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CoreCivic, Inc. (NYSE:CXW)
Q1 2020 Earnings Call
May 7, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Carrie, and I'll be your conference operator today. [Operator Instructions] At this time, I would like to welcome you to the CoreCivic's First Quarter 2020 Earnings Conference Call.

I would now like to turn the call over to Cameron Hopewell, CoreCivic's Managing Director of Investor Relations. Mr. Hopewell, you may now begin.

Cameron Hopewell -- Managing Director, Investor Relations

Thanks, Carrie. 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. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. The call today on the call today, we will focus on our ongoing response to the COVID-19 pandemic with Damon providing an overview of our preparation and operational response and Dave covering our financial results for the first quarter and providing an update on our financial outlook.

During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our first quarter 2020 earnings release issued after market yesterday and in our Securities and Exchange Commission 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. On this call, we will also discuss certain 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 at www.corecivic.com.

With that, it's my pleasure to turn the call over to our President and CEO, Damon Hininger. Damon?

Damon T. Hininger -- President and Chief Executive Officer

Thank you, Cameron. Good morning, everyone, and thank you for joining our first quarter 2020 conference call today. The start of 2020 has certainly been unprecedented in our company's history due to the rapid spread of COVID-19 and the abrupt negative impact it has had on the health of the nation's people and economy. As COVID-19 continues to threaten our nation, more and more Americans are being affected. At this point, most of us know either someone who has become ill or someone who is working on the frontlines. The inherent nature of our work means thousands of CoreCivic employees are on those frontlines every day. I am immensely proud of our frontline heroes at CoreCivic, and I thought it was only fitting to say upfront, thank you to the CoreCivic team. Working together with such an amazing group of people through this unprecedented event has only reinforced our team's dedication to better the public good every day.

During this unprecedented time, our number one priority is the health and safety of those entrusted to our care, our employees and our communities. For more than 35 years, we have worked closely with our government partners to develop and implement industry best practices to handle the potential spread of infectious diseases. Our executive management team has deep expertise leading the company through times of economic volatility, rapid fluctuations in customer needs and operational complexities. I myself have been with the company for over 28 years and have served in my current role for almost 11 years. Dave has been with the company for nearly 20 years and have served the last six years as CFO. Our operational leaders have decades of experience addressing complex and unique challenges across the corrections industry, both public and private.

I am very confident in our team's ability to lead the company through these difficult times, and I'm impressed with the speed at which we deployed comprehensive plans to tackle the virus. Under leadership of Patrick Swindle, our Chief Corrections Officer, he directed in early March the activation of our Emergency Operations Center, or EOC, within our Facility Support Center here in Brentwood, Tennessee, to manage and direct leadership and resources across our portfolios appropriate throughout the pandemic. We structure our EOC platform to follow FEMA's National Incident Command System protocols, so we are following emergency response best practices.

Since 2004, our EOC platform has followed these FEMA protocols, so we have dedicated operations staff who have been thoroughly trained and have conducted live simulations in preparation for disruptive events like natural disasters within our facilities, but also like the one we are currently experiencing. We also formed a COVID-19 Task Force, which is chaired by one of our long-term senior operations leaders, Steve Conry, who is also a former executive with the New York City Department of Correction. The Task Force is made up of our medical experts, including our Chief Medical Officer and operations leadership and is charged with monitoring the progression of COVID-19 working with each facility to develop response plans and exploring emergency continency options.

The resulting COVID-19 medical action plans were specifically developed for each safety and community facility. These plans include implementing current guidelines from the CDC and World Health Organization for COVID-19 at all CoreCivic facilities, structuring plans to separate high-risk individuals in our care who are potentially more susceptible to the virus, urging employees to stay at home if they are ill, have medical staff participated in the intake process to identify those who are deemed high-risk of being infected with or contracting COVID-19, working closely with our government partners to suspend in-person visitation at our facilities, and finally working with local and state health departments to conduct appropriate testing.

We quickly pushed out guidance to our facilities to actively promote healthy habits for individuals in our care, including regular hand hygiene, respiratory etiquette and avoiding touching of one's face. We also implemented strategies for practicing social distancing for all individuals within our facilities. We also trained all our employees to help prevent the spread of COVID-19 and other respiratory diseases through similar guidance, expanding the guidance for when our employees are outside of the facilities. In all CoreCivic facilities, staff adhere to the CDC recommendations for cleaning and disinfection.

This includes cleaning and disinfecting surfaces, objects and shared equipment that are frequently touched or used by staff members or those in our care. Our facilities use commercial cleaners and EPA registered disinfectants that are effective against the virus that causes COVID-19 following label instructions to ensure they are safe and effective use. We have adequate supply to support these intensified cleaning and disinfecting practices. The initial nationwide shortage of personal protective equipment and COVID-19 testing equipment required us to coordinate a portfoliowide supply chain in order to provide face masks to all staff and individuals in our care, consistent with CDC recommendations and ensure availability of testing equipment. As guidance from the CDC on the use of mask recently changed, we have worked hard to quickly ensure that we are in full compliance.

We also had to coordinate with each of our government partners as their policies evolve to expand the utilization of PPE. Importantly, with PPE, we provided information materials and instructions to employees and those in our care on how to properly use the equipment to reduce the risk of contamination. The CDC makes it clear that the mask recommendation complements but does not replace other critical steps to help prevent the spread of COVID-19. Other measures like social distancing and proper hygiene recommendations, as I mentioned earlier, are the primary measures to reduce the spread of the virus.

