Q1 2026 The GEO Group Earnings Call

May 6, 2026

Operator: Good day. Welcome to The GEO Group Q1 2026 Earnings Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch tone phone. To withdraw your question, please press star and then 2. Please note this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President, Corporate Relations. Please go ahead.

Speaker #2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone.

Speaker #2: To withdraw your question, please press star and then two. Please note, this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President, Corporate Relations.

Speaker #2: Please go ahead.

Speaker #3: Thank you, operator. Good morning, everyone, and thank you for joining us for today's discussion of the Geo Group's first quarter 2026 earnings results. This morning, we will discuss our first quarter results as well as our outlook.

Pablo Paez: Thank you, operator. Good morning, everyone. Thank you for joining us for today's discussion of The GEO Group's Q1 2026 earnings results. This morning, we will discuss our Q1 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.geogroup.com. 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 that 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.

Speaker #3: 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.geogroup.com. Today, we will discuss non-GAAP basis information.

Speaker #3: A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and the supplemental disclosure that we issued this morning.

Pablo Paez: A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and the supplemental disclosure that 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.

Speaker #3: 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.

Speaker #3: 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, 10-Q, and 8-K reports.

Pablo Paez: 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, 10-Q, and 8-K reports. With that, please allow me to turn this call over to our Chairman, CEO, and founder, George Zoley. George.

Speaker #3: With that, please allow me to turn this call over to our chairman, CEO, and founder, George Zoley. George.

Speaker #4: Thank you, Pablo. Good morning, everyone, and thank you for joining us on this call. I will conduct the entire conference call due to Shane being out for the next couple of weeks.

George Zoley: Thank you, Pablo. Good morning to everyone, and thank you for joining us on this call. I will conduct the entire conference call due to Shayn being out for the next couple of weeks. Our diversified business units delivered strong financial and operational performance during Q1 2026. Our better-than-expected performance reflects significant revenue growth from the contracts that we entered into throughout 2025. As we have previously discussed, in 2025, we were awarded new or expanded contracts that represent up to approximately $520 million in new incremental annual revenues, which represents the largest amount of new business we have won in a single year in our company's history.

Speaker #4: Our diversified financial and operational performance during the first quarter of 2026. Our better-than-expected performance reflects significant revenue growth from the contracts that we entered into throughout 2025.

Speaker #4: As we have previously discussed, in 2025, we were awarded new or expanded contracts that represent up to approximately $520 million in new incremental annual revenues.

Speaker #4: Which represents the largest amount of new business we have won in the single year in our company's history. In our secure services segment, we entered into new contracts to house ICE detainees at four facilities totaling approximately $6,000 beds.

George Zoley: In our Secure Services segment, we entered into new contracts to house ICE detainees at 4 facilities totaling approximately 6,000 beds, including 3 previously idle company-owned facilities in New Jersey, Michigan, Georgia, and a management services contract in Florida. We also reactivated our company-owned Adelanto ICE Processing Center in California, which was already under contract but had been severely underutilized due to a long-standing COVID-related court case. These facility activations represent annual revenues of approximately $300 million and increased our total beds under contract with ICE to approximately 26,000 beds. The census across our ICE facilities reached a high of 24,000 early this year, has since declined to approximately 21,000, still representing more than 1/3 of the national ICE population of approximately 58,000.

Speaker #4: Including three previously idle company-owned facilities in New Jersey, Michigan, Georgia, and a management services contract in Florida. We also reactivated our company-owned Atalanto ICE processing center in California, which was already under contract, but had been severely underutilized due to a long-standing COVID-related court case.

Speaker #4: These facility activations represent annual revenues of approximately $300 million and increased our total beds under contract with ICE to approximately 26,000 beds. The census across our ICE facilities reached a high of 24,000 early this year, but has since declined to approximately 21,000.

Speaker #4: But still representing more than one-third of the national ICE population of approximately 58,000. We believe that this recent decline is likely due to several factors, including the recent transition in leadership at the Department of Homeland Security, and the 82-day partial government shutdown of DHS resulting in a lapse in annual appropriations for ICE.

George Zoley: We believe that this recent decline is likely due to several factors, including the recent transition in leadership at the Department of Homeland Security and the 82-day partial government shutdown of DHS, resulting in a lapse in annual appropriations for ICE. During this lapse in annual appropriations, we believe ICE detention operations have been supported with funding from the One Big Beautiful Bill. As a reminder, under the budget reconciliation bill, ICE received approximately $45 billion for detention available through 30 September 2029, and this funding is not impacted by the partial government shutdown. Congress has approved legislation that reopened most of DHS, excluding ICE and Customs and Border Protection, through an annual appropriations bill while proposing legislation through reconciliation for $70 billion to fund ICE and CBP through the next three and a half years.

Speaker #4: During this lapse in annual appropriations, we believe ICE detention operations have been supported with funding from the one big, beautiful bill. As a reminder, under the budget reconciliation bill, ICE received approximately $45 billion for detention, available through September 30, 2029, and this funding is not impacted by the partial government shutdown.

Speaker #4: Congress has approved legislation that reopened most of DHS, excluding ICE and customs and border protection, through an annual appropriations bill while proposing legislation through billion to fund ICE and CPB through the next three and a half years.

