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Executives

Damon T. Hininger - Chief Executive Officer, President, Director and Member of Executive Committee

Todd J. Mullenger - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Assistant Secretary

Analysts

Manav Patnaik - Barclays Capital, Research Division

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

Clara Houin - Avondale Partners, LLC, Research Division

Clint D. Fendley - Davenport & Company, LLC, Research Division

Corrections of America (CXW) Q1 2013 Earnings Call May 9, 2013 11:00 AM ET

Operator

Good morning, everyone, and welcome to CCA's First Quarter 2013 Earnings Conference Call.

If you need a copy of our press release or supplemental financial data, both documents are available on the Investor page of our website at www.cca.com.

Before we begin, let me remind today’s listeners that this call contains forward-looking statements pursuant to the Safe Harbor provisions of the Securities and Litigation Reform Act. These statements are subject to risks and uncertainties that could cause actual results to differ materially from statements made today.

Factors that could cause operating and financial results to differ are described in the press release as well as our Form 10-K and other documents filed with the SEC.

This call may include discussion of non-GAAP measures. The reconciliation of the most comparable GAAP measurement is provided in our corresponding earnings release and included in the supplemental financial data on our website.

We are under no obligation to update or revise any forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events.

Participating on today's call will be our President and CEO, Damon Hininger; and Chief Financial Officer, Todd Mullenger.

I would now like to turn the call over to Mr. Hininger. Please go ahead, sir.

Damon T. Hininger

Good morning, everyone, and thank you for joining our call. In addition to Todd and I, we also have on the line John Ferguson, who is our Chairman; and David Garfinkel, who is our Vice President of Finance.

I'm going to start our discussion today and give highlights of the quarter and give also a business update, then we're going to hand it off to Todd to talk about the quarter in more detail.

But let me start with a few highlights as it relates to the quarter, first of which is that we're very pleased with our performance of $0.50 in EPS and $0.70 in FFO. We also saw some nice growth during the first part of the year in the portfolio. Some on the state side with some growth with the state of Oklahoma, and then also on the Federal side with United States Marshals Service and ICE. We're also very excited about what has been completed during the first part of the year and our steps to finalize our conversion to a REIT. As you know, we completed the REIT activities earlier this year that gives us flexibility to operate as a REIT and this was primarily done through our activities with the refinance. I'm very proud of the team as we've obtained the lowest interest rates ever achieved in our industry as part of this refinance. And later this month, we will pay the special dividend that'll distribute our pre-REIT accumulated E&P, and this is the last step in the REIT conversion process.

Now let me move from the quarter and just talk a little bit about the business and give an update on a couple of fronts, first of which is on the state side of the portfolio. And there's a few notable updates since we talked in February. But first of which is that we are still working hard at our Red Rock facility to make the retrofits and upgrades to get ready for our new Arizona contract, which, as a reminder, was awarded late last year. So the retrofits are underway. We're working on that through the summer into early fall and expecting Arizona to start using beds in January of next year. And this is the facility, as you may remember, has a population from State of California, so they will be taking the capacity that California is currently utilizing within the Red Rock Facility.

I also want to note that the state of Oklahoma has shown a continued need for additional beds in-state. We did -- have been able to meet their needs by providing additional beds at our Cimarron facility. Due to a recent change in governor, and also changes within the legislature, the Commonwealth of Puerto Rico is reassessing their needs within their correction system, and with that has drawn down their population within our facility and placed them back in our system -- in their system.

However, the contract is still active with Puerto Rico, and there is -- still is interest on their part to use beds in our system in the future. The state of Oklahoma has requested the utilization of virtually all the beds that were vacated by Puerto Rico, and they are ramping up into those beds as we speak.

So although we understand Puerto Rico's decision, we think Oklahoma is a great long-term solution for our Cimarron facility.

Now are a couple of specific observations about the current landscape and how state partners will be looking at CCA to help them address their challenges. And the first item of note is that 9 of our existing state customers have seen growth in the last 12 months at a combined total of approximately 3,000 inmates. An example of this is Oklahoma, which has increased by about 700 inmates this past year, and our contract with them has grown by nearly the same amount. Additionally, we now have 3,010 beds under contract with the state, and that's an increase of about 32% since June of last year.

