Q2 2025 CoreCivic Inc Earnings Call

Good day, and thank you for standing by. Welcome to the core Civic 2 quarter.

2025 earnings call.

At this time, all participants earned this and only mode. After the speaker's presentation, there will be a question and answer session.

to ask a question during the session. You'll need to press star 1, 1 on your telephone.

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To a story. A question, please. Press star. 1 1 again, please be advised. That today's conference is being recorded.

I would now like to turn the call over to David.

Gutiera.

You may now begin.

Thank you, operator. Good morning, everyone and welcome to core Civic. Second quarter 2025 earnings, call participating on today's call are Damon heiner or civic's chief executive officer, Patrick Swindle, or Civic president and Chief Operating Officer and David. Garfinkle, our Chief Financial Officer. We also are joined here in the room by our vice president of Finance Brian Hammonds.

On this call, we will discuss Financial results for the second quarter of 2025 as well. As updated Financial guidance, for the 2025 year.

We will also discuss developments with our government partners and provide you with other general business updates.

During today's call a 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 are Trends May differ from materially as a result of a variety of factors including those identified in our second quarter, 2025 earnings release issued after market yesterday, as well as in our Securities and Exchange Commission filings including forms 10K 10q and also AK reports. You are cautioning that any forward-looking statements reflect Management's, current views only, and the company undertakes, no obligation to revise or update such statements in the future.

Management will discuss certain non-gaap metrics, a Reconciliation of the most comparable gaap measurement is provided in the corresponding earnings release and including it in the company's quarterly. Supplemental financial data report posted on the investors page of the company website, at course civic.com,

With that. It is my pleasure to turn the call over to our CEO Damon hiniker.

Thank you, David. Good morning, and thanks everyone for joining us for CoreCivic's second quarter 2025 earnings call.

On this morning's call. I will provide an overview of the current environment, briefly review, our second quarter financial highlights and discuss our Outlook Contracting and acquisition activity and opportunities resulting from Government funding initiatives. At both the federal and state level

Following my open remarks, I will hand the call over to Patrick Swindell, our president and Chief Operating Officer.

Patrick will review the performance of our core portfolio discussed in further detail, our operational activities related to facility activations during the quarter and how we are preparing for additional demands from our government partners.

Finally, we will return the call over to our CFO Dave, garfinkle who will provide greater detail on our second quarter Financial results as well as our updated 2025 Financial guidance.

Dave will also provide an update on our Capital allocation strategy.

Moving first to a discussion of the business climate, our business is to help solve tough government challenges in flexible, cost-effective ways. We aim to provide safe environments where people in our care can reside temporarily as they go through their legal due process.

Our business is perfectly aligned with the demands of this moment.

We are in an unprecedented environment with rapid increases in Federal Detention populations Nationwide and a continuing need for Solutions. We provide

At the end of June 2025, Nationwide ICE detention populations were 57,861, the highest detention population ever recorded by ICE, which has been our largest customer for over 10 years.

From the end of 2024, through the end of the second quarter, ice populations in our care increased to just over 13,000 or 28%.

And we know the demand from Ice will increase.

Through the 1, big beautiful act, that is historically unmatched and will be available through September of 2029.

I will elaborate more on the impact of this funding later in the call.

Nationwide, populations from the United States. Merge service, our second largest customer, have also begun to increase. Although we expect a Marshall's population to increase further towards the end of 2025 and into 2026.

Our year-over-year Marshall's population increased, slightly to just over 7,000 700 at the end of June.

Many of our state Partners continue to face complex Correctional challenges, either because of Staffing. Shortages overcrowding or outdated infrastructure.

Our year-over-year state populations were up about 3.5% driven, most notably from new contracts with the state of Montana.

The business environment contributed to the strength of our second-quarter financial results.

Total revenue increased by 9.8% from the second quarter of 2024 to the second quarter of 2025 and we've generated, double or even triple digit percent increases in gaap net income, adjusted net income or their corresponding per share amounts as disclosed in our earnings press release.

Hi, Jesse. The quarter increase is to $103.3 million, up $19.5 million, or 23.2% from the prior year quarter.

While the second quarter included, certain payroll tax credits that Dave will explain further even excluding these credits, we exceeded our internal projections for adjusted EPs and normalized ffo per share by 7 cents and adjusted EBA by 9.2 million.

We have carried these favorable financial results into our updated full year 2025 financial guidance. We have further increased our guidance for updated occupancy projections and new developments, which Dave will review in detail.

During the second quarter, we repurchased 2 million shares of our common stock and an aggregate cost of 43.2 million. Increasing our year-to-date repurchases to 3.9 million shares at an aggregate cost of 81 million.

During the second quarter of 2025, we also announced that we had entered into an affinity of agreement, to acquire the Farmville, detention center located in Virginia for a total purchase price of 67 million, which was completed on July 1st at an attractive, even on multiple and accretive to earnings.

We believe the deployment of capital on these opportunities as substantial value, to our shareholders.

Turning next to an update on our reactivation activities, as we disclosed in the first quarter, we entered into an agreement with ICE to resume operations at the Dilly Immigration Processing Center in Dilley, Texas, a 2,400-bed facility originally constructed in 2014 to provide a safe and secure environment appropriate for family populations.

Before resuming operations in the first quarter. This facility, which we lead from Target? Hospitality has been idled since August of 2024.

We began receiving a residence at this facility during the second quarter. And we are in scheduled to complete the full reactivation by the end of the third quarter of 2025

in the first quarter. We also announced we entered into a letter contract with ice to reactivate, our 25,560 bed, California City, immigration process and Center effective, April 1st of 2025,

The letter contract provides funding to begin cert of activities, while we work to negotiate and execute a longer term contract.

As a result, the process made on this reactivation, we expect to receive detainees in the third quarter.

Based on the status of negotiations with ice. We also believe we will be successful in entering into longer-term contract before the end of the third quarter.

Effective March 1, 2025, we entered into another letter contract with ICE to begin activation efforts at the 1,033-bed Midwest Regional Reception Center.

The intake process has been delayed by a lawsuit filed by the city of Leavenworth. Alleging, that a special use permit is required to operate the facility, which we do not believe is required.

Ice remains very intent on using the facility and we are pursuing several Avenues through the course to be able to accept detainees

the timing for resolution is currently uncertain.

Patrick will provide further details on the progress of these activations.

we are in advanced negotiations to activate a fourth Idol facility and have just recently begun discussions to activate a fifth Idol facility

Although it is difficult to predict if, and when government actions might be taken on these potential contracts, we are optimistic, that we will be successful in paying contract Awards to activate additional Idol facilities. Especially now that historic funding levels for border security and immigration detention have been obtained.

Let me also provide 1, other legal case, update that I know many of you have been following

We are pleased that the third Circuit Court of Appeals upheld a lower Court's, judgement that determined that New Jersey could not block private immigration to facilities, like Elizabeth detention center from operating in the state.

The court again, found New Jersey's law and constitutional under the supremacy clause of the US Constitution.

We strongly believe that this was the right decision.

We're very proud of our long partnership with ice at Elizabeth. And as the filings in the case, may clear, Elizabeth is absolutely critical to the successful execution of Isis. National mission.

Before I turn the call over to Patrick. I wanted to provide some details of this Government funding approved by Congress. Under the reconciliation process, remind you of our detention bed capacity and close my remarks on additional business opportunities.

On July 4th president, Trump signed the 1, big beautiful, bill act, a pivotal moment for funding related to our industry.

This act appropriates 75 billion in mandatory funding to ice for immigration enforcement activities and to increase the attention capacity.

Specifically the ACT appropriates 45 billion dollars of the 75 billion for single adult alien detention capacity and family residential Center capacity. Whereas represents more than 3 times previous budget levels.

The remaining $30 billion of the $75 billion to ICE was appropriated for, among other expenditures, hiring and training of new ICE agents, transportation costs for alien removals, and promoting family unity by detaining aliens who have been charged with a misdemeanor along with the aliens' children.

This funding is a historic increase in funding provided to ice for border security and immigration detention, which we know will further Drive demand for the solutions. We provide

It has been widely reported in the press that the ACT is intended to fund. Approximately 100,000 beds and increase from 41,500 that had been funded since late 2024, which was an increase.

