Investor Presentation June 2013 CXW

7/27/2019 Investor Presentation June 2013 CXW

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InvestorPresentation

June2013


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2

ForwardLookingStatements

AsdefinedwithinthePrivateSecuritiesLitigationReformActof1995,certainstatementshereinmaybeconsideredforwardlookingstatementsthataresubjecttorisksanduncertaintiesthatcouldcauseactualresultstodiffermateriallyfromthestatementsmade.

FactorsthatcouldcauseoperatingandfinancialresultstodifferaredescribedintheCompany'sForm10K,aswellasinotherdocumentsfiledwiththeSecuritiesandExchangeCommission.Thesefactorsinclude,butarenotlimitedto,risksanduncertaintiesassociatedwithgeneraleconomicandmarketconditions,includingtheimpactgovernmentalbudgetscanhaveonourperdiemrates,occupancyandoverallutilization; fluctuationsinouroperatingresultsbecauseof,amongotherthings,changesinoccupancylevels,competition,andincreasesincostofoperations;theCompany'sabilitytoobtainandmaintainfacilitymanagementcontractsincludingastheresultofsufficientgovernmentalappropriations

andinmatedisturbances;changesintheprivatecorrectionsanddetentionindustry;changesingovernmentalpolicyandinlegislationandregulationofthecorrectionsanddetentionindustryincludingtheimpactoftheBudgetControlActof2011onfederalcorrectionsbudgets,California'sutilizationofoutofstateprivatecorrectionalcapacity,andtheimpactofanychangestoimmigrationreformlaws;thetimingoftheopeningofanddemandfornewprisonfacilities; increasesincoststodeveloporexpandcorrectionalfacilitiesthatexceedoriginalestimates,ortheinabilitytocompletesuchprojectsonscheduleasaresultofvariousfactors,manyofwhicharebeyondtheCompany'scontrol;ourabilitytomeetand

maintainREITqualificationtests;andtheavailabilityofdebtandequityfinancingontermsthatarefavorabletous.OtherfactorsthatcouldcauseoperatingandfinancialresultstodifferaredescribedinthefilingsmadebyuswiththeSecuritiesandExchangeCommission.

TheCompanydoesnotundertakeanyobligationtopubliclyreleaseorotherwisedisclosetheresultofanyrevisionstoforwardlookingstatementsthatmaybemadetoreflecteventsorcircumstancesafterthedatehereofortoreflecttheoccurrenceofunanticipatedevents.


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AttractiveInvestmentCharacteristics

3

REITconversionnowfinalized

$0.48quarterlydividend;$1.92annualized

Only10%ofthe$74billionU.S.correctionsmarketisprivatized

Increasingmarketpenetration:7%in2002to10%in2011

Significantgrowthandvaluecreationpotential

Populationgrowth,overcrowding,needforcostsavingsandagingpublicfacilities

Fillingvacantbedsadds$0.92toEPS&AFFOperdilutedshare

Acquireexistingfacilities

Replaceagingpublicprisons

Repricecontracts

Strongbalancesheetsupportsgrowth

3xleverage;7xfixedchargecoverage,lowcostofdebtcapital,BB+/BA1ratings

Difficulttoreplacerealestate=resilientcashflow&highbarrierstoentry

Nationalplatformwithgeographicdiversity

Moreownedthanleasedassetsenableshigher,moreresilientvaluecreation

Contractualrateescalators;certaincontractsprovideoccupancyguarantees

Clearindustryleaderwith44%marketshareofprivatizedcorrectionsmarket


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WhoWeAre

4

CCAisAmerica'sleaderinPrivateCorrections

Establishedin1983,CCAownsandoperatesminimum,mediumandmaximum

levelsecuritycorrectionalfacilities ConvertedtoaREITeffectiveJanuary1,2013

FifthlargestcorrectionalsystemintheUnitedStates PublicorPrivate

Largestprivateowner&operatorinU.S.

67facilitieslocatedin20statesandtheDistrictofColumbia Clearleaderwith44%marketshareofallprivateprisonbedsintheU.S.

