CoreCivic (CXW) Q4 2025 Earnings Call Transcript

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Date

Feb. 12, 2026 at 2:30 p.m. ET

Call participants

• President and Chief Executive Officer — Patrick Swindle
• Chief Financial Officer — David Garfinkle
• Vice President of Finance — Brian Hammonds
• Director of Investor Relations — Jeb Bachmann

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Takeaways

• Adjusted EPS -- $0.27, up 69% from $0.16 in 2024, excluding special items.
• Normalized FFO per share -- $0.52, up 33% from $0.39 in the prior-year quarter.
• Adjusted EBITDA -- $92.5 million, a 25% increase from $74.2 million in 2024.
• Federal partner revenue -- Represented 57% of total revenue in Q4; up 49% during 2025.
• ICE revenue -- Increased by $124.4 million, or 103.4% during 2025.
• U.S. Marshals revenue -- Declined by $11.3 million during 2025, attributed to shifting contract mix.
• State partner revenue -- Grew 5%, with new contracts from Montana and population gains in Georgia and Colorado.
• Facility occupancy -- Combined Safety and Community segment occupancy rose to 78.1%, up 2.6 points.
• Average daily population -- 56,380 individuals managed, up from 50,202, reflecting new demand and the FarmVille acquisition.
• Dilley Immigration Processing Center -- Reactivated and fully operational in 2025 after funding terminated in 2024.
• California City and Diamondback facilities -- Began start-up activities in Q4; both expected to reach stabilized occupancy in 2026, with 2025 net operating losses totaling $3.6 million.
• Operating margin -- Safety and Community combined margin was 22.2%; margin was 24.1% excluding four activated/activating facilities.
• 2026 guidance -- Diluted EPS projected at $1.49-$1.59, FFO per share at $2.54-$2.64, and EBITDA at $437-$445 million, excluding Midwest Regional contribution.
• Potential upside -- Midwest Regional contract, if activated after securing a special use permit, could add revenue; current guidance excludes this facility.
• Idle facility capacity -- Five idle facilities provide 7,066 beds, with surge and partial capacity totaling nearly 13,000 beds available to ICE.
• Share repurchases -- 5.3 million shares repurchased in Q4 for $97.3 million; year-to-date repurchases total 11.2 million shares ($218.4 million), reducing outstanding shares by 10.2%.
• Credit facility expansion -- Revolving credit capacity expanded from $275 million to $575 million; total bank credit commitments now $700 million.
• Liquidity -- $97.9 million in cash and $311.4 million of untapped revolver capacity, totaling $409.3 million in liquidity at year-end.
• Planned 2026 capital expenditures -- Maintenance CapEx of $60-$70 million, plus $15 million other CapEx, and $35-$40 million for idle facility activations and preparation.
• Adjusted FFO (AFFO) guidance -- Projected at $245-$259.3 million for 2026, serving as a proxy for available cash flow for capital allocation.
• Expected effective tax rate -- 25%-30% forecast for 2026.
• G&A expense guidance -- $160-$165 million in 2026.
• Q1 seasonality -- A typical $0.04 per share decline expected from Q4 due to fewer days and higher taxes/utilities, but anticipated to be offset by California City and Diamondback facility profitability.
• Contract duration -- Dilley Immigration Processing Facility agreement extends through 2030.
• ICE detainee share -- CoreCivic manages about 23% of ICE detainees as of year-end, compared to 25% at the end of 2024.
• Share repurchase authorization -- Board authorization for $700 million in aggregate, with $300.5 million remaining at year-end.
• Net debt to adjusted EBITDA -- Leverage ratio of 2.8x as of Dec. 31, 2025.
• Activation staffing capability -- Management stated, "we do not believe that our ability to staff would be a limiter in terms of our ability to offer or use our bed capacity."
• AI investment -- A Chief Information and Digital Officer was appointed; pilots under way for administrative and facility enhancements using AI.
• Growth visibility -- Management described visibility into 2026 guidance as "the greatest visibility that we have had in providing guidance in a number of years."

Summary

Federal partner demand, particularly from ICE, drove a substantial increase in revenue and facility utilization, while U.S. Marshals' volumes declined. Management expects 2026 to realize further earnings growth from previously idle facilities reaching stabilized occupancy, explicitly projecting EBITDA of $437-$445 million. Recent credit facility expansion positions CoreCivic (NYSE:CXW) for continued share repurchases and growth investments without leverage concerns. The company retains considerable surplus capacity, signaling readiness to capitalize on new federal or state contract opportunities as they arise.

