Good day and welcome to the CoreCivic’s Second Quarter Earnings Conference Call. As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Cameron Hopewell, Managing Director of Investor Relations. Please go ahead, sir.

Thanks, operator. Good morning, ladies and gentlemen and thank you for joining us. Participating on today’s call are Damon Hininger, President and Chief Executive Officer and David Garfinkle, Chief Financial Officer. During today’s call, our remarks will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our second quarter 2017 earnings release and in our SEC filings, including Forms 10-K, 10-Q and 8-K reports. You are also cautioned that any forward-looking statements reflect management’s current views only and that the company undertakes no obligation to revise or update such statements in the future. This call will include a discussion of non-GAAP measures. A reconciliation of the most comparable GAAP measurement is provided in our corresponding earnings release and included in the supplemental financial data on our Investors page of our website at www.corecivic.com/investors. With that, it’s my pleasure to turn the call over to our President and CEO, Damon Hininger.

Thank you, Cameron and good morning and thank you to everyone for joining our call today. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. Our second quarter financial performance came in ahead of our initial forecast as we experienced modestly higher revenues across multiple federal and state partners in addition to the favorable variances in operating expenses across our facility portfolio during the quarter. Normalized FFO of $0.59 per share was $0.04 ahead of the high-end of our second quarter guidance and AFFO of $0.56 per share was $0.03 ahead of the high-end of our guidance. This has allowed us to raise our full year 2017 per share guidance for the third consecutive quarter to normalize FFO per share of $2.31 to $2.35, an increase of nearly 8% in the guidance range from $2.11 to $2.21 per share or $0.17 at the midpoint from the initial full year 2017 guidance we provided back in October of last year. David will provide a more detailed summary of the drivers of our financial performance and key factors impacting our updated full year outlook at the conclusion of my remarks. In terms of an update on our business outlook, I will begin first with our federal partners. The Federal Bureau of Prisons has continued to see modest declines in the inmate populations through the first half of 2017. This has allowed the Bureau to take additional federal inmates out of contract facilities, like our Eden detention center that was idled at the end of April after expiration of our contract with the BOP. The agency is in the process of taking additional populations out of other non-course of the contract facilities that were also not awarded new contracts under the CAR 16 procurement. Today, the…

Thank you, Damon and good morning everyone. In the second quarter, we generated $0.38 of EPS and $0.39 of adjusted EPS compared to our guidance range of $0.35 to $0.36 and $0.03 ahead of consensus estimates. Normalized FFO totaled $0.59 per share compared to our guidance range of $0.54 to $0.55 and $0.04 ahead of consensus estimates. AFFO totaled $0.56 per share ahead of our prior guidance range of $0.52 to $0.53 and $0.03 ahead of consensus estimates. Our per share results exceeded our forecast as revenues and operating expenses were both better than anticipated with revenues beating forecasts by a little more than the expenses. The beaten revenue was spread pretty evenly between federal and state customers and among several facilities and geographic locations. Adjusted EBITDA was $4.2 million higher than the midpoint of our guidance for the second quarter, reflecting strong operating performance. Our per share results were lower than the prior year quarter as a result of the previously disclosed renegotiation and extension of a contract with Immigration and Customs Enforcement or ICE at our South Texas family residential center effective in November 2016 and expected lower U.S. Marshal populations in the Southwest region of the country. These declines were partially offset by higher detainee populations from ICE when compared with the prior year quarter, higher inmate populations under our new 1,000 bed contract with the State of Arizona at our newly expanded Red Rock Correctional Center completed in January 2017 and higher inmate populations from the State of Tennessee and the reduction in expenses at our Trousdale Turner Correctional Facility where populations were ramping in the prior year under a new contractor that commenced in January 2016. Financial results also included five acquisitions with an investment totaling $57 million for 11 residential reentry centers from the…

Thank you. [Operator Instructions] Okay. We will take our first question from Michael Kodesch with Canaccord Genuity.

Hey, guys. Thanks for taking my question. I guess just to start off with guidance, you gave a lot of good color behind some of your expectations there, but I was wondering if you could just expand upon it a little bit, what gave you guys some confidence, what are you seeing in the numbers in terms of the increases and the ability to sustain that throughout the rest of the year in order to hit guidance and what are your kind of – can you kind of marry both your expectations and maybe the range of guidance as it relates to ICE and United States Marshals?

