Good morning. My name is Tony 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 2016 Financial Results Conference Call. All lines have been placed on mute to avoid any background noise. After the speaker's remarks, there will be a question and answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Cameron Hopewell, CCA's Managing Director of Investor Relations. Mr. Hopewell, you may begin.

Thanks Tony. 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 Private Securities and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our first quarter 2016 earnings release and in our Securities and Exchange Commission filings, including the forms 10-K, 10-Q and 8-K reports. 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 also 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 our Investors page at our website at www.cca.com. With that, it's my pleasure to turn the call over to Damon Hininger.

Thank you, Cameron and good morning, to everyone joining our call today. Also joining us today is our VP of Brian Hammonds. CCA is the nation’s leading provider of correctional, detention and community correction real estate and services. We provide federal state and local governments flexible and efficient solutions to address specific needs unique to their correctional systems. We see common theme facing correctional system that include overcrowding due to population growth or lack of funding for new capacity. The need for significant infrastructure investment resulting from government owned facilities reaching the end of their lifecycle and the need to expand community based reentry services offered to offenders reaching the end of their census and returning to their communities. We believe we’re well positioned to be the ideal partner for government that are actively working to address these issues. CCA’s existing facility portfolio is young and operationally efficient allowing our government partners the opportunity to lower their operating expenses when compared to relatively older and less efficient government owned facilities. Partnering with us allows us the opportunity to help them significant upfront capital expenditures required to develop a new facility. We currently have a number of facilities that have either all or some available capacity to meet a partner’s immediate need but we also have industry leading experience in the development of a filled options should a government partner have a specific need. In a very short period of time we’ve also significantly expanded our capabilities to provide community based corrections and reentry services per recent acquisitions which complement the reentry services provided in our correctional facility. CCA is now the second largest owner and operator of residential reentry service in the United States and we’re strategically pursuing additional investments to further grow in this area as we continue to…

Thank you, Damon and good morning everyone. In the first quarter we generated $0.40 of adjusted EPS compared to our February guidance range of $0.37 to $0.39 and $0.02 ahead of the First Call Consensus estimates. Normalized FFO totaled $0.60 per share, exceeding our February guidance range of $0.57 to $0.59 and AFFO totaled $0.61 per share ahead of our February guidance range of $0.56 to $0.58. The adjusted or normalized results exclude $1.1 million of M&A expenses primarily incurred during the first quarter of 2016 and $1 million of asset impairment during the first quarter of 2015. Per share results exceeded expectations largely due to stronger revenue driven by higher than anticipated inmate populations across numerous facilities. Federal revenue was particularly strong in the South West and we began to see increase in federal population in our newly constructed Otay Mesa detention center in California which were higher than our forecast. However, the first quarter was constrained by an operating loss of $0.02 per share at our new trial correctional center which began receiving inmates from the state of Tennessee in January. The operating loss of $0.02 of Trousdale comparing with an operating loss of $0.01 per share included in our guidance for the first quarter and $0.01 more than we expected due to higher start up of expense which are very difficult to predict for a ramp up of a facility of this size. Revenues at this facility during the quarter were in line with our expectations. Although EPS and FFO were a penny above the high end of our guidance AFFO was $0.03 above the high end of our guidance because maintenance capital expenditures on real estate were $1.6 million lower than expected. Maintenance capital expenditures can fluctuate from quarter-to-quarter although they are typically lowest than the…

Thanks so much David. So before, I turn the call over to the operator for the Q&A session I would like to reiterate that we believe we have ample avenues for growth through the impact from recently completely acquisitions targeting additional acquisitions of residential reentry facilities ramping up new contracts and Tennessee and Arizona utilizing available capacity and competing for new development projects. We believe our strong balance sheet and operating performance will maintain our access to capital allowing us to fund the accretive growth opportunity as we have discussed. We expect our earnings will trend positively throughout the year as evidenced by our updated 2016 guidance. Additionally, we remain committed to our dividend payout policy and will increase future dividends as your earnings and cash flow increase. Finally, last week was a national recognition of the work that reentry professionals do both in public and private facilities and this week actually it's correctional employees week here in the United States. And with that I just want to say how much I appreciate the CCA management team administrators and wardens and our entire CCA team here national and nationwide. I am internally grateful of the significant work you do for our company. Thank you again for calling today's conference and let me know let me now turn the call over to our operator for the question and answer session.

