Q2 2026 Geo Group Inc Earnings Call

August 6, 2026

Operator 3: Good day, and welcome to the GEO Group Q2 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead.

Operator: Good day, and welcome to the GEO Group Q2 2026 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead.

Speaker #1: Welcome to the GEO Group Second Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1, on a touch-tone phone.

Speaker #1: To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you, operator. Good afternoon, everyone, and thank you for joining us for today's discussion of The GEO Group's second quarter 2026 earnings results. With us today are George Zoley, Chairman, Chief Executive Officer, and Founder; and Shane March, Senior Vice President and Chief Financial Officer.

Pablo Paez: Thank you, operator. Good afternoon, everyone, and thank you for joining us for today's discussion of the GEO Group's Q2 2026 earnings results. With us today are George Zoley, Chairman, Chief Executive Officer, and Founder, and Shayn March, Senior Vice President and Chief Financial Officer. This afternoon, we will discuss our Q2 results as well as our outlook, and we will conclude the call with a question and answer session. This conference call is also being webcast live or on investor website at investors.geogroup.com. Today, we will discuss non-GAAP basis information. A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and supplemental disclosure we issued this morning. Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters.

Speaker #2: This afternoon, we will discuss our second quarter results as well as our outlook. We will conclude the call with a question-and-answer session. This conference call is also being webcast live on our investor website at investors.geogroup.com.

Speaker #2: Today, we will discuss non-GAAP basis information. A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and supplemental disclosures we issued this morning.

Speaker #2: Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters.

Speaker #2: These forward-looking statements are intended to fall within the safe harbor provisions of the securities laws. Our actual results may differ materially from those in the forward-looking statements, as a result of various factors contained in our Securities and Exchange Commission filings, including the Form 10-K, 10-Q, and 8-K reports.

Pablo Paez: These forward-looking statements are intended to fall within the safe harbor provisions of the securities laws. Our actual results may differ materially from those in the forward-looking statements as a result of various factors contained in our Securities and Exchange Commission filings, including the Form 10-K, 10-Q, and 8-K reports. With that, please allow me to turn this call over to our Chairman, CEO, and Founder, George Zoley. George?

Speaker #2: With that, please allow me to turn this call over to our Chairman, CEO, and Founder, George Zoley. George?

Speaker #3: Thank you, Pablo. Good afternoon, everyone, and thank you for joining us. Our diversified business units continue to deliver strong financial and operational performance during the second quarter of 2026.

George Zoley: Thank you, Pablo. Good afternoon, everyone, and thank you for joining us. Our diversified business units continued to deliver strong financial and operational performance during Q2 2026. Revenues increased 15% from Q2 2025, while net income increased 63% from the same period. Our better-than-expected performance reflects significant revenue growth from the contracts that we entered into throughout 2025. As we have previously discussed, in 2025, we were awarded several new or expanded contracts that represent up to approximately $520 million in annual revenues, which represents the largest amount of new business we've won in a single year in our company's history. In our secure services segment, we entered into new contracts to house ICE detainees at 4 facilities valued at approximately $280 million in annual revenues and totaling approximately 6,000 beds, increasing our total active ICE beds to approximately 27,000.

George Zoley: Thank you, Pablo. Good afternoon, everyone, and thank you for joining us. Our diversified business units continued to deliver strong financial and operational performance during Q2 2026. Revenues increased 15% from Q2 2025, while net income increased 63% from the same period. Our better-than-expected performance reflects significant revenue growth from the contracts that we entered into throughout 2025. As we have previously discussed, in 2025, we were awarded several new or expanded contracts that represent up to approximately $520 million in annual revenues, which represents the largest amount of new business we've won in a single year in our company's history. In our secure services segment, we entered into new contracts to house ICE detainees at four facilities valued at approximately $280 million in annual revenues and totaling approximately 6,000 beds, increasing our total active ICE beds to approximately 27,000.

Speaker #3: Revenues increased 15% from the second quarter of 2025, while net income increased 63% from the same period. Our better-than-expected performance reflects significant revenue growth from contracts that we entered into in 2025.

Speaker #3: As we have previously discussed, in 2025 we were awarded several new or expanded contracts that represent up to approximately $520 million in annual revenues.

Speaker #3: This represents the largest amount of new business we've won in a single year in our company's history. In our Secure Services segment, we entered into new contracts to house ICE detainees at four facilities, valued at approximately $280 million in annual revenues, and totaling approximately 6,000 beds.

Speaker #3: Increasing our total active ICE beds to approximately 27,000. Our current census across our active ICE facilities is approximately 24,000, representing more than one-third of the current national ICE population of approximately 68,000, which is distributed over 225 separate locations that are primarily short-term jail facilities.

George Zoley: Our current census across our active ICE facilities is approximately 24,000, representing more than one-third of the current national ICE population of approximately 68,000, which is distributed over 225 separate locations that are primarily short-term jail facilities. Over the last 6 weeks, we've experienced a 20% increase in ICE populations following the passage of the Secure America Act, which restored baseline appropriations funding for ICE and Customs and Border Protection after the longest partial government shutdown in US history. Under the Secure America Act, ICE received $38.5 billion in funding available through September 30, 2029. This amount is in addition to the $75 billion in funding previously allocated to ICE under the One Big Beautiful Bill, including $45 billion for detention, which is available through September 30, 2029.

George Zoley: Our current census across our active ICE facilities is approximately 24,000, representing more than one-third of the current national ICE population of approximately 68,000, which is distributed over 225 separate locations that are primarily short-term jail facilities. Over the last six weeks, we've experienced a 20% increase in ICE populations following the passage of the Secure America Act, which restored baseline appropriations funding for ICE and Customs and Border Protection after the longest partial government shutdown in US history. Under the Secure America Act, ICE received $38.5 billion in funding available through September 30, 2029. This amount is in addition to the $75 billion in funding previously allocated to ICE under the One Big Beautiful Bill, including $45 billion for detention, which is available through September 30, 2029.

Speaker #3: Over the last six weeks, we have experienced a 20% increase in ICE populations following the passage of the Secure America Act, which restored baseline appropriations funding for ICE and Customs and Border Protection after the longest partial government shutdown in U.S. history.

Speaker #3: Under the Secure American Act, ICE received $38.5 billion in funding available through September 30, 2029. This amount is in addition to the $75 billion in funding previously allocated to ICE under the $1 Big Beautiful Bill, including $45 billion for detention, which is available through September 30, 2029.

