Corrections Corp. of America has signed an agreement with California City, Calif., officials to house hundreds of federal inmates at a prison it had planned to shut down next month.
The contract, which will result in U.S. Marshals Service inmates moving in early next month, is for 15 years [2] and CCA officials expect about 1,200 USMS prisoners will be at the site by next fall.
The Nashville-based company has raised its full-year earnings per share guidance to between $1.34 and $1.37, up from $1.26 to $1.30. (Analysts' consensus is $1.28 per share.) The hike – which is the result of this new contract as well as a temporary boost in USMS volumes – almost makes up for the loss early this year [3] of a Bureau of Prisons contract that had kept CCA's California City facility occupied.
But the company added that fourth-quarter profits will drop from Q3's because "margins per man-day will be negatively impacted [...] as populations are removed from facilities that are operating at very high occupancy levels and moved into facilities that will operate initially at lower occupancy levels."
Shares of CCA (Ticker: CXW [4]) are up more than 3 percent in pre-market trading. Year to date, they've lost about 8 percent of their value.