Speaker #4: Consistent with prior shutdowns, the services rendered under our contracts with ICE have continued uninterrupted as they are considered essential public safety services. However, the timing of payments and collections has been somewhat delayed, requiring us to carefully manage our liquidity and working capital needs.

George Zoley: Consistent with prior shutdowns, the services rendered under our contracts with ICE have continued uninterrupted as they are considered essential public safety services. However, the timing of payments and collections has been somewhat delayed, requiring us to carefully manage our liquidity and working capital needs. With the expansion of our revolving credit facility by $100 million earlier this year, we believe we have substantial liquidity. Our Q1 2026 results also reflect a significant expansion in our secure transportation services on behalf of both ICE and the U.S. Marshals Service. In 2025, we entered into a new or amended contracts to expand secure ground transportation services at 4 existing ICE facilities and at our 3 newly activated ICE facilities. The support services that we provide under our ICE air transportation subcontract have continued to steadily increase.

George Zoley: In addition, in 2025, we signed a new 5-year contract with the U.S. Marshals Service covering 26 federal judicial districts and spanning 14 states. Overall, these new and expanded transportation contracts are valued at approximately $60 million in incremental annual revenue. Importantly, in 2025, we also secured a new 2-year contract for the ISAP V program. ISAP is the only ICE program currently in place to provide electronic monitoring and case management services for individuals on the non-detained docket. The program relies on several forms of monitoring, including GPS, ankle monitors, or wrist-worn devices that provide real-time tracking, as well as the SmartLINK phone app, which relies on facial recognition, voice ID, and GPS to confirm a person's location during predetermined check-ins.

George Zoley: ISAP counts remained relatively stable during Q1 2026 at approximately 180,000 to 181,000 participants. Consistent with the trend we highlighted last quarter, we have continued to see steady technology shift to more intensive and higher priced monitoring devices such as ankle monitors. The number of ISAP participants on GPS ankle monitors has increased to more than 48,000 currently from 17,000 in early 2025. Correspondingly, the number of ICE participants on the SmartLINK mobile app has declined to approximately 131,000 today from approximately 159,000 in early 2025. We also continue to experience a steady increase in the number of ICE participants assigned to case management services, which involve staff interaction and monitoring for approximately 111,000 individuals currently.

George Zoley: If this trend continues, the technology and case management mix shift would continue to increase the revenues and earnings generated under the ISAP V contract, even if overall volume remains constant. Thus, we continue to be optimistic about the importance and growth potential of the ISAP V contract. We believe it is well-positioned to scale up to higher overall accounts. In Q4, we were also awarded a new 2-year contract by ICE for the provision of skip tracing services valued at up to $60 million in revenues per year. We began providing skip tracing services under this new 2-year contract in March and are optimistic that the contract can ramp up to higher volumes later this year.

George Zoley: Finally, at the state level, we were awarded two new management-only contracts in 2025 from the Florida Department of Corrections, valued at approximately $100 million in combined annual revenues. They include the 1,884-bed Graceville facility and the 985-bed Bay facility and are scheduled to transition to GEO Management on 1 July 2026. Moving to our updated guidance, we have increased our outlook for 2026 to reflect the strength of our Q1 results, and we believe there are still several sources of potential upside that are not currently included in our guidance. On the revenue side, sources of potential upside include additional growth in our Secure Services segment from the reactivation of additional idle facilities and or higher overall populations across our active facilities.

George Zoley: Additional volume increases and or accelerated technology service mix in our ISAP V contract. Additional revenue from higher utilization of our skip tracing contract. Additional growth potential in our secure transportation segment. On the expense side, our guidance assumes more moderate contribution from labor savings in subsequent quarters. Moving to our outlook for new business opportunities in 2026, we will continue to be in active discussions with ICE and the U.S. Marshals Service regarding the potential reactivation of additional idle facilities. It is our understanding that the present ICE detention census is approximately 58,000, distributed over 225 separate locations, which are primarily short-term jail facilities. We believe the federal government is continuing to pursue the priority of increasing immigration detention capacity to approximately 100,000 beds or more and consolidate to fewer, larger facilities.

George Zoley: As a 40-year partner to ICE, we expect to be part of the solution. We have approximately 6,000 idle beds at 6 company-owned facilities, which are primarily former U.S. Bureau of Prisons facilities and therefore high security, making them ideally suited for the current needs of the federal government. At full capacity, these 6,000 beds could generate more than $300 million in combined incremental revenues. Before moving on to a more detailed review of the Q1 results, I'd like to highlight our continued progress towards strengthening our capital structure and enhancing shareholder value. During the Q1, we purchased approximately 3.6 million shares for approximately $50 million, bringing the total number of shares repurchased to 8.5 million for approximately $141 million.

George Zoley: Our current total outstanding share count is approximately 133.7 million shares. We have approximately $359 million still available under our $500 million share repurchase authorization. We believe our stock continues to trade at historically low multiple despite the intrinsic value of our assets and our significant growth opportunities. We recognize that the imbalance creates a unique opportunity to enhance value for our shareholders through share repurchases. Moving to a more detailed review of our financial results.

