GEO Group (GEO) Q4 2025 Earnings Call Transcript

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Date

Thursday, Feb. 12, 2026 at 1 p.m. ET

Call participants

• Executive Chairman of the Board — George C. Zoley
• Chief Financial Officer — Mark J. Suchinski
• Executive Vice President, Corporate Relations — Pablo Paez

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Takeaways

• Net income (Q4) -- $32,000,000, or $0.23 per diluted share, up from $15,500,000, or $0.11 per diluted share, in the comparable period.
• Adjusted net income (Q4) -- $35,000,000, or $0.25 per diluted share, versus $18,000,000, or $0.13 per diluted share, previously.
• Quarterly revenue (Q4) -- $678,000,000, compared to $608,000,000 during the previous year's period.
• Adjusted EBITDA (Q4) -- $126,000,000, increased from $108,000,000 in the same prior-year quarter.
• Owned and leased secure services revenues -- Increased $70,000,000, or 23%, driven by new ICE contracts; partially offset by the Lawton, Oklahoma sale and Lea County, New Mexico depopulation.
• Managed-only contracts revenue (Q4) -- Increased $26,000,000, or 17%, mainly due to the North Florida Detention Facility joint venture and transportation revenues.
• Electronic monitoring and supervision services revenue (Q4) -- Up 3%, reflecting lower ISAP 5 pricing offset by technology/case management mix shift, and inclusion of the skip-tracing pilot contract.
• Employee severance expense (Q4) -- $1,600,000 charged to electronic monitoring and supervision services as part of an efficiency initiative, expected to yield $2,000,000–$3,000,000 in quarterly labor cost improvements in 2026.
• Operating expenses (Q4) -- Increased 18.5% due to new facility activations and higher occupancy.
• General and administrative expense ratio (Q4) -- Declined to 8.4% of revenue from 10% in the prior year period.
• Net interest expense (Q4) -- Decreased $6,000,000, reflecting net debt reduction.
• Effective tax rate (Q4) -- Approximately 35% was reported.
• Net income (full year 2025) -- $254,000,000, or $1.82 per diluted share, compared to $32,000,000, or $0.22 per diluted share, previously; includes gains on asset sales.
• Adjusted net income (excluding extraordinary items, full year 2025) -- $120,000,000, or $0.86 per diluted share, versus $101,000,000, or $0.75 per diluted share, previous year.
• Adjusted EBITDA (full year 2025) -- $464,000,000, roughly unchanged from $463,000,000 prior year.
• Asset sales (2025) -- Lawton, Oklahoma facility sold for $312,000,000 and Hector Garza, Texas facility for $10,000,000, delivering a $232,000,000 pretax gain in Q3.
• Contingent litigation reserve (2025) -- Noncash reserve of approximately $38,000,000 recorded.
• ISAP 5 monitoring mix shift -- Ankle monitor count increased from 17,000 to over 42,000 during the year; SmartLink app participants declined to under 135,000, while 106,000 participants are now assigned to additional case management services.
• New and expanded contracts (2025) -- Up to $520,000,000 in new annualized revenue awarded, spanning secure services, secure transportation, and reentry services with staggered activations.
• Largest facility startups in company history (2025) -- Five facilities, representing approximately $400,000,000 in annualized revenue, and approximately 2,000 new employee hires.
• Active ICE facility populations -- Reached approximately 24,000, the highest level in company history.
• New ICE contracts -- Four ICE-dedicated facilities totalling approximately 6,000 beds (Delaney Hall NJ, North Lake MI, D. Ray James GA, North Florida) and a reactivation of Adelanto, CA; management highlighted staggered revenue normalization.
• ISAP 5 contract scope -- Two-year contract includes pricing for 361,000 participants in the first year and 465,000 in the second; management confirmed investment in monitoring and case management capacity.
• Skip-tracing contract awarded (Dec. 2025) -- Two-year award for up to $60,000,000 per year in revenue, following a $10,000,000 pilot during 2025.
• Secure transportation expansion -- Approximately $60,000,000 in incremental annualized revenue, including new federal contracts and supporting ICE Air.
• Revolving credit facility -- Increased by $100,000,000 during the quarter to support liquidity.
• Share repurchases (2025) -- Approximately 5,000,000 shares bought for $91,000,000 since August; authorization expanded in November to $500,000,000, with $409,000,000 remaining at year-end and shares outstanding at 136,000,000.
• Full-year 2026 guidance -- GAAP net income of $0.99–$1.07 per diluted share on revenue of $2,900,000,000–$3,100,000,000; adjusted EBITDA forecast $490,000,000–$510,000,000; effective tax rate of 28%; capital expenditures expected at $120,000,000–$155,000,000.
• First quarter 2026 guidance -- GAAP net income of $0.17–$0.19 per diluted share, revenue of $680,000,000–$690,000,000, and adjusted EBITDA of $107,000,000–$112,000,000.
• Cash and debt position (year-end 2025) -- $70,000,000 cash; $1,650,000,000 total debt, with net debt subsequently improving to $1,500,000,000 post period-end.
• Interest expense savings (2025) -- Annual reduction of $30,000,000 achieved through debt reduction.
• Idle bed capacity -- 6,000 idle beds at six company-owned, high-security former Bureau of Prisons facilities could generate over $300,000,000 in incremental annualized revenue at full utilization.
• Contract pipeline -- Management indicated active engagement with ICE on further facility activations and participation in ICE’s large-scale warehouse/capacity procurement initiatives.
• CEO transition announced -- J. David Donahue to retire; George C. Zoley returning as Chairman and CEO under a new contract through April 2, 2029, effective end of February.

Summary

GEO Group (NYSE:GEO) reported record levels of new and expanded contract awards in 2025, totaling up to $520,000,000 in annualized revenue, marking the most active growth period in company history. The quarter included the activation of five major facilities and material shifts in the ISAP 5 electronic monitoring mix toward higher revenue modalities like ankle monitors and expanded case management services. Management emphasized readiness for rapid scale under the new ISAP 5 contract, which provides stepped-up participant capacity and pricing for the next two years. The company closed substantial asset sales, implemented a large-scale share repurchase program, and expanded liquidity resources via an increased credit facility, while also disclosing use of sale proceeds for strategic facility acquisitions.

