nine-month periods was primarily a result of an increase in revenue of $18.2 million and $58.8 million, respectively, driven primarily by an increase of 4.0% and 4.3%, respectively, in average revenue per compensated man-day. The increase in average revenue per compensated man-day in both periods primarily resulted from the effect of per diem increases at many of our facilities. The increase in total management revenue resulting from an increase in average revenue per compensated man-day in the three-month period was partially offset by a decrease in revenue of $3.3 million driven primarily by a decrease in average daily compensated population from the third quarter of 2023 to the same period in 2024. The decrease in average daily compensated population during the three-month period was primarily a result of the termination of an IGSA with respect to the STFRC effective August 9, 2024, coupled with a reduction in compensated populations at our Allen Gamble Correctional Center, which transitioned to a lease in our Properties segment effective October 1, 2023.

Current wording

The $3.7 million, or 0.8%, decrease in total management revenue for the three months ended March 31, 2025 as compared with the same period in 2024 was primarily a result of a decrease in revenue of $12.0 million driven by a decrease in average daily compensated population from 2024 to 2025, including the effect of one less day of operations due to a leap year in 2024. The decrease in average daily compensated population was primarily driven by the termination of funding of the IGSA associated with the Dilley Facility effective August 9, 2024. The IGSA was subsequently amended and operations resumed at the facility on March 5, 2025. The decrease in revenue resulting from the decline in average daily compensated population was partially offset by an increase in revenue of $8.6 million driven by an increase of 1.8% 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. Revenue generated from our electronic monitoring and case management services during the three months ended March 31, 2025 decreased $0.3 million (from $8.8 million during the three months ended March 31, 2024 to $8.5 million during the three months ended March 31, 2025).

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 51% and 52% of our total revenue for the three months ended September 30, 2024 and 2023, respectively, decreasing $1.5 million, or 0.6%, during the three months ended September 30, 2024 as compared with the same period in 2023. The federal customers in our Safety and Community segments generated approximately 52% of our total revenue for both the nine months ended September 30, 2024 and 2023, increasing $39.8 million, or 5.4%, during the nine months ended September 30, 2024 as compared with the same period in 2023. The decrease in federal revenue in the three-month period was primarily a result of the termination of the IGSA with respect to the STFRC effective August 9, 2024, which was partially offset by the effect of increased occupancy and per diem increases at certain facilities. The increase in federal revenue in the nine-month period 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, partially offset by the termination of an IGSA with respect to the STFRC.

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 49% and 52% of our total revenue for the three months ended March 31, 2025 and 2024, respectively, decreasing $21.1 million, or 8.0%, during the three months ended March 31, 2025 as compared with the same period in 2024. The decrease in federal revenue was primarily a result of the termination of funding of the IGSA associated with the Dilley Facility in August 2024, and as a result of one less day of operations due to a leap year in 2024. The decrease in federal revenue was partially offset by the increased occupancy and per diem increases at certain facilities, particularly those where we have contracts with ICE, as well as the resumption of operations at the Dilley Facility on March 5, 2025.

Previous wording

State revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $5.6 million, or 2.9%, from the third quarter of 2023 to the third quarter of 2024. State revenues increased $24.8 million, or 4.5%, from the nine months ended September 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 and 2024, as previously described herein, as well as higher utilization from other states under existing management contracts. State revenues generated during the nine months ended September 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 nine-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.

Current wording

State revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $9.8 million, or 5.2%, during the three months ended March 31, 2025 as compared with the same period in 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 state of Montana resulting from two new management contracts executed during 2024 and 2025, as previously described herein, as well as higher utilization from other states under existing management contracts. The increase in state revenues was partially offset by the effect of one less day of operations due to a leap year in 2024.