Beyond our supply chain for PPE and testing equipment, our most critical supply lines of food, pharmaceuticals and other medical equipment were bolstered in advance, and we currently do not anticipate a significant supply chain disruption, nor have we experienced one. The combination of our detailed facility level action plans, our COVID-19 Task Force mobilized and our Emergency Operations Center functional, we believe we position the company to be well prepared to appropriately and thoroughly respond to the virus with care for the safety and well-being of those entrusted to us and our communities.

As a 24/7 operation, one of the largest challenges we face is staffing. Particularly in a strong economy with low unemployment, we, along with all public and private correction systems, have faced stiff competition in the market the last few years to attract and retain talent. While the unprecedented increase in unemployment since the start of the pandemic may significantly expand the pool of available employees, corrections is facing an additional challenge in staffing with COVID-19 now. That is when you have a test come back positive for either staff or inmates, we follow the guidelines that you should proactively isolate for up to 14 days, others who may have come in contact with the individual.

In certain cases, you could see an individual facility temporarily lose a meaningful percentage of their correctional staff, creating the need for us to take additional steps to fill critical post. Our action plans included the contingencies to employ staff from other facilities from around the country with lower COVID-19 impacts to support facilities that may have higher COVID-19 impacts, resulting in temporary reductions in available staff. This is an important contingency plan that we have utilized, which can't necessarily be replicated in the public sector when their employee pools are consolidated in a single state. Other challenges our government partners face are that many of their facilities are overcrowded or operating above their design capacity and outdated with physical plant designs that do not allow ease of separation.

Social distancing, according to the CDC, is a critical step everyone should take in order to reduce the spread of the virus. When a facility is operating above its design capacity, there is less available square feet per resident, in some cases, making social distancing in accordance with the CDC guidance impossible. Our facility designs are generally more modern and allow for easier separation and social distancing plans. And as the outbreak of the virus has impacted various public correctional systems, our bed capacity has become an important part of our government partners' ability to adhere to the CDC guidelines regarding distancing and separation of COVID-19 positive individuals.

Examples of this are with both the states of Kansas and Nevada who have extended agreements with us to allow for lower density within their systems by utilizing capacity within our Saguaro facility in Arizona. What is yet to be determined is if these measures to reduce density and capacity levels will be implemented on a more permanent basis across our nation's correctional systems. But as always, we believe our capacity serves an important role in reducing overcrowding among our government partners. Challenges related to how the facilities can create many situations that increase the risk of transmission of the virus. For example, many older facilities use central HVAC system that recirculate air throughout the entire facility.

This is particularly impactful with airborne communicable diseases. Another example could be that in older facilities medical units may lack negative pressure rooms that allow individuals that have been tested positive to be medically isolated. Our portfolio of correctional real estate assets is newer and more modern, so we do not face the type of significant real estate limitations that many other systems face. And here are a few numbers around this. In states where we conduct business within our safety segment, our facilities are approximately half the average age of the state's public prisons. In fact, there are 39 prisons or about 43,000 beds within our state customer group that are 50 years old or older and even seven prisons that are 100 years old or older.

Let me now provide some detail on the number of confirmed cases we have experienced to date. On March 19, we had our first confirmed case that affected a staff member and on March 28 was when we had our first resident that was a confirmed case. As of Tuesday of this week, we had 148 staff cases and 1,630 confirmed resident cases. These are not necessarily active cases, just cases that we confirmed over the last 60-plus days. To put this in perspective, we have approximately 15,000 employees working for the company at an average of 56,000 residents in our 70-plus prisons, detention and community correction facilities over the last 60 days.

The vast majority of the confirmed cases we have had were asymptomatic at the time of testing, which is consistent with what other correctional systems around the country are reporting. 39 states have reported their testing results to date, which is approximately 25,000 tests, and they have reported positive results around 42%, which is consistent with our own experience. And as of Tuesday, we currently have three staff members and 13 residents that were receiving local medical treatment near their places of work or facilities where they are housed. Finally, it is estimated that approximately 218 inmates have died nationally because of COVID-19 related causes. And tragically, we have had two deaths, which actually were this week, and they are being monitored for pending autopsies or official death rulings as both tested positive for COVID-19, but also had pre-existing medical issues and multi-day hospitalizations.

Finally, on this topic, with us working with nearly 20 government partners around the country, we have worked closely with them to mirror proactive testing within our facilities. The most recent partner to conduct wide-scale testing is the State of Tennessee, and that effort is ongoing this week going into later this month. Check out corecivic.com for news releases for more information on what has taken place here in Tennessee, but also information for family members of incarcerated individuals, which includes detail about our 24/7 information hotline with a live operator. And we have made it known that we believe the data gathered from these mass testing efforts can also be critical to public and private health professionals, government leaders and scientists around the country as we better as we try to better understand this virus.

I will now take a few minutes to review how COVID-19 pandemic has generally impacted the utilization trends of our government partners. Immigration and Customs Enforcement has experienced the most significant impact of any of our partners and for unique reasons. Today, their total detention population is approximately 30,000 nationwide, which is a sharp decline from their population net year-end 2019 of roughly 43,000 detainees. Some of this decline has been the result of ICE proactively releasing detainees that are deemed to be higher risk. However, the largest impact has been the result of reduced activity at the southwest border and the federal government's decision to deny entry at the border to asylum seekers and anyone crossing the border without proper documentation in an effort to contain the spread of COVID-19.