RealEstateisanessentialcoreofourbusiness

Over14millionsquarefeetin51owned/controlledfacilities

Land&buildingscomprise90%ofgrossfixedassets >90%ofour$508millionof2012NOIwasgeneratedbyourowned

facilities


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DifficulttoReplaceRealEstate

5

Attractiverealestateportfolio:

51ownedorcontrolledpropertieswith67,975bedsandover14millionsquarefeet

>90%ofnetoperatingincomegeneratedbyownedproperties 75+yeareconomicusefullife

Youngandwellmaintainedportfolio:16yearmedianageofownedproperties

Modestannualrealestatemaintenancecapex:5%ofNOI

Allfixedassetsfullyunencumbered

Difficulttoreplaceassets=highcontractretention&highbarrierstoentry

Difficultpermittingandzoning,longdevelopmentleadtimes,uniqueknowledgerequirementsandhighcapitalinvestment

90%contractrenewalrateonownedfacilities

InflationHedge:Correctionalrealestateappreciatesinvalue

Replacementcostinflation:concrete,steel,labor=repricingopportunities

Supplyshortage=repricingopportunities

ManycontractsincludeCPIescalators


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ClearIndustryLeader

6

CCAistheclearleaderofprivateprisons,controllingapproximately44%oftheprivatecorrectionsanddetentionbedsintheUnitedStates.

CCA Total CapacityatMarch31,2013GEO Asreportedoncompanywebsiteorotherpublicsources March2013MTC AsreportedoncompanywebsiteorotherpublicsourcesMarch2013Allothers Asreportedoncompanywebsites,brochuresorotherpublicsourcesMarch2013

67,975

42,086

976 5,773

43.9%

28.9%

14.1% 13.1%

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

CCA GEO MTC AllOthers

Owned/Controlled ManagedOnly


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NationalPortfoliowithGeographicDiversity

7

51Ownedandcontrolledfacilitieslocatedin16statesandtheDistrictofColumbia(49owned;2controlledvialease),18managedonlyfacilitieslocatedin7states


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HighQuality,DiverseCustomerBase

8

Mostagencieshavemultiple,individualagreementswith

staggeredexpirationdates Compensatedperoccupant,

perday "PerDiem";Averagetermof35years

Certainagreementsprovide

occupancyguarantees Allofourcustomershave

investmentgradecreditratings;Nobaddebts

PercentageofRevenuefortheThreeMonthsEndedMarch31,2013

USMS,18.21%

BOP,12.07%

California,11.91%

ICE,11.56%Georgia,6.14%

Texas,5.15%

Tennessee,5.01%

Florida,4.47%

Colorado,3.63%

Oklahoma,2.54%

AllOthers,19.30%

Weprovidehousingandservicesunderapproximately90agreementswithvariousfederal,state,andlocalagencies

Furtherdiversificationwithinfederalagencycustomers:

>100potentialcustomerswithinfederalagencies:94U.S.Marshaldistricts;24ICEfieldofficesandtheFederalBureauofPrisons


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FinancialHighlights

9

2013 2012

AdjustedDilutedEPS (1) 0.50$ 0.33$

NormalizedFFOperdilutedshare(2)

0.70$ 0.52$

Debtleverage 2.7x 3.0x

Fixedchargecoverageratio 7.9x 5.9x

FortheFirstQuarter

Q12013AdjustedEPSof$0.50exceededpreviousguidanceandconsensus

RaisedfullyearAdjustedEPSguidanceto$1.91to$1.98(1)(2)

