Good morning. My name is Jessica, 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 Corrections Corporation of America’s First Quarter 2015 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Cameron Hopewell, CCA's Managing Director of Investor Relations. Mr. Hopewell, you may begin your conference.

Thanks, Jessica. 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. During today's call, our remarks will include forward-looking statements pursuant to the Safe Harbor provisions of the Securities and Litigation Reform Act. Actual results or trends may differ as a result of a variety of factors, including those identified in our earnings release and with our various filings with the SEC. 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. This call will include a discussion of non-GAAP measures. A reconciliation of the most comparable GAAP measurements is provided in our corresponding earnings release and included in the supplemental financial data on the Investors page of our website, www.cca.com. With that, it's my pleasure to turn the call over to Damon Hininger.

Thank you, Cameron. Good morning and thank you for joining our call today. Also joining me on today’s call is our Chairman, John Ferguson, and Brian Hammonds, our VP of Finance. I will begin today’s call by providing some highlights of our financial results for the first quarter 2015 before providing an update on key business developments and opportunities. Following my remarks, I will hand the call over to Dave, who will provide a more in-depth review of our first quarter financial performance and will walk through the factors impacting our updated full year 2015 guidance. We started off 2015 with strong financial performance in the first quarter. Revenue of $426 million in the first quarter represented a 5.4% increase from the comparable prior year period. Total net operating income for the first quarter was $125.3 million, an increase of 7.3% over the prior year. And we generated normalized funds from operations of $0.68 per share in the first quarter of 2015, an increase of 9.7%. Both our EPS and FFO results exceeded the high end of our guidance for the first quarter as the result of our continued outperformance in our portfolio of owned and controlled facilities. Revenue generated from owned and controlled properties increased 9.7% and net operating income increased 8.3% year-over-year. Dave will provide additional color on the drivers of our financial performance following my remarks. Also during the first quarter of 2015 our board of directors approved a 6% increase in our quarterly cash dividend to $0.54 per share or $2.16 per share annually. This was the second 6% of a dividend increase in as many years and reflects our continued confidence in the strength of the earnings and cash flows generated by the business. And it is also important to note that our view hasn’t…

Thank you, Damon, and good morning, everyone. In the first quarter, we generated $0.49 of adjusted EPS compared to our February guidance range of $0.44 to $0.45, and $0.04 ahead of the First Call consensus estimate. Normalized FFO totaled $0.68 per share, ahead of our February guidance range of $0.62 to $0.63 and AFFO also totaled $0.68 per share compared to our February guidance range of $0.61 to $0.62. Adjusted EPS, normalized FFO, and AFFO exclude a non-cash impairment charge of $1 million for the write-off of goodwill associated with our decision to exit the managed-only contract at the Winn Correctional Center. Compared with the first quarter of the prior year, these first quarter results represent increases in adjusted EPS, normalized FFO per share and AFFO per share of 11%, 10% and 17%, respectively. These increases were attained through the continued ramp of new contracts with the state of Arizona at our Red Rock facility and ICE at our South Texas Family Residential Center, as well as from exiting certain unprofitable contracts as we discussed last quarter and in this quarter’s earnings release. We expect the new contracts with Arizona at our Red Rock facility, where occupancy increased from about 500 inmates at year-end 2014 to nearly 1000 inmates by the end of Q1 2015, and with ICE at our South Texas Family Residential Center to contribute to further growth in 2015. As a reminder, revenue at the South Texas facility is largely based on the number of beds brought online rather than the number of residents at the facility. As Damon mentioned, we currently have 960 beds in service and expect to have the full 2400 bed facility online near the end of this quarter. On a percentage basis AFFO per share increased from the prior year quarter more…

Thank you, Dave. That now ends our prepared remarks. We now like to take it over to the operator and open it up for Q&A.

[Operator Instructions] And at this time, we'll go to Kevin McVeigh with Macquarie.

Great, thanks. Hey, and very helpful comments. Hey, I wonder if you could just drilling down a little bit more on California. It sounds like kind of the in-state is pretty safe, the volatility could be on the out-of-state, is there any way to think about kind of a range of kind of best worst case scenario to the extent the state has continued success in terms of reductions? And then, just along those same lines Damon, if I heard you right, in the CAR 16, you have about 1,800 beds or so, 1,500 rather, and the total opportunity is 10,008, who has got those other beds and just any thoughts on puts and takes across the guidance as it is currently laid out from a California and CAR 16?

