Cameron Hopewell - Managing Director, Investor Relations Damon Hininger - President and Chief Executive Officer David Garfinkle - Chief Financial Officer Brian Hammonds - Vice President, Finance.

Michael Kodesch - Canaccord Genuity Tobey Sommer - SunTrust Kevin McVeigh - Deutsche Bank Kevin McClure - Wells Fargo Securities Jordan Hymowitz - Philadelphia financial.

Good day and welcome to the CoreCivic’s Second Quarter Earnings Conference Call. As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Cameron Hopewell, Managing Director of Investor Relations. Please go ahead, sir..

Thanks, operator. 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 second quarter 2017 earnings release and in our SEC filings, including 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 include a discussion of 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 our Investors page of our website at www.corecivic.com/investors. 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 quarter financial performance came in ahead of our initial forecast as we experienced modestly higher revenues across multiple federal and state partners in addition to the favorable variances in operating expenses across our facility portfolio during the quarter.

Normalized FFO of $0.59 per share was $0.04 ahead of the high-end of our second quarter guidance and AFFO of $0.56 per share was $0.03 ahead of the high-end of our guidance.

This has allowed us to raise our full year 2017 per share guidance for the third consecutive quarter to normalize FFO per share of $2.31 to $2.35, an increase of nearly 8% in the guidance range from $2.11 to $2.21 per share or $0.17 at the midpoint from the initial full year 2017 guidance we provided back in October of last year.

David 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. In terms of an update on our business outlook, I will begin first with our federal partners.

The Federal Bureau of Prisons has continued to see modest declines in the inmate populations through the first half of 2017. This has allowed the Bureau to take additional federal inmates out of contract facilities, like our Eden detention center that was idled at the end of April after expiration of our contract with the BOP.

The agency is in the process of taking additional populations out of other non-course of the contract facilities that were also not awarded new contracts under the CAR 16 procurement.

Today, the BOP has approximately 107,000 federal inmates down from 189,000 at the beginning of this year and down approximately 33,000 inmates from the Bureau’s peak population levels about 3 years ago.

The Attorney General recently appointed retired Army Major General Mark Inch to be the new Director of the BOP, filling a pivotal leadership role within the agency that has been vacant since January of 2016. We look forward to working with the new Director as he takes over leadership of the country’s largest correction system.

As we look ahead, the BOP is projecting their populations will increase approximately 2% in fiscal year ‘18. We therefore believe the BOP will have the need for additional contract for the capacity in the future.

Additionally, the fiscal year ‘17 Omnibus Appropriation bill included a requirement that the Bureau produced a capacity realignment plan to be presented to the House Committee on appropriations for commerce, justice, science and related agencies in August.

The purpose of the report is to address ongoing overcrowding in the BOP’s medium and high-security facilities and to ensure that low security offenders are placed in most cost effective facilities.

Population declines in recent years have disproportionately impacted low security inmate populations increasing capacity available in low secured facilities owned and operated by the BOP, while their medium and high security facilities remain at overcrowded levels.

The committee in its approval of the fiscal year ‘18 appropriations bill confirmed its view that contracting is an effective tool for the BOP to meet low security facility requirements to alleviate overcrowding.

It has also expressed concern that the BOP continues to house low security and made some costly environments, where savings could be realized by using available contracted facility capacity. The committee has expressed its desire for the BOP’s capacity realignment plan to ensure that inmates with lower security classifications both U.S.

citizens and criminal aliens are being housed in the most cost effective facilities. Private contractors currently house approximately 19,000 low security criminal aliens for the BOP at a cost savings of over 20% versus similar security level BOP facilities. These savings numbers are based on the latest data issued by the Bureau itself.

So, we believe that the private sector can provide the most cost effective solution to assist with the realignment plan. The CAR 19 procurement issued in May is seeking an additional 9,540 low security beds and we believe we are well-positioned to compete in this procurement and have submitted multiple facilities in response.

As a reminder today, we operate only two facilities representing approximately 4,000 beds on behalf of the BOP making it the smallest of our three federal agencies. Moving next to the United States Marshal Service, the agency has been a great deal of variability and the level of prosecutions across their federal districts in the first half of 2017.

These variations have resulted in prison populations – prisoner population changes in various districts. When federal administrations change, it is typical to see wholesale turnover in U.S. attorneys’ offices across all 94 federal districts. That was the case this year when 93 U.S. attorneys either resigned or were let go by the incoming administration.

U.S. attorneys serve as the nation’s principal litigators under the direction of the Attorney General and lead in the prosecution of criminal cases brought by the federal government. To-date, the administration has nominated 33 of 93 new U.S. attorneys, which most are awaiting confirmation by the Senate. In the interim, acting U.S.

attorneys have been named to lead the judicial districts, but they have limited ability to enact all the directives of the new administration.

On our conference call in May, I highlighted that the Attorney General had recently announced a renewed commitment by the Department of Justice to pursue criminal and immigration enforcement and instructed all federal prosecutors to prioritize immigration related offenses for prosecution.

Subsequent to our conference call, the Attorney General issued additional directives to federal prosecutors to change and pursue the most serious readily provable offense in all federal cases.

As has been widely reported, these directives may lead to increases in the average daily prisoner populations for United States Marshals over the medium to long-term. In the short-term, the most non-Southern Board of District saw their average daily prisoner population to increase modestly year-over-year as of June 30.