Previous wording

The $6.4 million, or 61.0%, decrease in lease revenue from the third quarter of 2023 to the third quarter of 2024, and the $16.4 million, or 43.3%, decrease in lease revenue from the nine months ended September 30, 2023 to the comparable period in 2024 primarily resulted from the termination of the lease agreement at our California City Correctional Center effective March 31, 2024 and, to a lesser extent, 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. The decrease in lease revenue during the nine-month period was also a result of the termination of the lease at our North Fork Correctional Facility effective June 30, 2023, also as further described hereinafter.

Current wording

The $8.4 million, or 64.6%, decrease in lease revenue during the three months ended March 31, 2025 as compared with the same period in 2024 primarily resulted from the termination of the lease agreement at our California City Facility effective March 31, 2024.

Previous wording

Operating expenses totaled $370.8 million and $377.3 million for the three months ended September 30, 2024 and 2023, respectively, while operating expenses for the nine months ended September 30, 2024 and 2023 totaled $1,124.7 million and $1,093.9 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.

Current wording

Operating expenses totaled $374.7 million and $378.1 million for the three months ended March 31, 2025 and 2024, 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, decreased $6.2 million, or 1.7%, during the third quarter of 2024 when compared with the same period in 2023. Operating expenses in the three-month period decreased primarily as a result of the new lease of our Allen Gamble Correctional Center effective October 1, 2023, which is now reported in our Properties segment, and the termination of an IGSA with respect to the STFRC effective August 9, 2024, particularly because ICE ceased using the STFRC in early July 2024, which allowed us to reduce operating expenses associated with the STFRC. We leased the STFRC and the site upon which it was constructed from a third-party lessor. Our lease agreement with the third-party lessor was over a base period concurrent with the extended IGSA, which was amended in September 2020 to extend the term of the lease agreement through September 2026. The lease agreement provided us with the ability to terminate the lease with a notification period of at least 60 days if ICE terminated the extended IGSA. Upon being notified by ICE of its intent to terminate the IGSA at the STFRC, we provided notice to the third-party lessor of our intent to terminate the lease agreement effective August 9, 2024. We have no further lease or other operating expense commitments associated with STFRC following the termination date on August 9, 2024. The decrease in operating expenses incurred by CoreCivic Safety and Community in the three-month period was partially offset by the effect of wage increases resulting from labor shortages and wage pressures, as further described hereinafter. We achieved higher staffing levels during the three months ended September 30, 2024 when compared to the same period in 2023, and correspondingly, we were able to reduce our use of temporary incentives by $4.6 million during the three-month period, as we continued to see improvement in our attraction and retention of facility staff in this challenging labor market. The decrease in operating expenses incurred by CoreCivic Safety and Community in the three-month period was also partially offset by increased expenses associated with the new contracts at our Tallahatchie and Saguaro facilities.

Current 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, decreased $2.6 million, or 0.7%, during the three months ended March 31, 2025 when compared with the same period in 2024. Operating expenses decreased primarily as a result of the termination of funding of an IGSA associated with the Dilley Facility effective August 9, 2024. We leased the Dilley Facility and the site upon which it was constructed from a third-party lessor. The original lease agreement provided us with the ability to terminate the lease with a notification period of at least 60 days if ICE terminated the IGSA associated with the Dilley Facility. Upon being notified on June 10, 2024 by ICE of its intent to terminate the funding of the IGSA associated with the Dilley Facility, we provided notice to the third-party lessor of our intent to terminate the lease agreement effective August 9, 2024, at which time we had no further lease or material other operating expense commitments associated with the Dilley Facility. However, the IGSA was subsequently amended and operations resumed at the facility on March 5, 2025. Simultaneous with the March 5, 2025 amendment of the IGSA and resumption of operations at the Dilley Facility, we entered into a new lease agreement with the same third-party lessor over a period co-terminus with the term of the amended IGSA. The new lease agreement contains a graduated lease rate over the first six months consistent with the amended IGSA to correlate with the activation of the five neighborhoods within the facility, as further described hereinafter.