• Share repurchase activity represented 10.2% of the year's starting outstanding shares, with authorization raised to $700 million.
• 2026 guidance excludes any benefit from the Midwest Regional Reception Center pending resolution of special use permit delays.
• Guidance incorporates projected profitability at California City and Diamondback as intake ramps, offsetting seasonal Q1 headwinds.
• CoreCivic is actively piloting AI-driven initiatives and expanded its digital leadership, citing future technology as a strategic component.
• Ongoing contract discussions and idle bed capacity could provide additional upside not reflected in current financial forecasts.

Industry glossary

• ICE: U.S. Immigration and Customs Enforcement, a primary federal client detaining individuals for immigration-related reasons.
• FFO (Funds From Operations): A REIT-specific earnings metric that adds depreciation and amortization back to net income, excluding gains/losses from property sales.
• Surge capacity: Temporary or standby facility capacity activated to handle periods of atypical demand spikes.
• SUP (Special Use Permit): A government-issued allowance required for specific types of facility operation, in this context impacting contract activation timing.
• AFFO (Adjusted Funds From Operations): FFO adjusted for recurring capital expenditures and maintenance costs, regarded as a proxy for available distributable cash flow.

Full Conference Call Transcript

Jeb Bachmann: Thank you, operator. Good morning, everyone, and welcome to CoreCivic, Inc.'s fourth quarter 2025 earnings call. Participating on today's call are Patrick Swindle, CoreCivic, Inc.'s President and Chief Executive Officer, and David Garfinkle, our Chief Financial Officer. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. On this call, we will discuss financial results for 2025 as well as financial guidance for the 2026 year. We will also discuss developments with our government partners and provide you with other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act.

Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our fourth quarter 2025 earnings release issued after market yesterday, as well as in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q, and also 8-K reports. You are cautioned that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future. Management will discuss certain non-GAAP metrics. Reconciliation to the most comparable GAAP measurement is provided in the corresponding earnings release and included in the company's quarterly supplemental financial data report posted on the Investors page of the company's website at corecivic.com.

With that, it is my pleasure to turn the call over to our CEO, Patrick Swindle. Thank you, Jeb. Good morning, and thanks, everyone,

Patrick Swindle: for joining us for CoreCivic, Inc.'s fourth quarter 2025 earnings call. On this morning's call, we will discuss our latest operational results and update you on the latest developments and opportunities with our government partners. Following my opening remarks, I will hand the call over to our CFO, Dave Garfinkle, who will provide greater detail on our fourth quarter and full year 2025 financial results, as well as introduce our 2026 financial guidance. Dave will also provide an update on our capital structure, including activity on our share repurchase program and other balance sheet initiatives. First, I would like to provide an update on our activation activities where we continue to move towards stabilized occupancy in mid-2026.

As a reminder, we announced new awards in the second half 2025 at the 600-bed West Tennessee Detention Facility, the 2,560-bed California City Immigration Processing Center, the 1,033-bed Midwest Regional Reception Center, and the 2,160-bed Diamondback Correctional Facility. While three of the four previously idle facilities continue to receive additional populations, the Midwest Regional continues to experience a delay in the intake process, as we await the result of a special use permit application that we filed in December 2025. We have been engaged with the city on the application, and the conversation has been productive. In aggregate, and excluding Midwest Regional, these three new contract awards are expected to generate annual revenue of $260 million once our operations normalize.

Once we reach stabilized occupancy on these previously idle facilities, which we expect to occur during 2026, we expect our annual revenue run rate to be approximately $2.5 billion and our annual EBITDA run rate to increase by almost $100 million year over year to approximately $450 million. This is not counting Midwest Regional or any additional contract awards. Let me emphasize that point. Our 2026 guidance is consistent with the commentary on our last earnings call despite excluding Midwest Regional due to uncertainty around initial detainee intake. Once operational, that facility will provide upside to our initial 2026 guidance. Moving to a discussion of the business climate.

In early January 2026, nationwide ICE detention populations were at historical highs of around 99,000 individuals, an increase of almost 10,000 individuals from the end of the third quarter. ICE was our first customer 43 years ago and has been our largest customer for over a decade. From 2024 through 2025, ICE populations in our care increased 5,903 individuals to just over 16,000, or 58%. Nationwide populations from the U.S. Marshals Service, our second largest customer, have declined from the prior year, partially offsetting the increase from ICE as facilities that share contracts between the two agencies have extended the capacity to ICE due to the higher demand.