Importantly, the department’s directives are likely not to be fully implemented until all U.S. attorneys have been nominated by the administration and confirmed by the Senate, which most experts believe won’t happen until 2018. Additionally, the U.S.

Marshals are operating without permanent leadership and the Department of Justice has not yet appointed a director for the agency. New leadership will be TAS, we are pursuing the priorities of the new administration and we would expect this appointment to be announced relatively soon.

With the appointment of John Kelly to the President’s Chief of Staff effective on July 31, the Department of Homeland Security is also without permit, a permanent secretary. Both of these positions must be confirmed by the Senate.

In May, I also highlighted that the average daily prisoner populations in the first quarter of 2017 were relatively consistent in most districts, except for declines in the Southwest Border states, especially Arizona and Texas, due to a lower number of prosecutions related to immigration offenses.

This trend coincided with the historic decline in the Southwest border apprehensions in the first quarter and continued into first 2 months of the second quarter. Prisoner populations for U.S. Marshals did not begin to stabilize – did begin to stabilize I should say and increased modestly in June and July.

At the same time, prison populations in the second quarter in Texas, Arizona and New Mexico below levels experienced in prior years and negatively impacted the financial performance of our Marshal facilities in Arizona and New Mexico.

We expect these declines to be temporary and have seen increasing population trends in June and July, but we believe it could take a period of multiple quarters to fully reverse in some Federal districts.

This combined with a lower than expected utilization by ICE at our Cibola Corrections Center as I will describe in a moment led to the decision to idle our 910 bed Torrance County detention facility next month and consolidate prison populations into our Cibola facility to more efficiently utilize viable capacity in our system.

We are working closely with the U.S. marshals and Torrance County on this transition and we will actively market the Torrance facility to accommodate future needs of the U.S. marshals for other potential partners. Now, let’s turn to recent trends and developments with immigration and customs enforcement.

There has been a great deal of focus on the reduction in apprehensions on the Southwest border during the first six months of the new administration. Aggregate apprehensions have declined by roughly two-thirds from the elevated rate of apprehensions in the calendar year of 2016 to approximately 15,000 per month in the second quarter of 2017.

Historically, apprehension rates have averaged roughly 30,000 monthly over the last 6 years. At the same time efforts to step up immigration enforcement in the interior of the U.S. has increased interior apprehensions albeit to a smaller magnitude than the declines in border apprehensions.

These trends have allowed ICE to reduce the number of detainees [indiscernible] on a daily basis from historically high levels we saw in the fourth quarter of 2016 and early in the first quarter of 2017.

We believe these trends make it unlikely that ICE will have additional detention capacity needs the long-stuff reported and in near-term bar in a meaningful increase in the rate of border apprehensions. However, interior enforcement efforts could create demand for additional detention capacity in other areas of the country.

While our ICE populations decline from the first quarter to the second quarter as we expected, our ICE populations were nonetheless higher during the second quarter of 2017 compared to the prior year quarter.

At our South Texas family residential center the number residents house at the facility was meaningfully impacted by the reduction in apprehensions rolled – apprehension rolled with the activity along the Southwest border in February, March and April as well as the short length of time family stay at the facility.

However, apprehensions in May, June and July increased towards similar levels seen in fiscal year 2015 leading to increased utilization at the facility.

It’s important to remember that we have a fixed price contract at the South Texas family residential center, so revenue does not fluctuate with the utilization level of the facility or length of time the family stay at the facility.

At our Cibola County Corrections Center ICE has not needed as much capacity as they initially expected when we entered into the new contract in October 2016. So, as I briefly mentioned, we have decided to move at our prisoners from the Torrance facility and consolidate within Cibola. Should ICE or U.S.

marshals have a need for additional capacity in New Mexico, we will be well positioned to offer the capacity at our Torrance facility to meet their future needs as our partners have been very satisfied with our performance at the Torrance facility.

I am very proud of the employees who have served the facility for so many years and we have offered the employees affected by the consolidation opportunities to continue their employment with CoreCivic at other locations in our portfolio should they wish to remain with the company like I hope they will.

As it relates to ICE we are also closely monitoring the fiscal year ‘18 appropriation process. ICE requested funding in fiscal year ‘18 for 48,879 adult detention beds and 2,500 family residential beds for a total of 51,379 beds.

As a significant increase over the fiscal year ‘17 [indiscernible] funding package that provided ICE with funding for 39,324 detention beds.

We believe the reason for the request for increased funding of this magnitude are twofold; first, ICE expects the implementation of new policies and executive orders to lead increases in arrest, charging documents and detainers issued either at the border or in the interior of the country in fiscal year ‘18.

Second, ICE expects the average length of stay for detainees to increase as a result of increased interior enforcement.

The latest data from ICE indicates that the average length of stay for Southwest border apprehensions is approximately 27 days in a detention facility compared with the average length of stay for individuals arrested in the interior of the country of approximately 52 days.

This is because interior cases are typically more complicated and many are not subject to expedite or removal proceedings, which can more often be utilized for new border rivals. It is ultimately up to Congress to determine the actual perforations for ICE and the appropriation committees are in the process of marking up their funding bills.

However, ICE capacity needs will be determined by local activity on the Southwest border and by the rate of apprehensions in the interior. At the state level our contracts were stable in the second quarter across the board. As for borders or it could be partner specific updates, I will touch first on California.