Speaker #3: We believe the federal government is continuing to pursue the priority of increasing immigration detention capacity to 100,000 beds or more and consolidating to fewer, larger facilities.

George Zoley: We believe the federal government is continuing to pursue the priority of increasing immigration detention capacity to 100,000 beds or more and consolidating to fewer, larger facilities. As a 40-year partner to ICE, we expect to be part of that solution. In the past few weeks, we've announced 2 new contracts with ICE for the activation of ICE processing centers at 2 previously idle facilities. We have entered into a five-year support services contract with ICE for the activation of a federal immigration processing center at the 1,188-bed Big Horn Facility in Hudson, Colorado, while also entering into a lease agreement with the facility owner. The Big Horn support services contract is expected to generate approximately $85 million in annual revenues in the first full year of operations.

Speaker #3: As a 40-year partner to ICE, we expect to be part of that solution. In the past few weeks, we've announced two new contracts with ICE for the activation of ICE processing centers at two previously idle facilities.

Speaker #3: We've entered into a five-year support services contract with ICE for the activation of a federal immigration processing center at the 1,188-bed Bighorn facility in Hudson, Colorado, while also entering into a lease agreement with the facility owner.

Speaker #3: The Bighorn support services contract is expected to generate approximately $85 million in annual revenues in the first full year of operations. We have also entered into a five-year support services contract with ICE for the activation of a federal immigration processing center at the GEO-owned, 1,320-bed Rivers facility in Winton, North Carolina.

George Zoley: We have also entered into a five-year support services contract with ICE for the activation of a federal immigration processing center at the GEO-owned 1,320-bed Rivers Facility in Winton, North Carolina. The Rivers support services contract is expected to generate approximately $80 million in annual revenues in the first full year of operations. Under both contracts, ICE will reimburse GEO for the capital expenditures needed to reactivate these 2 facilities, as well as providing funding for start-up expenses during the activation period. We expect the activation of the Big Horn and Rivers Facilities to be completed by the end of 2026, with both facilities achieving normalized operations and earnings contribution in early 2027. Following the activation of these 2 facilities, our total ICE beds under contract will increase to approximately 29,500 beds.

Speaker #3: The Rivers support services contract is expected to generate approximately $80 million in annual revenues in the first full year of operations. Under both contracts, ICE will reimburse GEO for the capital expenditures needed to reactivate these two facilities, as well as provide funding for startup expenses during the activation period.

Speaker #3: We expect the activation of the Bighorn and Rivers facilities to be completed by the end of 2026, with both facilities achieving normalized operations and earnings contribution in early 2027.

Speaker #3: Following the activation of these two facilities, our total ICE beds under contract will increase to approximately 29,500 beds. We also have approximately 4,500 idle beds that remain available at five company-owned facilities, which are designed for high security and therefore well-suited for the current needs of the federal government.

George Zoley: We have also approximately 4,500 idle beds that remain available at five company-owned facilities, which are designed for high security and therefore well-suited for the current needs of the federal government. We continue to have active discussions with the federal government regarding potential reactivation of additional idle facilities. At full capacity, these 4,500 idle beds could generate approximately $250 million in combined incremental annual revenues. Our Q2 2026 results reflect a significant expansion in our secure transportation services on behalf of both ICE and the US Marshals Service. In 2025, we signed a new 5-year contract with the US Marshals, covering 26 federal judicial districts and spanning 14 states. We have entered into new or amended contracts to expand secure ground transportation services at seven ICE facilities. The support services that we provide under our ICE air transportation subcontract have also continued to steadily increase.

Speaker #3: We continue to have active discussions with the federal government regarding potential reactivation of additional beds. At full capacity, these 4,500 idle beds could generate approximately $250 million in combined incremental annual revenues.

Speaker #3: Our second quarter of 2026 results reflect a significant expansion in our secure transportation services on behalf of both ICE and the U.S. Marshals Service.

Speaker #3: In 2025, we signed a new five-year contract with the U.S. Marshals, covering 26 federal judicial districts and spanning 14 states. We have also entered into new or amended contracts to expand secure ground transportation services at seven ICE facilities.

Speaker #3: The support services that we provide under our ICE air transportation subcontract have also continued to steadily increase. Additionally, in our new Bighorn and Rivers contracts with ICE, we are expected to generate approximately $20 million combined in additional annual transportation services revenues once normalized in early 2027.

George Zoley: Additionally, in our new Big Horn and Rivers contracts with ICE, we are expected to generate approximately $20 million combined in additional annual transportation services revenues once normalized in early 2027. Importantly, during Q2 2026, our ISAP V contract continued to experience a steady technology shift to more intensive and higher-priced monitoring devices such as ankle monitors. ISAP is the only ICE program currently in place to provide electronic monitoring and case management services for individuals on the non-detained docket. The program relies on several forms of monitoring, including GPS, ankle bracelets, or wrist-worn devices that provide real-time tracking, as well as the SmartLINK phone app, which relies on facial recognition, voice ID, and GPS to confirm a person's location during predetermined check-ins. The current overall ISAP count is approximately 184,000 participants.

Speaker #3: Importantly, during the second quarter of 2026, our ICEF-5 contract continued to experience a steady technology shift to more intensive and higher-priced monitoring devices, such as ankle monitors.

Speaker #3: ICEF is the only ICE program currently in place to provide electronic monitoring and case management services for individuals on the non-detained docket. The program relies on several forms of monitoring, including GPS ankle bracelets or wrist-worn devices that provide real-time tracking, as well as the SmartLINK phone app, which relies on facial recognition, voice ID, and GPS to confirm a person's location during predetermined check-ins.

Speaker #3: The current overall ICEF count is approximately 184,000 participants. The number of ICEF participants on GPS ankle monitors has increased to approximately 54,000 currently, from 17,000 in early 2025.

George Zoley: The number of ISAP participants on GPS ankle monitors has increased to approximately 54,000 currently from 17,000 in early 2025. We also continue to experience a steady increase in the number of ISAP participants assigned to case management services, which involves staff interaction and monitoring for approximately 116,000 individuals currently. If this trend continues, the technology and case management mix shift will continue to increase the revenues and earnings generated under the ISAP contract, even if overall participation counts remain relatively stable. Thus, we continue to be optimistic about the importance and growth potential of the ISAP contract, and we believe it is also well-positioned to scale up to higher overall counts. Finally, during Q2 2026, we did not receive any revenues from our new skip tracing contract, which we believe was due to the lapse in ICE appropriations funding during the government shutdown.

