CCA Q4 profits climb 12%

Avondale analyst says Q1 guidance 'appears conservative'

Corrections Corp. of America reported fourth-quarter profits of $45.4 million, up 12 percent from a year. Excluding various one-time items from late 2012 and 2011, adjusted earnings per share came in at 44 cents versus 41 cents.

Revenues at Nashville-based CCA were flat at $437 million during the quarter, when the company's compensated man-days held steady at almost 7.4 million, but its occupancy rate was 320 basis points lower than in the last three months of 2011. As a result, operating margins slipped a point to 30.7 percent.

Looking ahead to the current quarter — when his team will for the first time report earnings as a real estate investment trust — President and CEO Damon Hininger said CCA expects to post adjusted EPS of 47 to 48 cents. At first glance, Avondale Partners analyst Kevin Campbell told clients late Wednesday, that guidance "appears conservative" based on the much lower tax rate CCA will pay as a REIT, as well as various other factors.

"[M]anagement is guiding for a $0.15-$0.16 sequential decline," Campbell wrote. "It outlined variables in the press release that account for some portion of the decline, including the seasonal increase in unemployment taxes ($0.05), two fewer operating days in 1Q ($0.025), and higher G&A from operating as a REIT ($0.025 (our estimate)). This still leaves 1Q13 EPS approximately $0.53 v. $0.47-$0.48 in guidance."

Shares of CCA (Ticker: CXW) ended Wednesday trading at $37.54, down slightly on the day. They've risen about 16 percent in the past six months.