CoreCivic Q1 2025 Earnings Report

CoreCivic EPS Results

• Actual EPS: $0.45
• Consensus EPS: $0.35
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: $0.46

CoreCivic Revenue Results

• Actual Revenue: $488.60 million
• Expected Revenue: $478.49 million
• Beat/Miss: Beat by +$10.11 million
• YoY Revenue Growth: -2.40%

CoreCivic Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 11:00AM ET

CoreCivic (NYSE:CXW) owns and operates partnership correctional, detention, and residential reentry facilities in the United States. It operates through three segments: CoreCivic Safety, CoreCivic Community, and CoreCivic Properties. The company provides a range of solutions to government partners that serve the public good through corrections and detention management, a network of residential reentry centers to help address America's recidivism crisis, and government real estate solutions. Its correctional, detention, and residential reentry facilities offer rehabilitation and educational programs, including basic education, faith-based services, life skills and employment training, and substance abuse treatment. The company owns and operates correctional and detention facilities, residential reentry centers, and properties for lease. CoreCivic, Inc. was founded in 1983 and is based in Brentwood, Tennessee.

CoreCivic Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the CoreCivic First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you'll need to press 11 on your telephone.

[Operator]

You'll then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michael Graham, Managing Director of Investor Relations.

[Michael Grant, Managing Director of Investor Relations at CoreCivic]

Thank you, operator. Good morning, everyone, and welcome to CoreCivic's first quarter twenty twenty five earnings call. Participating on today's call are Damon Heininger, CoreCivic's Chief Executive Officer Patrick Swindle, CoreCivic's President and Chief Operating Officer and David Garfinkel, 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 the first quarter of twenty twenty five as well as updated financial guidance for the 2025 year.

[Michael Grant, Managing Director of Investor Relations at CoreCivic]

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 and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our first quarter twenty twenty five earnings release issued after market yesterday as well as in our Securities and Exchange Commission filings, including Forms 10 ks, 10 Q and also eight ks 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.

[Michael Grant, Managing Director of Investor Relations at CoreCivic]

A reconciliation of 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 corescivic.com. With that, it is my pleasure to turn the call over to our CEO, Damon Heininger.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Thanks, Mike. Good morning, and thanks, everyone, for joining us for CoreCivic's first quarter twenty twenty five 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, including high level comments on our quarter and updates on contracting activity, I will hand the call over to Patrick Swindle, our President and Chief Operating Officer. Patrick will discuss operational results as well as our ongoing facility activations.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Finally, we will turn the call over to our CFO, Dave Garfinkel, who will provide greater detail on our first quarter financial results as well as our updated 2025 financial guidance. Dave will also provide an update on our capital allocation strategy. Before I go to the highlights of our first quarter results and numerous contracting actions, I would like to share how excited I am for and deeply proud of our team here at CoreCivic. Our team has always been mission and outcomes focused, but this is such a significant moment of time in our company's history. Never in our forty two year company history have we had so much activity and demand for our services as we are seeing right now.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

As you know, and as shared daily in the media, many of our partners are facing tough challenges, and our team is focused and energized to be able to answer the call with solutions our partners need at this critical moment in time. Let me now move on to a few highlights from our first quarter results. Financially, CoreCivic exceeded its expectations for revenue and profit during the first quarter. Patrick and Dave will discuss the quarter in greater detail, but the strong financial performance resulted from realized cost management improvements coupled with meaningful increases in facility utilization, which improved to 77 from 75.2% in the first quarter of the prior year. Specifically, first quarter revenue of $488,600,000 exceeded our expectations, with notable strength from facilities serving the United States Immigration and Customs Enforcement, or ICE, facilities as well as from our state partners.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Similarly, EBITDA exceeded plan coming in at $81,000,000 Both metrics were up meaningfully from the fourth quarter of twenty twenty four, but down slightly from the first quarter of last year when our Dilly facility had a full quarter of operation and when our California City facility was fully leased by the State of California. I'll have more on those two facilities in a minute as we have begun to reactivate both facilities. Turning to contracting activity, we have been busy this quarter, particularly since the change in presidential administration in late January. On February 27, we announced contract modifications for our twenty sixteen bed Northeast Ohio Correctional Center in Youngstown, Ohio, our ten seventy two bed Nevada Southern Detention Center in Pahrump, Nevada and our 1,600 bed Cimarron Correctional Facility in Cushing, Oklahoma to add capacity for up to seven eighty four ICE detainees. Additionally, a contract modification at our 2,672 bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi details that ICE may use up to two fifty eight beds.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

On March 5, we announced that we had agreed under an amendment to our Intergovernmental Services Agreement, or IGSA, to resume operations and care for up to 2,400 individuals at the 2,400 bed Dilly Immigration Processing Center in Dilly, Texas, a facility operated by CoreCivic and owned by a third party. The term of the amended IGSA, which expires in February, and it may be further extended by mutual agreement. We anticipate total annual revenue once the facility is fully activated to be approximately $180,000,000 As those who follow the company will recall, we previously received notification from ICE on 06/10/2024, after nearly ten years of operation of ICE's intent to terminate funding of the IGSA for services at the Dilley facility effective 08/09/2024. We did not operate the Dilley facility from 08/09/2024 until the resumption of operations at the facility on 03/05/2025, though we did continue to provide a maintenance team at the facility to keep it ready to reactivate. We are honored to have this important facility operating again, and we are grateful to work once again with Target Hospitality, our exceptional real estate partner, and we are thankful to ICE for their trust in our capabilities.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Patrick will share more about this activation development, but I'm proud to share that we began receiving an initial population at the Dilly facility just thirty one days after amending the contract, an accomplishment only possible due to months of preplanning by our hardworking activation team. Sticking with ICE, we also have entered into two six month letter contracts with ICE. Effectively, these letter contracts provide initial funding to Corsova to begin activation efforts while we engage collaboratively with ICE to negotiate and execute a longer term contract. On March 7, we commenced a letter contract at our ten thirty three bed Midwest Regional Reception Center in Leammworth, Kansas. On April 1, we signed a letter contract for our 2,560 bed California City Immigration Processing Center in California City, California.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

We continue to have active conversations with ICE regarding their increased secured bed needs at other facilities. We expect additional contracts with ICE to follow budget reconciliation when ICE has a clear line of funding, though it is possible some contracts could be announced even prior to reconciliation. CoreCivic has three facilities currently under activation with ICE, and we are also leaning forward on facility and transportation CapEx at other facilities so that we are ready to mobilize quickly. To that end, on our last conference call, we mentioned that we had internally approved 40,000,000 to $45,000,000 of capital expenditures related to facility activations and transportation services. And based on our opportunities, we are now adding another $25,000,000 more for facility activation expenditures.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