• Management addressed government funding uncertainty, indicating contractual services for ICE are deemed essential, but noting that payment and collections could be delayed in the event of a Department of Homeland Security shutdown.
• The company guided for temporary margin compression in early 2026 connected to staggered contract activations and start-up expenses, with expectations for normalization and improved EBITDA run rates later in the year.
• GEO signaled active participation in ICE’s new large-scale warehouse-based detention procurement, specifically evaluating select Sunbelt state opportunities in collaboration with a prime contractor.
• Net debt is targeted to fall below a 3x leverage ratio during 2026, per management’s stated capital allocation priorities.
• Facility startup complexity and ICE’s evolving needs, such as increased demand for high-security and specialized space, are driving a structurally longer activation process for new and idle GEO facilities.

Industry glossary

• ISAP 5 (Intensive Supervision Appearance Program, Phase 5): Latest generation of ICE’s electronic monitoring and community supervision contract, involving biometric and device-based compliance for non-detained immigrants.
• Skip-tracing: The process of locating individuals using commercial and government data for address verification and legal compliance under ICE contracts.
• Managed-only contracts: Agreements where GEO Group operates a facility it does not own, typically for state or federal government clients.

Full Conference Call Transcript

Operator: Good day, and welcome to The GEO Group, Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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, Corporate Relations. Please go ahead. Thank you, Operator.

Pablo Paez: Good afternoon, everyone, and thank you for joining us for today's discussion of The GEO Group, Inc.'s fourth quarter 2025 earnings results. With us today are George C. Zoley, Executive Chairman of the Board, and Mark J. Suchinski, Chief Financial Officer. This morning, we will discuss our fourth quarter and full-year results, as well as our outlook. We will conclude the call with a question-and-answer session. This conference call is also being webcast live on our investor website at investors.geogroup.com. Today, we will discuss non-GAAP basis information. A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and the supplemental disclosure we issued this morning.

Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall within the safe harbor 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-Ks, 10-Q, and 8-K reports. With that, please allow me to turn this call over to our Executive Chairman, George C. Zoley. George, thank you, Pablo, and good afternoon to everyone. During the past year, we believe we have made significant progress

George C. Zoley: towards meeting our financial and strategic objectives. Since the beginning of 2025, we have been awarded new or expanded contracts that represent up to approximately $520,000,000 in new incremental annualized revenues that have staggered activation dates and are expected to primarily normalize by the end of this year. This represents the largest amount of new business we have won in a single year in our company's history. We have entered into new contracts to house ICE detainees at four facilities totaling approximately 6,000 beds, which include three company-owned facilities we announced in 2025: the 1,000-bed Delaney Hall, New Jersey facility; the 1,800-bed North Lake facility in Michigan; and the 1,868-bed D.

Ray James facility in Georgia; and more recently, the 1,310-bed North Florida Detention Facility, which is a state-owned facility where we are providing management services under a joint venture agreement that we announced in early October. The Florida contract arrangement demonstrates The GEO Group, Inc.'s ability to provide management services through alternative solutions like the State of Florida's partnership with the federal government. During the third quarter, we also reactivated our 1,940-bed Adelanto ICE Processing Center in California, which was already under contract but had been underutilized due to a longstanding COVID-related court case.

The activation of these five facilities represents the largest startup activity in our company's history with a combined annualized revenue value of approximately $400,000,000 and involves the hiring and training of approximately 2,000 new employees. The census across our active ICE facilities has continued to steadily increase from the third quarter at approximately 22,000 to presently approximately 24, which is the highest level of ICE populations we have ever had. This past year, we also significantly expanded the delivery of our secure transportation services on behalf of both ICE and the U.S. Marshals Service, valued at approximately $60,000,000 in incremental annualized revenue.

The increase in ICE enforcement and removal has resulted in an increased need for secured ground and air transportation services. In 2025, we entered into new or amended contracts to expand secure ground transportation services at four existing ICE facilities and at our three newly activated ICE facilities, and the support services that we provide under our ICE Air transportation subcontract continued to steadily increase throughout this past year. In addition to the secure ground transportation services we have historically provided for the U.S. Marshals, last year, we signed a new five-year contract with the agency covering 26 federal judicial districts and spanning 14 states.

At the state level, we were awarded two new management-only contracts in 2025 from the Florida Department of Corrections. The 1,884-bed Graceville facility and the 985-bed Bay facility are scheduled to transition to The GEO Group, Inc. management on July 1 and have combined annualized revenues of approximately $100,000,000. Of particular importance in 2025, we also secured a new two-year contract for the ISAP 5 program following a competitive procurement process. ISAP is the only ICE program currently in place to provide electronic monitoring and case management services for individuals on the non-detained docket.

It is mainly for people ICE considers a higher flight risk or who have pending asylum or removal cases but are still allowed to live in the community. The program relies on several forms of monitoring, including GPS ankle bracelets or wrist-worn devices that provide real-time tracking, as well as a phone app which relies on facial recognition, voice ID, and GPS to confirm a person's location during predetermined check-ins. The ISAP counts have declined slightly over the last year to approximately 180,000 presently due to a decline in the use of a phone app called SmartLink, provided by The GEO Group, Inc. at a very nominal cost.

Instead, we have had a steady increase in more intensive and higher-priced monitoring devices such as ankle monitors. The number of 17,000 in early 2025 to more than 42,000 ankle monitors today. Correspondingly, the number of ISAP participants on the SmartLink mobile app has declined to less than 135,000 participants today. Currently, with this trend, we have also seen an increase in the number of ISAP participants additionally assigned to case management services, which involves staff interaction and monitoring for approximately 106,000 individuals at this time. If this trend continues, the technology and case management mix shift would increase the revenues and earnings generated under the contract even if overall volume remains

Operator: constant.