George Zoley: Revenues for Q1 2026 increased to approximately $705.2 million, up from approximately $604.6 million in the prior year's Q1, reflecting a 17% increase. For Q1 2026, we reported net income attributable to GEO operations of approximately $38.3 million or $0.29 per diluted share. This compares to net income attributable GEO operations of approximately $19.6 million or $0.14 per diluted share for Q1 2025, reflecting a 96% increase this year.

George Zoley: Our adjusted EBITDA for Q1 2026 increased to approximately $131.4 million, up from approximately $99.8 million in the prior year's Q1, reflecting a 32% increase. Looking at revenue trends, our owned and leased Secure Services revenues increased by approximately $70 million or 23% increase compared to the prior year's Q1. This increase was driven by the activation of our 3 company-owned facilities under new contracts with ICE, which was offset by revenue loss from the sale of the Lawton, Oklahoma facility and the depopulation of Lee County, New Mexico facility. Quarterly revenues for our managed-only contracts increased by approximately $33 million or 22% from the prior first year's Q1.

George Zoley: This increase was driven by the joint venture agreement for the management of the North Florida ICE detention facility, as well as certain transportation revenue increases that are reported in this segment. Quarterly revenues for our Reentry Services increased by approximately 5%, offset by a 5% decline in non-residential services revenues compared to the prior year's Q1. Finally, Q1 2026 revenues for our electronic monitoring and supervision services decreased by approximately 4% from the prior year's Q1. This decrease was driven by the reduced pricing for our ICE ISAP V contract, which was offset by favorable technology and case management mix shift and some modest skip tracing revenues.

George Zoley: Turning to the expenses during Q1 2026, our operating expenses increased by approximately 15% as a result of the activation of our new ICE facility contracts and increased occupancy compared to the prior year's Q1. Operating expenses were favorably impacted by lower than expected labor costs compared to our prior guidance for Q1 2026. Our general and administrative expenses for Q1 2026 declined to 8.6% of revenue as compared to 9.6% of revenue in the prior year's Q1. Our Q1 2026 results reflect a year-over-year decrease in net interest expense of approximately $4 million as a result of the reduction of our total net debt.

George Zoley: Our effective tax rate for Q1 2026 was approximately 28.5%. Moving to our outlook, we have increased our guidance for the full year 2026 and issued guidance for Q2 2026. We expect full year 2026 GAAP net income to be $153 million to $166 million or a range of $1.15 to $1.25 per diluted share on annual revenues of $2.95 billion to $3.1 billion based on an effective tax rate of approximately 30%, inclusive of known discrete items. We expect full year 2026 E-adjusted EBITDA to be in the range of $525 million to $545 million.

George Zoley: We expect total capital expenditures for the full year of 2026 to be between $137.5 million and 162.5 million. For Q2 2026, we expect GAAP net income to be $33 million to 39 million or a range of $0.25 to 0.29 per diluted share on a quarterly revenues of $715 million to 725 million. We expect Q2 2026 adjusted EBITDA to be between $130 million and 135 million.

George Zoley: Moving to our balance sheet, we closed Q1 2026 with approximately $80 million in cash on hand and approximately $1.61 billion in total debt. At the end of Q1 2026, our total net debt was approximately $1.53 billion, and our total net leverage was below 3.2x adjusted EBITDA. With the expansion of our revolving credit facility by $100 million, which we announced in January, we believe we have substantial liquidity to support our diverse capital needs as we manage through the current partial government shutdown. In closing, we are very pleased with our Q1 results and improved full-year outlook.

George Zoley: Our strong performance has been driven by the new growth opportunities we captured in 2025 and are normalizing in 2026. Last year was the most successful period for new business wins in our company's history, and we expect 2026 to be a very active year as well. We therefore believe we have upside potential across our diversified business segments. We have approximately 6,000 idle high-security beds that remain available, which could generate in excess of $300 million in annual revenues at full occupancy. The continued shift in technology and case management mix and potential increases in counts under our ICE ISAP V contract could also provide additional upside through 2026.

Last year was the most successful period for new business wins in our company's history and we expect 2026 to be a very active year as well.

We have therefore believe we have upside potential across our Diversified business segments. We have approximately 6,000 Idol, high-security beds, that remain available which could generate in excess of $300 million in annual revenues at full occupancy.

George Zoley: We are also well positioned to continue to expand our delivery of secure ground and air transportation services for ICE and the U.S. Marshals beyond the significant growth we have already experienced. Finally, as we discussed last quarter, ICE has purchased 11 commercial warehouses that were to be retrofitted as detention facility while contracting with private sector companies for operations. These purchases were part of a plan to acquire 24 warehouses and re-retrofit them as detention facilities using funds from the $45 billion provided for detention in the One Big Beautiful Bill. At this time, the warehouse project has been paused, and DHS is evaluating how to proceed with this initiative to increase and consolidate detention capacity. It has also been widely reported that ICE is considering the purchase of approximately 10 privately-owned turnkey ICE processing centers.

to continue shift in technology and case management, mix and potential increases in counts under our IAP 5 contract could also provide additional upside through 2026

We are also well, positioned to continue continue to expand our delivery of secure ground, and air transportation services for ice. And the US, Marshals beyond the significant growth. We have already experienced

Finally, as we discussed last quarter, Isis purchased 11 commercial warehouses that we that were to be retrofitted as Detention Facility, while Contracting with private sector companies for operations.