In its April 7 document titled Justification for Other than Full and Open Competition, ICE cites a need for nearly 100,000 beds based on the Lincoln Riley Act, three executive orders around border security, and the administration's goal of removing 1,000,000 aliens annually. In contrast, ICE's budget currently funds 41,500 beds. In this document, ICE's justification for streamlining the contracting process recognizes that the procurement process is very time consuming and that the private sector, in particular, is needed to fill the gap and meet the immediacy of the current need. We believe this justification could allow for expedited contracting incorporating fair and reasonable pricing once the federal budget is determined. Turning now to the federal budget process.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Our current outlook is that we are still moved toward President Trump's singular funding bill, which in addition to significant funding for border security would include the administration's tax and spending priorities, and that this will be achieved via budget reconciliation process. Republicans are currently aiming for reconciliation by Memorial Day, but that could slide to July 4. The key to a reconciliation bill is the concurrent adoption by the House and Senate of specific reconciliation instructions, which aligns the two houses of Congress to a common budget outcome. On April 28, the Republican House Judiciary Committee's portion of the budget reconciliation bill requested $45,000,000,000 over the four years ending in 2029 for immigration detention, which if annualized would be over three times the current detention budget. The Senate has not yet shared its version, but we believe support for ICE is strong there too.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Our belief is that most new contracts with ICE will come after funding that's established via a congressional budget agreement. We continue to believe that detention beds supplied by the private sector represent the best value and are the most humane, most efficient logistically, have the highest audit compliance scores in their system and are readily available. Additionally, with forty two years of operating experience with ICE, private sector beds are the least likely to be legally challenged, particularly relative to some international options. Before I move on, let me take a minute and pan out to the big picture regarding capacity we still have available for ICE versus capacity already under contract. I also want to provide a crosswalk to some of the numbers we discussed on last quarter's call.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Dave will note in his comments that we have nine idle facilities that have over 13,400 beds available. As mentioned last quarter, if you include this amount, the 13,400 beds, along with surge capacity we have made available at certain facilities, partial capacity we have in facilities that are currently in operation, and finally, capacity we can make available through third party leases, like our great partnership with Target Hospitality at our Dilley facility, as an example. If you add all of these options together, we're close to the 30,000 beds that we proposed to ICE earlier this year. So with the four contract modifications at our Ohio, Mississippi, Nevada and Oklahoma facilities, our amendment at the Dilley facility and the letter contracts at our Midwest and Cal City facilities that we assume will be replaced with long term agreements, these together represent approximately 7,000 beds that either are or that we expect will be under contract. So we continue to have an excess 20,000 beds that could be available for ICE if they get additional funding through reconciliation.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

We are also looking at additional opportunities for expansion that could be cost effective and allow for greater efficiencies. Finally, we are looking at facilities all across The United States that might be attractive for lease or purchase, but to be clear, our primary near term focus on the solutions we are proposing to ICE is our existing idle or underutilized capacity. Switching now to the stateside, during January, we announced that we were awarded a new management contract with the State of Montana to care for additional inmates outside the State of Montana, with two forty inmates arriving at our 2,672 bed Tallahatchie County Correctional Facility in Tutwiler, Mississippi during the first quarter. The base term of the new management contract with the State of Montana, which is for an unspecified number of inmates and therefore could grow beyond 140, runs through December of twenty twenty six, and contract extensions could run as long as seven years. Also during January of twenty twenty five, we received 120 additional Montana inmates at our eighteen ninety six bed Saguaro Correctional Facility in Eloy, Arizona under an existing contract.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Our partnership with Montana remains strong, and we now serve the state at three facilities, those two out of state facilities I just mentioned and also our six forty four bed Crossroads Correctional Center in Shelby, Montana. We are grateful for our strong partnership with Montana, and we appreciate the trust they put in our company and our facility teams. On the state budget front, most states initiate the annual budget process with the governor submitting a proposed budget around the start of the year, followed by a review and amendments by the legislature and culminating in a budget before the start of the new fiscal year, typically on July 1. We continue to work with our state partners to help ensure that our per diem rates fully reflect the higher levels of inflation, particularly around labor experienced during and after the COVID-nineteen pandemic period. We are generally encouraged by the direction of the budget proposals.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

We remain in active dialogue with several other existing state partners as well as new state partners that could result in additional populations, including the possible use of one or more of our idle facilities. We are also currently evaluating RFPs for several different facilities with the Florida Department of Corrections.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Now, I'll pass it over to Patrick Swindle for an overview of operations during the first quarter. Patrick?

[Patrick Swindle, EVP & COO at CoreCivic]

Thanks, Damon. I'll start with a high level overview of our first quarter operational performance. As Damon mentioned, overall occupancy for the quarter was 77%, up 1.5 percentage points from the fourth quarter of last year and 1.8 points since the year ago quarter.

[Patrick Swindle, EVP & COO at CoreCivic]

Occupancy has been on an upward trajectory since early twenty twenty three when it stood at approximately 70%. This quarter also showed a month to month trend of improving occupancy with increases in ICE detention population levels beginning in late January. Federal partners, primarily Immigration and Customs Enforcement and the US Marshals Service comprised 48% of CoreCivic's total revenue in the first quarter. Revenue from our federal partners declined 8% during the first quarter of twenty twenty five compared to the prior year quarter. However, excluding the Dilley Immigration Processing Center from both years, our revenue from ICE increased 11% versus the first quarter of twenty twenty four.

[Patrick Swindle, EVP & COO at CoreCivic]

Our first quarter revenue from the U. S. Marshals Service, our second largest customer was essentially flat year over year, though we believe the U. S. Marshals Service population may start to increase later this year.

[Patrick Swindle, EVP & COO at CoreCivic]

Now I'd like to discuss ICE's usage of detention capacity nationally across all facilities. ICE started the quarter with its national detention population approximately 39,000 and ended the quarter at nearly 48,000 individuals in detention. The most recently published ICE detention total was 47,928 on 04/06/2025. CoreCivic share of the total detention population is running roughly steady during this period of expansion and we've increased from roughly 10,000 ICE detainees in our facilities at the end of twenty twenty four to about 12,000 now. As we anticipated last quarter, the accelerated rate of interior enforcement arrest has more than offset the decline in order apprehensions resulting in ICE exceeding the 41,500 funded bed level.

[Patrick Swindle, EVP & COO at CoreCivic]

On March 5, we announced the resumption of operations at a 2,400 bed Dilley Immigration Processing Center in Dilley, Texas, which was idled during August 2024. The contract modification calls for CoreCivic to reopen the facility's five neighborhoods over one hundred and eighty days, which commenced on March 5. The fixed revenue scale accordingly. While the activation plan called for CoreCivic to have the first two neighborhoods ready to receive detainees after sixty days, CoreCivic was able to mobilize even more swiftly and we received our first detainees just thirty one days after commencement. Many of our facility leaders and former employees were able to transfer back to the facility or to be rehired, and we already have reestablished a team of approximately three sixty employees and growing at Dilly.

[Patrick Swindle, EVP & COO at CoreCivic]

Target Hospitality Corporation, a real estate partner at Dilly, moved in lockstep with CoreCivic, and we appreciate our strong relationship. Importantly, we are on track to open the additional neighborhoods on schedule and we should be fully ramped and receiving full contract economics beginning in September. We're also actively working to prepare two additional facilities for detention intake for ICE under letter contracts. Key work includes preparing the physical facilities to ensure compliance with national detention standards and hiring and training the professionals the operation will require. Our ten thirty three bed Midwest Regional Reception Center located in Leavenworth, Kansas has begun preliminary activation steps under a March 7 letter contract with ICE.

[Patrick Swindle, EVP & COO at CoreCivic]

While we work collaboratively with ICE toward negotiation and execution of a longer term contract, we have begun the on ground steps necessary to get the physical facility and the team ready to receive a population there. Notably, we have assembled our facility leadership team there and they're now on-site. We posted job listings for employment at this facility on March 17. We've already received over 1,500 applications for an estimated 300 positions. Our first training class for detention officers started this past Monday.

[Patrick Swindle, EVP & COO at CoreCivic]

Similarly, we have begun preparation activities at our two thousand five and sixty bed California City Immigration Processing Center in California City, California under a letter contract signed 04/01/2025. Again, our facility leadership team is now in place and they're actively preparing the facility to receive an ICE population once a long term contract has been negotiated and executed. We posted job listings for Cal City on April 7 and we received over 2,500 applications already. One other significant component of CoreCivic's broader ICE activation plan involves adding capacity for detainee transportation. Over the last four months, CoreCivic has purchased or has in production a total of 120 vehicles comprised of a mix of buses and vans.

