Good morning. My name is Latif and I will be your conference operator. As a reminder, this call is being recorded. At this time, I'd like to welcome you to CoreCivic's Fourth Quarter 2022 Earnings Conference Call. All lines have been placed on mute to avoid any background noise. After the speakers' remarks there will be a question-and-answer session. Thank you. I would now like to turn the call over to Cameron Hopewell, CoreCivic's Managing Director of Investor Relations. Mr. Hopewell, you may begin your conference.

Thank you, 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. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. On today's call, we will discuss our financial results for the fourth quarter of 2022, developments with our government partners, and provide you with other general business updates. During today's call, our remarks, including our answers to your questions, 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 fourth quarter 2022 earnings release issued after market yesterday and in our Securities and Exchange Commission 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. On this call, we will also discuss certain 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 the Investors page of our website, corecivic.com. With that, it's my pleasure to turn the call over to our President and CEO, Damon Hininger.

Thank you, Cameron. Good morning everyone and thank you for joining us today for our fourth quarter 2022 earnings call. On today's call, I will provide you with details on our fourth quarter financial performance and our newly issued 2023 full year financial guidance. I will also discuss with you our latest operational developments, update you on our capital allocation strategy, and the latest developments with our government partners, including the transition of contracts at our La Palma facility from a federal mission to a new contract with the State of Arizona. Following my remarks, I will turn the call over to our CFO, Dave Garfinkle, who will review our fourth quarter 2022 financial results and our newly issued full year 2023 guidance in greater detail. He will also provide a more detailed update on our ongoing capital structure initiatives. Before I get started, I would like to take a moment and highlight a significant milestone for the Company. On January 28th, we celebrated CoreCivic's 40th anniversary. It brings me deep pride to know that I got to celebrate this milestone alongside a team of some of the most dedicated people in the field of corrections and reentry services. Over the years, we have expanded both in the number of government contracts and our capabilities through our partnerships with federal, state, and local governments. As a result, our workforce has significantly grown and the scope of services we provide has meaningfully expanded. Most excitingly, our reentry services have evolved to reflect a more robust rehabilitative approach to programming to further support the individuals in our care as they prepare to return home to their communities. While 40 years of continuous 24/7 operations is an achievement we're celebrating, it is important to call attention to the original reason the Company was founded. Back in 1983, the core theme was that prisons in more than 40 states were in crisis due to overcrowded conditions, challenging infrastructure, and inadequate correctional services. The conditions in many cases were deemed unconstitutional by the courts. The Company's founders, T. Don Hutto and Tom Beasley, saw the need for the private sector to bring solutions to the pressing issues facing these correctional systems. From day one, the Company's purpose has been rooted in service to our nation's criminal justice system. Mr. Hutto was also instrumental in establishing a standard of correctional care still upheld by the American Correctional Association and its members today. The American Correctional Association is the leading organization championing the cause of corrections and correctional effectiveness, existing since 1870. During 2022, 15 of the facilities we manage were newly accredited or reaccredited by the ACA with an average score of 99.5%, making our portfolio average 99.5%. Our partnerships with local, state, and federal governments have helped to dramatically improve conditions for all incarcerated individuals, which is clearly something that we should celebrate. The correction profession is not an easy field of work. It takes commitment, focus, and dedication to helping people, even in difficult circumstances. Through four decades of dedicated service, CoreCivic has continued to be relied upon again and again as a solution to the needs of our government partners and the individuals in our care. We have earned a reputation as a trusted partner because the entire CoreCivic team shows up every day to help improve the lives of incarcerated individuals and keep our community safe. I am deeply proud of the dedication of our team over the last 40 years, and I am truly humbled for the opportunity to work alongside them. Now, I will provide an overview of our fourth quarter financial results and our 2023 financial guidance. In the fourth quarter, we generated revenue of $471.4 million, which was a decline of only 0.1% compared to the prior year quarter, despite the non-renewal of a contract with the United States Merchant Service at a detention center in 2021, and the non-renewal of the contract with Marion County, Indiana at the Marion County Jail effective January 31, 2022. Collectively, these two facilities accounted for a $13.1 million or 2.7% reduction in revenue in the fourth quarter of this year versus the prior year quarter. We generated normalized funds from operation or FFO of $49.1 million or $0.42 per share compared to $57.8 million or $0.48 per share in the fourth quarter of 2021. The decline was driven by the non-renewal of the two contracts I just mentioned, the transition of populations at our La Palma Correctional Center under a new contract with the State of Arizona, the expiration of our contract with the Federal Bureau of Prisons at our previously owned McRae Correctional Center in November of 2022, and a challenging labor market. While we have spent considerable amounts to recruit and retain valuable frontline staff, these investments are positioning us to take advantage of increased demand from our government partners that we believe will occur once COVID restrictions are fully relaxed. We are also poised to enter into new contracts and accept additional residential populations from our government partners that are unable to manage their existing population levels. We believe these needs could manifest into new contracts in the near term. While our year-over-year financial results declined, we did experience sequential improvement in financial results. There were three primary drivers of our improved results in the fourth quarter. By the end of the year, we completed the transition of contracts at our La Palma facility. In April of this past year, we began transitioning populations at the La Palma facility in Arizona from ICE populations to Arizona State populations pursuant to a new contract we were awarded by the Arizona Department of Corrections, Rehabilitation, and Reentry late in 2021. While we didn't achieve normalized utilization until five days before the year-end, our average utilization of the facility in the fourth quarter was 66% compared to only 50% during the third quarter of 2022, while the La Palma facility currently supports the mission of the State of Arizona by caring for approximately 2,500 inmates. We also experienced an increase in average utilization by our current partners, particularly from Immigration and Customs Enforcement. Our third quarter earnings call in early November of last year highlighted that ICE populations in our facilities increased by 26% in the month of October. We attributed this increase to the start of the new federal government's fiscal year, providing more budget certainty with new appropriations. While the increase in utilization was noteworthy and had a modestly positive impact on the fourth quarter, utilization levels were still below their pre-pandemic levels. Importantly, this occurred despite some reduction in utilization in December as I prepared for the anticipated termination of Title 42, which did not occur. The third driver of our improved fourth quarter performance was a continuation of modest improvements in the employment market, a trend we began detecting in mid-2022. This trend allowed us to reduce reliance on registry nursing and various forms of incentive compensation. These costs still remain elevated from their pre-pandemic levels, but moderate improvements in the employment market can lead to meaningful cost savings. As for our newly issued 2023 financial guidance, we are forecasting for the year FFO per share in the range of $1.35 to $1.50, and adjusted funds from operations or AFFO per share in the range of $1.29 to $1.45. Our guidance reflects the completed transition at the La Palma facility, although the cost structure has yet to normalize as we work to fully staff the facility with local employees. Additionally, we expect utilization by our federal partners to remain below pre-pandemic levels due to the continued application of Title 42. Our guidance also reflects continued efforts to increase staff to position ourselves for increasing occupancy. I will now turn the call over to Dave to provide a more detailed look at our financial results in the fourth quarter, discuss our full year 2023 financial guidance, and provide additional financial updates.

