HOUSTON, Aug. 8, 2008 (PRIME NEWSWIRE) -- Cornell Companies, Inc. (NYSE:CRN) today reported results for the three and six months ended June 30, 2008.
James E. Hyman, Cornell's chairman, president and chief executive officer, said, "The progress we made on executing our business plan resulted in strong operating performance for our second quarter, which enabled us to raise and then exceed our updated guidance for the period. We continued the expansions at the Great Plains Correctional Facility (Great Plains) and the additional expansion at D. Ray James Prison. We remain confident we can deliver our outlook for 2008, we can succeed in this strong demand environment, and we can accelerate our growth into 2009."
The Company also announced that it finalized arrangements for the construction of a 1,250-bed male facility in Hudson, Colorado, which will be built and owned by a third party and be located on land the Company is expected to sell to the third party. The Company has signed a new implementation agreement with the Colorado Department of Corrections relating to the development of the site and expects to begin receiving inmates in the fourth quarter of 2009.
Second-Quarter Summary (in thousands, except per share data)
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Three Months Ended Six Months Ended
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As Reported 6/30/2008 6/30/2007 6/30/2008 6/30/2007
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Revenue from operations $ 94,646 $ 91,494 $ 190,038 $ 181,138
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Income from operations 14,914 12,047 29,404 19,880
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Net income 5,345 3,446 9,979 4,109
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EPS - diluted $ 0.36 $ 0.24 $ 0.68 $ 0.29
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Diluted shares outstanding
used in per share
computation 14,655 14,465 14,711 14,382
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Higher Net Income on Increased Revenues
Revenues grew 3.4 percent to $94.6 million for the second quarter from $91.5 million in the 2007 period. Much of the increase came from expanding the Big Spring Correctional Center and the D. Ray James Prison, in November 2007 and February 2008, respectively. Strength at core programs, including the Cornell Abraxas Academy and the Southern Peaks Regional Treatment Center, and the facility reactivation and subsequent ramp during the 2007 fourth quarter at Great Plains also added to revenue. These increases were partially offset by lower revenue due to two events in July 2007; the exit from our management contract at the Donald W. Wyatt Detention Center, and the previously announced withdrawal of detainees by the Bureau of Immigration and Customs Enforcement from the Regional Correctional Center (RCC) in July 2007. Average contract occupancy levels were 93.0 percent for our residential facilities compared with 102.9 percent in last year's second quarter. The spare capacity at the RCC and the Cornell Abraxas I juvenile facility primarily accounted for this decrease in overall occupancy.
Income from operations of $14.9 million for the second quarter improved from $12.0 million in the 2007 quarter. The increase was related in part to the higher revenues mentioned above. For the second quarter net income was $5.3 million, or $0.36 per diluted share, compared with net income of $3.4 million, or $0.24 per diluted share, in last year's second quarter. The Company capitalized interest of $0.8 million (or $0.03 per diluted share, after taxes) in 2008, compared with capitalized interest of $0.2 million (or $0.01 per diluted share, after taxes) in the 2007 quarter. Net income in 2007 included approximately $0.5 million in pre-tax costs (or $0.02 per diluted share, after taxes) associated with the merger agreement with Veritas Capital that terminated during the second quarter.
Increased Revenues, Net Income for the Six-Months
For the first half ended June 30, 2008, revenues grew 4.9 percent to $190.0 million from $181.1 million in 2007. The increase was principally related to the facility expansions and activations at those programs mentioned earlier. In addition, the 2008 period included approximately $1.5 million associated with the contract-based true-up calculation at the Regional Correctional Center (RCC) for the contract period ended March 2008.
Income from operations was $29.4 million for this year's six month period compared with $19.9 million in the prior year. The increase was related in part to the higher revenues. Net income was $10.0 million, or $0.68 per diluted share, compared with net income of $4.1 million, or $0.29 per diluted share, in the previous year's first six months. 2008 results reflect capitalized interest of $1.3 million (or $0.05 per diluted share, after taxes) as compared with $0.2 million (or $0.01 per diluted share, after taxes) in last year's period and revenues of approximately $1.5 million from the true-up calculation mentioned earlier. The 2007 period included approximately $3.7 million in pre-tax costs (or $0.15 per diluted share, after taxes) associated with the terminated Veritas merger and related shareholder litigation.