[Patrick Swindle, EVP & COO at CoreCivic]

This is a significant increase in our fleet and we believe this capacity will be necessary to accommodate ISIS transportation requirements. CoreCivic's first quarter revenue from state partners in our Safety and Community segments increased 5.2% compared with the prior year quarter. This increase is a result of higher per diem rates and higher occupancy from our state government partners, as well as contributions from additional contracts with Montana that commenced in the third quarter of twenty twenty four and the first quarter of twenty twenty five. During January 2025, we expanded our relationship with the State of Montana with a new contract that expanded the geographic area of our facilities that can serve the State. During the first quarter, we accepted two forty inmates at our Tallahatchie County Correctional Facility in Tutwiler, Mississippi.

[Patrick Swindle, EVP & COO at CoreCivic]

Within our facilities, we continue to realize operational improvements. Improved staffing levels continue to drive much of our operating improvement as we've been able to reduce or eliminate expensive short term labor measures necessary in response to the COVID-nineteen pandemic. In addition to being more cost effective over the long term, permanent and locally hired staff also improved facility performance in such areas of safety, program outcomes, and audit performance. Labor is the largest expense in our industry, and in recent years, we've experienced unusual levels of labor inflation and cost uncertainty. At this point, labor inflation and availability have returned to relatively normal and predictable levels and labor markets are displaying stability.

[Patrick Swindle, EVP & COO at CoreCivic]

In recent years, we have invested significantly in our frontline employees often ahead of receiving funding support from our partners. Through per diem increases and operational improvements, we are restoring the performance of many of these facilities. CoreCivic's ability to maintain strong staffing levels in our current base of facilities is particularly important as we address increased demand under existing contracts and approach facility activations. In short, our improved staffing positions us well operationally to maintain the trust of our partners to manage our higher population needs and respond swiftly to new opportunities. CoreCivic's Community segment is comprised of 21 residential reentry facilities serving the Federal Bureau of Prisons, as well as various state and county governments.

[Patrick Swindle, EVP & COO at CoreCivic]

Facilities in our Community segment are engaged primarily in preparing individuals for successful reentry to their communities after a period of incarceration or as an alternative to incarceration. Revenue in our Community segment was essentially flat compared with the first quarter of twenty twenty four, but facility net operating income for Community increased 6%. We remain positive about the outlook for the Community segment as more of our government partners, including the BOP, returned their focus to successful reentry in order to curb the recidivism challenge. In conclusion, CoreCivic is well positioned operationally to serve our government partners' growing needs. The longer term macro environment for our federal, state, and local businesses remains positive as we are well positioned to support increasing public safety and immigration priorities.

[Patrick Swindle, EVP & COO at CoreCivic]

Our government partners at all levels face complex challenges, including capacity limitations, aging, expensive to maintain and expensive to build facilities, persistent staffing challenges, and populations that are increasing in numbers and evolving their complexity. Our ongoing conversations with our partners highlight their growing needs as do other metrics, including jail backlogs and population forecasts. Now, I will turn the call over to David Garfinkel, who will provide a detailed look at our first quarter financial results, our capital markets activities and assumptions included in our 2025 financial guidance. Dave?

[David Garfinkle, EVP & CFO at CoreCivic]

Thank you, Patrick, and good morning, everyone. In the first quarter of twenty twenty five, we generated net income of $0.23 per share and FFO per share of $0.45 both exceeding average analyst estimates by $0.10 per share. Adjusted EBITDA was $81,000,000 exceeding average analyst estimates by $10,000,000 Excluding the contribution of our South Texas Family Residential Center and our California City Correctional Center contracts in the prior year period, revenue increased 6.7% and adjusted EBITDA increased 21.2% in the remainder of our portfolio, helping offset some of the impact of these contract losses. On an as reported basis, compared to the prior year quarter, adjusted EBITDA decreased $8,500,000 adjusted EPS declined $02 and normalized FFO per share decreased $01 These year over year declines resulted from the termination of our contract with ICE at the South Texas Family Residential Center effective 08/09/2024 and a lease expiration with the State of California effective 03/31/2024 at our California City Correctional Center. These terminations combined for a decrease in facility net operating income of $22,600,000 or $0.16 per share from the prior year quarter.

[David Garfinkle, EVP & CFO at CoreCivic]

During the first quarter, we began reactivating the South Texas facility, now known as the Dilly Immigration Processing Center under a new five year agreement that became effective March 5 and accepted our first residence at this facility April 9. Further, on 04/01/2025, we entered into a letter contract with ICE at the California City facility, now known as the California City Immigration Processing Center, which authorizes funding for a six month period to reactivate the facility while we work with ICE to negotiate and execute a long term contract. The reductions in adjusted EBITDA and per share results during the first quarter of twenty twenty five compared with the prior year quarter were partially offset by higher occupancy from state and local partners as well as from ICE across the remainder of the portfolio. First quarter twenty twenty five results also include an income tax benefit associated with stock based compensation vesting and certain payroll tax credits aggregating $04 per share, which compares to a $02 income tax benefit associated with stock based compensation vesting in the prior year quarter. Our capital allocation strategy contributed to increases in per share earnings aggregating approximately $03 per share through reductions in interest expense and common shares outstanding.

[David Garfinkle, EVP & CFO at CoreCivic]

Federal revenue in our Safety and Community segments decreased $21,100,000 from the first quarter of twenty twenty four to the first quarter of twenty twenty five, including a reduction in management revenue at the Dilly facility of $33,600,000 So excluding this facility, federal revenue in our Safety and Community segments increased $12,500,000 or 5.6 percent. State revenue in the Safety and Community segments increased $9,800,000 or 5.2% from the first quarter of twenty twenty four to the first quarter of twenty twenty five, which included revenue from two new contracts with the State of Montana awarded in the third quarter of twenty twenty four and the first quarter of twenty twenty five. Revenue in our property segment declined $8,400,000 primarily due to the aforementioned expiration of the lease at our California City facility. Based on our activation activities resulting from the letter contract signed effective April 1, the California City facility will move to our Safety segment in the second quarter to be reported with other correctional and detention facilities we operate. Operating margin in our Safety and Community facilities combined was 23.6% in the first quarter of twenty twenty five compared to 23.7% in the prior year quarter.

[David Garfinkle, EVP & CFO at CoreCivic]

The slight decrease in our operating margin was due to the termination of the ICE contract at the Dilly facility. As we have previously mentioned, the margin at the Dilly facility was higher than the portfolio average due to the size and scalability of expenses and due to the unique design and specialized services provided at the facility. All else equal, we expect our margin to improve as we fully reactivate the Dilly facility. Excluding the Dilly facility, operating margin was 22.2 in the prior year quarter. The increase in our operating margin, excluding the Dilly facility, was due to an increase in occupancy from 75.2% to 77% for our Safety and Community segments combined and a reduction in certain operating expenses.

[David Garfinkle, EVP & CFO at CoreCivic]

Turning next to the balance sheet. During the first quarter, we repurchased 1,900,000.0 shares of our common stock at an aggregate cost of $37,900,000 under our $350,000,000 share repurchase program, accelerating the pace of our repurchases compared with recent quarters. Since our share repurchase program was announced in May 2022, through March 31, we have repurchased 16,500,000.0 shares of our stock at a total cost of $219,000,000 or an average price of $13.3 per share. As of March 31, we had $131,000,000 available under the Board authorization. Our leverage measured by net debt to adjusted EBITDA was 2.5 times using the trailing twelve months ended 03/31/2025, right in the middle of our target range of 2.25 times to 2.75 times.

[David Garfinkle, EVP & CFO at CoreCivic]

As of March 31, we had $75,000,000 of cash on hand and an additional $256,000,000 of borrowing capacity on our revolving credit facility, providing us with total liquidity of $331,000,000 Our next debt maturity is October 2027, when $238,500,000 of senior unsecured notes mature. Based on our first quarter performance, which beat our internal forecast, our business momentum and new contract awards and contract expansions announced since we last provided guidance, we are increasing our full year 2025 financial guidance. For 2025, we now expect to generate diluted EPS of $0.83 to $0.92 up from $0.48 to $0.61 in our previous guidance, up 61% at the midpoint. We now expect FFO per share of $1.72 to $1.82 up from $1.37 to $1.5 up 23% at the midpoint. And we expect EBITDA of $331,000,000 to $339,000,000 up from $281,000,000 to $293,000,000 or 17% at the midpoint.