And looking forward, our 11 state customers, where we provide both owned and managed solutions, and this is excluding California, we are expecting a bed shortfall from them of about 17,000 over the next 5 years. We're pursuing 6 new state prospects, which show their projected overcrowding in the next 5 years to be about 8,000 inmates.

Now there's a few updates on California, which I'll discuss it a minute, but I did want to highlight a couple of the near-term risks on the state side that we're watching very closely. And this relates to our facilities both in Mineral Wells, Texas and in Wilkinson County, Mississippi.

As it relates to Mineral Wells, this facility, along with the state as a whole, has recently experienced declines in their population and some legislators are proposing the elimination of some bed capacity within the state of Texas, which is included in this -- included in their evaluation, is our facility in Mineral Wells. We have incorporated into our guidance range the recent population deterioration at this facility for the rest of this year. And we're estimating the impact for the 2013 earnings to be the range of about $0.06 to $0.07.

Now as it relates to our Wilkinson facility, our contract with the state of Mississippi is expiring on June 30, and the state of Mississippi has issued a procurement for the rebid of this contract, which is managed-only. This procurement is extremely competitive, and the state of Mississippi has become a very challenging environment as it relates to managed-only business. Under this contract, we have also been experiencing that per diem increases have not kept up with inflation. So we still have this facility in our forecast, but the potential loss in operating earnings as it relates to 2013 would be not material.

Now as for state customer budgets. State economies continue to improve, and many states are exceeding their revenue forecast for the last half of the fiscal year. With this, we are cautiously optimistic that this will manifest itself into pricing improvement going forward, but in the near term, we're also encouraged that this improved budget environment has led to recent actions taken by Idaho, Oklahoma and Arizona, and moving forward and using the private sector to manage their very real challenges of growth and overcrowding.

I'd also note that last year, we closed the first of its kind transaction within our industry by buying a government-owned prison. This type of solution, which is monetized in a government-owned asset with a fixed income stream provided through a long-term management contract, we know in this budget environment, is very attractive to other states and local governments.

Now as it relates to state budgets and our proposed appropriations for new capacity, we are observing very minimal new appropriations for construction of new government-owned capacity to address overcrowding and population growth. And finally, on the state budget front, all of our 17 state partners have released their initial budget proposals for the upcoming fiscal year, which is on July 1. However, only a couple have completed their respective budgets, so we believe in the next few weeks we'll see many of these budgets being finalized and we'll have a better assessment as we get closer to July 1.

Now moving over to the Federal book of business. Let me just note that the current fiscal year budget was passed in late March. Congress passed what they call a full-year continued (sic) [continuing] resolution or CR to fund the Federal government through the end of the fiscal year, which expires in September 30 of this year. As it relates the Bureau of Prisons and the United States Marshals Service, the funding bill provides a full appropriation for all of our contracts with those 2 respective agencies. And as mentioned earlier, we have also seen a modest increase in our Marshals populations earlier this year.

For ICE, the impact of sequestration and not having a full year appropriation in place affected our operations very briefly earlier this year. As reported widely in the media, ICE lowered their detention population nationally in early March because of sequestration, and we were impacted by this for about 3 weeks. However, the CR that passed fully funds our contracts, and our populations have not only completely recovered, but we have also seen a modest increase this spring.

Now as it relates to the President's proposed budget in 2014, he released this budget on April 10, just last month. Our review of the budget proposal shows appropriate funding levels for the United States Marshals Service and the Bureau of Prisons as it relates to our contracts but also increased funding for the BOP for an additional 1,000 contract to find the beds.

As for ICE, we believe ICE's budget will be in flux until efforts on achieving immigration reform are completed.

Let me also just give an update on the BOP's procurement, and just a reminder, in August of last year, the BOP released a procurement for our contractor-owned and operated facilities, up to 1,600 beds that must be ready to accept inmates within 150 days of award, or no later than September 1, 2013. This is purely focused on a -- already built facility. The proposals were due in September of last year, and based on their time line, we believe an award will be some time later this year.

Now let me give the update on California, and just a couple of items of note. First of which is on April 11, the three-judge panel upheld its previous mandate, which was affirmed by the U.S. Supreme Court 2 years earlier, requiring that the state operate its 33 public facilities of 137.5% of design capacity. Currently, the state is operating at approximately 150%. The three-judge panel denied the state's claim to vacate its capacity order, and has ordered compliance by December of 2013 and ordered California to submit a plan showing how they would do so.