From about 34,000, generally funded with a few exceptions over the past 15 years.

The funding under the ACT will remain available through September 30, 2029, and will be in addition to base annual appropriations during that time period.

We also understand that these funds will be released from the treasury and available to ice in the coming weeks.

In addition to funding directly for ICE, the ACT also appropriates $23 billion in mandatory funding to the Department of Homeland Security (DHS) for border support activities, including $10 billion to the DHS Secretary for reimbursement of costs incurred in undertaking activities and support of the DHS mission to safeguard U.S. borders.

This funding is available for use at the discretion of the DHS Secretary.

The ACT appropriates an initial $65 billion in mandatory funding to Customs and Border Protection (CBP) for border control and security activities, including border infrastructure, personnel, fleet vehicles, facilities, border surveillance, and technology.

Finally, the ACT appropriates roughly 12 billion dollars to the Department of Justice or doj for immigration enforcement and border security related, activities and programs.

These funds are used are to be used to combat drug trafficking, prosecution of immigration matters, and hiring of immigration, judges and staff to address backlogs of petitions, cases and removals.

Law enforcement activities by DHS icbp and doj, often contribute to the demand and utilization of our bed capacity.

Um, prior earnings calls. We have discussed the detention bed capacity. We can make available to our federal Partners to accommodate their needs.

But as a reminder, we owned 9 idle, Corrections and detention facilities, containing 13,400 beds.

A letter contract that I mentioned earlier, that contains 3,600 bits.

by adding surge capacity, we have made available at certain facilities

Partial capacity we have in facilities that are currently in operation.

And capacity. We can make available through 30. Third party Lisas, like our great partnership with Target Hospitality. I have previously mentioned, we have close to 30,000 beds that we have informed ice. We could make available

We also continue to evaluate additional opportunities for expansion that could be cost-effective and allow for greater efficiencies.

We know that detention beds, like these represents the best value. And are the most Humane, most efficient logistically have the highest audit compliance scores in their system. Are more secure weatherproof and are readily available.

Additionally with 42 years of operating experience with ice private sector beds. Are the least likely to be legally challenged particularly relative to International and some other options

Before we move on, let me reinforce these 2 points.

First.

The passage of the 1. Big beautiful. Bill has changed dramatically the activity of ice and securing bed capacity.

We did see very brisk Contracting activity for detention bed capacity. Since the first of the year through the end of the second quarter.

However, ICE didn't have enough funding for all this new capacity. So, they knew that they would have to get several reprogramming of funds to meet the increased utilization. Even with that, it was not enough funding because we knew that they were running a significant budget deficit over the last 60 days.

But now, with the passage of the 1, big beautiful bill act Contracting, activity is running at a much faster pace.

And not just for capacity.

On July 29th, ice launched a very aggressive. Nationwide hiring program for 10,000 employees. This is very important for 2 Reasons, 1, it is another sign of the intensity of ice Behavior, with the passage of the 1, big beautiful, bill act,

And 2, this increase in law enforcement Personnel will obviously raise the level of individuals arrested and the requirement for detention capacity.

My second point is to reinforce that all of the proposed or implemented detention Solutions discuss discuss publicly soft side of solutions at military bases or at locations like alligator Alcatraz capacity at Guantanamo Bay or traditional secure capacity. That historically we have provided Ice's view of all of these offerings. Is that all the above approach and not 1 solution is preferred over the others that are available in the near term.

They have a need and funding for all of these Solutions.

But in addition to the superior benefits that I noted earlier in our Solutions is important to note, that ice does not see soft side of facilities as long-term Solutions.

And as you can see in these agreements that have been put in place,

minimum standards and requirements have been Incorporated whereas our agreements have comprehensive requirements and mandate National detention standards that we have complied with over many many years.

Wrapping this section up, as I previously mentioned, in addition to increasing utilization of beds under existing contracts, we have experienced, over the past couple of quarters, the expansion of contracts at our Ohio, Mississippi, Nevada, and Oklahoma facilities. We have previously disclosed.

We are in various stages of negotiation on multiple Idol facilities. Provide additional bed capacity to ice,

In addition to these federal opportunities, we continue to have active dialogue with several existing state partners, as well as new state partners that could result in additional populations, including the possible use of idle facilities.

We have also responded to a proposal from the Florida Department of Corrections to manage 1 or more facilities. They own and hope to hear results of that procurement in the near future.

1 final note on state budgeting activity.

State budgets are typically approved and start annually on July 1st.

We are pleased with the level of funding approved by state legislators for our state contracts, including Purity and increases that were important for us to obtain.

The increases of approved across our state portfolio, averaged in the mid single digits and were about double the increases that we were able to obtain last year.

We are extremely grateful for the support of our state government partners.

Now, I'll pass the call over to Patrick Swindell for a further review of our operations activity during the second quarter.

53.

Thanks, Damon.

I'll start with the high level overview of Topline revenue and second quarter operational performance.

Federal Partners, primarily Immigration, and Customs Enforcement in the US Marshal. Service. Comprise 50% of course, Civics total revenue in the second quarter.

Revenue from our federal Partners increased 11% during the second quarter of 2025 compared with the prior year quarter, including a reduction in Revenue at the Dilly immigration processing center which closed in August 2024, but resumed operations in the first quarter of 2025 and continues to ramp toward full operations.

Excluding the daily immigration processing center from both years, revenue from federal partners increased 19% versus the second quarter of 2024.

Further breaking down our federal revenue revenue from ice increased 25.9 million or 17% while revenue from the US Marshal Service was up 2.7 million or 3%.

As Damon mentioned, we expect increases in US Marshal's populations later in 2025 and into 2026.

Revenue from our state Partners increased 9.9 million or 5% from the prior year quarter.

These increases include additional revenue from the state of Montana. Resulting from 2. New contracts. We signed with the state since the second quarter of 2024.

We care for these additional populations at our SORRO Correctional Facility in Arizona and our Tallahassee County Correctional Facility in Mississippi.

total occupancy for our safety and Community segments for the quarter was 76.8% of 2.5 points since the year ago quarter

Note that occupancy for the second quarter, reflects the transfer of our 2560 bed. California City. Immigration processing center from our property segment which isn't included in these occupancy statistics to our safety segment.

this facility has been in our property segment because it was previously leased to the state of California until lease expired in March 2024,

We resumed operations at this facility. In the second quarter of 2025 due to a letter contract, signed with ice effective, April 1st 2025, although we had not yet received any detainees during the second quarter.

Therefore if we exclude, this additional capacity from the calculation, making a more apples to apples comparison with prior periods, a reported occupancy would have been 79.7%.

I keep on seeing it. It's been on an upward trajectory since early 2023, when it stood at approximately 70%.

Another way to look at occupancy, is the average population. We manage on a daily basis.

The average daily population across all of the facilities. We manage was 54,026 during the second quarter of 2025 compared with 51541 in the year ago quarter.

This increase was driven by more demand for our services and new Contracting activity.

Our teams have been very successful in working with our government partners and managing the additional people in our care which we are focused on every day and do not take for granted.

As Damon alluded. The second quarter was a very busy quarter with reactivation activities that several previously Idol facilities.

We resumed operations at the Dilly Immigration Processing Center in the first quarter under an amendment to an Intergovernmental Services Agreement (IGSA), and we are on schedule to complete full activation by the end of the third quarter, when we expect to generate the full fixed monthly revenue for the facility.

We've activated 4 neighborhoods at the facility and have hired approximately 550 staff at this facility. Progressing towards 640 staff. When we expect all 5 neighborhoods to be fully activated,

Effective April 1st 2025, we entered into a letter contract with ice to begin. Activation efforts at our 2560 bed, California City. Immigration processing center.

The letter contract provides funding for a 6-month period to begin startup activities. While we worked to negotiate and execute a longer-term agreement.

We've hired over 200 staff.

Held 10, preserve training academy and have invested 3.5 million in capital, expenditures and preparation for receiving detainees from Ice.

As a result of the progress made on this reactivation and based on communications from ICE, we currently expect to begin receiving detainees from ICE in the third quarter under the terms of the letter contract.