[David Garfinkle, EVP & CFO at CoreCivic]

The single largest factor in our increased guidance is the reactivation of the Dilly Immigration Processing Center effective March 5. The new agreement for the Dilly facility provides for a fixed monthly revenue payment in accordance with a graduated schedule to correlate with the activation of each neighborhood within the facility. We expect to have the entire facility activated by early September twenty twenty five and expect to begin recognizing revenue for the entire 2,400 bed facility at that point. Consistent with our past practice, our guidance does not include the impact of new management contract awards not previously announced because the timing of government actions on new contracts is always difficult to predict. Although we have entered into short term letter agreements for our ten thirty three bed Midwest Regional Reception Center and our 2,560 bed California City Immigration Processing Center, our guidance does not include the impact of potential longer term contracts at these facilities as we have not yet negotiated a per diem rate or a definitive quantity of beds to be utilized at either facility.

[David Garfinkle, EVP & CFO at CoreCivic]

The timing of any new longer term contract awards at these facilities is also difficult to predict. In the meantime, the net financial impact to the forecast of the short term agreements is not material. But assuming we are able to negotiate longer term contracts with these facilities, the EBITDA contribution will occur sooner than if we did not have the letter contracts because the letter contracts enable us to offset activation expenses we have already begun to incur. We are expecting to execute new contracts during 2025, including, but not limited to, the potential long term contracts at the Midwest Regional Reception Center and our California City Immigration Processing Center, and we'll revise our financial guidance throughout the year if and when new contracts are signed. Based on immigration policies of the new administration, as well as newly enacted legislation requiring the utilization of more detention for certain criminal violations, we expect new contracts to require the activation of one or more of our idle facilities.

[David Garfinkle, EVP & CFO at CoreCivic]

We currently own nine idle correctional and detention facilities that have over 13,400 available beds, including the two I just mentioned. The activation of an idle facility generally requires four to six months to hire, train, and prepare the facility to accept residential populations, which depending on contract structure could result in substantial startup expenses before we realize additional revenue. To the extent any new contract requires the activation of an idle facility before we begin to recognize revenue, our guidance could be negatively impacted by these startup expenses until the revenue we generate offsets these expenses. We plan to spend 60,000,000 to $65,000,000 on maintenance capital expenditures during 2025, unchanged from our prior guidance and 9,000,000 to $10,000,000 for other capital expenditures, up slightly from our prior guidance. Our 2025 forecast also includes $65,000,000 to $70,000,000 of capital expenditures associated with potential idle facility activations and for additional transportation vehicles, including $12,000,000 spent in the first quarter.

[David Garfinkle, EVP & CFO at CoreCivic]

We have increased this forecast by $25,000,000 from our prior guidance in order to expand the number of facilities ready to accept residential populations beyond the initial list of priority locations we had previously identified. Our 2025 guidance contemplates staying within our targeted leverage of 2.25 times to 2.75 times. Although we continue to evaluate M and A opportunities, which if completed would most likely include transactions in our core business, our guidance does not include any M

[David Garfinkle, EVP & CFO at CoreCivic]

and A

[David Garfinkle, EVP & CFO at CoreCivic]

activity. However, we could deploy additional capital into M and A opportunities where we believe cash flows are sustainable over the long term and where returns meet or exceed returns on share repurchases. Considering the size of M and A opportunities under evaluation, we would expect to finance such M and A opportunities with existing liquidity. Our guidance also does not include any share repurchases beyond those completed to date or additional capital expenditures beyond those mentioned that could be needed in connection with the reactivation of our idle facilities, which may depend on customer needs and preferences. However, we expect to continue executing on our share repurchase program, taking into consideration our earnings trajectory, stock price, liquidity and alternative opportunities to deploy capital.

[David Garfinkle, EVP & CFO at CoreCivic]

As a result, we could temporarily exceed our leverage target in the short term, but considering the strength of our existing cash flows and the potential growth in our earnings, we would expect to naturally achieve and sustain our targeted leverage over the medium and long term. Our balance sheet remains strong with low leverage and no near term debt maturities and readily available bed capacity positioning us well to take advantage of opportunities in the marketplace. 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, M and A activity and growth CapEx such as facility activations to range from 187,500,000 to $200,500,000 for 2025. We expect our normalized annual effective tax rate to be 25% to 30%, unchanged from our prior guidance, which reflected a lower tax rate in Q1 compared with the other quarters, as previously mentioned. The full year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense.

[David Garfinkle, EVP & CFO at CoreCivic]

We are forecasting G and A expenses in 2025 to be between 145,000,000 and $150,000,000 unchanged from our prior guidance. I will now turn the call back to the operator to open up the lines for questions.

[Operator]

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 1, 1 again. Please stand by while we compile the Q and A roster.

[Operator]

Our first question comes from Joe Gomes with NOBLE Capital. Your line is open.

[Joe Gomes, Senior Research Analyst at Noble Capital Markets]

Good afternoon, gentlemen. Congrats on the quarter.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Hey, Joe, thank you so much.

[Joe Gomes, Senior Research Analyst at Noble Capital Markets]

So I want to start with these letter agreements, great news on both Midwest and Cal City. Are you hiding any more of them on us? Has ICE come to you and signed a couple more recently?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Definitely not hiding any more on you, Joe. But I guess a couple observations. One is that it's clear to us that there's a lot of intensity for obvious reasons for ICE to get a lot of beds under contract. And so they kind of pulled this tool out of the toolbox here earlier this year to basically get these facilities under at least the protection for ICE so they can get these secured more under long term contracts. So it was a great feature on their part to at least get these facilities secured.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

They know they're going to need them. They know they're going to get additional funding through reconciliation to support the contracts. And obviously, it's a great feature for us because, as Dave noted, it allows us to go ahead and start the activation process, start hiring staff, put leadership in place, get the academies going. It would not surprise us, Joe, that we see a lot more of these in the coming days and weeks, especially as we get closer to reconciliation. But anything you'd add to that, Dave?

[David Garfinkle, EVP & CFO at CoreCivic]

The two letter contracts that we have, we have heard from ICE for the longest time that the Midwest Regional Reception Center was a priority for them to consolidate populations in that area, then the Cal City facility becoming available at the March. That's in a strategic location, so a great facility for ICE could potentially be used for the U. S. Marshals Service. But those are two key facilities we are really pleased to get under letter agreements.

[David Garfinkle, EVP & CFO at CoreCivic]

And then of course, the Dilly facility, which is not a letter agreement, it's extended to the longer term contract stage between Cal City and Dilly. Those were really two key facilities we were prioritizing at the beginning of the year. Good to get those across at least Billy across the finish line in the letter agreement with Cal City.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

One thing I'll also add, Joe, is that again, I've been with the company almost thirty three years, almost sixteen years as CEO. I've never seen the intensity and activity on Ionis' part to secure capacity.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Again, these letter agreements are a new tool that we're utilizing again to I think secure these beds again with Cal City and Midwest. But we have also seen I mean, they've toured a lot of our facilities that are not under contract. Capacity we've got in Colorado, capacity we've in Oklahoma, capacity we've got in Tennessee. I mean, really all over the country, they've expressed interest in some way or another, not just in the details of each facility and the capabilities, actually making efforts to tour the facilities, see our capabilities, see maybe some CapEx that we deploy to be able to put not only additional transportation assets in place, but also maybe courts and other services to help support the mission. A lot of activity is the bottom line.

[Joe Gomes, Senior Research Analyst at Noble Capital Markets]

Okay. And then the additional 25,000,000 CapEx that you announced, how many more facilities could that stand up?