Last Thursday night, the state filed a new plan in response to the three-judge panel. Their plan does not meet the court ordered cap in the required time line and consists of many components. Most notably, as it relates to us, it would delay the return of the out-of-state inmates under our contract. So the obvious question is, "What is next?" Well, the plaintiffs now have the opportunity to file a response to the state's submittal to the court, and have to submit it to the court by May 20. Then the court will rule on the state's plan.

Now as mentioned in February, our forecast anticipates us ramping down the population at our Red Rock facility in the last half the year and the population would be returned to California. We are keeping this assumption in place until we receive more definitive action by the State and/or the court. The final comment on California is just to say that this is the time of the year where we expect a revised budget from the Governor, and we expect that to be out either in next few days or in the next week or 2, so an update on that front later.

So now, let me turn the call over to Todd.

Todd J. Mullenger

Thank you, Damon, and good morning, everyone. In the first quarter of 2013, we generated $0.50 of adjusted EPS, compared to our February guidance range of $0.47 to $0.48, and a first call consensus estimates of $0.48 for the quarter.

Normalized FFO totaled $0.70 per share, as did AFFO. Revenues for the quarter were in line with our forecast, but we exceeded our earnings guidance due primarily to lower-than-anticipated operating expense.

You will also note that the statement of operations presents a $134 million income tax benefit, which reflects $138 million of special REIT items, including the reversal of deferred tax liabilities associated with our REIT conversion.

Moving next to the discussion of our guidance. As indicated in the press release, we have an increased full year guidance, with adjusted EPS for the full year now in the range of $2.08 to $2.16, while Q2 2013 adjusted EPS guidance is a range of $0.52 to $0.53.

Full year FFO guidance is a range of $2.83 to $2.91, with Q2 FFO guidance in the range of $0.70 to $0.72. The guidance excludes REIT conversion special items, debt refinancing costs as well as the impact of any shares to be issued as part of an E&P dividend.

The increase in full year guidance reflects lower interest expense compared to our February guidance as a result of our recent debt refinancing, partially offset by a reduction in earnings associated with the reduced inmate population assumptions at our Mineral Wells facility.

In April, the company closed on 2 new issuances of 8- and 10-year senior notes, totaling $675 million, with coupons of 4 1/8% and 4 5/8%.

Concurrent with that refinancing, S&P upgraded our credit ratings from BB flat to BB plus, consistent with the existing ratings from Moody's and Fitch.

Keep in mind that the impact on interest expense savings from the refinancing will not be fully realized until Q3, as we will carry higher average debt levels in Q2 related to $150 million of the 2017 notes, which were not submitted for purchase under our tender offer and will therefore remain outstanding until June 1, when they will be redeemed under our call.

As mentioned in the press release, our guidance continues to assume all of the approximately 1,500 inmates at our Red Rock facility, a return to the custody of California between July and December 2013 in order to make space available for the State of Arizona. We have left this assumption in place, even though the plan California recently submitted to the Federal court lists a measure that could result in an increase of the average daily California populations above those currently assumed in our earnings guidance. We have left this assumption in place as California continues to work through the issues associated with this proposed plan, which includes obtaining approval of the plan from the court.

However, we do have beds in our system we can make available to California to replace some or all of the capacity they are losing at Red Rock, or to otherwise assist them with their needs.

As Damon mentioned in his remarks, our Wilkinson County facility contract is expiring on June 30, and the state of Mississippi has issued a procurement for the rebid of this contract. This is a managed-only facility that is operating at breakeven, so if we did happen to lose the contract, it would not impact recurring earnings, but there would be some one-time costs incurred with the loss of the contract, which we have not included in our guidance.

General and administrative expenses for 2013 should approximate 5.25% of revenues. While we continue to work diligently to maximize our income tax efficiency, guidance continues to assume a consolidated GAAP income tax rate of 8.5% to 9% for Q2 through Q4.

With regards to our next recurring quarterly cash dividend to be paid in July, obviously the amount of the per share dividend currently set at $0.53 a quarter, or $2.12 annually, will need to be adjusted as a function of the additional shares that will be issued as part of the special E&P dividend to be distributed later this month. As a result, the declaration of the next quarterly dividend to be paid in July will be announced sometime later this month after we finalize the number of shares that will be issued in conjunction with the special E&P dividend.