These purchases were, were part of a plan, to acquire, 24, warehouses and retrofit them as detention facilities. Using funds from the 45 billion dollars provided for detention. In the 1, big, beautiful bill.

At this time, the warehouse project has been paused.

Incapacity. It is also been widely reported that Isis considering the purchase of approximately 10 privately owned turnkey.

George Zoley: ICE uses approximately 40 existing detention sites nationwide that are owned and operated by private contractors. CoreCivic owns and operates approximately 15 detention facilities, while GEO owns and operates 23 ICE detention facilities. I can respectfully acknowledge that we have been in discussions with ICE regarding the potential sale of multiple facilities subject to mutual agreement on price and our continued management of those facilities under long-term support services contracts. We consider ourselves primarily a support services operator and will place particular importance on our ability to continue our support services at any facility sold to ICE. There will also be a need to renegotiate select contracts so as to eliminate the ownership costs, such as depreciation and property taxes embedded in our present contracts in the event of ICE ownership.

Ice processing centers.

ICS is approximately 40 existing detention sites Nationwide that are owned and operated by private contractors.

Course, Civic owns and operates approximately 15 debt facilities. While go owns and operates 23 ice detention facilities.

I can respectfully acknowledge that we have been in discussions with ICE regarding the potential sale of multiple facilities.

Subject to mutual agreement on price and our continued management of those facilities under long-term Support Services contracts.

We consider ourselves primarily a support services operator and will place particular importance on our ability, to continue our support services at any facility. Sold to ice.

George Zoley: At this time, there is no definitive agreement in place with ICE and no precise timeline for the closing of any such transactions. Of course, we can give no assurances that these transactions will take place at all. If select facilities are sold to ICE, GEO would use the proceeds to reduce debt and continue stock repurchases, as well as other corporate purchase purposes. The potential sale of multiple facilities to ICE could represent a significant liquidity and shareholder value-enhancing event for our company. While the exact timing of government actions is always difficult to estimate, we remain focused on pursuing new growth opportunities and allocating capital to enhance our long-term value for our shareholders.

There will also be a need to renegotiate select contracts. So, as to eliminate the ownership costs, such as depreciation, and property, taxes embedded in our present contracts, in the event of ice ownership,

At this time, there is no definitive agreement in place with ice and no precise timeline for the closing of any such transactions.

And of course, we can give no assurances that these transactions will take place at all.

But if select facilities are sold to ice Geo would use the proceeds to reduce debt and continue to stock repurchase says, as well as other corporate purchases purposes.

George Zoley: Given the intrinsic value of our assets, including 50,000 owned beds at 70 facilities and our current and expected future growth, we believe that our stock is significantly undervalued and offers a very attractive investment opportunity. That completes my remarks, and I would be glad to take on any questions from our audience. Thank you.

The potential sale of multiple facilities to eyes. Could represent a significant liquidity and shareholder value. Enhancing the event for our company. While the exact timing of government actions is always difficult to estimate. We remain focused on pursuing new growth opportunities and allocating Capital to enhance our long-term value for our shareholders.

Intrinsic value of our assets including 50,000 owned beds at 70 facilities and our current and expected future growth. We believe that our stock is significantly undervalued and offers a very attractive investment opportunity that completes my remarks and I would be glad to take on any questions from our audience. Thank you.

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star 2. At this time, we will pause momentarily to assemble a roster. The first question will come from Greg Gibas with Northland Securities. Please go ahead.

Thank you. We will now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone,

If you were using a speaker-phone, please pick up your handset before pressing the keys.

If at any time your question has been addressed and you would like to withdraw your question. Please press star and then 2

At this time, we'll pause momentarily to assemble the roster.

And the first question will come from Greg Gibbus with Northland Security. Please, go ahead.

Greg Gibas: Hey, good morning. Thanks for taking the questions, and congrats on the execution there. Wanted to follow up on the potential facility sales and maybe how we should think about potential valuations in relation to the Lawton facility sale last year at, I believe, $130,000 per bed.

Hey, good morning. Thanks for taking the questions and congrats on the execution there. Um wanted to follow up on the potential facility sales and maybe how we should think about potential valuations in relation to the lot and facility sale last year at I believe 130,000 per bed.

George Zoley: Thank you for the question. I think the Lawton bed valuation is a good baseline to be followed by several other factors that should be result in a meaningful higher valuation of our ICE facilities. First, the physical plant at an ICE processing center is much more complicated with the addition of courtrooms and office space requirements for ICE personnel, which adds to the cost. Second, the ICE facility locations are in or near urban areas, which add to the land and construction costs. Third, several of the ICE facility locations are in blue states, which makes their development very difficult to establish and very problematic to replicate, thus adding to their value. Again, the Lawton sale at Oklahoma is a good baseline, but there's many things to consider beyond that which would drive the price to a higher level.

Thank you for the question.

