HOUSTON, March 5, 2009 (GLOBE NEWSWIRE) -- Cornell Companies, Inc. (NYSE:CRN) today reported results for the three and twelve months ended December 31, 2008, and provided guidance for the first quarter and the full year for 2009.
James E. Hyman, Cornell's chairman, president and chief executive officer, said, "Cornell finished the year with another quarter of strong execution of our business plan and a resulting increase in earnings above the prior year's quarter. Looking to 2009, the company expects to deliver another year of solid growth while recognizing the uncertainty in the current budget environment."
Fourth-Quarter Summary (in thousands, except per share data)
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Three Months Ended Twelve Months Ended
------------------- -------------------
As Reported 12/31/2008 12/31/2007 12/31/2008 12/31/2007
Revenue from operations $101,499 $ 92,139 $386,724 $360,604
Income from operations 18,756 14,590 62,197 45,009
Net income 7,384 5,384 22,191 11,910
EPS - diluted $ 0.50 $ 0.37 $ 1.51 $ 0.82
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Diluted shares outstanding
used in per share
computation 14,727 14,599 14,698 14,480
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Higher Net Income on Increased Revenues for Fourth-Quarter Results
Revenues grew 10.2 percent to $101.5 million for the fourth quarter of 2008 from $92.1 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. In addition, the Great Plains Correctional Facility (Great Plains) reactivation and subsequent ramp during the fourth quarter of 2007, and its September 2008 expansion activation and subsequent ramp during the 2008 fourth quarter also added to revenue. Average contract occupancy levels were 90.2 percent for our residential facilities compared with 93.9 percent in the fourth quarter of 2007. The increase in capacity from expanding D. Ray James Prison in the first quarter of 2008, and Great Plains and Walnut Grove Youth Correctional Facility in the third quarter of 2008, along with spare capacity at the Cornell Abraxas I juvenile facility, primarily accounted for this decrease in overall occupancy.
Income from operations of $18.8 million for the fourth quarter of 2008 improved from $14.6 million in the fourth quarter of 2007. The increase was related in part to the higher revenues mentioned above. Income from operations for the 2008 fourth quarter also included the net claim settlement received of $1.5 million as well as a gain on the settlement of a life insurance policy pertaining to the Company's founder of approximately $0.7 million.
Net income for the latest three months was $7.4 million, or $0.50 per diluted share, compared with net income of $5.4 million, or $0.37 per diluted share, in the fourth quarter of 2007. The Company capitalized interest of $0.6 million (or $0.02 per diluted share, after taxes) in the fourth quarter of 2008, compared with capitalized interest of $0.5 million (or $0.02 per diluted share, after taxes) in the 2007 fourth quarter. As previously noted, the 2008 fourth quarter results included a net claim settlement received of approximately $1.5 million in pre-tax income (or $0.06 per diluted share, after taxes), as well as a gain on settlement of a life insurance policy pertaining to the Company's founder of approximately $0.7 million (or $0.03 per diluted share, after taxes). The fourth quarter 2008 results also benefited from a lower effective tax rate of 37.6%, compared with 39.6% in the 2007 fourth quarter, largely driven by the utilization of certain payroll tax credits.
Increased Revenues, Net Income for the Full Year 2008
For the twelve months ended December 31, 2008, revenues grew 7.2 percent to $386.7 million from $360.6 million in 2007. The increase was principally related to the facility expansions and activations at those facilities mentioned earlier. These increases were partially offset by lower revenues as a result of our exit from several management contracts in 2007 and 2008, including the Donald W. Wyatt Detention Center in July 2007. In addition, the 2008 period included approximately $1.5 million in revenue associated with the contract-based true-up calculation at the RCC for the contract period ended March 2008.
Higher revenues increased income from operations to $62.2 million for the 2008 twelve month period compared with $45.0 million in the prior year. Net income was $22.2 million, or $1.51 per diluted share, compared with net income of $11.9 million, or $0.82 per diluted share, in 2007. 2008 results also reflected capitalized interest of $2.9 million (or $0.12 per diluted share, after taxes) as compared with $1.2 million (or $0.05 per diluted share, after taxes) in 2007. Included in 2008 results is a net claim settlement received of approximately $1.5 million in pre-tax income (or $0.06 per diluted share, after taxes). The 2008 results also benefited from a lower effective tax rate of 40.8%, compared with 42.6% in 2007, largely driven by the utilization of certain payroll tax credits. The 2007 year included approximately $3.7 million in pre-tax costs (or $0.15 per diluted share, after taxes) associated with a terminated merger and related shareholder litigation and the net claim settlement received of $1.5 million in pre-tax income (or $0.06 per diluted share).