Marshals populations are also down nationwide due to fewer apprehensions at the southern border. Our average daily Marshals population has declined by 1,235 individuals from 2024. As we continue to look for additional ways to meet our government partners' needs, we believe we can make available substantial capacity to meet future demand. Even after the aforementioned activations, we own five idle correction and detention facilities containing approximately 7,000 beds. Along with surge capacity we have made available at certain facilities and partial capacity we have in facilities that are currently in operation, we have informed ICE that we could provide it with nearly 13,000 additional beds.

And this does not include additional capacity we may be able to provide through other means. We are confident that the detention beds that we provide are the most humane, most efficient logistically, most compliant, most secure, readily available, and provide the best value to the government. Our Dilley Immigration Processing Facility is a great example. This is a purpose-built facility for family residential housing that we first operated in 2014 under the Obama administration. Last year, we entered into a new agreement that extends into 2030. As part of that contract, we must meet performance requirements based on a combination of rigorous accreditation and government-established performance standards.

There are full-time federal monitors on-site to ensure accountability and compliance with the contract. This includes specific quality measures and standards for cleanliness, high-quality food and basic necessities, legal access, medical care, and translation services. For those of you interested in learning more about this facility, I would encourage you to visit our website at www.corecivic.com where you can take a virtual guided tour. Beyond these federal opportunities, we are seeing an increase in opportunities at the state level as well. In addition to increases in populations under existing contracts, we are in discussions with several states in need of additional bed capacity. One or more of these opportunities could include the use of our idle correctional facilities.

These opportunities could transpire in the coming quarters. I will now move on to a high-level overview of our top-line revenue and fourth quarter operational performance. Federal partners, primarily Immigration and Customs Enforcement and the U.S. Marshals Service, comprised 57% of CoreCivic, Inc.'s total revenue in the fourth quarter. Revenue from our federal partners increased 49% during 2025 compared with the prior-year quarter. Further breaking down our federal revenue, revenue from ICE increased $124.4 million, or 103.4%, while revenue from the U.S. Marshals Service decreased by $11.3 million versus the prior-year quarter. As mentioned, some of this decline is simply a shift in mix where ICE and Marshals share a contract.

Revenue from our state partners increased 5% from the prior-year quarter. This increase includes additional revenue from the state of Montana, resulting from two new contracts we signed with the state since 2024, and population increases in Georgia and Colorado. Total occupancy for our Safety and Community segments for the quarter was 78.1%, up 2.6 points since the year-ago quarter. The average daily population across all of the facilities we manage was 56,380 individuals during 2025 compared with 50,202 in the year-ago quarter. This increase was driven by more demand for our services, new contracting activity, and the FarmVille acquisition that was completed 07/01/2025.

Our teams continue to be successful in working with our government partners in managing the additional people in our care for which we are delivering the highest quality services and environment every day. Our fourth quarter results exceeded our internal projections for adjusted EPS and normalized FFO per share by $0.08 each, and adjusted EBITDA by $8.6 million. Despite full-year 2026 EBITDA guidance near record levels, our stock is currently trading at a discount to our historical trading, which we believe does not reflect the cash flows of our business, particularly considering the ongoing ramp of previously idle facilities, giving good visibility of our growth potential in 2026 and beyond.

Therefore, we plan to continue to prioritize our cash flow and share repurchases, taking into consideration stock price and alternative opportunities to deploy capital, among other factors. That being said, we have the balance sheet flexibility to take advantage of other growth opportunities that we may identify. The substantial progress made during the year in reactivating previously idle facilities could not have been accomplished without the hard work of our employees and strong relationships with our government partners. I am confident we have the right plan and the right teams in place to be successful both in these and future activations.

In the meantime, we continue to remain focused on effectively managing our core portfolio and ensuring we meet our high operational standards as well as those of our government partners. Without this focus and strong performance, these additional opportunities would not exist. And so as I turn it over to Dave to discuss our fourth quarter financial results in more detail, our capital allocation activities, and assumptions included in our 2026 financial guidance, I would like to again express my appreciation to our 13,000 employees. I want to recognize their focus and commitment to ensuring that everyone in our care is provided a safe, secure, and humane environment, delivering industry-leading quality to every individual for which we are responsible. Dave?

David Garfinkle: Thank you, Patrick, and good morning, everyone. In 2025, we generated GAAP EPS of $0.26 per share, FFO per share of $0.51. Special items in 2025 included a $1.5 million net loss on the sale of assets and $700,000 of M&A charges reported in G&A expense. Excluding special items, adjusted EPS was $0.27 compared with $0.16 in 2024, an increase of 69%. And normalized FFO per share was $0.52 per share, compared with $0.39 per share in the prior-year quarter, an increase of 33%. Adjusted EBITDA was $92.5 million compared with $74.2 million in 2024, an increase of 25%. Adjusted EPS exceeded average analyst estimates by $0.09 per share and adjusted EBITDA exceeded average analyst estimates by $9 million.