Previous wording

Total expenses per compensated man-day decreased to $77.02 during the three months ended September 30, 2024 from $77.67 during the three months ended September 30, 2023, a decrease of 0.8%, and increased to $77.16 during the nine months ended September 30, 2024 from $77.01 during the same period in the prior year, an increase of 0.2%. 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 $4.6 million and $9.2 million during the three and nine months ended September 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.

Current wording

Total expenses per compensated man-day increased to $78.47 during the three months ended March 31, 2025 from $76.94 during the three months ended March 31, 2024. 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 progressively improved since the COVID-19 pandemic, recruiting remains particularly challenging due to the front-line nature of the services we provide 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 have been able to reduce the use of these temporary incentives due to the improving hiring environment, we expect to continue to incur a certain level of incremental expenses in the future, particularly as demand from the federal government for capacity at our correctional and detention facilities is increasing, particularly from ICE. 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. The increase in total expenses per compensated man-day includes the effect of the termination of the funding of the IGSA associated with the Dilley Facility effective August 9, 2024. The IGSA was subsequently amended and operations resumed at the Dilley Facility in March 2025.

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 nine months ended September 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.

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 63% and 62% of our total operating expenses during the three months ended March 31, 2025 and 2024, 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 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 revenue deductions for staff vacancies as a result of the labor shortages, which are reflected as reductions to other management revenue. Estimating revenue deduction amounts due to staff vacancies can be complex and subject to management judgment and estimations. Some of our government partners have granted waivers for revenue deductions for staff vacancies 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

We enter into facility management contracts to provide bed capacity and management services to governmental entities in our CoreCivic Safety and CoreCivic Community segments for terms typically ranging from three to five years, with additional renewal periods at the option of the contracting governmental agency. Accordingly, a substantial portion of our facility management contracts are scheduled to expire each year, notwithstanding contractual renewal options that a government agency may exercise. Although we generally expect these customers to exercise renewal options or negotiate new contracts with us, one or more of these contracts may not be renewed by the corresponding governmental agency. Further, our government partners can generally terminate our management contracts for non-appropriation of funds or for convenience.

Current wording

We enter into facility management contracts to provide bed capacity and management services to governmental entities in our CoreCivic Safety and CoreCivic Community segments for terms typically ranging from one to five years, with additional renewal periods at the option of the contracting governmental agency. Accordingly, a substantial portion of our facility management contracts are scheduled to expire each year, notwithstanding contractual renewal options that a government agency may exercise. Although we generally expect these customers to exercise renewal options or negotiate new contracts with us, one or more of these contracts may not be renewed by the corresponding governmental agency. Further, our government partners can generally terminate our management contracts for non-appropriation of funds or for convenience.

Previous wording

Our management contract at the 300-bed Elizabeth Detention Center in New Jersey is currently scheduled to expire November 30, 2024, and contains three one-month extension options. ICE has issued an RFP for up to 600 beds in New Jersey. We intend to offer the Elizabeth Detention Center under this RFP, but can provide no assurance that we will be awarded a new contract under this RFP. We generated total revenue of $14.6 million at this facility during the nine months ended September 30, 2024.

Current wording

Our management contract at the 300-bed Elizabeth Detention Center in New Jersey is currently scheduled to expire on May 31, 2025. ICE has issued a request for proposal, or RFP, for up to 600 beds in New Jersey. We have offered the Elizabeth Detention Center under this RFP but can provide no assurance that we will be awarded a new contract under this RFP. We generated total revenue of $5.6 million and $19.6 million at this facility during the three months ended March 31, 2025 and the twelve months ended December 31, 2024, respectively.

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 $15.9 million, or 3.6%, from $443.3 million during the three months ended

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 decreased $3.6 million, or 0.8%, from $457.7 million during the three months ended March 31, 2024 to $454.2 million during the three months ended March 31, 2025. CoreCivic Safety's facility net operating income decreased $1.4 million, or 1.3%, from $107.6 million during the three months ended March 31, 2024 to $106.2 million during the three months ended March 31, 2025. During the three months ended March 31, 2025, CoreCivic Safety generated 91.7% of our total segment net operating income, compared with 86.3% during the three months ended March 31, 2024.

