Q2 2026 CoreCivic Inc Earnings Call

August 6, 2026

Operator: Good day, thank you for standing by. Welcome to the Q2 CoreCivic, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please limit yourself to one question and one follow-up question. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today. Please go ahead.

Speaker #1: After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please limit yourself to one question and one follow-up question.

Speaker #1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today. Please go ahead.

Speaker #2: Thank you, operator. Good morning, everyone, and welcome to CoreCivic's second quarter 2026 earnings call. Participating on today's call are Patrick Swindle, CoreCivic's President and Chief Executive Officer, and David Garfinkle, our Chief Financial Officer.

Jeb Bachmann: Thank you, operator. Good morning, everyone, and welcome to CoreCivic's Q2 2026 earnings call. Participating on today's call are Patrick Swindle, CoreCivic's President and Chief Executive Officer, and David Garfinkle, our Chief Financial Officer. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. On this call, we will discuss financial results for the Q2 2026, as well as updated financial guidance for the 2026 year. We will also discuss developments with our government partners and provide you with other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act.

Speaker #2: We are also joined here in the room by our vice president of finance, Brian Hammonds. On this call, we will discuss financial results for the second quarter of 2026, as well as updated financial guidance for the 2026 year.

Speaker #2: We will also discuss developments with our government partners and provide you with other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the Safe Harbor Provisions of the Private Securities and Litigation Reform Act.

Speaker #2: Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our second quarter 2026 earnings release issued after market yesterday, as well as in our securities and exchange commission filings, including Forms 10-K, 10-Q, and also 8-K reports.

Jeb Bachmann: Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our Q2 2026 earnings release issued after market yesterday, as well as in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q, and 8-K reports. You are cautioned that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future. Management will discuss certain non-GAAP metrics. A reconciliation of the most comparable GAAP measurement is provided in the corresponding earnings release and included in the company's quarterly supplemental financial data report posted on the investors page of the company's website at corecivic.com. With that, it is my pleasure to turn the call over to our CEO, Patrick Swindle.

Jeb Bachmann: Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our Q2 2026 earnings release issued after market yesterday, as well as in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q, and 8-K reports. You are cautioned that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future. Management will discuss certain Non-GAAP metrics. A reconciliation of the most comparable GAAP measurement is provided in the corresponding earnings release and included in the company's quarterly supplemental financial data report posted on the investors page of the company's website at corecivic.com. With that, it is my pleasure to turn the call over to our Chief Executive Officer, Patrick Swindle.

Speaker #2: Your caution that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future.

Speaker #2: Management will discuss certain non-GAAP metrics. A reconciliation of the most comparable GAAP measurement is provided in the corresponding earnings release and included in the company's quarterly supplemental financial data report posted on the Investors page of the company's website at corecivic.com.

Speaker #2: With that, it is my pleasure to turn the call over to our CEO, Patrick Swindle.

Speaker #3: Thank you, Jeb. Good morning, and thank you for joining us for CoreCivic's second quarter 2026 earnings call. On this morning's call, we will discuss our second quarter operational results and provide updates on the latest developments with our government partners.

Patrick Swindle: Thank you, Jeb. Good morning, and thank you for joining us for CoreCivic's Q2 2026 earnings call. On this morning's call, we will discuss our Q2 operational results and provide updates on the latest developments with our government partners. Following my opening remarks, I will hand the call over to our CFO, Dave Garfinkle, who will provide greater detail on our Q2 2026 financial results, as well as our updated 2026 financial guidance. Dave will also provide an update on our capital structure, including recent actions to reduce our outstanding indebtedness and planned activities for remaining proceeds from our recent asset sale activities. Before we discuss this quarter's financial performance, I want to highlight the activity that has occurred subsequent to the end of the Q2.

Patrick Swindle: Thank you, Jeb. Good morning, and thank you for joining us for CoreCivic's Q2 2026 earnings call. On this morning's call, we will discuss our Q2 operational results and provide updates on the latest developments with our government partners. Following my opening remarks, I will hand the call over to our Chief Financial Officer, Dave Garfinkle, who will provide greater detail on our Q2 2026 financial results, as well as our updated 2026 financial guidance. Dave will also provide an update on our capital structure, including recent actions to reduce our outstanding indebtedness and planned activities for remaining proceeds from our recent asset sale activities. Before we discuss this quarter's financial performance, I want to highlight the activity that has occurred subsequent to the end of the Q2.

Speaker #3: Following my opening remarks, I will hand the call over to our CFO, Dave Garfinkle, who will provide greater detail on our second quarter 2026 financial results as well as our updated 2026 financial guidance.

Speaker #3: Dave will also provide an update on our capital structure, including recent actions to reduce our outstanding indebtedness and planned activities for remaining proceeds from our recent asset sale activities.

Speaker #3: Before we discuss this quarter's financial performance, I want to highlight the activity that has occurred subsequent to the end of the second quarter. In early July, we announced the sale of two facilities: the California City Detention Facility and Otay Mesa Detention Center, both located in California to the Department of Homeland Security for gross proceeds of $1.5 billion.

Patrick Swindle: In early July, we announced the sale of two facilities, the California City Detention Facility and Otay Mesa Detention Center, both located in California, to the Department of Homeland Security for gross proceeds of $1.5 billion. Earlier this week, we announced the sale of two additional facilities, the Midwest Regional Reception Center, located in Kansas, and the Prairie Correctional Facility, located in Minnesota, to our government partner for gross proceeds of $734 million. After estimated income taxes and transaction costs, we estimate our net proceeds from these four sales to be approximately $1.6 billion. At an average price per bed of $307,000, and considering the location, size, cost, time, and effort to replace these facilities, we believe these sales were conducted at a fair valuation for both parties and supports our continued work to be a dependable partner for government.

Speaker #3: Earlier this week, we announced the sale of two additional facilities: the Midwest Regional Reception Center, located in Kansas, and the Prairie Correctional Facility, located in Minnesota, to our government partner for gross proceeds of $734 million.

Speaker #3: After estimated income taxes and transaction costs, we estimate our net proceeds from these four sales to be approximately $1.6 billion. At an average price per bed of $307,000, and considering the location, size, cost, time, and effort to replace these facilities, we believe these sales were conducted at a fair valuation for both parties, and supports our continued work to be a dependable partner for government.

Speaker #3: These transactions also demonstrate the underlying value of the company's real estate portfolio. They also fortify our already strong financial position and create significant balance sheet flexibility for investments in our business, our capital allocation, and our growth strategies going forward.

Patrick Swindle: These transactions also demonstrate the underlying value of the company's real estate portfolio. They also fortify our already strong financial position and create significant balance sheet flexibility for investments in our business, our capital allocation, and our growth strategies going forward. As we've previously disclosed in the press releases for the facilities that we have sold, we will continue operating these four facilities under terms of the existing management contracts. However, contract terms may be ultimately modified due to the transfer of ownership. We've adjusted fiscal 2026 guidance to account for the potential of modified terms, which Dave will discuss further. In addition to the asset sales completed to date, we have recently begun discussions with ICE about the potential acquisition of additional detention facilities. These discussions are in preliminary stages, and we can provide no assurance that any additional sales will occur.

Speaker #3: As we've previously disclosed in the press releases for the facilities that we have sold, we will continue operating these four facilities under terms of the existing management contracts.

Speaker #3: However, contract terms may be ultimately modified due to the transfer of ownership. We have adjusted fiscal 2026 guidance to account for the potential of modified terms, which Dave will discuss further.

Speaker #3: In addition to the asset sales completed today, we have recently begun discussions with ICE about the potential acquisition of a traditional detention facilities. These discussions are in preliminary stages and we can provide no assurance that any additional sales will occur.

Speaker #3: Also earlier this week, and just prior to closing on the sale of the Prairie Correctional Facility, we announced a new contract award to manage this $1,600-bed facility.

Patrick Swindle: Earlier this week, and just prior to closing on the sale of the Prairie Correctional Facility, we announced a new contract award to manage this 1,600-bed facility. Idle since 2010, we made significant investments in this facility over the last 18 months as we prepared it for occupancy, and we are pleased to reactivate another idle facility as we work to meet our government partner needs. We currently expect this facility to have a minimal contribution to earnings in 2026, as we've just begun hiring staff and expect to begin receiving detainees at this facility in the Q4. Bolstered by a strong cash position, we moved quickly to reduce our outstanding indebtedness to give us maximum flexibility as we consider how to best deploy remaining proceeds and continue our return of capital to our shareholders.

Speaker #3: Idle since 2010, we made significant investments in this facility over the last 18 months as we prepared it for occupancy. And we are pleased to reactivate another idle facility as we work to meet our government partner needs.

Speaker #3: We currently expect this facility to have a minimal contribution to earnings in 2026, as we have just begun hiring staff and expect to begin receiving detainees at this facility in the fourth quarter.

Speaker #3: Bolstered by our strong cash position, we moved quickly to reduce our outstanding indebtedness to give us maximum flexibility as we consider how to best deploy the remaining proceeds and continue our return of capital to our shareholders.

Speaker #3: A portion of the net sale proceeds was used to repay in full the outstanding balance under our $575 million revolving credit facility, which is available to be redrawn, and our incremental term loan.

Patrick Swindle: A portion of the net sale proceeds was used to repay in full the outstanding balance under our $575 million revolving credit facility, which is available to be redrawn, and our incremental term loan. We've also announced our intention to redeem on 12 August 2026, $238.5 million of senior notes due in 2027. Following these actions, on 4 August, the board approved a $500 million increase to our existing share repurchase program, providing capacity for approximately $756 million in additional repurchases. I'll now move on to a high-level overview of our Q2 operational performance. Despite lower enforcement activity and reductions in nationwide ICE detention populations following leadership changes and funding uncertainty at the agency, our Q2 results exceeded average analyst estimates for adjusted EPS by $0.04 and adjusted EBITDA by $2 million.

Speaker #3: We have also announced our intention to redeem on August 12, 2026, $238.5 million of senior notes due in 2027. Following these actions, on August 4, the board approved a $500 million increase to our existing share repurchase program, providing capacity for approximately 756 million in additional repurchases.

Speaker #3: I'll now move on to a high-level overview of our second quarter operational performance. Despite lower enforcement activity and reductions in nationwide ICE detention populations, following leadership changes and funding uncertainty at the agency, our second quarter results exceeded average analyst estimates for adjusted EPS by 4 cents and adjusted EBITDA by $2 million.