Along with the progress we believe we had made on the negotiations with ice. This Milestone gives us confidence that we will be successful in entering to a longer term contract before the end of the third quarter.

Center.

We've hired approximately 130 of the approximately 300 staff that will be needed to operate a full facility.

We've also held 12, preserve training academy and invested 3.5 million, in capital expenditures, in preparation for receiving detainees from Ice.

Based on the progress we have made we are ready to begin accepting detainees at this facility under the terms of letter contract.

however, the intake process has been delayed by the lawsuit with the city of Leavenworth, the Daemon mentioned

I was eager to begin utilizing this facility and we are optimistic about successfully resolving the dispute.

But, Ice, and we will both have to wait until the disagreement is resolved.

In the meantime, we will continue to go with ice for a longer term contract.

As previously reported on July 1st, we completed the acquisition of the 736-bed Farmville Detention Center in Virginia and immediately began implementing the integration plan we designed during the due diligence period.

The facility provides transportation care and civil detention services to adult male non-citizens through an IGSA between Prince Edward County, Virginia, and ICE, which expires in March 2029. While we have an exercise disintegration muscle and several years, I'm pleased with the status of the integration of systems processes and, of course, the team, which is already substantially complete.

We're excited to welcome the 200 plus employees at the Farmville, facility to the core Civic team and are pleased to expand our book of business with ice at such a critical location, which ice is used since the facility was constructed in 2010.

I would like to extend my gratitude to our activation team that has worked so diligently on all of these activations and Integrations along with the countless professionals, executing our activation plans who Reserve credit for these activities.

These accomplishments have only been possible due to months of pre-planning and hard work.

We know there's more work to be done.

While the activations of the Dilly California City and Midwest Regional Reception Center facilities are not done. We continue to prepare for additional Idol facility activations.

We are in advanced negotiations to activate a fourth Idol facility and have just begun discussions to activate a fifth Idol facility.

And we continue to lean forward on capital expenditures for additional facility activations, demonstrating our confidence in future contracting activity.

Including the capital expenditures previously mentioned through June 30th, we've incurred over $1 million associated with activations and our transportation vehicles, and we plan to spend an additional $40 to $45 million.

With all of this activity, we remain focused on effectively managing our core portfolio.

It is the stability of operations and financial results that these facilities that gives us the opportunity to grow our business.

We're managing our cost prudently making Investments, where we see needs.

We're meeting with customers to help ensure we're meeting their needs and expectations, and we're attending to residential populations. We're providing the programs and services they need to transition successfully upon their release from our care.

And so as I turn it over to today to discuss our second quarter Financial results in more detail, our Capital allocation activities and assumptions included in our updated 2025 Financial guidance. I'd like to express my appreciation to our 13,000 employees for their focus and commitment to our mission.

Dave.

Thank you, Patrick and good morning everyone. In the second quarter of 2025. We generated, gaap EPS of 35 cents per share and ffo per share of 58 cents, excluding special items, adjusted EPs. And the second quarter was 36 Cents compared to 20 cents in the second quarter of 2024. And increase of 16 cents per share or 80%.

Normalized FFO per share is $0.59 per share compared with $0.42 per share in the prior year quarter, an increase of $0.17 per share, or 40.5%.

Special items for the second quarter of 2025 included $1.5 million of charges associated with our acquisition of the Farmville Detention Center, reported in G&A expenses.

Special items in the prior year, quarter included 4.1 million of expenses, associated with debt payments, and refinancing transactions.

Adjusted EBITDA was $103.33 million, exceeding average analyst estimates by $21 million, and compared with $83.9 million in the second quarter of 2024.

The increase in adjusted ebit off from the prior year, quarter of 19.5 million resulted from higher federal and state populations as well as higher average per diem rates across much of our portfolio, which contributed approximately 20 million dollars in incremental facility net. Operating income over the prior year quarter.

Amounting to 8.3 million or 8 cents per share, including 3.2 million of interest on the on the credits.

These increases were net of the financial impact of the termination of the contract with ice at the Dilly immigration processing center. Effect of August 9th 2024,

However, we began reactivating the daily facility during March 2025 under a new 5-year agreement, and accept that our first residents at this facility will arrive on April 8th.

This facility, accounted for a net decrease in facility net, operating income of 11.4 million or 7 cents per share from the second quarter of 2024.

As Damon and Patrick both mentioned, we expect this facility to be fully operational by the end of the third quarter of 2025, when we expect to generate revenue for the full fixed, monthly payment from Ice.

Other factors affecting ebitda and per share, results, included, higher GNA expenses. And the favorable impact of our Capital allocation strategy contributing to increases in per share earnings of 2 cents per share through reductions and growth interest expense and common shares outstanding.

We exceeded our internal forecast that adjusted ibida by 20.7 million, and both adjusted EPs and normalized ffo per share by 15 cents per share.

Even after excluding the employer retention credits, we exceeded adjusted ibida by 9.2 million and our per share results by 7 cents, reflecting the strength of the quarter driven primarily by higher Federal populations under existing contracts combined with new Contracting activity.

The number of ice populations in our care, followed NA national Trends, which reached a record high at the end of June.

Operating margin in our safety and Community facilities combined. It was 26.2% in the second quarter of 2025 compared with 23.7% in the prior year quarter,

Again, the increase in our operating margin was due to higher occupancy, as well as the employee retention credits, which are reflected as a reduction to operating expenses.

Excluding the employee retention credits. Our operating margin was 24.6% a 90 basis point. Increase from the prior year quarter,

Turning next to the balance sheet. During the second quarter, our board of directors authorized an increase to our share repurchase program by $150 million, increasing the total aggregate authorization to $500 million during the second quarter. We repurchased 2 million shares of our common stock at an aggregate cost of $43.2 million, increasing our year-to-date repurchases to 3.9 million shares at an aggregate cost of $81 million.

Since our share repurchase program was announced in May 2022 through June 30th, we have repurchased 18.5 million shares of our stock at a total cost of $262.1 million, or an average price of $4.19 per share.

As of June 30th, we had 237.9 million available under the updated board authorization.

After taking into consideration, these share repurchases are leveraged measured by net deck to adjust to the I was 2.3 times using the trailing 12 months end of June 30th 2025.

As of June 30th, we had 130.5 million of cash on hand and an additional 216.4 million of borrowing capacity. On our revolving credit facility, which had a balance of $40 million outstanding providing us with total, liquidity of 346.9 million on July 1st 2025. We used our existing liquidity to acquire the farm bill Detention Center. A 736 bed facility located in Virginia, for a total purchase price of 67 million

Ice has been using this facility since it was constructed in 2010.

Our strong balance sheet and cash flows. Provide us with significant flexibility, to implement our Capital, allocation strategy of returning, Capital to shareholders and to take advantage of unique talking and acquisition opportunities like this with favorable investment returns.

Moving. Lastly, to a discussion of our updated 2025 Financial guidance, we expect to generate adjusted diluted EPS of a17 to 1. 1 4 2.

We expect adjusted ebitda of 365 to 371 million up from 331 to 339 million.

Of receiving detainee. Populations during the third quarter of 2025 our guidance, reflects a range of assumptions pertaining to the activation of our California City facility, which is still operating under terms of the letter contract.

There could be upside to our guidance if the timing or terms of a longer term contract that our California City facility, including the pace of receiving detainees is more favorable than our forecast.

Our guidance does not include the impact of a potential longer term contract that are thousand 33 bed Midwest Regional Reception Center as the intake process has been delayed by the lawsuit Damon. And Patrick mentioned as we have not yet. Completed negotiations on a long-term contract.

The timing of any resolution on this legal matter is difficult to predict. We have updated our guidance to reflect the reduction in facility net operating income at this facility in the second half of 2025 compared with our previous guidance. As we continue to ramp up our staffing levels and other operating expenses, these are expected to exceed the revenue available under the letter contract.

There could be upside to our guidance if the litigation is resolved expeditiously.

As a reminder, the new agreement reached in March to activate the Dilly facility provides for a fixed monthly Revenue payment, in accordance with a graduated schedule to correlate with the activation of each neighborhood within the facility.

Our guidance reflects revenue for the full facility, beginning September 2025, which is unchanged from from our previous guidance.