The increase in adjusted EBITDA from the prior-year quarter of $18.3 million resulted from higher demand and utilization of our solutions by our federal and state partners, including revenue from ICE that more than doubled. The number of ICE detainees in our care followed national trends, which reached record highs during 2025. We manage approximately 23% of total ICE populations as of both December 31 and 09/30/2025, compared with approximately 25% at year-end 2024. Revenue from our state partners grew 5% and included notable increases from Georgia, Colorado, and Montana. Results for 2025 reflect the full activation of the 2,400-bed Dilley Immigration Processing Center, which was completed in 2025.

Funding for this facility was previously terminated effective 08/09/2024, and the facility remained idle until its reactivation in 2025. Fourth quarter results also included start-up activities for new contracts at our 2,560-bed California City Immigration Processing Center and our 2,160-bed Diamondback Correctional Facility. We signed new management contracts during the year. Both of these facilities were idle at the beginning of the year and are expected to reach stabilized occupancy in 2026, respectively. These two facilities incurred facility net operating losses totaling $3.6 million in 2025. Other factors affecting EBITDA and per-share results included higher G&A expense, more than offset by the favorable impact of our share repurchase program and the acquisition of the FarmVille Detention Center on 07/01/2025.

Jeb Bachmann: Collectively, these three items accounted for an increase in adjusted EPS

David Garfinkle: and normalized FFO per share of $0.03. Operating margin in our Safety and Community facilities combined was 22.2% in 2025 compared with 23.6% in the prior-year quarter.

Jeb Bachmann: Excluding the four facilities in various stages of activation,

David Garfinkle: operating margin was 24.1% for Q4 2025. As these facilities reach stabilized occupancy, we anticipate further margin growth. Turning next to the balance sheet. On December 1, we amended our bank credit facility to increase the size of the accordion feature that provides for uncommitted incremental extensions of credit and expanded the capacity under our revolving credit facility from $275 million to $575 million. Including the original $125 million term loan, commitments under our bank credit facility totaled $700 million, which reflects the strength of our accessibility to bank capital and our deep banking relationships.

Expanding the size of our revolving credit facility provides us with enhanced balance sheet flexibility while remaining positioned for strategic investments and long-term value creation such as through our share repurchase program. During the fourth quarter, we repurchased 5.3 million shares of our common stock at an aggregate cost of $97.3 million, increasing our year-to-date repurchases to 11.2 million shares at an aggregate cost of $218.4 million. These repurchases represent 10.2% of our outstanding shares at the beginning of the year and reduce the number of shares outstanding to 100 million as of 12/31/2025.

Since the share repurchase program was authorized in 2022, through December 31, we have repurchased a total of 25.7 million shares at an aggregate price of $399.5 million, or $15.52 per share. As of December 31, we had $300.5 million available under our board authorization, which includes an increase of $200 million authorized by our board in 2025, increasing the cumulative repurchase authorization to up to $700 million. After taking into consideration these share repurchases, our leverage measured by net debt to adjusted EBITDA was 2.8 times using the trailing twelve months ended 12/31/2025.

As of December 31, we had $97.9 million of cash on hand and an additional $311.4 million of borrowing capacity on our expanded revolving credit facility, which had a balance of $245 million outstanding, providing us with total liquidity of $409.3 million. Moving lastly to a discussion of our 2026 financial guidance, we expect to generate diluted EPS of $1.49 to $1.59, FFO per share of $2.54 to $2.64, and EBITDA of $437 to $445 million. Consistent with our past practice, guidance does not include the impact of new contract awards not previously announced because the timing of government actions on new contracts is always difficult to predict.

Even though we entered into a new management contract with ICE at our Midwest Regional Reception Center last year, our guidance does not contemplate the ramp-up of detainee populations at this facility, as the intake process continues to be delayed by a claim that a special use permit is required to operate the facility. Although we dispute this claim and consequently filed a lawsuit in state court, which is under appeal, we have nonetheless filed an application for the SUP. Although we can provide no assurance, discussions have been collaborative, and we are optimistic in a favorable outcome, which would be upside to our guidance.

We still have five remaining idle facilities containing 7,066 beds, and we believe incremental demand for more idle facilities will likely be needed once ICE absorbs the recently contracted beds. With historic funding levels for border security and immigration detention obtained under the One Big Beautiful Bill Act secured through September 2029, and an expectation of a continued increase in detention bed demand nationwide, as well as growing demand from existing and potentially new state government partners, we believe there are numerous opportunities to activate additional idle facilities we own. We also believe there could be opportunities to manage additional bed capacity not currently in our portfolio.

