Q3 2025 Geo Group Inc Earnings Call

Good day and welcome to the Geo Group. Third quarter 2025 earnings call. Albert has been listening only mode. Should you need assistance please sign up with conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions to ask a question. You may press star then 1 on your telephone keypad to withdraw your question. Please press star then 2. Please note. This event is being recorded. I would now like to turn the conference over to Pablo Pas, Executive Vice President of corporate relations. Please go ahead.

Thank you, operator. Good morning, everyone. And thank you for joining us. For today's discussion of the Geo groups, third quarter of 2025 earnings results.

With us today are George Ollie, executive chairman of the board.

Dave Donahue chief executive officer and March, the chinsky Chief Financial Officer.

This morning, we will discuss our third quarter results, as well as our Outlook, we will conclude the call with a question and answer session.

This conference call is also being webcast live on our investor website at investors.gov.

Today, we will discuss non-gaap basis information. A Reconciliation from non-gaap basis information to gaap basis. Results is included in the press release and the supplemental disclosure. We issued this morning.

Additionally much of the information we will discuss today, including the answers. We give in response to your questions may include forward-looking statements regarding our beliefs and current expectations with respect to various matters.

These forward-looking statements are intended to fall within the safe harbor, provisions of the Securities laws.

Our actual results May differ materially from those in the forward-looking statements as a result of various factors contained in our Securities and Exchange Commission filings including the form. 10 K, thank you and 8K reports.

with that, please allow me to turn this call over to our executive chairman, George Ollie, George

Thank you, Pablo, and good morning to everyone, thank you for joining us on our third quarter earnings call.

During the first 3 quarters of the year, we believe we've made significant progress toward meeting our financial and strategic objectives.

Since the beginning of 2025 we've entered into new or expanded contracts that represent over 4006 million dollars in new incremental, annualized revenues that are already under contract in our expected to normalize next year.

This represents the largest amount of new business that we have won in a single year in our company's history.

Include.

3, company-owned facilities.

Where we announced in the first half of 20. 25 the Thousand bed Delaney Hall New Jersey,

Facility. The 1800 bed. North Lake facility in Michigan.

And the 1868 bed Dre. James facility. In Georgia.

And more recently, the 1310 bed, North Florida, detention facility, which is a state-owned facility where we are providing Management Services under a joint venture agreement that we announced in early October.

The Florida contractor. Arrangement demonstrates Geo's ability to provide Management Services through alternative Solutions like the state of Florida's partnership with the federal government.

Additionally, during the third quarter, we reactivated our 1940 bit, Adelanto ice facility in California, which was previously under utilized due to co related court cases.

On a combined basis, these 5 facilities are expected to generate more than $300 million in incremental and annualized revenues at full occupancy as they normalize their financial contributions next year.

these facility activations have increased, our total ice capacity to over 26,000 beds and our current census is over 22,000, which is the highest

Ice population. We've ever had.

In addition to these facility activations, we are reviewing the physical plant at 20 of our ice facilities to determine our capacity to expand the office space for additional I staff and their expanding mission.

Our Delaney Hall and Dre. James facilities will have added ice office space as part of our new contracts and we have submitted similar proposal for most Shannon Valley in response to a request from the agency.

This effort is representative of our long-standing partnership with ice and our companies flexibility.

In adjusting to and addressing the ever-changing needs of ice.

With respect to our secure transportation, we have significantly extended our footprint for ICE and the U.S. Marshals over the course of 2025.

earlier this year, we signed a

5, new 5-year contract with the US, Marshals for the provision of secure transportation services covering 26 Federal Judicial districts and spanning 14 States.

Throughout the year we've executed new or amended contracts to expand secure ground transportation services at 4 existing ice facilities. And at our

3 new recently activated ice facilities.

Additionally, the services we provide under our ice air support contract have steadily increased throughout this year. On a combined basis of this new transportation business represents approximately 60 million dollars. In expected incremental, annualized revenues,

we are encouraged by the growth opportunities at the state level as evidenced by the 3, only contract awards from the Florida Department of Corrections, including 2 facilities. We do not currently manage, which are expected to generate approximately $100 million in incremental annualized revenues, beginning in July of 2026,

Of particular importance.

We are very honored to have been awarded a new 2-year contract for the IEP 5 program at the end of September,

we believe the significant contractor award is a testament to the high quality, electronic monitoring and Case Management Services are wholly owned subsidiary, bi has consistently delivered for over 20 years.