Earnings Outlook for First Quarter and Full Year 2009
Management expects earnings per share for the first quarter of 2009 to range from $0.30 to $0.34 per share. For the full year 2009, management anticipates earnings of $1.64 to $1.72 per share.
This guidance for 2009 assumes the approximate 700 bed expansion at D. Ray James Prison begins to ramp at the beginning of the third quarter of 2009. If this expansion were to remain empty for all of 2009, earnings for the full year could be reduced by up to approximately $0.11 per share.
Also, guidance assumes the new Hudson, Colorado facility commences operations at the end of the fourth quarter, incurring approximately $0.04 to $0.06 per share of expenses related to activation and ramping of population of the facility. If conditions warrant opening the facility sooner, pre-opening expense would increase. Similarly, if we decide to defer opening into the first quarter of 2010, pre-opening expense in the fourth quarter would decrease.
This guidance reflects an annual effective tax rate of approximately 42.5 percent.
Comparing the Company's first quarter of 2009 guidance to its fourth quarter of 2008 actual results requires certain adjustments. First, the first quarter is negatively impacted by two fewer days than the fourth quarter and, for 2009, will have one fewer day than the first quarter of 2008 due to the leap year. Second, the first quarter is also negatively impacted by unemployment taxes as base wage rates reset for state unemployment tax purposes. Lastly, as mentioned above, the fourth quarter of 2008 included net positive benefits from several non-recurring events.
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 11127146. The replay will be available through Thursday, March 12, 2009 by phone and through Thursday, April 9, 2009 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 2009, ability to succeed, growth for 2009, long-term demand, future earnings, facility expansions including those at D. Ray James Prison, results of operations and effective tax rate, 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 risks and uncertainties associated with general economic and market conditions, including the impact governmental budgets can have on our per diem rates and occupancy, Cornell's ability to perform according to its current expectations, changes in supply and demand, actions by government agencies and other third parties, access to capital and other risks and uncertainties detailed in the Company's most recent Form 10-K and other filings made by us from time to time 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 the statements made. All information set forth in this release is current as of the date of this release. Cornell undertakes no duty to update any statement in light of new information or future events.
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 69 facilities in 15 states and the District of Columbia and a total service capacity of 19,945.
The Cornell Companies, Inc. logo is available at http://www.globenewswire.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,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues $101,499 $ 92,139 $386,724 $360,604
Operating expenses 70,906 67,652 280,630 274,110
Depreciation and
amortization 5,100 4,246 17,943 15,986
General and administrative
expenses 6,737 5,651 25,954 25,499
-------- -------- -------- --------
Income from operations 18,756 14,590 62,197 45,009
Interest expense, net 6,342 5,679 23,958 24,264
-------- -------- -------- --------
Income before provision
for income taxes and
minority interest 12,414 8,911 38,239 20,745
Provision for income taxes 4,672 3,527 15,603 8,835
Minority interest in
consolidated special
purpose entity 358 445
-------- -------- -------- --------
Net income $ 7,384 $ 5,384 $ 22,191 $ 11,910
======== ======== ======== ========
Earnings per share:
- Basic $ 0.52 $ 0.38 $ 1.55 $ 0.84
- Diluted $ 0.50 $ 0.37 $ 1.51 $ 0.82
Number of shares used in
per share computation:
- Basic 14,329 14,247 14,298 14,149
- Diluted 14,727 14,599 14,698 14,480
Total service capacity
(end of period) 19,945 18,587 19,945 18,587
Contracted beds in
operation (end of period) 16,821 14,211 16,821 14,211
Average contract
occupancy (A) 90.2% 93.9% 92.0% 99.6%
(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 percent if
the average actual occupancy exceeded contracted capacity.
