Good morning. This is James, and I'll be your conference operator. As a reminder, this call is being recorded. At this time, I'd like to welcome you to the CoreCivic's Third Quarter 2017 Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to Cameron Hopewell, CoreCivic's Managing Director of Investor Relations. Mr. Hopewell, you may begin your conference.

Thank you, James. 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 including our answers to your questions 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 third quarter of 2017 earnings release and in our various SEC filings. 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. On this call we discuss non-GAAP measures. A reconciliation of the most comparable GAAP measurement is provided in our corresponding earnings release and included in the supplemental financial data on the Investors page of our website. With that, it's my pleasure to turn the call over to our President and CEO, Damon Hininger.

Thank you, Cameron and good morning and thank you to everyone for joining our call today. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. Our second third financial performance came in ahead of our initial forecast as we experienced modestly higher revenues across multiple federal and state partners during the quarter. Normalized FFO of $0.56 per share was $0.02 ahead of the high-end of our third quarter guidance and AFFO of $0.53 per share was $0.01 ahead of the high-end of our guidance. This has allowed us to raise our full year 2017 per share guidance for the fourth consecutive quarter to normalize FFO per share of $2.33 to $2.35, an increase of over 8% in the guidance range from $2.11 to $2.21 per share or $0.18 at the midpoint from the initial full year 2017 guidance we provided back in October of last year. Dave will provide a more detailed summary of the drivers of our financial performance and key factors impacting our updated full year outlook at the conclusion of my remarks. Before I begin to discuss business developments during the third quarter, I'd like to say and take a few moments to recognize the contributions of our Chief Corrections Officer, Harley Lappin who after nearly seven years in the role at CoreCivic has decided to retire from the position at the end of this year. Harley's time as Chief Corrections Officer with CoreCivic adds to a highly distinguished 33 year career as a Corrections Administrator that began with the Federal Bureau of Prisons in 1985. His leadership experience insights and knowledge have been incredibly helpful to the executive management team, our Board of Directors and to me personally. For all of his contributions to the company previous service to…

Thank you, Damon and good morning everyone. In the third quarter, we generated $0.35 of EPS and $0.36 of adjusted EPS compared to our guidance range of $0.33 to $0.35. Normalized FFO totaled $0.56 per share compared to our guidance range of $0.52 to $0.54 and $0.02 ahead of First Call consensus estimates. AFFO totaled $0.53 per share ahead of our prior guidance range of $0.50 to $0.52. Our per share results exceeded our forecast as revenues exceeded expectations aided by higher than expected revenue from the U.S. Marshal Service and Immigration and Customs Enforcement or ICE. Adjusted EBITDA was $2.4 million higher than the midpoint of our guidance for the third quarter. Our per share results were lower than the prior year quarter as a result of the previously disclosed renegotiation and extension of a contract with ICE at our South Texas family residential center effective in November 2016 which contributed to reduction of approximately $0.10 per share. And the expiration and non-renewal of two contracts with the Federal Bureau of Prisons in April 2017 and October 2016, which resulted in an additional $0.03 reduction in earnings per share from the prior year quarter. Following these expirations, CoreCivic Safety revenue from the POP or revenue generated from two remaining BOP facilities comprised 5% of our total revenue for the third quarter of 2017. These declines were partially offset by higher inmate populations under a new 1000-bed contract with the State of Arizona at our newly expanded Red Rock Correctional Center completed in January 2017. Higher inmate populations from the State of Colorado and higher inmate populations from the State of Tennessee and a reduction in expenses at our Trousdale Turner Correctional Facility, where populations were ramping in the prior year under a new contract that commenced in January 2016.…

Thank you, sir. [Operator Instructions] We'll take our first question today from Tobey Sommer with Sun Trust.

Hi, this is Kwan Kim on for Tobey. Thank you taking for questions. First, it looks like CoreCivic has made small one-off acquisitions, such as the three properties in Georgia and North Carolina leased with those government. Is there a target portfolio of properties you are aiming to build out through these acquisitions and what may that look like? Thank you.