Sure. Good morning, Michael. I will take that. I guess on back to February, when February’s call we have seen a large surge of ICE populations in the fourth quarter, we continue to see a very large ICE population in the first quarter, which when we had our call in February and reiterated in May, we didn’t expect those populations to be sustainable. So, our forecast reflected declines in those populations beginning at the end of the first quarter basically to the summer months and then slowly and gradually increasing in the third quarter and fourth quarter. We had anticipated that some of those populations had been accelerated around the inauguration or before the inauguration, before the President’s new policies on immigration could take effect and it appears that, that’s turned out somewhat true. Those populations have come in very close in fact a little bit above what are our expectations reflected in Q1 and Q2. So, our forecast aside from the declines at our Cibola facility and the consolidation of U.S. Marshals from Torrance as we discussed, is basically the same as what we are predicting in February and again in May. What gives me some confidence that those projections are accurate not only that they have been accurate for a couple of quarters in a row now that we have begun to see population increases in both U.S. Marshals and immigration customs enforcement in June and July. So we are pretty comfortable with the range of the guidance that we set forth. Obviously, it is a range of guidance and if they don’t escalate as gradually as we anticipated, we would expect to be toward the low end of that guidance so that they accelerate faster than what we have we’d be toward the high-end of that guidance. And I would one more thing, Michael, this is Damon that not definitive, it won’t be really determined until we get to October 1, but with our budget request of 51,000 retention beds going into next fiscal year, again it’s got to work its way through Congress and the actual number is going to be something different likely, but I think that with ICE pushing pretty hard for a higher funding level next year, where you would add up with some of the populations that we have seen kind of in the summer months, whether it’s going to modestly improve gives us also some comfort as we go into late this year and early next year.

One final point on that as Damon mentioned in his comments, prepared remarks as some of the U.S. attorneys are confirmed and put into place and execute policies of the new administration we would expect that to contribute to increasing populations as well. Timing has been slower than expected on that, but that could have an impact on the back half of the year as well.

Great, that’s really good color. And then kind of along the same band, Northeast Ohio, you guys have I think three different populations you have got Marshal service and state as well you, can kind of talk to the ramp of each of those and sort of your expectations for the ramp of each of those?

Yes. We have seen a little bit higher populations, the federal populations there primarily due to interior enforcement, so that’s contributed to higher ICE populations. We are projecting the State of Ohio as I mentioned to begin ramping that facility in the next couple of weeks. It’s a very slow ramp. It’s a higher security inmate population, they want to be very thoughtful and measured in how they ramp up that facility. So it’s up to about 1,000 inmates and we expect that not be completed until really the end of the first quarter of 2018. So it’s a very slow ramp that does have an impact on the third quarter for startup expenses of probably about $0.01 per share.

Great, that’s helpful. And then we are on the topic of states, can you talk a little bit about appropriations and the processes that certain states and have you seen that become a headwind in certain in procurements in certain states or have you seen kind of reverse budget being settled where we might actually see some more procurements come out?

Yes. We are – this is David again. Michael this has really been a good year for us [indiscernible] we have gotten good budget numbers come out from respective states all over the country. So you have versus 4 years, 5 years, 6 years ago where we were giving a lot of detail of kind of the review to the best kind of some of the challenges or headwinds we had as big of the budget process we are in a really good environment now. We have had some nice modest, but nice little incremental increases on pricing around the country to accommodate for some additional labor costs that we have or something else within the business. So we are in a good environment right now on the state side. And with that your question, yes we think that either a public or non-public it will be – it seem to be meaningful opportunities to secure additional beds within the private sector, we think here in the near-term.

Great. And then just one last one for me and then I will jump back in the queue at anything else, but I was wondering if you guys looked at the 3M-Apax electronic monitoring deal that got done, [indiscernible] public process, but wondering what your thoughts were on that and any additional interest and potentially getting into the diversified business like electronic monitoring? Thanks.