As of the beginning of August all aspects of Proposition 57 have become effective. Prop 57 creates a pro-consideration process for non-violent offenders who have served the full term of their primary criminal offense in state prison and authorizes CDCR to award credits earned for good behavior and improve rehabilitative and educational achievements.

The fiscal year ‘18 budget released by the Governor of California indicated that the state intends to remove all offenders from one of the two remaining out-of-state facilities by June 30, 2018.

Today we are housing approximately 3,100 inmates at our La Palma Correctional Center in Arizona and approximately 1,300 offenders at the Tallahatchie County Correctional Facility in Mississippi.

In the first quarter of 2017, we worked closely with CDCR to gradually drawdown populations at our Tallahatchie County facility and consolidate populations to more optimally occupy our La Palma facility. During the second quarter, population at both facilities remained relatively stable.

As the implementation of Prop 57 began in May, California’s total inmate population has actually increased by approximately 700 offenders. However, more time is required to see the potential impact of Prop 57 on California’s inmate populations.

Is because of those facts that our financial guidance assumes populations will begin to exit our Tallahatchie facility in the fourth quarter 2017 or did that occurs will be dependent on actual inmate population trends that California experiences throughout their fiscal year 2018.

We have identified multiple partners that have interest in available capacity at our Tallahatchie County Facility and we will provide updates in the future of these marketing efforts One final comment on California on the out-of-state contract, California has been a significant and great partner to CoreCivic over the past decade, at one point representing over 20% of our total company EBITDA.

California remains a very important partner of us. However today, California represents a much lower percentage of our total EBITDA as California has reformed their prison system resulting in lower out-of-state need and we have been successful in utilizing the space that they have vacated.

For example, at our Central Arizona Florence Complex, we have replaced their utilization with Federal partners. At our Red Rock Correctional Center, which California previously fully occupied we have expanded the facility to accommodate additional demand from the State Arizona who fully occupied the facilities today.

And where California previously utilized space at our North Fork Correctional Center, we have leased the entire facility to the State Oklahoma. So this proves the endearing value of not only our real estate, but also our government solutions to many new or existing partners.

But it is also important to note that as we enter – as we enter 2018 the earnings performance as a percentage of EBITDA from California’s out-of-state contract will be in the low single-digits, drastically mitigating this risk going forward.

In July, we were notified by the Texas Department of Criminal Justice that they selected other operators who responded to the re-bid of contracts for management of three Texas state jails that we currently operate. The Bradshaw, Lindsey and Willacy state jails. But we were disappointed that our bids were not ultimately selected.

We submit responses to this solicitation that would allow us to continue to provide appropriate employee compensation, staffing levels, facility maintenance and adequate return for providing correctional services at these facilities.

This is a consistent approach we have taken with managed only contracts in recent years, which has resulted in a substantial reduction in the number of managed only contracts in our portfolio.

Managed only contracts in many cases are put out to be routinely to drive down apprehensions and in many cases there are other service providers in the market who are willing to accept a lower return than we believe is necessary.

These three facility contracts and the Bartlett State Jail which closed in the second quarter generated nearly $24 million in revenue for the first six months of 2017, but only generated $300,000 in net operating income.

We are proud of our long history of providing high quality services at these facilities for many years and we are working closely with the state and the new operators to ensure successful transition of September 1.

This must begin the intake process for Ohio offenders at our Northeast Ohio Correctional Center under our new contract to house up to 996 offenders from the Ohio Department of Rehabilitation & Correction which we expect to be completed by the first quarter of 2018.

In advance of the new populations at the facility, we have incurred start expenses to hire and train additional staff, so we don’t expect a financial benefit from the new contracts until 2018.

At the local level in June, we entered into a new 3-year agreement with the City of Mesa, Arizona to house up to 200 offenders at our 4,128 bed Central Arizona Florence Correctional Complex. We were pleased to reach this agreement after responding to RFP from the city nearly 5 years ago.

The agreement has allowed the city to save nearly 30% from the per diem they had previously paid to a County jail to house their offenders and we began to transfer offenders into our facility in early July.

This is a very notable agreement as it gets us established within one of the fastest growing top 50 metropolitan [ph] areas in size in the United States. And with that we believe other [indiscernible] communities in Phoenix area have similar needs as Mesa.

We continued to actively pursue additional opportunities with several states, including the new contract with the State Ohio, we continued to have the potential absorb over 8,000 beds or more than 10% of the total company’s own beds in the next 12 months with new contracts with state customers in both idle and active facilities.

We are pleased with the execution of our acquisition strategy to build out a nationwide residential and community reentry facility network. In the second quarter, we completed the acquisition of residential reentry facilities in Oklahoma operated by Center Point Incorporated, a California based non-profit organization for $7 million.

We consolidated a portion of Center Point’s operations into available capacity with our system in Oklahoma and also assumed ownership of the Oklahoma City transitional center, a 200 bed facility.

Subsequent to the end of the second quarter, we completed the acquisition of New Beginnings Treatment Center, a Tucson, Arizona based community corrections company that provides residential reentry services for the Federal Bureau of Prisons for male and female adults in facilities containing 92 beds for $6.4 million.

Upon completing these acquisitions CoreCivic now owns 29 residential reentry facilities across seven states representing 5,600 beds. In the last 4 years, the company has invested over $270 million in acquisitions to further our mission to provide high quality rehabilitative programs to help address the nation’s recidivism crisis.