Earnings Outlook for Third and Fourth Quarters and Full Year 2008
Management expects 2008 earnings per share for the third quarter to range from $0.29 to $0.33 per share, and for the fourth-quarter to be between $0.37 to $0.41 per share. For the full year, management now anticipates earnings of $1.34 to $1.42 per share, as compared to most recent guidance of $1.26 to $1.33 per share.
The guidance also assumes estimated net activation costs of approximately $0.9 million for the expansion activations at Great Plains and Walnut Grove Youth Correctional Facility during the third quarter and the subsequent population ramp through the fourth quarter.
This guidance reflects an annual effective tax rate of approximately 43.0 percent.
Quarterly Webcast
Cornell's management will host a conference call and simultaneous webcast at 11:00 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 Website, or can otherwise be heard by dialing (800) 405-2236 or (303) 590-3000 and providing confirmation code 11117812. The replay will be available through Friday, August 15, 2008 by phone and through Friday, September 12, 2008 on the Web site. This earnings release can be found on Cornell's Website under "Investor Relations - Press Releases."
Forward-Looking Statements
Statements regarding the Company's outlook for 2008, ability to succeed, growth plan for 2009, new facility in Hudson, Colorado, future earnings, facility expansions including those at D. Ray James Prison, Walnut Grove Youth Correctional Facility and Great Plains, results of operations, effective tax rate and future growth, as well as any other statements that are not historical facts, are forward-looking statements within the meaning of applicable securities laws that involve certain risks, uncertainties and assumptions. These include but are not limited to Cornell's ability to perform according to its current expectations, changes in supply and demand, actions by governmental agencies and other third parties, and other factors detailed in the Company's most recent Form 10-K and other filings with the Securities and Exchange Commission, which are available free of charge on the SEC's Web site at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.
About Cornell Companies
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 currently has 71 facilities in 15 states and the District of Columbia and a total service capacity of 18,550.
The Cornell Companies, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=1468
CORNELL COMPANIES, INC.
FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues $ 94,646 $ 91,494 $190,038 $181,138
Operating expenses 68,280 68,360 138,491 137,973
Depreciation and amortization 4,220 3,912 8,377 7,753
General and administrative
expenses 7,232 7,175 13,766 15,532
-------- -------- -------- --------
Income from operations 14,914 12,047 29,404 19,880
Interest expense, net 5,567 5,918 11,862 12,552
-------- -------- -------- --------
Income before provision for
income taxes 9,347 6,129 17,542 7,328
Provision for income taxes 4,002 2,683 7,563 3,219
-------- -------- -------- --------
Net income $ 5,345 $ 3,446 $ 9,979 $ 4,109
======== ======== ======== ========
Earnings per share:
- Basic $ 0.37 $ 0.24 $ 0.70 $ 0.29
- Diluted $ 0.36 $ 0.24 $ 0.68 $ 0.29
Number of shares used in per
share computation:
- Basic 14,278 14,124 14,285 14,067
- Diluted 14,655 14,465 14,711 14,382
Total service capacity (end of
period) 18,900 18,632 18,900 18,632
Contracted beds in operation
(end of period) 15,298 13,331 15,298 13,331
Average contract occupancy(A) 93.0% 102.9% 94.3% 101.7%
(A) Average contract occupancy percentages are calculated based on
actual occupancy for the period as a percentage of the contracted
capacity for residential facilities in operation. These
percentages do not reflect the operations of non-residential
community-based programs. At certain residential facilities, our
contracted capacity is lower than the facility's service
capacity. In addition, certain facilities have and are currently
operating above the contracted capacity. As a result, average
contract occupancy percentages can exceed 100% if the average
actual occupancy exceeded contracted capacity.