[David Garfinkle, EVP & CFO at CoreCivic]

Good question, Joe. Mean, we're kind of leaning forward on almost all of our idle facilities at this point. At the beginning of the year, we kind of targeted the priority locations that we thought would make the most sense. So we've obviously expanded the number of facilities that we're investing in to have ready. They obviously, depending on how long they've been idle, have different levels of CapEx.

[David Garfinkle, EVP & CFO at CoreCivic]

I wouldn't necessarily say that's the total CapEx that we would end up spending on them because we're leaning forward at different levels as well. So I don't know if that number is an additional $25,000,000 or maybe even as high as $50,000,000 if we were to activate all facilities and incur all the capital expenditures necessary to reactivate them all. But we are certainly leaning forward on more facilities than we were last quarter just due to the confidence that we have in our ability to reactivate these facilities. And that's not just for federal. I think that could include potential state contracts as well.

[David Garfinkle, EVP & CFO at CoreCivic]

So we want to position these facilities to be available for the next customer that would use them.

[Joe Gomes, Senior Research Analyst at Noble Capital Markets]

Okay. And then one of the things that I know has been in the news was use of some soft sided facilities. There was the Fort Bliss, you know, on off type of contract. What would your guys appetite be for, you know, either putting together or managing one of these types of soft sided facilities?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yeah, great question, Joe. And the bottom line is we're very interested. We're very interested. We've been monitoring this very closely. You've probably seen the press.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

I think they're talking about potentially 10 military reservations around the country that potentially could be good sites for that type of solution. We think this type of solution they're looking for is something that we're very capable to provide. As you know, with Dilly, we just again reactivated it in thirty one days. But going back ten years when we first opened that facility, we basically had to do that. We had to work quickly with Target to provide the CapEx, get the campus configured and operate very quickly.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

I think we did it within, I think, probably eighty to ninety days. So we've got the capability to provide something very quickly that they're anticipating on some of these military reservations. I'll also say that in addition to our experiences at Dilly, we've got obviously great capacity and ability to do transportation that may be needed on this site. It's also very consistent with what we do on the detention side with our other facilities. Also, again, we've got the capability to do it very, very quickly.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

I talked about Dilly, but also we've been asked by ICE from time to time to help with natural disasters, depopulate a facility very quickly when a hurricane is coming. That's a long way of saying we've got the capabilities that they're anticipating they'll need for these solutions on these military properties. The only other thing I would just say is that every procurement, every RFI, every survey or sources side that we've seen from ICE here in the last ninety days, we've expressed interest in one way or another. So again, you asked specifically about Bliss, but obviously a lot of activity going on around the country for unique detention solutions, either existing facilities, which obviously again, we've had a lot of success already with all the facilities we just announced, but maybe some other unique solutions they want in other parts of country. But anything to add to that, Dave?

[David Garfinkle, EVP & CFO at CoreCivic]

Just that obviously our priority would be on our idle facilities and maximizing the utilization of our facilities, but we'll respond to whatever needs our customer has. We think our own facilities provide the most cost effective readily available capacity, but there are some other solutions that, as Damon just mentioned, we'd be interested in and could and could put up fairly quickly as well.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

One other quick thing, I alluded to this in my comments, Joe, but we've got a lot of real estate around existing facilities that maybe would be suitable for expansion too. So if there's a certain location in the country where ICE is saying, your facility in this location is 2,000 beds, can you add another two fifty very quickly? That's part of the analysis that we're doing, and again, that could be a kind of a short term expansion consistent with these type of facilities that are anticipated for these military reservations.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

So again, all the different solutions we're bringing to bear based on what their needs are and where they need those beds at.

[Joe Gomes, Senior Research Analyst at Noble Capital Markets]

Okay, great. Thanks. I'll let someone else ask a couple of questions.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Thank you, Joe.

[David Garfinkle, EVP & CFO at CoreCivic]

Thanks, Joe.

[Operator]

Thank you. Our next question is from Jay McCanless with Wedbush. Your line is open.

[Jay McCanless, SVP - Equity Research at Wedbush Securities]

Hey. Good morning, guys. Thanks for taking my questions. The first one I had, it was interesting you guys were talking about increasing the size of your rolling fleet. I guess, could you give us maybe some preliminary idea of what revenues you might be able to generate through doing more transportation work for ICE?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yeah, a little hard to put a number to it. We can maybe talk to you offline and give you a ballpark. The way we thought about it is, places like Cal City and Leavenworth, we know kind of historically what the needs are based on the number beds for capacity need for transportation. So we just basically have done that analysis. So anyway, it's a long way of saying we probably won't get clarity on that until we kind of finalize some of these contracts like Cal City and Leavenworth.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Again, we can work with you a little bit offline and give you at least a ballpark.

[Jay McCanless, SVP - Equity Research at Wedbush Securities]

Okay.

[Jay McCanless, SVP - Equity Research at Wedbush Securities]

That sounds great. And then also wanted to you know, you guys talked about looking at some different facilities, you know, and your partner you guys have partnered with with Target Hospitality. Guess, is PECOS one of the ones that you guys might consider purchasing and or what other facilities might you be looking at this point?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yeah, probably be a little inappropriate for me to give a lot of clarity on that. Often know the market really, really well. And so we basically have surveyed facilities that are available that maybe are newer in construction that would be consistent with this type of mission. I wouldn't want to necessarily say we're looking at these various facilities around the country for obvious competitive reasons, but again, we've got a great real estate team that's not only looking at potentially what's available, maybe owned by local or city or county governments, but also again, obviously talking to Target about their capabilities, what they have at their various locations. But anything you'd add to that, Dave?

[David Garfinkle, EVP & CFO at CoreCivic]

No. Going back to the transportation question, I was thinking about that further. A lot of our negotiations are including the transportation services in the existing detention contracts, so they're not necessarily separate and often built into the per diem, but we are seeing certainly an increased need for transportation services in connection with those contracts.

[Jay McCanless, SVP - Equity Research at Wedbush Securities]

That's great. And then the last question I had, you guys said in the prepared comments that BOP is starting to get more active on the community side. Guess, anything you can tell us there? Have you seen any more push out of Hand Bondi or Justice in terms of the First Step Act?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yeah, great question. It's been, I think, two weeks that the BOP has announced a new director, a gentleman from West Virginia. And I think he's been in the early days just getting his leadership team in place. So I think he still got some positions filled at the senior leadership level at the BOP. So it's our belief that probably in the coming days and weeks, once he gets, again, his leadership team in place, they've got a plan on what they want to do now in the community side, but also maybe on the secure side that they'll start making those kind of priorities and goals known out to private sector.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

We understand that there's been some work on that already, but again, it's just been announced with the new director and like I said, he's getting his team in place. And like I said, we'll probably know a lot more over the summer leading up to our call in August on kind of where the direction is. But we do feel like back to your kind of initial part of your question, we do feel like there's going be a big push by this administration and DOJ leadership to really supercharge the capacity that's available in the private sector for community beds to again really fulfill the goals and the intent of the First Step Act. I don't know if have anything to add to that, Dave.

[David Garfinkle, EVP & CFO at CoreCivic]

Yeah, I think potentially in the secure side too, it's well documented they've had challenges with their infrastructure, it's old and outdated, and they've had some staffing challenges.

[David Garfinkle, EVP & CFO at CoreCivic]

So we think we provide a great solution to be able to provide additional services to the BOP in our correctional facilities like we did years ago. It's cost effective as well. So we're optimistic that that can be an opportunity at least in the medium term, maybe not tomorrow, but in the medium to long term certainly.

[Operator]

Our next question comes from M. Marin with Zacks. Your line is open.

