Jordon Hymowitz

Jordon Hymowitz of Philadelphia Financial Management of San Francisco asked about the potential for a double-digit dividend yield by late 2026, whether CoreCivic would consider an M&A transaction with its partner Target Hospitality, and the necessary scale of the ISAP business to support two providers.

Answer

CFO David Garfinkle acknowledged that a dividend could be considered if the stock price appreciates significantly, but the current focus is on share repurchases. CEO Damon Hininger politely declined to comment on M&A speculation regarding Target Hospitality. Hininger opined that the ISAP contract does not necessarily need to grow to be split between two providers, as introducing competition could be valuable to the government.

Jordon Hymowitz asked about the amount of legal fees from the recently dropped CFPB lawsuit that would not be repeated and inquired about the company's underlying earnings power if provisions for older pools were excluded. He also asked if other elevated expenses, such as IT spending, might decrease in the near future.

Answer

Executive Jay Martin declined to disclose specific legal costs, citing materiality, but reiterated the company's satisfaction with the CFPB's withdrawal. He advised using the company's adjusted financial results as the best proxy for performance. CEO Kenneth Booth addressed spending, stating that while foundational investments in areas like technology have been elevated, he does not foresee them decreasing soon as the focus will shift to product improvements once the modernization phase is complete.

Jordon Hymowitz of Philadelphia Eagles Capital Management asked about the potential return on equity (ROE) given the rising average premium written, and whether the gap between operating book value and stated book value could narrow due to falling interest rates and the recent Lehman litigation gain.

Answer

COO Robert Bailenson detailed the ROE mix, with public finance at 8-10%, structured finance at 12-18%, and international infrastructure at 15-20%, suggesting a shift towards a low double-digit average ROE. CEO Dominic Frederico cautioned that this reflects the current market and that earned premiums are a blend of many years. Regarding book value, Dominic Frederico and executive Robert Tucker confirmed the Lehman gain would add approximately $2 per share pre-tax, but noted the AOCI component is subject to interest rate volatility.

Jordon Hymowitz of Philadelphia Financial asked about the possibility of a contingent payment structure based on the PREPA outcome to acquire MBIA, and whether the new Puerto Rican governor might influence the PREPA resolution process.

Answer

President and CEO Dominic Frederico acknowledged Assured Guaranty's continued interest in industry consolidation and confirmed that price has been the main obstacle in past discussions with MBIA. Regarding Puerto Rico, he suggested that the composition of the federally appointed control board, potentially changing with the U.S. administration, is a more critical factor for the PREPA resolution than the new local governor.

Jordon Hymowitz asked about the potential for shifting Bureau of Prisons (BOP) populations to GEO facilities and questioned the cost-effectiveness of international detention options compared to GEO's domestic facilities, which include comprehensive services like legal access.

Answer

Executive Chairman George Zoley stated that GEO is awaiting the appointment of a new BOP Director before pursuing opportunities, but he expects all of GEO's current idle facilities will be contracted by other federal agencies in the near term. Regarding international options, Zoley suggested such sites would more likely be used for post-deportation detention rather than initial processing, emphasizing GEO's four-decade track record of providing high-quality, comprehensive services to U.S. agencies.

Jordon Hymowitz of Philadelphia Financial questioned why MBIA is waiting for more clarity on Puerto Rico before attempting to sell National again, suggesting a structured deal with variable payments could be pursued now. He also asked if the new governor's plans for the electrical system would necessitate a PREPA resolution.

Answer

Executive William Fallon acknowledged that a structured sale is a possibility they have considered, but feedback to date indicated it would not be beneficial for shareholders at this time. He agreed a faster resolution is preferable. On the follow-up, Fallon stated that while a PREPA restructuring is not a prerequisite for addressing operational issues like Luma, resolving the bankruptcy would certainly facilitate improvements.

Jordon Hymowitz asked about the timeline for a potential credit rating upgrade from Moody's, the feasibility of refinancing high-cost debt in the near future, and when the Saudi Arabian joint venture is expected to contribute meaningfully to income.

Answer

CFO Brad O'Connor clarified that Moody's upgrade target is based on gross debt-to-cap, which he projects will be ~56% at year-end, still above the 50% threshold, but hopes for an upgrade discussion next fiscal year. He stated that refinancing high-cost debt would likely be cost-prohibitive in the next year but is a key focus for the next 12-18 months as the company aims to transition to unsecured debt. Regarding the Saudi venture, O'Connor projected it would not generate meaningful profit until late fiscal 2025 or early 2026. CEO Ara Hovnanian added that future refinancing at lower rates presents a significant opportunity to enhance ROE.