HOUSTON, Nov. 6, 2008 (GLOBE NEWSWIRE) -- Cornell Companies, Inc. (NYSE:CRN) today reported results for the three and nine months ended September 30, 2008.
James E. Hyman, Cornell's chairman, president and chief executive officer, said, "Solid progress on executing our business plan resulted in a strong operating performance for the third quarter, despite the negative effect of Hurricane Ike on our Houston operations. We completed and activated the expansions previously announced, at the Great Plains Correctional Facility (Great Plains) and the Walnut Grove Youth Correctional Facility (Walnut Grove) during the third quarter-and continued the additional expansion at D. Ray James Prison. We remain confident we can deliver our outlook for 2008, continue our growth into 2009, and strengthen our platform to expand in what we believe continues to be a strong long-term demand environment."
Third-Quarter Summary (in thousands, except per share data)
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Three Months Ended Nine Months Ended
-------------------- --------------------
As Reported 9/30/2008 9/30/2007 9/30/2008 9/30/2007
Revenue from operations $ 95,187 $ 87,327 $285,225 $268,465
Income from operations 14,037 10,538 43,442 30,419
Net income 4,828 2,417 14,809 6,526
EPS - diluted $ 0.33 $ 0.17 $ 1.01 $ 0.45
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Diluted shares
outstanding used in per
share computation 14,763 14,559 14,691 14,443
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Higher Net Income on Increased Revenues
Revenues grew 9.0 percent to $95.2 million for the third quarter from $87.3 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 facility reactivation and subsequent ramp during the 2007 fourth quarter and its expansion activation during the 2008 third quarter also added to revenue. These increases were partially offset by lower revenue after our exit from the management contract at the Donald W. Wyatt Detention Center in July 2007. Average contract occupancy levels were 90.0 percent for our residential facilities compared with 99.4 percent in last year's third quarter. The increase in capacity from expanding D. Ray James Prison in the first quarter, and Great Plains and Walnut Grove this quarter, along with spare capacity at the Regional Correctional Center (RCC) and the Cornell Abraxas I juvenile facility, primarily accounted for this decrease in overall occupancy.
Income from operations of $14.0 million for the third quarter improved from $10.5 million in the 2007 quarter. The increase was related in part to the higher revenues mentioned above. Income from operations for the 2008 third quarter also included net costs of approximately $0.9 million for the expansion activations at Great Plains and Walnut Grove. In addition, charges of approximately $0.5 million resulted from damage caused by Hurricane Ike at certain of our Texas facilities.
Net income for the latest three months was $4.8 million, or $0.33 per diluted share, compared with net income of $2.4 million, or $0.17 per diluted share, in last year's third quarter. The Company capitalized interest of $1.0 million (or $0.04 per diluted share, after taxes) in 2008, compared with capitalized interest of $0.4 million (or $0.01 per diluted share, after taxes) in the 2007 quarter. Last year's results included a net claim settlement received of approximately $1.5 million in pre-tax income (or $0.06 per diluted share, after taxes)
Increased Revenues, Net Income for the Nine-Months
For the nine months ended September 30, 2008, revenues grew 6.2 percent to $285.2 million from $268.5 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 in revenue associated with the contract-based true-up calculation at the RCC for the contract period ended March 2008.
Higher revenues lifted income from operations to $43.4 million for this year's nine month period compared with $30.4 million in the prior year. Net income was $14.8 million, or $1.01 per diluted share, compared with net income of $6.5 million, or $0.45 per diluted share, in the previous year's first nine months. It also reflected capitalized interest of $2.3 million (or $0.09 per diluted share, after taxes) as compared with $0.6 million (or $0.02 per diluted share, after taxes) in last year's period. 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 and the net claim settlement received of $1.5 million in pre-tax income (or $0.06 per diluted share).
Earnings Outlook for Fourth Quarter and Full Year 2008
Management expects 2008 earnings per share for the fourth quarter to range from $0.37 to $0.41 per share. For the full year, management anticipates earnings of $1.38 to $1.42 per share.
This guidance reflects an annual effective tax rate of approximately 42.5 percent.
Quarterly Webcast
Cornell's management will host a conference call and simultaneous webcast at 1:00 p.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 11121488. The replay will be available through Thursday, November 13, 2008 by phone and through Thursday, December 11, 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 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 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 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 20,191.