We continue to pursue attractive acquisition targets in the residential reentry market that will complement our existing portfolio and be immediately accretive to FFO per share. We have a long runway of attractive acquisition targets in this market and we are continuing to aggressively execute our growth strategy here.

And I feel that by the end of 2019 by continuing our goal of closing an acquisition every quarter, we will have approximately 10% of our company’s EBITDA on a run rate basis coming from our CoreCivic community portfolio. We are also very encouraged by our process in promoting the value proposition of CoreCivic properties.

There are five states publicly considering a privately financed solution to address their aged prison infrastructure needs and we are having dialogue with the number of those jurisdictions to educate them on the potential benefits of a privately financed solution.

In Kansas one of those five states, we are pursuing the opportunity to replace the state’s 150-year-old prison in Lansing. On July 25, the state issued its formal RFP for the facility’s replacement.

Final proposals are currently scheduled to be submitted to the state by September 22 and a notice of award to the successful respondent is scheduled for October 20. We were honored to be one of the three organizations that were selected to respond to the RFP and are working diligently to submit its compelling response.

With our progress in growing our CoreCivic community portfolio and also the near-term opportunities to grow our CoreCivic properties portfolio, we believe we will have nearly 20% of company EBITDA by the end of 2019 on a run rate basis coming from these two business lines.

This is tremendous progress in diversifying our cash flows in a short period of time in our efforts to bring not only long-term value, but also increased ability to our shareholders.

As I wrap up my prepared remarks, let me stress that CoreCivic brings more than three decades of industry experience as it works with government at this federal, state and local levels to relieve pressure and enhance conditions in some of our countries most challenge prison systems.

Stark, widespread and social challenges face our nation’s correctional systems including high recidivism rates, escalating costs and overcrowded and aging facilities.

We are proud that CoreCivic is helping our government partners solve these problems in innovative ways that are both humane and cost effective for tax payers, We promote safer communities nationwide by rolling thousand of inmates in daily reentry programs.

These programs help ensure that inmates have a greater chance of successfully returning to society and not returning to prison.

When I reflect upon the viable services CoreCivic provides, I always remember that our estimates are only possible through the hard work for chaplains, teachers, principals, counselors and correctional officers serving each day in communities across the country.

And it is to those thousands employees that I would like to say, thank you very much for what you do. You are having a profound impact on the lives entrusted in our care.

With that I would like to turn the call over to Dave to review our second quarter 2017 financial results and provide additional details on our updated full year 2017 financial guidance.

Dave?.

Thank you, Damon and good morning everyone. In the second quarter, we generated $0.38 of EPS and $0.39 of adjusted EPS compared to our guidance range of $0.35 to $0.36 and $0.03 ahead of consensus estimates. Normalized FFO totaled $0.59 per share compared to our guidance range of $0.54 to $0.55 and $0.04 ahead of consensus estimates.

AFFO totaled $0.56 per share ahead of our prior guidance range of $0.52 to $0.53 and $0.03 ahead of consensus estimates. Our per share results exceeded our forecast as revenues and operating expenses were both better than anticipated with revenues beating forecasts by a little more than the expenses.

The beaten revenue was spread pretty evenly between federal and state customers and among several facilities and geographic locations. Adjusted EBITDA was $4.2 million higher than the midpoint of our guidance for the second quarter, reflecting strong operating performance.

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 Immigration and Customs Enforcement or ICE at our South Texas family residential center effective in November 2016 and expected lower U.S. Marshal populations in the Southwest region of the country.

These declines were partially offset by higher detainee populations from ICE when compared with the prior year quarter, higher inmate populations under our new 1,000 bed contract with the State of Arizona at our newly expanded Red Rock Correctional Center completed in January 2017 and higher inmate populations from the State of Tennessee and the reduction in expenses at our Trousdale Turner Correctional Facility where populations were ramping in the prior year under a new contractor that commenced in January 2016.

Financial results also included five acquisitions with an investment totaling $57 million for 11 residential reentry centers from the beginning of the second quarter of 2016 through the end of the second quarter of 2017, including three acquisitions during 2017 for $14.1 million.

These five acquisitions generated annualized returns that met or exceeded our targeted returns and contributed about $0.01 per share in the current year quarter after interest expense incurred to finance these acquisitions. So we are very pleased with the FFO per share accretion generated from these acquisitions.

Our balance sheet remains strong with leverage of 3.3x and fixed charge coverage of 6.4x using the trailing 12 months. Based on our updated guidance for 2017 which does not assume EBITDA from any new contracts, future M&A activity or the impact on leverage for any capital markets transactions, our total leverage peaks at 3.6x.

At June 30, we had $47 million of cash on hand and $482 million of availability on our $900 million revolving bank credit facility and no debt maturities until 2020.

We have no material capital commitments and are in excellent position to grow our cash flows through the utilization of idle bed capacity and have the flexibility to take advantage of M&A and other growth opportunities that require capital deployment.

Moving next to discussion of our guidance, as indicated in the press release adjusted EPS guidance for the third quarter of 2017 is range of $0.33 to $0.35. Normalized FFO per share guidance for the third quarter is $0.52 to $0.54 while AFFO per share guidance is range of $0.50 to $0.52.