Okay. Thank you. [Operator Instructions] We will take our first question from Tobey Sommer with SunTrust. Please go ahead your line is open.

Thanks. I am curious about the real estate transaction opportunities that you are looking at and those investment what could those mean to your historically targeted returns in EBITDA margins and I know you don't have a lot of them kind of under your belt yet, but how do you think about that over the longer term? Thanks.

Tobey good morning this is Damon and thanks for your question. And answer is they really will depend on the location and the jurisdiction relative to the return and I think the same discipline we are showing on what I say on a managed solution. So we have got a jurisdiction that has a very specific need in a locale where there maybe not a necessarily obvious user if for whatever reason they have vacated the premise then we would think about maybe a higher return in with that maybe lease term that are loner in length and maybe add a little more rate relative to lease rate that provide a lot more return to us because of higher risk profile. So really it's determined by the jurisdiction. But having all things equal if it's real estate only solution versus the own and operative solutions that we do already the risk obviously is going to be a little lower with the real estate only just because we don't have the operational risk and a legal risk and somebody other kind of areas of the expense that we would have the volatility that we typically express within our own managed statement. And so with that we may require maybe a little lower return.

And I would add EBITDA margins there would go up because you don't have the level of operating expenses we have in the core business. Q - Tobey Sommer Okay. Thank you this is helpful and how would you characterize the evolution of your conversations because going from sort of introducing the concept and what in what you may be able to offer customers in is there a difference in the cadence of those conversations when I think about local state and maybe even federal conversations you are having? Thanks.

Yes, Tobey this is Damon again. I would say yes, I would say the cadence is picked up I would say primarily at the local level where you have got a lot of jurisdictions for the reasons we talked in the past. Maybe the deferred maintenance has got a significant unfunded pension liability where they clearly have a need and also they see an opportunity where not only they get this capacity but maybe consolidate their system because they maybe built a facility or two or three over the last 30 to 50 years. So I would say the interest in the solutions that we will put in front of them I would say that interest is growing and we are getting more interest from more jurisdiction also, so I would say we have got say about a handful of jurisdiction that are very intrigue by what we brought to the table and we are hopeful we can give one of these cross fish line sometimes soon.

Thanks. In I want to ask one more question about California I will get back in the queue. You are looking for I guess pretty stable volumes from California for the balance of the year how should we think about the states the capacity that they have got coming online and what if anything it means or the kind of business that you are doing with them which maybe a little bit apple and oranges. Thank you.

Yes, Tobey so couple of answers there the first part is yes, for the rest of the year we feel like we are at the position we are kind of stabilized our populations on the out of date program. So they have said California and they have indicated such in their proposed budget January which we expect it may revise coming out here next couple of weeks that they need about 4700 to 5000 beds out of state for the coming fiscal year. So all indications again we have reached I think a good level of kind of stability within our system based on their feedback but also what they proposing to fund next fiscal year. And as we look out in that couple of years based on their projections they continue to say that they are going to really need I would say program long term I say long term being next three to five years because they are already showing forecasted increase in their population within the state even though they do have some capacity as you noted coming online in today date so we feel like we reached a good point with them on [indiscernible] program I have got your clarity for the foreseeable future and what the needs are and also city which is the solution in state continues to be a kind of viable solution for them both short term and long term.

And further the classification of inmates that they need are the types of inmate that we house for them so that's favorable to CCA as well.

Coming online or not sort of equivalent bed?

Correct. They are the lower level.

Thank you very much.

Thanks Tobey.

Thank you and [Operator Instructions] meanwhile we will move to Michael Curtis with Canaccord Genuity. Please go ahead. Your line is open.