I think the lot in bed, valuation is a good Baseline to be followed by several other factors. That should be

The result is a meaningful higher valuation of our facilities.

First, the physical plant at an ice processing center is much more complicated with the addition of courtrooms and office, space requirements, price personnel, which adds to the cost.

Second, the ice facility locations are in or near urban areas, which add to the land in construction costs.

And third, several of the ICE facility locations are in blue states, which makes their development very difficult to establish and very problematic to replicate, thus adding to their value. So, again, um,

The lot and sale at Oklahoma is a good Baseline, but there's many things to consider beyond that which would drive the price to a higher level.

Greg Gibas: Got it. That makes sense. Appreciate that. You know, I know, I know you mentioned it's difficult to predict the timing of these sales, but do you believe initial sales could still be, you know, I guess, realized or announced within Q2, or is Q3 a more likely timeframe?

Got it, that makes sense. Appreciate that. And you know I I know you mentioned. It's difficult to predict the timing of these sales. But do you believe initial sales could still be, you know, I guess realized or announced within Q2, or is Q3 a more likely time frame.

George Zoley: I would guess at late Q2 and maybe early Q3, but that's just a guess.

I would guess at late Q2, and, and maybe early Q3, but that's just a guess.

Greg Gibas: Fair enough. Fair enough. I guess last one from me as it related to some reports that, you know, ICE was activating the Central Valley Annex facility in California, you know, next to the Golden State Annex. Wondering if you could comment on, is that a transfer facility or is that a new any color you can provide there would be helpful.

Fair enough, fair enough, and I guess last one for me, as it relates to, um, some reports that, you know, ICE was activating the Central Valley Annex facility, um, in California, you know, next to the Golden State Annex. Uh, I wonder if you could comment on, is that a transfer facility or is that, that new—um, any color you could provide there would be helpful.

uh,

George Zoley: The Central Valley facility actually was under ICE to begin with in 2020. It was lent to the U.S. Marshals Service for up till only recently. ICE has taken it over since then. It's a 700-bed facility. It's located in the McFarland, California area next to another ICE facility actually adjacent to it. It's part of a complex that is entirely ICE controlled.

the Central Valley facility. So that actually was under ice to begin with uh in in 2020 and uh was lent to the US Marshal services for up up to only recently. And then uh I has taken it over since then. It's a 700 bed facility. It's located in the McFarland California area. Uh, next to um, another ice facility actually adjacent to it. So it's part of a comp

complex that is entirely ice controlled

Greg Gibas: Got it. Thanks very much.

got it. Thanks very much.

Operator: The next question will come from Joe Gomes with Noble Capital. Please go ahead.

The next question will come from Joe Gomes with Noble Capital. Please go ahead.

Joe Gomes: Good morning. Thanks for the detailed overview, George. Much appreciated.

George Zoley: You're welcome. Thank you.

Good morning, thanks for that. The details. Overview George much appreciated.

Okay, you're welcome. Thank you for

Joe Gomes: Just wanted to kinda circle back on the Q1 performance, especially given the, you know, the decline in ICE populations over the period. They were down, you know, roughly from 24,000, I think you said, in the end of the Q4 to 21,000 at the end of the Q1 or to today. Maybe give a little more color on, you know, on the kind of how that progressed through the quarter. Also maybe some more color on the ramp up of the reactivated facilities. Is that going as expected, or are they going slower than expected given the decline in ICE populations here recently, and what that, you know, possibly means for, you know, getting those facilities up to, you know, normalized occupancy levels?

So just wanted to kind of circle back on the the q1 uh performing the you know the decline in ice populations over the period. They were down. You know roughly from 24,000 I think you said in

The end of the fourth quarter to 21,000 at the end of the first quarter or to today. Um, maybe even a little more color on, you know, on the the the kind of how that progressed through the quarter. Um and also maybe some more color on the ramp up of the reactivated facilities. Is that going as expected, or they going slower than expected. Given the decline in ice populations here recently. Um, and what that, you know, positively means for, you know, getting those facilities up to, you know, a normalized occupancy levels.

George Zoley: Well, two very good questions. Let me take the first question regarding, you know, lower populations, which actually promoted an increase in our EBITDA. With respect to lower populations, it required less intake duties, less housing assignments, less off-site travel, less labor and overtime, for, you know, servicing these facilities, which at one point were extremely active as to the intake and outflow of detainees, which was very costly in bringing people in on an overtime basis, often, you know, to handle those areas of intake, housing, and off-site requirements. You know, it is stabilized at this point, and we think it will be fairly stable through the Q2 as well, with a pickup starting probably in the H2 of the year.

Well, 2, very good questions. Let me take the first questions regarding, um, you know, lower populations which actually, um, promoted an increase in our evida

With respect to lower populations it required less intake, duties less, uh, housing, assignments, less off-site, travel, less labor and overtime. Um, for you know,

servicing these facilities, which at 1 Point were extremely active as to the intake and and outflow of uh

George Zoley: The, the new facilities, you know, were had very rapid intakes at one point, and, you know, that has slowed down because of the general, you know, scale down of the populations nationally. We're kind of in a holding pattern, I guess to a large extent because of the change in administration and the lack of specific funding for ICE. You know, the, and a reevaluation of the immigration enforcement policies and programs.