These factors have resulted in a reduction in the number of people being apprehended and detained by ICE. Beyond the uncertainty of how long the pandemic will play out, we are also uncertain on how long the federal government will keep these border restrictions in place. As our largest customer, representing approximately 28% of our revenue in the first quarter, this reduction in utilization has a material effect on our near term earnings, but as of now, there is no indication that the pandemic will have a long-term impact on ICE demand for our real estate solutions.

Utilization trends for the United States Marshals Service, the Federal Bureau of Prisons, and most of our state partners have modestly declined as a result of COVID-19. This is due to disruptions in the criminal justice system as the number of courts in session and prosecutions have declined and with many state and local government agencies deciding to release certain offenders to reduce the risk of COVID-19 transmission. With some states already starting to reopen their economies and even more following similar plans over the next few months, we expect a coinciding gradual resumption of these government activities returning to pre-pandemic levels.

Now that we've broadly covered our response to the COVID-19 pandemic and impact on our government partners are experiencing, I'd now like to take a moment to touch on our first quarter results. In the first quarter, we posted total revenue of $491 million, a 1.5% increase year-over-year and normalized FFO per share of $0.54 or $0.01 above the high end of our first quarter 2020 guidance that we reaffirmed last month. The primary driver of our financial performance in the quarter versus our original guidance was the experienced that we experienced lower-than-expected operating expenses in our safety portfolio.

At this time, we are not providing financial guidance for the second quarter or full year 2020 due to the uncertainties around the length of the COVID-19 pandemic, the timing and pace of the recovery and policy choices by federal, state and local governments. We remain focused on positioning the company for the long-term, understanding that the pandemic will eventually pass, and our government partners will continue to face the same challenges that were present prior to COVID-19 and perhaps even more.

It is with that focus that we continue to make prudent investments that we believe will provide long-term benefits. As I mentioned earlier, the key to our long-term success is our entire CoreCivic team. To show our appreciation for their service and dedication during the pandemic, all frontline employees will receive a Hero Bonus. We have also provided additional paid leave and healthcare benefits for our employees. We believe it is the right thing to do for our employees who have been so dedicated and steadfast through a very difficult time.

One thing that I'd assert is that government revenues will see a meaningful reduction this year due to the shutdown of certain portions of the economy. The pace of economic recovery will also affect future tax revenues, which at this time is difficult to predict and will likely vary greatly state by state. A reduction in tax revenues can be a challenge for state agencies as budget cuts are off in the results. The good news is that most states are in a better fiscal health than the last recession due to the financial crisis with larger rainy day funds to weather disruptions and the economic disruption occurring today is not the result of structural issues within the economy or an industry. There are also discussions in Washington about a potential federal aid to state and local governments to assist in the recovery, which we will continue to monitor.

Even without aid or a quick economic recovery, we have experienced we have the experience to weather these challenges as we did successfully during the last recession and drawdown economic recovery. To date, we have not seen any negative budgetary impacts to our contracts, but we are prepared to address these situations and mitigate our risks should they arise. As you can see, we have been very proactive in our response to this unprecedented pandemic, and we are upholding our commitment to bettering the public good. Whether it's responding to COVID-19 or the work we do every day to help people prepare to return to our communities, we believe strongly in the role that we play and the difference we make in people's lives.

Now before I turn it over to Dave, I want you to know that we're continuing to focus on our core mission and doing everything we can to support our employees, the individuals in our care, our communities and our government partners. You can see these commitments are ingrained in our response to COVID-19. Here are just a few examples. For our employees, we have expanded healthcare and PTO benefits and provided a Hero Bonus. For residents, we have negotiated free phone calls from our telecom vendors and obtained government authorization to waive medical copays.

For our communities, we have offered our idle capacity at no cost. To help local health systems combat COVID-19 and hospital capacity shortfalls, we've also donated to local food banks and COVID-19 response funds. And we have worked collaboratively with our government partners to roll out new and enhanced policies and protocols in response to the pandemic, working aggressively to ensure consistent supply chain of critical items and have remained flexible and nimble to address needs as they arise. This represents only a small sample of our response efforts. I encourage all of you to go to our website at corecivic.com to see all the material we have published about COVID-19 response, which includes weekly updates on our efforts.

I'd now like to pass the call over to Dave to provide a more detailed look of our financial results in the first quarter, the strength of our balance sheet and liquidity position and other recent trends. Dave?

David Garfinkle -- Executive Vice President and Chief Financial Officer

Thank you, Damon, and good morning, everyone. In the first quarter, we generated $0.27 of EPS or $0.30 of adjusted EPS compared to our guidance range of $0.26 to $0.29. Normalized FFO totaled $0.54 per share compared to our guidance range of $0.49 to $0.53. AFFO totaled $0.58 per share compared to our guidance range of $0.50 to $0.54 and adjusted EBITDA was $100.4 million for the quarter compared to our guidance range of $96 million to $99 million. Adjusted amounts exclude expenses associated with M&A transactions and a nonrecurring deferred tax expense, both of which were included in our guidance and $500,000 of asset impairments associated with the sale of an idle residential reentry center for $1.6 million completed in the second quarter.

Revenue was slightly below our forecast for the quarter due to a reduction in March. However, our financial results for the quarter exceeded our guidance levels due to positive variances in numerous operating expense categories as well as in G&A expenses. Our first quarter results were largely unaffected by COVID-19, although our compensated populations declined by 1,300 from March 20 when the federal government closed the nation's southern border to March 31, in order to help contain the spread of COVID-19.