Absolutely. Thank you Kevin. It is Damon. So let me – a couple of questions you had there, first with California and then with the BOP. So let me tackle those in that order. So California that key question that we will have and really everybody I think has in California, in the legislature, in the Department of Corrections is the population projection, so let me back up a minute and give you at least what we know and then some of the kind of key milestones and things that we will be looking towards here in the coming weeks and months. So if you go back about 16 months, at the time right before the Prop 47 was passed, those observers within the state and probably the most notable one was LAO, which is Legislative Analyst's Office, they were expecting Prop 47 to have an impact of a couple of thousand inmates within their correction system. And you understand that and you understand the current number they are at 5000. So it was notably higher than what they are projecting going into the vote on Prop 47. The other thing as I mentioned earlier, and we had mentioned also in February the Governor’s budget in January fully funded the 9000 beds. So going into their vote, [Indiscernible] couple of thousand bed reduction in the Department of Corrections system, but the governor still felt strongly about fully funding [the NSA] program. So it obviously has been higher, the impact on Prop 47 has been higher than anybody expected within the state. So the key question going forward is what would be the impact going forward, and our projection that will be released by the State. We don’t know the timing of that, but obviously that will be a key thing…

Got it. Damon, just the MTC, I missed that? How much of MTC?

Geo has got over half of the beds up for rebid, MTC has about 2000 beds up for rebid, and we have got the smallest quantity of the total amount, which is our Eden facility of about 1500 beds.

Got it. And then just, if you said this, I apologize. In terms of the guidance, where you are projecting kind of where should California sit in that in terms of number of beds embedded in the full-year guidance now, if you can give that?

So we’re projecting from where we are now, which was again down to 8100 from say 8700 – down to 8100 at the end of April. We’re projecting 2000 to 2500 additional inmates, pretty much pro rata between now and December 31st, calendar year ’15.

Got it. So, there is an outside chance that if those current trends kind of continue that maybe upset there. Okay, awesome. Thank you.

Thank you Kevin.

And our next question comes from Brian Rutenbur from Sterne Agee.

Yes, thank you very much. So, trying to understand the California impact a little bit further, 2,200 beds on an annualized basis would be about $50 million, is that the right ballpark?

Well, I wouldn’t want to quantify I mean the guidance reflects the range that is going to be dependent on that 2000 to 2500, but it is also going to be dependent on where they are coming from and the pace at which they take them out between now and the end of the year. So all I can really want to tell you is that it is all – that range we have [8% range] embedded in that guidance.

Okay. Can you tell us how much -- I didn't hear the revenue guidance. Was there anything that you gave us in terms of revenue for the year?

No we haven’t historically provided the consolidated revenue guidance.

Okay. I was just trying to do a back of the envelope, what it would – then would this impact be on an annualized basis, if we took the 2,200 or 2,100, you pick the middle of your range. And at the end of the year if in fact they take out those beds, what would be the annual impact in terms of AFFO or earnings?

I really don’t want to provide that to you Brian.

Okay. Then the exposure, I'm trying to understand is, there is an additional -- is it 8,000 beds you have or additional 6,000 on top of the 2,000 to 2500 that you have out of state?

Our contract is for about 8900, and so we are projecting – so you are down about 600 to date, and then on top of that it will be 2000 to 2500 additional that we are forecasting between now and the end of the year. Obviously we haven’t put out 2016 guidance, which is really why it is hard for me to tell you what the impact would be in 2016, not to mention the fact that we don’t really have very good visibility on what that impacts in terms of any additional population reductions would be in 2016.

Brian I would add to that that we as I mentioned earlier, we believe we will having a contract pass next fiscal year, and so that will be obviously a conversation we will have with the Department on the location and the ultimate amounts. We know that is a notable – that will be a notable event for the investment community because that should give clarity on locations and the populations going into 2017 fiscal year. The other thing I would say is that we have a great relationship with California and as in the last couple of years they have been very flexible, as much as they can be on the impact and on the location. So your earlier question to Dave about kind of impact, one thing that we will be working on in the coming days and weeks is to try to meet their – what they need to accomplish in their system in order to bring it down the population, but also try to minimize the impact as much is possible within our system. And they have expressed as they have had in the past a desire to be flexible and try to minimize the impact to the company.

Okay, thank you very much.

Brian I want to say one other data point. California is expected to bring on about 2400 infill dorm beds in early 2016. So we wouldn’t be surprised if the May revise includes some additional reductions into 2016, but it is just very difficult to predict what that is going to be.