Consistent with our past practice. Our guidance does not include the impact of new contract Awards. Not previously announced because the timing of government actions on. New contracts is always difficult to predict. We are an advanced negotiations to activate a fourth Idol facility and have just begun discussions on activating a fifth Idol facility,

although it is difficult to predict if, and when government actions might be taken on these potential contracts, we are optimistic that we will be successful in, obtaining contract Awards to activate additional Idol facilities. Especially now that historic funding levels for border security and immigration detention have been obtained. Under the 1, big beautiful, bill act.

We expect to revise our financial guidance throughout the year if and when new contracts are signed.

In addition to our 25,560 bed, California City, immigration processing center and our 1,033 bed Midwest, Regional Reception Center. We own 7, Idol, Correctional and detention facilities. That have 9,826 available beds, or a total of 13,419 available beds as of June 30th.

The activation of an idol facility involves hiring training and preparing the facility to accept residential populations, which depending on contract structure, could result in substantial startup expenses before we realize additional Revenue.

To the extent. Any new contract requires the activation of an idol facility. Before we begin to recognize Revenue, our guidance could be negatively impacted by these startup expenses until the revenue. We generate offsets these expenses.

For modeling purposes, when bridging results from Q2 to Q3, it is important to take into consideration the $11.5 million of EBITDA, or $0.08 per share, associated with the employee retention credits, recognized in the second quarter.

Further, during Q3, we expect to continue to increase staffing levels to prepare for the receipt of detainees under both letter contracts without a proportionate increase in revenue, negatively impacting Q3 by approximately 6 cents per share compared with Q2.

The negative impact of the letter contracts in Q3 is more than offset in the fourth quarter by the assumption of a longer-term contract. At our California City facility, there is a continuing increase in detaining populations at that facility, as well as a fully operational Dilly facility.

We plan to spend 60 to 65 million on maintenance Capital expenditures during 2025 and 9 to 10 million, for other Capital expenditures, both unchanged from our prior guidance.

Our 2025 forecast also includes $70 to $75 million of capital expenditures associated with potential Idol facility activations, and for additional transportation, vehicles are up $5 million from our prior guidance.

During the first half of the year we spent 30.7 million on potential Idol facility activations, and additional Transportation vehicles.

Our guidance includes a similar level of sharing purchases as we purchased during the first two quarters. Our share repurchases will take into consideration our stock price, earnings trajectory, liquidity, and alternative opportunities to deploy capital.

Our guidance does not include any additional Capital expenditures Beyond those mentioned that could be needed in connection with the reactivation of our Idol facilities. Which may depend on customer needs and preferences.

Such as Cherry purchases and growth capex, such as facility, activations to range from 216 million to 227 million for 2025.

We expect our normalized effective tax rate to be 25% to 30% unchanged from our prior guidance.

The full year, even the guidance in a press release, provides you with our estimate of total depreciation and interest expense.

and we are forecasting, G&A expenses in 2025, to be approximately 160 million, excluding, expenses associated with m&a transactions,

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

Thank you.

If you would like to ask a question, please press star 1 on your telephone using an automated message. Advisor in your hand is raised.

We also ask that you, please wait for your name and Company to be announced before proceeding with your question. 1 moment for the first.

And our first question will come from the line of Joe Gomez of noble Capital. Your line is open.

Joe, your line is open.

Can you hear me? Yes, we can hear you. Yes sir. Good morning.

Hey.

Okay.

Good morning. Thank you. Um,

Congrats on the quarter on the the raised guidance um did want to to start with. Um, you know, you you talked that amen about you know alternative Solutions like the softsided international things of that nature and I guess the kind of 2. Multi-part question here is, you know, 1 is is I starts to look at these Solutions.

You know, is it is it slowing down?

You know the process with you discussing discussions with you guys and your type of solutions.

And secondly what would be your interest in either participating in some of these softsided spaces or, you know, maybe you just managing them if not actually constructing them.

Yeah, great. Great question, Joe, and, and thank you for that. And thank you for the comments. Um, let me start with the first part. Um, and as I indicated on the call or in my script, I should say the intensity is really picked up here in the last couple weeks, with the passage of the 1, big, beautiful, bill act. Um, so we obviously saw a lot of activities. I mentioned from kind of January through end of June. Obviously, we've got the letter contracts. We got the new contract at Dilly, so a lot of activity, for sure, but with the funding now in place, we clearly

You're seeing a lot of intensity. Both at the national level with DHS and isolation, but also seeing the play out when field offices where they're engaging us on tours contract. Negotiations is you know, we all alluded to we've got multiple facilities that are in some level of discussion relative to activation and uh final and long-term contracts. But maybe if I could let me just step back for a minute and just give you kind of big picture how we see things and then kind of answer the second part of your question about these other alternatives.

Let me just first, just give you a kind of reminder for you and the rest of the folks on the call, just the demand as we see it today. So as you know it's been reported in the Press over the last 12 months there is about about 14 million people. In the country illegally about half of that amount um is what we call 9 to 10 dock or people in the immigration proceedings. So these are folks as we understand it from my eyes to 7 and a half million that they're focusing on especially ones that have a criminal record and so 7 and a half million. And if they've got a goal with this Administration to do the importations that a clip of a million a year, that's obviously a lot of people that they're going to have to work through here. The next, you know, 3 4 5 years. So that's those are big, big numbers and now to see that's going to be a multi-year effort. So that would be number 1 as I think about the demand,

The second thing I would say about the demand is that resources also have to be recalibrated here in the last few months. So, first of this year, most of the resources—no surprise—were focused on the Southwest border. If you look at the detention populations at that time, about 90% of all people detained in facilities at the first of the year were people that were arrested at the Southwest border. That is now completely flipped. If you look at the detention population today, which is again about 56,000 people, about 70% of those individuals were arrested in the interior. So, it's completely flipped here in the last 7 to 8 months. It's gotten some press on that, but I think it's important to note that ICE has been working hard, along with DHS leadership, to recalibrate their resources for enforcement.

Reported in the press, the last, you know, 2 or 3, uh months, and basically, the Southwest border has been completely closed down. The apprehensions are at record lows, but we know that ice and even custom border patrol, they can recalibrate as appropriate if that changes. So that's the demand side. So now, let's flip over to the supply side.

Again, while the reported and we notice some of these things in my script, there was this big beautiful bill act, 175 billion dollars under that act for border security. Uh, that's going to take, you know, many different, uh, Personnel levels within the federal government to higher levels. Uh, it's also going to put a lot of resources in place, but I guess a couple of things I'd point to of Note, 1 of which is there's 6,000 Frontline, uh, officers law enforcement officers on Ice. Uh, today, they want to take up to 16,000 so 6,000 and 16,000. So, that would be a lot more people that will be able to do these enforcement actions within the United States. Secondly, there's a lot of resources for custom border patrol. I touched on that, at my script, a lot of resources for immigration judges and courts, a lot of resources for technology, especially on south of Border, uh, Vehicles etc, etc. So they're clearly doing a ton of investment what I'd say, kind of on the front of the funnel to get, uh, the ability to have more enforcement efforts around the United States.

But coming back to us and then going back to your second part of your question.

If you look at just the dollars that were appropriated for detention capacity. So again as in my script it's been widely reported that's about 45 billion dollars that's just for detention

If you take that over to the next 4 to 5 years and layer that on top of the 3 and a half billion, that's been, you know, appropriate the last couple of years for ice attention and round numbers, that's about 13 and a half billion dollars on annual basis over the next 4 to 5 years. And if you take their per day, average,

Ice is average per day for detention beds in the United States, which is about 165 dollars. That's about 200,000 beds that they could purchase. Uh, either from the private sector from state and local governments um or other uh other offers that they have if we met Solutions available to them. But 200,000 beds is the capability. If you look at just purely from a dollars perspective,

And so, to answer your question, you know, we've got the 30,000 beds that we've offered to ICE. Those are, uh, in the facilities that we've talked about. And Dave noted 9,000 in my Sprint, the 13,400 in bacon facilities. But we've also got surge capacity that we've made available in our facilities that are currently operational, where we've reconfigured the operational capacity and added some beds. The third is what we've added as some partial capacity in places where we've got maybe lower occupancy, where we can provide.

