CoreCivic Q2 Earnings Call Highlights

Key Points

• CoreCivic exceeded second-quarter earnings expectations, reporting adjusted EPS of $0.38 and adjusted EBITDA of $109.4 million. Excluding prior-year Employee Retention Credits, adjusted EPS rose 35.7% and adjusted EBITDA increased 19.3% year over year.
• The company sold four facilities to government partners for approximately $2.23 billion in gross proceeds, expecting about $1.6 billion after taxes and transaction costs. CoreCivic used proceeds to repay debt and plans to allocate a substantial portion of the remaining cash toward share repurchases, with total authorization now at $1.2 billion.
• CoreCivic raised its 2026 adjusted EPS outlook to $1.62–$1.70 and expects GAAP EPS of $15.00–$15.20, largely reflecting facility-sale gains, but lowered adjusted EBITDA guidance to $440.5–$445.5 million due partly to potential contract changes after the sales.

CoreCivic NYSE: CXW reported second-quarter 2026 results that exceeded average analyst estimates for adjusted earnings per share and adjusted EBITDA, while outlining a series of facility sales, debt repayments and expanded share-repurchase capacity.

President and Chief Executive Officer Patrick Swindle said the company sold four facilities to government partners for combined gross proceeds of about $2.23 billion. The transactions include the California City Detention Facility and Otay Mesa Detention Center in California, sold to the Department of Homeland Security for $1.5 billion, as well as the Midwest Regional Reception Center in Kansas and Prairie Correctional Facility in Minnesota, sold for $734 million.

After estimated taxes and transaction costs, CoreCivic expects net proceeds of approximately $1.6 billion from the four sales. The company will continue managing the facilities under existing contracts, though management said contract terms could be modified following the ownership transfers.

Second-Quarter Results and Segment Changes

CoreCivic generated GAAP earnings per share of $0.37 in the second quarter and funds from operations, or FFO, of $0.63 per share. Adjusted EPS, excluding acquisition-related expenses, was $0.38, compared with $0.36 in the prior-year quarter. Normalized FFO was $0.64 per share, up from $0.59 a year earlier.

Chief Financial Officer David Garfinkle noted that the prior-year quarter included $11.6 million in Employee Retention Credits, including interest. Excluding that benefit, adjusted EPS increased 35.7% and normalized FFO per share increased 25.5% year over year.

Adjusted EBITDA totaled $109.4 million, compared with $103.3 million in the second quarter of 2025. Excluding the prior-year Employee Retention Credit benefit, adjusted EBITDA increased $17.7 million, or 19.3%.

The company redefined its operating and reportable segments during the quarter. The CoreCivic Residential segment now includes 64 correctional, detention and reentry facilities. The CoreCivic Services segment includes pharmaceutical supplies and services through Clinical Solutions Pharmacy, transportation through TransCor, and electronic monitoring and case-management services through Recovery Monitoring Solutions. The CoreCivic Property segment, consisting of five facilities leased to government agencies, was unchanged.

Residential operating margins declined to 22.4% from 26.1% a year earlier, primarily because the prior-year period included Employee Retention Credits. Excluding those credits, the prior-year margin was 24.5%. Garfinkle said lower ICE populations during the second quarter and the ramp-up of newly activated facilities also affected margins.

Population Trends and Facility Activations

Total occupancy in the Residential segment was 78.4%, up 1.6 percentage points from the prior-year quarter. Average daily population across CoreCivic-managed facilities rose to 66,363 people from 64,026 a year earlier, driven by increased demand, new contracts and the Farmville acquisition completed in July 2025.

Federal partners, primarily U.S. Immigration and Customs Enforcement and the U.S. Marshals Service, represented 53% of second-quarter revenue. Revenue from federal partners increased 27.2% year over year. ICE revenue rose $91.3 million, or 51.6%, while U.S. Marshals Service revenue declined $14.1 million, partly reflecting contract-level population mix shifts between the agencies.

CoreCivic’s ICE population increased by approximately 6,000 people, or 59.6%, from the beginning of 2025 through June 30, reaching 16,197 individuals. However, average daily population declined by 1,184 people in the second quarter from the first quarter, net of a 793-person increase at five activated facilities.

Swindle said nationwide ICE detention populations fell after reaching roughly 70,800 in late January, citing a Department of Homeland Security funding-related shutdown, leadership reorganization and the redeployment of ICE agents to Transportation Security Administration checkpoints. Nationwide populations subsequently rose to about 65,500 in early July.

The company continues ramping capacity at the 2,560-bed California City Detention Facility and 2,160-bed Diamondback Correctional Facility. As of June 30, the facilities housed 1,674 and 1,522 individuals, respectively. The Midwest Regional Reception Center began accepting detainees in March and housed 379 individuals at quarter-end.

CoreCivic also received a new contract to manage the 1,600-bed Prairie Correctional Facility, which had been idle since 2010. The company expects to begin receiving detainees in the fourth quarter and said the facility will make only a minimal earnings contribution in 2026 because of start-up activity.

Debt Reduction, Liquidity and Repurchases

CoreCivic used a portion of the initial facility-sale proceeds to repay its $575 million revolving credit facility balance and an incremental term loan. The company also plans to redeem $238.5 million of 4.75% senior notes due in 2027 on Aug. 12.

Following taxes and debt repayments, Garfinkle said CoreCivic expects to hold about $1 billion in cash, with total debt outstanding of $739.1 million and $553.3 million of available revolving-credit capacity.

On Aug. 4, the board authorized a $500 million increase to the company’s share-repurchase program, bringing total authorization to $1.2 billion. CoreCivic had repurchased 28.1 million shares for $444.2 million, or $15.82 per share, since the program began in May 2022, leaving $755.8 million available.

Management said it expects to use a substantial portion of remaining facility-sale proceeds for share repurchases, while also considering debt reduction, business investment and potential acquisitions. Swindle said the company has also begun preliminary discussions with ICE concerning possible additional detention-facility sales, though no assurance was provided that further transactions will occur.

Updated 2026 Outlook

CoreCivic raised its adjusted diluted EPS outlook to $1.62 to $1.70, from prior guidance of $1.53 to $1.63. It maintained normalized FFO guidance of $2.61 to $2.70 per share, compared with its earlier range of $2.60 to $2.70.

The company now expects GAAP diluted EPS of $15.00 to $15.20, reflecting the significant gains from facility sales. Adjusted EBITDA guidance was lowered to $440.5 million to $445.5 million from $453.8 million to $461.8 million, incorporating CoreCivic’s estimate of possible contract modifications following the ownership transfers.

Garfinkle said the outlook also assumes modestly higher residential populations than previously forecast, reflecting recent ICE population trends. Guidance does not include the effects of potential second-half share repurchases or any additional facility sales.

About CoreCivic (NYSE:CXW)

CoreCivic, Inc NYSE: CXW is a real estate investment trust specializing in the ownership, management and operation of private correctional and detention facilities in the United States. The company enters into contracts with federal, state and local government agencies to house inmates and detainees in facilities that it owns or operates on a concession basis. In addition to traditional prison operations, CoreCivic provides specialized services such as community-based reentry programs, electronic monitoring and rehabilitation initiatives aimed at reducing recidivism.

CoreCivic's portfolio encompasses a mix of adult correctional facilities, immigration detention centers, residential reentry centers and other community-based programs.

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