There are presently approximately 7.6 million immigrants on the non detained docket with approximately 1, 100 18200 enrolled in the isap program at this time.

Isap.

as a sub program within ATD, it's mainly used for people ice considers a higher Flight Risk or who have been

pending Asylum or removal cases, but are still allowed to live in the community.

The program relies on several forms of surveillance. Some are required to wear GPS, ankle, or wrist monitors. That track their movements in real time.

Others are enrolled in smart link mobile app, which relies on facial recognition voice ID, and GPS to confirm a person's location during check-ins.

Under the previous 5-year, isap contract, the participant count started at 91,000 individuals and thereafter doubled. Ending at 183,000 individuals.

The present ISTEP 5. Participant count is more than 182,000, but the new contract includes pricing for 361,000. Participants in year 1 and 465,000 participants in year 2.

In order to further assure our success in the rebid competition and provide lower unit costs. For further isap growth, we reduced our pricing as in the past on a variety of services which has resulted in a new Financial Baseline which will later be discussed by Mark.

We are able to implement this strategy by identifying Staffing efficiencies through the program services.

Along with the continued development of less costly, New Generation monitoring devices, which also required margin compression.

We are optimistic that isap ramp up could begin early next year. Go has the capability in monitoring devices and Case Management Services to achieve those significantly. Increased participation levels and far beyond its desired by us.

But of course, we cannot provide definitive Assurance of future isap participation levels, which are determined by Ice management.

And as I said on our previous call, the focus of ice at this time, has been toward the increase in detention capacity, in which we are participating.

But what we have seen is a steady increase in more intensive and higher price monitoring devices, such as ankle monitors and a steady decrease in the less intensive and lower price use of phones or phone apps.

This new policy seems to be consistent with the objective of more aggressive supervision of the 7.6 million immigrants on the non detained docket.

As the world's largest service provider of electronic monitoring devices, we remain optimistic in the importance and growth potential of the isap 5 contract.

Going forward, we expect to be able to capture additional growth opportunities. We believe the federal government's objective continues to be to scale up immigration detention to approximately 100,000 beds or more from the approximately 6.

60,000 beds. Isis currently utilizing.

This objective of scaling up to 100,000 detention. Beds is a 270% increase from the 2024 average of 37,000 beds.

However, the pace of new detention contracts has been slower than anticipated, which we believe is possibly due to 3 factors.

First as has been reported in the media, the Department of Homeland Security has implemented a policy that requires Homeland, Security, Service, secretary to review and approve. All contracts above 100,000 which is time and staff intensive.

We have been intensely cooperating in this financial and Staffing review process toward providing assurance that the government is receiving best value at Geo facilities and services.

Second and more recently, the government shutdown has likely delayed the award of new contracts.

Funded by a source other than the regular appropriations.

Third is the need for ICE to have more staff to carry out its enforcement efforts, which is indicated by ISIS. The new recruitment program aims to double its employees from approximately 10,000 to 20,000, which is also time and staff intensive.

Following the resolution of the current government shutdown. We believe is will have ample funding to support its priorities.

not only will ice received it annual Appropriations Baseline of approximately 8.7 billion dollars but the agency also has access to 45 billion dollars in incremental funding for detention Services which is available through September 30th 2029,

While the exact timing of government accidents including our new contract Awards is difficult to estimate. We believe that our remaining idle facilities are likely to play an important role in supporting the objective of increasing overall detention capacity.

We have approximately 6,000 Idol beds at 6 company-owned facilities that remain available.

Most of these facilities are formally contracted.

We're formerly contracted to the US Bureau of Prisons and our high-security, which makes them ideally suited for the current needs of the federal government.

On a combined basis. These 6,000 beds could generate more than million dollars in additional incremental annualized revenues.

We also believe that increasing detention capacity to 100,000 beds or more will likely require ice to seek alternative Solutions in addition to traditional hard-sided facilities.

Based on our best estimate, the current beds available.

By the private sector at traditional hard-sided facilities would likely provide ice capacity for approximately 80,000 beds, thus scaling up to 100,000 detention beds or more will likely require additional Partnerships with States or additional temporary softsided facilities on military bases or other sites.

we will be exploring opportunities to participate in these new government sites, whether state sponsored or procured by the military,

Meanwhile, our focus is also on the activation on our remaining idle facilities.

As evidenced by our recent joint. Venture agreement in Florida. We believed you, as well, positioned to pursue other state partnership opportunities that increase detention capacity for ice.