Uh, solutions for ICE have already taken place in places like Nevada and Oklahoma. And then finally, the third-party leases through Target. You know, we've got either opportunities with a vendor like them where they could do a complete new activation or do an expansion. An example of an expansion would be at our daily facility, which we've talked about previously. It's got a lot of capabilities for expansion, so we've got 30,000 beds available today. Some of this is already under contract or under letter contracts, like Cal City and Midwest, but also a lot of other capabilities to provide capacity in a very short term. So, to your last part of your question, if that comes through a solution with a state government, or is that a solution that we do on a military base, we are all— all the above—are very interested. We've got the capabilities; obviously, we've been working with state governments for almost 42 years. We've been in constant conversations with them as they see kind of the...

Need for the federal government and as you're seeing there is some interest from states to partner. So we think there's a great kind of win-win where we can partner with someone like that to provide these these Solutions. So, um, let me tag team a little bit and see if Patrick anything you'd add to that. Uh, thank you Damon. The only thing that I would add is I think it's really important to look at uh prioritization of the different solutions or Alternatives that Isis considering. And it's you can imagine as they shifted from the border to Interior enforcement their gaps that present across the country. And so, you may see for example, a private sector solution electrical, California, City, facility, contracted for,

Location and resource needs. So we believe that Isis considering all of those Alternatives. And, and we continue to believe that the Investments that we've made in our capacity uh position it. Well to meet ice needs at the appropriate time and that thank you for that Patrick. I mean that's a really important Point. Again you go back to the dollars, they've got the funding capability to go to 200,000 bets today and their current population is 56,000. So they really to Patrick's Point have opportunities to say, okay, where is the near-term need and demand at and then look at the Alternatives, they've gotten those various various locations. Um, so I think that's an important point. And the last thing I'll just say, um, you think about our, you know, financial performance today, you think about our guidance for the rest of the year that just assumes, obviously, South Texas, which we've announced is part of our guidance but also, uh, Cal City and also a couple of little smaller contracts, where they've had increased utilization, our financial performance, which has been pretty significant this year. Only incorporates, a really kind of a very small

Small part of the opportunity that's going to be, I think, near-term for us as we go to the end of this year into 2026.

Great. Thanks for that. And then you brought up the, uh, non-detained docket. So, um, you know, how many people are there? So I'll switch gears for a second. You know it’s common knowledge the ISAP contract is...

Uh, coming up for renewal here. You know, your competitors got a...

Extension on it for right now. Um, they were hoping to get at least a 6-month to a year on it, but I think after that it would come up for rebid.

Is that something you'd be interested in, to, you know, kind of assess our capabilities? Do you have insight on that? Um, do you think, given the potential size we're talking about here, you know, again the 7 million non-detained docket?

Is this something? Maybe in your view? Ice would look into split into multiple contracts out there, like they do on the detention side. Uh, given that the past High, here was a, you know, roughly 375,000 people.

Yeah, great. Great question. And um, let me first just say and I think we've been pretty consistent on this. Is that

You know, really in the days since the election, the message has been pretty darn clear from an Administration, DHS leadership and Ice leadership that detention is going to be the priority. So we've been working around the clock uh, at that really almost for a year on getting ourselves, ready with Capital Improvements to facilities that are currently either, partially utilized or completely vacant, uh, leaning forward on buying buses and vans for transportation needs. Uh, making sure that we've got strong Pipelines.

For the labor that we'll need for these activations or, um, you know, additional staff we'll need for facilities that go up to a higher occupancy. So detention has been the priority. It's been made clear to us from, again, from leadership, administration, DHS, and ICE. And so, again, that's what we've been focused in on.

Having said that we've been watching to see what's going on with ice subcontract. Obviously we heard some of the comments from Gia's leadership yesterday, on on their call and we are interested. And so we're going to watch off the closely what plays out relative to their extension and then the RFP once it comes out, which I guess could be a little later this year, or maybe early next year. But the answer to the second part of your question, we absolutely got the capability, especially, and I think this came out a little bit yesterday on the Geo call. If they go to more of a active monitoring solution, I mean, that is right on our wheelhouse. So, our our community division has been doing those type of solutions for, you know, nearly 30 years, uh, with jurisdictions all over the country. So we clearly got that cap capability and competency. And also, we've got the leadership, and also, we've got the financial wherewithal, and the technology to scale up. So, so we're monitoring very closely we'd be interested, but also again, we know right now, uh, In This Moment, the tension is the priority and that's been our Focus. Uh, since the first of this year late last year

Great. And 1 more for me and I'll I'll pass it on um, the Midwest facility. And, you know, unfortunately, we're we're kind of the logger heads here right now. Hopefully gets resolved quickly, but it given its location and Isis interest in it. You know, are there other potential facilities in that location that ice at this continued to drag along? Could could decide to move, um, their interests too.

Very interested in this facility. I mean, for all the points you just made, the location is ideal. It's near a major metropolitan airport, and it's close to I-70. So from a transportation perspective, it's very good, location-wise. I'm confident, obviously, I don't want to speak to any kind of pending legal matters you. You heard what we said in our script, so I really can't add more than that. But I'm confident we're going to get through resolution on this in the near term, and that facility will be made available to ICE.

Okay, great. Thanks for taking my questions. And I'll pass it on. Yes, sir.

Thank you. One moment for the next question.

And our next question will be coming from the line of Jason Weaver of Jones Trading. Your line is open.

Hi guys. Uh it's great to see the updated guidance. Um you know as you're well on your way to activating these new facilities. Are you seeing any efficiency gains in the expected timelines of staff and get everything new prepared for intake? I know Dilly's a unique case here but uh just overall

Uh, this is Patrick, I, I guess the way I would answer that is we started preparing for activations. In the fourth quarter of last year and, uh, the timeline is, as we talked about being somewhat funding driven has given us a window in the first half of 2025, to really invest resources and making sure that our facilities are positioned to activate quickly. Uh, so we've had strong visibility on where the initial demand.

Would manifest, uh, and we've made preemptive Investments to make sure that we can meet that demand as quickly as possible. And so, um, I think because of the preparation work that we did, it really is, uh, made the activations that we've initiated so far in Midwest at Cal City. Uh, and in South Texas, very smooth. Now, I think 1 of the things we're obviously sensitive to is the ramp up in activity Nationwide. After the passage of the funding of, uh, the wind, big beautiful, bill act. Uh, so we do believe that there may be an acceleration, but we also believe that the work that we've already done at our existing site, and it is helpful, uh, with our existing facilities at those facilities are already in place, they don't have to be constructed on a very rapid timeline, uh, the ready, we can have them prepared, uh, the physical plant, uh, is primed for, uh, activation puts us in a great position to activate those quickly. So, again, uh, the timelines, the resource Investments we made early, we think positioned us really well, uh, you know, depending on where demand does shift and manifest to be.

Able to meet that within our existing portfolio.

Great. Thanks, Patrick. I believe we touched on that in the past. Do you have any new visibility into, or have you had any incremental discussions regarding the Pico Texas facility that was formerly managed by HHS?

Yeah, we have nothing, uh, nothing new to report. Obviously, we're again monitoring kind of more globally what the needs are there in the Southwest border and kind of recalibrating where the needs are based on kind of enforcement actions there. And again the focus is more on the interior versus the Southwest border. So, um, again we're well aware of that facility and its capabilities and then continue to kind of monitor based on what the needs are for migrants at that moment in time and that part of the country.

Got it. And just one more. Um, I think you might have mentioned in your prepared remarks, but just to clarify, FarmVille. Can you talk about the timing of that? When do you expect that incremental $40 million revenue run rate?

Yeah, I I can take that 1 so immediately, so we closed on it, July 1st. It was a 40 million annual, uh, annual revenue. Um, and so it, it was a contract in place. So I would expect approximately 20 million for the second half of the year.

Got it. Fair enough. Thanks a lot, guys.

Thank you.

Thank you. One moment for the next question, please.

And the next question will come from the line of M. Moran of Zach. Your line is open.