Dpes, which was very costly in bringing people in on an overtime basis often, you know, to handle those areas of intake housing, and off-site, uh, requirements. But, you know, it is stabilized at this point and, um, we think it it'd be, it would be fairly stable through the second quarter as well. With a pickup starting, probably in the second half of the year.

Of the new facilities you know, we had very rapid intakes at one point and, you know, that has slowed down because of the general, you know, scaled-down of the populations nationally.

so, we're kind of in

a a holding pattern, um, I guess to a large extent because of the the change Administration and the lack of specific funding for ice and you know, the and a re-evaluation of the uh, immigration enforcement, um, policies and programs,

Joe Gomes: Right. Okay. Thank you for that. Then you talked about, you know, lower than anticipated, you know, labor cost. Maybe you could talk a little bit more, also a little more color on where all that is coming from or what is driving that?

Right. Okay, thank you for that and then

You talk about, you know, lower than anticipated, you know, labor cost.

More.

All color on where all that is coming from, or what is driving that?

George Zoley: Well, as I said, it's the lower number of intakes and lower overall population that drives It's primarily in the overtime costs. You know, to, you know, have additional people in the intake area, additional people serving in special needs cases, particularly mental health cases, you have to have additional staff. That requires, in many cases, overtime. You know, we're seeing a population that I'm told is more sickly than we've historically had. These people require more off-site visits, require more staff involvement, more overtime expense. So it's been a different situation for us.

Well, as I said, it's it's the lower number of intakes, and lower overall population, that, that drives. It's primarily in the overtime costs, you know, to, you know, have additional people in the intake area additional people uh serving. Um,

George Zoley: With the pause in the overall population levels and the intake activity, you know, it's given us a welcome breather from that very rapid intake and outflow processing that we experienced last year.

Joe Gomes: Okay. One more from me, if I may. In the last quarter, I believe it was, you talked about looking at some additional opportunities in the mental health area, and I am just wondering, you know, how that is progressing, those efforts.

In in Special Needs cases, particularly mental health cases. You have to have additional staff and that requires many cases over time. And, uh, you know, we're, we're seeing a, a population that I, I'm told is, is more sickly than we've historically had. And these people require more off-site visits, requiring more staff involvement more overtime expense. Um, it's so it, it's, it's been a different situation for us, but with the pause in the overall, uh, population levels and the intake, uh, activity, you know, it's it's giving us, uh, ah, ah, welcome breather from that, uh, very rapid intake and outflow processing that we experienced last year.

George Zoley: We do have a pending proposal with the Florida Department of Children and Families for a forensic facility in the state that we, at one time, developed, constructed, and operated for eight years. We expect there'll be a decision on that procurement in the next 30 days, I imagine.

Okay, and then 1 more for me. If if I met um you know the last quarter I believe it was you you talked about looking at some additional opportunities in the mental health area and I'm just wondering, you know how that has progressing those efforts.

Um, we do have a pending proposal, uh, with the State of Florida Department of Children and Families for a, uh, forensic facility in the state that we at one time developed, constructed, and operated for eight years. So, um, we expect there, there will be a decision on that, uh, procurement in the next 30 days, I imagine.

Joe Gomes: Okay, great. Thanks, George. Appreciate it. I'll get back in queue.

George Zoley: Thank you.

Okay great. Thanks George. Appreciate it. I'll get back in queue.

Thank you.

Operator: The next question will come from Brendan McCarthy with Sidoti & Co. Please go ahead.

Operator: The next question will come from Brendan McCarthy with Sidoti & Company. Please go ahead.

The next question will come from Brendan McCarthy with sidonian Co. Please. Go ahead.

Brendan McCarthy: Great. Good morning. Thanks for taking my questions here. I wanted to start off on the skip tracing business. I know you're only about maybe 2 months or so into operations there, but can you give us any detail on the current volume in that program and the revenue model associated with the program?

Great. Good morning. Thanks for taking my questions here. I wanted to start off on the skip tracing business. I know you're, you're only about maybe 2 months or so into operations there. Uh, but can you give us any detail on the current volume in that program and and the revenue model associated with the, with the program?

George Zoley: Our guidance really reflects some modest improvement in that program where we received an initial contract, we delivered it very quickly. There are other contractors that were awarded similar contracts. They're still working on their assignments. We're waiting for them to catch up so we can get our next assignment.

Our our guidance really reflects some uh modest Improvement in that program. We're we we received an initial contract. We delivered it very quickly. There are other contractors that were awarded similar contracts, they're still working on their

Their assignments and we're waiting for them to catch up so we can get our next assignment.

Brendan McCarthy: Understood. Just on the updated 2026 guidance, I know the low end of the revenue guide was brought up, but it looks like there was a more meaningful uplift in the adjusted EBITDA and EPS guidance for the year. I'm just curious as to what's the read through there, and is it really just in line with your prior comments on kind of a lower cost structure at these new facilities?