Hey guys good morning and thanks for taking my questions here also nice quarter I guess just first off you mentioned in your prepared remarks little bit about some of your ideal facilities and pursuing some contracts with those headline actually I think this morning about a meeting with the Oklahoma corrections board to potentially replace some of their housing with actually the facility that was vacated by I believe out of state California bed so I was wondering if you could just provide little bit more color on that what’s happening there? Thanks.

Michael thank you this is Damon I appreciate your question. Oklahoma has one of those states that you seen in the headline this spring where they are considering potential lease of facilities by the private sector CCA and with that petition they could close on the order and facilities so nothing to report today but they already said that they have expressed interest on our potential solution that we provide to them in state.

Okay, great, thanks. And then I guess my only other question here and this is a bit more speculated but so what’s going in Alabama with the $800 million budget I guess it's kind of seen lot of a approvals at this point is there any space for the private sector to play in that? Thanks.

Absolutely and we think that in Alabama and some of the other states I mentioned as they think about opportunities to close and consolidate their system it could be the solution where the private sector provide whole solution or it could be a public private partnership or maybe part of it publicly funded in some of its privately operated or privately funded I should say. So we think yes, Alabama like other states that are considering these types of solution and it could be a kind of all the above type of approach providing that solution.

Great, thanks again. That's all from me and nice quarter.

Thanks Michael.

Thank you. Next we will move to Kevin McVeigh with Macquarie. Please go ahead your line is open.

Okay let me congratulations well. Around the dividend growth payment should we think about that in terms of consistent with the rate of growth EBITDA or is only way to just try to frame with what that potential opportunity is?

Yes, what we have said Kevin last couple of years we [indiscernible] AFFO so as we think about kind of what that looks like now but also as we look at forecast over the next day and six to 12 months, and play part as you think about the dividend and what adjustments we want to make quarter-for-quarter.

Got it and then nice to see your federal partners kind of stepping up a little bit any thoughts on that piece over the balance of the year and then just as each respective quality seems like they are getting there kind of respected nominees and placed, anything to think about Damon in terms of that over the next couple 3, 6 months?

Yes, on the federal side I will just say we don't see any kind of immediate meaningful new opportunities and I think it for obvious reasons we have got a national election going on right now. We have got two of our three federal partners at this level have vacancies so they are led with interim directors and so I think as we go for the end of this year early next year probably not going to see a lot of activity just because we will have a new president inaugurated in January and he or she then will go out about the business and go ahead and start filling some of the position. So I think as we think about our partners it will be status quo for the rest of 2016.

Got it and then just one last one on pricing and attrition as it has been in terms of pricing discussion some of your partners and anything to call out around turn over?

So on the pricing side I would say incrementally becoming little better and better and I look at the last kind of 36 months of the nice kind of modest trend of improved pricing. We are still got a lot of legislature in session around the country, but our state folks as they kind of continue kind of keep yea in ground and need legislature do feel that funding is improving overall there is the couple thoughts so oil and gas to impact some revenues for some states overall feel like state revenues are improving and in term with that has quite a little bit of relief for us on a pricing and also gaining our annual escalators. So it is improved again it's not dramatic year-over-year but it is still continues on a trend of improved models year-over-year.

And turn over. I would say we have seen pockets where staffing compensation levels have been challenging would not characterize that as across the board. So if you look at certain markets we have certain challenges we are here to make adjustments and look at that closer and make just make adjustments so but we will continue to monitor that as the overall economy continues to improve. And make adjustments accordingly going forward as well.

Okay. Awesome. Thanks guys.

Thanks Kevin.

Thank you and [Operator Instructions] next we will move to Andrew Berg with Post Advisory Group. Please go ahead. Your line is open.

Hey guys I may have missed this can you just go back over how much the start up cost were impacted you in the quarter and what the anticipated impact would be 2Q I think you guys have talked previously about most impact being first half of the year.