Speaker #3: We also continue to experience a steady increase in the number of ICEF participants assigned to case management services, which involves staff interaction and monitoring for approximately 116,000 individuals currently.

Speaker #3: If this trend continues, the technology and case management mix shift would continue to increase the revenues and earnings generated under the ICEF contract, even if overall participation counts remain relatively stable.

Speaker #3: Thus, we continue to be optimistic about the importance and growth potential of the ICEF contract, and we believe it is also well positioned to scale up to higher overall counts.

Speaker #3: Finally, during the second quarter of 2026, we did not receive any revenues from our new Skip Tracing contract, which we believe was due to the lapse in ICE appropriations funding during the government shutdown.

Speaker #3: With the restoration of ICE funding, we are optimistic that the contract will begin to ramp up during the second half of 2026. Moving to our outlook, we have increased our net income and adjusted EBITDA guidance for 2026 to reflect the strength of our results in the first half of the year.

George Zoley: With the restoration of ICE funding, we are optimistic that the contract will begin to ramp up during H2 2026. Moving to our outlook, we have increased our net income and adjusted EBITDA guidance for 2026 to reflect the strength of our results in H1 of the year. Our updated guidance does not include any earnings contribution from our new Big Horn and Rivers contracts since we expect the activation period for these facilities to be completed by the end of 2026, achieving normalized earning contributions in early 2027. Our updated guidance also does not include any earnings contributions from our previously announced managed only contracts for our 1,884-bed Graceville facility and our 985-bed Bay facility in the state of Florida, which have been rescheduled for implementation.

Speaker #3: Our updated guidance does not include any earnings contribution from our new Bighorn and Rivers contracts, since we expect the activation period for these facilities to be completed by the end of 2026, achieving normalized earnings contributions in early 2027.

Speaker #3: Our updated guidance also does not include any earnings contributions from our previously announced managed-only contracts for our 1,884-bed Graysville facility and our 985-bed Bay facility in the state of Florida, which have been rescheduled for implementation.

Speaker #3: These two contracts, which are valued at approximately $100 million in combined annual revenues, are now expected to transition to GEO on July 1, 2027.

George Zoley: These two contracts, which are valued at approximately $100 million in combined annual revenues, are now expected to transition to GEO on 1 July 2027. Looking at our improved outlook, we believe there are still several sources of potential further upside. On the revenue side, sources of potential upside include additional growth in our Secure Services segment from the reactivation of additional idle facilities and/or higher overall population across our active facilities. Additional volume increases and/or accelerated technology services mix in a shift in our ISAP contract, additional growth in our secure transportation services business, additional revenue from higher utilization of our skip tracing contract. On the expense side, our guidance assumes more moderate contributions from labor cost savings in the H2 of the year.

Speaker #3: Looking at our improved outlook, we believe there are still several sources of potential further upside. On the revenue side, sources of potential upside include additional growth in our Secure Services segment from the reactivation of additional idle facilities and/or higher overall population across our active facilities.

Speaker #3: Additional volume increases and/or accelerated technology services mix in a shift in our ICEF contract, additional transportation services business, and additional revenue from higher utilization of our Skip Tracing contract. On the expense side, our guidance assumes more moderate contributions from labor cost savings in the second half of the year.

Speaker #3: Before I turn the call over to our CFO, Mark Suchinski, for a more detailed review of our second quarter results, I'd like to highlight our continued commitment to strengthening our capital structure and enhancing shareholder value.

George Zoley: Before I turn the call over to our CFO, Shayn March, for a more detailed review of our Q2 results, I'd like to highlight our continued commitment towards strengthening our capital structure, enhancing shareholder value. During the Q2 of 2026, we repurchased approximately 1.6 million shares for approximately $37 million, bringing the total shares repurchased to 10.1 million for approximately $177 million since the current share repurchase program was authorized in August 2025. Our current total outstanding share count is approximately 132 million, and we have approximately $323 million still available under our $500 million share repurchase authorization. We believe our stock continues to trade at a relatively low multiple despite the intrinsic value of our assets and our significant growth opportunities. We believe this imbalance creates a unique opportunity to enhance value for our shareholders through share repurchases.

Speaker #3: During the second quarter of 2026, we repurchased approximately 1.6 million shares for approximately $37 million, bringing the total shares repurchased to 10.1 million for approximately $177 million.

Speaker #3: Since the current share repurchase program was authorized in August 2025, our current total outstanding share count is approximately 132 million, and we have approximately 32.3 million still available under our 50 million share repurchase authorization.

Speaker #3: We believe our stock continues to trade at a relatively low multiple, despite the intrinsic value of our assets and our significant growth opportunities. We believe this imbalance creates a unique opportunity to enhance value for our shareholders through share repurchases.

Speaker #3: At this time, I will turn the call over to Sheen to review our quarterly results and increased guidance.

George Zoley: At this time, I will turn the call over to Shayn to review our quarterly results and increased guidance.

Speaker #1: Thank you, George. Good afternoon, everyone. Revenues for the second quarter of 2026 increased to approximately $732.1 million, up from approximately $636.2 million in the prior year's second quarter, reflecting a 15% increase.

Shayn March: Thank you, George. Good afternoon, everyone. Revenues for the Q2 of 2026 increased by approximately $732.1 million, up from approximately $636.2 million in the prior year's Q2, reflecting a 15% increase. For the Q2 of 2026, we reported net income attributable to GEO operations of approximately $47.5 million, or $0.36 per diluted share. This compares to net income attributable to GEO operations of approximately $29.1 million or $0.21 per diluted share in the Q2 of 2025, reflecting a 63% increase for net income and a 71% increase for earnings per share. Our adjusted EBITDA for the Q2 of 2026 increased to approximately $142 million, up from approximately $118.6 million in the prior year's Q2, reflecting a 20% increase. Looking at revenue trends, our owned and leased Secure Services revenues increased by approximately $55 million, or 16%, compared to prior year's Q2.

Speaker #1: For the second quarter of 2026, we reported net income attributable to Geo operations of approximately $47.5 million or $36 per diluted share. This compares to net income attributable to Geo operations of approximately $29.1 million or $21 per diluted share, and the second quarter of 2025, reflecting a 63% increase for net income and a 71% increase for earnings per share.

Speaker #1: Our adjusted EBITDA for the second quarter of 2026 increased to approximately $142 million, up from approximately $118.6 million in the prior year's second quarter, reflecting a 20% increase.