Okay, great. Thank you very much.

And we will now move to Tobey Sommer from SunTrust Robinson Humphrey.

Thanks. One question on California that I think has been asked, but I missed it. If the beds come down in terms of the demand, is there an expectation that you might have for which facility they would be drawn from? Thanks.

Yes, this is – Tobey, thanks for your question. This is Damon, and I wouldn’t want to point out a specific facility, but as I expressed earlier the state has been and has expressed going forward a lot of desire to be flexible whether that is on the timing and on the impact, and so it would be our desire to minimize the impact obviously, but also to see if we do have line of sight on another opportunity, as expressed earlier like Oklahoma where they have got desire to do [1,000] beds to see if we can kind of link those two events together but as of right now it is too early to tell exactly the location and the timing of specific facility.

Okay, but I guess the point is you might be able to play a role in that decision?

Absolutely. Yes, absolutely. In California again they have and this is going several years, they have expressed a lot of desire, basically we have had some ups and downs in populations in years past. And so they have always come to the table saying, we know this will also have an impact with you. We want to help you minimize that. It is clearly something that they have got to achieve but we will have a role in that and have a dialogue. So it will be a two-way conversation.

After the beds, the small number of beds that California has coming online shortly -- come online, are there any more beds in California under development or accessible to the states?

There are not. There is not. So yes, other than the ones that Dave just highlighted there is not, and again the key question in the coming days and weeks will be the POP projection going forward. The one thing that we look at very closely is not only the state populations, but also what is going on in the county level, and so we are seeing – we are seeing some volatility in the county level too. We don’t see anybody building capacity at the county level but we are also starting to see a little bit of a shift on certain offenders that maybe are serving their full sentence versus maybe US pats are only serving 20% to 50% of their sentence. But that will be a key question on continuing to look at capacity, which again we don’t see anybody developing it, but also what happens and what kind of shifts in behavior do you see at the local level.

Okay. California has achieved successful results in its – kind of its goals in recent years with innovative measures, I guess, is one way to describe it. To what extent do you think other customers that are having inmate population increases right now and experiencing that are maybe increasingly willing to engage in innovative things such as California or perhaps things – new measures to mitigate that population growth?

It is a good question, and I would say California is very extraordinary as you know because they went up to 200% capacity within their system. They had the Federal Courts come in and also mandate them to take their system down to 137.5%. So I would say some of the efforts that they have taken and some of the results they have been able to achieve as a result of the pressure and the direction they have gotten from these Federal Courts, which we have seen in the past some states have these type of situations where they are severely overcrowded and they are forced to make some very, very tough decisions with respect to the system. But I would say in my – all my time in the industry California clearly was the worst off of any system were crowded and with that had these extraordinary measures. But to answer your question, we don’t see these type of steps that California has taken, we don’t see these happening in other states, no. Some states have done some adjustments and tweaks and have made some provision changes related to sentencing and sentencing guidelines, but nothing to the extent that we see in California. The other thing I would point to is that virtually every state in the country does a five-year population projection, and they update it on a regular basis and it is really important to update that as they go into the budget season so legislators can think clearly on what they need to appropriate for dollars for the permanent corrections in the coming fiscal year. And that is something that we look at on a regular, regular basis, and so if you heard me kind of talk about the numbers telling the rate of growth over the last couple of years, they are projections that we see going forward and those projections are always taken into account any tweaks or changes that are made with parole standards, sensing guidelines and looking at the numbers. Just not reading the newspapers, but looking at the numbers and the projections that we are seeing around the country. Again we don’t see anything as notable as what is going on in California.

Turning and applying the same kind of scrutiny to the federal side, do you see actions and changes either in sentencing or other areas to curtail population growth?

There has been some tweaks and we have talked about here in the last, I guess, probably 24 months, and that has an impact on the BOP populations. Their populations have been coming down. The conventional wisdom within the industry is that it is a little more of kind of wait and see. So no one really I think want to come out and say, definitely here is what we think the projection is going to be for the next five years with the BOP. I think this year you probably will still see some declines, but as I mentioned earlier, the feeder into the bureau of prisons is the United States Marshals Service and the Marshals Service has declined somewhat here in the last 12 to 18 months, but as I indicated in my comments we are starting to see really on the front end of that pipeline where you have got more dollar fee appropriated and people being hired in both the law enforcement community at the Federal level, but also US attorney’s offices and like I said we are now seeing nationally, but also in our system marshal population starting to rise. Marshals Service has these individuals for a short period of time anywhere from 60 days to 6 months, and they ultimately pass over to the BOP. So a little bit of a wait and see in 2015, but we think that if the Marshal population start to increase than that could have a like impact on the bureau of prisons.