[M. Marin, Senior Analyst at Zacks Investment Research]

Thank you. So in your prepared remarks and now in the Q and A, you've mentioned some of the competitive advantages that you see with your facilities versus other options for government partners, you know, newer infrastructure, more modern amenities, I guess, and cost effectiveness. So in terms of your ability to negotiate higher per diem, how much room do you think you have before that cost advantage might go away?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Well, it's a great question. We watched I mean, we've been doing this for years where we watch really closely on what the rates, city and counties negotiate with the Marsh Service and ICE. So, obviously, we look at that as a kind of a not as a benchmark, but just obviously want to appreciate what certain jurisdictions are charging ICE and Marsh Service in certain geographical locations in the country. So, that's one data point. And then the second thing is really what the scope is.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

So, ICE, they may want detention capacity, but they also may want transportation or they want a specialized medical component that's got infirmary beds. So, again, we kind of put all those pieces in place and look at the total cost. And if you look at even those where we have maybe a more comprehensive level of services, I mean, we're still very competitive to the alternatives both the city and counties can offer, but also what the federal government could do to sell, especially if they're buying beds from the BOP or other agencies within the federal government. And then there's been some discussion, as you know, about maybe capacity outside The US. And if you look at those numbers, I mean, we are really, really, really cost competitive.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

And again, higher quality, great audit scores, more effective logistically for transportation, and obviously a lot less likely to get challenged from a legal perspective relative to our capabilities and the services we provide. I don't know if can add to that, Dave.

[David Garfinkle, EVP & CFO at CoreCivic]

Yes. Where we already have the capacity, the challenge with some of the other solutions being proposed is they intend on them being temporary. And so you have to recover that cost of activation and cost of infrastructure over a short period of time, which adds to the challenges in providing a competitive per diem compared with our traditional detention capacity where the beds are in the ground, already built, paid for, can ramp staffing fairly quickly.

[David Garfinkle, EVP & CFO at CoreCivic]

So I think that will continue to be a competitive price advantage.

[M. Marin, Senior Analyst at Zacks Investment Research]

Okay. Thank you. That makes sense. One more question, which is the three facilities that you're currently in the process of reactivating or you've already, you know, onboarding people are in three different states, right? Texas, California, Kansas, and you talked about how these all three facilities are strategically located, I think, you know, specifically for ICE's needs.

[M. Marin, Senior Analyst at Zacks Investment Research]

If you look at your overall portfolio, the facilities that are currently idled and you're thinking in terms of, you know, strategic location. You've been talking about the Kansas, you know, Midwest Regional Reception Center for quite a while, so you knew, for a while that was a strategically located facility. If you look at your portfolio and specifically look at idled facilities, are there any others that jump out at you in terms of the location as being particularly attractive for ICE and then potentially other government partners?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yeah, that's great question. I'll tag team here a little bit with Dave on that. But I'd say the three locations that I think for me are top of mind that I think would be most attractive to ICE is one, our facility Northeast Of Memphis here in Tennessee, so right there on the border of Memphis and Arkansas. It's about a 600 bed facility. I think ICE would find that very attractive just because of proximity to Memphis and obviously the transportation hub there with I-forty going through Memphis.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

So that would be one. Second, and this is an obvious one, but Oklahoma, I mean, such a relocated period. So our capacity at both our Diamondback facility and our Norfolk facility, which again, right there on I-forty west of Oklahoma City. Oklahoma City usually is a very big hub for air transportation for ICE and Marshall service. So checks a lot of boxes with those two facilities.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Again, think both of those will be very attractive to ICE. And then finally, I'll just say the capacity we've got in Colorado. I think having beds out west that are not all the way over to the coast in California where they could service the needs of Salt Lake and Denver and even some of the needs out of Wyoming and Montana makes our Kit Carson and our Warefield facilities very attractive to ICE. So, I'd say those are probably the next ones kind of top of the list. We also have got capacity up in Minnesota with our Prairie facility that could be a good solution if their activity more kind of mid to long term for ICE on the northern border.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

So that would be a great location. Then we do have some incremental beds in Kentucky that are maybe a little lower on the list. But I'd say Tennessee, Oklahoma, Colorado, I think they're probably the top three locations where we've got capacity that think will be very attractive. But anything to add to that, Dave?

[David Garfinkle, EVP & CFO at CoreCivic]

Just the beds in Oklahoma, they're sizable, they're scaled.

[David Garfinkle, EVP & CFO at CoreCivic]

So Diamondback's two thousand one hundred sixty, North Fork's two thousand four hundred. So those are very large facilities. And when you get large facilities like that, if they need that type of demand, if the demand is there, can certainly offer a more competitive per diem compared with a smaller facility where per diems wouldn't be able to compete as well as a large facility like those two.

[M. Marin, Senior Analyst at Zacks Investment Research]

Okay. Thank you very much.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Appreciate your question.

[David Garfinkle, EVP & CFO at CoreCivic]

Thanks, Tim.

[Operator]

Thank you. Our next question is from Greg Gibas with Northland Securities. Your line is open.

[Greg Gibas, Vice President & Senior Research Analyst at Northland Securities, Inc]

Hey, good morning, Damon, Dave, Patrick. Thanks for taking the questions. Congrats on the quarter.

[Greg Gibas, Vice President & Senior Research Analyst at Northland Securities, Inc]

Yes, I wanted

[Greg Gibas, Vice President & Senior Research Analyst at Northland Securities, Inc]

to ask, on the puts and takes, I guess, of the $48,000,000 EBITDA range increase at the midpoint, Gilly obviously being the primary one. But could you maybe discuss the drivers or pieces of the increase in your guidance assumptions?

[David Garfinkle, EVP & CFO at CoreCivic]

Sure. I'll take that one, Greg. Certainly, the Q1 beat was like I think we were $13,000,000 higher than our internal forecast, 10,000,000 higher than average analyst estimates. So that's obviously being carried through. You mentioned the Dilly facility that will be ramping up.

[David Garfinkle, EVP & CFO at CoreCivic]

So we don't get a full run rate until September or really a full quarter until Q4. But also I'd add the population increases we've seen, if you looked at January, February and March, particularly ICE populations, they increased sequentially each month. So we're kind of carrying through those populations that we saw in March expecting them to sustain throughout the remainder of the year. Those are really impactful as well. On the expense side, I'd say probably status quo on the expense side.

[David Garfinkle, EVP & CFO at CoreCivic]

We didn't build any additional cost savings in for the rest of the year. That's where we've normalized expenses for the most part, particularly we continue to refer to the pandemic years. So I think those are really at a good level these days. And so didn't necessarily see a lot of opportunity for cost savings going forward. Where there could be potential opportunities in the guidance, as we mentioned, the Midwest Regional Reception Center and the Kale City facility, the longer term contracts are not baked in.

[David Garfinkle, EVP & CFO at CoreCivic]

I think we took a fairly reasonable approach on per diem increases, particularly from state customers. They don't kick in until July. That's not coincidentally the same month where we provide wage increases to our staff. So we're in discussions with most state legislatures right now. Our legislatures are in session.

[David Garfinkle, EVP & CFO at CoreCivic]

And we'll see where we come out on that. There potentially could be upside with per diem increases there, but we won't know that for another couple months.

[Greg Gibas, Vice President & Senior Research Analyst at Northland Securities, Inc]

Got it. That's helpful, guessing there's nothing specific that you can share here, but did you have a general sense of the timing of when the letter contracts are expected to be finalized via a formalized contract? Like how long would you expect maybe that negotiation process to take? Do you think it would have to be post budget reconciliation?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yeah, another great question. And I'll tag team with Patrick on this a little bit. But both of them are progressing pretty darn well. We got, I guess, the template of the actual contracts on both locations, I think, within the last ten days. So we're thumbing through it and making notes.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

And so there'll probably be some back and forth on the contract itself, and I'm sure a fair amount of revisions as we go back and forth and then that usually leads into probably a face to face or a couple over the phone or both negotiations as we finalize term. So hard to say today exactly the timing, But I mean, I don't think it's going to be days and weeks, definitely not months. And then the second part of your question, I think there's a chance we get these done before reconciliation. And again, I think part of the rationale in getting these letter contracts is that they didn't want to miss this moment in time to get these two facilities. And again, it would surprise us that we get maybe another letter contract or two prior to reconciliation to where they can kind of put their get their hands on the capacity and on the facilities as we work on a parallel path on the contracts.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

But Patrick, let me let you kind of add or amplify to this.