Thank you. So, I have a couple of questions. Um, you know, we've touched upon both of the topics that I sort of like to get a little bit more color on. Um, you know, given what you've said, ICE is extremely well-funded at the moment and has significant needs. You have a strong relationship.

You know, with ice and long-term relationship and you have, you know, significant ongoing discussions. Um, all that said, we still hear, you know, in the news, as you mentioned, al alligator, Alcatraz, and other, um, Solutions. Can you give us a little bit more color on? You know what you see as the, um, possible advantages, of course, of facilities compared to some of these other Solutions we're hearing about.

Absolutely. So, uh,

Our facilities. Their, uh, very secure, you know, made with, you know, hardened construction, they have been, you know, tested, uh, by ice or ins for the last 40 years, they have got the most Superior, Odyssey course, versus any alternatives they've ever had any United States even more recent solutions that you just noted, they're um, got great capabilities. So many of our facilities have court rooms and other other Solutions on site to make the mission a lot more efficient. Uh, and there's streamly cost effective. I mean, you look at our uh, per day rates versus some of these Alternatives that were recently procured. I mean, they're, you know, dozens if not hundreds of dollars cheaper for US versus the other Alternatives, a lot more cost-effective. The other thing that we're watching closely on some of these other Solutions. As, as you mentioned, like alligator, Alcatraz

Um, you know what we're seeing, you know, once these, you know, contracts are in place, they've got really minimum standards um both for the operation facility, but also for the staff, and what we're hearing kind of uh, a back channel is that they kind of see these Solutions at very short term that there is its kind of Patrick said, there's maybe a very unique and a short period of time and a third part of the country and these facilities can be rapid deployed but they don't want to do a huge investment both on. Not only the physical asset but also the standards and requirements some of the infrastructure and also the personnel. And so flip it back to us you know our our Solutions in the contracts that we've had.

Like Dilly and some of the others that we've been working on last, you know, last couple of months like how City and Midwest, they're going to have a comprehensive set of terms and conditions and requirements they're going to have all the newest uh, detention standards and requirements. Again that we've been doing for decades and we can comply of comply with very easily and quick quickly and then also they're going to have the highest standards from a Personnel perspective. And so I think the better way to say it or kind of think about this is that

Not only our facilities more cost effective and have all these other other benefits. But I think they see our facilities is now a more secure but also a longer term solution, more permanent solution versus these others, where we're here and privately that they could be only for 6 to 12 months. I don't think you add to that Patrick. Yeah, the only thing that I would add is I think again, this is back to my comments earlier, which is I think Isis in the process at this moment of identity.

Where it has the greatest Geographic needs and those. So that might be a focus on an area of the country where uh you have significant needs for internal, um, enforcement support. But there isn't existing capacity. Obviously, you can't pick up uh, 1 of our facilities and drop it in Florida, for example. And so uh there are very specific Geographic needs or uh,

Support needs for, uh, the ism mission in various parts of the country that are going to require alternatives to our capacity to be used. But again, as Damon said, our facilities are both our facilities and our operation very well understand the uh, the standards that ice has Sports operations. Our ability to scale those uh, is very rapid uh, in a way that's consistent with the way that we performed with ice uh, for our forty years of operations. And so we feel like our assets are very well positioned. Uh, they meet all applicable standards. We can activate those very quickly. And again, I look at the prioritization right now, being a function of where the geographic need is and the mission support need is for Ice. Uh, but ultimately funding, if such that we would expect, uh our facilities are very well positioned to meet the intermediate long-term needs for Ice uh as they ramp up their activities Nationwide.

Thank you. Um, okay, so that's something I've weighed into my next question, which is about occupancy. And you talked in your prepared remarks about how occupancy is not an upward trajectory, I think you gained about 200 basis points, year-over-year and the second quarter. So just I I went back and I looked at some of your um, you know, metrics prior to uh the pandemic and it looked like at 1 point and this might not be the high, but it looked like occupancy was close to 87.

%. I'm wondering. You know what you see is your potential Runway here?

Bed capacity available to ice and and the US Marshal Service as we get into later 2025 and into 2026, uh, certainly we, we could see high 80s in a relatively short term. Um, it is not the high. I think the high I've been with the company since 2001 and I think we were in the mid 90s uh, back then. So, uh, we certainly have the capability to go higher.

And only got to add to that is that you can go back to, you know, free capacity. Yeah, 87% sounds right. Again, we had several vacant facilities I think in that period of time, but it's crystal clear to us that ICE is interested in every single bed that we've got in the enterprise. So to today's point, and going back to, you know, pre-COVID, 87%, but sitting here today knowing what we know and understanding what the demand is, and also knowing what the financial capability of ICE is, I think every single bed that we've got in our enterprise is very attractive to ICE for multiple reasons.

Okay, thank you very much.

Thank you.

Thank you. 1 moment for the next question.

And our next question is coming from the line of Ben Briggs of StoneX Financial. Your line is open.

Hey guys, uh, congratulations on the quarter and the guidance and uh thank you for taking a call. Thanks B.

Yeah. Uh, so a couple things first of all, and maybe I missed this, but I I know you said you've got um, 30,000 Idol beds. If those were to get activated, theoretically immediately, what could you put some number on the revenue potential for that? I'm not sure if you already gave it or if I missed it.

Yeah, I'll let Dave tackle that 1. Yeah. Uh, we did not, but if you took the 165 per day per diem that Damon mentioned, that's kind of the average across the country for ice beds. Um, and applied that uh, to the 30,000 beds, you're at 1.8 billion.

Dollars of incremental revenue. Um, and again, not all of that is capacity in our portfolio today, as Damon mentioned. Some of that's, uh, relationships with other parties to lease facilities. But, uh, you know, I think we've said if you activated all of our idle, um, 13,419 beds, uh, we would get around $500 million in annual revenue, and that would translate to around $200 million to $225 million in incremental EBITDA.

Okay, got it. So 500 million.

200 to 225 of additional IBA. Got it, thank you. I appreciate that. Um, and then the next thing for me, uh, so you were talking a little about how a lot of the, um, the apprehensions are no longer happening on borders, but they're now happening in the interior. Um, and obviously there are potential facilities located around the country, um, and people have to get transported from, you know, where they're detained to those potential facilities. Can you talk a little bit about what your transportation capabilities are, um, and how they might be expanding? And, and any opportunities that you guys see there?

Yeah, great question and, uh, tag team with the Dave and Patrick on that, but, uh, let me just say at a, at a high level. As I mentioned earlier, I guess it was probably October, and November of last year, we started a leaning way far forward on buying Vans. And, uh, buses, because the, the clearer message was I said earlier was detention, but the second message was we need real help on Transportation too. So we certainly am pretty far forward on, uh, getting ourselves into queue for the purchase of Vans and buses that were being constructed to different manufacturers around around the country. So we have seen a dramatic increase

Is over 5 times. What we would normally spend for a capex for uh, our transport operation, uh, is Damon mentioned. We wanted to be ahead of the curve knowing that there is a, a long lead time on purchases 4, buses, and vans, uh, to be able to get the inventory in place. So we could ramp, uh, our operations in a timely way when that was needed. So it gave us an ability to ensure that we would be able to meet those needs, and we continue to receive delivery on those Vehicles. The last thing I'd say is from an experience perspective. Uh, we're just celebrating our 35th year anniversary of operations, that are transport facility this year. Uh, so again we've been able to flex up or down, our transportation support needs as needed by our customers. And I think what you're seeing this year is an indication of both our capability to do that and the knowledge and expertise that that allow us to be able to meet that mission. In addition to the housing mission,

Got it, got it. Thank you what percentage? I'm not sure if you just closed this. What percentage of call it I guess. LTM or 2024 revenue is transport

Well, most of our uh, our transportation revenue is kind of intercomp. So we do a lot of the transportation among our own facilities. I don't have the breakout of of, but we do do Mass moves for certain States like Hawaii Vermont, Etc. So that is third-party Revenue that shows up in our in our um in our financial statements as incremental Revenue uh but a lot of our trans

Transportation. It comes in various forms. So we have, uh, some fixed. Some of our contracts have fixed monthly amounts that they pay us for to provide a, a minimum number of, uh, minimum number of miles of transportation. And then, uh, other contracts will get paid on a, on a per mile basis. So our I don't have our our third party. Uh, Transportation revenue is, is not a material number, but most of the transportation Revenue that we really, uh, generate is, is through, uh, the management contracts where it's eliminated in interco company, but, but is, but is kind of like, part of the embedded in the per diem.