Previous wording

Operating margins in the CoreCivic Safety segment have been positively impacted by a 4.1% and 4.0% increase in average revenue per compensated man-day during the three and nine months ended September 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. Operating margins in CoreCivic Safety in both the three- and nine-month periods were also positively impacted by decreased variable operating expenses per compensated man-day which were primarily driven by a reduction in registry nursing expenses, as well as travel and recruiting expenses, as previously described herein. The positive impacts on operating margins resulting from the increase in average revenue per compensated man-day and the reduction in variable operating expenses per compensated man-day were partially offset by increased fixed operating expenses per compensated man-day associated with 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 nine months ended September 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.

Current wording

The negative impact on operating margins resulting from the termination of funding of the IGSA for services at the Dilley Facility was offset to some extent during the three months ended March 31, 2025 by the effect of per diem increases at many of our facilities. We have received per diem increases as a result of additional government appropriations funding to address increases in the wages of our employees. Revenue per compensated man-day also increased during the three months ended March 31, 2025 when compared to the same period in 2024, as a result of a change in our mix of business. Operating margin was negatively impacted by increased operating expenses per compensated man-day primarily associated with incremental staffing levels, higher wage rates, other staffing related expenses, and inflationary increases in variable 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. In addition, wages have increased as a result of an increase in our overall staffing levels as the demand from the federal government for capacity at our correctional and detention facilities, particularly from ICE, has increased under recent changes in immigration policies under the new presidential administration. 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 2024, we expect to continue to incur a certain level of additional incremental expenses in future quarters and may be required to increase certain incentives again as the demand for labor in our industry is increasing. We expect to continue to invest in staffing resources to meet this increasing demand.

Previous wording

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 began receiving inmates from the state of Montana in November 2023. In addition, on August 1, 2024, we entered into a second new management contract with the state of Montana to care for an unspecified number of inmates at facilities we operate. The second new contract is scheduled to expire on July 31, 2026, and may be extended by mutual agreement for a total term of up to seven years. As of September 30, 2024, we cared for approximately 245 inmates from the state of Montana at our Saguaro facility under both of these management contracts. We also care for residents from the state of Hawaii and the state of Idaho at the Saguaro facility. The new contracts represent an expansion of our relationship with the state of Montana where 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

On August 1, 2024, we entered into a management contract with the state of Montana to care for an unspecified number of inmates at facilities we operate. The contract is scheduled to expire on July 31, 2026, and may be extended by mutual agreement for a total term of up to seven years. As of March 31, 2025, we cared for 365 inmates from the state of Montana at our Saguaro facility under this management contract, along with another similar contract with the state of Montana that was entered into during the fourth quarter of 2023. We also care for residents from the state of Hawaii and the state of Idaho at our Saguaro facility. On January 16, 2025, we announced that we were awarded a new management contract with the state of Montana to care for additional inmates outside the state of Montana, with 240 inmates arriving at our Tallahatchie facility during the first quarter of 2025. This latest contract expands the geographic range of our facilities that can serve the state of Montana where 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.

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 decreased $1.6 million, or 5.3%, from $29.8 million during the three months ended September 30, 2023 to $28.2 million during the three months ended September 30, 2024, and increased $3.8 million, or 4.5%, from $84.6 million during the nine months ended September 30, 2023 to $88.4 million during the nine months ended September 30, 2024. CoreCivic Community's facility net operating income decreased $2.9 million, or 45.0%, from $6.5 million during the three months ended September 30, 2023 to $3.6 million during the three months ended September 30, 2024, and decreased $0.2 million, or 1.1%, from $15.7 million during the nine months ended September 30, 2023 to $15.5 million during the nine months ended September 30, 2024. During the three and nine months ended September 30, 2024, CoreCivic Community generated 2.9% and 4.2%, respectively, of our total segment net operating income, compared with 6.0% and 4.9%, respectively, during the three and nine months ended September 30, 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 decreased $0.2 million, or 0.6%, from $29.9 million during the three months ended March 31, 2024 to $29.7 million during the three months ended March 31, 2025. CoreCivic Community's facility net operating income increased $0.3 million, or 5.9%, from $5.8 million during the three months ended March 31, 2024 to $6.1 million during the three months ended March 31, 2025. During the three months ended March 31, 2025, CoreCivic Community generated 5.2% of our total segment net operating income, compared with 4.6% during the three months ended March 31, 2024.