Speaker #3: For purposes of reviewing results, we redefined our operating and reportable segments during the second quarter to align financial reporting with the manner in which we manage the businesses.

Patrick Swindle: For purposes of reviewing results, we've redefined our operating and reportable segments during Q2 to align financial reporting with the manner in which we manage the businesses. We now view operating results in three operating segments: CoreCivic Residential, CoreCivic Services, and CoreCivic Properties, which Dave will describe in more detail. Total occupancy for our residential segment for the quarter was 78.4%, up 1.6 points since the year-ago quarter. The average daily population across all of the facilities we manage was 66,363 individuals during Q2 2026, compared with 54,026 in the year-ago quarter. This increase was driven by more demand for our services, new contracting activity, and the Farmville acquisition that was completed 1 July 2025. Federal partners, primarily ICE and the U.S. Marshals Service, comprised 53% of CoreCivic's total revenue in Q2.

Speaker #3: We now view operating results in three operating segments: CoreCivic Residential, CoreCivic Services, and CoreCivic Properties, which Dave will describe in more detail. Total occupancy for our Residential segment for the quarter was 78.4%, up 1.6 points since the year-ago quarter.

Speaker #3: The average daily population across all of the facilities we manage was 66,363 individuals, during the second quarter of 2026, compared with 54,000 in 2026 and the year-ago quarter.

Speaker #3: This increase was driven by more demand for our services, new contracting activity, and the Farmville acquisition that was completed July 1, 2025. Federal partners, primarily ICE and the U.S.

Speaker #3: Marshals Service, comprise 53% of CoreCivic's total revenue in the second quarter. Revenue from our federal partners increased $27.2% during the second quarter of 2026, compared with the prior year quarter.

Patrick Swindle: Revenue from our federal partners increased 27.2% during Q2 2026 compared with the prior year quarter. Further breaking down our revenue mix, revenue from ICE increased to $91.3 million, or 51.6%, while revenue from the U.S. Marshals Service decreased by $14.1 million versus the prior year quarter. Some of this decline is simply a mix shift where ICE and Marshals share a contract. Revenue in Q2 2026 also benefited from the contribution of Clinical Solutions Pharmacy, which was in line with our expectations. Populations from ICE in our care increased by approximately 6,000 individuals, or 59.6%, from the beginning of 2025 through 30 June 2026, when we cared for 16,197 individuals. Our average daily population decreased by 1,184 individuals in Q2 2026 from Q1 2026, net of a 793 increase that occurred at the 5 facilities we've activated.

Speaker #3: Further breaking down our revenue mix, revenue from ICE increased $91.3 million, or 51.6%, while revenue from the U.S. Marshals Service decreased by $14.1 million versus the prior year quarter.

Speaker #3: Some of this decline is simply a mixed shift where ICE and Marshals share a contract. Revenue in the second quarter of 2026 also benefited from the contribution of clinical solutions pharmacy, which was in line with our expectations.

Speaker #3: Populations from ICE and our care increased by approximately 6,000 individuals, or 59.6%, from the beginning of 2025 through June 30, 2026, when we cared for 16,197 individuals.

Speaker #3: Our average daily population decreased by 1,184 individuals in the second quarter of 2026, from the first quarter of 2026, net of a 793 increase that occurred at the five facilities we've activated.

Speaker #3: In late January, 2026, nationwide, ICE detention populations reached historical highs of around 70,800 individuals. However, a government shutdown that centered around Department of Homeland Security funding; a reorganization of DHS leadership; and a subsequent impact to enforcement activities, including redeployment of ICE agents to TSA checkpoints, led to a 10,500 decrease in detention populations by early April 2026.

Patrick Swindle: In late January 2026, nationwide ICE detention populations reached historical highs of around 70,800 individuals. However, a government shutdown that centered around Department of Homeland Security funding, a reorganization of DHS leadership, and a subsequent impact to enforcement activities, including redeployment of ICE agents to TSA checkpoints, led to a 10,500 decrease in detention populations by early April 2026. Consistent with our internal forecast, populations have begun to rise again, reaching approximately 65,500 in early July. Dave will review our population assumptions at a high level reflected in our financial guidance. As demand from ICE returned, populations at activating facilities continued to increase. We continue to receive detainee populations at our 2,560-bed California City Detention Facility, where we signed a new contract effective 1 September 2025, and our 2,160-bed Diamondback Correctional Facility, where we signed a new contract effective 30 September 2025.

Speaker #3: Consistent with our internal forecast, populations have begun to rise again, reaching approximately 65,500 in early July. Dave will review our population assumptions at a high level, reflected in our financial guidance.

Speaker #3: As demand from ICE returned, populations that activating facilities continued to increase. We continue to receive detainee populations at a 2,560-bed California City detention facility, where we signed a new contract effective September 1, 2025, and at our 2,160-bed Diamondback Correctional Facility, where we signed a new contract effective September 30, 2025.

Speaker #3: As of June 30, 2026, we cared for 1,674 and 1,522 individuals, respectively, at these two facilities. As mentioned last quarter, after obtaining a special use permit at the Midwest Regional Reception Center, we began accepting detainees at the previously idle facility in March.

Patrick Swindle: As of 30 June 2026, we cared for 1,674 and 1,522 individuals respectively at these two facilities. As mentioned last quarter, after obtaining a special use permit at the Midwest Regional Reception Center, we began accepting detainees at this previously idle facility in March. As of 30 June, we cared for 379 individuals at this facility. We continue to maintain four idle corrections and detention facilities containing approximately 5,500 beds to meet any federal or state increase in demand. We remain confident that the corrections and detention beds that we provide are the most humane, most efficient logistically, most compliant, most secure, are readily available, and provide the best value to the government. Since our last earnings call, our share price has begun to reflect the underlying value of our business and our assets.

Patrick Swindle: As of 30 June 2026, we cared for 1,674 individuals and 1,522 individuals respectively at these two facilities. As mentioned last quarter, after obtaining a special use permit at the Midwest Regional Reception Center, we began accepting detainees at this previously idle facility in March. As of 30 June, we cared for 379 individuals at this facility. We continue to maintain four idle corrections and detention facilities containing approximately 5,500 beds to meet any federal or state increase in demand. We remain confident that the corrections and detention beds that we provide are the most humane, most efficient logistically, most compliant, most secure, are readily available, and provide the best value to the government. Since our last earnings call, our share price has begun to reflect the underlying value of our business and our assets.

Speaker #3: As of June 30, we cared for 379 individuals at this facility. We continue to maintain four idle corrections of detention facilities containing approximately 5,500 beds to meet any federal or state increase in demand.

Speaker #3: We remain confident that the corrections of detention beds that we provide are the most humane and most efficient logistically, most compliant, most secure, and readily available, and provide the best value to the government.

Speaker #3: Since our last earnings call, our share price has begun to reflect the underlying value of our business and our assets. However, we believe that our current share price continues to imply a significant discount to fair value.

Patrick Swindle: However, we believe that our current share price continues to imply a significant discount to the fair value. Based on updated guidance, our enterprise value to EBITDA multiple has actually contracted since last quarter after taking into consideration the cash on our balance sheet, and we traded a meaningful discount to our long-term average. Accordingly, we plan to continue prioritizing our share repurchase program, taking into consideration our stock price and alternative opportunities to deploy capital. Additionally, the recently completed facility sales provide meaningful proceeds that have been used to reduce outstanding debt and can be used for further debt repayments and investments to bolster our core business. Following on the successful acquisition of CSP, M&A could also provide opportunities for growth, but any potential transaction would need to be a strategic fit and compare favorably on a valuation basis with our other capital deployment targets.

Speaker #3: Based on updated guidance, our enterprise-valued EBITDA multiple has actually contracted since last quarter, after taking into consideration the cash on our balance sheet and we traded a meaningful discount to our long-term average.

Speaker #3: Accordingly, we plan to continue prioritizing our share repurchase program, taking into consideration our stock price and alternative opportunities to deploy capital. Additionally, the recently completed facility sales provide meaningful proceeds that have been used to reduce outstanding debt and can be used for further debt repayments and investments to bolster our core business.

Speaker #3: Following on the successful acquisition of CSP, M&A could also provide opportunities for growth, but any potential transaction would need to be a strategic fit and compare favorably on evaluation basis with our other capital deployment targets.

Speaker #3: With that, I'll turn the call over to Dave to discuss our second quarter financial results in more detail. Our capital allocation activities and the assumptions underlying are updated 2026 financial guidance.

Patrick Swindle: With that, I'll turn the call over to Dave to discuss our Q2 financial results in more detail, our capital allocation activities, and the assumptions underlying our updated 2026 financial guidance. Dave?

Speaker #3: Dave?

Speaker #2: Thank you, Patrick, and good morning, everyone. In the second quarter of 2026, we generated GAAP EPS of $37 per share and FFO per share of $63.

David Garfinkle: Thank you, Patrick, and good morning, everyone. In the Q2 of 2026, we generated GAAP EPS of $0.37 per share and FFO per share of $0.63. Special items in the Q2 of 2026 included $0.7 million of expenses associated with M&A activities reported in G&A expense for the acquisition of Clinical Solutions Pharmacy, compared with $1.5 million of M&A expenses in the prior quarter related to the acquisition of the Farmville Detention Center. Excluding M&A expenses from both periods, adjusted EPS was $0.38 compared with $0.36 in the Q2 of 2025, and normalized FFO per share was $0.64 per share compared with $0.59 per share in the prior year quarter. As a reminder, the prior year quarter included the collection of Employee Retention Credits of $11.6 million, including interest or $0.0008 per share.

Speaker #2: Special items in the second quarter of 2026 included 0.7 million of expenses associated with M&A activities reported in G&A expense, for the acquisition of clinical solutions pharmacy, compared with 1.5 million of M&A expenses in the prior quarter related to the acquisition of the Farmville Detention Center.

Speaker #2: Excluding M&A expenses from both periods, adjusted EPS was $38, compared with $36 in the second quarter of 2025. A normalized FFO per share was $64 per share, compared with $59 per share in the prior quarter.

Speaker #2: As a reminder, the prior quarter included the collection of employee retention credits, of 11.6 million dollars, including interest, or $0.08 per share. Excluding this per share impact from the prior year, adjusted EPS and normalized FFO per share increased $35.7% and $25.5%, respectively.