Understood got it. So it's kind of, it's kind of baked into the, into the rest of the rest of the contract, right? That's right. Um, got it, got it. All right, well, this has been very helpful again. Thank you guys and congratulations and I look forward to talking to you soon.

All right. Thank you. Thank you so much.

Thank you. One moment for the next question.

The next question I have is coming from the line of Mason. Born of awh Capital, your line is open.

All right guys. Thanks for the question uh, more point of clarification. But I just wanted to ask about the reported beds from Ice. And so I think the current level like you mentioned is about 57,000. Uh, at the beginning of the year it was pretty easy to see where those uh beds were occupied by facility and more recently that Gap has really widened. And so I think most recently, I'm kind of calling them Phantom beds. It's about

about 15,000 of the 56,000 are, um,

not broken out by facility, it seems like you're capturing them giving your

Financial results, but just hope you could talk about that if that's a reporting issue, or if it's just due to the activity, or what you might think might be going on there.

Yeah, I appreciate your question. I'm not sure. Uh, I've got an answer for you. Um, but yeah, again to go to the high-level number, I'm looking at the most recent report; yes, 66,945, that I reported again, that was on July 27th.

And, um, you know, as of yesterday, I think we were at about 13,500, uh, with within our facilities, but I don't know. You need anything to add to that Patrick.

I don't know; we try, but we do try. Where growth is occurring, really, by facility, nationally. And, um, we can—we're certainly willing to share with you our approach for gathering that data. You want to touch base with us offline.

Great 1 other quick 1. I I appreciate your uh, conservatism and the guidance. I just want to make sure that I understand it right? So uh I think it's not very well understood between you and your main public competitor. But you're basically at or above all of your contractual minimums, right? So as you capture an incremental, bet you're getting the incremental economics of that. Which I think maybe isn't necessarily the case. Um, with your competitors is that fair

Yeah, I absolutely think it is fair. Um, I would say.

Oh gosh, I'd say during the pandemic we were below some of the fixed monthly guarantees, but nowadays we have a couple of contracts that can bounce around that level. But, for the most part, yes, every incremental detainee is contributing to additional revenue.

Good question.

Thank you.

You're welcome.

Give me 1 moment for the next question.

And the next question is coming from the line of Jay, Mandolis of Woodbush. Your line is open.

Hey, good morning, everyone. Um, so the first question, and apologies for the pretty basic modeling question, but if you look at the 66,100 beds that were in safety at the end of the quarter, does that include both Dilly and Cal City, or are those going to get included later in the year?

That it now includes both Delhi and Cal City, that's correct.

Okay.

And then, when the farm bill comes on, that's an immediate add of 736 for that number because I believe that facility was full when you all bought it, correct?

Yes, definitely. Uh, we'll come into that number in the third quarter and it was about full

I said some capacity it wasn't completely full but but High occupancy. Pretty darn close.

Okay, great. Um, all right thank you for that and then um David I want to go back to what you said about, occupancy potentially getting into the mid 80s. Is that something that happens this year is that more of a 26 type of of probability, just maybe give us some some guide posts for that. Yeah, I think even if we're activating facilities, like we talked about Cal City in our guidance because uh, we think we could accept detainees within the coming days,

Some weeks. Uh, it will take some time to ramp those up. So I think that's really a 2026, um, before we get to the mid 80s. Uh, but certainly, I mean, we're already in the high 70s. We could be low 80s by the end of the year depending on our ability to uh sign new contracts. I think if if you exclude any new contracts, we're probably going to be still be in the upper 70s, maybe low 80s. But, um, as we expect, um, these new new contracts to come online, we'll, we'll, we'll ramp up to the mid 80s.

Okay, great. And then just the last question, um, you all referenced some, I think it's 10 billion dollars in Border funds that that was allocated to DHS. Are there any Revenue opportunities for civic in the inside that pool of money?

Well, yeah, yeah. So the 10 billion. This is Damon. The 10 billion is referring to. Yeah, that's the dollars of the total $175 billion for border security, and or the big beautiful bill act that's for detention. So, absolutely. That's the that's the money. So, again, 10 billion dollars and again, that's on top of the 3 and a half billion that's in the Bas appropriation that Congress does on an annual basis. So, you had those 2 numbers together at 134 13.5 billion on an annual basis. And again this money is multi-year money that goes through 2029 so that that is going to be the money that ice is going to look to you know fund uh existing uh capacity but also new capacity. They get under contract

In the coming days and weeks.

And that's theoretically of the $40 billion, $45 billion. Exactly right. Carving it out by year. That's exactly right. So that's a good clarification. So, yeah, that's prorated. So again, $40 billion, we're saying $40 billion is that $40. It's actually $45 billion. There's going to be some money, as we understand it, if fixed a couple of deficits here and there within DHS. But yeah, $40 billion is probably a good number for the next, you know, 4 plus years on top of the $3.5 billion that they get from Congress on an annual basis.

Right. And so, I mean, you know, since the letter contracts, something y'all been receiving this year, there's a potential—if they wanted to do something with that—they could put that $10 billion per year, issue some new letter contracts, potential revenue opportunities for the course of it down the road. Is that the right way to think about it?

Uh, it's pretty darn close. I get 1 1 thing, I would say is that, um, the letter contracts that we got again Cal City and Midwest, that was during early this year. And the way we thought about those agreements is they were basically got bridged to help with activation activities but also get on the other side of the big, beautiful, bill act, we think now now that that is been passed and as we said earlier, we think in probably by the end of August, the actual dollars will be transferred to accounts within DHS. We think now they're going to go straight into direct contracts or igas with us. They're not going to use letter contracts because now they've got the funding. They don't need a bridge.

They don't need to wait for kind of funny as they do or early this year. So we think it's going to not only accelerate um, Contracting activity but also they're going to go straight into agreements and not do these letter agreements.

Okay, that's great. Thanks, guys. I appreciate it.

Yes, sir.

Thank you. 1 moment for the next question.

What science security is your line is open.

Hey, thanks for taking the questions, guys. Congrats on the quarter. Um, you know, you mentioned expectations for U.S. Marshal Service population growth. Um,

You know, towards the end of 2025 into 2026.

What I guess are you hearing that that supports those expectations and what facilities in the portfolio are maybe best positioned to meet their needs? You know, kind of based on what they're looking for from a regional capacity perspective.

Yeah, a great. Great question. Uh, the first part is is that just history indicates uh, that will happen. So if you look over the last, you know, 1015 years, when you have, um, you know, a new Administration, you know, usually takes a year, maybe 18 months, maybe a little longer for, uh, every individual us attorney that, uh, is needed in a different Court, districts around the country to get, you know, nominated and get, um, uh, through the process through the Senate. And again, there's a probably about 94 us attorneys around the country. So again, that's going to take a while. Once those us attorneys, get in place in different Court, districts around the country. Then obviously, they can start implementing the direction from Administration from relative to focus on prosecutions and certain crimes and offenses and so history indicates that. Once that happens. And these people get in place, they build their staff. They're getting direction from kind of, uh, behavior and prioritization relative to prosecutions, uh, in certain parts of the country. You'll

Starting to see an increase in, um, federal prisoner population for the Marshal Service. And so we're already seeing that a little bit. But once I think they get fully staffed with, uh, and get through all these nominations, you'll see an increase pretty, pretty dramatically. I don't know anything. You add to that, uh, Patrick? The only thing I would add is that obviously, in addition to the staffing changes, there are enforcement changes that take time to work their way through the system. A combination of the appointment in the U.S. attorney's combined with a shift in enforcement priorities toward the administration's priorities results in a bit of a lag. But, you know, as Damon said, we typically see during the second year of an administration an increase in need. Now, in terms of magnitude of demand, initially I would expect that there would be additional utilization of existing contracts and existing facilities, more than there would be a need for a substantial expansion of new capacity that's not already in place.