Previous wording

Operating margins in our CoreCivic Community segment were negatively impacted during the three and nine months ended September 30, 2024 by an increase in operating expenses per compensated man-day which, similar to our CoreCivic Safety segment, were driven, in large part, by higher staffing levels and wage rates. In addition, variable expenses per compensated man-day during the three and nine months ended September 30, 2024 increased over the prior year periods primarily as a result of the settlement of a legal matter at a facility in the Community segment. The effect of the increased operating expenses per compensated man-day in the nine-month period was partially offset by an increase in average revenue per compensated man-day, which increased from the same period in 2023 primarily as a result of per diem increases at several of our facilities. Because facilities in our Community segment are typically smaller in size than those in our Safety segment, occupancy fluctuations or changes in operating expenses have a larger impact on operating margin per compensated man-day. Accordingly, modest changes in occupancy or operating expenses can have a notable impact on margins in our Community segment.

Current wording

Operating margins in our CoreCivic Community segment were positively impacted during the first quarter of 2025 by an increase in average revenue per compensated man-day, which increased from the first quarter of 2024 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 and inflationary increases in variable expenses. 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 continued to operate the Dahlia facility through the expiration of the management contract in June 2024. During our period of operation in 2024 and during the nine months ended September 30, 2023, this facility generated facility net operating income of $0.2 million and $0.5 million, respectively, including $0.1 million during the three months ended September 30, 2023.

Current wording

In January 2024, we completed the sale of the 120-bed Dahlia Facility, a residential reentry center in Denver, Colorado. 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 our period of operation in 2024, this facility generated facility net operating income of $0.2 million.

Previous wording

In July 2024, we completed the sale of our idled 390-bed Tulsa Transitional Center, a residential reentry center in Tulsa, Oklahoma. We received net sales proceeds of $3.4 million on the sale of the Tulsa property, resulting in a gain on sale of $1.2 million, which was recognized in the third quarter of 2024.

Current wording

In July 2024, we completed the sale of the idled 390-bed Tulsa Transitional Center, a residential reentry center in Tulsa, Oklahoma. We received net sales proceeds of $3.4 million on the sale of the Tulsa property, resulting in a gain on sale of $1.2 million, which was recognized in the third quarter of 2024.

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 $6.4 million, from $10.5 million during the three months ended September 30, 2023 to $4.1 million during the three months ended September 30, 2024, and decreased $16.3 million, from $37.9 million during the nine months ended September 30, 2023 to $21.5 million during the nine months ended September 30, 2024. CoreCivic Properties' facility net operating income decreased $6.1 million, from $7.4 million during the three months ended September 30, 2023 to $1.3 million during the three months ended September 30, 2024, and decreased $16.7 million, from $28.1 million during the nine months ended September 30, 2023 to $11.5 million during the nine months ended September 30, 2024. The decreases in total revenue and net operating income in the three- and nine-month periods were primarily the result of the termination of the lease at our California City Correctional Center effective March 31, 2024. The decreases in total revenue and net operating income in the nine-month period were also the result of the termination of the lease at our North Fork Correctional Facility effective June 30, 2023, and the sale of three actively leased properties during 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 nine months ended September 30, 2024, CoreCivic Properties generated 2.8% and 4.9% of our total segment net operating income, respectively, compared with 8.8% and 10.9%, respectively, during the three and nine months ended September 30, 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 $8.4 million, or 64.4%, from $13.0 million during the three months ended March 31, 2024 to $4.6 million during the three months ended March 31, 2025. CoreCivic Properties' facility net operating income decreased $7.7 million, or 83.5%, from $9.2 million during the three months ended March 31, 2024 to $1.5 million during the three months ended March 31, 2025. The decreases in total revenue and net operating income were primarily the result of the termination of the lease at our California City Facility effective March 31, 2024, as further described hereinafter. During the three months ended March 31, 2025, CoreCivic Properties generated 3.1% of our total segment net operating income, compared with 9.1% during the three months ended March 31, 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 $8.6 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.

