HOUSTON, March 13, 2008 (PRIME NEWSWIRE) -- Cornell Companies, Inc. (NYSE:CRN) today reported results for the three and twelve months ended December 31, 2007, and provided guidance for the first quarter and the full year for 2008.
James E. Hyman, chairman, president and chief executive officer, said, "Cornell continued the facility expansions as previously announced, and completed the initial ramp at the Great Plains Correctional Facility (Great Plains) during the fourth quarter. Our core operations performed well during the latest quarter, and we remain confident in both our growth plan for the business and our outlook for 2008 and beyond.
"With regard to last Friday's announcement concerning our operations at the Regional Correctional Center (RCC) in Albuquerque, New Mexico, we remain in ongoing discussions with the US Marshals, the Office of the Federal Detention Trustee (OFDT) and Bernalillo County, who holds the intergovernmental service agreement (IGA) with the customer. At present, we expect to continue to operate and market the facility. Our guidance assumes both operating with the current populations for the US Marshals and the continuance of all obligations under the terms of the IGA between the County and the customer as described below."
Fourth-Quarter Summary (in thousands, except per share data)
Three Months Ended 12 Months Ended
--------------------------------------------
As Reported 12/31/2007 12/31/2006 12/31/2007 12/31/2006
Revenue from operations $ 92,139 $ 94,127 $360,604 $360,855
Income from operations 14,590 13,322 45,009 44,798
Net loss from
discontinued
operations -- -- -- (707)
Net income 5,384 4,721 11,910 11,873
EPS - diluted $ 0.37 $ 0.33 $ 0.82 $ 0.84
---------------------------------------------------------------------
Diluted shares
outstanding used in
per share computation 14,599 14,161 14,480 14,059
Higher Net Income on Slightly Lower Revenues for Fourth-Quarter Results
Revenues decreased 2.1 percent to $92.1 million for the latest quarter from $94.1 million in the 2006 period. Much of the decrease came from lower revenues due to the previously announced withdrawal of inmates by the Bureau of Immigration and Customs Enforcement (ICE) from RCC in July 2007 and the management contract terminations at the Alexander Youth Services Center and the Donald W. Wyatt Detention Center, in January 2007 and July 2007, respectively. Improved utilization at programs including the Cornell Abraxas Academy and D. Ray James Prison, as well as the expansion activation at the Big Spring Correctional Center and the facility reactivation at Great Plains partially offset this decrease. The High Plains Correctional Facility in Brush, Colorado (acquired in May 2007) also contributed to higher revenue. Average contract occupancy levels were 93.9 percent in residential facilities compared with 100.5 percent in the fourth quarter of 2006. The decrease in occupancy was principally driven by the situations at RCC and Great Plains.
Income from operations of $14.6 million for the fourth quarter of 2007 compared with income of $13.3 million in the same quarter of 2006. For the quarter ended December 31, 2007, the Company reported net income of $5.4 million, or $0.37 per diluted share, compared with net income of $4.7 million, or $0.33 per diluted share, in the same period last year.
Stable Revenues, Net Income for 2007
For the year ended December 31, 2007, revenues were flat at $360.6 million compared with $360.9 million reported in 2006. The latest year was affected by lower revenues from the previously announced temporary closure of Great Plains in April 2007 (which was reactivated in September 2007), the withdrawal of inmates by ICE from RCC and the Alexander Youth Services Center management contract termination in January 2007. The decrease was offset by new programs opened in 2006 (principally the Moshannon Valley Correctional Center), the acquisition of the High Plains Correctional Facility in May 2007, as well as higher utilization at those programs mentioned earlier. In addition, the 2006 period included approximately $2.4 million (net of state receipts tax) associated with revenue recognized from the true-up calculation required by the minimum guaranteed population contract at RCC (for the 2005/2006 contract period).