David Garfinkle: Excluding this per share impact from the prior year, adjusted EPS and normalized FFO per share increased 35.7% and 25.5% respectively. Adjusted EBITDA was $109.4 million compared with $103.3 million in the second quarter of 2025. Again, excluding the Employee Retention Credits from the prior quarter, adjusted EBITDA increased $17.7 million or 19.3%. We received the final payment we claimed for the Employee Retention Credits in the first quarter of 2026. The increase in adjusted EBITDA from the prior quarter resulted from the activation of five previously idle facilities under new management contracts with ICE and the acquisitions of the Farmville Detention Center on 1 July 2025, and Clinical Solutions Pharmacy on 1 April 2026. Our per share results were also favorably impacted by an 8.9% decrease in weighted average diluted shares outstanding as a result of our share repurchase program.

Speaker #2: Adjusted EBITDA was $109.4 million, compared with $103.3 million in the second quarter of 2025. Again, excluding the employee retention credits from the prior quarter, adjusted EBITDA increased $17.7 million or $19.3%.

Speaker #2: We received the final payment we claim for the employee retention credits in the first quarter of 2026. The increase in adjusted EBITDA from the prior quarter resulted from the activation of five previously idle facilities, under new management contracts with ICE, and the acquisitions of the Farmville Detention Center on July 1, 2025, and clinical solutions pharmacy on April 1, 2026.

Speaker #2: Our per share results were also favorably impacted by an 8.9% decrease in weighted average diluted shares outstanding, as a result of our share repurchase program.

Speaker #2: Following the acquisition of CSP, to better reflect our operational strategy, beginning in the second quarter, we redefined our operating and reportable segments. Our core civic residential segment consists of the 64 correctional detention and reentry facilities we manage.

David Garfinkle: Following the acquisition of CSP, to better reflect our operational strategy, beginning in the second quarter, we redefined our operating and reportable segments. Our CoreCivic Residential segment consists of the 64 correctional, detention, and reentry facilities we manage. Our CoreCivic Services segment consists of the delivery of complementary services to the corrections industry, including pharmaceutical supplies and services through CSP, transportation through our subsidiary, TransCor, and electronic monitoring and case management services as alternatives to incarceration through our subsidiary, Recovery Monitoring Solutions. Our CoreCivic Property segment remains unchanged, currently consisting of five correctional facilities held for lease to government agencies. Operating margins in our Residential segment, which generated 92.4% of our segment net operating income, decreased to 22.4% from 26.1% in the prior year quarter, primarily due to $8.2 million of ERCs reflected in facility operations during the second quarter of 2025.

Speaker #2: Our core civic services segment consists of the delivery of complementary services to the corrections industry, including pharmaceutical supplies and services through CSP, transportation through our subsidiary Transcore, and electronic monitoring and case management services, as subsidiary Recovery Monitoring Solutions.

Speaker #2: Finally, our core civic property segment remains unchanged, currently consisting of five correctional facilities, held for lease to government agencies. Operating margins in our residential segment, which generated $92.4% of our segment net operating income, decreased to $22.4% from $26.1% in the prior year quarter primarily due to 8.2 million dollars of ERCs reflected in facility operations during the second quarter of 2025.

Speaker #2: The operating margin was $24.5% in the prior year quarter, excluding the ERCs. The decline in ICE population in the second quarter of 2026, which we believe was temporary, contributed to the margin decline.

David Garfinkle: The operating margin was 24.5% in the prior year quarter, excluding the ERCs. The decline in ICE populations in the second quarter of 2026, which we believe was temporary, contributed to the margin decline. Although we generated operating income of $21.1 million at the four facilities we continued to activate, they were only 55% occupied during the second quarter of 2026. Operating margins are expected to increase in the H2 of the year as occupancies increase at these facilities and as ICE populations portfolio-wide increase from the declines in the second quarter. Margins could be negatively impacted at the facilities we sold and by startup activities under a new management contract with ICE at the 1,600-bed Prairie Correctional Facility. The operating margin in our Services segment was 10.2% in the second quarter of 2026, in line with expectations.

Speaker #2: Further, although we generated operating income of $21.1 million at the four facilities we continue to activate, they were only $55% occupied during the second quarter of 2026.

Speaker #2: Operating margins are expected to increase in the second half of the year, as occupancies increase at these facilities, and as ICE populations portfolio-wide increase from the declines in the second quarter.

Speaker #2: However, margins could be negatively impacted at the facilities we sold, and by startup activities under a new management contract with ICE at the $1,600-bed Prairie Correctional Facility.

Speaker #2: The operating margin in our services segment was $10.2% in the second quarter of 2026, in line with expectations. The services segment generated $6.1% of our segment net operating income in the second quarter of 2026, up from 0.5% in the prior quarter due to the acquisition of CSP.

David Garfinkle: The Services segment generated 6.1% of our segment net operating income in the second quarter of 2026, up from 0.5% in the prior year quarter, due to the acquisition of CSP. Turning next to the balance sheet, during the second quarter, we funded the $148 million initial purchase price for CSP with cash on hand and borrowings under the revolving credit facility. We also obtained a $100 million incremental term loan shortly following the acquisition to replenish the borrowings under the revolving credit facility. We obtained the incremental term loan, which had a 364-day maturity and was pre-payable without penalty, as a short-term solution to maintain our strong liquidity position as we assess potential asset sales that could further enhance our liquidity. As of 30 June, our leverage, measured by net debt to adjusted EBITDA, was 2.9 times using the trailing 12 months.

Speaker #2: Turning next to the balance sheet during the second quarter, we funded the $148 million initial purchase price for CSP with cash on hand and borrowings under the revolving credit facility.

Speaker #2: We also obtained $100 million incremental term loan, shortly following the acquisition to replenish the borrowings under the revolving credit facility. We obtained the incremental term loan, which had a $364-day maturity and was prepayable without penalty, as a short-term solution to maintain our strong liquidity position as we assess potential asset sales that could further enhance our liquidity.

Speaker #2: As of June 30, our leverage measured by net debt to adjusted EBITDA was $2.9 times using the trailing 12 months. As of June 30, we had $108.9 million of cash on hand and an additional $273.3 million of borrowing capacity on our revolving credit facility, which had a balance of $280 million outstanding, providing us with total liquidity of $382.2 million.

David Garfinkle: As of 30 June, we had $108.9 million of cash on hand and an additional $273.3 million of borrowing capacity on our revolving credit facility, which had a balance of $280 million outstanding, providing us with total liquidity of $382.2 million. On 2 July 2026, we completed the sales of our 2,560-bed California City Detention Facility and our 1,994-bed Otay Mesa Detention Center, both located in California, to the Department of Homeland Security, for a total gross sales price of $1.5 billion, while retaining management of these facilities. After transaction costs and estimated federal and state income taxes, which will be paid next month, we estimate our net proceeds to be $1.1 billion. We used the net proceeds to pay down debt totaling $608.5 million, as detailed in our press release, including $238.5 million of our 4.75% unsecured notes that will be repaid on 12 August.

Speaker #2: On July 2, 2026, we completed the sales of our 2,560-bed California City Detention Facility and our 1,994-bed Otimesa Detention Center, both located in California, to the Department of Homeland Security for a total gross sales price of $1.5 billion.

Speaker #2: While retaining management of these facilities, after transaction costs and estimated federal and state income taxes, which will be paid next month, we estimate our net proceeds to be $1.1 billion.

Speaker #2: We used the net proceeds to pay down debt totaling $608.5 million, as detailed in our press release, including $238.5 million of our 4.75% unsecured notes that will be repaid on August 12.

Speaker #2: Earlier this week, after entering into a new management contract with ICE to activate our Prairie Correctional Facility in Minnesota, we completed the sales of our Midwest Regional Reception Center and our Prairie Facility for a total gross sales price of $734 million.

David Garfinkle: Earlier this week, after entering into a new management contract with ICE to activate our Prairie Correctional Facility in Minnesota, we completed the sales of our Midwest Regional Reception Center and our Prairie facility for a total gross sales price of $734 million, again, retaining management of these facilities. After estimated federal and state income taxes and transaction costs, we estimate our net proceeds to be approximately $522 million. After income taxes and debt repayments, we will have approximately $1 billion of cash on hand, total debt outstanding of $739.1 million, and $553.3 million of borrowing capacity under our revolving credit facility. This is more liquidity than the company has ever had and provides us with significant flexibility to execute our capital allocation strategy and growth plans.

Speaker #2: Again, retaining management of these facilities. After estimated federal and state income taxes, and transaction costs, we estimate our net proceeds to be approximately $522 million.

Speaker #2: After income taxes and debt repayments, we will have approximately $1 billion of cash on hand, total debt outstanding of $739.1 million, and $553.3 million of borrowing capacity under our revolving credit facility.

Speaker #2: This is more liquidity than the company has ever had, and provides us with significant flexibility to execute our capital allocation strategy and growth plans.

Speaker #2: On August 4, the Board of Directors authorized an increase to our existing share repurchase program, pursuant to which we may purchase up to an additional $500 million in shares of our common stock, increasing the total repurchase authorization to $1.2 billion.

David Garfinkle: On 4 August, the board of directors authorized an increase to our existing share repurchase program, pursuant to which we may purchase up to an additional $500 million in shares of our common stock, increasing the total repurchase authorization to $1.2 billion. Since the share repurchase program was authorized in May 2022, we have repurchased a total of 28.1 million shares at an aggregate cost of $444.2 million or $15.82 per share. Including the increased authorization, therefore, we have $755.8 million authorized and available under the share repurchase program. We expect to utilize a substantial portion of the remaining net proceeds from the facility sales to repurchase shares of our common stock under the recently expanded authorization.

Speaker #2: Since the share repurchase program was authorized in May 2022, we have repurchased a total of $28.1 million shares at an aggregate cost of $444.2 million or $15.82 per share.

Speaker #2: Including the increased authorization, therefore, we have $755.8 million authorized and available under the share repurchase program. We expect to utilize a substantial portion of the remaining net proceeds from the facility sales to repurchase shares of our common stock under the recently expanded authorization.

Speaker #2: While these facility sales have created significant balance sheet flexibility, following the sales, we still retain ownership of a vast real estate portfolio consisting of 56 corrections detention and reentry facilities, with a designed capacity of 63,727 beds, containing 12.3 million square feet, including 9 facilities contracted and dedicated fully to ICE, with a designed capacity of 10,750 beds containing 2.2 million square feet.