Thank you, Damon, and good morning everyone. In the fourth quarter of 2022, we reported net income of $0.21 per share, or $0.22 of adjusted earnings per share. Normalized FFO per share was $0.42, and AFFO per share was $0.38. The adjusted normalized per share results are $0.09 above average analyst estimates primarily due to lower operating expenses stemming from moderated staffing incentives. Adjusted and normalized per share amounts exclude a gain on the sale of real estate assets, asset impairments, and expenses associated with debt repayments as detailed in the reconciliations to non-GAAP metrics included in the press release. The decline in normalized FFO per share of $0.06 compared with the prior year quarter included an EBITDA decline of $9.1 million due to the earnings disruption in our La Palma Correctional Center, as we transitioned to populations from the State of Arizona. The intake process for Arizona residents was substantially complete by the end of December, and we currently care for approximately 2,500 inmates from Arizona at this facility. Although occupancy at the La Palma facility during the fourth quarter of 2022 surpassed the occupancy level from the fourth quarter of 2021, we incurred substantial transition expenses in the fourth quarter. We expect these expenses will normalize around the middle of 2023. The fourth quarter results were also impacted by the expiration of the final prison contract we had with the Federal Bureau of Prisons at our McRae Correctional Facility, contributing to a decline of $0.02 per share compared to the fourth quarter of 2021. However, these declines were partially offset by employee retention credits we were entitled to under the CARES Act for retaining employees who could not perform their job duties at 100% capacity due to COVID-19 restrictions during 2020 and part of 2021. These credits were reflected in the fourth quarter of 2022 as a reduction to operating expenses and amounted to $0.02 per share net of related expenses. Our adjusted EPS increased $0.14 from $0.08 per share in Q3 to $0.22 per share in Q4 and normalized FFO per share increased $0.13 from $0.29 per share in Q3 to $0.42 per share in Q4, primarily driven by reduced expenses and favorable federal populations at our facilities. Although we expect our operating margin percentages to trend toward pre-pandemic levels of approximately 25%, we do not anticipate reaching or exceeding those levels in 2023, as occupancy constraints from COVID-19 may continue through much of the year. As of December 31, we had $149 million of cash on hand and an additional $233 million of borrowing capacity on our revolving credit facility. Our leverage measured by net debt-to-EBITDA was 3.2x using the trailing 12 months ended December 31, 2022. For the full year 2023, we expect to generate adjusted EPS of $0.50 to $0.65, normalized FFO per share of $1.35 to $1.50, and AFFO per share of $1.29 to $1.45. Our guidance reflects the continuation of a tight albeit improving labor market, with less reliance on temporary incentives but offsetting higher staffing levels. During 2023, we expect to incur $61 million to $63 million of maintenance capital expenditures, roughly in line with 2022, which is substantially lower than in 2022 when we completed several renovation projects. We will sculpt stock repurchase levels to EBITDA performance but remain flexible and opportunistic in repurchasing shares without materially increasing leverage. I will now turn the call back to the operator to open up the lines for questions.