Okay. My last question is, could you give us any color on your view of the implications of budget activity at the federal level and state level that you're anticipating I guess for the state's fiscal year coming up? Thanks.

Over all, and thank you, an overall view on the state level is positive. It has really been on a nice trend here in the last three years. So as revenues have increased we’re seeing now the Department of corrections get a little bit of breathing room to where they could not only do some investment. Their facilities at many states that have imposed multi-year merit increased freezes. So we’re starting to see a little bit of breathing room for the Department of Correction to achieve around the country where they can do a little bit stuff in their system, but also we are seeing a little bit of modest improvement on pricing. So, nothing in the foreseeable future that we think is going to reverse that trend. Now you have got – not every state is in the same financial health, but overall we see kind of a general modest trend upward on state budgets. On the Federal level, as I mentioned earlier, the proposed budgets from the President and at least what we are hearing out of the committees in both the house and Senate indicate that our contracts will be fully funded, and it is most notable with ICE there is going to be a meaningful increase just because of the investment ICE has made on family detention for both facilities that we have and Geo has and then marshals service will be adjusted if they are seeing the trend as I mentioned earlier on populations, and they can increase far beyond what [Indiscernible]. So nothing more to add to that, but overall I would say it has been modest improvement on the state side and fully funded on the Federal side.

Thank you very much.

Thank you for your questions.

And we will now go to Kevin McVeigh with Macquarie.

Hi, so, just one follow-up, Damon. In terms of pricing, any impact in terms of what that could be at the top line, is it 25 bps, 50 basis points, just as pricing starts to affirm a little bit?

Historically we have been 2% to 3%, typically it is pretty much on par with DPI. I would say just for the near term it is probably just a tad below that because again I think States are still being somewhat cautious and careful on their expenditures, but I would say, yes, you probably normally – the normal level of kind of 2% to 3%, we could be heading that way here in maybe say, 12 to 24 months.

And what would that translate to in terms of revenue?

Probably wouldn’t give you a number on that. We could maybe follow up with you online on that, but – and put a number to it, but I couldn’t gives you one right now.

Okay and then just with California factored in at a very high level, how are we thinking about capacity nationwide in terms of potential beds, because I know one of the things we've talked about in the past is some of that, ultimately the capacity gets absorbed. That should help the pricing a little bit more. Just any thoughts on available capacity and how that should absorb and does California change that discussion at all?

I would say to that question it probably would have to do a little bit of a wait and see, get into [Indiscernible] half of this year. As I mentioned earlier, we have Arizona get an authorization for another 1000 beds, Oklahoma if their budget is finalized they should get an authorization for another 1000 beds, and we have also seen some POP improvements in our system in places like Colorado, and so that is positive dynamic for the company and for the industry if a fair amount of this bed is absorbed with these new opportunities and with the reduction in California. It could be the case where we were a year ago, which we think capacity drying up and there is opportunity for pricing improvement, but I think we will have a little more clarity on that as we get into the late summer, early fall. The other thing I would note and I did mention this in my remarks, but it is just important to reinforce that even states that are growing, like Arizona, Oklahoma, Tennessee, Colorado, there is no prison capacity being built at the public sector level, at the state side or at the Federal side. So really the capacity of note that is out there is in the private sector because we just don’t see even through this budget cycle, which we’re not completely through yet, not everybody has passed their budget, but they are in a period everybody is going to be appropriating dollars for new prison capacity.

Helpful. Thanks Damon. Take care.

Thank you.

I will now go to Rob LaQuaglia with Wells Fargo Securities.

Hi, guys, thanks for taking my question. I guess this one would be for Dave. Could you just talk about any timing on unsecured debt, where it'll likely be 2015 or 2016 event, and then any detail you could give on potential pricing will be great. Thanks.