David Garfinkle: While these facility sales have created significant balance sheet flexibility, following the sales, we still retain ownership of a vast real estate portfolio consisting of 56 corrections, detention, and reentry facilities with a design capacity of 63,727 beds containing 12.3 million square feet, including nine facilities contracted and dedicated fully to ICE with a design capacity of 10,750 beds containing 2.2 million square feet. Stated differently, even after these sales, we are not simply a services company. We remain a significant owner of specialized mission-critical real estate infrastructure that is very difficult to replace with the operating expertise to manage those assets effectively for federal, state, and local government agencies, providing steady, predictable cash flows. Moving lastly to a discussion of our updated 2026 financial guidance, because of the significant gain on sale, we expect to generate diluted EPS of $15 to $15.20.

David Garfinkle: While these facility sales have created significant balance sheet flexibility, following the sales, we still retain ownership of a vast real estate portfolio consisting of 56 corrections, detention, and reentry facilities with a design capacity of 63,727 beds containing 12.3 million sq ft, including nine facilities contracted and dedicated fully to ICE with a design capacity of 10,750 beds containing 2.2 million sq ft. Stated differently, even after these sales, we are not simply a services company. We remain a significant owner of specialized mission-critical real estate infrastructure that is very difficult to replace with the operating expertise to manage those assets effectively for federal, state, and local government agencies, providing steady, predictable cash flows. Moving lastly to a discussion of our updated 2026 financial guidance, because of the significant gain on sale, we expect to generate diluted EPS of $15 to 15.20.

Speaker #2: Stated differently, even after these sales, we are not simply a services company. We remain a significant owner of specialized mission-critical real estate infrastructure, that is very difficult to replace, with the operating expertise to manage those assets effectively for federal, state, and local government agencies, providing steady, predictable cash flows.

Speaker #2: Moving lastly to a discussion of our updated 2026 financial guidance: Because of the significant gain on sale, we expect to generate diluted EPS of $15.00 to $15.20, and adjusted diluted EPS, which excludes special items, of $1.62 to $1.70—up from $1.53 to $1.63 in our previous guidance.

David Garfinkle: Adjusted diluted EPS, which excludes special items of $1.62 to $1.70, up from $1.53 to $1.63 in our previous guidance. We expect to generate normalized FFO per share of $2.61 to $2.70, up from $2.60 to $2.70. We expect adjusted EBITDA of $440.5 million to $445.5 million, compared with $453.8 million to $461.8 million. Our updated guidance reflects our best estimate of the financial impact of the aforementioned four facility sales and our expected continued management of these facilities. Although we and ICE have not yet modified the management contracts for these facilities to reflect the change in ownership, the range of our guidance incorporates our best estimate of the financial impact of the change in ownership. The updated guidance reflects the repayment of $608.5 million of debt, including $238.5 million of 4.75% unsecured notes that will be repaid 12 August.

David Garfinkle: Adjusted diluted EPS, which excludes special items of $1.62 to 1.70, up from $1.53 to 1.63 in our previous guidance. We expect to generate normalized FFO per share of $2.61 to 2.70, up from $2.60 to 2.70. We expect adjusted EBITDA of $440.5 to 445.5 million, compared with $453.8 to 461.8 million. Our updated guidance reflects our best estimate of the financial impact of the aforementioned four facility sales and our expected continued management of these facilities. Although we and ICE have not yet modified the management contracts for these facilities to reflect the change in ownership, the range of our guidance incorporates our best estimate of the financial impact of the change in ownership. The updated guidance reflects the repayment of $608.5 million of debt, including $238.5 million of 4.75% unsecured notes that will be repaid 12 August.

Speaker #2: We expect to generate normalized FFO per share of $2.61 to $2.70, up from $2.60 to $2.70. We expect adjusted EBITDA of $440.5 million to $445.5 million, compared with $453.8 to $461.8 million.

Speaker #2: Our updated guidance reflects our best estimate of the financial impact of the aforementioned four facility sales and our expected continued management of these facilities.

Speaker #2: Although we and ICE have not yet modified the management contracts for these facilities to reflect the change in ownership, the range of our guidance incorporates our best estimate of the financial impact of the change in ownership.

Speaker #2: The updated guidance reflects the repayment of $608.5 million of debt, including $238.5 million of 4.75% unsecured notes that will be repaid August 12. Our updated guidance for adjusted net income, FFO, and EBITDA were each favorably impacted by interest income associated with the residual cash balance after the repayment of debt, resulting from the facility sales.

David Garfinkle: Our updated guidance for adjusted net income, FFO, and EBITDA were each favorably impacted by interest income associated with the residual cash balance after the repayment of debt resulting from the facility sales. Unlike net income and FFO, EBITDA excludes the benefit of the reduction in interest expense resulting from the repayment of debt. Our updated guidance does not include the impact of any share repurchases we may execute during H2 2026, which could negatively impact net income, FFO, and EBITDA for a reduction in interest income associated with any cash used to repurchase shares, but could favorably impact their corresponding per share measures for the reduction in our weighted average shares outstanding.

Speaker #2: Unlike net income and FFO, EBITDA excludes the benefit of the reduction in interest expense resulting from the repayment of debt. Our updated guidance does not include the impact of any share repurchases we may execute during the second half of 2026, which could negatively impact net income, FFO, and EBITDA for a reduction in interest income associated with any cash used to repurchase shares, but could favorably impact their corresponding per-share measures, for the reduction in our weighted average shares outstanding.

Speaker #2: In addition to the financial impact associated with the facility sales, our updated guidance reflects modestly higher residential populations, based on recent trends, compared with our previous forecast, which already contemplated higher populations in the second half of 2026.

David Garfinkle: In addition to the financial impact associated with the facility sales, our updated guidance reflects modestly higher residential populations based on recent trends compared with our previous forecast, which already contemplated higher populations in H2 2026. The average daily ICE populations in our care declined by 6.6% during Q2 from Q1 2026, and nationwide ICE detention populations declined from a high of 70,766 at the end of January to 60,311 in early April, a decline of 14.8%. We believe these declines were for temporary reasons, including a partial government shutdown that centered around DHS funding, a reorganization of DHS leadership, and the subsequent impact to enforcement activities, including redeployment of ICE agents to TSA checkpoints, each of which has since resolved. Since early April, nationwide ICE detention populations increased to 65,765, or 9%, in mid-July.

Speaker #2: The average daily ICE populations in our care declined by 6.6% during the second quarter, from the first quarter of 2026, and nationwide ICE detention populations declined from a high of 70,766 at the end of January, to 60,311 in early April, a decline of 14.8%.

Speaker #2: We believe these declines were for temporary reasons, including a partial government shutdown that centered around DHS funding, a reorganization of DHS leadership, and the subsequent impact enforcement activities, including redeployment of ICE agents to TSA checkpoints, each of which has since resolved.

Speaker #2: Since early April, nationwide ICE detention populations increased to 65,765, or 9%, in mid-July. ICE populations in our care increased by 17.7% during the same period.

David Garfinkle: ICE populations in our care increased by 17.7% during the same period. Although the updated guidance includes the new management contract at the Prairie facility, taking into account startup activities and a phased commencement of intake operations at the facility, the updated guidance reflects an immaterial impact to earnings for the remainder of 2026. The updated guidance also includes an increase in general and administrative expenses for higher incentive compensation associated with the facility sales. As Patrick mentioned, in addition to the facility sales completed to date, we have recently begun discussions with ICE about the potential acquisition of additional detention facilities from us. These discussions are in preliminary stages, and our updated guidance does not include the impact of any potential additional facility sales.

Speaker #2: Although the updated guidance includes the new management contract at the Prairie facility, taking into account startup activities and a phased commencement of intake operations at the facility, the updated guidance reflects an immaterial impact to earnings for the remainder of 2026.

Speaker #2: The updated guidance also includes an increase in general and administrative expenses for higher incentive compensation associated with the facility sales. As Patrick mentioned, in addition to the facility sales completed to date, we have recently begun discussions with ICE about the potential acquisition of additional detention facilities from us.

Speaker #2: These discussions are in preliminary stages, and our updated guidance does not include the impact of any potential additional facility sales. We plan to spend $65 to $75 million on maintenance capital expenditures during 2026, and $15 million for other capital expenditures, up $5 million from our prior guidance.

David Garfinkle: We plan to spend $65 to $75 million on maintenance capital expenditures during 2026 and $15 million for other capital expenditures, up $5 million from our prior guidance. Our 2026 forecast also includes $35 to $40 million for capital expenditures associated with previously idle facilities we are activating and for additional potential facility activations, down $5 million from our prior guidance. We expect adjusted funds from operations or AFFO, which we consider a proxy for our cash flow available for capital allocation decisions such as share repurchases and growth CapEx, such as acquisitions and facility activations, to range from $257.5 million to $271.5 million for 2026. We expect our annual effective tax rate to be 25% to 28%, substantially unchanged from our prior guidance. The full year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense.

David Garfinkle: We plan to spend $65 to 75 million on maintenance capital expenditures during 2026 and $15 million for other capital expenditures, up $5 million from our prior guidance. Our 2026 forecast also includes $35 to 40 million for capital expenditures associated with previously idle facilities we are activating and for additional potential facility activations, down $5 million from our prior guidance. We expect adjusted funds from operations or AFFO, which we consider a proxy for our cash flow available for capital allocation decisions such as share repurchases and growth CapEx, such as acquisitions and facility activations, to range from $257.5 to 271.5 million for 2026. We expect our annual effective tax rate to be 25% to 28%, substantially unchanged from our prior guidance. The full year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense.

Speaker #2: Our 2026 forecast also includes $35 to $40 million for capital expenditures associated with previously idle facilities, we are activating, and for additional potential facility activations, down $5 million from our prior guidance.

Speaker #2: We expect adjusted funds from operations, or AFFO—which we consider a proxy for our cash flow available for capital allocation decisions, such as share repurchases and growth capex, including acquisitions and facility activations—to range from $257.5 million to $271.5 million for 2026.

Speaker #2: We expect our annual effective tax rate to be 25 to 28%, substantially unchanged from our prior guidance. The full-year EBITDA guidance in our press release provides you with our estimate of total depreciation in interest expense.

