HOUSTON, March 13, 2007 (PRIME NEWSWIRE) -- Cornell Companies, Inc. (NYSE:CRN) today reported results for the quarter and year ended December 31, 2006.
James E. Hyman, Cornell's chairman and chief executive officer, said, "2006 was a successful year for Cornell both operationally and financially. As we move into 2007, we continue to focus on improving utilization across our portfolio and building foundations for future growth. We are committed to delivering value to our shareholders, who collectively voiced their confidence in the company, its businesses and its management team during the strategic process earlier this year."
Fourth-Quarter Summary (in thousands, except per share data)
---------------------------------------------------------------------
Three Months Ended Twelve Months Ended
-------------------- --------------------
As Reported 12/31/06 12/31/05 12/31/06 12/31/05
Revenue from operations $ 94,127 $ 79,435 $360,855 $310,775
Income from operations 13,322 7,199 44,798 27,866
Net loss from
discontinued
operations -- (228) (707) (3,622)
Net income 4,721 1,613 11,873 306
EPS - diluted $ 0.33 $ 0.12 $ 0.84 $ 0.02
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Diluted shares
outstanding used in
per share computation 14,161 13,848 14,059 13,695
Pro Forma, excluding
New Morgan Academy
and pre-opening and
start-up costs and
related revenue:*
Revenue $ 94,127 $ 79,435 $360,855 $306,016
Income from operations 14,283 8,238 50,068 33,705
Net income 5,288 2,534 15,937 4,969
EPS - diluted $ 0.37 $ 0.18 $ 1.13 $ 0.36
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* See reconciliation of historical GAAP and non-GAAP information
attached.
Fourth-Quarter Results
For the quarter ended December 31, 2006, the company reported net income of $4.7 million, or $0.33 per diluted share, compared with net income of $1.6 million, or $0.12 per diluted share, in the same period last year.
Fourth-quarter 2006 pro forma net income was $5.3 million, or $0.37 per diluted share, versus pro forma net income of $2.5 million, or $0.18 per diluted share, in the comparable 2005 quarter. Pro forma amounts exclude losses associated with New Morgan Academy totaling $0.6 million in both 2006 and 2005, as well as pre-opening and start-up costs (net of start-up revenues) for new facilities totaling $0.3 million in 2005.
Revenues increased 18.5 percent to $94.1 million for the fourth-quarter of 2006 from $79.4 million in the 2005 period. Much of the increase is attributable to programs opened during 2006, including the Moshannon Valley Correctional Center and Mesa Verde Community Correctional Facility. In addition, improved utilization at the Regional Correctional Center, D. Ray James Prison and Leadership Development Program further contributed to the revenue increase. Average contract occupancy levels were 100.5 percent in residential facilities compared with 97.1 percent in last year's fourth-quarter.
The company reported income from operations of $13.3 million for the fourth-quarter of 2006 compared with income of $7.2 million in the same quarter of 2005. The increase in the 2006 quarter was due primarily to those facilities previously mentioned, partially offset by approximately $0.7 million in costs associated with a strategic review and subsequent entry in October 2006 into a merger agreement with Veritas Capital. Comparisons of income from operations were also affected by costs related to New Morgan Academy of $1.0 million in 2006 and $0.5 million in 2005, as well as $0.6 million in net start-up costs in 2005.
Excluding the effects of start-up costs (net of start-up revenues) for new facilities and losses associated with New Morgan Academy, pro forma income from operations was $14.3 million in the fourth-quarter of 2006 compared with $8.2 million in the 2005 quarter. The increase in 2006 fourth-quarter results is primarily attributable to those factors previously noted.
Full-Year Results
For the year ended December 31, 2006, revenues increased 16.1 percent to $360.9 million from $310.8 million reported in 2005. The increase is related in part to those new programs opened in 2006, as well as improved utilization at the Regional Correctional Center and Southern Peaks Residential Treatment Center, offset by the closure of the Hector Garza Center (formerly, the Campbell Griffin Residential Treatment Center) in 2005. Income from operations was $44.8 million for this year compared with $27.9 million in the prior year. Net income was $11.9 million, or $0.84 per diluted share, compared with net income of $0.3 million, or $0.02 per diluted share, in the previous year. The 2006 period included approximately $2.1 million in strategic review costs, offset by a benefit of approximately $2.4 million associated with a one-time contract true-up calculation (net of receipts tax) for the Regional Correctional Center. In addition, the 2006 period included charges of approximately $1.9 million related to the adoption of Statement of Financial Accounting Standards No. 123R. The 2005 period included charges totaling $2.4 million to streamline management and close several underperforming programs.