Speaker #1: Looking at revenue trends, our owned and leased secured services revenues increased by approximately $55 million or 16% compared to prior year's second quarter. This increase was driven by the activation of three company-owned facilities under new contracts with ICE, which was partly offset by revenue loss from the sale of the Lawton Oklahoma facility and the depopulation of the Lee County New Mexico facility.

Shayn March: This increase was driven by the activation of three company-owned facilities under new contracts with ICE, which was partly offset by revenue loss from the sale of the Lawton, Oklahoma facility and the depopulation of the Lea County, New Mexico facility. Quarterly revenues for our managed only contracts increased by approximately $44 million, or 30%, from prior year's Q2. This increase was primarily driven by the joint venture agreement for the management of the North Florida ICE detention facility, as well as certain transportation revenue increases that are reported in this segment. Quarterly revenues for our reentry services increased by approximately $3 million, offset by a $3 million decline in non-residential services revenues compared to the prior year's Q2.

Speaker #1: Quarterly revenues for our managed-only contracts increased by approximately $44 million, or 30%, from the prior year's second quarter. This increase was primarily driven by the joint venture agreement for the management of the North Florida ICE detention facility, as well as certain transportation revenue increases that are reported in this segment.

Speaker #1: Quarterly revenues for our reentry services increased by approximately $3 million, offset by a $3 million decline in non-residential services revenues compared to the prior year's second quarter.

Speaker #1: Finally, second quarter 2026 revenues for our electronic monitoring and supervision services decreased by less than $3 million, or approximately 3.5%, from the prior year's second quarter, despite the reduced pricing on our ISOP 5 contract.

Shayn March: Finally, Q2 2026 revenues for our electronic monitoring and supervision services decreased by less than $3 million, or approximately 3.5%, from the prior year's Q2, despite the reduced pricing on our ISAP V contract, which demonstrates the strength of the continued favorable technology and case management mix shift in the program. Turning to expenses. During Q2 2026, our operating expenses increased by approximately 12% as a result of the activation of our ICE facility contracts and increased occupancy compared to prior year's Q2. Operating expenses continue to be favorably impacted by lower labor costs during Q2 2026. Our general and administrative expenses for Q2 2026 remained steady at approximately 9% of revenue compared to prior year's Q2.

Speaker #1: This demonstrates the strength of the continued favorable technology and case management mix shift in the program. Turning to expenses, during the second quarter of 2026, our operating expenses increased by approximately 12% as a result of the activation of our ICE facility contracts and increased occupancy compared to the prior year's second quarter.

Speaker #1: Operating expenses continue to be favorably impacted by lower labor costs during the second quarter of 2026. Our general and administrative expenses for the second quarter of 2026 remained steady at approximately 9% of revenue, compared to the prior year's second quarter.

Speaker #1: Our second quarter 2026 results reflect a year-over-year decrease in net interest expense of approximately $4 million, as a result of the reduction in our total net debt.

Shayn March: Our Q2 2026 results reflect a year-over-year decrease in net interest expense of approximately $4 million as a result of the reduction in our total net debt. Our effective tax rate for Q2 2026 was approximately 28.7%. Moving to our outlook, we have updated our guidance for the full year 2026 and issued guidance for Q3 and Q4 2026. We have increased our full year 2026 GAAP net income guidance to a range of $168 million to $175 million, or a range of $1.27 to $1.32 per diluted share on annual revenues of $2.95 billion to $3.05 billion, and based on an effective tax rate of approximately 30%, inclusive of known discrete items. We have increased our full year 2026 adjusted EBITDA guidance to a range of $550 million to $560 million.

Speaker #1: Our effective tax rate for the second quarter of 2026 was approximately 28.7%. Moving to our outlook, we have updated our guidance for the full year 2026 and issued guidance for the third and fourth quarters of 2026.

Speaker #1: We have increased our full-year 2026 GAAP net income guidance to a range of $168 million to $175 million, or a range of $1.27 to $1.32 per diluted share, on annual revenues of $2.95 billion to $3.05 billion, and based on an effective tax rate of approximately 30%, inclusive of known discrete items.

Speaker #1: We have increased our full year 2026 adjusted EBITDA guidance to a range of $550 million to $560 million. We expect total unreimbursed capital expenditures for the full year 2026 to be between $135 million and $145 million, and we expect capex to decline below $100 million in 2027.

Shayn March: We expect total unreimbursed capital expenditures for the full year 2026 to be between $135 million and $145 million, and expect CapEx to decline below $100 million in 2027. For Q3 2026, we expect GAAP net income to be $45 million to $48 million, or a range of $0.35 to $0.37 per diluted share on quarterly revenues of $755 million to $805 million. We expect Q3 2026 adjusted EBITDA to be between $140 million and $145 million. For Q4 2026, we expect GAAP net income to be $37 million to $41 million, or a range of $0.28 to $0.31 per diluted share on quarterly revenues of $758 million to $808 million. We expect Q4 2026 adjusted EBITDA to be between $137 million and $142 million.

Speaker #1: For the third quarter of 2026, we expect GAAP net income to be between $45 million and $48 million, or a range of $0.35 to $0.37 per diluted share, on quarterly revenues of $755 million to $805 million.

Speaker #1: We expect third quarter 2026 adjusted EBITDA to be between $140 million and $145 million. For the fourth quarter of 2026, we expect GAAP net income to be $37 million to $41 million, or a range of $0.28 to $0.31 per diluted share, on quarterly revenues of $758 million to $808 million.

Speaker #1: We expect fourth quarter 2026 adjusted EBITDA to be between $137 million and $142 million. Moving to our balance sheet, we closed the second quarter of 2026 with approximately $55 million in cash and cash equivalents, and approximately $1.54 billion of total debt.

Shayn March: Moving to our balance sheet, we closed Q2 of 2026 with approximately $55 million in cash and cash equivalents and approximately $1.54 billion of total debt. At the end of Q2 of 2026, our total net debt was approximately $1.5 billion and our total net leverage was below 3x adjusted EBITDA. At the end of Q2, we had total available liquidity of approximately $300 million, including cash on hand and revolver availability to support our capital needs. At this time, I will turn the call back to George.

Speaker #1: At the end of the second quarter of 2026, our total net debt was approximately $1.5 billion, and our total net leverage was below three times adjusted EBITDA.

Speaker #1: At the end of the second quarter, we had total available liquidity of approximately $300 million, including cash on hand and revolver availability to support our capital needs.

Speaker #1: At this time, I will turn the call back to George.

Speaker #2: Thank you, Shane. To recap, we are very pleased with our strong second quarter results and the improved full-year outlook. Our financial performance in the first half of '26 has been driven by the new growth opportunities which we captured in 2025 and are normalizing this year.