Finally, we have and will continue to evaluate the potential acquisition or leasing of third-party owned facilities and we've identified approximately 5,000 combined beds that could be added using several options of temporary and permanent facilities at several of our existing ice sites.

We are also pursuing additional Diversified opportunities in the field of Mental Health Services, which we exited approximately 13 years ago when we became a Reit and subsequently dreaded.

We are currently participating in a procurement in the State of Florida for the management.

Contract at the South Florida evaluation Treatment Center which we expect to be awarded in q1 of next year.

Our goal with all these efforts is to place you in the best competitive position to pursue available growth opportunities. In addition to the steps we have taken to capture quality growth opportunities. We have made significant progress towards strengthening our capital structure by reducing outstanding debt deleveraging our balance sheet and enhancing shareholder value through Capital returns.

In 2025, we reduced our total net debt by approximately 275 million closing. The third quarter with approximately 1.4 billion dollars in total. Net debt with a total net.

Leverage of approximately 3.2 times adjusted ibida at this time.

Transformative event for our company, allowing us to significantly de-lever. Our balance sheet and launch a stock buyback program ahead of our prior expectations.

Approximately 60 million dollars of the Lan facility sale gain was used to purchase the 770 bed downtown, San Diego, California, facility, that we've been operating for 25 years for the US Marshal Service.

During the third quarter, we repurchased approximately 2 million shares for approximately 42 million. Under our newly launched buyback program, bringing our total shares outstanding to approximately 140 million.

as the end of the third quarter,

given the intrinsic value of our assets and already captured expected future growth. We believe that our current Equity valuation offers a very attractive opportunity.

To this end, our board of directors as increased our stock by good back program authorization by 200 million dollars, increasing the total, authorization to $500 million and an extending expiration date to December. 31st 2029.

We plan to execute our stock by bet program, opportunistically balancing it with our growth, Capital needs, and our objective to reduce debt, and de-lever or balance sheet. At this time, I will turn the call over to our CFO Mark Sinskey to review our financial highlights and guidance.

Thank you, George. Good morning, everyone.

I am happy to report that we had a very solid third quarter.

For the third quarter of 2025, we reported net income attributable, to Geo of approximately 174 million.

Or 1.24 cents per diluted share on quarterly, revenues of approximately 682 million.

this compares to net income attributable to Geo of approximately 26 million or 19 cents per diluted share in the third quarter of 2024 on revenues of approximately 603 million

During the third quarter of 2025, we completed the sale of the Lawton, Oklahoma, facility for 312 million and the hector Garza Texas facility for $10 million.

These 2 transactions, resulted in a 232 million gain, on asset sales during the third quarter.

Approximately dollars of the law and facility sale was used to purchase the 770 bed downtown San Diego, California facility that we have been operating for 25 years, for the US Marshal Service.

Additionally, during the third quarter of 2025, we incurred a non-cash contingent litigation reserve of approximately $38 million in connection with a legal case in the state of Washington involving claims of individuals who participate in the voluntary work program while in ICE detention.

The Ninth Circuit Court of Appeals ruled that the ICE volunteer detainees are entitled to state minimum wage payments but stayed their ruling pending an appeal to the U.S. Supreme Court.

The 9th Circuit of appeals ruling is in Stark conflict, with other federal court rulings on individuals providing work, while in confinement.

No company has ever paid State minimum wages to individuals working in confinement facilities.

While we are appealing, the case to the US Supreme Court due to accounting rules, we recorded this non-cash contingent litigation Reserve.

During the recent, our most recent third quarter.

Excluding this non-cash contingent litigation reserve.

The gain on asset sales and other items.

Adjusted net income. For the third quarter of 2025 was approximately 35 million.

Or 25 cents per diluted share compared to 29 million or 21 cents per diluted share for the prior Year's third quarter.

Adjusted IBA for the third quarter of 2025 was approximately $120 million.

Up from the approximately 119 million reported for the prior year. Third quarter.

Beginning with revenues.

Quarterly revenues and our owned and least secure service facilities.

Increase by approximately 22% year-over-year.

Centers to an all-time high.

Revenues for our non-residential contracts increased by approximately 10% from the prior year, third quarter.

Revenues for our managed only contracts increased by approximately 8%.

From the prior third quarter.

Revenues of our electronic monitoring and supervision services and for our re-entry centers.

Were largely unchanged from the prior year, third quarter.

Now, let's turn to our expenses.