Due to uncertainties related to the potential impact of the pandemic, we withdrew our full year financial guidance on April 1. Our management team and Board have been through numerous crises and have been actively managing this one under protocols that build off our historical experience that have been specifically tailored to the dynamics of COVID-19. We've been focused on the potential impact to our frontline staff and residents entrusted to our care and have made investments to help ensure their safety, as Damon described.

I will provide you with additional color about the potential financial impact as we are also focused on maintaining the long-term financial health of the company. However, quantifying the financial impact of COVID-19 is challenging in these unprecedented times as government actions and responses continue to evolve. We expect the largest financial impact of COVID-19 on our business to be reflected in our safety segment and more particularly our federal populations within this segment. At the beginning of the year, we expected a reduction in ICE population throughout 2020 compared with 2019 because of a dramatic rise in such populations during 2019 when southwest border apprehensions reached the highest levels in over a decade as we do not believe these high levels would be sustained.

However, the decision by the federal government to deny entry at the southern border to asylum seekers and anyone crossing the southern border without proper documentation or authority in an effort to contain the spread of COVID-19 has amplified the reduction in people being apprehended and detained by ICE. Further, disruptions to the criminal justice system have also contributed to a reduction in the number of U.S. Marshals populations and, to a lesser extent, state populations as the number of courts and session, arrests and prosecutions have declined due to shelter-in-place orders and other COVID-19 related restrictions on individuals, businesses and services.

Certain state and local government agencies have released vulnerable inmate populations, but so far, this has occurred more in local jails than in state correctional facilities, where the design is more conducive to promoting social distancing, separating certain populations and reducing offender interactions, as Damon described. Nonetheless, our total compensated populations have declined by an additional 2,000 offenders or 3% since the end of March through the end of April, again most of which are ICE and Marshals detainees. Management revenue for April was 3% lower than March, excluding the impact of one fewer day in April compared with March.

We cannot predict how long asylum seekers and anyone attempting to cross the southern border without proper documentation or authority will be denied entry. Therefore, it is difficult to quantify the impact of our more transient federal offender populations. It is also difficult to predict the actions of our state partners in response to any outbreaks in public or private correctional facilities, and we cannot predict how long the criminal justice system will be disrupted, or how long inmate population levels will remain below their pre-COVID-19 levels. I will note that none of our management contracts in the safety segment have been modified because of COVID-19.

Our community segment produces about 5% of our net operating income. The residents in our community segment are usually serving the last portion of their sentence and are preparing for release from government custody or are referred to our programs as a diversion from prison or jail placement. Like our safety segment, the disruption in court hearings as well as an overall desire to minimize movement within the system have resulted in a reduction in the number of referrals to our community facilities. Additionally, some of our government partners have transferred certain residents assigned to our reentry facilities to nonresidential statuses such as furloughs, home confinement or early releases to create additional space for enhanced social distancing within our reentry facilities.

Further, at some locations, residents are responsible for a portion of the subsistence payments which could be impacted by a curtailment in work programs available to them, negatively affecting our revenue to the extent that the government agency does not supplement such payments. Conversely, it is also possible that government agencies will increase the utilization of our community facilities or home confinement services as an alternative to incarceration. The Federal Bureau of Prisons has begun implementing plans to release certain federal prisoners from custody and place them directly into home confinement, which could mitigate some of the reduction in populations we have seen so far.

Our property segment, which produces about 12% of our net operating income and consists of 57 properties, including with our most recent portfolio acquisition completed in January 2020, 45 properties leased to the federal government through the General Services Administration and seven properties leased to state agencies. Although most of the tenants in this segment temporarily closed their offices by order of the agencies leasing the properties, we do not currently expect the financial performance of our property segment to be materially affected by COVID-19. And with 99% of the revenue in this segment generated from federal and state governments, we do not expect any rent concessions, lease modifications or any bad debts.

Because of all the uncertainties associated with our safety and community segments, we have suspended our financial guidance until we can produce more reliable estimates. In the face of these uncertainties, however, we are pleased to manage a strong balance sheet with ample liquidity. And as of March 31, we had over $335 million of cash on hand and $155 million of availability on our revolving credit facility in addition to a $350 million accordion feature under our credit facility, which matures in 2023. Our cash balance reflects a partial draw we made on our credit facility at the end of March out of an abundance of caution due to uncertainties associated with COVID-19 and to maintain maximum balance sheet and operating flexibility.

Except for the dividend payment we made in April, our cash balance is slightly higher today, and we have not seen any change in the timing of payments from our government partners despite many of their offices being closed. Our leverage measured by net debt-to-EBITDA is 3.85 times using the trailing 12 months, and we have no debt maturities until October 2022. Therefore, we have no need and do not anticipate accessing the capital markets in the short term.We will continue to monitor government assistance made available to businesses and will avail ourselves of certain provisions under the CARES Act that further bolster liquidity without putting undue burdens on our strategy.

One notable benefit includes the deferral of the employer portion of social security taxes, which will enable us to defer payments of approximately $30 million accumulated this year, half of which is due December 31, 2021, with the other half due December 31, 2022. The other notable benefit permits us to accelerate expense recognition for tax purposes on certain qualified improvement property retroactive to 2018. We have taken action to reduce operating expenses, including G&A expenses, although we have and will continue to incur incremental operating expenses because of COVID-19, at least until the pandemic subsides. Last month, we announced a Hero Bonus to be paid to all facility staff who are working through these challenging conditions, including those mandated to stay at home because of COVID-19 that we estimate will total between $6.5 million and $7.5 million during the second quarter.