George C. Zoley: Thus, we continue to be optimistic about the importance and growth potential of the ICE contract. The new two-year contract includes pricing for 361,000 participants in year one and 465,000 participants in year two. With the capital investment we made in 2025, we believe we have the capability in scaling monitoring devices and case management services to achieve those significantly increased participation levels and far beyond if desired by ICE. But, of course, we cannot provide definitive assurance of future ISAP participation levels, which are determined by ICE management. In December 2025, we were awarded a new two-year contract by ICE for the provision of skip-tracing services valued at up to $60,000,000 in revenues per year.

Skip tracing entails enhanced location research primarily with identifiable information and commercial data verification to verify current address information and investigate alternative address information for individuals on the non-detained docket. This two-year contract award follows an initial skip-tracing pilot contract that we successfully implemented, which generated approximately $10,000,000 in revenues during 2025. Looking at our initial guidance for 2026, we believe there are several sources of potential upside, including additional growth in our Secure Services segment, additional volume increases or accelerated mix shift in our ISAP contract, additional growth in our Secure Transportation segment, and the normalization of higher labor expenses at newly activated facilities.

It is our understanding that the present ICE detention census is presently approximately 70,000, distributed over 225 separate locations, which are primarily short-term jail facilities. We believe the federal government is continuing its focus to increase immigration detention capacity and looking for solutions as to how to upscale to 100,000 beds or more and consolidate to fewer, larger facilities.

Pablo Paez: As a 40-year partner to ICE, we expect to be part of this solution.

George C. Zoley: We continue to be in active discussions with ICE regarding our remaining available capacity and are currently in discussions for the potential activation of additional facilities. We have approximately 6,000 idle beds at six company-owned facilities, which are primarily former U.S. Bureau of Prisons facilities and are currently, therefore, high-security facilities, making them ideally suited for the current needs of the federal government. At full capacity, these 6,000 beds would generate more than $300,000,000 in combined incremental annualized revenues. We are obviously aware that ICE is exploring the purchase of several commercial warehouses that would be retrofitted to further increase detention capacity.

This procurement process would result in the federal government owning these assets while contracting with private-sector companies to retrofit and operate these potential sites. We are cautiously participating in this process and are evaluating select potential sites with the possibility of responding to this procurement opportunity. With respect to the federal government's annual appropriations process, the Department of Homeland Security is currently funded under a short-term continuing resolution that expires tomorrow night. If no additional appropriation bills are passed by Congress before the expiration of the current continuing resolution, there will be a partial government shutdown involving the Department of Homeland Security.

It is important to note that this process only affects the annual appropriations ICE receives from Congress, which is approximately $10,000,000,000. It does not impact the funding under the one big beautiful bill, which is available through September 30, 2029. Under that budget reconciliation bill, ICE was allocated approximately $75,000,000,000, including $45,000,000,000 for detention. Historically, during government shutdowns, the services rendered under our contracts with ICE have continued uninterrupted as they are considered essential public safety services. However, the timing of payments and collections could be delayed, requiring us to carefully manage our liquidity and working capital needs. With the recent expansion of our revolving credit facility by $100,000,000, we believe we have substantial liquidity.

While the exact timing of government actions, including congressional funding decisions and new contract awards, is difficult to estimate, we expect the balance of 2026 to be very active. In addition to the opportunities at the federal level, we are pursuing additional opportunities at the state level, specifically in the field of mental health services. In Florida, we are currently participating in a procurement by the Department of Children and Families for the management contract at the South Florida Evaluation and Treatment Center, which is a state forensic psychiatric hospital, which at one time we were the operator.

In addition to our efforts to capture new growth, we believe we also have made significant progress towards strengthening our capital structure and enhancing shareholder value. Our efforts to strengthen our balance sheet were enhanced by the successful sale of the Lawton, Oklahoma facility for $312,000,000 and the Hector Garza facility in Texas for $10,000,000. We used approximately $60,000,000 of the Lawton facility sale gain to purchase the 770-bed downtown San Diego, California facility that we have operated for the U.S. Marshals Service for 25 years. In 2025, we also began returning capital to shareholders through a share repurchase program that was initiated in August and expanded to $500,000,000 in November.

As of year-end 2025, we had repurchased approximately 5,000,000 shares for approximately $91,000,000, bringing our total shares outstanding to approximately 136,000,000. Given the intrinsic value of our assets, including 50,000 owned beds at 70 facilities and our expected growth, we continue to believe our stock is significantly undervalued and offers a very attractive investment opportunity. Our stock is trading at a historically low multiple despite the significant growth opportunities we expect going forward. We recognize that this imbalance creates a unique opportunity to enhance value for our shareholders through share repurchases. At this time, I will turn the call over to our CFO, Mark J. Suchinski, to review our financial highlights and guidance.

Mark J. Suchinski: Thank you, George, and good afternoon, everyone.

Mark J. Suchinski: For the fourth quarter of 2025, we reported net income attributable to The GEO Group, Inc. operations of approximately $32,000,000, or $0.23 per diluted share, on quarterly revenues of approximately $678,000,000. This compares to net income attributable to The GEO Group, Inc. operations of approximately $15,500,000, or $0.11 per diluted share, in the fourth quarter of 2024 on revenues of approximately $608,000,000. Excluding extraordinary items, we reported adjusted net income of approximately $35,000,000, or $0.25 per diluted share, for the fourth quarter of 2025 compared to approximately $18,000,000, or $0.13 per diluted share, for the prior year's fourth quarter.

Adjusted EBITDA for the fourth quarter of 2025 was approximately $126,000,000, up from approximately $108,000,000 reported for the prior year's fourth quarter. Looking at revenue trends, our owned and leased Secure Services revenues increased by approximately $70,000,000, or 23%, in the fourth quarter of 2025 compared to the prior year's fourth quarter. This increase was primarily driven by the activation of our three company-owned facilities under new contracts with ICE and was 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 $26,000,000, or 17%, from the prior year's fourth quarter.