These opportunities would also be incremental to our guidance, after considering any start-up expenses. We plan to spend $60 to $70 million on maintenance capital expenditures during 2026 and $15 million for other capital expenditures. Our 2026 forecast also includes $35 to $40 million for capital expenditures associated with previously idle facilities we are activating and for additional potential facility activations in order to prepare these facilities to quickly accept residential populations if opportunities arise. Approximately $23.5 million of the CapEx associated with activations represents capital expenditures included in our 2025 forecast that was not spent by year-end and therefore has been carried over to be spent in 2026.

We expect adjusted funds from operations, or AFFO, which we consider a proxy for our cash flow available for capital allocation decisions such as share repurchases and growth CapEx such as facility activations, to range from $245 million to $259.3 million in 2026. We do not believe the share price of our common stock reflects the value of the cash flows of our business as we are trading below historical multiples despite visibility of cash flow growth in 2026 driven by recent contract awards. Therefore, we expect to prioritize our cash flows to continue executing on our share repurchase program, which has been incorporated into the range of our guidance.

The amount of our share repurchases will take into consideration our stock price, liquidity, earnings trajectory, and alternative opportunities to deploy capital. We expect our annual effective tax rate to be 25% to 30%. The full-year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense. We are forecasting G&A expenses in 2026 to range from $160 million to $165 million.

When modeling our quarterly results, as a reminder, compared to the fourth quarter, Q1 is seasonally weaker because of two fewer days in the quarter and higher utilities and because we incur approximately 75% of our unemployment taxes during the first quarter, resulting in a collective $0.04 per share decline from Q4 to Q1, and negatively impacting our operating margins. However, in Q1 2026, these negative effects are expected to be offset by facility net operating income generated at our California City and Diamondback facilities, which are projected to reach profitability in the first quarter due to the continued intake of detainee populations. I will now turn the call back to the operator to open up the lines for questions.

Jeb Bachmann: Thank you.

Operator: If you would like to ask a question, please press 11 on your telephone. We also ask that you wait for your name and company to be announced before proceeding with your question, and limit yourself to one question and one follow-up. If you wish to rejoin the queue to ask additional questions, you may do so. One moment while we compile the Q&A roster. And our first question of the day will be coming from Raj Sharma of Texas Bank. Your line is open.

Raj Sharma: Hi. Thank you for taking my questions. I was so there were no new deactivations in Q4. Was that because of the government shutdown? Or, you know, the year-end

Patrick Swindle: But also, there has been a lot of talk of

Raj Sharma: warehouses

Patrick Swindle: So, to answer your question, this is Patrick. So,

Patrick Swindle: there were no new contracts that we entered into in the fourth quarter. We have been in active dialogue with our and we are always exploring different ways to support their desired enforcement approach. And so I would really look at the pacing of additional capacity as driven by bed demand. We have obviously available demand within facilities already activating, as we believe our peers do as well. And so you would expect that additional capacity would be added as needed to reflect that. And so I certainly would not take the fourth quarter not having a new award as indicative of lack of potential additional demand.

It is more reflective of, I think, the ebb and flow of demand that is presenting. And certainly, we are well positioned with 7,000 beds that are presently available in idle facilities. Additional 5,000 beds within existing facilities that are immediately available for use. So, again, we think we are very well positioned both with existing contracts and potentially idle facilities as that demand manifests in a way that requires additional contract actions.

Raj Sharma: Got it. Thank you. Thank you for answering my question. I will take it offline. Thanks. Thanks, Raj.

Operator: Thank you. One moment for the next question. The next question is coming from the line of Matthew Arbner of Jones Trading. Please go ahead.

David Garfinkle: Hey, guys. Thanks for taking the question. You talked a little bit about the safety margins and kind of the expectation for those to improve.

Jeb Bachmann: Is the decline in margin there just kind of as you guys activate these facilities, bring them online like you are talking about with California City and Diamondback.

David Garfinkle: Yes. Absolutely. This is Dave. So absolutely, that is correct. I think if you backed out the three facilities that were being activated during the quarter, our margin was around 24%. So as those facilities do reach a stabilized occupancy in 2026, we would expect that margin to continue to grow. Got it. That is helpful. And then as a follow-up, you talked a little bit about

Jeb Bachmann: the increased opportunities specifically to manage other facilities. You know, what is your confidence on, I guess, gaining the capacity, you know, for you guys to bring in employees, get it staffed up, you know, are there any concerns there with staffing that just

Patrick Swindle: I guess, what is the dynamic right there at the moment?