We have also provided additional PTO and are incurring incremental expenses to procure personal protective equipment amounting to $1.5 million to $2 million each. Although we have had a relatively small number of inmates require hospitalization due to COVID-19, we do not expect a material increase in our inmate medical expenses. With the completion of construction of our Lansing Correctional Facility in January 2020, which was 100% financed with proceeds from a private placement, we have no material capital commitments.

As a result of the uncertainties associated with COVID-19, including volatility in the equity markets, we do not currently expect to complete any additional acquisitions for the remainder of 2020 or until we have further clarity around the impact of COVID-19 on our business. We are targeting a 10% reduction in our maintenance capital expenditures, which we now expect to total $54 million split evenly between real estate and non-real estate assets. Our 2020 capital expenditure forecast also includes approximately $7 million for tenant improvements and leasing commissions, unchanged from our estimates at the beginning of the year associated with new lease agreements.

Even though we are unable to provide financial projections with the level of precision we are accustomed to providing, we expect to remain in compliance with all of our debt covenants and generate significant positive cash flows after maintenance capital expenditures exceeding $200 million. Our most restricted covenant is the total leverage covenant in our bank credit facility, which requires us to maintain on a quarterly basis a net debt-to-EBITDA ratio of 5.5 times using EBITDA for the trailing four quarters. Based on current populations and our internal forecast, we are comfortably below this covenant. We have also developed several financial models with reasonable downside scenarios, including various levels of different time lines of disruption, none of which reached a net debt-to-EBITDA of 5 times.

Our business is very durable and continues to generate cash flow, even during these unprecedented disruptions to the economy and criminal justice system. This resiliency is due to the essential nature of our facilities and services in our safety and community segments, further enhanced by the diversification and stability of our property segment. Although our cash flows have no doubt been impacted by the pandemic, we firmly believe that our cash flows will return to pre-pandemic levels. However, it is difficult to predict how quickly that occurs.

I'd like to close my prepared remarks with a brief note on our dividend, which currently yields 15%. The dividend declaration is a Board decision, and we are meeting with our Board quite frequently during the COVID pandemic. Following our historical calendar, our next dividend would typically be payable in July, and therefore, we have more than a month before the Board would be required to declare the dividend if it was to adhere to our historical calendar, which simply provides more time to assess the operating environment before making any decisions on capital allocation.

I will now turn the call back to the operator, Carrie, to open up the lines for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question will be from Joe Gomes from NOBLE Capital.

Joe Gomes -- NOBLE Capital -- Analyst

Good morning and thanks for taking my questions.

Damon T. Hininger -- President and Chief Executive Officer

Good morning.

Joe Gomes -- NOBLE Capital -- Analyst

Would just like to delve a little bit more into the ICE population decline. Listened to your competitor's call last week, and they talked about they have some guaranteed minimum contracts that are helping in this time to keep up a certain level of revenues. I was wondering if you could speak a little bit more about does CoreCivic also operate under such type contracts? A little bit more about the decline in the ICE populations. And on the ICE populations, where on the scale do they land in terms of margin contribution to the business versus the state contracts or the U.S. Marshal or the BOP?

Damon T. Hininger -- President and Chief Executive Officer

Yes, Joe, this is Damon. Thank you for your question. So a couple of answers there, and I may tag team a little bit with Dave on this. But looking at our federal contracts, I know you asked about ICE, but let me just give you kind of an overview of our federal contracts. We have about 21 federal contracts. And of those, about 14 of them have a monthly fixed payment provision. So the seven contracts again, federal contracts that do not have those fixed monthly payments are mostly smaller facilities, and they have multiple customers, whereas the 14 that do have the fixed monthly payments, the partner is either the anchor customer or they have the exclusive use to the entire facility.

So these provisions are offered by government in our contracts really is a way to ensure for them that they have access to our capacity and services, notably our staffing levels, making sure those are stable, even though their needs may materially fluctuate. So they're a really important provision for government to give them that comfort because, again, their populations can fluctuate. And in turn, for us, it gives us great predictability of staffing levels and expenses needed at each individual facility. You asked a little bit about the state side. We've got a fair amount of our state agreements that have similar provisions.

But those populations are typically more stable because they're a longer-term population versus ICE and Marshals Service or kind of a more transient population and may only be in our facilities 30, 60 or 90 days. Anything to add to that, David.

David Garfinkle -- Executive Vice President and Chief Financial Officer

Yes. I'd say, to your point on margins or revenues. So for the first quarter, ICE was 28% of our total revenue. I would say those margins for ICE are slightly higher than the average just because, as Damon mentioned, there are more transient populations, and therefore, there's more risk associated with those populations. So margins are typically higher, but we do have those fixed monthly payments, as Damon described, that protect us on the downside. And I would say, today, those populations are around or slightly below those fixed population levels.

Joe Gomes -- NOBLE Capital -- Analyst

Okay. Great. And also, if you guys Damon, you talked about the deep experience a lot of the team has. So if we look back at the Great Recession and at that time, again, as we talked a little bit about here in the call, states were having issues with their finances. Can you just give us what was your guys' experience then? Were states looking for concessions? If so, how did you guys deal with them? A little bit more color on that would be appreciated.