During the third quarter of 2025 our operating expenses increased by approximately 15% do the startup of new contract Awards and increased occupancies compared to the prior year quarter.

Our GNA expense for the third quarter of 2025 increase from the prior third quarter in part due to the reorganization of senior management team at the end of last year, higher employee related benefit costs

and support for the revenue growth from our new contract awards.

Our third quarter 2025 results. Reflect a year-over-year, decrease in net interest, expense of approximately 7, million dollars as a result of the reduction in our net debt.

Our effective tax rate. For the third quarter 2025 was approximately 25%

Now, let's move to our Outlook. We have updated our financial guidance for the fourth quarter.

And full year 2025.

Our updated guidance, for the fourth quarter, incorporates, a new reduced contract pricing for isap 5, which is George mentioned.

is being favorably impacted by a steady shift in technology mix.

As well as a higher intensity of Case Management Services and the potential for higher volumes.

All of which could improve the economics of the new contract.

Based on these variables.

The federal government assigned an estimated value to the 2-year contract of over 1 billion dollars.

Because the exact scope and timing of the government actions are difficult to estimate.

And are outside of our control. We have not included any assumptions with respect to favorable mixed shift or census growth in the isap contracts in our 2025 guidance.

Additionally, we are in the process process of implementing several cost mitigation measures for the isap contract by the end of this year.

We expect this to result in cost savings of approximately $2 to $3 million per quarter beginning in 2026.

The fourth quarter was also impacted by additional startup costs at the Adelanto California facility.

Which is required to hiring of 10079 additional staff due to its reopening and the increase of overtime costs due to new staff awaiting their final ice clearance before being allowed to perform their responsibilities.

We both.

Both issues to normalize in 2026.

As a result, we expect fourth quarter of 2025 gaap, net income to be in the range of 23 cents to 27 cents per diluted share on quarterly, revenues of 651 to 676 million.

We expect fourth quarter 2025 adjusted EBITDA to be between $117 million and $127 million.

Taking it into account are updated. Fourth quarter guidance, we expect full year, 2025, gaap net income,

To be in the range of 181 to 185 cents per diluted share, including the $232 million gain on the sale of the Lawton, Oklahoma, and Hector Garza, Texas, facilities.

We expect full year 2025 adjusted net income to be in the range of $0.84 to $0.87 per diluted share, with an expected increase in annual revenues of approximately $2.6 billion, based on an effective tax rate of approximately 25%.

Inclusive of known discrete items.

We expect full year 2025 adjusted ibida to be in the range of 455 million to 465 million.

We expect total Capital expenditures for the full year of 2025.

To be between 200 million and 205 million.

With the already announced contracts that are expected to normalize next year and new opportunities that are in discussions. We could see a path to approximately 3 billion dollars in annual revenues in 2026.

Now, let's move to our balance sheet.

we closed the third quarter of 2025

with approximately 184 million dollars in cash on hand and approximately 143 million in available capacity under our revolving credit facility.

We believe we have ample liquidity to support our working. Capital needs during the current government shutdown.

We have received verbal support from several of our banks to provide an initial additional liquidity. Should the government shut down continue for a prolonged period of time.

We also believe we've made significant progress Pro progress, towards delivering, our our balance sheet year to date, we've reduced our net debt by approximately 275 million.

closing the third quarter with total, net debt of approximately 1.4 billion dollars and total net leverage of 3.2 times adjusted debt

As a result, we've achieved an annualized reduction in interest expense.

Of over 25 million.

Our debt reduction efforts were bolstered by the successful sale of the law in Oklahoma facility for 312 million during the third quarter.

We believe this important transaction is representative of the intrinsic value of our real estate assets.

Totaling 50,000 owned bets and it allowed us to significantly de-lever, our balance sheet and big in to return Capital to our shareholders.

During the third quarter, we were purchased approximately 2 million shares.

For approximately 42 million under our recently, launched sty stock buyback program.

Which are board has increased by $200 million, bringing the total authorization to Millions.

We expect to continue to execute our buyback program opportunistically within the Covenant requirements of our debt agreements.

We remain focused on disciplined allocation of capital to enhance long-term value for our shareholders. And we believe that our strong cash flows will allow us to support all of our Capital allocation priorities.

At this time, I will return the call back to George for some closing comments.

Thank you, Mark in closing, we believe we've made significant progress toward meeting our strategic objectives.

So far in 2025, we've announced a new or expanded contracts that are expected to generate more than 460 million, in new incremental, an annualized revenues.