This increase was primarily driven by the joint venture agreement for the management of the North Florida 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%, while quarterly revenues for our Non-Residential Services were largely unchanged compared to the prior year's fourth quarter. Finally, quarterly revenues for our Electronic Monitoring and Supervision Services increased by approximately 3% from the prior year's fourth quarter.

Fourth quarter 2025 results for our Electronic Monitoring and Supervision Services reflect the reduced pricing for our ISAP 5 contract, which was offset by a favorable technology and case management mix shift, and the skip-tracing pilot contract that was implemented during the quarter. Additionally, our fourth quarter 2025 results for our Electronic Monitoring and Supervision Services were impacted by $1,600,000 in employee severance costs as part of our efficiency initiative, which will lead to labor cost improvements in 2026 of approximately $2,000,000 to $3,000,000 per quarter.

Turning to our expenses, during the fourth quarter of 2025, our operating expenses increased by approximately 18.5% as a result of activation of our new ICE facility contracts and increased occupancy compared to the prior year's fourth quarter. Our general and administrative expenses for the fourth quarter of 2025 declined to 8.4% of revenue as compared to 10% of revenue in the prior year's fourth quarter. Our fourth quarter 2025 results reflect a year-over-year decrease in net interest expense of approximately $6,000,000 as a result of our reduction in our net debt. Our effective tax rate for the fourth quarter of 2025 was approximately 35%.

For the full year 2025, we reported net income attributable to The GEO Group, Inc. operations of approximately $254,000,000, or $1.82 per diluted share, on annual revenues of approximately $2,630,000,000. This compares to net income attributable to The GEO Group, Inc. operations of approximately $32,000,000, or $0.22 per diluted share, on annual revenues of $2,420,000,000 for the full year 2024. In 2025, we completed the sale of the Lawton, Oklahoma facility for $312,000,000 and the Hector Garza, Texas facility for $10,000,000. These two transactions resulted in a $232,000,000 pretax gain on asset sales during the third quarter. Additionally, during 2025, we incurred a noncash contingent litigation reserve of approximately $38,000,000, which we disclosed last quarter.

Excluding the noncash contingent litigation reserve, the gain on asset sales, and extraordinary items, adjusted net income for the full year of 2025 was approximately $120,000,000, or $0.86 per diluted share, compared to approximately $101,000,000, or $0.75 per diluted share, for the full year 2024. Full-year 2025 adjusted EBITDA was approximately $464,000,000, largely in line with the approximately $463,000,000 reported for the full year 2024. Moving to our outlook, we have issued our initial financial guidance for the full year 2026.

We expect full-year 2026 GAAP net income to be in the range of $0.99 to $1.07 per diluted share on annual revenues of $2,900,000,000 to $3,100,000,000 and based on an effective tax rate of approximately 28% inclusive of no discrete items. We expect full-year 2026 adjusted EBITDA to be in the range of $490,000,000 to $510,000,000. We expect total capital expenditures for the full year of 2026 to be between $120,000,000 and $155,000,000. Our 2026 guidance includes an assumption for some modest organic growth in the second half of the year as well as the corresponding impact of startup expenses.

While the assumptions we have included in our 2026 guidance result in a temporary compression in our margins due to the impact of startup expenses and the gradual nature of contract activations, we would expect our margins to normalize

George C. Zoley: as

Mark J. Suchinski: growth begins to layer in, resulting in higher adjusted EBITDA run rates as we exit the year. For the first quarter of 2026, we expect GAAP net income to be in the range of $0.17 to $0.19 per diluted share on quarterly revenues of $680,000,000 to $690,000,000. We expect first quarter 2026 adjusted EBITDA to be between $107,000,000 and $112,000,000.

Compared to the fourth quarter 2025 results, our first quarter 2026 guidance reflects higher payroll tax expenses, which are front-loaded in the beginning of every year, two fewer days during the period, and no revenue or earnings assumptions for the skip-tracing contract as we transition from the pilot contract that was implemented in the fourth quarter to the new two-year contract. As a result of these factors, along with the assumptions we have made in our guidance related to startup expenses, our first quarter 2026 guidance reflects a decline from our fourth quarter 2025 results. However, we would expect subsequent quarters in 2026 to reflect more normalized results.

Moving to our balance sheet, we closed 2025 with approximately $70,000,000 in cash on hand and approximately $1,650,000,000 in total debt. During 2025, we experienced a temporary increase in accounts receivable in part as a result of the federal government shutdown in October and November, which resulted in a temporary increase in our outstanding debt borrowings. In recent weeks, we have been able to significantly improve our accounts receivable position, further improving our liquidity, resulting in improvement in our current net debt balance to approximately $1,500,000,000. With the recent expansion of our revolving credit facility by $100,000,000, which we announced last month, we believe we have adequate liquidity to support our diverse capital needs.

Additionally, with the prospect of a potential partial government shutdown in the future, we believe we have strong support from our lenders and creditors to address our liquidity should it be necessary. The significant achievements in 2025 have allowed us to make good progress towards strengthening our balance sheet as we enter 2026. As a result of these efforts, we achieved an annual reduction in interest expense of approximately $30,000,000 in 2025 compared to the prior year. We also believe we have made great progress towards enhancing long-term value for our shareholders through our share repurchase program, which we only initiated in August and was later increased to $500,000,000 in November.

As of year-end 2025, we had repurchased approximately 5,000,000 shares for approximately $91,000,000, leaving approximately $409,000,000 available under our current stock buyback authorization. We recognize the unique opportunity to enhance value for our shareholders through our share repurchases given the current valuations of our stock, which reflects a historical low multiple despite the growth we have already captured and the significant growth opportunities we expect going forward. We believe that our strong cash flows will allow us to support all of our capital allocation priorities. At this time, I will turn the call back to George for some closing remarks. Thank you, Mark.