Current wording

On December 6, 2022, we received notice from the California Department of Corrections and Rehabilitation, or CDCR, of its intent to terminate the lease agreement for our 2,560-bed California City Facility by March 31, 2024, due to the state's declining inmate population. The California City Facility was idled effective April 1, 2024. Rental revenue generated from the CDCR at the California City Facility was $8.5 million during the three months ended March 31, 2024. Facility net operating loss was $0.9 million and facility net operating income was $7.2 million during the three months ended March 31, 2025 and 2024, respectively, including carrying expenses we continue to incur post lease termination. Effective April 1, 2025, we entered into a letter agreement with ICE to begin activation efforts at the California City Facility. The letter agreement authorizes initial funding up to $10.0 million with maximum funding up to $31.2 million for a six-month period while we work to negotiate and execute a long-term contract. Because we are operating the facility rather than leasing it, we currently expect that the California City Facility will transition from our Properties segment to our Safety segment during the second quarter of 2025.

Previous wording

For the three months ended September 30, 2024 and 2023, general and administrative expenses totaled $41.2 million and $33.9 million, respectively, while general and administrative expenses totaled $111.5 million and $99.2 million during the nine months ended September 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 three and nine months ended September 30, 2024 when compared to the same periods in 2023, primarily as a result of an increase in corporate salaries and benefits, which was primarily related to higher incentive-based compensation.

Current wording

For the three months ended March 31, 2025 and 2024, general and administrative expenses totaled $36.0 million and $36.5 million, respectively. General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees, and other administrative expenses.

Previous wording

Interest expense is reported net of interest income for the three and nine months ended September 30, 2024 and 2023. Gross interest expense was $18.9 million and $20.7 million for the three months ended September 30, 2024 and 2023, respectively, and was $61.0 million and $64.0 million for the nine months ended September 30, 2024 and 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 $2.9 million and $2.8 million for the three months ended September 30, 2024 and 2023, respectively, and was $9.3 million and $8.7 million, for the nine months ended September 30, 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 the three months ended September 30, 2024 and 2023, and $6.2 million and $6.4 million for the nine months ended September 30, 2024 and 2023, respectively. Net interest expense during the three and nine months ended September 30, 2024 decreased when compared to same periods in 2023 primarily as a result of debt repayments netting $76.2 million since September 30, 2023, including the repurchase in the open market of $6.9 million principal amount of senior unsecured notes during the fourth quarter of 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 borrowings under our Revolving Credit Facility during the second and third quarters of 2024.

Current wording

Interest expense is reported net of interest income and capitalized interest for the three months ended March 31, 2025 and 2024. Gross interest expense was $18.4 million and $22.1 million for the three months ended March 31, 2025 and 2024, 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, or collectively, our Bank Credit Facility, 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 $3.2 million and $3.4 million for the three months ended March 31, 2025 and 2024, 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 $2.0 million and $2.1 million for the three months ended March 31, 2025 and 2024, respectively. Net interest expense during the first quarter of 2025 decreased when compared to the first quarter of 2024 primarily as a result of a decrease in our outstanding debt balances combined with a decrease in the interest rates associated with our variable rate debt, as further described hereinafter.