Damon T. Hininger -- President and Chief Executive Officer

Absolutely, and it's a great question. So I'd say a couple of things we learned during that period of time, kind of 2009 through, I'd say, 2011, 2012, one of which is we expected, but it really didn't appreciate how long would be how impactful would be for state budgets. And so I think in 2008 and '09, we figured it would impact state budgets, but it really didn't hit them as quickly as you think it would have. It really hit them 2010, 2011. So I think what we've got to do from that lesson is understand that, again, it may not have a real near-term impact, but over the next 12, 24, maybe 36 months, it could have impact as respective states recover. And so that we've got to plan accordingly.

The second thing is during that period of time and a little bit to your question, we learned in working with our partners way we can kind of reconfigure the operations to maybe make it not as more efficient, but maybe allow for maybe some change in scope and requirements in the contract that could allow for some cost savings back to government. On the whole, during that period of time, it wasn't perfect and every customer is a little different, but on a whole, we were able to provide some cost savings but didn't materially impact our margins. And so we've got, again, that playbook, and we'll use it as appropriate as we go through this with our respective states.

This is kind of an obvious point, and I alluded to this in my comments, but obviously, something very different today than 10 years ago as state relates to our state customers. And that is, states during that period of time where they had challenges with their fiscal condition, maybe would overcrowd their facilities, potentially significantly in a measure to kind of provide cost savings. I think and this is good news. I think that the mood and the feeling of doing that has changed even before COVID-19. Overcrowding significantly facilities is just challenging for many obvious reasons. And so I think that part of the playbook maybe 10 years ago is not necessarily there today.

And then, again, the other thing I would say is with COVID-19 with social distancing and reducing or having a desire, I should say, to reduce density and, again, overcrowding facilities, I think that's going to be top of mind, even though state governments are going to have to work through this challenging economic environment. I don't know, anything to add to that, David?

David Garfinkle -- Executive Vice President and Chief Financial Officer

Yes. I'd emphasize that part. I'd say the biggest impact to us during the Great Recession was loss of populations due to overcrowding in jail systems. And as Damon mentioned, it's just hard to believe that governments are going to want to do that even in the face of severe budget challenges. So I think that will be different this time around than the last time around. I'd also say we do have a playbook today that we created during the last downturn when it comes to working with our government partners in how to identify those cost savings. As I think you know, Joe, most of our contracts have mandatory staffing patterns. And there are certain critical posts that you're never going to not fill. But there are certain positions within a facility that could be reduced with consultation with the partner.

Unfortunately, they could reduce programs, and that's one of the tragic outcomes of challenging budget times when you want to make sure inmates are getting the programs so that when they get released they are able to hold the job and have the skills, so they don't end up recidivising back into the system. So there are various things that could be done to work with a partner to identify cost savings. The program is usually the last one, but there's ways to operate facilities safely and securely with fewer staff, again, not taking those critical posts away. And then probably the other the last thing I'd say is on the employment front.

So over the last, gosh, several years, attracting and retaining staff has been in the top three of our enterprise risk management process. And we've had to provide outsized wage adjustments at facilities where we were severely challenged. Another unfortunate situation in this economy is that more jobs will be plentiful. So perhaps we will not have as many of those outsized market adjustments that we've had in the past. So we're happily hiring at all of our facilities, and we'll certainly expect to have a larger talent pool as we identify ways to attract and retain our staff.

Joe Gomes -- NOBLE Capital -- Analyst

One more for me, and I'll jump back in line. I noticed during the quarter that you've lost a contract. Can you give a little more detail on that? And are states still out there in this environment RFP'ing? I know you had talked previously about, I think it was Idaho and Alabama, maybe even Oklahoma, the potential business there. I mean, where do we stand on those?

Damon T. Hininger -- President and Chief Executive Officer

Yes. Thank you for that question. So I think we had one small contract during the quarter. Didn't have a material impact for the quarter or for the rest of the year. To your question about kind of new business prospects, as you can appreciate, everything has basically been put on hold. And to give you a little color and to answer your question a little bit about some specific prospects, when we go through a procurement process, typically, they'll do government will do an RFP, or request for proposal. We submit a bid. And then part of that is doing not only maybe in-person interviews, but more importantly, they'll want to go tour the facility or facilities being considered by us as part of our proposal. And of course, with all the travel restrictions, all that has been halted with some activity we had with some current procurements.

So notably, you highlighted Idaho. Idaho is still an active opportunity. And we've actually been working with MDB, a little creative on giving them some additional detail on the facilities that we propose to them via kind of virtual conference or video conferencing or videos and whatnot. So those are still pending. Again, kind of to the big question, obviously, in front of all of us is when everything kind of gets back to normal. And again, it will be kind of jurisdiction by jurisdiction. But we are still seeing kind of active needs kind of near term, and we do think probably some procurement activities are probably resuming probably later this year, probably even this summer, I should say. I don't know, anything to add to that, David?

David Garfinkle -- Executive Vice President and Chief Financial Officer

No. Just one finer point on the loss contract. It was a very small contract. It was also in a facility that we leased. So that lease terminated along with the termination of the contract. So it's not like we have an idle facility as a result of that contract termination.

Joe Gomes -- NOBLE Capital -- Analyst

Great. Great. Guys. Appreciate it.

Damon T. Hininger -- President and Chief Executive Officer

Thanks, Joe.

David Garfinkle -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Our next question will be from Kenneth Williamson from JPMorgan.

Kenneth Williamson -- JPMorgan -- Analyst

Thanks for taking my call. Sorry there. I apologize, I missed part of the call, but did your contracts what percentage of your contracts have like a minimum service level that you are paid for regardless of occupancy?