$0.48regularquarterlycashdividend,$1.92annually

75%AFFOpayoutratio

(1) RefertotheAppendixsectionforaReconciliationofthesenonGAAPamountstothepershareamountsasreportedundergenerallyacceptedaccountingprinciples(2) GuidancereflectstheissuanceofsharesinconnectionwiththespecialdividendpayableMay20,2013 RefertotheReconciliationto2013GuidanceintheAppendixsectionofthis

presentation


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CapitalAllocationPolicy

Maintain AmpleLiquidityandSolidBalanceSheet

PayoutAFFOinDividends InvestAFFOinGrowth

Paidoutofinternallygeneratedcashflow

Revisitpayoutratioannuallyor

soonerifindicated

Increasedividendwithfuturegrowth

Investinfacilityacquisitionsanddevelopmenttogrowearnings

Unusedamountsavailablefor

increaseddividendsand/ordebtreduction

Raisedebtandequitycapitaltofurther

fundfacilityacquisitionsanddevelopment,ifwarrantedgivenourcostofcapital

(1) DividendpaymentssubjecttoBoardapprovalandminimumpayoutrequiredtomeetREITqualificationrequirements

10

Maximum4xDebtLeverage

FundAdditionalGrowth


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Q12013NetOperatingIncomeBreakdown

11

>90%ofNOIderivedfromownedandcontrolledproperties

OwnedandControlled

Properties,95%

ManagedonlyPropertiesandOther,

5%

(inthousands)NetOperatingIncomebySegment

OwnedorControlledProperties 112,330$

5,864

TotalNOI 118,194$

ReconciliationtoGAAPFinancialsOperatingIncome 59,332$

Add:Depreciationandamortization 27,630

Add:Generalandadministrativeexpenses 31,232

TotalNOI 118,194$

ManagedonlyandOther

Q12013NetOperatingIncomeBreakdown


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StrongHistoricalCashFlowGrowth

I1)Proforma AFFOpershareadjustedtoreflectProforma WASOforspecialdividendshareissuanceasiftheimpactin2013wasreflectedforeachprioryearperiod Pleaserefertothe

Appendix

section

of

this

presentation

for

reconciliation

of

net

income

to

AFFO

12

StrongAFFOgrowthwithmodestleverage

Durablecashflowduringeconomicdownturns

GreatRecession GuidanceMidPoint

AFFOperdi

lutedshare

LeverageRatio

1.0

2.0

3.0

4.0

5.0

6.0

7.0

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

2006 2007 2008 2009 2010 2011 2012 2013E

ProformaAFFOperdilutedshare Leverage

R

E

I

T


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StrongBalanceSheetSupportsGrowth

LowCostofCapitalCompetitiveAdvantage

Q22013issued$675million810yearseniornotesat41/8%&45/8%

$900millionrevolver@LIBOR+1.75%

$374.6millioninliquidity

S&P:BB+

(1) Proforma postSpecial

Dividend

(2) Followingredemptionoftheremaining7.75%SeniorNotesinJune2013

13

30%Debt/Undepreciated

Assets(1)

3.1xDebt toEBITDA(1)

7.0xFixedChargeCoverage(1)

100%UnencumberedFixed

Assets

Moody's:Ba1 Fitch:BB+

$560

$325$350

$

$100

$200

$300

$400

$500

$600

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

StaggeredDebt

Maturities

(2)


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MacroEnvironmentProvidesGrowthOpportunities

15

ISSUE

Improvingeconomy&taxcollectionswilldrivepopulations

higher Publicprisonsare

overcrowded Historicallylowpublic

sectorprisondevelopment

Desiretoimprovecostefficiencyofgovernment

Unfundedpensions Reduceoperationalcosts

Limitedcapitalavailabletofundnumerouspublicworksprojects

Largeportfolioofold,costlypublicprisons

CCA'sSOLUTION

Vacantbedsavailableatlower

operationalcost,avoidsneedforlargecapitalinvestmentbygovernment(Fillingvacantbedsadds$0.92toEPS&AFFOpershare)

UsingCCAstemsgrowthinunfundedpensions

CCAprovidescostssavingsof12%ormore

Sellinggovernmentprisonsprovidescash+costsavings

CCAprovidescapitalfornewcostefficientfacilities


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EconomicRecoveryWillDrivePopulationsHigher

16

Generally,U.S.inmatepopulationsgrowinlinewithtotalU.S.populationgrowth

From2002 2007stateinmatepopulationsgrew2%orabout23,000annually

Recessionsinterruptinmatepopulationgrowth:decreasesintaxcollectionslaw

enforcementandcorrectionsbudgetcutsearlyprisonreleases&fewerarrests 2001Recession:taxcollections&inmatepopulationgrowthdeclined,followedbygrowth