Which will normalize next year and likely achieve a proximately 3 billion dollars in total company revenues for 2026.

The amount of new contracted revenues is the largest in our history of our company.

Going forward, we expect to be able to capture additional growth opportunities.

We have approximately 6,000, I idle high security beds that remain available which could generate an excess of $0 million in annualized revenues. If fully activated

with the award of the new 2-year IP contract in the Investments, we've made to stock up on the inventory of GPS tracking devices.

And development of new generation devices. Bi is well, positioned to respond, respond to the Future demands under the isap 5 contract.

We are also well positioned to continue to expand our delivery of secure transportation services for ice in the US Marshals.

While the exact timing of government actions, including new contract Awards is difficult to estimate.

As a management team, we are focused on maintaining a level of readiness to successfully pursue and capture future growth, and continuing to allocate capital to enhance the value for our shareholders. That concludes our remarks, and we will be glad to take questions. Thank you.

Our first question comes from Joe Gomez with Noble Capital. Please go ahead.

Good morning. Thanks for taking my questions.

Warning warning.

Wanted to start off here. Um, I think there's there's a

Big question hanging out there, you know, with the government shutdown with the ice focus on hiring those extra 10,000 people that the rate of ice population. Detention has not been as robust here as originally anticipated. Um, just was wondering, you know, what you guys are seeing out there? Is it, um, flowing at at, you know, what you, what your expectations were or has it come in a little less than what you may have been previously expecting, uh, given the current status there with the federal government.

You know, it's obviously gone slower than we previously expected.

and um, our our existing facilities are

are at almost full capacity and their churning out deportations almost at the rate of approximately 100% of their capacity per month.

So we've never seen anything like this before. So our existing facilities are on.

Our, our Full Throttle.

We were expecting.

there's a need for additional ice staff to support additional facilities. That's why they're trying to recruit 10,000 staff. Well, as I said in my remarks, it takes

A lot of time and uh staff intensive uh, activities to recruit higher trained and bring on board that I staff, you know, to support new facilities around the country. You know, we think our Idol facilities, totally in 6,000 beds are ideal high-security facilities that are available, but, uh,

Just looking at a combination of factors of the government shutdown. The need for additional ice staff, uh, there that there have those factors have caused the delays that we hope will be uh, concluded by the end end of the year, if not the end of this month,

Okay, thanks for that George. Really appreciate the caller there.

Um, on the ISAP, you know, congrats on the contract. I understand there's going to be some puts and takes, some changes. But historically, if you look at that contract,

You know, it's run roughly about a 50% noi margin. Um, do you think even with all these puts and takes that that that stays at least at that level or do you think they'll be um, contraction in that noi margin

Well we we really don't discuss our margins uh by business units to that level of granularity. Um you know we

We've made a pricing cut to be competitive in, um, this last rebid. As we have done, I think, in 2, or 3 times previously. So every time there's a rebid of the ice contract, there's a lot of competition and we've

we've reduced our unit pricing and there's 40 different units in that pricing.

Winning the contract now.

the the account, as I've said, is been fairly stable, uh, which is, uh, a little disappointing, obviously, but the

The uh mix of of monitoring devices is leading towards more intensive devices that cost a bit more and more intensive supervision of Case Management Services. Uh

With regarding the existing population that will be applied to the increasing population as priced in years 1 and year 2. Remember year 1 is priced to double the existing capacity and year 2 is almost tripling.

So, uh, that remains to be seen. It's up to the government as to how do they get to those levels. But right now, I think we've been fairly consistent in saying the

the uh Focus has been on increasing detention capacity and that's where the activity has been and IEP will have to wait as we've said probably till early next year before the levels, the actual participation levels, you know, increase

Hey Joe, it's Mark. I would just add that, you know, our electronic monitoring business has been and will continue to be our highest margin business. Um, you know, we published that quarterly. Uh, it's it's we're fully transparent about that and we as George indicated. Um, we've made some adjustments, but we're working on the cost side of things. And we expect those actions to be complete by the end of the year, uh, and uh, reap those benefits in in 2026,

Okay, thanks for that. And then 1, 1 more.

Um, you know, Staffing is always been challenged, um, you know, especially when you're opening. So many, um, are are are idle facilities at 1 time. I was wondering, how are you guys? Uh, looking at or seeing um, the ability to staff up the the facilities that you're opening.