Damon T. Hininger -- President and Chief Executive Officer

Yes. Thank you for that question. So probably of most interest would be our federal contracts, which is just over half of our total business as a company. So we have about 21 federal contracts with the federal government, I should say, to have what we call monthly fixed payment provisions. So 21 excuse me, I'm sorry, 21 federal contracts and 14 of those have monthly fixed payment provisions. And so the seven that do not, again, are pretty small facilities and typically have multiple customers in there. The 14 that do have the monthly fixed payment it's because the government is either the anchor tenant or a customer in those facilities or they want exclusive use of the entire facility.

So it does give us great certainty on kind of what the needs are for the government to have those provisions. And it's really a nice benefit for the government because they wanted to make sure that even though their populations may fluctuate and in turn their needs may fluctuate they've got access to our capacity. And then David actually mentioned earlier, too. If you look at those agreements, again, those 14 of the 21 that have those monthly fixed payments, populations are generally today consistent with those provisions in those contracts. So anything to add to that, David?

David Garfinkle -- Executive Vice President and Chief Financial Officer

No. I think that covers it.

Kenneth Williamson -- JPMorgan -- Analyst

Yes. I think there was going to be a follow-up. So basically, of those 14, you're already at that kind of the occupancy level is such that you are receiving those minimum monthly fixed payments?

David Garfinkle -- Executive Vice President and Chief Financial Officer

Yes, today. I wouldn't say that was the case throughout the first quarter. But as the border has been basically shut down, those populations have declined to about the levels that are guaranteed.

Kenneth Williamson -- JPMorgan -- Analyst

And is there are those facilities are there any of those facilities that are not profitable when they're operating at those minimum levels?

David Garfinkle -- Executive Vice President and Chief Financial Officer

No.

Kenneth Williamson -- JPMorgan -- Analyst

Okay, thanks. That's all I had.

Damon T. Hininger -- President and Chief Executive Officer

Thank you.

David Garfinkle -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Our next question will be from Jordan Sherman from Ranger Global.

Jordan Sherman -- Ranger Global -- Analyst

Yes, hi gentlemen. Just a follow-up on that question. On the state side, are there any guaranteed minimums?

Damon T. Hininger -- President and Chief Executive Officer

We do. I don't know if you do have off the top of your head, Dave, the exact number, but I'd say probably the majority of our state agreements do, maybe a little less than that. But those populations, again, are very stable. They're typically populations that are very long term. And so they may be in our facilities, one, two, maybe five, even 10 years. So those populations even without those provisions are very, very stable. And even today, even the last 60 days, as I mentioned earlier, I think the high and low with the net side, which is about 30,000, 35,000 individuals, I think the high and low is within 1,000 from the top to the bottom. So again, it's been very stable here in the last 60 days.

David Garfinkle -- Executive Vice President and Chief Financial Officer

Yes. That's right. If you look at our supplemental disclosure report where we disclose the occupancy of every one of our facilities and the major customers. If you look at the ones that have a state customer and you trended it, they are very stable populations, usually in the 90% to 100% occupancy level. So they don't fluctuate very often, and therefore, you don't really have to have the protections that you do on a federal contract where you've got transient populations at ebb and flow.

Jordan Sherman -- Ranger Global -- Analyst

Understood. And just want to follow-up on this on the opportunities on the state side. Alabama, in particular, I guess, is the most active looking to replace their facilities. Where does that stand?

Damon T. Hininger -- President and Chief Executive Officer

So even with this is Damon, again. So even with COVID-19 and how it again, it's kind of halted a lot of activities around procurements, that one still is very active. And so there's been a move from where there are a lot of discussions in person in Alabama with the Department of Corrections and other parties that are managing the procurement. A lot of that has now moved to video conferencing. So it's still a very active procurement. We haven't heard any indication relative to kind of the ultimate time line being affected.

There has been a couple of adjustments on kind of respective due dates for like clarifications or negotiation details provided from negotiation sessions. But still very active, still looking for several facilities three facilities, and we think potentially one of them could be awarded end of this year and then maybe the other two next year. So I don't know, anything to add to that, David.

David Garfinkle -- Executive Vice President and Chief Financial Officer

Yes. Initial bids are actually due next week on Alabama. And then Idaho is still an opportunity out there. I think during the COVID-19, they've kind of put things on pause. So we've provided them with a couple options in terms of facilities. So still optimistic. I just don't think that's going to come well. Everybody is trying to deal with this crisis in the short term.

Damon T. Hininger -- President and Chief Executive Officer

And I should also I alluded this in my comments, but in the last, I guess, probably two weeks, we got extensions with both State of Nevada and State of Kansas. Both agencies were looking potentially to move populations within our facilities back in state, but they decided to extend them a year, again, because we think that they want to continue to kind of reduce overcrowding their system and not have any lower density, I should say, because of COVID-19. So those are that could be a sign of potentially some additional needs here near term.

David Garfinkle -- Executive Vice President and Chief Financial Officer

And then one last thing. We did disclosed in the press release was Mississippi expanded their contract in April from 375 to 1,000.

Jordan Sherman -- Ranger Global -- Analyst

Right. Understood. I want to come back to the Nevada, the two extensions. But I guess the reason I ask is particularly about Alabama is because that doesn't require because there's a new facility, that wouldn't require a touring of existing facilities. So I thought maybe that would be on a might be on a different track.