Speaker #2: We are forecasting G&A expenses in 2026 to range from $173 to $175 million. I will now turn the call back to the operator to open up the lines for questions.

David Garfinkle: We are forecasting G&A expenses in 2026 to range from $173 to $175 million. I will now turn the call back to the operator to open up the lines for questions.

David Garfinkle: We are forecasting G&A expenses in 2026 to range from $173 to 175 million. I will now turn the call back to the operator to open up the lines for questions.

Speaker #1: Thank you. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. Please limit yourself to one question and to one follow-up question. Please stand by while we compile the Q&A roster. The first question comes from the line of Greg Gibas of Northland Securities. Greg, please go ahead.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Please limit yourself to one question and to one follow-up question. Please stand by while we compile the question-and-answer roster. The first question comes from the line of Greg Gibas of Northland Securities. Greg, please go ahead.

Speaker #1: Please limit yourself to one question and to one follow-up question. Please stand by while we compile the Q&A roster. The first question comes from the line of Greg Jabayez of Northland Securities.

Speaker #1: Greg, please go ahead.

Speaker #3: Hey, good morning, Patrick. David, thanks for taking the questions. Are you able to provide how much of the adjusted EBITDA guidance delta reflects the anticipated contract adjustments to the facility sold?

Greg Gibas: Hey, good morning, Patrick, David. Thanks for taking the questions. Are you able to provide how much of the adjusted EBITDA guidance delta reflects the anticipated contract adjustments to the facilities sold? Maybe when does that imply contract changes were or will be effective? Hey, Greg, it's Dave. Good question. Yeah, we've incorporated the range of outcomes from those negotiations into our guidance, but we're not specifically quantifying them for obvious reasons. Those negotiations are not yet complete, but we felt like incorporating our best estimate into the range would provide investors with what the run rate could be. I don't yet know the effective date of those contract negotiations, when they'd be effective either as of yet.

Speaker #3: And maybe when does that imply contract changes were, or will be effective?

Speaker #2: Hey, Greg, it's Dave. Good question. Yeah, we're not we've incorporated the range of outcomes from those negotiations into our guidance, but we're not specifically quantifying them.

Speaker #2: For obvious reasons, those negotiations are not yet complete, but we felt like putting incorporating our best estimate into the range would provide investors with what the run rate could be.

Speaker #2: I don't yet know the effective date of those contract negotiations when they'd be effective, either, as of yet.

Speaker #3: Got it. Got it. And then also, as it relates to guidance, could you maybe discuss what it assumes with respect to ICE populations in Q3 and Q4, and maybe how that's changed since you last provided guidance?

Greg Gibas: Got it. Also as it relates to guidance, could you maybe discuss what it assumes with respect to ICE populations in Q3 and Q4, and maybe how that's changed since you last provided guidance?

Speaker #2: Yeah, sure. If you recall, last quarter, we expected ICE populations to be to decline in the second quarter of '26, and then increasing in the second half of the year.

David Garfinkle: Yeah, sure. If you recall last quarter, we expected ICE populations to decline in Q2 2026, increasing in H2 of the year. That was already baked into our guidance, we did increase, the range is probably $5 to $10 million for seeing those increases sooner than what we had in our previous guidance. I think, you've seen the nationwide detention populations have now been published and they have reflected an increase. That's probably going a little bit faster than what we had anticipated last quarter.

David Garfinkle: Yeah, sure. If you recall last quarter, we expected ICE populations to decline in Q2 2026, increasing in H2 of the year. That was already baked into our guidance, we did increase, the range is probably $5 to 10 million for seeing those increases sooner than what we had in our previous guidance. I think, you've seen the nationwide detention populations have now been published and they have reflected an increase. That's probably going a little bit faster than what we had anticipated last quarter.

Speaker #2: So that was already baked into our guidance, but we did increase—probably the range is about $5 million to $10 million—for seeing those increases sooner than what we had in our previous guidance.

Speaker #2: And I think you've seen the nationwide detention populations have now been published, and they have reflected an increase. So that's probably going a little bit faster than what we had anticipated last quarter.

Speaker #3: Understood. Thanks very much.

Greg Gibas: Understood. Thanks very much.

Speaker #2: You're welcome. Thank you.

David Garfinkle: You're welcome. Thank you.

Operator: One moment for your next question. The next question comes from the line of M. Marin of Zacks. M, please go ahead.

Operator: One moment for your next question. The next question comes from the line of Marla Marin of Zacks Investment Research. Marla please go ahead.

Speaker #1: One moment for your next question. The next question comes from the line of M. Marin of ZAX. M, please go ahead.

Speaker #4: Thank you. So, given that you're currently engaged in early-stage discussions with ICE regarding additional potential asset sales—sales of facilities—is it reasonable for us to think that there might be a temporary pause on share repurchases during this current quarter, which presumably would not indicate any change in your prioritization of capital allocations?

M. Marin: Thank you. Given that you're currently engaged in early-stage discussions with ICE regarding additional potential asset sales of facilities, is it reasonable for us to think that there might be a temporary pause on share repurchases during this current quarter, which presumably would not indicate any change in your prioritization capital allocations?

Marla Marin: Thank you. Given that you're currently engaged in early-stage discussions with ICE regarding additional potential asset sales of facilities, is it reasonable for us to think that there might be a temporary pause on share repurchases during this current quarter, which presumably would not indicate any change in your prioritization capital allocations?

Speaker #2: Yeah, I'll tag team with Patrick on that, maybe. It all depends on the status of negotiations. You'll see we kind of change the tone of those discussions to be very preliminary at this point.

David Garfinkle: Yeah, I'll tag team with Patrick on that maybe. It all depends on the status of negotiations. You'll see, we kind of changed the tone of those discussions to be very preliminary at this point. We've been in deep discussions for the due diligence on both Prairie and Midwest for a large part of the last quarter or maybe even beyond then. That did create some restrictions on our ability to buy back stock. It all depends on the facts and circumstances of what we know, at the time the window is open. Obviously, we're closed for earnings currently, until next week when our window would normally open up. Based on discussions right now, I think we feel pretty good about being able to buy back stock in H2, but it will all depend on the status of those discussions.

Speaker #2: So we've been in deep discussions for the due diligence on both Prairie and Midwest for a large part of the last quarter, maybe even beyond then.

Speaker #2: So that did create some restrictions on our ability to buy back stock. So it all depends on the facts and circumstances of what we know at the time the window is open.

Speaker #2: Obviously, we're closed for earnings. Currently, until next week, when our window would normally open up. But based on discussions right now, I think we feel pretty good about being able to buy back stock in the second half of the year, but it will all depend on the status of those discussions.

Patrick Swindle: The only thing that I would add is, obviously, we've seen meaningful price movement in Q2. We did not repurchase shares in Q2. That was not because we don't believe our stock is undervalued. We certainly see the value of being able to be in the market and initiate or continue our repurchase program. Certainly looking for those opportunities as they do present.

Speaker #5: And the only thing that I would add is, obviously, we've seen meaningful price movement in the second quarter. We did not repurchase shares in the second quarter.

Speaker #5: That was not because we don't believe our stock is undervalued. And so we certainly see the value of being able to be in the market and initiate or continue our repurchase programs.

Speaker #5: So certainly looking for those opportunities as they do present.

M. Marin: Understood. As your occupancy, consolidated occupancy, which reflects ICE and other government partners continues to rise, can you please remind us of what the historical peak was from prior years?

Marla Marin: Understood. As your occupancy, consolidated occupancy, which reflects ICE and other government partners continues to rise, can you please remind us of what the historical peak was from prior years?

Speaker #4: Understood. And as your occupancy consolidated occupancy which reflects ICE and other government partners continues to rise, can you please remind us of what the historical peak was from prior years?

Speaker #2: Yeah. So I've been with the company since 2001. That was probably the last time we were in the mid-90% occupancies. It's been a long it's been that long since it's been over 90%.

David Garfinkle: Yeah. I've been with the company since 2001. That was probably the last time we were in the mid-90% occupancies. It's been that long since it's been over 90%. Pre-pandemic, I think we were in the upper 80s in terms of total occupancy. We haven't yet hit that percentage as of yet.

Speaker #2: Pre-pandemic, I think we were in the upper 80s. In terms of total occupancy, so we haven't yet hit that percentage as of yet.

M. Marin: Okay, thanks very much.

Marla Marin: Okay, thanks very much.

Speaker #4: Okay. Thanks very much.

Operator: One moment for your next question. The next question comes from the line of Jordan Himowitz of Philadelphia Financial. Jordan, please go ahead.

Speaker #1: One moment for your next question. The next question comes from the line of Jordan Himowitz of Fidelity or, excuse me, of Philadelphia Financial. Jordan, please go ahead.

Speaker #6: Thank you. A couple of things. So the 500 million buyback is not in the FFO guidance. So if you would buy that back, the FFO guidance should be like 15 or 16 percent high on a per-share basis, correct?

Jordan Hymowitz: Thank you. Couple things. The $500 million buyback is not in the FFO guidance. If you would buy that back, the FFO guidance would be 15% or 16% high on a per share basis, correct?

Speaker #2: Well, correct. We did not include any share buybacks in our guidance. You would have to wait it's a weighted average calculation. So we wouldn't get the immediate benefit for a full year, but yeah, I mean, depending on what price you're buying back at the current prices, I think it's around 15 to 17 percent of total shares outstanding, if we were to execute on the full 500.

David Garfinkle: Well, correct. We did not include any share buybacks in our guidance. You'd have to wait. It's a weighted average calculation, we wouldn't get the immediate benefit for a full year. Yeah, depending on what price you're buying back at the current prices, I think it's around 15% to 17% of total shares outstanding if we were to execute on the full $500.

Speaker #6: Is there any program you could expedite that's automatic buying, like there's 10B5 programs that automatically sell, and there's no blackouts? Is there any such thing that a bank can structure that automatically buys a certain amount every month?

Jordan Hymowitz: Is there any program you could explain that's automatic buying, like there's 10b5-1 programs that automatically sell and there's no blackouts. Is there any such thing that a bank constructs that automatically buys a certain amount every month? Even if you were in knowledge of MNPI, it would still execute?

Speaker #6: So even if you were in knowledge of MMPI, it would still execute?

Speaker #2: Well, you'd have to be in an open window when you gave those instructions. I think I mean, nothing really better than a 10B5 that would enable us to trade through closed windows.