For the full year adjusted EPS guidance is range of $1.52 to $1.56, up from $1.50 to $1.56 from our prior guidance. Full year normalized FFO per share guidance is a range of $2.31 to $2.35, up from $2.27 to $2.33 from our prior guidance or an increase of $0.03 per share at the midpoint.

Full year AFFO per share guidance is $2.22 to $2.26, compared with $2.18 to $2.24 in our prior guidance, also an increase of $0.03 per share at the midpoint. The increases in our annual guidance reflects the Q2 be partially offset by lower federal populations at our Torrance County detention facility and at our Cibola County Corrections Center.

As a result of these lower populations, we plan to consolidate offender populations in the third quarter from the Torrance facility into our Cibola County facility in order to take advantage of the efficiencies gained by consolidating the populations into one facility.

These population reductions and the anticipated transition negatively impacted our third quarter and annual guidance by $0.02 per share. However, we believe these actions will improve the collective financial performance going forward of these two facilities.

Other than these population reductions our forecast for the third and fourth quarters contemplates stable to rising federal populations, consistent with our prior guidance and following the trend that we have begun to experience in June and July.

Our guidance continues to reflect a gradual increase of offenders from the State of Ohio under a contract we signed in April for up to 996 offenders to be cared for at our Northeast Ohio Correctional Center.

Over the next couple weeks, we expect the state to begin transferring offenders to the Northeast Ohio facility, which we project will continue through the first quarter of 2018. There has been essentially no change to our updated guidance for these new contracts which we expect to generate $0.05 per share for a full year.

During the second quarter 2017, we provided care for an average population of 4,300 offenders from the State of California, which was consistent with our forecast.

Our guidance continues to reflect the full utilization by the State of California through the third quarter of 2017 of our 3,060 bed La Palma Correctional Center in Arizona and 1,250 beds at our 2,672 bed Tallahatchie County correctional facility in Mississippi, with the phase-out of the Tallahatchie facility beginning in October through year end.

This reduction is based on the state’s budget signed by the governor earlier this year which anticipates reduction in the states and their populations as a result of Proposition 57 as Damon described.

Even though the state’s inmate population has increased by about 1,600 since the beginning of this calendar year, full implementation of Proposition 57 was expected to take some time. Accordingly we have not altered our population assumptions from our prior forecast.

Although we are marketing the beds, our guidance does not include replacement population. As indicated in the press release we have been notified of the Texas Department of Criminal Justice that we were not selected for the continued management of three managed only facilities owned by the state.

Following notification in March that the state would be closing a fourth facility we manage for them which dated back close in June due to the state’s tight budgetary constraints. These four facilities were subject to a competitive rebid of the contracts that expired in August.

We knew the solicitation would be extremely competitive and although disappointed we are content with the outcome as these contracts were awarded at per diem levels that failed to meet our risk adjusted return thresholds.

These four facilities comprising 5,129 beds generated $23.8 million in revenue for the first half of 2017, but only produced $0.3 million of net operating income before depreciation, demonstrating the challenges associated with certain aspects of the managed only business.

Therefore the loss of these four managed only contracts did not have a material impact on a per share prior guidance. Our 2017 guidance includes $0.05 per share from the five acquisitions of 11 residential reentry centers we have completed over the past five quarters which essentially remains unchanged from our previous guidance.

Although we continue to pursue a number of attractive investment opportunities, specifically in the reentry space that are accretive to earnings and FFO per share using our long-term weighted average cost of capital. Our guidance does not include any new M&A activity.

The magnitude and timing of our M&A activities is difficult to predict and therefore we will update our guidance on a quarterly basis if and when we successfully complete such transactions.

Further, we continue very active discussions with potential customers at both the federal and state level to utilize our idle facilities and available capacity like at our Northeast Ohio facility.

However, our guidance does not include any new contract awards beyond those previously announced as the timing on government actions on new contracts is always difficult to predict. Any new contract awards could also come with additional startup costs that are not included in our guidance either.

The adjusted EBITDA guidance in our press release, which was increased by $2 million at the midpoint compared with our prior guidance enables you to calculate our estimated effective income tax rate of 5% to 6% and provides you with our estimate of total depreciation and interest expense for the third quarter and full year 2017.

We expect G&A expenses to be approximately 6% of total revenue for each period. I will now turn the call back to the operator, Cathy, to open the lines for questions..

Thank you. [Operator Instructions] Okay. We will take our first question from Michael Kodesch with Canaccord Genuity..

Hey, guys. Thanks for taking my question.

I guess just to start off with guidance, you gave a lot of good color behind some of your expectations there, but I was wondering if you could just expand upon it a little bit, what gave you guys some confidence, what are you seeing in the numbers in terms of the increases and the ability to sustain that throughout the rest of the year in order to hit guidance and what are your kind of – can you kind of marry both your expectations and maybe the range of guidance as it relates to ICE and United States Marshals?.

Sure. Good morning, Michael. I will take that. I guess on back to February, when February’s call we have seen a large surge of ICE populations in the fourth quarter, we continue to see a very large ICE population in the first quarter, which when we had our call in February and reiterated in May, we didn’t expect those populations to be sustainable.

So, our forecast reflected declines in those populations beginning at the end of the first quarter basically to the summer months and then slowly and gradually increasing in the third quarter and fourth quarter.

We had anticipated that some of those populations had been accelerated around the inauguration or before the inauguration, before the President’s new policies on immigration could take effect and it appears that, that’s turned out somewhat true.

