The GEO Group, Inc. Q1 FY2026 earnings call

• Diverse five business units delivered strong financial and operational performance in Q1 2026, driven by new contracts entered into in 2025. - Secured services segment: Entered into new contracts to house ICE detainees at four facilities totaling ~6,000 beds, reactivated Atalanta ICE Processing Center, with annual revenues of ~$300 million and ~26,000 beds under contract with ICE. - Secure transportation services: Significant expansion with new or amended contracts for secure ground and air transportation, valued at ~$60 million in incremental annual revenue. - ISAP 5 program: ISEP counts stable at ~180,000 - 181,000 participants, with steady technology shift to more intensive and higher-priced monitoring devices like ankle monitors, and increase in case management participants. - Skip tracing services: Awarded new two-year contract by ICE valued at up to $60 million in revenues per year, began providing services in March 2026. - State level: Awarded two new management-only contracts in 2025 from Florida Department of Corrections, scheduled to transition on July 1, 2026. - Progress towards strengthening capital structure: Purchased approximately 3.6 million shares for ~$50 million in Q1 2026, with ~$359 million still available under $500 million share repurchase authorization.

For the first quarter of 2026, revenues increased to approximately $705.2 million, up from $604.6 million in the prior year's first quarter, a 17% increase. Net income attributable to geo-operations was approximately $38.3 million, or $0.29 per diluted share, compared to $19.6 million, or 14 cents per diluted share in the prior year's first quarter, a 96% increase. Adjusted EBITDA increased to approximately $131.4 million from $99.8 million in the prior year's first quarter, a 32% increase. Owned and leased Secure Services revenues increased by approximately $70 million, or 23%, driven by activation of three company-owned facilities under new contracts with ICE, offset by revenue loss from sale of Lawton, Oklahoma facility and depopulation of Lee County, New Mexico facility. Managed-only contracts quarterly revenues increased by approximately $33 million, or 22%, driven by joint venture agreement for management of North Florida ICE detention facility and transportation revenue increases. Reentry services quarterly revenues increased by approximately 5%, offset by 5% decline in non-residential services revenues. Electronic monitoring and supervision services revenues decreased by approximately 4% in Q1 2026, driven by reduced pricing for ISAP 5 contract, offset by favorable technology and case management mix shift and modest skip tracing revenues.

• Increased full-year 2026 guidance: Expect GAAP net income to be $153 million to $166 million, or $1.15 to $1.05 and 25 cents per diluted share on annual revenues of $2.95 billion to $3.1 billion, with effective tax rate ~30%. Adjusted EBITDA expected to be in range of $525 million to $545 million. Total capital expenditures for 2026 expected between $137.5 million and $162.5 million. - Second quarter 2026 guidance: Expect GAAP net income to be $33 million to $39 million, or $0.25 to $0.29 per diluted share, on quarterly revenues of $715 million to $725 million. Adjusted EBITDA expected between $130 million and $135 million. - Potential upside sources: Additional growth in secure services from reactivation of idle facilities or higher populations, additional volume increases and technology service mix in ISAP 5 contract, additional revenue from higher utilization of skip tracing contract, and additional growth in secure transportation segment. Expense guidance assumes more moderate contribution from labor savings in subsequent quarters.

• Timing of payments and collections from ICE contracts delayed due to partial government shutdown, requiring careful management of liquidity and working capital needs. - Warehouse project for retrofitting as detention facilities paused, and DHS evaluating next steps. - Uncertainty regarding potential sale of multiple facilities to ICE, including need to renegotiate contracts and ensure continued support services. - Potential changes in immigration enforcement policies and programs affecting ICE detention capacity and operations.

Q: Followed up on potential facility sales, valuation, timing of sales, and details on Central Valley Annex Facility.

A: Lot and bed valuation at Oklahoma is a baseline, but many factors drive higher value for ice facilities. Initial sales likely in late Q2 and early Q3. Central Valley Facility is a 700-bed facility in McFarland, California area, part of ice-controlled complex.

Q: Circled back on Q1 performance, decline in ice populations, ramp up of reactivated facilities, and lower than anticipated labor costs.

A: Lower populations led to less intake duties, housing assignments, etc., promoting increase in EBITDA. New facilities had rapid intakes but slowed due to scale down of populations. Lower labor costs driven by lower intakes, overtime costs, and more sickly population requiring more staff and overtime.

Q: Asked about progress in mental health area efforts.

A: Pending proposal of state of Florida Department of Children and Families for a forensic facility, expect decision in next 30 days.

Q: Inquired about skip tracing business volume, revenue model, updated 2026 guidance read-through, and CapEx increase.

A: Skip tracing program had initial contract, waiting for other contractors to catch up for next assignments. Updated guidance reflects lower cost structure at new facilities. CapEx increase due to retrofitting 6,000 idle beds to meet ICE's updated needs.

Q: Sought clarity on $520 million of revenues from wins last year not fully reflected in revenue guidance, and utilization at activated ice facilities.

A: $100 million of new 520 related to two Florida facilities not yet activated (starting July 1), with offset from discontinuation of Lawton and Lee County facilities. Outlook on ICE detention stats and 100,000 detentions: reassessment of initiatives, but still objective to increase and consolidate capacity.

Q: Asked about ICE owning facilities, number of beds in GEO's 23 ICE facilities, and discretion over $45 billion.

A: ICE may want to own as many facilities as possible for protections from litigation. GEO has 25,000 beds in 23 ICE facilities. $45 billion for detention is at ICE's discretion.