In closing, we are pleased with our strong fourth quarter results and the significant progress we have made in

George C. Zoley: in 2025 towards meeting our financial and strategic objectives. Over the past year, we have captured new growth opportunities that could generate up to $520,000,000 in annualized revenues, making it the most successful period for new business wins in our company's history. We expect 2026 to be as active as 2025, and we believe we have upside potential across our diversified business segments. We have approximately 6,000 idled high-security beds that remain available and generate in excess of $300,000,000 in annualized revenues at full capacity. The continued shift in technology and case management mix and potential increases in counts under ISAP 5 contract could also provide upside throughout 2026.

We are also well positioned to continue to expand our delivery of secure ground and air transportation services for ICE and the U.S. Marshals Service. While the exact timing of government actions, including new contract awards, is difficult to estimate, we remain focused on pursuing new growth opportunities and allocating capital to enhance long-term value for our shareholders. Finally, as we announced this morning, our CEO, J. David Donahue, has informed The GEO Group, Inc. of his decision to retire at the end of February. I would like to thank Dave for his more than 11 years of service to The GEO Group, Inc. and wish him well in his retirement.

I will be returning to my previous position of Chairman and CEO under an amended employment agreement effective through April 2, 2029. I look forward to working with our management team and our Board of Directors in leading our company through what we expect to be a very active period with significant growth opportunities that lie ahead. That completes our remarks, and we would be glad to take some questions.

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.

Mark J. Suchinski: Good afternoon. Thanks for taking my questions. Afternoon. Good afternoon.

Pablo Paez: George, I know in the past, you have said that, you know, if

Joe Gomes: if ICE are, you know, wanted to get to that 100,000-bed level, you know, it all could not come from, you know, the existing private that, you know, there would have to be alternatives out there. And with these warehouses, I guess, kind of the question is, I know you have talked about, you know, something that you are exploring, participating in. But do you see ICE's focus on this? Is that, you know, somewhat potentially behind the, I will say, delay in, you know, awarding new contracts for, you know, currently idle facilities? Or, you know, have they kind of taken their focus off of that and moved it over there to the warehouses?

George C. Zoley: Well, I think they are on a dual track to do both.

Operator: But the

George C. Zoley: warehouse initiative is large scale and, you know, is coast to coast. And it is very complicated to find locations in areas that are suitable to their needs and, you know, would meet with the less political resistance. You know? And you have red states versus blue states, issues they have to solve through. But, you know, you are right. The private sector available bed capacity at this time will not get them to the 100,000. I estimate they need to do at least 20,000 if they want to get to 100,000, and they may very well want to go beyond 100 and, you know, do 20,000, 30,000, 40,000 new beds.

So we are looking at it, and, you know, we have been a long-term, four-decade partner with ICE, and we want to be supportive in playing a role in, you know, this new initiative and hopefully see our idle facilities be utilized because, as I have said, most of our idle beds are prior BOP facilities, which are high-security facilities, which I think are very well suitable to their needs.

Joe Gomes: Thank you for that. And on ISAP, you know, yes, populations have been, you know, slightly declining here over the past year, about 180,000, as you mentioned. And then the new contract, you know, they talk about, you know, up to funding for, I think, up to, like, 360,000 in year one and, you know, 460-some-odd thousand in year two. Now in the past, you know, you did hit that 370,000 type of level. You know, if, you know, ICE came to you and said, hey, in 2026, you know, we want to start really increasing the number of people under ISAP, you know, to get up to that 360,000 level.

Are you set up that you could move quickly and get up to those levels?

George C. Zoley: Absolutely. We have made the investments on all of our devices from ankle monitors to wrist-worn devices to the phone apps that we can reach the levels you described that were included in the procurement as well as go beyond those

Pablo Paez: levels.

Joe Gomes: Okay. Perfect. Then one last one for me. You know, looking at the stock price and, you know, it is something that a lot of discussion about. But, you know, you hit a new 52-week low today, and you guys have done a great job on the buyback. But given where the stock is, is it possible or something to consider maybe even getting more aggressive on the buyback at these levels?

Mark J. Suchinski: Hey, Joe. As you said, I think we have done a great job. You know, we launched our stock purchase program in late August, and, you know, we were able to buy back over 5,000,000 shares in a short period of time. And so, you know, our focus is to lean in hard when there are opportunities, as you just mentioned. And I think we have been very diligent about making sure that we manage our liquidity and take advantage of the stock buyback program when we can. And so, you know, we are going to lean into it hard. We are looking at it. And we will continue to do that.

But, you know, we have, as I said, done a good job, and we will continue to look at buying back stock and create some value for our shareholders. But, you know, I think that is what we can say at this point.

Joe Gomes: Okay. Great. Thanks. I will pass it on. Thank you.

Mark J. Suchinski: Thanks, Joe. Appreciate it.

Operator: The next question comes from Matthew Erdner with JonesTrading. Please go ahead.

Joe Gomes: Hey, good afternoon, guys. Thanks for taking the question. I would like to kind of touch on the monitoring as well. You mentioned the investments that you guys have made there kind of on the forefront. But I see the margin kind of coming down to around 42.5% from, you know, a little under 50% quarter over quarter. And I apologize if I missed it earlier,

Mark J. Suchinski: is there a reason as to why the margin is compressing or is that just the mix shift change?

George C. Zoley: It is primarily the mix shift change that is related to the reduction in the phone apps, which we have had in the past and those have reduced. You know, what is increasing significantly are the ankle monitors. There is a desire to have a higher level of security for these individuals, and as well as increased case management services. So

Pablo Paez: the

George C. Zoley: top-level numbers kind of obscure what is happening below those numbers. You know, there is a mix change that is occurring that, you know, goes beyond the top-level numbers because the 100-and-some-thousand people that get the case management services is really on top of the 180,000 participants. It is just another billing mechanism within the 180,000. So it is, I do not know that the 180,000 is an accurate, you know, metric to be using anymore. When we have, you know,

Operator: different we

George C. Zoley: they call them CLINs, and these are billing mechanisms of which there are 40 within that program. And they are kind of all amalgamated into that 180,000, but that is the top-level number. But below that number, there are 40 different pricings that support, you know, the services that are rendered to the 180,000 participants.