GreatRecession:onaverage850,000fewerarrestsmadeannuallyfrom20082011vs.20042007resultinginsignificantreductionsininmatepopulationgrowth

Inmatepopulationsareexpectedtoincreaseastaxcollectionscontinuetorecoverfrom

theirbottomin2009/2010

l

Sources:IncrementalStatePrisonPopulationsfromBureauofJusticeStatistics whichexcludeCaliforniaStateTaxCollectionsfromU.S.CensusBureauandareadjustedforinflation(1)EPSadjustedtoexcludespecialitems

17,4

56

4,7

51

27,6

60

15,8

00

19,1

61

19,4

19

31,7

52

22,9

58

8,9

87

2,7

62

2,8

76

(6,1

21)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

IncrementalStatePrisonPopulationw/oCA PerCapitaStateTaxCollections

N/A

$0.98 EPS(1) Increase20022007 $0.51 EPS(1) Increase20072012


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PublicPrisonsareOvercrowded

17

AtDecember31,2011,24stateswereoperatingat100%ormoreofcapacity(1)

TheFederalprisonsystem(BOP)isoperatingat136%ofcapacity.(2)

BOP'sdesiredcapacityis115%

Nomeaningfulpublicsectorprisondevelopmentinlast5years

Overcrowding in some systems is

severe. For example, at one timeCalifornia's prison population was

about 100% overcrowded.

California's prison system at the end

of December 2012, was operating at

approximately 150% of its rated

capacity. (3)

(1) BJSPrisonersin2011

(2) BOP

website,

April

2013(3) CDCRwebsite OnlyincludesinmatesinCaliforniastateprisonsystem,doesnotincludeoutofstatepopulations


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WhyOurGovernmentPartnersUseCCA

18

Inventoryofavailablebeds

Immediate"justintime"occupancy

Avoidlargecapitalinvestment

Freesupcapitalforotherpublicworksprojects

Annualcostssavingsof12%ormore

SubstantiatedbyTempleUniversitystudyinApril2013

Stemsgrowthofunfundedpensionliabilities Compellingvaluepropositionhasdrivenprivatizedmarketpenetrationhigher

5.0%

7.0%

9.0%

11.0%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

PrivateC

aptureof

IncrementalGrowth

TotalPrivate%w/oCASource: BureauofJusticeStatistics&USMarshals Service(FederalpopulationfiguresincludeBOPandUSMS,theydonotincludeICE). PrivateinmatetotalsforCaliforniahavebeenrevisedfromBJSreportednumberstoincludetheoutofstateprogram)


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GrowthThroughFacilityAcquisitions

19

In2011,CCApurchasedandassumedoperationsofthestateownedLakeErie,Ohiofacility,anindustryfirst.

Eachsuccessivetransactionshouldresultinincreasedinterestfromothers

RecentlyGEOannouncedtheacquisitionoftheJoeCorleyDetentionCenterJailownedbyMontgomeryCounty

InterestfromotherstatesandmunicipalitiesincopyingtheOhiomodel

CCAisformallysolicitinginterestedsellersthrough"CorrectionsInvestment

Initiative"

Saleofprisonsbenefitsourourgovernmentpartners

Cashinfusion

Ongoingoperationalcostsavingswithoutthelossofoperationalquality

Stemgrowthoflongtermpensionobligations

Freebudgetdollarsforroads,bridges,airports,schools


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ReplaceOldCostly,UnsafePublicPrisons

20

120,659

94,956

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

75100

years 100

or

more

years

Replacingoldpublicprisonsprovidesoperationalcostsavings&improvessafetyandlivingconditions

CCAprovidescapitalallowinggovernmenttofundotherpublicworksprojects

>200,000publicprisonbedsare>75yearsold.

Source: Bureau of Justice Statistics Census of State and Federal Correctional Facilities 2005.