Finally, we believe that we have met all requirements necessary to be considered for addition to the FTSE All REIT and Equity REIT indices during their next rebalancing in June. And with that, I'll turn it back over to Damon.

Damon T. Hininger

Thank you, Todd. So let me wrap up our prepared remarks and just make these final comments. First of which is, again, we are very excited about all the steps that we've been able to complete during the spring as it relates to our REIT conversion, both for the refinance and also the declaration of the E&P payment. We've also seen some nice, modest increases in the portfolio as it relates to the populations, both on the state side increasing with Oklahoma, and then also on the Federal side with the Marshals Service and ICE. We are encouraged by the improved budget environment we're seeing also on the state side. But also looking on state budgets, we're seeing very, very limited investment for new public sector capacity, and so that states have to deal with growth overcrowding or be well-positioned to meet those needs, and Oklahoma, again, is a great example of this. And finally, further updates in California are very likely, but it is noteworthy that in our latest plan to the three-judge panel, a delay the return of inmates from out of state. So that concludes our prepared remarks. Thank you again for calling in today's conference. And let me now turn it over to back over to Farrah for questions and answers.

Question-and-Answer Session

Operator

[Operator Instructions] We'll hear first from Manav Patnaik of Barclays.

Manav Patnaik - Barclays Capital, Research Division

The first question is on the Texas population reductions. I guess you mentioned in your commentary that your guidance factors the negative $0.06 to $0.07 hit from that. Is that $0.06 -- does that $0.06 to $0.07 incorporate sort of just current population levels, or are we talking about further reductions?

Todd J. Mullenger

It assumes where we're at today, but also takes in account that if there is and maybe some additional deterioration we have factored that into it also, so can't give you great -- much more detail than that, but we have taken into a kind of a range of potential outcomes with that contract and with that facility.

Manav Patnaik - Barclays Capital, Research Division

Okay, and can you maybe tell us what that population level is today?

Todd J. Mullenger

We have been sitting, I think in the last, probably 30 days, in a range of about 1,000 to, I think about 1,300.

Manav Patnaik - Barclays Capital, Research Division

1,300. Okay, fair enough. In California, I missed this sort of -- I think you mentioned something about a May 20 deadline. What was -- could you just repeat that?

Damon T. Hininger

Absolutely. So the plaintiffs in the long-standing case now have the opportunity to file a response to the state's filing from last Thursday. So don't know exactly what they'll file, they could file their kind of opinions, or thoughts on the state's plan, they could submit their own plan, or it could be combination of both, but they've got until May 20 to file that to the court. And then the assumption is, then after that, the court then does a response and ruling to the state's plan they submitted last Thursday.

Manav Patnaik - Barclays Capital, Research Division

Okay, got it. All right, that's helpful. And then, Todd, I mean, your guidance on G&A of 5.25%, I guess that implies then that the $23 million x the one-time REIT cost that you recorded this quarter goes down for the rest of the year, is that right?

Todd J. Mullenger

We've historically seen some variability quarter-to-quarter in G&A expenses. There are some timing issues in first quarter so -- but on average, for the balance of the year, or for the full year, 5.25%. So you could see it go down, go back up and that's not unusual from a historical perspective. The selling average, full year, 5.25%.

Operator

And our next question will come from Tobey Sommer with SunTrust.

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

I wanted to see if you can give us a little bit more color on the general tone of new business opportunities. Does it feel like it's better here in early 2013 than it might have been at the end of 2012?