Understood and then just on the the updated 2026 guidance. Um I know the the low end of the revenue guide was was brought up but it looks like there was a more meaningful uplift in the adjusted ibida. And and EPS guidance for the year, I'm just curious as to what's the re what's the uh, the read through their

George Zoley: It really is. At this point, I think that's our view of as to what's taking place in the financials of these facilities. You know, we've had 1 month of activity to reflect on that, and it I think we're on track as to our guidance and our, the underlying assumptions in that guidance. Yeah, I think, you know, we've given you good guidance.

And is it really just in line with your prior comments on on, kind of a lower cost structure at these new facilities? It, it really is at this point, I I think that's our our, our view of as to what, uh,

Uh, taking place in in the financials of these facilities, you know, we've had 1 month of activity to reflect on that. And it it I think we're on track as to our our guidance and our the underlying uh assumptions in that guidance. So yeah, I think, you know, we've given you good guidance.

Brendan McCarthy: Got it. Thanks for that detail, George. One more question from me on the updated guidance for CapEx. I think it was up 10% to 11% at the midpoint. Any insight into that increase and maybe what specific segment in the business is gonna consume that incremental capital?

Got it. Thanks for that detailed George 1. More question from me, on the, on the updated guidance, for, for capex. I think it was up 10 to 11% at the midpoint.

Um, any insight into that increase and and maybe what specific segments in the business is, is going to consume that incremental capital.

George Zoley: Well, we have, as I said, 6,000 idle beds, and some of those facilities need some retrofitting to bring them up to date and revise them according to, you know, the new updated needs of ICE. You know, as we get these new contracts, ICE is typically asking for more office space, more areas for their use, for more staff. You know, we have to, you know, pay for those improvements to the capital structure of the facility.

Staff. And, you know, we have to, you know, pay for those, uh, improvements to the, the capital structure of the facility.

Brendan McCarthy: Understood. Thanks, George. That's all from me.

Understood. Thanks George. That's all from me.

Operator: The next question will come from Raj Sharma with Texas Capital. Please go ahead.

Operator: The next question will come from Raj Sharma with Texas Capital Securities. Please go ahead.

The next question will come from Raj, Sharma with Texas Capitol. Please go ahead.

Raj Sharma: Hi. Congratulations on the solid results and raising the guidance. Thank you for taking my questions. I wanted to get some clarity on the $520 million of revenues from wins last year. They don't seem to be fully reflected in the increase in the revenue guidance. Could you please help bridge how much of this, you know, the five wins will be fully ramped versus still to come? Also perhaps comment on the utilization at Adelanto and the other, you know, the three activated ICE facilities by end of year?

I um, congratulations on the solid results in raising the guidance. Um,

And thank you for taking my questions. I, I I wanted to get some clarity on. Um, the 520 million of revenues, from wins last year.

Um, are they? They don't seem to be fully reflected in the increase in the revenue guidance. Could you please help bridge?

how much of this, um,

You know, the 5 wins will be fully ramped versus still to come.

And also perhaps comment on the utilization that adolanto and the other. You know, the 3 activities facilities

George Zoley: Okay.

Raj Sharma: sort of the rate.

Raj Sharma: Sort of the rate.

George Zoley: Well, $100 million of the new 520 was related to 2 facilities in the state of Florida. Those facilities have not yet been activated. I think they start July 1. Only half of the $100 million will take place this year. We had an offset of 2 facilities with the discontinuation of the Lawton, Oklahoma facility, which was approximately 2,400 beds, and the Lee County facility, which was approximately 1,200 beds.

By end of year. Okay. Rate.

Well, a 100 million of the the new 520 was uh related to 2 facilities in the State of Florida. Those facilities have not inbit activated. I think they started July 1. So only half of the 100s of 2 facilities, uh with the discontinuation of the lotto Oklahoma facility, which was approximately 2400 beds and the Lee County facility, which was approximately 1,200 beds.

Raj Sharma: Got it. Got it. Then just I wanted to understand how soon do you see a pickup in the ICE detention stats? Has your outlook on achieving the overall ICE achieving the overall 100,000 detentions, has that changed at all with the change in the DHS administration and the lull?

Got it. Um, got it. And

and then just, I wanted to understand how soon, um,

Do you see a pickup?

In the ice detention stats and, and has your outlook.

Uh, on achieving the overall, uh, ice achieving the overall 100, 100 100 thousand detentions has that changed at all with the change in the DHS Administration.

and the

George Zoley: Well, we don't have any special insight as to what the administration is doing, as to how they're reassessing the initiative to convert warehouses to detention facilities. I think there's still an objective of, you know, trying to increase overall nationwide capacity, as close as possible to the 100,000 and to consolidate to less than the 250, approximately, locations they have now to, you know, fewer larger scale facilities. As I think people are aware that, as I've said today, you know, we have 6,000 beds that can be activated within a few months. I think CoreCivic has maybe 10,000 beds. I think both have further expansion capabilities on those beds that I'm citing, that we could expand for our 6,000 to maybe 10,000.

law. Well,

We don't have any.

Special insight as to what the administration is doing, uh, uh, as to how they're, uh, reassessing the initiative to convert warehouses to, uh, detention facilities. But I, I think there's still, uh,

An objective of you know trying to increase overall na Nationwide capacity. Uh,

As close as possible to the 100,000 and to consolidate uh, to less than the 200.