Thank you for your question. This is Damon. And the short answer is yes. So, what this did for us this acquisition we did earlier this fall of the three GSA properties, I think it woke up a lot of folks that own these assets are brokers that sell these assets. So, we actually have had a lot inbound interest here in a short period of time. We've probably looked at probably 20 or 30 properties that have been on-market or maybe off-market for transactions. So, we're building a really robust pipeline starting to scope these properties as I said earlier, we're adding resources on a real estate side to make sure that we can only scope and do the diligence, but also maintain these assets as going forward. So, as I said earlier, we're going to build this pipeline and get some guidance next year. But to your question specifically, yes, we have actually had some inbound interest on some portfolios. So, we've had some both companies that have some that are public, some that are private, maybe not necessarily focused purely on government leased assets, but looking at maybe selling some of these assets as a portfolio of multiple properties. So, we're taking a look at those also and that could be an opportunity here in the near term.

Got it. And in terms of where CoreCivic shares are trading now compared to those early this year. What is your view on what the market may be missing or misinterpreting on your valuation? Thank you.

Well, you probably never heard a CEO say that their shares are overvalued. I think clearly our shares are undervalued, and if I look at just one being a REIT, primarily in our case obviously exclusively working with government with $17 million - 17 million a square footage, I mean we are one of the largest, if not the largest government REIT out there. And so, I look at other publicly traded REITs that our third the size of the company and they're trading on FFO multiples of 15, 16, 17 times and we're in 11 times, I think, yeah, definitely can make the case where undervalued. So, here's what I'm hearing from investors, and what we're trying to do our darnedest is to try to make sure we are talking about some of their issues or concerns, risks that they're seeing. So, the number one, which we keep talking about regulate, I made this point in my remarks, and that is we think we really have moved the ball down the field on issue risk, on issues and opportunities or contract that we've had in place that have been involved in the past. So notably California as I said earlier, that was about 30% of our revenue, a couple years ago that is now 5% if you look just as a contract. We also with California, the facilities they vacated like North Fork in like Red Rock in Arizona, we have found alternative customers that we think our longer term solutions for those facilities. The Bureau of Prisons is the next one. The Bureau of Prisons that went out about 13% of our revenue a couple years ago, it's now 5%, and in places like Cal City, with the lease of California, where the BOP was there once upon…

No, I just to reemphasize what I said in my comment, I actually said twice in my comments that we generated 8.1% of our adjusted EBITDA to the CoreCivic Properties portfolio, that's a 100 leased, but very stable cash flows that I think commands a higher multiple. So, I think that that's an underappreciated fact along with everything else that you just said as well, Damon.

Thanks for your questions.

That's very helpful. Thank you.

[Operator Instructions] We'll now hear from Jordan Hymowitz with Philadelphia Financial.

Hi guys. Just a couple of quick questions. One is the Hamilton County, Tennessee a new contract or an existing contract with the expansion, I wasn't clear.

It's a new contract, it's basically a follow on an existing contract we've had for many years. So, it is a new contract, but it does have a feature where the County can engage us on consolidation at our existing facility with the new contract or we could expand it and would allow them to close some facilities that they've gotten downtown in Chattanooga.

But that has not been approved yet, it's just the opportunity?

The contracts have been approved, it is in force. As I said the provision to allow for potential consolidation that's a part of the agreement, but that has not been undertaken yet.

Okay. Second question as you said you would hope that up to 20% of your beds in this new expanded government entity. Is that in addition over the next few years of your existing portfolio or instead of in other words is that replace of one asset with another or were arguably be 20% less in two years?

Yes, to make sure I follow your question, so today between CoreCivic community and CoreCivic Property were about 14% of our EBITD coming from those two lines of business. Our goal is to take that 14% to 20% in 2019. So, we think we've made great progress and we think that goal is achievable to get 20% earnings coming from those two portfolios.

But my question is will it be a replacement or that balance sheet expand or I'm saying the contract expand?

Make sure, I understand your question. What we're looking at - make sure I'm following your question, if you could repeat it for me.

I'll follow-up after, because maybe I'm little confused. And my last question is, what is the next time - what is next time in the state will likely make a decision as probably Kansas correct this year?

Yes, our understanding to try to get that procurement awarded by Christmas.

Okay, thank you. We can follow up with the other question later.

And Jordan, just to provide additional color with what I think the earlier question, in order to go up to 20% of our adjusted EBTID will be generating an additional $25 million of EBITDA on a run right basis.

That that was my question.

Okay, thank you for that. Thanks for that.

Perfect, thank you

Thank you. At this time, we will conclude today's conference call. We do thank you for your participation. You may now disconnect.