CoreCivic Q3 Earnings Call Highlights

Key Points

• CoreCivic raised its 2026 outlook after third-quarter adjusted EBITDA increased 33% to $117.8 million and adjusted EPS rose to $0.49. The company now expects adjusted EPS of $1.74–$1.80 and adjusted EBITDA of $442.5–$445.5 million.
• Higher federal detention populations and newly activated facilities lifted residential occupancy to 84%, its highest level since the pandemic began. ICE revenue increased 34.8% year over year, while federal partners accounted for 53% of quarterly revenue.
• After selling four facilities to DHS for $2.2 billion in gross proceeds, CoreCivic repaid more than $700 million of debt and launched a $500 million share repurchase. Buybacks remain a capital-allocation priority, with $755.8 million of authorization available.

CoreCivic NYSE: CXW raised its full-year 2026 earnings outlook after higher federal detention populations and newly activated facilities helped drive a 33% increase in third-quarter adjusted EBITDA.

The company also detailed plans to prioritize share repurchases after selling four detention facilities to the Department of Homeland Security for $2.2 billion in gross proceeds. CoreCivic continues to manage the facilities, although it expects the change in ownership to result in modifications to its contracts.

Adjusted earnings per share rose to $0.49 from $0.24 a year earlier, while adjusted EBITDA increased to $117.8 million from $88.8 million, Chief Financial Officer David Garfinkle said. Normalized funds from operations, or FFO, rose to $0.75 per share from $0.48.

On a generally accepted accounting principles basis, earnings were $14.49 per diluted share. Garfinkle said five special items increased net income by a combined $1.3 billion, including an after-tax gain of approximately $1.3 billion from the facility sales.

Detention demand lifts occupancy

Residential segment occupancy climbed to 84% from 76.7% a year earlier, its highest level since the onset of the pandemic. CoreCivic reported an average daily population of 60,352 people across the segment, up from 55,236 a year earlier.

President and Chief Executive Officer Lucibeth Mayberry said higher enforcement activity and increased nationwide U.S. Immigration and Customs Enforcement detention populations contributed to the results. Revenue from ICE rose $75.2 million, or 34.8%, while revenue from the U.S. Marshals Service fell $5.2 million. Mayberry attributed some of the Marshals decline to a shift in mix at contracts shared with ICE.

Federal partners, primarily ICE and the Marshals Service, accounted for 53% of total third-quarter revenue. Clinical Solutions Pharmacy, acquired in April, generated $82.8 million in revenue during the quarter.

CoreCivic continues to maintain four idle correctional and detention facilities with 5,500 beds. Mayberry said she expects ICE demand to remain stable, citing available funding and continued use of contracted beds, while acknowledging that government priorities and funding levels could change.

Asked about facilities operating above rated capacity, Mayberry said the company uses flexible space and has limits on the populations it will accept. Garfinkle said the facilities operating above 100% typically house transient populations for relatively short stays and could incur some overtime, but he did not expect the higher occupancy to require additional staffing.

Asset sales fund debt repayment and buybacks

The four facilities sold to Homeland Security contained 7,187 beds and generated approximately $1.6 billion in net proceeds after transaction costs and estimated taxes, Garfinkle said. The company used part of the proceeds to repay more than $700 million of debt during the quarter, a move it expects to save more than $40 million in annual interest expense.

CoreCivic also launched a $500 million accelerated share repurchase agreement in August and initially received 12.4 million shares. The final number of shares will depend on the stock’s average price during the agreement’s term, with settlement expected before the end of the second quarter of 2027.

After the quarter, the board increased the company’s repurchase authorization by $500 million, leaving $755.8 million available under the program. Garfinkle said share repurchases are expected to remain a capital-allocation priority, although the company will also evaluate strategic acquisitions.

Mayberry said discussions with ICE about potential additional facility sales remain preliminary, with no assurance that transactions will occur. The company’s guidance does not include any additional sales.

Full-year outlook raised

CoreCivic raised its 2026 adjusted earnings forecast to $1.74 to $1.80 per share, from $1.64 to $1.73 previously. It also lifted its adjusted EBITDA outlook to $442.5 million to $445.5 million, from $434.5 million to $439.5 million, and projected normalized FFO of $2.78 to $2.85 per share.

Garfinkle said the forecast assumes stable residential populations for the rest of the year, except at facilities still being activated, where populations are expected to rise. It also incorporates the company’s estimate of the financial effect of changes to contracts at the four sold facilities. The anticipated modifications had not yet occurred, contributing to the third-quarter margin beat against CoreCivic’s forecast.

In response to an analyst’s question, Garfinkle offered a rough 2027 adjusted EBITDA estimate of approximately $436 million to $450 million, while emphasizing that the company was still preparing its budget. CoreCivic expects to provide formal 2027 guidance with its fourth-quarter earnings release in February.

Mayberry also addressed the leadership transition announced Sept. 25, when Patrick Swindle stepped down as CEO for health reasons. She said Swindle will remain a special adviser and that the company’s mission and strategy are unchanged.

About CoreCivic (NYSE:CXW)

CoreCivic, Inc is a diversified government solutions company that owns, manages and develops correctional and detention facilities in the United States. The company provides detention and corrections services to federal, state and local government agencies, primarily under contracts that call for the housing and care of individuals in custody.

In addition to secure facilities, CoreCivic operates residential reentry centers and provides community-based services designed to support individuals transitioning from incarceration.

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