Well, let me answer the last part first, yes, the big monitor here in the organization is diversify our cash flows and so we have built a really nice team here internally to do a lot of targeting of potential targets. Notably, as you know with the reentry side, growing it to 29 facilities, so they have been very aggressive on that front and we have got to weld all machine connecting to look at targets. So we are always kind of looking at what other opportunities are within the business. We did take a look at 3M, I would say kind of the high level of thing that created a pause for us to where we didn’t really make a run at it was it’s big concentration business internationally. In fact I think they are doing business like 34 different countries and so we have been really focused on U.S. operations as you know for 10 years, 15 years and that’s going to continue to be our focus was the thing at a high level that shied us from that company.

Yes. I think that makes a lot of sense, great that was really helpful. I will thank you. I will jump back in the queue with anything else.

Thanks Michael.

Thank you, Michael.

And we will take our next question from Tobey Sommer with SunTrust.

Good morning Tobey.

Good morning. I wanted to ask your perspective on the scenario that investors in the stock might reflected more optimism say six months ago for a more rapid utilization of idle capacity, in contrast it would today is there a basic change in the kind of multi-year outlook or would you describe it more as a function of timing having the pieces of the COGS of government kind of work?

I think it’s the later Tobey, this is Damon. Yes, government it takes a – it’s not for the weak need. Working with government, you got to be very persistent and very patient. And so as I mentioned earlier now to be on the Federal side, you have got so many vacancies with U.S. attorneys and they are really leading the prosecution that drive the demand for the Marshal service and open the BOP. So I think it’s really a timing issue to your point. And again government just you have to be very patient or very persistent. I highlighted the contract with the City of Mesa that took 5 years. A lot of persistence, a lot of meeting with stakeholders with that community, but we are really excited about that opportunity, because we think it’s a foot in a door in a community that has [indiscernible] going forward. So I think very much timing. And I think with administration change and this is I think by most experts’ analysis a little slower rather to go out and get in the key positions filled not only at the secretary level, but also some of the key agency heads and also with these U.S. attorneys. So I think timing is the key part of the issue this year. I don’t know if you can add on that David?

No, that’s very true and most opportunities do not take 5 years. But this one has taken – we have a number of opportunities that we have been looking at as you know there are actually publicly known that we are as frustrated as I am sure our investors are patient getting those transactions completed. But we still feel very confident that they will get done. They just don’t get done on the timelines that we would like to see. So we will continue to work hard to get them across the finish line.

Okay. And then you mentioned some goals for diversification, I was wondering if you could maybe comment on the key variables to either achieving greater percentages or smaller percentages over the next couple of years as you see it?

Yes, great questions. So let me talk about course of the community first and I feel really good about that goal, [indiscernible] very short period of time that build a really nice portfolio of about 29 facilities, about 5,600 beds. And so our goal and the team’s goal is really good about this, on closing one of those a quarterly we feel very achievable for the next few years. So I feel good bout that front. We got a very well process on sourcing potential target companies, doing the diligence and closing quickly. I mean we are a very good buyer just because financing contingencies we are able to close very quickly. On the course of the property that one is a little more variable because we have got some great opportunities near-term with Oklahoma at our Diamondback facility, but also as I mentioned and as you know Tobey we have got a lot of development projects going on right now, notably with procurement in Kansas. So we think if we get a couple of these across the finish line, kind of really show from a development perspective that this could be a very good solution that we could have really increased demand not only at the state level, but also at the local level. Another thing too and you know I have talked about this, but it would be interesting to the rest of the people on this call is that we have got a little bit of pipeline we are starting to build where you got these what I would say mission-critical properties that are privately owned and are leased say to the Federal government and the GSA. And so we are starting to get a few people come knocking our day saying I own this mission-critical property, got a nice long-term GSA lease and maybe it fits nicely into your portfolio. So what we have said to the investors here recently is don’t be surprised say six months from now where we have an announcement where we have got again a property that’s been leased to an agency that has a mission-critical component to it that’s serving some type of agency. So we don’t have a number out there yet, we want to get kind of that pipeline build and maybe get a couple of transactions done. But I think that also could be a catalyst to grow the course of the property side.