Great question. Uh, you know, I think

We've had.

we've been um, targeting hiring

a thousand or 1500 additional staff this year, which is an enormous amount, you know, comparatively speaking and that, that's been a very costly feature that is impacted our earnings this year, which I I don't think a lot of the new shareholders are, uh,

Aware of the impact when you hire people uh you have to put them into you know, you have to recruit them. You have to do background checks, you have to put them in training. Um all of that is a cost that's predominantly borne by us and not the client until the facility opens and normalizes. So almost all of that those staff are are paid according to Department of Labor, determine wages. And so I think we're having a good shot at at finding the people, but it takes a long time to get them through the ice clearance process.

And and and that's a costly wait for us.

Okay. Great thanks. I really appreciate the the answers there and um I'll pass it along. Someone else can ask some questions, thank you.

Thank you.

The next question comes from. Jason, Weaver with Jones trading. Please go ahead.

Hey, good morning, guys. Uh, this is Matthew ordenar on for Jason. Uh, thanks for taking the question. So going back to the isap. Um, you know, I just kind of want to clarification questions first. Um, the 2 or the 1 billion dollars that is over the 2-year term period and then I just want to make sure I get the numbers right on the scale up. It was uh I believe 361. You said in the

First year and then 465 for year 2.

Yes.

Okay. Um, and then, you know, as it relates to that, you know, should we kind of expect that, you know, a third of that Revenue trickles through over 27 with the remainder kind of coming through in 2027 as that program continues to scale.

As we indicated, um, that we, that's we responded to the government's request and the government had in the RFP identified, those counts.

Um, for us to respond to. And so we today the counts are at 182,000

Um, you know, we really we don't know exactly the exact timing of the uh, change in in isap participants over time, but I think is Georgia's articulated their Focus right now is in detention. And once we get to 100,000 beds, the pivot will be to ADT. So I I think it's hard for us to predict the exact timing of that. But what we do know is that the RFP had allocated significantly higher funding and participant counts than as compared to where we are today. Um, and so I think that's what we know. The contract term will will go into, uh, 2027. Obviously that's part of the answer to your question. You know, the exact counts. We can't are beyond our control. They they are identified in the pricing. Um,

Procurement document that uh everybody had to bid on. So you know the counts are as we've discussed and it remains to be seen. If we achieve or exceed those counts as because as I said, uh, in in my comments,

uh, previously that the

The count on on the previous IEP, 4 Awards started at 91,000 and ended at 183,000.

Uh, if that's any, um, indication of the the future then, you know, I think we're going to be on Solid Ground

Got it, that's that's helpful. And then, you know, touching on the additional growth opportunities. Um, you know, an alternative solutions that you guys that are still on the table. Um, it's nice to see you guys working with the state of Florida. Um, you know, how big is that opportunity set and, you know how many states are looking for these kind of Management Services as ice continues to try to look for additional beds.

There are several, uh, which we can't name at this time. Um, but they're

they're generally uh beds that would be part of their correctional system, idle beds or refurbished beds and that number typically in the hundreds that, you know, possibly getting up to a thousand beds per location

That we're aware of.

but, you know, we're not

Fully privy to, you know, what DHS is doing or who they're talking to obviously.

Got it. And then, you know, looking at that from kind of a margin perspective, you know, with that kind of fit in with the historical managed Services margins,

It's actually a bit better than that. Uh, because the

The Staffing levels for this. Kind of population is different than what we uh typically seen at at our state facilities that were managed only this is a higher security population, requiring more Staffing and you know we make a margin on the Staffing.

Got it. That's helpful. I appreciate the comments, guys.

Thank you.

The next question comes from Greg, give us with Northland Securities. Please go ahead.

Hey, good morning guys. Thanks for taking the questions. Um, wanted to ask, I guess regarding your commentary on the mix shift within the isap program.

Can you confirm that? That makes shift toward more intensive, um, uses is currently happening, but but not included in your Q4 guidance. I guess what assumptions with mix are implied by Guidance.

Uh, I hey it's Mark let me address that. Um, is George said we are seeing a shift

Of um a movement towards less usage of an app or a phone and higher participant counts, using our ankle, ankle bracelets. And so what we've seen today um, has been a slow and steady growth on the ankle bracelets which are higher cost and more intensive as it relates to the, the Case Management Services. Um and and to a certain degree, we've

We're expecting to continue to shift towards the higher intensive supervision which is the higher cost Services um, from a, from a technology device standpoint, as well as a case management. So the point we're making is, we we think there's some opportunities as we've, uh, rebid that contract. Both on the mix shift and some of the cost actions that we're taking to mitigate things. Um, obviously the new pricing went to effect on October 1st, it's going to take us a little while to implement the actions that we have. Um and that had an impact on the fourth quarter. Uh but we're working hard to to to push through that and um potentially take advantage of the shift towards the, uh, more intense services. And we think that would continue in the 2026 and we'll know better. When we provide guidance in February of next year.