Balance Sheet Data:
------------------
(in thousands) June 30, December 31,
2008 2007
------------ ------------
Cash and cash equivalents $ 1,021 $ 3,028
Investment securities -- 250
Working capital 35,444 47,757
Property and equipment, net 424,637 383,952
Total assets 602,787 562,287
Long-term debt 292,884 275,298
Total debt 304,296 286,709
Stockholders' equity 212,711 200,449
Cornell Companies, Inc.
Operating Statistics from Continuing Operations
For the Three and Six Months Ended June 30, 2008 and 2007
Three Months Ended June 30,
----------------------------------
2008 2007
---------------- ----------------
% %
---------- ---- ---------- ----
Contracted beds in operation(A):
--------------------------------
Adult Secure Services 11,200 74% 9,192 69%
Adult Community-based Services 2,661 17% 2,773 21%
Abraxas Youth & Family Services 1,437 9% 1,366 10%
---------- ---- ---------- ----
Total 15,298 100% 13,331 100%
========== ==== ========== ====
Number of billed mandays:
-------------------------
Adult Secure Services 941,827 63% 863,073 59%
Adult Community-based Services:
Residential 253,914 17% 258,990 18%
Non-residential(B) 59,337 4% 64,987 4%
Abraxas Youth & Family Services:
Residential 107,096 7% 118,301 8%
Non-residential(B) 131,522 9% 157,618 11%
---------- ---- ---------- ----
Total 1,493,696 100% 1,462,969 100%
========== ==== ========== ====
Revenues (in 000's):
--------------------
Adult Secure Services $ 50,305 53% $ 47,775 52%
Adult Community-based Services:
Residential 16,706 18% 16,069 18%
Non-residential 749 1% 883 1%
Abraxas Youth & Family Services:
Residential 20,398 21% 19,756 21%
Non-residential 6,488 7% 7,011 8%
---------- ---- ---------- ----
Total $ 94,646 100% $ 91,494 100%
========== ==== ========== ====
Average revenue per diem:
-------------------------
Adult Secure Services $ 53.41 $ 55.35
Adult Community-based Services:
Residential $ 65.80 $ 62.04
Non-residential(B) $ 12.62 $ 13.59
Abraxas Youth & Family Services:
Residential $ 190.46 $ 167.00
Non-residential(B) $ 49.33 $ 44.48
---------- ----------
Total $ 63.36 $ 62.54
========== ==========
Six Months Ended June 30,
----------------------------------
2008 2007
---------------- ----------------
% %
---------- ---- ---------- ----
Contracted beds in operation(A):
--------------------------------
Adult Secure Services 11,200 74% 9,192 69%
Adult Community-based Services 2,661 17% 2,773 21%
Abraxas Youth & Family Services 1,437 9% 1,366 10%
---------- ---- ---------- ----
Total 15,298 100% 13,331 100%
========== ==== ========== ====
Number of billed mandays:
-------------------------
Adult Secure Services 1,839,952 62% 1,708,786 59%
Adult Community-based Services:
Residential 510,669 17% 506,147 18%
Non-residential(B) 119,300 4% 127,200 4%
Abraxas Youth & Family Services:
Residential 218,965 8% 235,147 8%
Non-residential(B) 268,053 9% 310,851 11%
---------- ---- ---------- ----
Total 2,956,939 100% 2,888,131 100%
========== ==== ========== ====
Revenues (in 000's):
--------------------
Adult Secure Services $ 100,204 53% $ 94,284 52%
Adult Community-based Services:
Residential 33,641 18% 31,420 17%
Non-residential 1,534 1% 1,869 1%
Abraxas Youth & Family Services:
Residential 41,309 21% 39,795 22%
Non-residential 13,350 7% 13,770 8%
---------- ---- ---------- ----
Total $ 190,038 100% $ 181,138 100%
========== ==== ========== ====
Average revenue per diem:
-------------------------
Adult Secure Services $ 54.46 $ 55.18
Adult Community-based Services:
Residential $ 65.88 $ 62.08
Non-residential(B) $ 12.86 $ 14.69
Abraxas Youth & Family Services:
Residential $ 188.66 $ 169.23
Non-residential(B) $ 49.80 $ 44.30
---------- ----------
Total $ 64.27 $ 62.72
========== ==========
(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.