Patrick Swindle: So we reactivated our South Texas, our Dilley facility, very quickly. We were able to staff that rapidly, being able to deliver our activation sooner than we had expected or modeled initially. In our other locations, we have been very successful in being able to staff up. And so we do not believe that our ability to staff would be a limiter in terms of our ability to offer or use our bed capacity. The team is very well structured. They developed operating plans coming into 2025 that would allow them to be able to respond quickly when a new facility activated. We have made preemptive investments across our portfolio to prepare those facilities for use.

So really, we do not see an inhibitor in our ability to activate either through capital needs or through staffing challenges, our ability to quickly respond to demand if it presents. And I would add, Diamondback, we actually did not expect to start taking detainees until January. But we actually activated that one earlier, or began accepting detainees earlier, in late December. It did not have a big impact on the quarter. It was very late December, but indicative of our ability to hire and meet the demands of our partner in that case. Yeah. That is great. Thank you, guys. Thank you.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Greg Gibas of Northland Securities. Your line is open.

Gregory Thomas Gibas: Great. Good morning, Patrick, Dave. Congrats on the results.

Benjamin Briggs: Wondering if you could maybe speak to the current contracting environment and how your guide dialogue with ICE and the DHS has trended of late. And also maybe wondering along those lines, if you could, or would you be willing to, opine on the recent headlines related to the Minnesota pullback that OMB announced and, you know, possibly investors misinterpreting that as a national mandate change.

Patrick Swindle: Sure. So with your first question, the way I would answer that is we are in constant dialogue with our customer as we assess what their needs are and try to evaluate how we can participate in that. And so that dialogue is very consistent today as it has been all along, both current and prior administration. So we would expect to be actively engaged at all times in discussing what is the need, how can we best support that need, is that a need that we can deliver high-quality outcomes in a way that we believe we can be successful in supporting their mission.

So that is something that we are obviously always focused on, always ensuring that we are well positioned to be able to step in those places where we believe we can be helpful to our government partner. If opportunities present in a specific way that we can give you more detail, we are certainly going to do that. At this moment, there is not a specific update I would give you in terms of pipeline opportunity, but I can assure you that we remain in ongoing dialogue around how we can best support our partner's mission. Second part of that question is I think you really have to pan back to national enforcement activity and approach.

Any given time, ICE is taking different enforcement approaches across the country. And so I think if you were to look at Minnesota specifically as a discrete example, that was a larger-scale enforcement action that obviously is a bit different than what we have seen around the country. And so I think to extrapolate the activity or the action that was discussed this morning nationally, I think, is difficult because I think that was a unique enforcement action. And so if I look across the country, I, at this point, do not see meaningful changes in enforcement style or approach, as that approach has not been consistent with what we saw in Minneapolis, because it was a large-scale discrete initiative.

Gregory Thomas Gibas: Great. That makes sense. And if I could just maybe ask if you are willing to share any more color on buybacks and intentions there. Ten percent in terms of shares bought back for the year and, like, 5% in Q4, pretty impressive. And I just wanted to see if you could provide any, you know, additional color on, you know, maybe how aggressive you will be with buybacks going forward?

David Garfinkle: Yeah. Sure, Greg. This is Dave. I will take that one. Yeah. It was a pretty active quarter. We had indicated we were going to double the pace of 2025 in the fourth quarter. In fact, we bought back more than double the pace in the fourth quarter. We bought back at an average, I think it was, $18.25 in the fourth quarter. We are obviously trading lower than that this morning. So we fully expect to continue to buy back shares at this price. Even at the $18 of the quarter, we felt like it was a good buy, trading at a significant discount to our historical EV/EBITDA multiples. So yeah. I mean, that is

Patrick Swindle: that is, you know, we have full support of the board, so expect

David Garfinkle: we would continue to buy back shares subject to any legal limitations that there are

Gregory Thomas Gibas: Got it. Thanks very much. You are welcome. Thank you.

Operator: One moment for the next question, please. Our next question is coming from the line of Ben Briggs of Stonex Financial. Please go ahead.

Benjamin Briggs: Good morning, guys. Thank you

Patrick Swindle: taking the questions and congratulations on the quarter and the guidance. I have got a couple of quick ones here.

Jeb Bachmann: So

Benjamin Briggs: fiscal year guidance is for about $441 million. I know you said during the scripted portion of the call that $450-ish is kind of the new EBITDA run rate. Can you just clarify, does that $450 EBITDA run rate

Patrick Swindle: include

Benjamin Briggs: the two new contracts that you discussed at the beginning of the call, but not the Midwest Regional facility?