Enter the second part of your question. I think we've got really good opportunities in Arizona. Oklahoma uh potentially Mississippi and New Mexico, all those States we have facilities in those states with existing US Marshals contracts that have capacity.

Sure very helpful. Um and I guess simply because I don't think it was asked yet. Um are you able to provide any color or is there anything you can share um on the 4th and 5th Idol facility discussions and and maybe more particularly the the fourth that you're in advanced discussions for uh, nothing more than uh we share it already. Yeah, we're having discussions but not at a point.

Get to, uh, to reveal after we're going to get a little further down the road with ice on those discussions.

Fair enough. Um, and I guess lastly, you know, just as we think about kind of quarterly Cadence um, you know, as Cal City begins intake, this quarter, Dilly ramps to full occupancy by the end of this quarter, you know? Do you kind of see Q4 as a fair run rate of of maybe the currently contracted facilities going forward, you know, obviously with the exclusion of Midwest Regional

Yeah we do um yeah I'd say if if if you look at Q4 on a run rate basis you're probably no less than 400 million dollars in ebitda uh on an annual basis and that does not include any of the additional uh, contracts. Like the fourth, uh, and fifth, uh, Idol facilities. We just mentioned that were in discussions with 1 is an advanced stages of discussions. 1's kind of in the earlier stages, uh, and that's just 2 of them. And, you know, we've got additional opportunities after that. So as we look, obviously, we're not putting out guidance for 2026 but as we look at out to 2026, based on what the book of business that we have in 2025 and as these contracts wrap ramp up. Uh, and some of them will be fully ramped like Dilly in Q4. Uh, we don't see. Uh, well, we see a minimum even of 400 million uh, going into uh, 26 without new contracts.

Alright, thanks very much.

Thank you. One moment for the next question.

And the next question comes from the line of Raj Sharma of Texas Capitol. Your line is open.

Does the supervision sort of monitoring business? Does it stay at current levels here as your competitor has indicated? And then, you know, when should it pick back up once? Detention sort of goals are reached in. My question really is that if, if, um, ice levels of of isap, go back to 37500, you know, and you're up for a contract, you know, in 6 months, or a year, how much of that

Uh, business, are you ready to take get?

What is the capacity of how much you can handle in the electronic monitoring and supervision?

Yeah, thank you so much. I appreciate that question. And um, again, I'll just I'll do a reinforced. I mean the the laser focus from DHS isolator ship, Administration is detention. And again, as I said earlier, I mean, we're we're working, you know, 24/7 on to accommodate that. And again, you look at our oxy today. We've got a lot of Runway to help support that, uh, prioritization of using detention capacity so it won't rehash that but obviously, that's, that's our focus. And so to answer your question. Yeah, I think we would, uh, agree with Gio Connor. Our view is that the current program and its size is probably where it's going to be for the foreseeable future. Again, we're going to watch closely on kind of the timing and the RFP is Gio said yesterday, they've got the 1 month extension through August. They're waiting to see

if they do a 6 or 12 month extension,

After that, to allow time for our RFP. And again, as I said earlier, we've got the competency and the capability and also uh, if they kind of shift more to active monitoring which is the ankle bracelet, GPS type solution. We've been doing that for 30 plus years. So we definitely got, uh, we, you know, we check all the boxes relative to our ability and, and being very competitive in in that uh, procurement. But anything you'd add to that Patrick. Yeah, only thing that I would add is that I think it's really important to contextualize the program overall, which is, it isn't a singular service. It's a program that's actually evolved over time based on the needs of ice and the type of monitoring that might be required during a particular period, and those priorities May shift. And so clearly, the prioritization is around detention Services through the end of the year, that that is very clear. I think the question beyond that and and it really goes back to Damon's answer earlier to 1 of the questions which is the funding that's available under the 1,000.

Beds. That gets talked about a lot right now, uh, as a targeted bed number, and I I think really to, to think about what the world looks like in 6 months or 12 months of being different than today is somewhat difficult at this point because funding is available, uh, to utilize more beds than 100,000 beds. If that's ultimately needed. So, you you'd have to see a shift from in priority from Ice to focus on something other than detention and and we haven't seen that yet. Uh, then in terms of capacity, obviously,

Obviously this is a program that we've looked at. For some time, we've built the capacity and the Partnerships that we believe would allow us to compete very effectively for that program, a current funded levels. And so, uh, we are in a place where, you know, we would hope to be, uh, in a position to be considered as an alternative, uh, think we've positioned ourselves well. Uh, and certainly it, uh, the current level and capability set. We think we're very well positioned to compete at the appropriate time. But again, the short run, we believe the focus of, uh, ice today is on detention ramping up detention and meeting, uh, the needs of their current priorities

Thank you. That's, that's really helpful. Um, and then my next uh, question is on the contribution of Eva from the reactivated facilities, how much uh you know, what's the current contribution, from reactivated facilities right now in your uh, ebita number. And when would you when you think you'd reach mature margin profile on these on these facilities that we can. I I know that David has talked about

Um, the potential add-on in Evita once.

They turn on fully. Could you talk about that, please?

Up and achieving normalized run rate at some point during the fourth quarter. Uh, and as Dave said during, um, his most recent question, uh, we would expect a run rate would be north of 400 million uh as we exit this year and obviously you can look at the puts and takes that have contributed to our outperformance this year. Uh, but again, uh, we typically don't and and wouldn't expect to parse the individual contract economics.

Got it. Thank you. Uh thank you for taking my questions. I'll take it offline. Thanks a lot. Congratulations.

Thank you. One moment for the next question.

And the next question is coming from the line of Jordan.

Heimowitz of Philadelphia Financial Management of San Francisco. Please go ahead. Thanks, guys. A couple of questions. Um, the last time your occupancy was above 80%, could you remind us of the EBITDA margins and what it actually would be higher than that? Now, given the ICE mix, is a little higher profit margin of the federal, more specifically than the state.

Um, I would say we were around 25%, if I recall correctly, I have to go back and check, uh, to confirm for sure. But I think we are on 2526. Uh, total operating margin, that's across the whole portfolio. So again, as we've mentioned not, you know, in a portfolio of our size, you have some uh, better margins and some worse margins. Uh but that's the average across the portfolio.

I don't I wouldn't say our margin uh profile would change materially uh just with an increase in ice business. I think they're consistent with the overall, um, margin profile of the safety segment. So, uh, I, I'd expect us as we increase occupancy to approach and, uh, perhaps succeed that 25% margin again. Just because of higher occupancy, not necessarily because of the specific customer.

Okay, second question. Um, could you remind people you bid on the ISIP contract last time? And I believe you were the lower bidder instead. It did not win the contract. Do you see this administration possibly ignoring the lower bid if that was the case again?

Yeah, it it it's hard to say, to get, you know, into the heads of, you know, people that evaluate the proposals through a procurement process. So it'd be really kind of hard to answer that, add to that question. So, uh,

Again, we're waiting to see, uh, when the procurement comes out again. Go said it could be a 6-month or 12-month extension that they get after this um current extension through the end of in August and then uh we'll have to evaluate when it comes down to see if they've got any kind of new requirements and also with that to your question about kind of waiting of price. If that changes um, you know how they consider the overall arching, kind of cost of the contract with the proposal from us and the overall arching is kind of scouring of The Proposal

Okay, our final question is: Do you see yourself initiating a dividend in '26, given the increased cash flow and buyback already ongoing?

Uh, not at the current prices know.

Not the current stock price.

Okay, thank you.

Welcome, thanks. Jordan, thank you for your question.

Thank you. That does conclude today's Q&A session. I would like to go ahead and turn the call back over to Damon Hininger for closing remarks. Please go ahead.

All right. Thank you so, very much and thank you so much for your interest in the, uh, the company. I know we went a little over, but obviously, we had a lot to talk about on behalf of the team here in the room and throughout the organization. We're deeply grateful for your interest in the company, but more importantly your support and investment in our company. We have had a tremendous tremendous first half of 2025 as you see from the financial performance but also the forecast for us here. We're going to have a very strong year as we end 2025 and go in 2026. So we look forward to talking to you at our next call and uh, early fall. Thank you so much.

this does conclude today's conference call, you may all disconnect