Okay, thank you. And then could you comment on any managed only business that’s maybe coming up for renewal in the next 1 year or 2 years, the company has kind of weaned it’s portfolio as you have profitability thresholds that you want to achieve for yourselves and shareholders just kind of want to assess that outlook over the near-term? Thanks.

Yes. I think Dave will have only about 3%, 4% by next year for NOI coming from managed only, so it’s a very small percentage.

Less than that.

Yes. It’s as you know Tobey, back in 2000, we have 25%, so we really whittle down that portfolio and have made very powerful decisions kind of case by case as those contracts come up for renewal. So I think about – as I think about the kind of remaining portfolio, I think we are in good shape. We have got still kind of a pending process with the Hamilton County down Silverdale, but I would say rest of the portfolio is stable as we think about next few years.

Thank you very much. I will get back in the queue.

You bet, Tobey. Thank you.

And we will take our next question from Kevin McVeigh with Deutsche Bank.

Great. Thanks. Hey Damon and David.

Good morning.

Little more philosophical maybe hard to answer, but any sense of those ICE bid states, how many relate to interior enforcement versus the border in terms of kind of currently based on it sounds like above some are in 34,000 and the target is 44,000 in terms of where the budget is, any sense directionally what it is today and what that makes it look like to the extent they hit the 44,000?

Kevin, this is Damon, that’s a good question and I don’t think I have a good answer for you. They really have a no time, I don’t think they said it publicly and I don’t think we have heard anything from our people that worked the relationship with ICE that kind of either a target or where they expect that to go. But it is very clear and one thing that we look at on a regular basis is that the activity within that clearly has increased year-over-year. So we are seeing resources being deployed for actual activities. So I don’t think they probably are not going to have probably let’s say goal, but at least a target of what they are going to try achieve [indiscernible] quarter versus interior. But it is clear that we are seeing additional activity in interior. And with that is driving some demand. Dave talked a little bitter about Ohio and our Youngstown facility, that new contract at Northeast Ohio has been a nice location for them to kind of support their efforts kind of in the middle the Northeastern part in the country. So we think that additional – could manifest itself as they continue to kind of ramp up their efforts with the enforcement.

Got it. And to follow-up, it sounds like it’s definitely a longer stay in terms of interior, but is that more profitable for you given the site that maybe it was this utilization facilities outside of the borders or is it kind of apples-to-apples in terms of profitability?

Yes. It’s related to scope, it kind of services and profitability is all the same. So it really not a variance based on location or the type of individual if they are again apprehension versus the interior.

Got it. And then just one last one for me and managed only, I mean is it kind of less tolerance to kind of dilute the margin given all the other growth opportunities or is it just somebody get more aggressive in terms of the way they are bidding those contracts?

Yes. I would ay it’s the later. We have got these facilities especially in Texas and in the southeast where we just have had continued competition for labor. And one thing that’s the non-negotiable for us that we want to make sure we can safely operate a facility day-in and day-out for not only our partner, but our employees and the people entrusted in our care. So we just feel like we get the ability to do that through a re-bided contract and we will make those tough decisions. But the – I would say it’s there are some providers out there that are willing to do it at a lower margin than we feel comfortable doing.

Got it. And then just my last one, when you move into the pricing, was that at the state level, because you are pretty good escalators with the Federal, so was it were you able to kind of layer in some incremental price at the state level as well?

Absolutely, yes that’s exactly what I was talking about the state level. And I think it was also modestly impacting that in a positive way too is that we are seeing kind of demand from different fronts. I mean so these states that really need capacity with respect to the states that deal either with overcrowding or maybe closing the border facilities is not lost on the some of the demand is coming out of the federal government for ICE and potentially Marshal service too. So I think that’s also driving a little bit.

Super. Thank you.

Thank you, Kevin.

And we will take our next question from Kevin McClure with Wells Fargo Securities.

Good morning. Thank you for taking the question. I apologize if I missed this, but could we just go back to the increase in ICE population year-over-year, I understand why population down sequentially, but I am a little surprised why the populations were up when you comp against the prior year that can’t all be related interior enforcement can it?

No, definitely not. We signed couple of new contracts one Northeast Ohio facility and another one at our Cibola County facilities. So when you look at ICE populations, I would say most of the – while it’s hard to tell, but my guess would be most of those increases were from more apprehension. So an increase from the prior year, but down sequentially.