Examplesofstatesthathaveshutteredoldfacilitiesthatusetheprivatesector: Georgia(shuttered9facilities) Colorado


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GrowthScenarioA:

EconomyContinuestoImproveIncreasedtaxcollectionsfundbudgetincreasesforlawenforcementandcorrections;inmatepopulationsincrease;desireforcostsavings&capitaltofundpublicworksprojects;needtoreduceunfundedpensions

Fillvacantbeds(adds$0.92toEPS&AFFOperdilutedshare)(1)

Build&fillnewbeds

InvestundistributedAFFO&newcapital

Bedabsorptioncreatespotentialtorepricecontractshigher

Acquireexistinggovernmentownedfacilities

Replaceold,unsafe&inefficientpublicprisons

GrowdividendasAFFOgrows;reassesspayoutratio

21

(1)RefertoreconciliationandassumptionsintheAppendixSectionofthispresentation


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GrowthScenarioB:

EconomyStallsorDoubleDipsPrisonovercrowding;desireforcostsavings&capitaltofundpublicworks;needtoreduceunfundedpensions

Fillvacantbeds

Acquireexistinggovernmentownedfacilities

Replaceold,unsafe&inefficientpublicprisons

GrowdividendasAFFOgrows

Strongbalancesheet&durablecashflow

Dividendresilientineconomicdownturns

Evaluategrowingdividendbyincreasingpayoutratio

Opportunisticsharebuybacks

22


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AppendixSection


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FinancialModelingConsiderations

$2to$4million:IncreaseinannualG&AexpenseduetoongoingREITcompliancecosts

8.5%to9.0%:consolidatedGAAPincometaxrate(drivenbyTRStaxes) Onetimeconversionitems(excludedin2013Guidance)

$675million:2013specialonetimedividendofaccumulatedE&PpaidoutonMay20,2013

Similartostocksplitasequityinvestorswillnotbediluted

80%orapproximately13.88millionsharesissuedbasedonthe$38.90averageclosingpriceofthecommonstockforthethreetradingdaysfollowingMay9th

20%orapproximately$135millionpaidoutincash

$18million:Conversioncosts Legal,tax,investmentbanking,accountingandotheronetimeconversion

specificcosts

$137.7million:2013incometaxbenefitfromreversalofcertainnetdeferredtaxliabilities

A1


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FinancialModelingConsiderations

Sharesoutstanding:

Q1WASO:101.8million

Q2WASO:109.1million

FYWASO:111.5million

Sharesoutstandingimmediatelyfollowingspecialdividend:115.2million

A2


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HowCCAisMoreEfficient

A3

Lowercostofconstructionwithshorterdevelopmentcycle

Facilitylocationselectionanddesignprocessdrivenbyeconomicsaswellasability

tostaffandoperatesafelyandsecurely Nationalpurchasingpower

Bestpracticesdevelopedfromexperienceservingmultiplecustomers

Definedcontributionplansvs.definedbenefitplans

Safetyandsecurityremain1st priority

CCA Government Agencies

Total Cost per 1,000 beds $55 to $65 million $80 to $250 million

Average Length of Construction 1 - 3 years 3 - 7 years


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FillingVacantBedsDrivesGrowthEarnings

Fillingavailablebedsuptostandardoperatingcapacityatthemarginsweachievedduringthefirstquarterof2013wouldgenerateapproximately$0.92ofadditionalEPS(2) andAdjustedFundsFromOperationsperdilutedshare

Actualoperatingoccupancycanbesignificantlyhigherthanstandardoperatingcapacity

Carryinganinventoryofownedbedsprovidesasignificantcompetitiveadvantageincapturingnewbusiness nolongconstructionleadtimes

Cashoperatingcostsofvacantbedsweownisverymanageableatapproximately$1,000

perbedperyear

(1) AveragemarginisbasedonmarginsactuallyachievedforQ12013.Actualmarginsforthesebedsmaydifferfromthosehistoricallyachieved,particularlyformanagementcontractswithtieredperdiemsoratfacilitiesthathaveachievedstabilizedoccupancyandthereforefixedcosts