George Zoley: Thank you, Shayn. To recap, we are very pleased with our strong Q2 results and the improved full-year outlook. Our financial performance in H1 of 2026 has been driven by the new growth opportunities which we captured in 2025 and are normalizing this year. Last year was the most successful period for new business wins in our company's history, and we expect 2026 to continue to be very active as well. We therefore believe that we have upside potential across our diversified business segments. We recently announced new contracts with ICE to reactivate two previously idle facilities totaling approximately 2,500 beds, with annual revenue value of approximately $165 million once operations normalize in early 2027. With these two facility activations, we now have approximately 4,500 idle high-security beds that remain available, which could generate in excess of $250 million in annual revenues at full occupancy.

Speaker #2: Last year was the most successful period for new business wins in our company's history, and we expect 2026 to continue to be very active as well.

Speaker #2: We therefore believe that we have upside potential across our diversified business segments. We recently announced new contracts with ICE to reactivate two previously idle facilities, totaling approximately 2,500 beds, with annual revenue value of approximately $165 million once operations normalize in early 2027.

Speaker #2: With these two facility activations, we now have approximately 4,500 idle high-security beds that remain available, which could generate in excess of $250 million in annual revenues at full occupancy.

Speaker #2: We are pleased with the continued shift in technology and case management mix under our ISOP 5 contract, which could also provide additional upside throughout 2026.

George Zoley: We are pleased with the continued shift in technology and case management mix under our ISAP V contract, which could also provide additional upside throughout 2026. We also remain well-positioned to expand our delivery of secure ground and air transportation services for ICE and the US Marshals Service beyond the significant growth we've already experienced. Finally, I'd like to provide you with an update regarding the plan by ICE and DHS to purchase existing privately owned turnkey ICE processing centers. On our earnings call last quarter, we discussed that ICE was considering the purchase of approximately 10 privately owned turnkey processing centers. As was disclosed recently by CoreCivic, four facilities totaling 7,187 beds already have been acquired by ICE for more than $2.2 billion at an average purchase price of more than $300,000 per bed.

Speaker #2: We also remain well positioned to expand our delivery of secure ground and air transportation services for ICE and the U.S. Marshals Service, beyond the significant growth we've already experienced.

Speaker #2: Finally, I'd like to provide you with an update regarding the plan by ICE and DHS to purchase existing privately owned turnkey ICE processing centers.

Speaker #2: On our earnings call last quarter, we discussed that ICE was considering the purchase of approximately 10 privately owned, turnkey processing centers. As was disclosed recently by Korcevic, four facilities totaling 7,187 beds have already been acquired by ICE for more than $2.2 billion, at an average purchase price of more than $300,000 per bed.

Speaker #2: Based on our current discussions, we believe that the total number of facilities that are being considered for acquisition by ICE is likely larger than the 10 that were originally contemplated.

George Zoley: Based on our current discussions, we believe that the total number of facilities that are being considered for acquisition by ICE is likely larger than the 10 that were originally contemplated. It is possible that the number of facilities targeted for acquisition by ICE could continue to grow in the future. Following the recently completed sales, ICE now uses approximately 36 existing detention sites nationwide that are owned and operated by private contractors. CoreCivic now owns and operates approximately 11 ICE detention facilities, while GEO owns and operates 23 ICE detention facilities. We believe that future sales are likely to have similar valuations to the transactions that have already been completed, with standard adjustments with respect to geography and facility size.

Speaker #2: And it is possible that the number of facilities targeted for acquisition by ICE could continue to grow in the future. Following the recently completed sales, ICE now uses approximately 36 existing detention sites nationwide that are owned and operated by private contractors.

Speaker #2: Korcevic now owns and operates approximately 11 ICE detention facilities, while GEO owns and operates 23 ICE detention facilities. We believe that future sales are likely to have similar valuations to the transactions that have already been completed, with standard adjustments with respect to geography and facility size.

Speaker #2: We are engaged in an active process for the sale of several of our turnkey facilities, subject to mutual agreement on price and our continued management of those facilities under long-term support services contracts.

George Zoley: We are engaged in an active process for the sale of several of our turnkey facilities, subject to mutual agreement on price and our continued management of those facilities under long-term support services contracts. We believe we have 2 types of assets, the buildings and the businesses of providing support services. We are pursuing a potential sale of the buildings, but we want to retain the business. We consider ourselves primarily a support services operator, and we'll place particular importance on our ability to continue our support services at any facility sold to ICE. Several of our facilities already have long-term support services contracts in place and would likely only need to be modified so as to eliminate the ownership costs, such as depreciation and property taxes, embedded in our present contracts in the event of ICE ownership.

George Zoley: We are engaged in an active process for the sale of several of our turnkey facilities, subject to mutual agreement on price and our continued management of those facilities under long-term support services contracts. We believe we have two types of assets, the buildings and the businesses of providing support services. We are pursuing a potential sale of the buildings, but we want to retain the business. We consider ourselves primarily a support services operator, and we'll place particular importance on our ability to continue our support services at any facility sold to ICE. Several of our facilities already have long-term support services contracts in place and would likely only need to be modified so as to eliminate the ownership costs, such as depreciation and property taxes, embedded in our present contracts in the event of ICE ownership.

Speaker #2: We believe we have two types of assets: the buildings, and the business of providing support services. We are pursuing a potential sale of the buildings, but we want to retain the business.

Speaker #2: We consider ourselves primarily a support services operator and will place particular importance on our ability to continue our support services at any facility sold to ICE.

Speaker #2: Several of our facilities already have long-term support services contracts in place, and would likely only need to be modified so as to eliminate the ownership costs, such as depreciation and property taxes, embedded in our present contracts in the event of ICE ownership.

Speaker #2: One of these facilities has some unique and valuable assets that we believe require a separate appraisal, which has likely resulted in a somewhat longer process of evaluation.

George Zoley: One of these facilities has some unique and valuable assets that we believe require separate appraisal, which has likely resulted in somewhat longer process of evaluation. Several other GEO facilities have support services contracts that expire later this year. ICE has initiated a procurement process involving four facilities that we hope will result in new long-term support services contracts being awarded. At this time, there is no definitive agreement in place with ICE and no precise timeline for the closing of any transactions. Of course, we can give no assurance that any of these transactions will take place at all. If any of the GEO facilities are sold to ICE, we intend to use the proceeds to reduce debt, continue stock repurchases, and for other general corporate purposes. The potential sale of multiple facilities to ICE could represent a significant liquidity and shareholder value-enhancing event for our company.