Pro forma 2006 revenues were $360.9 million compared with $306.0 million in the prior year, and pro forma income from operations was $50.1 million compared with $33.7 million. Pro forma net income was $15.9 million, or $1.13 per diluted share, compared with $5.0 million, or $0.36 per diluted share, for the year ended December 31, 2005.
Earnings Outlook for First Quarter and Full Year 2007
Management expects first-quarter 2007 earnings to range from $0.01 to $0.05 per share. For the full year, management expects earnings to range from $0.80 to $0.86 per share. This guidance reflects an annual effective tax rate of approximately 42.2 percent.
Quarterly Webcast
Cornell's management will host a conference call and simultaneous webcast at 11 a.m. Eastern time today. The webcast may be accessed through Cornell's home page, www.cornellcompanies.com. An audio replay and podcast will be available on the above web site, or can otherwise be heard by dialing (800) 405-2236 or (303) 590-3000 and providing confirmation code 11084017. The replay will be available through Tuesday, March 20, 2007 by phone and through Wednesday, April 11, 2007 on the website. This earnings release can be found on Cornell's website at www.cornellcompanies.com under "Investor Relations -- Press Releases."
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based our forward-looking statements on management's beliefs and assumptions based on information available to management at the time the statements are made. Actual results may differ materially from those expressed or implied by forward-looking statements as a result of many factors or events, including the risks and uncertainties we discuss in our filings with the Securities and Exchange Commission. Our filings with the Securities and Exchange Commission are available free of charge on the Securities and Exchange Commissions's web site at http://www.sec.gov. Each forward looking-statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward looking-statement, whether as a result of new information, future events or otherwise. Information in this release is subject to adjustment resulting from further review and the obtaining of additional information that may impact our consolidated financial statements.
This release includes non-GAAP (pro forma) revenue, non-GAAP (pro forma) income from operations, non-GAAP (pro forma) net income, and non-GAAP (pro forma) net income per share data. These measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP (pro forma) measures used by other companies. Our management believes that the presentation of non-GAAP (pro forma) revenue, non-GAAP (pro forma) income from operations, non-GAAP (pro forma) net income, and non-GAAP (pro forma) net income per share data, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors regarding financial and business trends relating to our financial condition and results of operations. Our management further believes that where the adjustments used in calculating non-GAAP (pro forma) revenue, non-GAAP (pro forma) income from operations, non-GAAP (pro forma) net income, and non-GAAP (pro forma) net income per share data are based on specific, identified charges that impact different line items in our statements of operations that it is useful to investors to know how these specific line items in the statements of operations are affected by these adjustments.
Cornell Companies, Inc. (http://www.cornellcompanies.com) is a leading private provider of corrections, treatment and educational services outsourced by federal, state and local governmental agencies. Cornell provides a diversified portfolio of services for adults and juveniles, including incarceration and detention, transition from incarceration, drug and alcohol treatment programs, behavioral rehabilitation and treatment, and grades 3-12 alternative education in an environment of dignity and respect, emphasizing community safety and rehabilitation in support of public policy. The company has 79 facilities in 16 states and a total service capacity of 18,477.
The Cornell Companies, Inc. logo is available at http://www.primezone.com/newsroom/prs/?pkgid=1468
CORNELL COMPANIES, INC.
FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2006 2005 2006 2005
-------- -------- -------- --------
Revenues $ 94,127 $ 79,435 $360,855 $310,775
Operating expenses 71,305 63,462 275,040 238,305
Pre-opening and
start-up expenses (A) -- 563 2,657 9,017
Impairment of
long-lived assets 355 -- 355 --
Depreciation and
amortization 4,029 3,821 16,285 15,200
General and
administrative
expenses 5,116 4,390 21,720 20,387
-------- -------- -------- --------
Income from
operations 13,322 7,199 44,798 27,866
Interest expense, net 4,933 5,003 23,070 21,723
-------- -------- -------- --------
Income before
provision for
income taxes and
discontinued
operations 8,389 2,196 21,728 6,143
Provision for income
taxes 3,668 355 9,148 2,215
-------- -------- -------- --------
Income before
discontinued
operations 4,721 1,841 12,580 3,928
Discontinued
operations, net of
tax benefit -- (228) (707) (3,622)
-------- -------- -------- --------
Net income $ 4,721 $ 1,613 $ 11,873 $ 306
======== ======== ======== ========
Earnings per share:
- Basic $ 0.34 $ 0.12 $ 0.85 $ 0.02
- Diluted $ 0.33 $ 0.12 $ 0.84 $ 0.02
Number of shares used
in per share
computation:
- Basic 13,978 13,761 13,918 13,580
- Diluted 14,161 13,848 14,059 13,695
Total service capacity
(end of period) (B) 18,580 19,544 18,580 19,544
Contracted beds in
operation (end of
period) (B) 13,492 11,929 13,492 11,929
Average contract
occupancy (B) (C) 100.5% 97.1% 97.5% 96.0%
Average contract
occupancy excluding
start-up
operations (B) 100.5% 97.1% 97.5% 100.4%
(A) There were no revenues associated with reported start-up expenses
for the quarters ended December 31, 2006 and 2005. Revenues
associated with reported start-up expenses were zero million and
$4.8 million for the full years ended December 31, 2006 and 2005,
respectively.
(B) Data presented excludes discontinued operating facilities.
(C) Average contract occupancy percentages are based on actual
occupancy for the period as a percentage of the contracted
capacity of residential facilities in operation. Since certain
facilities have service capacities that exceed contracted
capacities, average contract occupancy percentages can exceed
100% if the average actual occupancy exceeded contracted
capacity.
Balance Sheet Data:
-------------------
(in thousands) December 31, December 31,
2006 2005
------------ ------------
Cash and cash equivalents $ 18,529 $ 13,723
Investment securities 11,925 7,250
Working capital 75,078 57,286
Property and equipment, net 319,064 323,861
Total assets 523,533 510,628
Long-term debt 255,471 266,659
Total debt 265,981 276,360
Stockholders' equity 181,564 165,461
Non-GAAP Financial Measures
Management uses non-GAAP financial measures to assess the operating results and effectiveness of Cornell's core continuing business operations. Pro forma measures exclude the effect of pre-opening and start-up revenues and costs and revenues and costs associated with New Morgan Academy. Earnings before interest, taxes, depreciation and amortization (EBITDA) measures operating income before depreciation and amortization, excluding the effect of pre-opening and start-up expenses, net of start-up revenue. The company calculates EBITDA amounts for comparative purposes to assist investors in analyzing its business performance. These non-GAAP financial measures may not be comparable to similarly titled measurements used by other companies and should not be used as a substitute for net income, earnings per share or other GAAP operating measurements. The following tables show reconciliations to GAAP measures for the non-GAAP measures included in this release.
RECONCILIATION OF HISTORICAL GAAP BASIS
RESULTS TO HISTORICAL NON-GAAP BASIS
INFORMATION (in thousands, except per share data):
--------------------------------------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2006 2005 2006 2005
-------- -------- -------- --------
GAAP revenues from
operations $ 94,127 $ 79,435 $360,855 $310,775
Less: Start-up revenue -- -- -- 4,759
-------- -------- -------- --------
Pro forma revenues
from operations $ 94,127 $ 79,435 $360,855 $306,016
======== ======== ======== ========
GAAP income from
operations $ 13,322 $ 7,199 $ 44,798 $ 27,866
Plus:
New Morgan Academy
loss from
operations 961 476 2,613 1,581
Pre-opening and
start-up expenses,
net of start-up
revenue -- 563 2,657 4,258
-------- -------- -------- --------
Pro forma income from
operations $ 14,283 $ 8,238 $ 50,068 $ 33,705
======== ======== ======== ========
GAAP net income $ 4,721 $ 1,613 $ 11,873 $ 306
Plus:
New Morgan Academy
net loss 567 589 2,496 2,151
Pre-opening and
start-up expenses,
net of start-up
revenue -- 332 1,568 2,512
-------- -------- -------- --------
Pro forma net income $ 5,288 $ 2,534 $ 15,937 $ 4,969
======== ======== ======== ========
GAAP income per share
-- diluted $ 0.33 $ 0.12 $ 0.84 $ 0.02
Plus:
New Morgan Academy 0.04 0.04 0.18 0.16
Pre-opening and
start-up expenses,
net of start-up
revenue -- 0.02 0.11 0.18
-------- -------- -------- --------
Pro forma earnings
per share -- diluted $ 0.37 $ 0.18 $ 1.13 $ 0.36
======== ======== ======== ========
RECONCILIATION OF HISTORICAL GAAP BASIS
RESULTS TO HISTORICAL NON-GAAP BASIS
INFORMATION (in thousands):
---------------------------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2006 2005 2006 2005
-------- -------- -------- --------
GAAP income from
operations $ 13,322 $ 7,199 $ 44,798 $ 27,866
Plus:
Depreciation and
amortization 4,029 3,821 16,285 15,200
Pre-opening and
start-up expenses,
net of start-up
revenue -- 563 2,657 4,258
-------- -------- -------- --------
EBITDA $ 17,351 $ 11,583 $ 63,740 $ 47,324
======== ======== ======== ========
Cornell Companies, Inc.