Balance Sheet Data:
-------------------
(in thousands) Dec. 31, Dec. 31,
2008 2007
-------- --------
Cash and cash equivalents $ 14,613 $ 3,028
Investment securities -- 250
Working capital 48,954 47,757
Property and equipment, net 450,354 383,952
Total assets 636,921 562,287
Long-term debt 308,070 275,298
Total debt 320,482 286,709
Stockholders' equity 227,722 200,449
Cornell Companies, Inc.
Operating Statistics from Continuing Operations
For the Three and Twelve Months Ended December 31, 2008 and 2007
Three Months Ended December 31,
-------------------------------------
2008 2007
---------------- -----------------
% %
---------- --- ---------- ---
Contracted beds in
operation (A):
------------------
Adult Secure Services 12,793 76% 9,969 70%
Adult Community-based Services 2,635 16% 2,805 20%
Abraxas Youth & Family Services 1,393 8% 1,437 10%
---------- --- ---------- ---
Total 16,821 100% 14,211 100%
========== === ========== ===
Number of billed mandays:
-------------------------
Adult Secure Services 1,061,893 67% 836,475 58%
Adult Community-based
Services:
Residential 229,684 14% 259,279 19%
Non-residential (B) 65,782 4% 59,955 5%
Abraxas Youth & Family
Services:
Residential 103,930 7% 117,976 8%
Non-residential (B) 121,781 8% 148,484 10%
---------- --- ---------- ---
Total 1,583,070 100% 1,422,169 100%
========== === ========== ===
Revenues (in 000's):
--------------------
Adult Secure Services $ 57,613 57% $ 45,827 50%
Adult Community-based
Services:
Residential 16,930 17% 16,898 18%
Non-residential 645 1% 766 1%
Abraxas Youth & Family
Services:
Residential 20,674 20% 21,735 24%
Non-residential 5,637 5% 6,913 7%
---------- --- ---------- ---
Total $ 101,499 100% $ 92,139 100%
========== === ========== ===
Average revenue per diem:
-------------------------
Adult Secure Services $ 54.25 $ 54.79
Adult Community-based
Services:
Residential $ 73.71 $ 65.17
Non-residential (B) $ 9.80 $ 12.78
Abraxas Youth & Family
Services:
Residential $ 198.92 $ 184.23
Non-residential (B) $ 46.29 $ 46.56
---------- ----------
Total $ 64.12 $ 64.79
========== ==========
Twelve Months Ended December 31,
-------------------------------------
2008 2007
---------------- -----------------
% %
---------- --- ---------- ---
Contracted beds in
operation (A):
------------------
Adult Secure Services 12,793 76% 9,969 70%
Adult Community-based Services 2,635 16% 2,805 20%
Abraxas Youth & Family Services 1,393 8% 1,437 10%
---------- --- ---------- ---
Total 16,821 100% 14,211 100%
========== === ========== ===
Number of billed mandays:
-------------------------
Adult Secure Services 3,870,860 64% 3,349,971 59%
Adult Community-based
Services:
Residential 985,384 16% 1,027,450 18%
Non-residential (B) 244,725 4% 253,231 5%
Abraxas Youth & Family
Services:
Residential 429,461 7% 469,866 8%
Non-residential (B) 512,713 9% 611,062 10%
---------- --- ---------- ---
Total 6,043,143 100% 5,711,580 100%
========== === ========== ===
Revenues (in 000's):
--------------------
Adult Secure Services $ 209,283 54% $ 183,199 51%
Adult Community-based
Services:
Residential 67,471 18% 64,638 18%
Non-residential 2,692 1% 3,470 1%
Abraxas Youth & Family
Services:
Residential 82,523 21% 82,194 22%
Non-residential 24,755 6% 27,103 8%
---------- --- ---------- ---
Total $ 386,724 100% $ 360,604 100%
========== === ========== ===
Average revenue per diem:
-------------------------
Adult Secure Services $ 54.07 $ 54.69
Adult Community-based
Services:
Residential $ 68.47 $ 62.91
Non-residential (B) $ 11.00 $ 13.70
Abraxas Youth & Family
Services:
Residential $ 192.15 $ 174.93
Non-residential (B) $ 48.28 $ 44.35
---------- ----------
Total $ 63.99 $ 63.14
========== ==========
(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.