Speaker #2: Several other GEO facilities have support services contracts that expire later this year. ICE has initiated a procurement process involving four facilities that we hope will result in new long-term support services contracts being awarded.

Speaker #2: At this time, there is no definitive agreement in place with ICE, and no precise timeline for the closing of any transactions. And, of course, we can give no assurance that any of these transactions will take place at all.

Speaker #2: But if any of the GEO facilities are sold to ICE, we intend to use the proceeds to reduce debt, continue stock repurchases, and for other general corporate purposes.

Speaker #2: The potential sale of multiple facilities to ICE could represent a significant liquidity and shareholder value-enhancing event for our company. While the exact timing of government actions is always difficult to estimate, we remain focused on pursuing new growth opportunities and allocating capital to enhance long-term value for our shareholders.

George Zoley: While the exact timing of government actions is always difficult to estimate, we remain focused on pursuing new growth opportunities and allocating capital to enhance long-term value for our shareholders. Given the intrinsic value of our assets, including 50,000 owned beds, our strong financial performance in providing diversified, secure support services, and our expected future growth, we believe our stock continues to be significantly undervalued and offers a very attractive investment opportunity. That completes our remarks, and we would be glad to take questions.

Speaker #2: Given the intrinsic value of our assets, including 50,000 owned beds, our strong financial performance in providing diversified, secure support services, and our expected future growth, we believe our stock continues to be significantly undervalued and offers a very attractive investment opportunity.

Speaker #2: That completes our remarks, and we would be glad to take questions.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star, then one, on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator 3: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Joe Gomes with Noble Capital. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Joe Gomes with Noble Capital. Please go ahead.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker #1: The first question today comes from Joe Gomes with Noble Capital. Please go ahead.

Speaker #3: Good afternoon, George and Sean. Thanks for taking my questions.

Joe Gomes: Good afternoon, George and Shayn. Thanks for taking my questions.

Speaker #4: Good afternoon.

George Zoley: Good afternoon.

Speaker #3: So I want to start out with the Florida facilities. It's a year push-out here to the right. I was wondering if you could give us a little more color as to why the push-out there.

Joe Gomes: I want to start out with the Florida facilities. It's a year pushout here to the right. I was wondering maybe to give us a little more color as to why the pushout there. Secondarily on that, I'm assuming since they were supposed to start in early July 2024, that there was some of those revenues that were expected in your prior guidance that you'd put out in the Q1, is that accurate? That would indicate that even with this push out to the right for these particular facilities, the guide still being raised had been raised even higher if these hadn't been pushed out?

Speaker #3: And then, secondarily on that, I'm assuming since they were supposed to start in early July this year, that there were some of those revenues that were expected in your prior guidance that you'd put out in the first quarter. Is that accurate?

Speaker #3: And so that would indicate that even with this push out to the right for these particular facilities, the guidance still being raised would have been raised even higher if these hadn't been pushed out?

George Zoley: That is correct. Yeah. There were some budgetary issues that remain unresolved that required the extension to 1 July 2025.

Speaker #2: That is correct. Yeah, there were some budgetary issues that remain unresolved that required the extension to July 1 of next year.

Speaker #3: Okay, thank you for that. And then on the CapEx—you mentioned, George, getting reimbursed for CapEx in some of the new contracts. If you could remind us if that is normal, if that's something new from ICE, and does that also play into the reduction in CapEx guidance on the growth side, especially for you guys for this year?

Joe Gomes: Okay. Thank you for that. On the CapEx, you mentioned, George, that getting reimbursed for CapEx and some of the new contracts. If you could remind us if that is normal, if that's something new from ICE, and does that also play into the reduction in CapEx guidance on the growth side, especially for you guys for this year?

Speaker #2: It is relatively new, but the answer to the second question may be twofold then. We've spent a lot of capex gearing up, ready for this expansion, for the reactivation of ICE facilities.

George Zoley: It is relatively new, the answer to the second question may be twofold, that we've spent a lot of CapEx gearing up, ready for this expansion for the reactivation of ICE facilities, and I think we'll be pretty much complete by the end of this year or early next year. The ongoing maintenance CapEx will come into play on a normal basis, but we won't have any unusual startup CapEx as we've had over the last year and a half.

Speaker #2: And I think we'll be pretty much complete by the end of this year or early next year. So the ongoing maintenance CAPEX will come into play on a normal basis, but we won't have any unusual startup CAPEX as we've had over the last year and a half.

Speaker #3: Okay, great. And then one more for me, if I may. I know you talked about the ISAP program—you got the two-year contract. And even though there’s been some mix shift, which is helping maintain revenue under that contract, if we go back a year and a half or so ago, I think there was some thought out there that the numbers under the ISAP program could hit well in excess of where we are today.

Joe Gomes: Okay, great. One more from me, if I may. I know you talked about the ISAP program, you got the two-year contract, and even though there's been some mix shift, which is helping maintain revenue under that contract. We go back a year and a half or so ago, and I think there was some thought out there that the numbers under the ISAP program could hit well in excess of where we are today. It's been pretty flat here now for probably, what, two years. Just trying to get your feel for, is it just not a focus of ICE at this point in time that's more on the detention side?

Speaker #3: I mean, it's been pretty flat here now for probably, what, two years. I'm just trying to get your feel for us— is this just not a focus of ICE at this point in time?

Speaker #3: Is it more on the detention side, or is there something else going on in the ISAP contract where maybe, in the near future, we'll start to see numbers go up to where they were a couple of years ago for you guys—up to that almost $400,000 level?

Joe Gomes: Is there something else going on in the ISAP contract where it just maybe in the near future, we'll start to see maybe numbers go up to where they were a couple of years ago for you guys up to that almost 400,000 level?

George Zoley: I think in general, the focus of ICE has been on increasing detention capacity. There's a lot of policy shifts as to who will be subject to immigration enforcement. At a later point, maybe next year, we could see ISAP increase dramatically. Right now, the focus is on increasing detention capacity.

Speaker #2: I think, in general, the focus of ICE has been on increasing detention capacity. But there are a lot of policy shifts as to who will be subject to immigration enforcement.

Speaker #2: So at a later point, maybe next year, we could see ISAP increase dramatically. But right now, the focus is on increasing detention capacity.

Speaker #3: Okay, great. Thanks for that. I'll get back in the queue. Thank you.

Joe Gomes: Okay, great. Thanks for that. I'll get back in queue. Thank you.

Speaker #4: Thanks.