Income from operations was $45.0 million for this year compared with $44.8 million in the prior-year period. Net income was $11.9 million, or $0.82 per diluted share, compared with net income of $11.9 million, or $0.84 per diluted share, in the previous year. 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. Net income in 2007 also included the net claim settlement received of $1.5 million in pre-tax income (or $0.06 per diluted share). Net income in the prior-year period was affected by pre-opening and start-up costs for new facilities totaling $1.6 million (or $0.11 per diluted share, after taxes), as well as $0.7 million (or $0.05 per diluted share, after taxes) in net losses from discontinued operations. 2006 results also included the pre-tax impact (net of state receipts tax) of approximately $2.4 million (or $0.10 per diluted share, after taxes) associated with revenue recognized from the true-up calculation required by the minimum guaranteed population contract at RCC.
Earnings Outlook for First Quarter and Full Year 2008
Management expects first-quarter 2008 earnings to range from $0.27 to $0.31 per share, and earnings for the full year to range from $1.21 to $1.27 per share.
This first quarter guidance reflects the economics of terms of the current IGA governing RCC that incorporates a contract year running from March 25, 2007 through March 24, 2008. As previously announced, the client for RCC attempted to unilaterally amend the contract to reduce the total annual guaranteed bed-days from 182,500 to 66,300 effective February 26, 2008, and neither we nor the County believe either the right to so amend the contract exists or proper notice to amend the contract has been given. The difference between the current 182,500 bed-days guarantee, which is assumed in the Company's first quarter guidance, and the 66,300 bed-days guarantee from February 26, 2008 represents approximately $0.02 per share.
The full year guidance assumes that through the end of the second quarter, RCC operates at its current population level and then begins a population ramp to an approximate average daily population of 600 during the fourth quarter. The guidance does not assume any "true-up" for the 2008-2009 contract year, independent of whether the actual bed-days used during the period would warrant such a payment under the IGA.
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 Company's Web site, or can otherwise be heard by dialing (800) 405-2236 or (303) 590-3000 and providing confirmation code 11110045. The replay will be available through Thursday, March 20, 2008 by phone and through Friday, April 11, 2008 on the Web site. This earnings release also can be found on Cornell's Web site under "Investor Relations - Press Releases."
Forward-Looking Statements
Statements regarding the Company's facility expansions, future earnings, results of operations, the contract and population at RCC, the guaranteed bed-days, the attempted amendment and the use of RCC by clients, costs, business outlook, 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 Website 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. (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 74 facilities in 15 states and the District of Columbia and a total service capacity of 18,887.
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 12 Months Ended
December 31, December 31,
-------------------- --------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenues $ 92,139 $ 94,127 $360,604 $360,855
Operating expenses 67,652 71,305 274,110 275,040
Pre-opening and
start-up expenses (A) -- -- -- 2,657
Impairment of
long-lived assets -- 355 -- 355
Depreciation and
amortization 4,246 4,029 15,986 16,285
General and
administrative
expenses 5,651 5,116 25,499 21,720
-------- -------- -------- --------
Income from
operations 14,590 13,322 45,009 44,798
Interest expense, net 5,679 4,933 24,264 23,070
-------- -------- -------- --------
Income before
provision for income
taxes and discontinued
operations 8,911 8,389 20,745 21,728
Provision for income
taxes 3,527 3,668 8,835 9,148
-------- -------- -------- --------
Income before
discontinued
operations 5,384 4,721 11,910 12,580
Discontinued
operations, net of tax -- -- -- (707)
-------- -------- -------- --------
Net income $ 5,384 $ 4,721 $ 11,910 $ 11,873
======== ======== ======== ========
Earnings per share:
- Basic $ 0.38 $ 0.34 $ 0.84 $ 0.85
- Diluted $ 0.37 $ 0.33 $ 0.82 $ 0.84
Number of shares used
in per share
computation:
- Basic 14,247 13,978 14,149 13,918
- Diluted 14,599 14,161 14,480 14,059
Total service capacity
(end of period) (B) 18,587 18,580 18,587 18,580
Contracted beds in
operation (end of
period) (B) 14,211 13,492 14,211 13,492
Average contract
occupancy (B) (C) 93.9% 100.5% 99.6% 97.5%
(A) There were no revenues associated with reported start-up expenses
for the years ended December 31, 2007 and 2006.
(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 was higher than contracted
capacity.