Those populations have come in very close in fact a little bit above what are our expectations reflected in Q1 and Q2. So, our forecast aside from the declines at our Cibola facility and the consolidation of U.S. Marshals from Torrance as we discussed, is basically the same as what we are predicting in February and again in May.

What gives me some confidence that those projections are accurate not only that they have been accurate for a couple of quarters in a row now that we have begun to see population increases in both U.S. Marshals and immigration customs enforcement in June and July. So we are pretty comfortable with the range of the guidance that we set forth.

Obviously, it is a range of guidance and if they don’t escalate as gradually as we anticipated, we would expect to be toward the low end of that guidance so that they accelerate faster than what we have we’d be toward the high-end of that guidance.

And I would one more thing, Michael, this is Damon that not definitive, it won’t be really determined until we get to October 1, but with our budget request of 51,000 retention beds going into next fiscal year, again it’s got to work its way through Congress and the actual number is going to be something different likely, but I think that with ICE pushing pretty hard for a higher funding level next year, where you would add up with some of the populations that we have seen kind of in the summer months, whether it’s going to modestly improve gives us also some comfort as we go into late this year and early next year..

One final point on that as Damon mentioned in his comments, prepared remarks as some of the U.S. attorneys are confirmed and put into place and execute policies of the new administration we would expect that to contribute to increasing populations as well.

Timing has been slower than expected on that, but that could have an impact on the back half of the year as well..

Great, that’s really good color.

And then kind of along the same band, Northeast Ohio, you guys have I think three different populations you have got Marshal service and state as well you, can kind of talk to the ramp of each of those and sort of your expectations for the ramp of each of those?.

Yes. We have seen a little bit higher populations, the federal populations there primarily due to interior enforcement, so that’s contributed to higher ICE populations. We are projecting the State of Ohio as I mentioned to begin ramping that facility in the next couple of weeks. It’s a very slow ramp.

It’s a higher security inmate population, they want to be very thoughtful and measured in how they ramp up that facility. So it’s up to about 1,000 inmates and we expect that not be completed until really the end of the first quarter of 2018.

So it’s a very slow ramp that does have an impact on the third quarter for startup expenses of probably about $0.01 per share..

Great, that’s helpful.

And then we are on the topic of states, can you talk a little bit about appropriations and the processes that certain states and have you seen that become a headwind in certain in procurements in certain states or have you seen kind of reverse budget being settled where we might actually see some more procurements come out?.

Yes. We are – this is David again. Michael this has really been a good year for us [indiscernible] we have gotten good budget numbers come out from respective states all over the country.

So you have versus 4 years, 5 years, 6 years ago where we were giving a lot of detail of kind of the review to the best kind of some of the challenges or headwinds we had as big of the budget process we are in a really good environment now.

We have had some nice modest, but nice little incremental increases on pricing around the country to accommodate for some additional labor costs that we have or something else within the business. So we are in a good environment right now on the state side.

And with that your question, yes we think that either a public or non-public it will be – it seem to be meaningful opportunities to secure additional beds within the private sector, we think here in the near-term..

Great.

And then just one last one for me and then I will jump back in the queue at anything else, but I was wondering if you guys looked at the 3M-Apax electronic monitoring deal that got done, [indiscernible] public process, but wondering what your thoughts were on that and any additional interest and potentially getting into the diversified business like electronic monitoring? Thanks..

Well, let me answer the last part first, yes, the big monitor here in the organization is diversify our cash flows and so we have built a really nice team here internally to do a lot of targeting of potential targets.

Notably, as you know with the reentry side, growing it to 29 facilities, so they have been very aggressive on that front and we have got to weld all machine connecting to look at targets. So we are always kind of looking at what other opportunities are within the business.

We did take a look at 3M, I would say kind of the high level of thing that created a pause for us to where we didn’t really make a run at it was it’s big concentration business internationally. In fact I think they are doing business like 34 different countries and so we have been really focused on U.S.

operations as you know for 10 years, 15 years and that’s going to continue to be our focus was the thing at a high level that shied us from that company..

Yes. I think that makes a lot of sense, great that was really helpful. I will thank you. I will jump back in the queue with anything else..

Thanks Michael..

Thank you, Michael..

And we will take our next question from Tobey Sommer with SunTrust..

Good morning Tobey..

Good morning.

I wanted to ask your perspective on the scenario that investors in the stock might reflected more optimism say six months ago for a more rapid utilization of idle capacity, in contrast it would today is there a basic change in the kind of multi-year outlook or would you describe it more as a function of timing having the pieces of the COGS of government kind of work?.

I think it’s the later Tobey, this is Damon. Yes, government it takes a – it’s not for the weak need. Working with government, you got to be very persistent and very patient. And so as I mentioned earlier now to be on the Federal side, you have got so many vacancies with U.S.

attorneys and they are really leading the prosecution that drive the demand for the Marshal service and open the BOP. So I think it’s really a timing issue to your point. And again government just you have to be very patient or very persistent. I highlighted the contract with the City of Mesa that took 5 years.

A lot of persistence, a lot of meeting with stakeholders with that community, but we are really excited about that opportunity, because we think it’s a foot in a door in a community that has [indiscernible] going forward. So I think very much timing.