George Zoley: Thanks.

Operator 3: The next question comes from Brendan McCarthy. Please go ahead.

Operator: The next question comes from Brendan McCarthy. Please go ahead.

Speaker #1: The next question comes from Brendan McCarthy. Please go ahead.

Speaker #5: Great. Good afternoon. I appreciate you taking my questions. Just a follow-up on the electronic monitoring side— is it still the expectation that ICE is looking to reach 100,000 operational beds before turning to ISAP?

Brendan McCarthy: Great, good afternoon. Appreciate you taking my questions. Just a follow-up on the electronic monitoring side. Is it still the expectation that ICE is looking to reach 100,000 operational beds before turning to ISAP? Is that still a reasonable expectation?

Speaker #5: Is that still a reasonable expectation?

Speaker #2: I think so. For the most part, the focus within the agency and throughout the agency is to try to stand up approximately 100,000 beds.

George Zoley: I think so, for the most part. The focus within the agency and throughout the agency is to try to stand up approximately 100,000 beds. They are at a census presently of about 68,000, and we have, of that, 24,000 in our facilities. They have another 30,000 or so more beds to go. Within that process, I think there is an objective of consolidation into fewer, larger facilities down from their present 225 facilities that they use nationwide. They want to be in fewer, larger facilities with a normal detention capacity of about 100,000, not including maybe a lot of these little jails, which are just feeder locations to the main facilities that they want to have.

Speaker #2: They're at a census presently of about 68,000, and we have, of that, 24,000 in our facilities. So, they have another 30,000 or so more beds to go.

Speaker #2: But within that process, I think there's an objective of consolidation into fewer, larger facilities, down from their present 225 facilities that they use nationwide.

Speaker #2: So they want to be in fewer, larger facilities with a normal detention capacity of about 100,000—not including, maybe, a lot of these little jails, which are just feeder locations to the main facilities.

Speaker #2: That they want to have.

Speaker #5: Understood. That makes sense. And on the skip tracing contract, I know you mentioned there was not much of an impact in Q2 from the lapse in ICE funding.

Brendan McCarthy: Understood. That makes sense. On the skip tracing contract, I know you mentioned there was not much of an impact in Q2 from the lapse in ICE funding. Is $60 million still a reasonable annualized revenue estimate from that contract? Has that changed at all? What are you seeing regarding trends in that program?

Speaker #5: Is $60 million still a reasonable annualized revenue estimate from that contract? Has that changed at all? And what are you seeing regarding trends in that program?

Speaker #2: Well, we do expect to receive another contract this quarter, possibly this month. And I think that number you quoted is correct.

George Zoley: We do expect to receive another contract this quarter, possibly this month. I think that number you quoted is correct.

Speaker #5: Okay, and last question from me, just on the potential facility sales. I know you mentioned ICE has initiated a procurement process involving four facilities.

Brendan McCarthy: Okay. Last question from me, just on the potential facility sales I know you mentioned ICE has initiated the procurement process involving 4 facilities. I guess, do you anticipate a potential sale lining up with the timing of a renewal, which it looks like a few of those facilities are up for a renewal this fall? Just curious if you think the timing might line up there.

Brendan McCarthy: Okay. Last question from me, just on the potential facility sales I know you mentioned ICE has initiated the procurement process involving four facilities. I guess, do you anticipate a potential sale lining up with the timing of a renewal, which it looks like a few of those facilities are up for a renewal this fall? Just curious if you think the timing might line up there.

Speaker #5: I guess, do you anticipate a potential sale lining up with the timing of a renewal? It looks like a few of those facilities are up for renewal this fall.

Speaker #5: Just curious if you think the timing might line up there.

Speaker #2: Well, they're not being renewed; they're being recompeted. This is a new procurement to establish a new contract term for those facilities, and we're hoping the contract term is a long contract term.

George Zoley: Well, they're not being renewed, they're being recompeted. This is a new procurement to establish a new contract term for those facilities, and we're hoping the contract term is a long contract term. I think there's a mutual interest to complete this process by the end of this quarter, hopefully, although it may spill into the next quarter. That means, as we understand it, a two-step process. There was originally an RFI, a request for information, in which potential interested parties could submit their proposal to indicate that they had such a facility in that particular location. There are four different locations. That first step has been completed. The next step is to validate where the facility is and the ability to activate it within 30 days. We think that process can take place fairly quickly.

Speaker #2: And I think there's a mutual interest to complete this process by the end of this quarter—hopefully. Although, it may spill into the next quarter.

Speaker #2: So, that means it's, as we understand it, a two-step process. There was originally an RFI—a request for information—in which potential interested parties could submit their proposal to indicate that they had such a facility in that particular location.

Speaker #2: There's four different locations. The next step of the process and that first step has been completed. The next step is to validate where the facility is and the ability to activate it within 30 days we think that process will can take place fairly quickly.

Speaker #2: And the last step of the process is pricing on that existing facility for the next contract term. And as I said earlier, I think there's a mutual interest by us and ICE that this process be, hopefully, completed by the end of this quarter.

George Zoley: The last step of the process is pricing on that existing facility for the next contract term. As I said earlier, I think there's a mutual interest by us and ICE that this process hopefully be completed by the end of this quarter, but it could spill into Q4.

Speaker #2: But it could spill into the fourth quarter.

Speaker #5: Got it. Thanks for that clarification, George. That's all from me.

Brendan McCarthy: Got it. Thanks for that clarification, George. That's all for me.

Speaker #1: The next question comes from Greg Givis with Northland Securities. Please go ahead.

Operator 3: The next question comes from Greg Gibas with Northland Securities. Please go ahead.

Operator: The next question comes from Greg Gibas with Northland Securities. Please go ahead.

Speaker #3: Great. Hi, George, and thanks for taking the questions. I recognize that there are no assurances of asset sales, but post-asset sales, could you maybe discuss how you're thinking about capital allocation and what your target net leverage would be?

Greg Gibas: Great. Hi, George, Shayn. Thanks for taking the questions.

Greg Gibas: Of course.

Greg Gibas: Post-asset sales, could you maybe discuss how you're thinking about capital allocation and what your target net leverage would be, and perhaps just thoughts on buybacks versus any potential considerations for a 1031 exchange following any sale?

Speaker #3: And perhaps just thoughts on buybacks versus any potential considerations for a 10/31 exchange following any sale?

Speaker #6: Hey Greg, this is Shane. And thanks for the question. So, post any asset sales, we do have certain restrictions in our current debt agreements on how those proceeds have to be applied.