David Garfinkle: Well, you'd have to be in an open window when you gave those instructions. Nothing really better than a 10b5-1 that would enable us to trade through closed windows. Again, you have to be in an open window when you enter into those agreements, and then they could extend through a closed window.

Speaker #2: But again, you have to be in an open window when you enter into those agreements. And then they could extend through a closed window.

Speaker #6: But and last question is, how much stock could you buy back or set a different way? What is the binding debt level to become an investment-grade company which I assume is your goal?

Jordan Hymowitz: Last question is, how much stock could you buy back? Said a different way, what is the binding debt level to become an investment-grade company, which I assume is your goal? What ratios do you hope to retain that would enable you to achieve an upgrade that would bind in some ways how much stock you could buy back?

Speaker #6: And so how much what ratios do you hope to retain that would enable you to achieve an upgrade that would bind in some ways how much stock you could buy back?

Speaker #2: Well, if I understand your question, Jordan, I think you're referring to the restricted payment basket covenant we have in our 2029 notes that limits our buyback we have a restricted payment basket unless we're below two times leverage.

David Garfinkle: Well, if I understand your question, Jordan, I think you're referring to the restricted payment basket covenant we have in our 2029 notes. We have a restricted payment basket unless we're below 2 times leverage. Using kind of current metrics, we could buy around $1 billion, and still be below that 2 times leverage. Did I get that question right, Jordan?

David Garfinkle: Well, if I understand your question, Jordan, I think you're referring to the restricted payment basket covenant we have in our 2029 notes. We have a restricted payment basket unless we're below 2x leverage. Using kind of current metrics, we could buy around $1 billion, and still be below that 2x leverage. Did I get that question right, Jordan?

Speaker #2: And so using kind of current metrics, we could buy around a billion dollars and still be below that two times leverage. Did I get that question right, Jordan?

Speaker #6: You answered it a different way to the same place. Thank you.

Jordan Hymowitz: You answered it a different way to the same place. Thank you.

Speaker #2: Okay. Well, maybe to add

David Garfinkle: Okay.

Patrick Swindle: Well, maybe to add on that just a bit. What we've stated previously is our leverage policy is 2.25 to 2.75 times leverage. We are below that. We want to make sure that we're in a position where we are able to deploy capital, at the levels that we believe would be advantageous to our shareholders and give us that flexibility, which is under 2 times. We have not established a target of investment-grade necessarily. We're always looking at what is optimal leverage from a value creation standpoint. We have been through periods of investment-grade ratings and periods of non-investment-grade ratings, that's always a calculus that we consider when we're looking at our leverage policy and how we approach that.

Patrick Swindle: Well, maybe to add on that just a bit. What we've stated previously is our leverage policy is 2.25x to 2.75x leverage. We are below that. We want to make sure that we're in a position where we are able to deploy capital, at the levels that we believe would be advantageous to our shareholders and give us that flexibility, which is under 2x. We have not established a target of investment-grade necessarily. We're always looking at what is optimal leverage from a value creation standpoint. We have been through periods of investment-grade ratings and periods of non-investment-grade ratings, that's always a calculus that we consider when we're looking at our leverage policy and how we approach that.

Speaker #5: on that, just a bit. So what we've stated previously is our leverage policy is two and a quarter to two and three-quarter times leverage.

Speaker #5: We are below that. We want to make sure that we're in a position where we are able to deploy capital at the levels that we believe would be advantageous to our shareholders and give us that flexibility, which is under two times we have not established a target of investment-grade necessarily.

Speaker #5: And so we're always looking at what is optimal leverage from a value creation standpoint. We have been through periods of investment-grade ratings and periods of non-investment-grade ratings.

Speaker #5: And so that's always a calculus that we consider when we're looking at our leverage policy and how we approach that. So but I think today, we should look at two times as being a limiter but at the same time, it's somewhat a function of the amount of capital available to deploy as well as additional capital that may result from additional future asset sales if they do occur because there's a point at which leverage could drop further to the extent that there are sufficient there's sufficient available proceeds to give us that flexibility while availing ourselves of a repurchase program or other investments.

Patrick Swindle: I think today we should look at two times as being a limiter, but at the same time, it's somewhat a function of the amount of capital available to deploy as well as additional capital that may result from additional future asset sales if they do occur. Because there's a point at which leverage could drop further to the extent that there are sufficient available proceeds to give us that flexibility while availing ourselves of a repurchase program or other investments.

Patrick Swindle: I think today we should look at 2x as being a limiter, but at the same time, it's somewhat a function of the amount of capital available to deploy as well as additional capital that may result from additional future asset sales if they do occur. Because there's a point at which leverage could drop further to the extent that there are sufficient available proceeds to give us that flexibility while availing ourselves of a repurchase program or other investments.

Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. One moment for your next question. The next question comes from the line of Bill Sutherland of Benchmark StoneX. Bill, please go ahead.

Operator: As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. One moment for your next question. The next question comes from the line of Bill Sutherland of Benchmark StoneX. Bill, please go ahead.

Speaker #1: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker #1: One moment for your next question. The next question comes from the line of Bill Sutherland of Benchmark Stone X. Bill, please go ahead.

Speaker #3: Thank you. Hey, good morning. When you have Prairie up and running, under contract, at stable occupancy, and $75 million in revenue, how should we think about the incremental EBITDA from that facility?

Bill Sutherland: Thank you. Good morning. When you have Prairie up and running under contract at stable occupancy and $75 million in revenue, how should we think about the incremental EBITDA from that facility?

David Garfinkle: I would say the margins on that facility are consistent with our other ICE contracts.

Speaker #2: I would say the margins on that facility are consistent with our other ice contracts. Or consistent with the portfolio average as well.

Patrick Swindle: Consistent with the portfolio average as well.

Speaker #3: Okay. And the Dave I was also thinking about or is there something that we should know about the kind of the quarterly cadence for the rest of the year given the puts and takes that you talked about with the model?

Bill Sutherland: Okay. Dave, I was also thinking about, is there something we should know about kind of the quarterly cadence for the rest of the year, given the puts and takes that you talked about with the models?

David Garfinkle: I think the only fluctuations you're going to see are, we're still ramping up our California City facility, our Diamondback facility. Those are two large facilities that continue to ramp. I think I mentioned in my prepared remarks, the four facilities that are really ramping, that were ramping during Q2 are 55%. We do expect them to continue ramping in the H2 of the year. If you back out our annual EBITDA guidance from like what year-to-date EBITDA is, you get to a run rate around $450 million of total adjusted EBITDA. That obviously does not include the Prairie facility, because the Prairie facility, we won't be able to accept the first detainees until late this year. It won't reach full activation until the Q2 of 2027.

Speaker #2: I think the only fluctuations you're going to see are we're still ramping up our California City facility, our Diamondback facility. Those are too large facilities that continue to ramp.

Speaker #2: I think I mentioned in my prepared remarks, the four facilities that are really ramping that were ramping during Q2 were at 55%. So we do expect them to continue ramping in the second half of the year.

Speaker #2: If you back out our annual EBITDA guidance from like what, a year to date EBITDA is, you get to run rate around 450 million dollars of total adjusted EBITDA.

Speaker #2: That obviously does not include the prairie facility because the prairie facility we won't be able to accept the first detainees until late this year.

Speaker #2: And it won't have reached full activation until the second quarter of '27.

Bill Sutherland: That's helpful. Thanks. Lastly, I was just thinking about what DHS is trying to get done here with capacity and, curious what you've heard about anything other than obviously the facilities they would like to buy from you and GEO and a few others. Where is the warehouse strategy at this point in their plans?

Speaker #3: That's helpful. Thanks. And lastly, I was just thinking about the we'll put DHS's trying to get done here with capacity. And curious what you've heard about anything other than obviously the facilities they would like to buy from you and GO and a few others.

Speaker #3: But where is the warehouse strategy at this point in their plans?

Speaker #5: Well, the public statements from DHS have been that there has been a de-emphasis of the warehouse strategy. Of the eleven warehouses they had purchased, four were being considered for conversion into operations, and they were continuing to explore whether to move forward with those.

Patrick Swindle: Well, the public statements from DHS has been that there has been a de-emphasis of the warehouse strategy. There were four of the 11 warehouses that they had purchased. They were continuing to explore whether they would convert those into operations. We believe they are still exploring that for some of those facilities. Again, we've seen pivots in strategy multiple times under the current administration. Whether we look back to the beginning with the Fort Bliss concept or an Alligator Alcatraz concept or utilization of state capacity or warehouse opportunities, there's been really a number of organic shifts in demand and we've been there consistently through that process and continue to believe we provide an optimal solution for ICE to the extent they wish to use it.

Speaker #5: We believe there's still exploring that for some of those facilities. But again, we've seen pivots in strategy multiple times under the current administration. And so whether we look back to the beginning with the Fort Bliss concept or an alligator alcatraz concept or utilization of state capacity or warehouse opportunities, there's been really a number of organic shifts in demand and we've been there consistently through that process.

Speaker #5: And continue to believe we provide an optimal solution for ice to the extent they wish to use it. And certainly, you're seeing that evidence through the award at our prairie facility and have seen that with awards to our competitors.

Patrick Swindle: Certainly you're seeing that evidenced through the award at our Prairie facility and have seen that with awards to our competitors. We think we provide a high-quality solution that provides great value to the government and think we're very well positioned to be able to meet any additional demand to the extent that it does present.

Speaker #5: So we think we provide high-quality solution that provides great value to the government and think we're very well positioned to be able to meet any additional demand to the extent that it does present.

Bill Sutherland: Okay. Thanks, Patrick. Appreciate it.

Speaker #3: Okay. Thanks, Patrick. Appreciate it.

Operator: One moment for your next question. The next question comes from the line of Edwin Groshans of Compass Point Research & Trading. Edwin, please go ahead.

Speaker #1: One moment for your next question. The next question comes from the line of Edwin Groschanz of Compass Point Research and Trading. Edwin, please go ahead.

Speaker #6: Thank you for taking my call. I just you kind of talked about the outlook and I guess we're talking about the tensions that were reports that July was a record for apprehensions for ice.

Edwin Groshans: Thank you for taking my call. You talked about the outlook and we're talking about detentions. There were reports that July was a record for apprehensions for ICE. That followed a record in June. There's talk of ICE has a target of 100,000 to 120,000 beds. You mentioned you have four or five still-idle facilities. Can you just talk about what you're seeing in detentions and then expectations for the idle facilities, whether that's reactivation. I know you've discussed preliminary discussions on potential sales, but I guess really looking at reactivation given ICE activity.