And I think with administration change and this is I think by most experts’ analysis a little slower rather to go out and get in the key positions filled not only at the secretary level, but also some of the key agency heads and also with these U.S. attorneys. So I think timing is the key part of the issue this year.

I don’t know if you can add on that David?.

No, that’s very true and most opportunities do not take 5 years. But this one has taken – we have a number of opportunities that we have been looking at as you know there are actually publicly known that we are as frustrated as I am sure our investors are patient getting those transactions completed.

But we still feel very confident that they will get done. They just don’t get done on the timelines that we would like to see. So we will continue to work hard to get them across the finish line..

Okay.

And then you mentioned some goals for diversification, I was wondering if you could maybe comment on the key variables to either achieving greater percentages or smaller percentages over the next couple of years as you see it?.

Yes, great questions. So let me talk about course of the community first and I feel really good about that goal, [indiscernible] very short period of time that build a really nice portfolio of about 29 facilities, about 5,600 beds.

And so our goal and the team’s goal is really good about this, on closing one of those a quarterly we feel very achievable for the next few years. So I feel good bout that front. We got a very well process on sourcing potential target companies, doing the diligence and closing quickly.

I mean we are a very good buyer just because financing contingencies we are able to close very quickly.

On the course of the property that one is a little more variable because we have got some great opportunities near-term with Oklahoma at our Diamondback facility, but also as I mentioned and as you know Tobey we have got a lot of development projects going on right now, notably with procurement in Kansas.

So we think if we get a couple of these across the finish line, kind of really show from a development perspective that this could be a very good solution that we could have really increased demand not only at the state level, but also at the local level.

Another thing too and you know I have talked about this, but it would be interesting to the rest of the people on this call is that we have got a little bit of pipeline we are starting to build where you got these what I would say mission-critical properties that are privately owned and are leased say to the Federal government and the GSA.

And so we are starting to get a few people come knocking our day saying I own this mission-critical property, got a nice long-term GSA lease and maybe it fits nicely into your portfolio.

So what we have said to the investors here recently is don’t be surprised say six months from now where we have an announcement where we have got again a property that’s been leased to an agency that has a mission-critical component to it that’s serving some type of agency.

So we don’t have a number out there yet, we want to get kind of that pipeline build and maybe get a couple of transactions done. But I think that also could be a catalyst to grow the course of the property side..

Okay, thank you. And then could you comment on any managed only business that’s maybe coming up for renewal in the next 1 year or 2 years, the company has kind of weaned it’s portfolio as you have profitability thresholds that you want to achieve for yourselves and shareholders just kind of want to assess that outlook over the near-term? Thanks..

Yes. I think Dave will have only about 3%, 4% by next year for NOI coming from managed only, so it’s a very small percentage..

Less than that..

Yes. It’s as you know Tobey, back in 2000, we have 25%, so we really whittle down that portfolio and have made very powerful decisions kind of case by case as those contracts come up for renewal. So I think about – as I think about the kind of remaining portfolio, I think we are in good shape.

We have got still kind of a pending process with the Hamilton County down Silverdale, but I would say rest of the portfolio is stable as we think about next few years..

Thank you very much. I will get back in the queue..

You bet, Tobey. Thank you..

And we will take our next question from Kevin McVeigh with Deutsche Bank..

Great. Thanks. Hey Damon and David..

Good morning..

Little more philosophical maybe hard to answer, but any sense of those ICE bid states, how many relate to interior enforcement versus the border in terms of kind of currently based on it sounds like above some are in 34,000 and the target is 44,000 in terms of where the budget is, any sense directionally what it is today and what that makes it look like to the extent they hit the 44,000?.

Kevin, this is Damon, that’s a good question and I don’t think I have a good answer for you. They really have a no time, I don’t think they said it publicly and I don’t think we have heard anything from our people that worked the relationship with ICE that kind of either a target or where they expect that to go.

But it is very clear and one thing that we look at on a regular basis is that the activity within that clearly has increased year-over-year. So we are seeing resources being deployed for actual activities.

So I don’t think they probably are not going to have probably let’s say goal, but at least a target of what they are going to try achieve [indiscernible] quarter versus interior. But it is clear that we are seeing additional activity in interior. And with that is driving some demand.

Dave talked a little bitter about Ohio and our Youngstown facility, that new contract at Northeast Ohio has been a nice location for them to kind of support their efforts kind of in the middle the Northeastern part in the country.

So we think that additional – could manifest itself as they continue to kind of ramp up their efforts with the enforcement..

Got it.

And to follow-up, it sounds like it’s definitely a longer stay in terms of interior, but is that more profitable for you given the site that maybe it was this utilization facilities outside of the borders or is it kind of apples-to-apples in terms of profitability?.

Yes. It’s related to scope, it kind of services and profitability is all the same. So it really not a variance based on location or the type of individual if they are again apprehension versus the interior..

Got it.

And then just one last one for me and managed only, I mean is it kind of less tolerance to kind of dilute the margin given all the other growth opportunities or is it just somebody get more aggressive in terms of the way they are bidding those contracts?.

Yes. I would ay it’s the later. We have got these facilities especially in Texas and in the southeast where we just have had continued competition for labor.

And one thing that’s the non-negotiable for us that we want to make sure we can safely operate a facility day-in and day-out for not only our partner, but our employees and the people entrusted in our care. So we just feel like we get the ability to do that through a re-bided contract and we will make those tough decisions.