Got it. That's helpful. Um, and, you know, nice to see the increase Cherry purchase authorization, with where the stock is trading. Now, um, could you maybe discuss your thoughts on leaning into it more or considerations of an acceleration of repurchase activity?

Well, we were aligned. Um, we think our share price is way undervalued. All right? George talked about our business. When we look at our profitability and our cash flows and the growth that we've achieved here, um, we think our stock price is significantly undervalued.

Undervalued. That's why we launched our share purchase program with Georgia support and the boards.

Um with where the stock price is, we had another dialogue with our board at our board meeting and we increased the size of that. Uh, and we're confident of our cash flows over time here and we're leaning into this. I think earlier in the year we talked about a uh, shareholder returns. We talked about doing that once we got less than 3 times levered. We're over 3 times levered, but we're leaning into it and our banks are supportive of that. So we're going to lean into it. We're going to as George said, be opportunistic about it and balanced. Uh but where our stock price is uh we're going to continue to preserve pursue the BuyBacks. Um,

And take advantage of the lower stock price and our cash flows, and our ability to go do that.

Got, it makes sense. Um, and I know timing like you said is difficult to predict. Uh, you know, just I guess referring to your prepared remarks. You know, you mentioned being optimistic on isap, ramping up early next year.

I guess I would just ask, like, what leads you to expect that or support that expectation? Is there anything new you've heard since maybe last quarter?

well, there's millions of people that are on the non detained docket and uh there's going to be a desire to

Provide more clarity as to where they are, what stage they are in with respect to their hearing process, and making sure they get to their hearing. If they're not qualified to be in the country, deport them.

so I think those are all

Publicly identified objectives of this administration, and I think the ISAP contract will be an important tool.

Toward that toward those objectives.

and as we've mentioned his, you know, in the past,

um, once once the detention

Um, continues to grow.

Um the government's talked about targeting 100,000 beds uh at that point in time, you know. Once they max out that capacity they'll they're and they continued the enforcement efforts that they have. Um, you know the the next logical tool to use is the isap program.

Yep. Understood. Thanks very much, guys.

Please go ahead.

Hi. Uh, thank you for taking my question. My my uh, uh, quite a few of my questions have been answered. Uh, but can I go back to um, the question on, um, on margin and the isap program, uh, I guess. And I know you not providing that much detail but could could the margins match or exceed

Your existing or earlier margins that a certain volume of monitored.

And supervised.

Counts.

How do we sort of model that out?

Time, as both Mark and I have said, we have to implement some cost savings.

Uh, with regard to Staffing, uh, efficiencies and uh, service efficiencies as well as um, cost of devices.

That will.

All of that will take place over the next succeeding months. And if the uh, numbers materialize as they're identified in the pricing, uh, that was uh, re required of all the bidders are are margins and and revenues and uh, we'll we'll exceed what we have previously, I believe.

Got it.

Uh, got it. And then on the guide, um, the fiscal 25 guide, you know, the margins of about 23 to 24%, uh, historically have been 26. Is this um...

to be considered this to be sort of a new base.

Of of IBA, damn margins.

Are you speaking regarding isap or or no? I'm talking about the overall. Sorry. Yeah. Talking about the overall, uh, margins. Um, you know, this quarter was flat to last year, on, on higher, um, on higher revenues. Um,

Anything that explains um the ibida margins not picking up as much.

And should be considered that as the base, uh, even down margin going forward.

No, I, I think, we, we tried to articulate it. We, we talked about the fact that, um, as we're starting up these contracts,

Um, there's a, a cost investment that that takes place. Uh, we talked about the Alonzo facility, um and the rapid increase in in the participants and and us working hard to hire those folks.

So, both in the third quarter and the fourth quarter are going to have are going to be impacted to a certain degree by by those costs. And we're working hard to to get those normalized uh those operations normalized like our existing facilities. So I wouldn't necessarily say that the third quarter is is the new Baseline and has been impacted by some puts and takes. Uh and so I would just say um you're just going to we're going to continue to work hard to to satisfy our clients and work hard to manage our business.