Damon T. Hininger -- President and Chief Executive Officer

Yes. That's fair. That's exactly right. Yes. Like the discussions on that one were mostly in person leading up to COVID-19. So it slowed down just a tad, I'd say, probably just a couple of weeks, probably the most.

Jordan Sherman -- Ranger Global -- Analyst

And then I'm just wondering, in response to state budget potential issues about the opportunity side for either overcrowding or for new facilities, it would seem that going forward that many of the states will not didn't have it in the past, but probably won't have in the future the funding for any new facilities. I'm wondering what how many Kansas like opportunities might be out there or might be coming down the pike as a result of any financial stress that comes along?

Damon T. Hininger -- President and Chief Executive Officer

Yes. This is Damon again. Great question. So after Alabama, the one that has been most public here recently that you may have heard about was Nebraska. So they put out an RFI early this year. Again, that got slowed down just a tad. But we think that's still a very live and meaningful opportunity for the industry. And I think we've been kind of talking about kind of the real estate solution being an important way to help jurisdictions that are looking for cost-effective ways to modernize their systems. That again, it's too early to tell, but I think with this COVID-19, that could accelerate because, again, if you got facilities that are 100 years old that they'll have modern HVA systems, don't have negative pressure rooms.

There could be a real catalyst for a lot of these jurisdictions maybe go out more quickly out to the marketplace to try to modernize their system. So I don't have anything to announce today, but it does feel like that potentially a couple of other jurisdictions are going to take a hard look at that. And then maybe try to follow Alabama and Nebraska's, lead. Anything to add to that, David?

David Garfinkle -- Executive Vice President and Chief Financial Officer

No, I don't think so. And to your point, I think it's where the private sector can come in and provide the capital that the governments are now going to be even more challenged to provide that bodes well for that future opportunity for us.

Damon T. Hininger -- President and Chief Executive Officer

And I guess this is an obvious point that I've made before. But by modernizing their system, obviously, it's a better environment, it's a healthier environment, but also could provide meaningful savings. So it's really a double benefit. Your modernizing your system, but also likely it's going to either be cost savings, if not budget neutral.

Jordan Sherman -- Ranger Global -- Analyst

Yes, that's that was what I was thinking. Just quickly on Nebraska, how many what's any details around the size of that opportunity?

Damon T. Hininger -- President and Chief Executive Officer

I think it's what they've advertised, it's somewhere in the range of 1,500 to 2,000 beds.

Jordan Sherman -- Ranger Global -- Analyst

Okay. And then just one question on the testing. You gave the numbers of people that have tested or had been positive, I think, a number of cases you mentioned. How I guess, is you said most of the people were asymptomatic when you were testing. How is the testing how are you deciding who to test and how many tests you can actually do?

Damon T. Hininger -- President and Chief Executive Officer

Yes. Great question. So a couple of answers. We've been testing, as directed by CDC for people that are expressing symptoms or showing symptoms, I should say, in addition to doing temperature checks of both staff and inmates. But there has been some jurisdictions like Tennessee, who have said, we want to test everybody. So we want to test staff, all staff and all inmates. And so again, we want to work closely with the partners and mirror what they're doing in their system with our system. And so going back to Tennessee, we did Trousdale Turner last week. We've got several facilities this week going into the next couple of weeks. And in this case, with Trousdale, I think it was north of 90% of the folks that were tested who were confirmed positive, were showing no symptoms.

And again, from what we've heard from our partners, but also what's been reported publicly, that appears to be pretty consistent with what we're seeing in other places. Like I said, we've heard nationally, there's 39 states who reported testing, and not all of them have reported, but the 39 states that have reported, it's been about half that have been reported as positive. So again, it really just depends on the jurisdiction. If it's no direction from the jurisdiction on mass testing, then we're following CDC guidance. But of course, if it's like Tennessee, who wants to do full testing, then we're also going to collaborate and mirror their testing policy.

Jordan Sherman -- Ranger Global -- Analyst

And then for those who are positive but asymptomatic, are they isolated as well? Is that part of the protocol?

Damon T. Hininger -- President and Chief Executive Officer

Exactly right. That's exactly what we're doing. And that's again, the benefit we have in new or modern facilities, we can do that where some jurisdictions may be challenged to do that.

Jordan Sherman -- Ranger Global -- Analyst

Thank you very much.

Damon T. Hininger -- President and Chief Executive Officer

Thank you.

David Garfinkle -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. This is the operator. I'd like to turn the call back over to the company for closing remarks.

Damon T. Hininger -- President and Chief Executive Officer

Thank you, Carrie. Before we conclude the call, I would like to remind everyone that our Annual Shareholder Meeting and proxy vote is next Thursday, May 14. Consistent with maintaining safety and health during this pandemic we have made this year's meeting completely virtual for the first time, making it available for all to listen to the webcast at your convenience. We will also be publishing our 2019 ESG report to build upon the industry first ESG report that we published last May. We are excited for this year's report, which includes even more disclosures and metrics that we believe will be useful for the investment community.

I would like to thank everyone for joining us on today's call. I hope everyone continues to stay safe as we all continue to do our part to address COVID-19 pandemic, and we look forward to providing you with another update when we report our second quarter results in August. Thank you again. [Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Cameron Hopewell -- Managing Director, Investor Relations

Damon T. Hininger -- President and Chief Executive Officer

David Garfinkle -- Executive Vice President and Chief Financial Officer

Joe Gomes -- NOBLE Capital -- Analyst

Kenneth Williamson -- JPMorgan -- Analyst

Jordan Sherman -- Ranger Global -- Analyst

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