Shayn March: Hey, Greg, this is Shayn. Thanks for the question. Post any asset sales, we do have certain restrictions in our current debt agreements, how those proceeds have to be applied. Once we were able to satisfy those restrictions in the indenture and in the credit agreement, we would absolutely look to deploy as much capital as we can to returning it back to shareholders. I think it's a combination of both debt repayment and ultimately using that money to get either active with share repurchases or other forms of remuneration back to our shareholder investors.

Speaker #6: But once we were able to satisfy those restrictions in the indenture and in the credit agreement, we would absolutely look to deploy as much capital as we can to returning it back to shareholders.

Speaker #6: So I think it's a combination of both debt repayment and ultimately using that money to get either active with share repurchases or other forms of remuneration back to our shareholder investors.

Speaker #3: Got it. That's helpful. And secondly, as it relates to ICE's recent push to utilize monitoring services for Haitian immigrants, would you expect that initiative to notably change the population under the ISAP program?

Greg Gibas: Secondly, as it relates to ICE's recent push to utilize monitoring services for Haitian immigrants, would you expect that initiative to notably change the populations under the ISAP program? Similarly, we've seen that continued technology mix shift. Wondering if you could maybe quantify it in a way, like what would be the impact of moving one individual from SmartLINK to ankle monitoring?

Speaker #3: And similarly, we've seen that continued technology makeshift. I was just wondering if you could maybe quantify it in a way, like what would be the impact of moving one individual from SmartLINK to ankle monitoring?

Speaker #2: Well, there's a corresponding decline in the SmartLink app to individuals on the ankle monitors, and the app is far less expensive than the ankle monitors.

George Zoley: Well, there's a corresponding decline in the SmartLINK app to individuals on the ankle monitors, and the app is far less expensive than the ankle monitors. Because of new policy shifts as to who will be subject to this immigration enforcement, like as you mentioned, the Haitians, we could see a significant increase in the number of people in the ISAP program. Most of them, we believe, would be placed under the ankle monitoring supervision technique.

Speaker #2: And because of new policy shifts as to who will be subject to this immigration enforcement—like, as you mentioned, the Haitians—we could see a significant increase in the number of people in the ISAP program.

Speaker #2: And most of them, we believe, would be placed under the ankle monitoring supervision technique.

Speaker #3: Okay, thank you. I'll pass it on.

Greg Gibas: Okay, thank you. I'll pass it on.

Speaker #1: The next question comes from Kirk Ledke with Raymond James. Please go ahead.

Operator 3: The next question comes from Kirk Ludtke with Raymond James. Please go ahead.

Operator: The next question comes from Kirk Ludtke with Raymond James. Please go ahead.

Speaker #5: Hello, George. Shane, thank you for the call. Maybe a follow-up on the 100,000-bed target. I know we've talked on past calls about ICE's efforts to build their own facilities.

Kirk Ludtke: Hello, George, Shane. Thank you for the call.

George Zoley: Hey. Thank you.

Kirk Ludtke: Maybe a follow-up on the 100,000-bed target. I know we've talked on past calls about ICE's efforts to build their own facilities. How many beds do you think might come from that effort?

Speaker #5: How many beds do you think might come from that effort?

George Zoley: I don't think they're building their own facilities per se. Of the warehouse program, I think of the 11 that they purchased, they may be trying to activate maybe two or three. That would be maybe 5,000 beds.

Speaker #2: I don't think they're building their own facilities, per se. Well, they may be—with the warehouse program—I think of the 11 that they purchased, they may be trying to activate maybe two or three.

Speaker #2: That would be maybe 5,000 beds.

Speaker #5: So the vast majority is going to have to come from other places, I guess.

Kirk Ludtke: The vast majority is going to have to come from other places, I guess.

George Zoley: It's really a reactivation of what were formerly BOP facilities that were discontinued under the Obama administration. These are generally high-security facilities. Single-cell facilities that are very desirable by ICE in expanding their detention capacity.

Speaker #2: It's really a reactivation of what were formerly BOP facilities that were discontinued under the Obama administration. And these are generally high-security, single-cell facilities.

Speaker #2: These are very desirable by ICE in expanding their detention capacity.

Speaker #5: Got it. That's helpful. Thank you. And are there any time limits on the funding? Does this effort have to happen before the end of this administration?

Kirk Ludtke: Got it. That's helpful. Thank you. Is there any time limits on the funding? Does this effort have to happen before the end of this administration?

Speaker #2: No, I believe ICE has maybe approximately $36 billion left for the build-up of new facilities. And I believe that that money is allocated through the president's current term.

George Zoley: No. I believe ICE has maybe approximately $36 billion left for the build-up of new facilities, and I believe that money is allocated through the president's current term.

Speaker #5: So, they've got some time for this to come to pass.

Kirk Ludtke: They've got some time for this to come to pass.

George Zoley: Yeah. About three years.

Speaker #2: About three years. Three years.

Speaker #5: Yeah, got it. And then you mentioned geographic considerations. Can you elaborate on what they might be looking for?

Kirk Ludtke: Yeah, got it. Then you mentioned geographic considerations. Can you elaborate on what they might be looking for?

Speaker #2: What does that mean? Well, it's the difference between the cost of a facility in Oklahoma versus the cost of a facility in Colorado or in Washington.

George Zoley: What that means?

Kirk Ludtke: Yeah.

George Zoley: It's the difference between a cost of a facility in Oklahoma versus the cost of a facility in Colorado or Washington or different states. Just like a house in Florida is a different cost than one in Mississippi.

Speaker #2: Or different states—just like a house in Florida is a different cost than one in Mississippi.

Kirk Ludtke: Interesting.

Speaker #5: And so?

Speaker #2: And the appraisal technique that's being used is the replacement cost of that facility in that location.

George Zoley: The appraisal technique that's being used is the replacement cost of that facility in that location.

Speaker #5: Got it. That's helpful. I appreciate it. Thank you.

Kirk Ludtke: Got it. That's helpful. I appreciate it. Thank you.

Speaker #1: This concludes our question and answer session. I would like to turn the conference back over to George Zoley, Chairman and CEO, for any closing remarks.

Operator 3: This concludes our question and answer session. I would like to turn the conference back over to George Zoley, Chairman and CEO, for any closing remarks.

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

Speaker #2: Okay, thank you for joining us today. We look forward to addressing you in the next quarter. Thank you.

George Zoley: Okay. Thank you for joining us today. We look forward to addressing you in the next quarter. Thank you.

Operator 3: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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

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