Damon T. Hininger

I would -- this is Damon. I would say yes. I would say, as it relates to the state side, the environment we've seen this legislative session is -- I mentioned earlier not all the budget proposals are completed, but the proposals that have been released to legislatures and the pricing and the CPI increases, proposing of those agreements or those proposals as it relates to our contracts, I would say, is modestly better than it was last year, and it's -- last year was better than 2 years ago. So I'd agree to you on that point. The other point I would say, that I'm encouraged by, I alluded to this a little bit earlier, is that we are starting to see some actions by states moving forward on uses of capacity within our system. So Idaho and Oklahoma, I think, are great examples of that to where we're seeing them feel a little more comfortable, that the budget environment maybe is stabilizing in respect to the states. They have been growing, they are dealing with overcrowding, and they're going ahead and use some beds in the private sector, and are also -- contributes to the action by Arizona last fall to go ahead and move forward on a 20-year contract is a very positive development. Arizona, as you know, that procurement was ongoing for about 2 or 3 years, so I think, by them going ahead and awarding the contract again gives them -- lends a belief that the environment is going to be a little better from a budget perspective, and they're feeling comfortable to go ahead and secure beds in the private sector. So yes, I would say it's modest, it's not dramatic, but seeing improved revenues, and then also these actions by the states, both in the existing portfolio but also of new customers like Arizona, I think, is encouraging.

Todd J. Mullenger

One other comment, just to follow on, that it's -- a proposal is being considered in the legislature around an Internet sales tax bill, it would generate somewhere between, I think, high teens to low 20s in billions of dollars of additional tax revenues for the states, which could be helpful as well if it's passed.

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

Regarding your conversations with states that are not in the middle of publicly announced and organized procurements, has the tone or pace of those conversations changed in recent months compared to last year?

Damon T. Hininger

This is Damon. I wouldn't say that pace has changed, but I'd say the tone is improved, and is back to my -- your earlier question, which is -- kind of, states are feeling like they've reached the bottom on the deficits they had to close in their budgets. And now that they've stabilized and now are seeing some increases in revenues, which -- I think if you talk to any CFOs at the state level, they'd say that they've still got -- they still want to see more growth. They're getting completely comfortable. But they have seen some growth, and they feel comfortable to go ahead and move forward on some of these decisions. So yes, I'd say the tone has modestly improved.

Operator

[Operator Instructions] We'll hear next from Clara Houin of Avondale Partners.

Clara Houin - Avondale Partners, LLC, Research Division

This is Clara in for Kevin Campbell this morning. So first off, just a big picture question, really. Have you seen an increasing interest in your customers' selling properties or having you develop and own the properties, but then new management? I mean, if you have seen any interest on that, could you explain maybe what's caused that change in demand?

Damon T. Hininger

Well, as I -- as you know, and as I mentioned last -- or during my prepared remarks, we closed on a transaction where we bought a government-owned property early last year, first of its kind in the industry. And we've noted the action taken by GO [ph], with them buying a facility at the local level in Montgomery County, Texas. So I think having a couple of transactions that have now been completed by the industry has been helpful as we talked to other kind of local and state jurisdictions to say, "Here's how we think we can provide some immediate value to you, especially in this challenging fiscal environment," and now we've got a real, live example, so we can point to that has been done in the last 12 to 18 months. So I think getting a few first done within the industry is always helpful, and now it can be used as a template and as a model as we propose these types of solutions at the state level and at the local level.

Clara Houin - Avondale Partners, LLC, Research Division

Great. And, okay, then moving on to Mineral Wells. Any reason why these think -- they're reducing the inmate counts there before they finalize the actual decision about whether or not to keep the facility open?

Damon T. Hininger

I can't really say on that point, but I would say that the state of Texas, as a whole, has seen a reduction in their overall system population. And so I don't think, I don't know this for sure, but I don't think we've necessarily been singled out, but I think they have -- since they've seen this reduction, they have seen some deterioration in their own facilities. I think probably some other private sector's probably seen a little reduction, and I know they've also taken the step here, in, I think, the last 12 or 18 months where they actually closed one of their facilities. So I think it's really driven at a kind of high level, where we're seeing a deterioration or reduction in their total systemwide population, and then they're taking appropriate steps, both in the public sector and private sector, to adjust populations accordingly.

Clara Houin - Avondale Partners, LLC, Research Division

Okay. And then on California, is there any interest there about using any of their in-state capacity? And how do you think they would handle that with their existing customers, ICE and USMS?

Damon T. Hininger

I'm not sure if I follow your question.

Clara Houin - Avondale Partners, LLC, Research Division

So I mean, really, for the inmates they have, they're bringing back in, are there any thoughts there about using their in-state capacity that's vacant?