Speaker #6: That followed the record in June. There's talk of ICE having a target of 100,000 to 120,000 beds, and you mentioned you have four or five still idle facilities.

Speaker #6: So can you just talk about what you're seeing in the detentions and then expectations for the idle facilities whether that's reactivation? And I know you've discussed preliminary discussions on potential sales, but I guess really looking at reactivation given ice activity.

Speaker #5: So I would answer that through two lenses. So as you mentioned, there has been an increase in enforcement activity the last couple of months that we've seen reflected in increases in detention populations in our facilities and in the national statistics.

Patrick Swindle: I would answer that through two lenses. As you mentioned, there has been an increase in enforcement activity the last couple of months that we've seen reflected in increases in detention populations in our facilities and in the national statistics. I believe we've seen three contract awards just in the last month, for activation of new capacity that was previously idled within the industry, both ourselves and our competitor. That clearly is an indication of anticipated additional demand needs. I think it's difficult to project what the pace would be for bringing on additional capacity beyond those contracts that have already been awarded. We have and continue to market our available capacity. As we mentioned in our comments, we have another 5,500 beds that are traditional turnkey facilities that are available today, again, in four facilities.

Speaker #5: I believe we've seen three contract awards just in the last month for activation of new capacity that was previously idled. Within the industry, both ourselves and our competitor.

Speaker #5: So that clearly is an indication of anticipated additional demand needs. I think it's difficult to project what the pace would be for bringing on additional capacity beyond those contracts that have already been awarded.

Speaker #5: We have and continue to market our available capacity as we mentioned in our press release, we have another or in our comments, another 5,500 beds that are traditional turnkey facilities that are available today.

Speaker #5: Again, in four facilities. So we've got an ability to be able to provide additional capacity that's needed and we're very well positioned to do that.

Patrick Swindle: We've got an ability to be able to provide additional capacity that's needed, and we're very well positioned to do that. We've made significant investments in that idle capacity to make it ready. Again, we've seen increased demand recently. If that continues, I think we're very well positioned for more, but I'd be reticent to provide any sense of timing at this point.

Speaker #5: We've made significant investments in the idle capacity to make it ready. Again, we've seen increased demand recently. If that continues, I think we're very well positioned for more.

Speaker #5: But I'd be reticent to provide any sense of timing at this point.

Edwin Groshans: Fantastic, Patrick. Appreciate that. I guess if we look at ICE's target of 100,000-plus beds, I think there's been some commentary out there that system-wide, maybe there is 85,000 beds available. Do you have a sense of how Even if ICE were to buy or contract for the idle facilities, it still seems that they're going to be short of their goal. Do you have any sense of how they could get to their goal, especially now in the prior question with putting the warehouse program on ice at the present time?

Edwin Groshans: Fantastic, Patrick. Appreciate that. I guess if we look at ICE's target of 100,000+ beds, I think there's been some commentary out there that system-wide, maybe there is 85,000 beds available. Do you have a sense of how Even if ICE were to buy or contract for the idle facilities, it still seems that they're going to be short of their goal. Do you have any sense of how they could get to their goal, especially now in the prior question with putting the warehouse program on ice at the present time?

Speaker #6: Fantastic, Patrick. We appreciate that. And I guess if we look at ice's target of 100,000 plus beds, I think there's been some commentary out there that system-wide maybe there is 85,000 beds available.

Speaker #6: Do you have a sense of how I mean, even if ice were to buy or contract for the idle facilities, it's still seems that they're going to be short of their goal?

Speaker #6: Do you have any sense of how they could get to their goal? Especially now in the prior question with putting the warehouse program on ice at the present time.

Speaker #5: Yeah. My view on that would be I think the goal is organic. It's based on what the ultimate detention bed needs are at any given point in time.

Patrick Swindle: My view on that would be, I think the goal is organic. It's based on what the ultimate detention bed needs are at any given point in time. What I would say is this moment, we believe that demand for additional capacity has increased with the awards that have already been made. We believe we're well positioned with already existing turnkey capacity to the extent there's more, and I believe there's other turnkey capacity available in the industry. As we've said on prior calls, we've also looked at a number of alternatives in terms of expansions of our existing facilities or different ways that we could provide capacity to the extent that that demand did manifest. I can see pathways for the provision of up to 100,000 beds in the industry, through a variety of different scenarios.

Speaker #5: So, what I would say at this moment is we believe that demand for additional capacity has increased with the awards that have already been made.

Speaker #5: We believe we're well positioned with already existing turnkey capacity to the extent there's more. And I believe there's other turnkey capacity available in the industry.

Speaker #5: But as we've said on prior calls, we've also looked at a number of alternatives in terms of expansions of our existing facilities or different ways that we could provide capacity to the extent that that demand did manifest.

Speaker #5: And so, I can see pathways for the provision of up to 100,000 beds in the industry through a variety of different scenarios. I continue to believe that turnkey solutions are the best initial option, and there's capacity to meet that demand initially.

Patrick Swindle: Continue to believe that turnkey solutions are the best initial option, there's capacity to meet that demand initially. We've done a number of scenario analyses and believe that there are some alternatives that could certainly leverage that capacity higher to the extent that the demand presented.

Speaker #5: But we've done a number of scenario analyses and believe that there are some alternatives that could certainly leverage that capacity higher to the extent that the demand presented.

Edwin Groshans: Okay. Would one of those alternatives, I'm sorry, third question, I'll stop after this. I've heard potential discussions of doing sort of soft-sided facilities on the sites. When you talk about expansion, is that one of the potential alternatives?

Speaker #6: Okay. And one of those alternatives—I'm sorry, third question, but I'll stop after this—but I've heard potential discussions of doing sort of soft-sided facilities on the sites.

Speaker #6: Is that, when you talk about expansion, is that one of the potential alternatives?

Patrick Swindle: There are a number of ways that you can flex up capacity and do it in a very humane and dignified way on the locations that are already operational. That would certainly be one pathway to achieving the additional capacity goal. Having capacity co-located can be very helpful for both the agency and for us operationally, as we try to deliver the highest quality service possible by concentrating at a single location allows us to also concentrate resources. Absolutely that would be I'm not going to speak to the form. You mentioned soft-sided. There could be a variety of forms of providing that capacity. Certainly that would be an optimal way to scale up capacity.

Speaker #5: There are a number of ways that you can flex up capacity and do it in a very humane and dignified way. On the locations that are already operational.

Speaker #5: So that would certainly be one pathway to achieving the additional capacity goal. And having capacity co-located can be very helpful for both the agency and for us operationally.

Speaker #5: As we try to deliver the highest quality service possible by concentrating at a single location, allows us to also concentrate resources. So absolutely, that would be I'm not going to speak to the form.

Speaker #5: You mentioned soft-sided. There could be a variety of forms of providing that capacity, but certainly, that would be an optimal way to scale up capacity.

Operator: One moment for your next question. The next question comes from the line of Jordan Hymowitz of Philadelphia Financial. Jordan, please go ahead.

Speaker #1: One moment for your next question. The next question comes from the line of Jordan Heimowitz of Philadelphia Financial. Jordan, please go ahead.

Jordan Hymowitz: I just want to follow up on Ed's very thoughtful question, and that is, you've now gone down the path of being willing to sell your facilities to others, and you've sold them to the government, but would you be willing to sell them to event centers or apartments? I think in my own mind towards the San Francisco Armory, which was a prison at one point and which became a movie theater show and now housing. In other words, are you willing to evaluate your assets at different price points to see what's there as opposed to just the use that it's currently in?

Jordan Hymowitz: I just want to follow up on Edwin's very thoughtful question, and that is, you've now gone down the path of being willing to sell your facilities to others, and you've sold them to the government, but would you be willing to sell them to event centers or apartments? I think in my own mind towards the San Francisco Armory, which was a prison at one point and which became a movie theater show and now housing. In other words, are you willing to evaluate your assets at different price points to see what's there as opposed to just the use that it's currently in?

Speaker #3: I just want to follow up on Ed's very thoughtful question. And that is, you've now gone down the path of being willing to sell your facilities to others and you've sold them to the government.

Speaker #3: But would you be willing to sell them to event centers or apartments or and I think in my own mind towards the San Francisco Armory in which was a prison at one point and which became a movie theater show and now housing.

Speaker #3: In other words, are you willing to evaluate your assets at different price points to see what's there, as opposed to just the use that they're currently in?

Speaker #5: We're always evaluating the ways to maximize the value of our assets. And looking at the alternatives that might present. I can say we have not at this moment considered actively alternative uses for our facilities.

Patrick Swindle: We're always evaluating the ways to maximize the value of our assets and looking at the alternatives that might present. I can say we have not, at this moment, considered actively alternative uses for our facilities. We believe the highest and best use is what they're purpose-built for. We think that generates the highest value for those assets to the extent that we do consider a sale. If we were to be approached by a buyer that had interest in our capacity, we would certainly not turn away that conversation. To the extent that someone did want to engage in dialogue, we're very open to that. At this time, again, think the best value that we can capture from our assets is for the purpose that they were originally built.

Speaker #5: We believe the highest and best use is what the purpose built for. We think that generates the highest value for those assets to the extent that we do consider a sell.

Speaker #5: But if we were to be approached by a buyer that had interest in our capacity, we would certainly not turn away that conversation. So to the extent that someone did want to engage in dialog, we're very open to that.

Speaker #5: But at this time, again, I think the best value that we can capture from our assets is for the purposes that they were originally built.

Speaker #3: Thank you.

[Analyst]: Thank you.

Jordan Hymowitz: Thank you.

Operator: One moment for your next question. The next question comes from the line of Joe Gomes of Noble Capital. Joe, please go ahead.

Speaker #1: One moment for your next question. The next question comes from the line of Joe Gomes of Noble Capital. Joe, please go ahead.

Joe Gomes: Good morning, Patrick and David.

Speaker #3: Good morning, Patrick and David.

Speaker #7: Morning, Joe.

Patrick Swindle: Morning, Joe.

David Garfinkle: Morning.