Operating Statistics from Continuing Operations
For the Three and Twelve Months Ended December 31, 2006 and 2005
Three Months Ended December 31,
----------------------------------------
2006 2005
------------------ ------------------
% %
---------- --- ---------- ---
Contracted beds in
operation:
------------------
Secure Institutional (A) 9,213 68% 7,553 64%
Adult Community-Based (A) 2,773 21% 2,770 23%
Juvenile(A) 1,506 11% 1,606 13%
---------- --- ---------- ---
Total 13,492 100% 11,929 100%
========== === ========== ===
Number of billed mandays:
-------------------------
Secure Institutional 864,148 59% 693,243 51%
Adult Community-Based:
Residential 251,637 17% 244,958 18%
Non-residential (B) 65,099 4% 130,614 9%
Juvenile:
Residential 131,655 9% 130,870 9%
Non-residential (B) 155,071 11% 171,969 13%
---------- --- ---------- ---
Total 1,467,610 100% 1,371,654 100%
========== === ========== ===
Revenues (in 000's):
--------------------
Secure Institutional $ 47,843 51% $ 34,146 43%
Adult Community-Based:
Residential 15,820 17% 15,368 19%
Non-residential 1,191 1% 1,421 2%
Juvenile:
Residential 22,814 24% 22,048 28%
Non-residential 6,459 7% 6,452 8%
---------- --- ---------- ---
Total $ 94,127 100% $ 79,435 100%
========== === ========== ===
Average revenue per diem:
-------------------------
Secure Institutional $ 55.40 $ 49.26
Adult Community-Based:
Residential $ 62.87 $ 62.74
Non-residential (B) $ 18.30 $ 10.88
Juvenile:
Residential $ 173.29 $ 168.47
Non-residential (B) $ 41.65 $ 37.52
---------- ----------
Total $ 64.14 $ 57.91
========== ==========
Twelve Months Ended December 31,
----------------------------------------
2006 2005
------------------ ------------------
% %
---------- --- ---------- ---
Contracted beds in
operation:
------------------
Secure Institutional (A) 9,213 68% 7,553 64%
Adult Community-Based (A) 2,773 21% 2,770 23%
Juvenile(A) 1,506 11% 1,606 13%
---------- --- ---------- ---
Total 13,492 100% 11,929 100%
========== === ========== ===
Number of billed mandays:
-------------------------
Secure Institutional 3,186,207 55% 2,649,041 49%
Adult Community-Based:
Residential 990,438 17% 942,721 17%
Non-residential (B) 461,081 8% 517,045 10%
Juvenile:
Residential 528,394 9% 555,151 10%
Non-residential (B) 685,411 11% 757,642 14%
---------- --- ---------- ---
Total 5,851,531 100% 5,421,600 100%
========== === ========== ===
Revenues (in 000's):
--------------------
Secure Institutional $ 178,795 50% $ 128,440 41%
Adult Community-Based:
Residential 61,116 17% 58,469 19%
Non-residential 5,179 1% 4,860 2%
Juvenile:
Residential 89,999 25% 93,086 30%
Non-residential 25,766 7% 25,920 8%
---------- --- ---------- ---
Total $ 360,855 100% $ 310,775 100%
========== === ========== ===
Average revenue per diem:
-------------------------
Secure Institutional $ 56.12 $ 48.49
Adult Community-Based:
Residential $ 61.71 $ 62.02
Non-residential (B) $ 11.23 $ 9.40
Juvenile:
Residential $ 170.33 $ 167.68
Non-residential (B) $ 37.59 $ 34.21
---------- ----------
Total $ 61.67 $ 57.32
========== ==========
(A) Residential contract capacity only.
(B) Non-residential "mandays" includes a mix of day units and
hourly units. Mental health facilities are reported in hours.