Joe Gomes: Got it. And then, yeah, I guess on a go-forward basis, I guess assuming that, say, there is the 360,000 in year one, you know, I guess, what would the margin be if, say, that

Greg Gibas: 360,000 was all on ankle monitors versus so it is kind of a half split between the SmartLink and ankle monitor.

George C. Zoley: Well, the ankle monitors, I believe, is our most expensive monitored devices, so the margins would substantially increase because of that. And we are, I think we are the largest providers of ankle monitors in the world. We make all of our devices in Boulder, Colorado. And, you know, we have properly resourced that company, which is called BI, to scale up to whatever level services ICE wants, whether it is a few more hundred thousand or beyond that. You know, we are ready to go.

Greg Gibas: Got it. Yeah. That makes sense. And then last one for me and then I will step out. In the guidance, it has about 134,000,000 to 136,000,000 for end-of-year share count. You know, if you guys repurchase the same amount that you did in the fourth quarter, you would already be at the low range of that target. Should we expect you guys to be a little more aggressive there? How are you thinking about capital allocation throughout the year?

Joe Gomes: Know, again, we are going to

Mark J. Suchinski: we have talked about it in the past.

Joe Gomes: You know, we are going to look at

Mark J. Suchinski: look at the capital allocation process. We are very diligent about allocating capital to our growth needs, addressing paydown of debt, and returning capital back to shareholders. And as you indicated, when the stock price goes low, there are opportunities for us to jump in the market and be more aggressive. And I think, you know, if you look at the last five months, we have done a pretty good job with that.

Greg Gibas: Got it. Thank you, guys. Appreciate it as always.

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

Greg Gibas: Hey, good afternoon, guys. Thanks for taking the questions.

Joe Gomes: First, with the midpoint of guidance set below your Q4 EBITDA run rate,

Mark J. Suchinski: it seems conservative when considering uplift in 2026 from a number of items like ISAP cost savings that I think you previously said are $8,000,000 to $12,000,000.

Greg Gibas: Adelanto cost normalization, ongoing mix shift in ISAP tech, and then those incremental Florida contracts. Is that fair, or is there some offset to take into account there?

Mark J. Suchinski: Greg, you know, I would not say there is anything that we are aware of in the business that would create a big offset to that. I think we are starting out here. You know, I think we are prudent as it relates to the guidance that we have provided here. The skip-tracing contract that we talked about that we won, that is coming off a protest, so we do not think it will contribute much here in the first quarter. But we are starting the year. We are executing well.

Greg Gibas: We have

Mark J. Suchinski: factored in some modest growth, you know, particularly as it relates to ISAP, as George talked about, the GPS and higher case management services. You know, we are looking at continued expansion and growth around our Marshals transportation contract and ICE Air. You know, we are going to factor, we factored in some skip tracing later in the year. So it is earlier in the year, I think we have done a good job of balancing the risks and opportunities as we have looked at our forecast. And as you indicated, you know, we know what our run rate was in the fourth quarter, but we think at this point in time, it is a well-balanced approach to guidance.

And as the quarters unfold, and we continue to pursue these growth opportunities, we will have opportunities to update our guidance.

Operator: Great.

Joe Gomes: Thanks for clarifying that. And I wanted to touch on your commentary around

Greg Gibas: participating in the process, I think you said, on the potential warehouse managed-only opportunities. Wondering if you could maybe add any color there and kind of what phase those negotiations or bidding process is in?

George C. Zoley: Well, we have a relationship with the prime contractor that is listed as eligible to participate in that procurement, and we are looking at some sites predominantly in the Sunbelt states, predominantly in red states, to be very frank about it. So we want to be careful as to, you know, where we extend our financial and operational commitments.

Greg Gibas: Got it. Thanks very much.

Operator: The next question comes from Raj Sharma with Texas Capital Bank. Please go ahead.

Greg Gibas: Hi, thank you for taking my questions. Good quarter. Congratulations.

George C. Zoley: Thanks, Raj. I had a question

Greg Gibas: Yeah. I had a question on the guidance again,

Raj Sharma: just trying to understand that fiscal 2026 does seem that the guidance seems to have been sort of taken down from just about a quarter ago. You know, even if the facilities get activated at pace, and even outside of new activations, plus the ISAP dynamics and the ankle monitors, you know, it seems like the numbers are conservative. And are you incorporating, and what sort of startup expenses are you incorporating? Can you give more color on that? And I know you have talked about this earlier too. We just wanted to understand if you are being more conservative than not.

Mark J. Suchinski: Well, again, I think I tried to talk a little bit about the guidance with Greg's question a few moments ago. But the truth is, you know, we still are incurring some level of startup expenses on the activation of our idle facilities, particularly on the West Coast. So that is creating a little bit of headwind as we move into the year here. But as I said earlier, we expect the back half of the year to really normalize, and we expect to see some expansion of our margins as we get into the back half of the year. So I would say this: there is nothing inherently going on from a business standpoint.

The fourth quarter was helped a little bit by the skip-tracing contract, and we talked about the fact that we have not built that into our first quarter forecast. So, you know, as I said earlier, I think it is a balanced and prudent approach, and we will look to update things as the business progresses over the coming quarters.

Raj Sharma: Got it. Got it. Thank you for that. And then just my next question is also, you had kind of talked about this. So there were no new activations in Q4. Was that sort of government shutdown or year-end related? And also, there has been a lot of talk of warehouses, but given, you know, can you help us understand a little bit? Given your favorable history with ICE and the low to reasonable sort of cost per detention bed, should not all your idle facilities be reactivated soon for ICE to meet their detention goals. Well, you are correct that there have been no new awards, but we are in active

George C. Zoley: discussions with ICE about all of our facilities. They are aware of where the facilities are. They are assessing the facilities to their needs.

Mark J. Suchinski: So fourth quarter did have the shutdown.