Damon T. Hininger

Well they don't have any -- the state doesn't have any additional capacity, so they're sitting today, as I mentioned earlier, kind of 150% capacity in their 33 facilities. So by our estimates, they have to reduce their population within those facilities by about 10,000 inmates, and they've had this effort over the last 2 years with realignment, where they have shifted certain offenders with certain categories of sentences down to the local level, and I think, by most accounts, that has pretty much run its course. It's been successful, but I think it's pretty much run its course. I think they are limited on what they could do at they local level and, again, they're still 10,000 short within their 33 facilities. So as it relates to other capacity in-state, there is some capacity in the private sector, and I think as they think about a plan to try to achieve compliance with the court, I think they'll consider potential options in the private sector to use beds to help them get to that level.

Clara Houin - Avondale Partners, LLC, Research Division

And just another quick couple on population. Oklahoma was up 200 in April. Is this something we should expect further growth from as a customer, or is it a one-time increase, and that's the current run rate we should expect going forward?

Damon T. Hininger

So we have grown by about 700 under our contract with the state of Oklahoma since spring of last year. So as I mentioned earlier, we're going to have a contract now with about 3,000 beds versus about 2,200, 2,300, middle of last year. And we are ramping down population at Cimarron that's currently used by Puerto Rico, but Oklahoma's indicated that they wanted to use virtually all those beds that are being vacated by Puerto Rico. So we should see some still continued growth with Oklahoma. A modest amount, but they're, actually they're ramping to those beds right now that are being vacated by Puerto Rico.

Clara Houin - Avondale Partners, LLC, Research Division

And similarly, the BOP increased their utilization of the McRae facility in April by about 300 inmates. Is this just then using the expansion of using the expansion beds of this facility? I mean, are these inmates coming in above the guaranteed occupancy rate, and therefore, is it -- is there incremental revenue there associated with them, or is that minimal?

Damon T. Hininger

No, this is under the new contract for the expansion. So these were beds that were anticipated to be used by the BOP. We did -- I guess it's about 400-bed, 500-bed expansion at McRae as part of the new contract that was awarded here in the last 12 months.

Operator

Next we'll hear from Clint Fendley with Davenport.

Clint D. Fendley - Davenport & Company, LLC, Research Division

Most of my questions have been answered, but one quick one on California here. I wondered if California's prison realignment plan were to be repealed, as one of Jerry Brown's critics has suggested it should be, what do you think the impact would be on their populations as they stand currently?

Damon T. Hininger

Make sure I understand your question, Clint. The -- if the Court rejects the latest plans submitted by the states?

Clint D. Fendley - Davenport & Company, LLC, Research Division

I guess, no, I'm basically saying if the prison realignment were basically undone. One of his potential Republican challengers, I think for next year's election, has suggested that it's been a sort of a bad plan for California. And if he were successful and they did repeal it, how do you think that that might affect their prison population? Or is it too hard to know?

Damon T. Hininger

Well, it's probably the latter, too hard to know. But if there was an effort to unwind realignment, which I think, at the end of the day, I think it was about 20,000 inmates that were shifted from state facilities to local facilities, and the court continued to require the state to be compliant at 137.5%, then that would make their need for additional capacity even greater. But that's -- it's too hard to tell. I'd say there has been a lot of discussion about realignment. I think, overall, many of the stakeholders from the local and the -- from the cities have been somewhat concerned about the shift, but overall, I think they've worked pretty collaboratively with the state. And like I said, the state has seen some success on reducing their populations by this program being in place. So that's a long way of saying it's probably hard to tell. We'll see if it gets any traction, I guess, as we go into election year next year, but it'd be hard to forecast that and say what the potential outcomes could be.

Clint D. Fendley - Davenport & Company, LLC, Research Division

No, the 20,000 was sort of what I was looking for, and really, isn't it -- am I correct, they're at 150% now to get to the 137%, that's about 10,000 or so inmates, correct?

Damon T. Hininger

That's exactly right.

Operator

And with that, we have no further questions. Gentlemen, I'll turn the call back to you for any additional or closing remarks.

Damon T. Hininger

All right. Thanks, Farrah, and thank you so much for your time and participating in our call this morning. More importantly, let me just say to our investors, very much appreciate your investment in CCA. And me and the management team continue be focused on another good quarter and a strong year for 2013. And we look forward to reporting on additional progress on our call in August of this year. So thank you again for your time this morning.

Operator

Ladies and gentlemen, again, that does conclude today's conference. We do thank you all for joining us.

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