But the – I would say it’s there are some providers out there that are willing to do it at a lower margin than we feel comfortable doing..

Got it.

And then just my last one, when you move into the pricing, was that at the state level, because you are pretty good escalators with the Federal, so was it were you able to kind of layer in some incremental price at the state level as well?.

Absolutely, yes that’s exactly what I was talking about the state level. And I think it was also modestly impacting that in a positive way too is that we are seeing kind of demand from different fronts.

I mean so these states that really need capacity with respect to the states that deal either with overcrowding or maybe closing the border facilities is not lost on the some of the demand is coming out of the federal government for ICE and potentially Marshal service too. So I think that’s also driving a little bit..

Super. Thank you..

Thank you, Kevin..

And we will take our next question from Kevin McClure with Wells Fargo Securities..

Good morning. Thank you for taking the question.

I apologize if I missed this, but could we just go back to the increase in ICE population year-over-year, I understand why population down sequentially, but I am a little surprised why the populations were up when you comp against the prior year that can’t all be related interior enforcement can it?.

No, definitely not. We signed couple of new contracts one Northeast Ohio facility and another one at our Cibola County facilities. So when you look at ICE populations, I would say most of the – while it’s hard to tell, but my guess would be most of those increases were from more apprehension. So an increase from the prior year, but down sequentially..

Okay.

[Indiscernible] was getting to the border patrol statistics indicate that the apprehensions are lower on a year-over-year basis as well?.

I think we were capturing some market share at Cibola facility and at our Northeast Ohio facility..

Got it. Thanks.

And then congressional appropriation for ICE, how aggressively can they expand or ramp up or accelerate interior enforcement once they have this appropriation?.

Yes. Good question. I think it’s going to take a little bit more time just because they have got kind of well established resources and infrastructure in Southwest borders. So I think they can kind of scale the operations quickly if there is more demand down there.

But I think it’s going to take a little more time to kind of put in place those resources nationwide. And again, it is clear to us based on kind of mostly some of the numbers we are seeing, but also the feedback we are getting from our Federal partners that they are making us big investors.

But this is probably going to take a little more time than say, it was increased activity on Southwest border..

Got it. Thank you. And then final question for me, what are your updated thoughts on maybe lengthening your weighted average maturity schedule considering that the tower you have in 2020 and the blank space you have in out years? Thanks..

Yes. That’s a great question Kevin, it’s something we are keeping an eye on. The debt capital markets are quite attractive right now. But we do have plenty of capacity under our revolving credit facility, plenty of liquidity.

So obviously can’t, it would be challenging to refinance those the outstanding unsecured notes they make whole provisions which would be very expensive.

But when it comes to new capital markets transactions that we are able to identify some opportunities to grow the company through M&A for example that require capital deployment, the debt capital markets are very attractive, so something we are monitoring..

I appreciate your time. Thank you..

Thanks Kevin..

Thank you, Kevin..

[Operator Instructions] We will take our next question from Jordan Hymowitz with Philadelphia Financial..

Hi guys, Thanks for taking my question.

I have a question, I guess those contracts are ramping up about 9,000 to 10,000 over the next 2 years in terms of availability and at the same time, the number of apprehensions across the border are down somewhat, but it seems like I guess most of your contracts have fixed minimums and you are much more sensitive to the upside on increased overall volumes than you would be to the downside or decrease numbers per facility, does that make sense?.

Yes. If I understand your question properly, you are absolutely right in that utilization or maximum utilization of existing contracts is likely going to have a larger impact than entering into a new contract, particularly if you are entering into a new contract for an idle facility where you are having the ramp up staff and so far.

So where our population stands today, there is plenty of capacity to maximize existing contract utilization.

So that’s actually more impactful the new contract even though I know the market looks for expanding through new contract awards is that what you are asking?.

Yes.

It’s sort of the other side of this because utilization minimums in most contract that if there is another 10,000 people to come in and even facilities if they are 70% don’t you get paid for 80% or 90%, so the bigger thing is the absolute number of our total debt is needed as opposed to them all being filled, correct?.

Yes. So not all of our facilities have that guarantee population or fixed monthly price, many of them do. So to the extent where you are already getting compensated and they are not maximizing the guaranteed occupancy then yes, that’s not outside until they hit that level..

Okay.

And my other question is the interior opportunity most of your idle facilities seem to be in the interior, almost you can considered the Canadian border I guess in Florida which I guess no, but I mean Minnesota and Oklahoma and Kansas those seems to be very well suited for the opportunity set that’s presented itself?.

That’s correct, yes. So we have virtually I think every facility that has vacant capacity either facility is completely vacant or partially utilized, we have given an overview from ICE and in many cases they [indiscernible].

So you are exactly right, we feel like when we have got vacant capacity could be very attractive based on their activities on interior enforcement. But we are not depending on demand from ICE for interior enforcement to utilize a lot of our idle capacities.

We have talked about in the past, a lot of that utilization will come from state customers and then there is the pre-procurement that’s out there as well, so not dependent on it..

Got it. Thank you..

Thank you..

Thank you. Good questions..

[Operator Instructions] And there is currently no question in the queue at this time. I would like to turn the conference back over to today’s speakers..

Thanks again to everyone joined on our call today. We look forward to reporting you again on our third quarter results in early November. Thanks again..

And this does conclude today’s conference. Thank you for your participation. You may now disconnect..