George C. Zoley: And did have the conceptualization, let us say, of this new warehouse initiative. You know, all that takes time, and, you know,

Raj Sharma: the government

George C. Zoley: I guess, slowed down is a fair way of saying that in the fourth quarter and may be a bit delayed if there is another shutdown. You cannot say what exactly is going to happen, but we do expect more activations in 2026 and more activity.

Mark J. Suchinski: Yep. That will drive our financial results.

Raj Sharma: Right. Yeah. So thank you. I just wanted to kind of understand that given the stock price reaction and trying to make sense of what the concerns are. And so I want to understand that even outside of this talk of warehouses, you know, it is fairly certain that the pace of reactivations should continue given where, you know, ICE goals stand. And right. And so you are saying yes.

George C. Zoley: Yeah. We are in discussions. We are hopeful of awards. And these are high-security facilities, which I believe are more desirable by ICE compared to lower-security facilities. Yeah. And so as that plays out, we think there will be more awards sometime this year.

Raj Sharma: Got it. Yeah. Thank you for taking my questions again. Thank you. I will take it offline. Thanks. Thanks, Raj.

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

Greg Gibas: Great. Good afternoon. Appreciate you taking my

Pablo Paez: questions here. I wanted to ask a follow-up on the facility reactivation side.

Joe Gomes: I know in recent quarters, we had discussed certain headwinds around the fall government shutdown, maybe ICE staffing challenges, and then the DHS policy around contract approvals. Do you still sense that those headwinds are in force today, or

Brendan Michael McCarthy: what is your kind of sense around how that is impacting the contract or facility reactivations?

George C. Zoley: Well, I think it is similar to what, you know, I just discussed. I think there was a slowdown because of the government shutdown, the time spent on conceptualizing this warehouse program. But as I said, we are in active discussions with ICE about our available facilities, and they are high security. They are high quality. And, you know, they are

Pablo Paez: they are

George C. Zoley: I think, comparatively speaking, they are, you know, very high quality compared to any other facilities in the country, actually, because they were formerly Bureau of Prisons facilities. Several of them are mostly cellular-type facilities, not dormitories, and I think they are well suited for ICE needs. And, you know, we just continue to have discussions with ICE about those things, and not only just the facilities, but what physical plant changes they want to those facilities, all of which takes time and has to be evaluated by different sections of the department. You have the security section of the department. You have the health services section of the department. You have transportation.

You know, standing up a new facility is a very complicated process. And particularly now, as the objectives at ICE have expanded, they have hired another 10,000 staff. Those staff have to go somewhere, and in part, they will be going

Mark J. Suchinski: at

George C. Zoley: to these facilities around the country. You know, there has been a request to add more space at, I think, at most of our facilities, actually. So that is part of the discussion. You know, providing office space, courtroom space, transportation space, expanded health care space. All those things take time to be worked out, and that we hope will eventually lead to more awards.

Joe Gomes: Understood there. I appreciate the detail. And wanted to ask a question on the skip-tracing contract. I think you mentioned that contract is included in guidance likely to have an impact in the back half of 2026. I am just curious as to what kind of case volume assumptions you make with that contract, and maybe if you could provide detail on the margin profile there.

Mark J. Suchinski: Brendan, you know, we are not going to get into margins. We do not go to that level of specificity on these types of calls here. So we will not talk about that. And as George indicated, the award was a two-year award for $121,000,000, approximately $60,000,000 per year. We talked about the fact that the protest was removed. We do not anticipate any activity on that here in the first quarter. We expect there to start to ramp up in the second quarter, but we expect it mainly to occur in the back half of the year.

And so, you know, as that is a new program for us, it is one that we do not have a lot of history with from a projection standpoint. So we are working closely with our client on that to understand their needs and help support them. So, again, we have factored in some modest assumptions as it relates to this, and then as we start to execute with our client, I think we will be able to provide more specifics on that in the coming quarters.

Raj Sharma: Got it. And lastly, on capital allocation,

Joe Gomes: I know that you mentioned net debt has stepped down to about $1,500,000,000 in recent weeks.

Raj Sharma: What is your sense for, you know, how much debt you may look to pay down in 2026 just regarding your priorities?

Mark J. Suchinski: Yeah. You know, again, we are going to focus on continuing to pay down debt. You know, the goal here in 2026 is to get our net debt below three times levered. Right? And so we believe as we move through the course of the year, we will be able to achieve that goal.

Joe Gomes: Great. I appreciate it. That is all for me.

Raj Sharma: K.

Operator: Thank you. The next question comes from Kirk Ludtke with Imperial Capital. Please go ahead.

Greg Gibas: Hello, everyone. Thank you. Thank you for the call.

George C. Zoley: Mentioned that

Greg Gibas: ICE was looking to consolidate those 225 facilities, mostly short-term jail facilities. There are a lot of people in those, as you know, a lot of people in those facilities. I am just curious. You know, what is the motivation there? Is it cost? Is it that those facilities do not do a good job? Or is there any background you can share?

Raj Sharma: Well,

George C. Zoley: the complexity of overseeing 225 facilities is enormous. I think it is just a human preference would be to have fewer facilities. But they need some level of access because interior ICE enforcements occur throughout the country, and they need to have a relationship with county jails throughout the country, and that is what most of those things are. So they have a few beds here, a few beds there.

Raj Sharma: But

George C. Zoley: those people are in a short-term detention confinement, and most of them will eventually go to an ICE Processing Center for evaluation of their cases, and most of them will be then deported outside the country. But they have to go through a process which typically does not occur at the county jail level. They need to go to formal ICE process facilities, and, of course, the federal government would, you know, prefer to enjoy economies of scale of having larger facilities rather than smaller facilities, which would be a force multiplier in, you know, the ability to, you know, process and detain and deport, you know, approximately 100,000 people per month.

Raj Sharma: Yeah. No. That all makes sense.

George C. Zoley: Now I am sure you would per

Greg Gibas: prefer to utilize your own beds first before you facilitated additional government-owned capacity

Joe Gomes: But the contracts to just operate the facilities,

Greg Gibas: you know, those are pretty attractive contracts, are they not? I mean, in terms of ROI,

Raj Sharma: that is operating those facilities

Greg Gibas: could be a pretty good business. Right?