David Garfinkle: There's been a lot of discussion today on ICE. Let's switch gears here. Maybe, David, you could talk a little bit, and Patrick, on the state opportunities, the US Marshals, where those populations have been. I know this time here in July is normally when you get your per diem increases. Maybe you could talk a little bit about how that unfolded this year.

Speaker #3: There's been a lot of discussion today on ICE. Let's switch gears here. Maybe David could talk a little bit, and Patrick as well, on the state opportunities, the U.S. Marshals, and where those populations have been.

Speaker #3: And I know this time here in July is normally when you get your per diem increases. Maybe you could talk a little bit about how that unfolded this year.

Speaker #5: So at the state level, we have made our way through the state legislative process. Our team was very effective at getting the traditional inflation-related per-diem increases that we would expect we would get.

Patrick Swindle: At the state level, we have made our way through the state legislative process. Our team was very effective at getting the traditional inflation-related per diem increases that we would expect we would get. We saw adjustments in some markets for additional compensation for wages for our staff, as we've provided significant wage increases in recent years. I would say from a state perspective, very consistent with what you would expect. No anomalies. That portion of our business continues to perform well, and outlook for balance of the year continues to be solid in our state operations. We find out later in the year, after the legislative sessions have resolved and they begin to spend budget dollars, as to what additional demand may present.

Speaker #5: We saw adjustments in some markets for additional compensation for wages for our staff, as we've provided significant wage increases in recent years. So, I would say from a state perspective, very consistent with what you would expect.

Speaker #5: No anomalies. That portion of our business continues to perform well. And outlook for the balance of the year continues to be solid in our state operations.

Speaker #5: We find out later in the year, after the legislative sessions have resolved and they begin to spend budget dollars, as to what additional demand may present.

Speaker #5: So it's very possible that we could see additional demand for services from those customers. But certainly don't have anything at this time that would be notable to share.

Patrick Swindle: It's very possible that we could see additional demand for services from those customers, certainly don't have anything at this time that would be notable to share. On the Marshals Service, one of the things that we referenced in both our press release and our script is that in a number of our facilities where the Marshals Service and ICE share capacity, you see a mix shift from Marshals Service to ICE. We have seen positive movement in Marshal populations in the last quarter. When you look at overall trends, I would say we're seeing trends that would be, I think, at this point, consistent with the seasonal expectations that we would normally see this time of year, but not more than that.

Speaker #5: And then on the marshal service, one of the things that we've referenced in both our press release and our script is that in a number of our facilities where the marshal service and I share capacity, you see a mix shift from marshal service to ice.

Speaker #5: We marshal populations. In the last quarter, but when you look at overall trends, I would say we're seeing trends that would be, I think at this point, consistent with the seasonal expectations that we would normally see this time of year, but not more than that.

Speaker #3: Okay. And then Patrick, 10,000-foot level type question here. Again, we made the sales got the proceeds, increased stock buyback. The stock's up 70% year to date.

Joe Gomes: Patrick, 10,000-foot level type question here. Again, we made the sales, got the proceeds, increased stock buyback. The stock's up 70% year to date. What kind of gives you confidence? What are you looking at that the stock today is still a great value for the share repurchase program?

Joe Gomes: Patrick, 10,000-ft level type question here. Again, we made the sales, got the proceeds, increased stock buyback. The stock's up 70% year to date. What kind of gives you confidence? What are you looking at that the stock today is still a great value for the share repurchase program?

Speaker #3: What gives you confidence? What are you looking at that makes you believe the stock today is still a great value for the share repurchase program?

Speaker #5: Yeah. Thank you for that question. I'd go back a little bit to the question that was asked earlier around free cash flow per share.

Patrick Swindle: Thank you for that question. I'd go back a little bit to the question that was asked earlier around free cash flow per share, with the cash that we have on our balance sheet, with it not having been deployed, you don't see the value of that cash reflected yet in our per-share metrics. The consequence of that is when you look at EPS or price to earnings, or you look at free cash flow per share at this moment, we believe it understates the value of the cash that sits on our balance sheet. For our purposes, the way that I've looked at the value of our company this moment is from an enterprise value to EBITDA perspective.

Speaker #5: Because with the cash that we have on our balance sheet, with it not having been deployed, you don't see the value of that cash reflected yet in our per-share metrics.

Speaker #5: And so the consequence of that is, when you look at EPS, or price-to-earnings, or you look at free cash flow per share at this moment, we believe it understates the value of the cash that sits on our balance sheet.

Speaker #5: So for our purposes, the way that I've looked at the value of our company, this moment is from an enterprise value to EBITDA perspective.

Speaker #5: And so if I think about the dynamics that we've seen since the beginning of the year, we have seen north of a 60% increase in our share price but we're actually trading more cheaply today than we did coming into the year.

Patrick Swindle: If I think about the dynamics that we've seen since the beginning of the year, we have seen north of a 60% increase in our share price, we're actually trading more cheaply today than we did coming into the year. From a multiple perspective, our multiple today, well, there's been movement during the day to day, but is approximately 6 times EBITDA, which is well below our historical EBITDA multiple average over the last 20 years of 9.5 times. I'd argue we're objectively cheap. How do I look at that in terms of the value creation that's occurred? Looking at the four transactions that we have completed, $1.6 billion in net after-tax proceeds, that's $16 a share in cash.

Patrick Swindle: If I think about the dynamics that we've seen since the beginning of the year, we have seen north of a 60% increase in our share price, we're actually trading more cheaply today than we did coming into the year. From a multiple perspective, our multiple today, well, there's been movement during the day to day, but is approximately 6x EBITDA, which is well below our historical EBITDA multiple average over the last 20 years of 9.5x. I'd argue we're objectively cheap. How do I look at that in terms of the value creation that's occurred? Looking at the four transactions that we have completed, $1.6 billion in net after-tax proceeds, that's $16 a share in cash.

Speaker #5: And so from a multiple perspective, our multiple today well, there's been movement during the day-to-day, but it's approximately six times EBITDA, which is well below our historical EBITDA multiple average over the last 20 years of nine and a half times.

Speaker #5: So, I'd argue we're objectively cheap. And then, how do I look at that in terms of the value creation that's occurred? So, looking at the four transactions that we have completed, $1.6 billion net after-tax proceeds—that's $16 a share in cash.

Speaker #5: So, I think about the beginning of the year, the additional cash from these transactions, the performance and visibility that you have with the guidance that we've provided, which we believe reflects the impact that we're going to see on our operating contracts.

Patrick Swindle: I think about the beginning of the year, the additional cash from these transactions, the performance and visibility that you have with the guidance that we've provided, which we believe reflects the impact that we're going to see on our operating contracts. You're looking at a stock that, despite the movement that we've experienced year to date, we believe is significantly undervalued. Just using enterprise value to EBITDA and our guidance and the debt level that Dave described at $734 million as we go forward, at 9.5 times, our shares would trade just north of $48, which again, that's our 20-year average. If you look at 8 times, we would trade at $41.50, 7 times, $37. Today, we're trading approximately $32.

Patrick Swindle: I think about the beginning of the year, the additional cash from these transactions, the performance and visibility that you have with the guidance that we've provided, which we believe reflects the impact that we're going to see on our operating contracts. You're looking at a stock that, despite the movement that we've experienced year to date, we believe is significantly undervalued. Just using enterprise value to EBITDA and our guidance and the debt level that Dave described at $734 million as we go forward, at 9.5x, our shares would trade just north of $48, which again, that's our 20-year average. If you look at 8x, we would trade at $41.50, 7x, $37. Today, we're trading approximately $32.

Speaker #5: And you're looking at a stock that, despite the movement that we've experienced year to date, we believe is significantly undervalued. And so, just using enterprise value to EBITDA and our guidance, and the debt level that Dave described at $734 million, as we go forward, at nine and a half times, our shares would trade just north of $48, which again, that's our 20-year average.

Speaker #5: If you look at eight times, we would trade at $41.50. Seven times, $37.00. And today, we're trading at approximately $32.00. We think the stock is still very attractively valued, and that's based on the value that we've been able to capture this year and that we would hope to be able to redeploy in a way that over time is reflected in our per-share metrics.

Patrick Swindle: We think the stock is still very attractively valued, that's based on the value that we've been able to capture this year and that we would hope to be able to redeploy in a way that over time is reflected in our per-share metrics.

Joe Gomes: Thank you for that, Patrick. Much appreciated.

Speaker #3: Thank you for that, Patrick. Much appreciated.

Speaker #5: Thank you.

Patrick Swindle: Thank you.

Operator: This concludes the question and answer session. I will now turn the call back over to Patrick Swindle for any closing remarks.

Speaker #1: This concludes the question-and-answer session. I will now turn the call back over to Patrick Swindle for any closing remarks.

Speaker #5: Thank you, operator. And thank you, everyone who's joined our second quarter earnings call today. In closing, our overall operational performance affirms that the goals that we set are translating into meaningful results.

Patrick Swindle: Thank you, operator, and thank you everyone who's joined our Q2 earnings call today. In closing, our overall operational performance affirms that the goals that we set are translating into meaningful results. Strong operating and financial performance, successful facility activations, and continued demand from our government partners reflect the confidence we have earned by delivering quality, compliant service, and care. These outcomes also demonstrate the strength of our people and our ability to respond to change with integrity, excellence, teamwork, service, and impact. Just as important, our progress confirms that we are well-positioned to lead our industry's evolution, adapting, innovating, and expanding our capabilities while strengthening our culture and our relationships. When we improve operations, support our employees, and deliver better outcomes for those in our care and the partners and communities we serve, we turn performance into purpose.

Speaker #5: Strong operating and financial performance, successful facility activations, and continued demand from our government partners reflect the confidence we have earned by delivering quality, compliant service and care.

Speaker #5: These outcomes also demonstrate the strength of our people and our ability to respond to change with integrity, excellence, teamwork, service, and impact. Just as important, our progress confirms that we are well positioned to lead our industry's evolution.

Speaker #5: Adapting, innovating, and expanding our capabilities while strengthening our culture and our relationships. When we improve operations, support our employees, and deliver better outcomes for those in our care and the partners and communities we serve, we turn performance into purpose.

Speaker #5: That is how we advance our strategic ambition of building safer, healthier, and more productive communities, one person at a time. Again, thank you all for joining today.

Patrick Swindle: That is how we advance our strategic ambition of building safer, healthier, and more productive communities one person at a time. Again, thank you all for joining today.

Operator: This concludes today's conference call. You may now disconnect.

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