CXW: New Credit Facilities Extend Maturities, Substantial Liquidity

By M. Marin



Credit facilities underscore CXW stable revenue, strengthening balance sheet…

CoreCivic (NYSE:CXW) announced new credit facilities this week, comprised of a $100 million term loan and $250 million revolver, to replace and extend CXW’s prior credit facilities that were slated to mature in April 2023 (the new facilities mature on May 12, 2026).

… as leverage ratio reaches targeted level…

CXW has executed its strategy to pare debt and deleverage. Long-term debt was $1.484 billion at the end of 1Q22, down from $1.492 billion at the end of 2021 and $1.747 billion at year-end 2020. At the end of 1Q22, the TTM leverage ratio (net debt to adjusted EBITDA) was 2.7x, down from 3.7x at the end of 2020. CXW’s targeted leverage ratio is 2.25x to 2.75x; thus, the company is within its targeted range at this point.

CXW had $378.2 million of cash at the end of 1Q22, up from $299.6 million at 4Q21, plus an additional $12.3 million of restricted cash. The company has no major debt maturities coming due before 2023 and has reduced this amount significantly and with no funds drawn against its revolver, we believe the company has significant liquidity.

… and CXW implements additional measures to enhance shareholder value: new share buyback

We expect the company to continue with balance sheet strengthening efforts, but at this point it is implementing additional steps to enhance shareholder value. The company implemented a new $150 million share repurchase plan. We expect the company to buy back shares depending on market conditions; we are not adjusting our estimated 2022 quarterly share count at this time.

Separately, trade publications report that a court ruling regarding the potential lifting of Title 42 is likely over the next few days, as the Biden administration has announced that Title 42 will cease by May 23, 2022. We expect ICE demand for capacity will increase once Title 42 is lifted, implying possible revenue upside for CXW.

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