George C. Zoley: Are you speaking of our facilities or the warehouses?

Greg Gibas: The warehouses. Just managing facilities.

George C. Zoley: I think it is a reasonable opportunity that we are assessing. We have only had one experience in renovating a warehouse, and that occurred maybe 30 years ago. So it is more complicated than you may think as far as the physical plant renovations of a warehouse to get it operational. It is complicated. And then the operational implications of how you manage such a facility, particularly a large-scale facility, is going to be concerning because our prior experience was only on, I think it was, like, a 200-bed facility. What is being discussed are 500-bed facilities, 1,500-bed facilities, and facilities of several thousands of beds—7,000, 8,000, or 9,000 beds per facility—which is an enormous capacity.

And it, you know, has to be carefully evaluated as to how you would do that.

Greg Gibas: Understood. I appreciate it.

George C. Zoley: Because those are larger numbers than any in existence. Now I think the largest facility is probably 2,500 beds, not more than 3,000 beds, in the country.

Raj Sharma: Wow. Interesting.

George C. Zoley: I appreciate it. Thank you.

Raj Sharma: Thanks, Kirk.

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

George C. Zoley: Well, thank you for participating in today's call, and we look forward to addressing you on the next one.

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

George C. Zoley: Good day.

Operator: And welcome to The GEO Group, Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. If 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. Note this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President, Corporate Relations. Please go ahead.

Pablo Paez: Thank you, Operator. Good afternoon, everyone, and thank you for joining us for today's discussion of The GEO Group, Inc.'s fourth quarter 2025 earnings results. With us today are George C. Zoley, Executive Chairman of the Board, and Mark J. Suchinski, Chief Financial Officer. This morning, we will discuss our fourth quarter and full-year results, as well as our outlook. We will conclude the call with a question-and-answer session. This conference call is also being webcast live on our investor website at investors.geogroup.com. Today, we will discuss non-GAAP basis information. A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and the supplemental disclosure we issued this morning.

Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall within the safe harbor provisions of the securities laws. Our actual results may differ materially from those in the forward-looking statements as a result of various factors contained in our Securities and Exchange Commission filings, including the Form 10-Ks, 10-Q, and 8-K reports. With that, please allow me to turn this call over to our Executive Chairman, George C. Zoley. George,

George C. Zoley: Thank you, Pablo, and good afternoon to everyone. During the past year, we believe we have made significant progress towards meeting our financial and strategic objectives. Since the beginning of 2025, we have been awarded new or expanded contracts that represent up to approximately $520,000,000 in new incremental annualized revenues that have staggered activation dates and are expected to primarily normalize by the end of this year. This represents the largest amount of new business we have won in a single year in our company's history.

We have entered into new contracts to house ICE detainees at four facilities totaling approximately 6,000 beds, which include three company-owned facilities we announced in 2025: the 1,000-bed Delaney Hall, New Jersey facility; the 1,800-bed North Lake facility in Michigan; and the 1,868-bed D. Ray James facility in Georgia; and more recently, the 1,310-bed North Florida Detention Facility, which is a state-owned facility where we are providing management services under a joint venture agreement that we announced in early October. The Florida contract arrangement demonstrates The GEO Group, Inc.'s ability to provide management services through alternative solutions like the State of Florida's partnership with the federal government.

During the third quarter, we also reactivated our 1,940-bed Adelanto ICE Processing Center in California, which was already under contract but had been underutilized due to a longstanding COVID-related court case. The activation of these five facilities represents the largest startup activity in our company's history with a combined annualized revenue value of approximately $400,000,000 and involves the hiring and training of approximately 2,000 new employees. The census across our active ICE facilities has continued to steadily increase from the third quarter at approximately 22,000 to presently approximately 24, which is the highest level of ICE populations we have ever had.

This past year, we also significantly expanded the delivery of our secure transportation services on behalf of both ICE and the U.S. Marshals Service, valued at approximately $60,000,000 in incremental annualized revenue. The increase in ICE enforcement and removal operations has resulted in an increased need for secured ground and air transportation services. In 2025, we entered into new or amended contracts to expand secure ground transportation services at four existing ICE facilities and at our three newly activated ICE facilities, and the support services that we provide under our ICE Air transportation subcontract continued to steadily increase throughout this past year. In addition to the secure ground transportation services we have historically provided for the U.S.

Marshals, last year, we signed a new five-year contract

Pablo Paez: districts

George C. Zoley: with the agency covering 26 federal judicial and spanning 14 states. At the state level, we were awarded two new management-only contracts in 2025 from the Florida Department of Corrections. The 1,884-bed Graceville facility and the 985-bed Bay facility are scheduled to transition to The GEO Group, Inc. management on July 1 and have combined annualized revenues of approximately $100,000,000. Of particular importance in 2025, we also secured a new two-year contract for the ISAP 5 program following a competitive procurement process. ISAP is the only ICE program currently in place to provide electronic monitoring and case management services for individuals on the non-detained docket.

It is mainly for people ICE considers a higher flight risk or who have pending asylum or removal cases but are still allowed to live in the community. The program relies on several forms of monitoring, including GPS ankle bracelets or wrist-worn devices that provide real-time tracking, as well as a phone app which relies on facial recognition, voice ID, and GPS to confirm a person's location during predetermined check-ins. The ISAP counts have declined slightly over the last year to approximately 180,000 presently due to a decline in the use of a phone app called SmartLink, provided by The GEO Group, Inc. at a very nominal cost.

Instead, we have had a steady increase in more intensive and higher-priced monitoring devices such as ankle monitors. The number of 17,000 in early 2025 to more than 42,000 ankle monitors today. Correspondingly, the number of ISAP participants on the SmartLink mobile app has declined to less than 135,000 participants today. Currently, with this trend, we have also seen an increase in the number of ISAP participants additionally assigned to case management services, which involves staff interaction and monitoring.

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