(2) Assumesapproximately111.5 millionweightedaveragesharesoutstanding

($ in thousands)

TotalBedsAvailable

atMay1,2013

Average

Margin(1)

EstimatedPotential

AnnualIncremental

NOI

TotalOwnedAvailableBeds 13,595 22.40$ 111,152,720$

A4


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A6

ReconciliationtoAdjustedDilutedEPS

($inthousands)

2013 2012

Netincome 181,092$

31,680$Specialitems:

Expensesassociatedwithdebtrefinancingtransactions 225 1,541

ExpensesassociatedwithREITconversion 8,061 50

IncometaxbenefitforreversalofdeferredtaxesduetoREITconversion (137,686)

Incometaxbenefitforspecialitems (602) (593)

Dilutedadjustednetincome 51,090$ 32,678$

Weightedaveragecommonsharesoutstandingbasic 100,070 99,292

Effectofdilutivesecurities

Stockoptions 1,556 631

Restrictedstockbasedcompensation 209 163

Weightedaveragesharesandassumedconversionsdiluted 101,835 100,086

AdjustedDilutedEarningsPerShare 0.50$

0.33$

March31,

FortheQuarterEnded


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A7

ReconciliationtoAFFO

($amountsinthousands)

2013 2012

Netincome 181,092$ 31,680$

Depreciationonrealestateassets 19,747 19,343

FundsFromOperations 200,839$ 51,023$

Expensesassociatedwithdebtrefinancingtransactions 225 1,541

ExpensesassociatedwithREITconversion 8,061 50

Incometaxbenefitforspecialitems (602) (593)

IncometaxbenefitforreversalofdeferredtaxesduetoREITconversion (137,686)

NormalizedFundsFromOperations 70,837$ 52,021$

Maintenanceandtechnologycapitalexpendituresonrealestateassets (4,134) (2,112)

Stockbasedcompensation 3,205 2,629

Amortizationofdebtcostsandothernoncashinterest 1,047 1,153

AdjustedFundsFromOperations 70,955$ 53,691$

NormalizedFundsFromOperationsPerDilutedShare 0.70$ 0.52$

AdjustedFundsFromOperationsPerDilutedShare 0.70$ 0.54$

FortheQuarterEndedMarch31,


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A8

Reconciliationto2013Guidance

GuidanceexcludesREITconversioncosts,anddebtrefinancingcostsandthereversalofcertainnetdeferredtaxliabilitiesassociatedwiththeREITconversion.FormorespecificsonthoseitemsrelatedtotheREITconversion,pleaserefertothepressreleaseandinvestorpresentationweissuedonFebruary7,2013.

Note:CCAprovideditsEPSandAFFOperdilutedshareguidanceforthesecondquarterandfullyear2013initsFirstQuarterFinancialResultsreleasedatedMay8,2013.OnMay16,2013,weissuedapressreleaseandupdatedthatguidancetoreflect thesharesissuedinconnectionwiththespecialdividend.Thisslidesetsforththeguidancegivenatthattimeanddoesnotconstituteareaffirmationorupdateofthatguidance.

($inthousands,exceptpershareamounts)Low High Low High

Adjustedearningsperdilutedshare 0.49$ 0.50$ 1.91$ 1.98$

Adjustednetincome 53,000$ 54,000$ 213,000$ 221,000$

Depreciationonrealestateassets 19,000 20,000 77,000 77,000

FundsfromOperations 72,000$ 74,000$ 290,000$ 298,000$

Othernoncashexpenses 4,300 4,400 17,000 17,000

Maintenancecapitalexpendituresonrealestateassets (5,250) (6,250) (25,000) (20,000)

AdjustedFundsFromOperations 71,050$ 72,150$ 282,000$ 295,000$

FFOperdilutedshare 0.66$ 0.68$ 2.60$ 2.67$

AFFOperdilutedshare 0.65$ 0.66$ 2.53$ 2.65$

SecondQuarter2013 FullYear2013


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Documents

Investor Presentation June 2013 CXW