[Patrick Swindle, EVP & COO at CoreCivic]

Sure. Thank you, Damon. Thank you for the question. I'd offer two additional thoughts. So, one of them is normal activation for a month of facility would be one hundred and twenty to one hundred and eighty days.

[Patrick Swindle, EVP & COO at CoreCivic]

And so the value of a letter contract is it really allows us to go fully into activation mode for those facilities. Over the six months, we're under the letter contract agreement, put ourselves in a place where when the final agreement is in place, we're able to begin ramping the facility operations very quickly. In other words, we can be ready for receipt of the first group of detainees, even advance of the end of the six month letter contract. So, it really accelerates the timeline under which we can prepare. We are pacing ourselves during the letter contract period, but we are working toward being fully activated so that when the final agreement is in place, we're ready to immediately begin supporting our customers' needs.

[Patrick Swindle, EVP & COO at CoreCivic]

That's certainly a key focus of us and it's a benefit of letter contract structure. Second thing I'd mention is letter contracts are only one mechanism that ICE is using presently to solicit beds. So we've talked a lot about letter contracts and the potential for activations under letter contracts, but there also are other mechanisms that we can use as well to activate facilities. So, I think, certainly that is one pathway toward a contract and activation. There are also others that are available to us as well.

[Patrick Swindle, EVP & COO at CoreCivic]

So each individual location may have specific intricacies that may require one pathway or another, but we're very well prepared, whether it be under a letter contract with a six month ramp or another mechanism that might allow us to also activate very quickly.

[Greg Gibas, Vice President & Senior Research Analyst at Northland Securities, Inc]

Great. Really appreciate the color there. And I guess lastly, because I don't think it was touched on yet, could you provide an update on how you're thinking about potential rebidding of the ISAP contract positioning CoreCivic for that and maybe anything you've heard on it?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yes, thank you for that question. Obviously heard what GEO said yesterday on their call and they mentioned maybe a one or two year extension. We haven't heard two, but we heard maybe there was going to be a one year extension and obviously waiting the timing on the RFP. But I think we've made it very clear. We've been preparing ourselves for the last couple of years for the rebid of this contract.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

We got the capability. It's something that we do already in our community division. So we continue to get ourselves prepared for not just the needs relative to the contract itself, but also getting ourselves aligned with the appropriate technology and third party providers to help support our proposal. So again, we're watching very closely. I think in this environment, especially when you've got Doge and others looking at most cost effective solutions for government, we think introducing some additional competition for innovation and cost effectiveness would be value added to the federal government.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Anything you add to that, Dave?

[David Garfinkle, EVP & CFO at CoreCivic]

I think you covered it, Damon.

[Greg Gibas, Vice President & Senior Research Analyst at Northland Securities, Inc]

Got it. Thanks very much.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yes, sir.

[Operator]

Thank you for your questions.

[Operator]

One moment.

[Operator]

Our next question is from Benjamin Briggs with Stonix Financial. Your line is open.

[Ben Briggs, Director at StoneX Group]

Hey, guys. Thank you holding the call and taking the questions. A lot of mine got answered, but I've got a couple left here. So I think the last guy asking questions brought up the ISAP and the monitoring contracts. So how many individuals are you monitoring under ISAP as it stands today?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Well, we currently don't have a contract with ICE for ISAP. That's, again, completely under the contract that GEO and BI has got at the moment. We've got lots of contracts with other jurisdictions.

[Ben Briggs, Director at StoneX Group]

Okay, so I guess under that's what I'm referring to under those jurisdictions. How many individuals are you monitoring?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Oh, keep me on with your Dave, I want to say it's a probably 20,000 to 30,000. Yeah, I was thinking more towards the 20,000, but it may have grown. So yeah, that's probably about right.

[Ben Briggs, Director at StoneX Group]

Okay, got it. What is your ability to ramp there? Would there be kind of a long process? Would you have to get additional infrastructure? Or is it a relatively fast ramping period?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

It's relatively fast. And again, we've been watching this agreement and this requirement for, gosh, probably going on six, seven years. So we've got to get into capabilities. We know that there would be a requirement to very quickly provide office space in certain locations where they've got great or high utilization. So again, we know those locations.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

We know where we have to kind of ramp up leases for probably storefront office space. And again, from staffing perspective, we feel like we can do that both in our community division, but also probably pull some folks from our safety division on the high side to help support that activation. So yes, we definitely got the capabilities and we've got the plan that if we get some of that contract going forward, again, we've got the plan where we can scale up and ramp up very quickly. But anything to add to that, Dave?

[David Garfinkle, EVP & CFO at CoreCivic]

Yes, something we do differently.

[David Garfinkle, EVP & CFO at CoreCivic]

So in our monitoring subsidiary, we use a teaming agreement with a third party to provide the devices. And we've checked in with them to make sure or to ask them how quickly they could scale up. And we don't have any concerns about scaling up to the size that would be certainly under the current ISAF contract or potentially larger. So we're very comfortable with our ability to scale there.

[Ben Briggs, Director at StoneX Group]

Okay, got it. That's very helpful. So it sounds like it's mostly kind of offices and some administrative stuff. The technology is already in place.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yes, correct. That's a good way to frame it.

[Ben Briggs, Director at StoneX Group]

Got it. Understood. Thank you. So moving on again to some of your, I guess, growth opportunities. I think you said that you've got nine facilities with a total of 13,000 beds that are idle.

[Ben Briggs, Director at StoneX Group]

If those were all activated, can you ballpark for me what the total incremental revenue might be?

[David Garfinkle, EVP & CFO at CoreCivic]

Well, I'd say I know I can back into that, but I think last call we said it was probably anywhere from $250,000,000 to $275,000,000 We've activated Dilly. Probably, not putting any further pen to paper, it's probably, oh gosh, the 200,000,000 to $225,000,000 in EBITDA as well if we activated all of them at this point, that would be the upside.

[Ben Briggs, Director at StoneX Group]

Okay, got it. Dollars 200,000,000 to $225,000,000 of EBITDA, that's helpful. And then as far as and I know, Guy, I know that you got some questions earlier, but I'm going to try to ask a different way. As far as timing is concerned, I know it can be unpredictable. Has to be budget appropriations and you're waiting for some government sign offs.

[Ben Briggs, Director at StoneX Group]

But as far as what the pace is for a ramp, when do you think is a fair time to model to you guys hitting, call it, a run rate peak EBITDA? Do you think by second half of twenty twenty six, it should be realized? Do you think it might take a little longer, potentially faster? How is it that you guys think about that?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yeah, let me I'm going to tag team with Patrick on this a little bit, but I would say, let me, I guess, talk about kind of the coming days and weeks and kind of key milestones. And so we've talked about obviously contract with Dilly. We've talked about the letter contracts leading into permanent contracts on Cal City. So those feel like on those two probably will get finalized again as we go into summer, maybe early fall. Additional contracting actions, again, I talked about our capacity in Tennessee and Oklahoma and Colorado probably be in the next round of most attractive capacity to ICE.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

It feels like we'll get additional engagement on that again in the coming days and weeks. I don't think reconciliation has to get done for them to engage on us. Again, I wouldn't be surprised to call us tomorrow and say, hey, we're ready to do a letter contract on name of facility, Diamondback. But we do feel like that reconciliation will then will be a catalyst, to get if it's a letter contract going into a permanent contract, because I think, again, no one is start showing activity in the third or fourth quarter of having this capacity available as they kind of ramp up the rest of the part of the infrastructure, again, especially around law enforcement and other assets they've got on their side that are probably coming from the funding. So a long way of saying that, yes, it feels like that if reconciliation gets done and I'll just say, again, I don't have anything unique to offer on this call, but if you just listen to the media on any given day, it feels like all leadership in Congress, House, Senate, and obviously the White House are focused on getting this done ideally by the July 4, it's definitely the August, August recess.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

So it feels like again, the momentum there on the funding side. And again, I think that'll be on a parallel path on all these contracting activities. But Patrick, let me let you kind of add and amplify to that.