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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues $ 95,187 $ 87,327 $285,225 $268,465
Operating expenses 71,234 68,485 209,723 206,458
Depreciation and
amortization 4,466 3,988 12,843 11,740
General and administrative
expenses 5,450 4,316 19,217 19,848
-------- -------- -------- --------
Income from operations 14,037 10,538 43,442 30,419
Interest expense, net 5,754 6,031 17,615 18,585
-------- -------- -------- --------
Income before provision
for income taxes and
minority interest 8,283 4,507 25,827 11,834
Provision for income taxes 3,368 2,090 10,931 5,308
Minority interest in
consolidated special
purpose entity 87 87
-------- -------- -------- --------
Net income $ 4,828 $ 2,417 $ 14,809 $ 6,526
======== ======== ======== ========
Earnings per share:
- Basic $ 0.34 $ 0.17 $ 1.04 $ 0.46
- Diluted $ 0.33 $ 0.17 $ 1.01 $ 0.45
Number of shares used in
per share computation:
- Basic 14,306 14,214 14,288 14,116
- Diluted 14,763 14,559 14,691 14,443
Total service capacity
(end of period) 20,191 17,602 20,191 17,602
Contracted beds in
operation (end of period) 17,017 13,472 17,017 13,472
Average contract
occupancy (A) 90.0% 99.4% 92.7% 102.1%
(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) Sept. 30, Dec. 31,
2008 2007
-------- --------
Cash and cash equivalents $ 1,784 $ 3,028
Investment securities -- 250
Working capital 38,988 47,757
Property and equipment,
net 441,047 383,952
Total assets 628,107 562,287
Long-term debt 306,027 275,298
Total debt 318,439 286,709
Stockholders' equity 219,179 200,449
Cornell Companies, Inc.
Operating Statistics from Continuing Operations
For the Three and Nine Months Ended September 30, 2008 and 2007
Three Months Ended September 30,
------------------------------------
2008 2007
---------------- ----------------
% %
---------- --- ---------- ---
Contracted beds in
operation (A):
------------------
Adult Secure Services 12,793 75% 9,276 69%
Adult Community-based Services 2,671 16% 2,805 21%
Abraxas Youth & Family Services 1,553 9% 1,391 10%
---------- --- ---------- ---
Total 17,017 100% 13,472 100%
========== === ========== ===
Number of billed mandays:
-------------------------
Adult Secure Services 969,014 65% 804,710 58%
Adult Community-based
Services:
Residential 245,031 16% 262,025 19%
Non-residential (B) 59,643 4% 66,076 5%
Abraxas Youth & Family
Services:
Residential 106,567 7% 116,743 8%
Non-residential (B) 122,880 8% 145,223 10%
---------- --- ---------- ---
Total 1,503,135 100% 1,394,777 100%
========== === ========== ===
Revenues (in 000's):
--------------------
Adult Secure Services $ 51,470 54% $ 43,088 49%
Adult Community-based
Services:
Residential 16,776 17% 16,406 19%
Non-residential 710 1% 749 1%
Abraxas Youth & Family
Services:
Residential 20,662 22% 20,577 24%
Non-residential 5,569 6% 6,507 7%
---------- --- ---------- ---
Total $ 95,187 100% $ 87,327 100%
========== === ========== ===
Average revenue per diem:
-------------------------
Adult Secure Services $ 53.12 $ 53.54
Adult Community-based
Services:
Residential $ 68.46 $ 62.61
Non-residential (B) $ 11.90 $ 11.34
Abraxas Youth & Family
Services:
Residential $ 193.89 $ 176.26
Non-residential (B) $ 45.32 $ 44.81
---------- ----------
Total $ 63.33 $ 62.61
========== ==========
Nine Months Ended September 30,
------------------------------------
2008 2007
---------------- ----------------
% %
---------- --- ---------- ---
Contracted beds in
operation (A):
------------------
Adult Secure Services 12,793 75% 9,276 69%
Adult Community-based Services 2,671 16% 2,805 21%
Abraxas Youth & Family Services 1,553 9% 1,391 10%
---------- --- ---------- ---
Total 17,017 100% 13,472 100%
========== === ========== ===
Number of billed mandays:
-------------------------
Adult Secure Services 2,808,967 63% 2,513,496 59%
Adult Community-based
Services:
Residential 755,700 17% 768,172 18%
Non-residential (B) 178,943 4% 193,276 5%
Abraxas Youth & Family
Services:
Residential 325,531 7% 351,891 8%
Non-residential (B) 390,932 9% 456,074 10%
---------- --- ---------- ---
Total 4,460,073 100% 4,282,909 100%
========== === ========== ===
Revenues (in 000's):
--------------------
Adult Secure Services $ 151,673 53% $ 137,373 51%
Adult Community-based
Services:
Residential 50,207 17% 47,988 18%
Non-residential 2,454 1% 2,456 1%
Abraxas Youth & Family
Services:
Residential 62,186 22% 60,211 22%
Non-residential 18,705 7% 20,437 8%
---------- --- ---------- ---
Total $ 285,225 100% $ 268,465 100%
========== === ========== ===
Average revenue per diem:
-------------------------
Adult Secure Services $ 54.00 $ 54.65
Adult Community-based
Services:
Residential $ 66.44 $ 62.47
Non-residential (B) $ 13.71 $ 12.71
Abraxas Youth & Family
Services:
Residential $ 191.03 $ 171.11
Non-residential (B) $ 47.85 $ 44.81
---------- ----------
Total $ 63.95 $ 62.68
========== ==========
(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.