Our first question comes from Joe Gomes of NOBLE Capital Markets. Your line is open, Joe.

Good morning, Damon and David, congrats on the quarter. I wanted to start out by diving a little bit more into the guaranteed minimum contracts with ICE. I know you had mentioned previously you've been in discussions with them on some of the facilities that do not have those types of contracts. Can you provide an idea of the progress on those? Is there a timeframe in your mind for relief? What do you expect would happen if you don't receive relief?

Yes, thank you for that question. We really didn't cover this in our scripted remarks, but I will say that, in the near term, we've had some meaningful discussions with ICE about their needs in anticipation of the end of Title 42. They’ve been receptive to our conversations and we have seen positive renegotiation of contracts. We're encouraged by the conversation as we believe they will need those beds and capacity. Anything you'd add to that, Dave?

Yes, I'd add that while we have opportunities to address occupancy levels, our ICE populations are much lower than historic levels, and we are having ongoing conversations with ICE about individual facilities due to these low occupancy levels. So far, they have been reluctant to consolidate populations into fewer facilities, which I think indicates a future need.

We are leaning forward on staffing facilities in anticipation for increased occupancy. If we were not staffing up, we would likely be close to consensus estimates for 2023. This provides a good indication of ICE's needs based on our staffing efforts.

Thanks for that insight. How flexible have you seen the ICE occupancy restrictions lately, especially in regard to the administration's changes coming in May regarding COVID health restrictions?

We think that is likely. However, there are a lot of moving parts with the pandemic emergency and ongoing court activity around Title 42. So while we anticipate some improvements, it’s hard to make definitive statements at this time.

Switching questions, regarding the California facility where you received a lease termination notice, do you think there is a possibility that decision could be reversed?

Based on communications I've had directly with state officials in the last 30 days, I feel there is a likelihood that the decision could be reversed. We are exploring opportunities and engaging with the state on various fronts.

What kind of EBITDA does that California facility produce?

Its margin is very comparable to the margins that we disclose in the property segment, which is around 70% to 75%.

How should we view Title 42 in 2023? Is there a sense that it really could end on May 11th or shortly thereafter?

It's difficult to predict with so much litigation ongoing. While it is anticipated that the administration will terminate the emergency on May 11th, how this impacts Title 42 remains uncertain.

Are there any discussions about introducing dual contract models like the one at Northeast Ohio into any other facilities?

Yes, absolutely. We are always looking for opportunities to activate dual contracts, especially in underutilized facilities. This has been successful in the past and we anticipate more opportunities in the future.

Just a follow-up on understanding your financial guidance, what are the potential headwinds besides the McRae expiration?

Labor is a factor impacting our guidance. While we are ramping up staffing, the increased labor costs will impact our revenue significantly.

When do you anticipate the La Palma Facility's cost structure to normalize and when will it be fully staffed?

The staffing is expected to normalize around midyear. We're in good shape overall, but external expenses continue to be incurred until local staffing is fully established.

The ramp is substantially completed. As we've mentioned, we have about 2,500 people there today, and the staffing remains supplemented by staff from other parts of our systems. However, external expenses due to travel and registry nursing continue until the local staff is fully engaged.

Thank you. That does conclude today's conference call. Thank you for participating. Please disconnect your lines at this time.