George Zoley: The private sector with the two major providers can provide a very material, meaningful increase in nationwide capacity at a very comparable, favorable cost.

50 approximately locations, they have now to, you know, fewer larger scale facilities. But as I think people are aware that as I've said today, you know, we have 6,000 beds that can uh, be activated within a few months. Uh, I think of course, Civic has maybe 10,000 beds, so that and I think both have further expansion, you can build capabilities on those beds that I'm citing that we could expand for our 6,000 to maybe 10,000. Um and so the private sector with the 2 major providers can provide uh uh

A very material, meaningful increase in nationwide capacity at a very comparable, favorable cost.

Raj Sharma: Got it. Thank you for taking the questions. I'll get back in the queue. Thank you.

Got it. Thank you. Uh for taking my questions. I'll get back in the queue. Thank you.

Operator: The next question will come from Kirk Ludtke with Imperial Capital. Please go ahead.

Kirk Ludtke: Hello, everyone. Thank you for the call. George, you mentioned the 100,000 beds in fewer facilities. Do you have a sense for how many of those 100,000 beds ICE would want to own?

The next question will come from Kirk leki with imperial capital. Please go ahead.

Uh, hello everyone, thank you for the call. Um, George, you mentioned the 100,000...

Beds and fewer facilities. Do you have a sense for how many of those 100,000 beds? Ice would want to own.

George Zoley: Probably as many as possible. I think they're starting to look at the price tags of each of the facilities and doing comparisons as to, you know, whether the existing turnkey facilities may be a better play financially, operationally, so forth, than some of these other locations which have been politically problematic. You know, all of the plans, I think, are being reviewed, assessed, and, you know, I'm sure they'll come up with some reasonable conclusions.

Probably as many as possible. Uh,

Financially operationally so forth, then some of these other locations which have been politically problematic. But you know,

Kirk Ludtke: Got it. Why do they wanna own the facilities rather than contract with third parties?

So all of the plans I think are being reviewed assess and, you know, I'm sure they'll come up with some reasonable conclusions.

Got it.

Um,

Why, why do they want to own the facilities rather than contract with third parties?

George Zoley: I think it's been reported that through federal ownership that there is more protections from litigation, unwarranted litigation, that infringes upon the activities of the ICE processing centers. There's been litigation regarding overseeing medical services, food services, general cleanliness, et cetera. It's really unprecedented and I believe it's fundamentally unconstitutional. As some blue states are considering more active involvement in oversight of facilities, I think the logical solution to much of that is federal ownership of the facilities. They are federal facilities to begin with, in my opinion. It's the federal government who's paying for, you know, the operations of the facilities.

Reported that. Uh,

Through Federal ownership that there is more protections from litigation. Uh,

Unwarranted litigation that infringes upon the activities of the uh Ice uh processing centers. Uh there's been litigation regarding um, overseeing Medical Services food services, General cleanliness Etc, and it's it's really unprecedented in in, I believe it's fundamentally unconstitutional. And as, as some blue states, are considering more active involvement in oversight of facilities, I think the The Logical, uh, solution to much of that is federal ownership of the facilities. They, they are federal food.

George Zoley: The ownership of the buildings will provide stronger credibility in the courts as to, you know, the Supremacy Clause in the Constitution, that these are federal facilities and they are carrying out the congressional priorities of the immigration programs and policies that Congress has passed, and that states can only have very limited involvement in those policies and programs.

Facilities to begin with, in my opinion, it's the federal government who's paying for, you know, the uh, operations of the facilities.

But the ownership of the buildings will provide stronger—um,

Credibility in the courts as to, you know, the supremacy clause in the Constitution that these are federal facilities. And and they are carrying out the Congressional priorities of of the immigration programs and policies that Congress has passed and that

States can only have very limited involvement in those policies and programs.

Kirk Ludtke: Interesting. Thank you. How many beds are in your 23 ICE facilities?

Interesting, thank you. Um,

How many, how many beds are in your 23, ice facilities?

George Zoley: We have 25,000 beds in those 23 owned facilities.

we have, uh,

25,000 uh bets in those 23 owned facilities.

Kirk Ludtke: Great. Lastly, you mentioned the $45 billion. Would ICE need any type of incremental approval to do this, or is that at their discretion, the $45 billion at their discretion?

Great. And then lastly do you mentioned the 45 billion do they would ice need any type of incremental approval to

George Zoley: The $45 billion is at their discretion.

To do this, or is that at their discretion, the 45 billion at their discretion.

45 billion is at their discretion.

Kirk Ludtke: Got it. I appreciate it. Thank you very much.

Got it, I appreciate it. Thank you very much.

Operator: This concludes our question and answer session. I would like to turn the conference back over to George Zoley, Executive Chairman and CEO of The GEO Group, for any closing remarks.

This concludes our question and answer session. I would like to turn the conference back over to George Zoley, Executive Chairman and CEO of The GEO Group, for any closing remarks.

George Zoley: Thank you for being on this call. We look forward to addressing you on the next one.

Thank you for, uh, being on this call and we look forward to addressing you on the next 1.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded, thank you for attending today's presentation. You may now disconnect

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