David Garfinkle: Yeah. I was going to say that you have got it exactly right.

Jeb Bachmann: Okay.

Benjamin Briggs: Alright. Great. And then over and above that, if you were to activate the Midwest Regional facility, what do you think the potential EBITDA upside from that would be?

David Garfinkle: Well, we did not disclose the EBITDA associated with that facility. I think we did disclose the revenue associated with that facility. So that is probably the best data I could give you. If you look at our full-year guidance for 2026, we do expect still to be at the $450 million run rate in the second half of the year. So if you just back off the, you know, half of that minus the, you know, or $441 million at the midpoint of our guidance minus $225 million for the second half of the year, you get to a little over $100 million per quarter in Q1 and Q2. So that is pretty detailed.

You know, there is that dip, as I mentioned in my prepared remarks, from Q4 to Q1. The $0.04 decline from Q4 to Q1 for unemployment taxes and utilities. So yeah. And Midwest was a $60 million annual

Benjamin Briggs: revenue.

Patrick Swindle: Just to reinforce, just to add a bit, I would say, you know, when you look at the guidance that we have provided, it assumes no new incremental contract wins. So whether that is Midwest Regional and the ability to activate that facility under the final approval of the SUP, which we are optimistic regarding, also any other new business opportunities that present would also provide upside. So in terms of visibility into the guidance, this is probably the greatest visibility that we have had in providing guidance in a number of years, given the pace of growth that we are anticipating in 2026.

Benjamin Briggs: Understood. Understood. I appreciate that.

Michael Grant: So

Benjamin Briggs: I guess my follow-up was going to be, so you have these, you have got five idle facilities that you said had 7,000 beds over and above these new contract wins, and then did I hear you correctly when you said with surge capacity, the total room for additional population you could have is up to 13,000 beds.

Patrick Swindle: That is correct.

Benjamin Briggs: Understood. Okay. Just wanted to clarify that. And then finally, just want to touch on the revolver that you guys utilized in the share purchases. Does drawing the revolver remain an option for share repurchases? Or are you more likely to fund those repurchases with cash from operations?

David Garfinkle: Well, if you take our annual guidance, we always like to use AFFO as kind of the proxy for cash flow available for growth opportunities and buybacks. And if you back out the growth CapEx that we have for the activation of the idle facilities, you are somewhere in the neighborhood of $200 million of annual cash flow. So that would be available throughout the year without increasing leverage. But certainly, you know, the revolving credit facility can be used for whatever we wish it to be used for. So, yes, it is available.

Benjamin Briggs: Okay. Understood. I appreciate it. Thank you, guys, for the call, and congratulations again.

Jeb Bachmann: Thank you.

Operator: One moment for the next question, please. And the next question will be coming from the line of M. Marin of Zacks. Your line is open. Thank you. So I have a couple of housekeeping questions because you have, you know, answered a lot of

M. Marin: lot of things on the call and in the Q&A. You did say during the prepared remarks that between the idled facilities that could be reactivated and other means, you know, you have significant capacity for if and when new contracts come online. So in 2025, you made that one acquisition of FarmVille. Are there any other potential small tuck-ins that you have seen come up that might be on the horizon or it is very remote that would be an opportunity.

Patrick Swindle: We have a business development team that is always actively out looking at opportunities that may be available. And so certainly, there is nothing that I would say that is imminent today, but we are going to evaluate opportunities that present. From time to time, there may be opportunities to look at circumstances or situations that would be similar to FarmVille. You know, obviously, we recognize where our stock is trading, and it is incredibly valuable at the current trading multiple. So a multiple would have to be pretty compelling to be better than our current stock price, but we do on occasion see those opportunities.

And if they do and we think it is a good strategic fit, we would avail ourselves.

M. Marin: Mhmm. Okay. Thanks. And then one other question, which is, and I think other callers, you know, the participants have tried to get at this as well. You have substantial liquidity, and I think that there is, you know, potentially a sense on the street that, you know, your liquidity cannot support everything you are trying to accomplish, you know, between satisfying, you know, new demands, capacity, potentially, you know, increasing capacity through reactivating idle facilities, the share buybacks, and other potential growth initiatives. Could you just touch upon that, particularly in light of the potential for delayed payments from some of your government partners?