Previous wording

In connection with the Tender Offer, on March 12, 2024, we completed an underwritten registered public offering of $500.0 million aggregate principal amount of 8.25% senior unsecured notes due 2029, or the New 8.25% Senior Notes. The net proceeds from the issuance of the New 8.25% Senior Notes totaled approximately $490.3 million, after deducting underwriting discounts and offering expenses. We used the net proceeds from the offering of the New 8.25% Senior Notes, together with borrowings under our Revolving Credit Facility and cash on hand, to fund the Tender Offer and to redeem the remaining outstanding balance of the Old 8.25% Senior Notes on April 15, 2024. During the nine months ended September 30, 2024, we recorded charges totaling $31.3 million associated with the Tender Offer and redemption of the Old 8.25% Senior Notes.

Current wording

On March 12, 2024, we completed an underwritten registered public offering of $500.0 million aggregate principal amount of 8.25% senior unsecured notes due in April 2029, or the 8.25% Senior Notes. During March and April 2024, we used the net proceeds from the offering, along with cash on hand, to tender and redeem in full our remaining 8.25% senior unsecured notes due in April 2026, amounting to $593.1 million. During 2024, we recorded charges totaling $31.3 million associated with the cash tender offer and redemption of such senior unsecured notes, including $27.2 million during the first quarter of 2024.

Previous wording

Based on our total leverage ratio, interest on loans under our previous bank credit facility through October 10, 2023 was at a base rate plus a margin of 2.25% or at BSBY plus a margin of 3.25%, and a commitment fee equal to 0.45% of the unfunded balance of the then-existing revolving credit facility. From October 11, 2023 through the first full fiscal quarter of 2024, loans under our Bank Credit Facility bore interest at a base rate plus a margin of 2.25% or at Term SOFR plus a margin of 3.25%, and a commitment fee equal to 0.45% of the unfunded balance of the Revolving Credit Facility, as the interest rate spreads were fixed under the terms of the Bank Credit Facility until the first calculation date occurring after the first full fiscal quarter after the closing date of the Bank Credit Facility. Based on our total leverage ratio as of March 31, 2024, during the second quarter of 2024, the interest rate spread for base rate loans declined to 2.00%, the interest rate spread for Term SOFR loans was reduced to 3.00%, and the commitment fee decreased to 0.40%. Based on our total leverage ratio as of June 30, 2024, during the third quarter of 2024, the interest rate spread for base rate loans further declined to 1.75%, the interest rate spread for Term SOFR loans was reduced to 2.75%, and the commitment fee decreased to 0.35%.

Current wording

Based on our total leverage ratio, during the first quarter of 2024, interest on loans under our Bank Credit Facility bore interest at a base rate plus a margin of 2.25% or at the Secured Overnight Financing Rate, or Term SOFR, plus a margin of 3.25%, and a commitment fee equal to 0.45% of the unfunded balance of the Revolving Credit Facility. Based on our total leverage ratio as of March 31, 2024, during the second quarter of 2024, the interest rate spread for base rate loans declined to 2.00%, the interest rate spread for Term SOFR loans was reduced to 3.00%, and the commitment fee decreased to 0.40%. Based on our total leverage ratio as of June 30, 2024 and each quarter since then, the interest rate spread for base rate loans further declined to 1.75%, the interest rate spread for Term SOFR loans was reduced to 2.75%, and the commitment fee decreased to 0.35%.

Previous wording

Gain on sale of real estate assets, net during the three and nine months ended September 2024, includes the $1.2 million gain on the sale of our idled 390-bed Tulsa Transitional Center in July 2024. Gain on sale of real estate assets, net during the nine months ended September 30, 2024 also includes the $0.5 million gain on the sale of our 120-bed Dahlia Facility in January 2024, both as previously described herein. During the first quarter of 2024, we also sold an unused parcel of land in Texas generating net sales proceeds of $0.2 million and resulting in a gain on sale of $0.1 million. The gain was also reported in the first quarter of 2024.

Current wording

Gain on sale of real estate assets, net during the three months ended March 31, 2024, includes the $0.5 million gain on the sale of our 120-bed Dahlia Facility in January 2024, as previously described herein. In addition, during the first quarter of 2024, we sold an unused parcel of land in Texas generating net sales proceeds of $0.2 million and resulting in a gain on sale of $0.1 million. The gain was also reported in the first quarter of 2024.