Yes, I will cover that. This is David. We had two stance of startup cost Trousdale. It's hard and then we have got penny to two pennies of start-up cost for the Red Rock facility we don't have a definite ramp schedule yet. I negotiated with Arizona we are still working through that with them, but we have estimated a penny to two pennies of start-up there. Come back to Trousdale it's more difficult to estimate what start-up is at because it does turn profitable so at what point do you say it's start-up ends and your operational we are not projecting the targeted returns on that facility by the modeled we did those pricing for that facility until the second half of the year but certainly the short answer to your question is $0.02 in Q1 for Trousdale a penny to two pennies in Q3, Q4 for Red Rock and then Trousdale will not be optimized I guess the way I would characterize that until the second half of the year.

Okay. So first quarter $0.03 it's like $20.5 million on the dollar basis versus EPS business.

Just $0.02 for Trousdale because the Red Rock hasn't started yet.

Okay. Got it. And then, I know that it's a little bit speculative obviously you start rolling a bit more into your election season any thoughts about or any concerns about what we may start hearing in terms of changes in the industry notwithstanding the fact I think you guys make a pretty compelling case for why the industry should continue to be there we know that [indiscernible] have comments maybe to the contrary and I guess more importantly any thoughts of what you guys maybe proactively trying to counteract some of the Red Rock, Washington?

Yes, this is Damon and let me answer that question. I appreciate the question itself. I think about the in terms of issue and this question that we have got in the past I think it's really important to kind of look back over the last 30 years, we have had tremendous success at the state and federal level with either state level governors being a democrat or being a republican or president being democrat or republican we have been able to have really good operations perform very, very well and provide great value to our partners regardless of who is in White House or how is in the governmental residence and irrespective state. And that's our focus just to make sure that we continue to have great job everyday have high quality operations and then provide great value back to the tax payers in that respect to jurisdiction. And at the end of the day again we are 30 years again regardless of who we elected in office once again in office and they do appreciate the value and the track record and format we have had great success on renewing our contracts and that's the other point to is that over the last six- seven years again with changes and leadership both at state and federal level we have had renewal rates on our contracts north of 90%. So there is a lot of fun on cable TV that have a lot of views on the election season that we find ourselves in I think that best thing to kind of look at is to think about this business in our industry as look at our last 30 years I think it's a very good indicator on how we have been successful regardless of changes in leadership at the state or federal level.

One additional point just to be clear under long standing policy, we don't lobby for any legislation that would determine the basis or duration of an individual in parturition or detention.

Yes, and I think you guys have been pretty clear in past and I agree I think that the service provider is needed it's given the physical plan of the lot of the federal facilities it makes perfect sense. But I just was -- anything you do law being another one as to maybe trying to offset some of the potential Red Rock comes out I think the need for the business is clearly there. It's more than Red Rock that David was addressing?

Yes, I will say that we have done very effective but to your point is we are constantly on a daily basis educating stakeholders at the local state and federal level and that includes me going to DC or meet with folks within respected state to really truly help them understand exactly what we do, the value we provide and the quality of our operation. That's the concept regardless of there is election going on or not that's something in our DNA that we can do everyday just to make sure because there is a lot of turnover. I mean, we are all focused on the national election but I think in the last four five years I have seen over a 1000 new legislatures within respective state capitals around the country. And so that's just the constant process where you making sure that when someone is new to office and we have got an operation within respective district or state that they are aware of who we are what we do, quality of operation and with that making sure before they have a view or comment or have an opinion -- understand exactly what we do but also talk to our partners. Our partners are director of the corrections the people that we work with day in and day out if we are not doing a good job in their eyes we wouldn't be renewing contracts 90% and they would also have serious concerns about moving forward with [indiscernible] so that's a constant process and that just happens during election season.

Got you. Okay thank you.

Thank you. I appreciate your question.

Thank you and it appears we have no further questions at this time.

Alright well thank you very much we really appreciate your participating in our call today and we look forward to reporting our progress in the August earnings call. Thanks again. Have a great day.

Thank you. This does conclude today's conference call. You may disconnect and have a great day.