Provides Guidance for First Quarter and Full Year 2009
HOUSTON, March 5, 2009 (GLOBE NEWSWIRE) -- Cornell Companies, Inc. (NYSE:CRN) today reported results for the three and twelve months ended December 31, 2008, and provided guidance for the first quarter and the full year for 2009.
James E. Hyman, Cornell's chairman, president and chief executive officer, said, "Cornell finished the year with another quarter of strong execution of our business plan and a resulting increase in earnings above the prior year's quarter. Looking to 2009, the company expects to deliver another year of solid growth while recognizing the uncertainty in the current budget environment."
Fourth-Quarter Summary (in thousands, except per share data)
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Three Months Ended Twelve Months Ended
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As Reported 12/31/2008 12/31/2007 12/31/2008 12/31/2007
Revenue from operations $101,499 $ 92,139 $386,724 $360,604
Income from operations 18,756 14,590 62,197 45,009
Net income 7,384 5,384 22,191 11,910
EPS - diluted $ 0.50 $ 0.37 $ 1.51 $ 0.82
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Diluted shares outstanding
used in per share
computation 14,727 14,599 14,698 14,480
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Higher Net Income on Increased Revenues for Fourth-Quarter Results
Revenues grew 10.2 percent to $101.5 million for the fourth quarter of 2008 from $92.1 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 Correctional Facility (Great Plains) reactivation and subsequent ramp during the fourth quarter of 2007, and its September 2008 expansion activation and subsequent ramp during the 2008 fourth quarter also added to revenue. Average contract occupancy levels were 90.2 percent for our residential facilities compared with 93.9 percent in the fourth quarter of 2007. The increase in capacity from expanding D. Ray James Prison in the first quarter of 2008, and Great Plains and Walnut Grove Youth Correctional Facility in the third quarter of 2008, along with spare capacity at the Cornell Abraxas I juvenile facility, primarily accounted for this decrease in overall occupancy.
Income from operations of $18.8 million for the fourth quarter of 2008 improved from $14.6 million in the fourth quarter of 2007. The increase was related in part to the higher revenues mentioned above. Income from operations for the 2008 fourth quarter also included the net claim settlement received of $1.5 million as well as a gain on the settlement of a life insurance policy pertaining to the Company's founder of approximately $0.7 million.
Net income for the latest three months was $7.4 million, or $0.50 per diluted share, compared with net income of $5.4 million, or $0.37 per diluted share, in the fourth quarter of 2007. The Company capitalized interest of $0.6 million (or $0.02 per diluted share, after taxes) in the fourth quarter of 2008, compared with capitalized interest of $0.5 million (or $0.02 per diluted share, after taxes) in the 2007 fourth quarter. As previously noted, the 2008 fourth quarter results included a net claim settlement received of approximately $1.5 million in pre-tax income (or $0.06 per diluted share, after taxes), as well as a gain on settlement of a life insurance policy pertaining to the Company's founder of approximately $0.7 million (or $0.03 per diluted share, after taxes). The fourth quarter 2008 results also benefited from a lower effective tax rate of 37.6%, compared with 39.6% in the 2007 fourth quarter, largely driven by the utilization of certain payroll tax credits.
Increased Revenues, Net Income for the Full Year 2008
For the twelve months ended December 31, 2008, revenues grew 7.2 percent to $386.7 million from $360.6 million in 2007. The increase was principally related to the facility expansions and activations at those facilities mentioned earlier. These increases were partially offset by lower revenues as a result of our exit from several management contracts in 2007 and 2008, including the Donald W. Wyatt Detention Center in July 2007. 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 increased income from operations to $62.2 million for the 2008 twelve month period compared with $45.0 million in the prior year. Net income was $22.2 million, or $1.51 per diluted share, compared with net income of $11.9 million, or $0.82 per diluted share, in 2007. 2008 results also reflected capitalized interest of $2.9 million (or $0.12 per diluted share, after taxes) as compared with $1.2 million (or $0.05 per diluted share, after taxes) in 2007. Included in 2008 results is a net claim settlement received of approximately $1.5 million in pre-tax income (or $0.06 per diluted share, after taxes). The 2008 results also benefited from a lower effective tax rate of 40.8%, compared with 42.6% in 2007, largely driven by the utilization of certain payroll tax credits. The 2007 year included approximately $3.7 million in pre-tax costs (or $0.15 per diluted share, after taxes) associated with a terminated 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 First Quarter and Full Year 2009
Management expects earnings per share for the first quarter of 2009 to range from $0.30 to $0.34 per share. For the full year 2009, management anticipates earnings of $1.64 to $1.72 per share.
This guidance for 2009 assumes the approximate 700 bed expansion at D. Ray James Prison begins to ramp at the beginning of the third quarter of 2009. If this expansion were to remain empty for all of 2009, earnings for the full year could be reduced by up to approximately $0.11 per share.
Also, guidance assumes the new Hudson, Colorado facility commences operations at the end of the fourth quarter, incurring approximately $0.04 to $0.06 per share of expenses related to activation and ramping of population of the facility.