Previous wording

We recorded an income tax expense of $9.1 million and $5.6 million for the three months ended September 30, 2024 and 2023, respectively, and $17.2 million and $18.0 million for the nine months ended September 30, 2024 and 2023, respectively. Income tax expense related to operations for the three and nine months ended September 30, 2024 was net of an income tax benefit of $0.6 million and $10.2 million, respectively, for expenses associated with asset impairments and, in the nine-month period, debt repayments and refinancing transactions, net of the gain on sale of real estate assets, all as previously described herein. Income tax expense for the nine months ended September 30, 2024, was also net of an income tax benefit associated with stock-based compensation vesting in the first quarter of 2024. Income tax expense for the nine months ended September 30, 2023 included an increase to income tax expense of $0.9 million for the revaluation of net deferred tax liabilities associated with a change in our corporate tax structure. During the first quarter of 2023, we completed a reorganization of our tax structure to simplify and more closely align operations and assets of certain of our subsidiaries and to reduce administrative efforts following our conversion from a real estate investment trust to a taxable C-corporation. Income tax expense related to operations for the three and nine months ended September 30, 2023 was net of an income tax benefit of $0.7 million and $0.8 million, respectively, associated with asset impairments and expenses associated with debt repayments and refinancing transactions, net of the gain on sale of real estate assets.

Current wording

We recorded an income tax expense of $7.0 million for the three months ended March 31, 2025 and an income tax benefit of $0.5 million for the three months ended March 31, 2024. The income tax expense related to operations for the three months ended March 31, 2025 and 2024 was net of an income tax benefit associated with stock-based compensation vesting. The income tax benefit related to operations for the three months ended March 31, 2024 included an income tax benefit of $8.4 million for expenses associated with debt repayments and refinancing transactions, net of the gain on sale of real estate assets, both as previously described herein.

Previous wording

Our principal capital requirements are for working capital, capital expenditures, and debt service payments, as well as outstanding commitments and contingencies, as further discussed in the notes to our financial statements. Effective January 1, 2021, we revoked our election to be taxed as a REIT. We believe this conversion in corporate tax structure improves our overall credit profile, as we are able to allocate our free cash flow toward the repayment of debt, which may include the purchase of our outstanding debt in open market transactions, privately negotiated transactions or otherwise, and to exercise more discretion in returning capital to our shareholders, which could include share repurchases and/or future dividends. Any future dividend is subject to our Board of Directors', or BODs, determinations as to the amount of distributions and the timing thereof, as well as limitations under the Company's debt covenants. Any such debt repurchases will depend upon prevailing market conditions, our liquidity requirements, contractual requirements, applicable securities laws requirements, and other factors. We were not able to implement a meaningful share repurchase program under the REIT structure without increasing our debt because a substantial portion of our free cash flow was required to satisfy the distribution requirements under the REIT structure.

Current wording

Our principal capital requirements are for working capital, capital expenditures, and debt service payments, as well as outstanding commitments and contingencies, as further discussed in the notes to our financial statements. Effective January 1, 2021, we revoked our election to be taxed as a real estate investment trust, or REIT. We believe this conversion in corporate tax structure improves our overall credit profile, as we are able to allocate our free cash flow toward the repayment of debt, which may include the purchase of our outstanding debt in open market transactions, privately negotiated transactions or otherwise, and to exercise more discretion in returning capital to our shareholders, which could include share repurchases and/or future dividends. Any future dividend is subject to our Board of Directors', or BODs', determinations as to the amount of distributions and the timing thereof, as well as limitations under the Company's debt covenants. Any such debt repurchases will depend upon prevailing market conditions, our liquidity requirements, contractual requirements, applicable securities laws requirements, and other factors. We were not able to implement a meaningful share repurchase program under the REIT structure without increasing our debt because a substantial portion of our free cash flow was required to satisfy the distribution requirements under the REIT structure.