CoreCivic, Inc. Q3 FY2025 earnings call

• Activation activities: Substantial progress on contracting idle facilities, with 4 new contract awards expected to generate $320 million annually once stabilized. Included facilities like West Tennessee Detention Facility, California City Immigration Processing Center, etc.
• Business climate: Nationwide ICE detention populations at historical highs, U.S. Marshals populations relatively flat but expected to increase in 2026, state partners facing correctional challenges with increasing populations.
• Share repurchase program: Purchased 5.9 million shares in 9 months ended September 30, 2025, with $198 million remaining under authorization. Plan to accelerate share repurchases due to stock valuation misalignment with business cash flows.

Federal partners, primarily Immigration and Customs Enforcement and the U.S. Marshals Service, comprised 55% of CoreCivic's total revenue in the third quarter. Revenue from federal partners increased 28% compared to the prior year quarter. Specifically, revenue from ICE increased $76.2 million or 54.6%, while revenue from the U.S. Marshals Service decreased by 5%. Revenue from state partners increased 3.6% from the prior year quarter. Total occupancy for the Safety and Community segments for the quarter was 76.7%, up 1.5 points since the year ago quarter. The average daily population across all managed facilities was 55,236 during the third quarter of 2025, an increase from 50,757 in the year ago quarter.

Expected adjusted diluted EPS of $1 to $1.06, down from previous guidance of $1.07 to $1.14. Normalized FFO per share expected $1.94 to $2, down from $1.99 to $2.07. Adjusted EBITDA expected $355 million to $359 million, down from $365 million to $371 million. 2026 run rate EBITDA expected over $450 million once newly activated facilities reach stabilized occupancy, with expectation to reach stabilized occupancy of last activation in second quarter of 2026.

• Litigation: Intake process at Midwest facility delayed by lawsuit from City of Leavenworth, uncertainty in favorable resolution.
• Government shutdown: Impact on cash collection timing for services provided, but expect payment resumption with interest under Prompt Payment Act.
• Uncertainty in ICE population growth: Lumpy nature of enforcement activity and population growth, making exact timing of population increases difficult to predict.

Q: Concern about pace of ICE population detentions and how it plays out the rest of the year A: Damon and Patrick respond that on the contractor side, pace of admissions, discharges, and activity is status quo, with increased transportation and recent fast clip of contract signings. Patrick adds on uneven growth path but no lessening of long-term demand potential Q: Color on updated guidance and start-up costs A: David Garfinkle explains updated guidance reflects start-up activities in Q4 from new contracts, incorporating West Tennessee, California, Midwest, and Diamondback facilities, leading to reduction in EBITDA guidance Q: Share repurchases and leverage goals A: Damon and Patrick state they are aggressive on share repurchases, seeing stock undervaluation, and will consider exceeding leverage goals if beneficial Q: Impact of government shutdown on facility reactivations and state demand A: Damon states active conversations with partners about reactivating facilities, including state partners, with activity continuing despite shutdown Q: Competition with alternative sites for ICE beds A: Damon and Patrick say it's an all-of-the-above approach, with CoreCivic's facilities' value proposition attractive, and 100,000 beds goal to be met through various means Q: Staffing issues at ramping facilities A: Patrick states strong hiring experience, with favorable staffing environment moderating wage pressures Q: Cash collection delays and credit line availability A: David Garfinkle notes expectation of payment resumption with interest, and credit facility has accordion feature for support if needed Q: Start-up costs impact on 2026 and EBITDA run rate A: David Garfinkle says start-up costs will carry into 2026, with EBITDA run rate expected over $450 million once stabilized Q: CapEx for achieving longer-term EBITDA run rate A: David Garfinkle estimates $150 million-ish all in for CapEx to achieve longer-term EBITDA run rate Q: Update on PECOS and share repurchase tender A: Damon says no update on PECOS, and they see stock undervalued, looking for opportunities to repurchase shares Q: Impact of ICE management changes on facilities A: Damon and Patrick discuss lumpy nature of impact, with ICE hiring agents taking time, and conversation ongoing about enforcement operations impacting detention capacity Q: Surge capacity and bed utilization A: Patrick explains surge capacity is consistent with ebb and flow, and new beds are utilized with ongoing consideration of geography and facility Q: Deportations impact on detentions and long-term pipeline for ICE beds A: Patrick states variation in deportations impact based on field office and country of origin, and ongoing 2-way conversation with ICE about capacity needs in different regions