[Patrick Swindle, EVP & COO at CoreCivic]

Thank you, Damon. Only thing that I would add is I think a lot of it, a lot of your question depends on where peak demand ultimately stops. In other words, what is the ultimate aggregated bed number when you look across all the alternative solutions that we can provide? So, whether that's the utilization of our existing capacity, I know that was the question that was asked previously, whether that would be the work that we're doing with our partner Target to look at solutions that might be in non traditional or soft sided type structures could be additional capacity related to opportunities currently contemplated for military bases. So I think in some respects, there's a lot of dependency on where peak demand ultimately settles out as to what the timing might be, because it certainly could extend beyond second half of twenty twenty six.

[Patrick Swindle, EVP & COO at CoreCivic]

But I would say just thinking about the timeline around activations, when we expect full funding will be in place, I think second half of twenty twenty six is a reasonable assumption for when we could hit peak EBITDA run rate based on the demand level that ultimately presents.

[Ben Briggs, Director at StoneX Group]

All right. That's very helpful. I appreciate that. Thank you for taking the questions and congratulations on the quarter.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yes, sir. Thank you.

[Operator]

You for your question. Our next question comes from Kirk Ledke with Imperial Capital. Your line is open.

[Kirk Ludtke, Managing Director at Imperial Capital LLC]

Well, thank you, everyone. Appreciate the call and for you staying late.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Thanks, Kirk. My pleasure.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

My pleasure.

[Kirk Ludtke, Managing Director at Imperial Capital LLC]

I just I just had a you know, assuming let's assume that that there are zero border crossings, no funding limitations. What is the relationship between the deportation rate and the number of beds? So, in other words, you mentioned a million a year, you mentioned 100,000 beds. Is that roughly the relationship there?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yes, that's what and I think I heard Tom Homan say that again this morning on one of the morning shows, but that's the near term goal is 100,000 bed capacity and a million deportations on an annual basis. And so I think we mentioned on the last call, 100,000 feels like kind of the new base going forward. Again, we'll see what happens with funding through reconciliation, but at the moment, feels like a pretty good number. Patrick, don't know there's anything you'd add to that.

[Patrick Swindle, EVP & COO at CoreCivic]

Nothing to add, Damon. Great.

[Kirk Ludtke, Managing Director at Imperial Capital LLC]

Thank you. And do you have a sense for when they'll get to a million, a run rate of a million a year?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

I don't think I've heard, and I don't think they've expressed that in the press. Again, I'm sure part of it is also through reconciliation, the additional funding they'll need for staffing, for law enforcement and processing case managers, whatnot. So I'm sure they've done that scenarios on their side of the fence relative to that, but I have not heard of ramp plan.

[Kirk Ludtke, Managing Director at Imperial Capital LLC]

Okay, got it. Thank you. Libya was added to the list of foreign locations, and I suspect that these foreign locations are serving a different mission. You don't really view them as competition, but how should we think about those?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yeah, exactly right. We don't see them as competition, and I think there's probably strategic and political reasons why some of those locations make sense. But again, for all the reasons we've talked about, forty two years in business, highest quality, best audit scores, logistically more favorable, where obviously not only just location wise, but we can provide transportation and less likely to get challenging courts, which we're seeing that obviously play out more and more here in the last few weeks. So yeah, don't see it as competition.

[Kirk Ludtke, Managing Director at Imperial Capital LLC]

Got it. I appreciate it. Thank you and congratulations on the quarter.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yes, sir.

[Operator]

Thank you. Our next question comes from Jordan Himelwitz with Philadelphia Financial Management of San Francisco. Your line is open.

[Jordan Hymowitz, Portfolio Manager at Philadelphia Financial]

Thanks, guys. Couple of questions. If the numbers you're talking about come to fruition, it seems like in the second half of twenty twenty six, you guys could be in a place to initiate a close to a double digit dividend yield if you don't do M and A. Is that a reasonable thought process? You're not going to take the debt down any more than 2% to 2.25 are you?

[David Garfinkle, EVP & CFO at CoreCivic]

No. No, that's right, Jordan. Dividend, we have not had a lot of conversations lately with our Board or quite frankly even with investors about a dividend because we think the share repurchase is more compelling at this point. But if we were to execute on a number of contracts and the stock price response, obviously, we don't want to overpay for shares. At that point, a dividend might make sense.

[Jordan Hymowitz, Portfolio Manager at Philadelphia Financial]

Okay. Second question, you've spoken incredibly favorably on TH during this call and potentially in a number of joint ventures with them. Would there be a possibility of an interest in them as an M and A candidate? They were approached by a different private equity, but might that potentially fit with your M and A potential list of things?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Oh, wow, what a direct question, Jordan. This never crossed our mind. They're a great, great partner, and I'll say it's not something that we've talked about or have entertained. So I appreciate your question, but it wouldn't be appropriate for me to provide any additional feedback on that.

[Jordan Hymowitz, Portfolio Manager at Philadelphia Financial]

Okay. And last question is, how big do you think the ISAP business has to be for a government to entertain two people splitting the contract versus one?

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Oh, that's a great question. And I don't think they have to. I don't think they have to grow. I mean, I think there could be a path forward where they say, okay, we want to introduce a little bit of diversification with providers in anticipation of growth, but I think it could be what it is today, allow for two providers. If they do think there's going to grow, then I think having two providers that could help with the scale of that growth would be, I think, a good idea on the government side.

[Jordan Hymowitz, Portfolio Manager at Philadelphia Financial]

Okay, thank you.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Yes, sir.

[David Garfinkle, EVP & CFO at CoreCivic]

Thanks, Jordan.

[Operator]

And this is the end of our Q and A session. I would now like to turn back to Damon Hininger for closing remarks.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

Thank you so much, operator. And before I let you all go, let me just note one quick thing. This week nationally is National Correctional Officer Employees Week. This was put in place by President Ronald Reagan back in 1984, and the intent is to recognize people in our profession, both public and private correctional officers, correctional workers around the country for the important work they do day in and day out. It is a tough business.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

As you all know, as many of you on the call are long time investors, it's tough, tough work, but it's also very rewarding work. So I didn't want this moment to pass without recognizing our employees. They're the best of the business that do this work. Again, can be very challenging, but also very rewarding, they are obviously executing really, really effective right now with all of these opportunities, but also great outcomes for people in our facilities. So, again, my hats off to our entire team here within CoreCivic.

[Damon Hininger, President & Chief Executive Officer at CoreCivic]

With that, we're adjourned. Thank you so much for participating in today's call. Thank you again for your continued support of the company.

[Operator]

This does conclude the program. You may now disconnect.

Participants

Executives

• Michael Grant, Managing Director of Investor Relations
• Damon Hininger, President & Chief Executive Officer
• Patrick Swindle, EVP & COO
• David Garfinkle, EVP & CFO

Analysts

• Joe Gomes, Senior Research Analyst at Noble Capital Markets
• Jay McCanless, SVP - Equity Research at Wedbush Securities
• M. Marin, Senior Analyst at Zacks Investment Research
• Greg Gibas, Vice President & Senior Research Analyst at Northland Securities, Inc
• Ben Briggs, Director at StoneX Group
• Kirk Ludtke, Managing Director at Imperial Capital LLC
• Jordan Hymowitz, Portfolio Manager at Philadelphia Financial