Okay. [Indiscernible] was getting to the border patrol statistics indicate that the apprehensions are lower on a year-over-year basis as well?

I think we were capturing some market share at Cibola facility and at our Northeast Ohio facility.

Got it. Thanks. And then congressional appropriation for ICE, how aggressively can they expand or ramp up or accelerate interior enforcement once they have this appropriation?

Yes. Good question. I think it’s going to take a little bit more time just because they have got kind of well established resources and infrastructure in Southwest borders. So I think they can kind of scale the operations quickly if there is more demand down there. But I think it’s going to take a little more time to kind of put in place those resources nationwide. And again, it is clear to us based on kind of mostly some of the numbers we are seeing, but also the feedback we are getting from our Federal partners that they are making us big investors. But this is probably going to take a little more time than say, it was increased activity on Southwest border.

Got it. Thank you. And then final question for me, what are your updated thoughts on maybe lengthening your weighted average maturity schedule considering that the tower you have in 2020 and the blank space you have in out years? Thanks.

Yes. That’s a great question Kevin, it’s something we are keeping an eye on. The debt capital markets are quite attractive right now. But we do have plenty of capacity under our revolving credit facility, plenty of liquidity. So obviously can’t, it would be challenging to refinance those the outstanding unsecured notes they make whole provisions which would be very expensive. But when it comes to new capital markets transactions that we are able to identify some opportunities to grow the company through M&A for example that require capital deployment, the debt capital markets are very attractive, so something we are monitoring.

I appreciate your time. Thank you.

Thanks Kevin.

Thank you, Kevin.

[Operator Instructions] We will take our next question from Jordan Hymowitz with Philadelphia Financial.

Hi guys, Thanks for taking my question. I have a question, I guess those contracts are ramping up about 9,000 to 10,000 over the next 2 years in terms of availability and at the same time, the number of apprehensions across the border are down somewhat, but it seems like I guess most of your contracts have fixed minimums and you are much more sensitive to the upside on increased overall volumes than you would be to the downside or decrease numbers per facility, does that make sense?

Yes. If I understand your question properly, you are absolutely right in that utilization or maximum utilization of existing contracts is likely going to have a larger impact than entering into a new contract, particularly if you are entering into a new contract for an idle facility where you are having the ramp up staff and so far. So where our population stands today, there is plenty of capacity to maximize existing contract utilization. So that’s actually more impactful the new contract even though I know the market looks for expanding through new contract awards is that what you are asking?

Yes. It’s sort of the other side of this because utilization minimums in most contract that if there is another 10,000 people to come in and even facilities if they are 70% don’t you get paid for 80% or 90%, so the bigger thing is the absolute number of our total debt is needed as opposed to them all being filled, correct?

Yes. So not all of our facilities have that guarantee population or fixed monthly price, many of them do. So to the extent where you are already getting compensated and they are not maximizing the guaranteed occupancy then yes, that’s not outside until they hit that level.

Okay. And my other question is the interior opportunity most of your idle facilities seem to be in the interior, almost you can considered the Canadian border I guess in Florida which I guess no, but I mean Minnesota and Oklahoma and Kansas those seems to be very well suited for the opportunity set that’s presented itself?

That’s correct, yes. So we have virtually I think every facility that has vacant capacity either facility is completely vacant or partially utilized, we have given an overview from ICE and in many cases they [indiscernible]. So you are exactly right, we feel like when we have got vacant capacity could be very attractive based on their activities on interior enforcement. But we are not depending on demand from ICE for interior enforcement to utilize a lot of our idle capacities. We have talked about in the past, a lot of that utilization will come from state customers and then there is the pre-procurement that’s out there as well, so not dependent on it.

Got it. Thank you.

Thank you.

Thank you. Good questions.

[Operator Instructions] And there is currently no question in the queue at this time. I would like to turn the conference back over to today’s speakers.

Thanks again to everyone joined on our call today. We look forward to reporting you again on our third quarter results in early November. Thanks again.

And this does conclude today’s conference. Thank you for your participation. You may now disconnect.