Balance Sheet Data:
-------------------
(in thousands) Dec. 31, Dec. 31,
2007 2006
-------- --------
Cash and cash equivalents $ 3,028 $ 18,529
Investment securities 250 11,925
Working capital 47,757 75,078
Property and equipment, net 383,952 319,064
Total assets 562,787 523,533
Long-term debt 275,298 255,471
Total debt 286,709 265,981
Stockholders' equity 200,449 181,564
Cornell Companies, Inc.
Operating Statistics from Continuing Operations
For the Three and 12 Months Ended December 31, 2007 and 2006
Three Months Ended December 31,
---------------------------------------
2007 2006
----------------- -----------------
% %
---------- --- ---------- ---
Contracted beds in operation:
-----------------------------
Secure Institutional (A) 9,969 70% 9,213 68%
Adult Community-based (A) 2,805 20% 2,773 21%
Juvenile (A) 1,437 10% 1,506 11%
---------- --- ---------- ---
Total 14,211 100% 13,492 100%
========== === ========== ===
Number of billed mandays:
-------------------------
Secure Institutional 836,475 58% 864,148 59%
Adult Community-based:
Residential 259,279 19% 251,637 17%
Non-residential (B) 59,955 5% 65,099 4%
Juvenile:
Residential 117,976 8% 131,655 9%
Non-residential (B) 148,484 10% 155,071 11%
---------- --- ---------- ---
Total 1,422,169 100% 1,467,610 100%
========== === ========== ===
Revenues (in 000's):
--------------------
Secure Institutional $ 45,827 50% $ 47,843 51%
Adult Community-based:
Residential 16,898 18% 15,820 17%
Non-residential 766 1% 1,191 1%
Juvenile:
Residential 21,735 24% 22,814 24%
Non-residential 6,913 7% 6,459 7%
---------- --- ---------- ---
Total $ 92,139 100% $ 94,127 100%
========== === ========== ===
Average revenue per diem:
-------------------------
Secure Institutional $ 54.79 $ 55.36
Adult Community-based:
Residential $ 65.17 $ 62.87
Non-residential (B) $ 12.78 $ 18.30
Juvenile:
Residential $ 184.23 $ 173.29
Non-residential (B) $ 46.56 $ 41.65
---------- ----------
Total average $ 64.79 $ 64.14
========== ==========
12 Months Ended December 31,
---------------------------------------
2007 2006
----------------- -----------------
% %
---------- --- ---------- ---
Contracted beds in operation:
-----------------------------
Secure Institutional (A) 9,969 70% 9,213 68%
Adult Community-based (A) 2,805 20% 2,773 21%
Juvenile (A) 1,437 10% 1,506 11%
---------- --- ---------- ---
Total 14,211 100% 13,492 100%
========== === ========== ===
Number of billed mandays:
-------------------------
Secure Institutional 3,349,971 59% 3,186,207 54%
Adult Community-based:
Residential 1,027,450 18% 990,438 17%
Non-residential (B) 253,231 5% 461,081 8%
Juvenile:
Residential 469,866 8% 528,394 9%
Non-residential (B) 611,062 10% 685,411 12%
---------- --- ---------- ---
Total 5,711,580 100% 5,851,531 100%
========== === ========== ===
Revenues (in 000's):
--------------------
Secure Institutional $ 183,199 51% $ 178,795 50%
Adult Community-based:
Residential 64,638 18% 61,116 17%
Non-residential 3,470 1% 5,179 1%
Juvenile:
Residential 82,194 22% 89,999 25%
Non-residential 27,103 8% 25,766 7%
---------- --- ---------- ---
Total $ 360,604 100% $ 360,855 100%
========== === ========== ===
Average revenue per diem:
-------------------------
Secure Institutional $ 54.69 $ 56.12
Adult Community-based:
Residential $ 62.91 $ 61.71
Non-residential (B) $ 13.70 $ 11.23
Juvenile:
Residential $ 174.93 $ 170.33
Non-residential (B) $ 44.35 $ 37.59
---------- ----------
Total average $ 63.14 $ 61.67
========== ==========
(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.