Shares of Corrections Corp. of America were down almost 5 percent in Thursday afternoon trading after the prison operator lowered its profit outlook for the rest of 2012 because several customers’ inmate counts came in lower than expected.
CCA execs said their company earned $31.7 million in the first three months of this year, down from more than $40 million in 2011. Per diluted share, adjusted earnings from continuing operations came in at 33 cents, in line with analysts’ expectations. Revenues rose 2 percent to $435 million.
Going forward, CCA’s leadership expects to post diluted EPS for the year to come in between $1.53 and $1.61. That’s down from a range of $1.60 to $1.70. President and CEO Damon Hininger said the main reasons for the downward revision are a slower-than-expected rebound in the number of inmates the company is getting from the U.S. Marshals, which pulled back late last year. In addition, Georgia officials have been reducing their inmate counts and CCA’s medical claims costs rose during the quarter.
At about 1:15 p.m., shares of CCA (Ticker: CXW) were changing hands at $27.62, down 4.8 percent on the day. Volume was heavy, with three times the average 2.1 million shares trading. Year to date, CCA is still up more than 30 percent.
Separately, the company also announced its leaders have been studying since late last year its options on converting to a real estate investment trust structure. Execs haven’t yet asked the Internal Revenue Service about an opinion on the potential move, which would involve creating a taxable REIT subsidiary. An investor group last month asked the board to consider a REIT conversion, but the company at the time did not disclose that it already was studying such a plan.