Uh and um you know, continue to to do the best job that we can here, but uh there was some a few anomalies that took place in the quarter.

Great. And that's, that's really helpful. Thank you. And then just lastly on the activated facilities, normalizing in 2026.

Um, what what uh Revenue in ibida Step Up um should we expect?

uh, 426

I don't think we've got given guidance for 26 as yeah. No, we'll uh, we want to wrap up the quarter and I think we'll be able to provide you further details when we when we see you guys, when we chat with you guys. Uh early next year.

Got it. I guess the activated facilities would have normalized by Q1 or by Q2 next year.

Well the the ones that have been activated this year that that would be correct but we have 2, that will be activated the middle of next year.

Right.

Okay, uh, great. That's it. That's it for me. Thank you so much for answering my questions.

Thank you.

The next question comes from Brendan McCarthy with Sedoti. Please go ahead.

Great. Good morning. Thanks for taking my questions here. I wanted to start off in electronic monitoring. I think you mentioned your continuing to invest to stock up on some of the higher intensity wearables.

Um, can you can you quantify what what your ultimate you know, capacity is for some of the higher intensity wearables? Um, perhaps you know what, what number of population counts, could you monitor, you know, under that kind of segments of your

products.

I don't know how high is high. Um,

We are capable of monitoring, obviously, several hundreds of thousands.

Operations over the course of this year, we were developing new generation products for every one of our products that will be rolling out sometime next year, and we have.

The largest capacity of any monitoring company in the world to roll out.

New devices, each and every week.

Great? That makes sense. And then last question for me, just amid the government shutdown. Um, are you still having active negotiations? Uh, for the remaining idle beds that you have available or you have those negotiations? Negotiations pause. I'm just curious. If anything has really changed as it relates to your uh, discussions. Um, with reactivation

Help, I would characterize him as a discussion on. I don't think they're in the formal negotiation stage, but our discussions with ICE.

really take place almost on a continuous basis.

Understood understood that that's all for me. Thanks everybody.

The next question comes from Kurt Leki with Imperial Capital. Please go ahead.

Hello everyone. Thank you for the call and.

Uh, much appreciated with respect to ISAP.

I remember correctly.

I sat 4 was a 5-year deal.

And I'm I'm uh this is now a 2 year. Inclusive of the option periods. What what is the um what is it exclusive? Uh, of the option periods?

School.

Yes, what is the period? It would be a 1-year contract. It's a 1-year deal with a 1-year.

Option.

Okay, a lot of our contracts are 1 year with 4 1-year extensions, and we call them 5-year contracts because they almost always take all option options of the contract.

Okay, got it. And

So it's a shorter deal. What do you, what is the...

What's the takeaway there?

Um,

There's been no formal.

Policy announcement of the change that I'm aware of, but you know it.

It is a technology-driven kind of service, and technology changes fairly rapidly. Um, so it may make sense to make it a 2-year contract.

And that's one of the reasons that we are doing New Generation devices.

So, just given the, um,

The.

Uh, I guess uncertainty about how they want to proceed. They decided

To pursue a shorter deal.

You know, it's it's the large population base that you're you're grappling with its, it's almost 7 million people. And uh, it it's the service is in 2 forms as I said technology and Case Management Services and there may be a better way of doing that 2 years from now with

That's possible. And yeah we're we're we have the flexibility to respond to whatever the the policy change may or may not be 2 years from now.

Got it. Okay. That's and you're you've you you're, you're you've committed to

To be prepared to monitor 361,000.

People next year at some point.

Or next year, um, and we could monitor far beyond that.

Yeah.

Is there a will? That mean significant capex next year?

It'll be some capex. Yes. Uh, well, we've been stocking up on our our devices this year, as we've said, we've made significant Investments.

And I think we have more devices than any other company in the world.

I appreciate it. Thank you. And

um,

Uh, how much you mentioned, you know, increasing the authorization to $500 million and you've got some limitations on the...

Under your covenants today.

You know, I think we've said that we would be buying back approximately 100 million dollars of stock per year.

And I think at this present time, we're stuck in that. We've done 42 million so far this year.

That would leave, you know, the balance.

For the balance of the year.

Okay, appreciate it. Thank you.

This concludes our question and answer session, I would like to turn the conference back over to George, Sully executive, chairman of the Geo Group, for any closing, remarks.

Okay, well thank you for listening and providing us with your questions. We hope to address you at the next conference call. Thank you.

The Congress that have now concluded. Thank you for attending today's presentation. You may now disconnect