David Garfinkle: I think I know where you are going with that. So, yeah, I mean, we had, you know, at December 31, over $300 million available on our revolving credit facility. So really feel like we have got plenty of liquidity to execute our strategy even despite a slowdown in some collections of receivables. So that, you know, we had, gosh, it was close to $100 million cash on top of that. So we are not liquidity constrained in executing our strategy. So yeah. And also during the fourth quarter, we expanded our revolving credit facility by $300 million through a supportive bank group. So that bank credit facility is now up to $700 million, so we do not feel

Patrick Swindle: constrained at all by liquidity. And maybe to build off that, you know, we have maintained a conservative leverage approach as well. And our EBITDA is certainly growing faster than our levered debt at this point. And so when you think about leverage policy, we are certainly going to continue to maintain a conservative approach. We are going to maintain appropriate levels of liquidity. We did make meaningful investments in our idle facilities in anticipation of activation. So we did a bit of preloading in terms of the capital that would be necessary to support activation. So going to continue to make measured investments as appropriate, take advantage of opportunities to buy back stock based on its attractiveness.

But at this moment, there is nothing that we see on the horizon that would cause us to believe we are capacity-limited from a capital perspective.

M. Marin: Alright. Thanks very much.

Michael Grant: Thank you,

Operator: Thank you. One moment for the next question, please. And our next question will come from the line of Bill Sutherland of Benchmark. Your line is open.

Jeb Bachmann: Hey, good morning. Thanks for taking the question. I thought I would

Benjamin Briggs: zoom out a little bit here. Just thinking about what the growth trajectory might be over a multiyear period for you guys given the visibility you have with ICE to 2029.

Patrick Swindle: And some of the emerging state demand,

Benjamin Briggs: you know, I look back at EBITDA even back to 2009, and it has kind of been a very steady range, but no discernible CAGR. So I just want to

David Garfinkle: to, you know, how should we think about potential CAGR here for the next three or four years? Thanks.

Patrick Swindle: It is a great question. I think, as you have said, you have gone back and done a historical review of the growth rates of the company over multiple years. And I think that is important in that what you typically see is that growth will come in periods of demand with very specific customers. So if you look back over the history of our organization, we have gone through periods where we would see significant demand from the state of California, for example, or significant demand with the Bureau of Prisons.

Jeb Bachmann: Or

Patrick Swindle: at present, we are seeing meaningful demand from Immigration and Customs Enforcement. What we know is that you have got large, aging infrastructure for many of our state and federal partners. You have demand needs that are presenting as both populations grow and service offerings are changing. And we believe we are in a position to provide that. And so I would say we are always going to be in a position where we have got the greatest visibility a year out, but our team is obviously focused well beyond this year in future periods. So I would love to give you a more precise answer in terms of what would be sustainable growth after the current period.

But, obviously, that is something that we continue to be focused on, and we will give updates as our pipeline develops both with other federal and state partners, as well as we consider potentially other ways to deliver services to our customers as we mentioned earlier.

Benjamin Briggs: Mhmm.

Michael Grant: Okay.

Benjamin Briggs: And I

Jeb Bachmann: you cannot get through a conference call now without a question about AI. So

Benjamin Briggs: are you all, you know, I guess, what are some of the ways you can apply it to your business model? Obviously, I think,

Jeb Bachmann: you know, this kind of business is going to be a net beneficiary or just pure beneficiary. It is, I mean, in terms of efficiencies, or how do you think it can be used in your organization?

Patrick Swindle: Well, there are a number of ways that, you know, we have contemplated use of AI in our organization. I think the most obvious and straightforward is in back-office efficiency. So as we think about our ERP systems and we think about the ways that we support our facility operations from an administrative perspective, we are certainly seeing opportunities to enhance the way that we currently deliver those services. Out in our facilities, there are always opportunities to enhance what we are providing.

So whether that be educational opportunities for the individuals in our care, whether that be security tools that we can use both to actively monitor and make our facilities more safe, whether that be making our cameras smarter as we are trying to evaluate activities that are occurring in the facility.

There are a number of pilots that we have under way across the organization to explore how we may be able to use AI to enhance our services, but I would say we are also very sensitive to the fact that we are in an environment where we are managing care for individuals and want to be sensitive to what we use and how we use it so we can ensure that it is being used effectively. So we do hope to give updates in future quarters. We did make a meaningful investment in this year in our team. We hired an executive leader, Laura Groeschin, to step in as our Chief Information and Digital Officer.

So I would view that as indicative of the investment that we are making to bolster our technology team and grow and build out our capabilities. We do believe that is part of our future. And, again, we will have more to update on in future quarters as we are able to talk more specifically around some of those opportunities, some of which may be ultimately commercializable.

David Garfinkle: Got it. Thanks so much.

M. Marin: Thank you. One moment for the next question.

Operator: And our next question is coming from the line of Joe Gomes of Noble Capital. Your line is open.

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