Prison management company CoreCivic working to diversify after income falls in 2018


Prison management company CoreCivic working to diversify after income falls in 2018

CoreCivic plans to move into a new office on Virginia Way in Brentwood in 2019. / Photo Mark Cook

By MATT BLOIS

The prison management company CoreCivic, which plans to move its headquarters to Brentwood this year, is working to diversify its operations after a dip in net income in 2018.

CoreCivic is a for-profit company that manages prisons for federal, state and local governments. It operates six detention or correctional centers in Tennessee, including the Metro-Davidson County Detention Facility. It has more than 50 locations across the U.S.

The company’s net income for 2018 was about 11 percent lower than the previous year. Revenues increased by about 4 percent over the same period, but expenses and some non-recurring costs reduced profits. The company announced its financial results on Tuesday.

According to the Public Policy Institute of California, a court-ordered reform in 2011 and a 2014 proposition reducing sentences for some crimes has reduced the state’s prison population. CoreCivic also expects the Firs Step Act — a bill signed into law last year that reduces sentences for some federal crimes — will keep people out of federal prisons. 

In a press release, the company reported the decline in California’s prison population hurt the bottom line, but those losses were partially offset by new federal contracts with U.S. Immigration and Customs Enforcement, the U.S. Marshals Service and several states.

As governments continue to look for ways to reduce prison populations through criminal justice reform, CoreCivic executives said on a conference call Wednesday the company has already been looking for new ways to make money.

The company expanded its investment in reentry programs last year. It purchased two companies that monitor suspected or convicted criminals using techniques like GPS tracking, alcohol monitoring or urine screenings.

Executives from CoreCivic believe the demand for alternatives to incarceration will increase as government agencies look for ways to reduce recidivism. 

This part of the company—called CoreCivic Community—also includes other reentry programs like halfway houses, but it only makes up a small part of the company’s revenues—about 6 percent of revenues in 2018. However it is growing. Revenues for CoreCivic Community increased by more than 30 percent between 2017 and 2019.

CoreCivic also leases property back to governments. That portion of the business is even smaller than CoreCivic Community, but grew faster in 2018. The leasing business grew by more than 40 percent last year.

The spending bill pass by Congress earlier this month gives ICE more money to detain people compared with last year. However, CoreCivic executives said on a conference call Wednesday it’s too early to tell if that extra money will result in new contracts.

Earlier in the call, CEO Damon Hininger, said the number of beds ICE used increased throughout 2018, but the next year will be hard to predict.

“We are anticipating utilization of ICE facilities to remain consistent throughout 2019. However, the rate of border apprehensions in 2019 are well above 2018 levels, so ICE could have emerging needs as the year unfolds,” he said.

He added that CoreCivic doesn’t operate any facilities that detain unaccompanied minors. The company does manage one facility that detains mothers with their children, which was opened at the request of the Obama administration.

In 2019, CoreCivic expects to spend up to $130 million to construct or expand prisons. The main projects are a 2,400 bed prison for the Kansas Department of Corrections and the expansion of an ICE detention center in San Diego.

CoreCivic is also chasing a new contract with the government of Puerto Rico this year. The country is hoping to transfer some of its prisoners to the mainland U.S. because some prisons were damaged by hurricane Maria in 2017.

Next year the company expects that diluted earnings per share will increase, landing closer to the number it hit in 2017.

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