Yes, so as I mentioned we have about 320 million of liquidity available at the end of the quarter. A substantial portion of our debt is at variable rate. So as we look forward and as we move into a higher interest rate environment, it makes some sense to turn out a portion of our short-term debt into long-term debt. As far as pricing goes, I would speculate, but I will just throw a number out, anywhere from 5 to 5.25, maybe 5.5, depending on where markets are at the time we go to market. So it also somewhat depends on what we see in the pipeline for growth opportunities to deploy capital. We see some coming imminently. You could see us going shorter – you could see a transaction coming shorter than later, but – so a lot of variables, but we are certainly keeping an eye on the markets, and it is something we are looking at as far as where we are on the – given the balance on the credit facility.

Great, thanks.

And we will now go to Barry Klein with Macquarie.

Hi, guys, thanks for taking my question. On the tax rate, if I'm doing my math right, it was only at 2% or 3% for the quarter, is that the new run rate or is this just a sort of blip and really you get back to the run rate you've talked about in the past?

As I had indicated in my comments, we had a low rate in Q1 driven by a couple of things. Actually Q1 is normally lower than the other quarters because of some seasonality and unemployment taxes, which reduces the taxable income at the taxable REIT subsidiary, primarily in our managed only segment. Q1 was also further driven down by some operating losses at our Winn Correctional Center. So as we phase out of that you will see the effective income tax rate rising.

Okay, got you. And then a couple of the procurements, the BOP you mentioned at 10,100 beds. I just had two questions, one is on the timing and then two, does having to bid in the California beds with inmates in the prisons, does that have any impact on the bids, is that viewed favorably or unfavorably by the BOP for the procurement or no?

Good question, and the answer is no. In fact it maybe just a tiny net positive if you have got an existing facility that has got staff with a lot of tenure and lot of experience. And the answer is no as it relates to BOP. And as I mentioned earlier it is important to note that California has again been very, very flexible within the past and as you may remember, we are holding California inmates at Red Rock, which now hold Arizona, and we were very clear on our expectation that we were going to be aggressive for the opportunity in Arizona with the State, and in California that expressed a lot of interest and flexibility to help us work down, and ramp down the population there in advance of the Arizona population coming in. So probably mutual maybe a tad net positive again [Indiscernible] it has got existing staff with a lot of experience and tenure.

Okay. And the timing, did you say anything on timing?

Excuse me. So the timing, the proposals are due here within the next 30 days, and this procurement like others, it has a shelf life of a year. So an award we expect will probably be within the next 12 months.

Okay, and then with regard to Red Rock, the additional 1,000 beds, is this – I'm sorry, with Arizona, the additional 1,000 beds by July 1, 2016 that has been authorized, can Red Rock handle all of the 1,000 beds, I know there is only 500 or 600 beds remaining or as is or could they do – could you guys do something with Red Rock to make some modifications or is it something that you might split up with the existing California beds and work with them…

Yes, we think that the facility would be perfect for 1000 beds, but we would have to do some physical plan modifications.

As you mentioned, there is 500 available today.

That is correct.

Right. So you would put on another unit or something like that, I would assume, right, is that how --?

Right, correct. Exactly.

Okay, got you. And the July 1, 2016, that's when inmates go in or that's when you get an answer or what is the – I guess what is the – a little bit more clarity on the timing there?

A good question. July 1, 2016 is when you would have to start taking inmates. So it will be a very short period of time. So again we think we are well positioned for this opportunity.

All right. Is there a timeline on when we could get more information on whether you guys win or whether they move forward?

We think the procurement could be out here very quickly, maybe at the end of this quarter or maybe right at the beginning of July as the new fiscal starts, and my suspicion is even though I haven’t seen a procurement yet, is that once it is out that will give not only some clarity on time of the award, but that could probably happen pretty quickly, probably sometime maybe in the third quarter, if they really want to get the beds online by July 1 of next year.

Okay. And then lastly, sorry, I am asking all these timing questions, on Oklahoma, the 1,000 bed RFP, I know they've talked about this in the past and they've pushed it off, but is there any update on your views on timing if they move forward with that RFP?

Yes, as I mentioned earlier, the state of Oklahoma has not finished their budget yet. We think it is going to be finalized this week. The department has requested funding and authorization in the budget for an additional 1000 beds. So, once the budget signs and I think it will be pretty apparent on kind of the timing on not only the procurement, but also when they would want to award the beds in state.

Okay. So, again probably soon after the budget is passed then they'll probably start the work on that I would assume, is that what you are saying?

That is correct.

Okay, great. Thanks again for the time.

Thank you.

And that is all the time we have for questions today. At this time, I will turn the conference back over to you, Damon, for any additional or closing remarks.