Damon Hininger: That’s a good point.
Brian Violino: Okay. Great. Thank you. Appreciate it.
Damon Hininger: Yes sir.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Greg Gibas from Northland Securities. Your question please.
Greg Gibas: Hey Damon and Dave. Thanks for taking the question. Congrats on the results.
David Garfinkle: Thank you, Greg.
Greg Gibas: I was wondering if you could maybe elaborate a little bit more on the assumptions for occupancy and compensation per bed that is implicit in your guidance. It sounds like ICE not really forecasting a change in population size there. But just if you could talk about kind of any changing dynamics with respect to the split between occupancy changes versus increased revenue per bed.
David Garfinkle: Yes, on the occupancy front, the forecast is fairly stable, so not much higher than 74%. We’ve talked in past calls about getting to that magical pre-pandemic occupancy of just north of 80%. So the guidance certainly does not include that. It’s probably stable, maybe a slight increase from the 74% occupancy we achieved in the fourth quarter. With respect to — and that would include the populations that we’re bringing in under the — or have actually already brought in under the four new contracts that we executed during the second half of 2023 as well as some population increases that we saw from a number of states under existing contracts. So those will contribute to increases in occupancy. On the per diem rate, most of our per diem increases take effect in July particularly from our state customers since that’s when their fiscal years begin.
So we’ll be beginning those conversations if we haven’t already engaging with our partners, talking about our needs for per diem increases related to staffing and other inflationary costs. So it’s hard to get that visibility now. We take a pretty conservative approach when we talk about per diem increases that we include some of our contracts have stipulated per diem increases in them, in which case, obviously, we’re going to put those per diem increases in the forecast. Others are dependent on appropriations. So depending on the history with a particular customer, we may or may not include that. Our federal contracts, the other hand, most of them have per diem increases built into those contracts. And so they would be built into the guidance as well.
So I’d say probably a pretty average year. Last year 2023, we were quite successful in per diem increases, particularly from states that hadn’t provided per diem increases during the pandemic. And we continue to provide wage increases as we really need to get a per diem increase to maintain our margins and pay our staff appropriately. So I wouldn’t say we’re forecasting as good a year in 2024 as we had in ’23 because ’23, we were making up for some lost ground during the pandemic.
Greg Gibas: Great. Makes sense. That’s very helpful. And I wanted to follow-up to — it seems like there was some nice profitability upside just from the normalization of expenses, particularly reducing temporary staffing and more so going to a higher percentage of local based, more permanent. And I just wanted to ask if you see that as kind of a tailwind for continued margin improvement in 2024? Or do you kind of see that mostly already normalized?
David Garfinkle: That’s a great question. I’d say a little bit of both. There are some facilities where we still have some opportunities to normalize the expense structure, but we’ve made a lot of progress. And so if you go back to fourth quarter of 2022 compared with the fourth quarter of 2023 significant reductions, as I pointed out in my prepared remarks. But I wouldn’t say it’s totally complete. There’s still some opportunities where we could reduce those travel expenses a bit further. We will also be hiring some additional staff, too. So there’s the put and takes on that. But overall, I’d say there’s still some opportunities to normalize expenses.
Greg Gibas: Okay, good to hear. Thanks guys.
David Garfinkle: Thank you.
Damon Hininger: Thank you.
Operator: Thank you. [Operator Instructions] And this does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Damon Hininger for any further remarks.
Damon Hininger: Thank you so very much, and thank you all for joining us on our call today and especially to our investors, thank you for your trust and confidence and your investment in the company. We look forward to talking to you in May as we talk about our first quarter results. Have a great day, everyone.
Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
