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Operator: Good day and thank you for standing by. Welcome to the CoreCivic’s First Quarter 2025 Earnings Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. 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 Grant, Managing Director of Investor Relations.

Michael Grant: Thank you, Operator. Good morning, everyone, and welcome to CoreCivic’s first quarter 2025 earnings call. Participating on today’s call are Damon Hininger, CoreCivic’s Chief Executive Officer; Patrick Swindle, CoreCivic’s President and Chief Operating Officer; and David Garfinkle, 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 2025 as well as updated financial guidance for the 2025 year. We’ll 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 2025 earnings release issued after market yesterday as well as in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q, and also 8-K 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 also discuss certain non-GAAP metrics. 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 corecivic.com.

With that, it is my pleasure to turn the call over to our CEO, Damon Hininger.

Damon Hininger: Thanks Mike. Good morning, and thanks, everyone, for joining us for CoreCivic first quarter 2025 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. Finally, we will turn the call over to our CFO, Dave Garfinkle, 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 42-year company history have we had so much activity and demand for our services as we are seeing right now. 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 $488.6 million 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. Similarly, EBITDA exceeded plan coming in at $81 million. Both metrics were up meaningfully from the fourth quarter of 2024, but down slightly from the first quarter of last year when our Dilley 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 2,016-bed Northeast Ohio Correctional Center in Youngstown, Ohio, our 1,072-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 784 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 258 beds. 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 Dilley Immigration Processing Center in Dilley, Texas, a facility operated by CoreCivic and owned by a third-party.

The term of the amended IGSA, which expires in March of 2030, and it may be further extended by mutual agreement. We anticipate total annual revenue once the facility is fully activated to be approximately $180 million. As those who follow the company will recall, we previously received notification from ICE on June 10, 2024 after nearly 10 years of operation of ICE’s intent to terminate funding of the IGSA for services at the Dilley facility effective August 9, 2024. We did not operate the Dilley facility from August 9, 2024, until the resumption of operations at the facility on March 5, 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.

Patrick will share more about this activation development, but I’m proud to share that we began receiving an initial population at the Dilley facility just 31 days after amending the contract, an accomplishment only possible due to months of pre-planning by our hard working 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 CoreCivic 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 1,033-bed Midwest Regional Reception Center in Leavenworth, Kansas. On April 1, we signed a letter contract for our 2,560-bed California City Immigration Processing Center in California City, California.

We continue to have active conversations with ICE regarding their increased secure 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 million to $45 million of capital expenditures related to facility activations and transportation services. And based on our opportunities, we are now adding another $25 million more for facility activation expenditures.

In its April 7 document titled Justification for Other than Full and Open Competition, I cite the need for nearly 100,000 beds based on the Laken Riley Act, three executive orders around border security, and the administration’s goal of removing 1 million 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.

Our current outlook is that we are still moving 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 a 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 billion over the four years ending in 2029 for immigration detention, which if annualized would be over 3x the current detention budget.

The Senate has not yet shared its version, but we believe support for ICE is strong there too. Our belief is that most new contracts with ICE will come after funding is 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 42 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. 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 that are 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 will — that we expect will be under contract.

So we continue to have in excess 20,000 beds that could be available for ICE if they get additional funding through reconciliation. 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 are awarded a new management contract with the State of Montana to care for additional inmates outside the State of Montana, with 240 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 2026 and contract extensions could run as long as seven years. Also, during January of 2025, we received 120 additional Montana inmates at our 1,896-bed Saguaro Correctional Facility in Eloy, Arizona, under an existing contract. 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 644-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-19 pandemic period. We are generally encouraged by the direction of the budget proposals. 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 the RFPs for several different facilities with the Florida Department of Corrections. Now I’ll pass it over to Patrick Swindle for an overview of operations during the first quarter. Patrick?

Patrick Swindle: 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. Occupancy has been on an upward trajectory since early 2023 when it sitted approximately 70%. This quarter also showed a month-to-month trend in improving occupancy with increases in ICE detention population levels beginning in late January. Federal partners, primarily Immigration and Customs Enforcement, and the U.S. Marshal Service, comprised 48% of CoreCivic’s total revenue in the first quarter. Revenue from our federal partners declined 8% during the first quarter of 2025 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 2024. 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. Now, I’d like to discuss ICE’s usage of detention capacity nationally across all facilities. ICE started the quarter with this national detention population at 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 April 6, 2025. CoreCivic’s share of the total detention population has remained roughly steady during this period of expansion and we’ve increased from roughly 10,000 ICE detainees in our facilities at the end of 2024 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. 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 180 days, which commenced on March 5. The fixed revenues scale accordingly. While the activation plan called for CoreCivic to have the first two neighborhoods ready to receive detainees after 60 days, CoreCivic was able to mobilize even more swiftly and we received our first detainees just 31 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 360 employees and growing at Dilley. Target Hospitality Corporation, our real estate partner at Dilley has 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 are 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 1,033-bed Midwest Regional Reception Center located in Leavenworth, Kansas, has begun preliminary activation steps under a March 7 letter contract with ICE. 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. Similarly, we have begun preparation activities at our 2,560-bed California City Immigration Processing Center in California City, California, under a letter contract signed April 1, 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. This is a significant increase in our fleet and we believe this capacity will be necessary to accommodate ICE’s 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 2024 and the first quarter of 2025. 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 240 inmates at our Tallahatchie County Correctional Facility in Tutwiler, Mississippi. 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-19 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 have 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. 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 their 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. 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 2024, 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. 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 Garfinkle 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: Thank you, Patrick, and good morning, everyone. In the first quarter of 2025, 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 million, exceeding average analyst estimates by $10 million. 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 $8.5 million, adjusted EPS declined $0.02, and normalized FFO per share decreased $0.01.

These year-over-year declines resulted from the termination of our contract with ICE at the South Texas Family Residential Center effective August 9, 2024, and a lease expiration with the State of California effective March 31, 2024, at our California City Correctional Center. These terminations combined for a decrease in facility net operating income of $22.6 million or $0.16 per share from the prior year quarter. During the first quarter, we began reactivating the South Texas facility now known as the Dilley 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 April 1, 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 2025 compared with the prior 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 2025 results also include an income tax benefit associated with stock-based compensation vesting and certain payroll tax credits aggregating $0.04 per share, which compares to a $0.02 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 $0.03 per share through reductions in interest expense and common shares outstanding. Federal revenue in our safety and community segments decreased $21.1 million from the first quarter of 2024 to the first quarter of 2025, including a reduction in management revenue at the Dilley facility of $33.6 million.

So excluding this facility, federal revenue in our safety and community segments increased $12.5 million or 5.6%. State revenue in the safety and community segments increased $9.8 million or 5.2% from the first quarter of 2024 to the first quarter of 2025, which included revenue from two new contracts with the State of Montana awarded in the third quarter of 2024 and the first quarter of 2025. Revenue in our property segment declined $8.4 million 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 2025 compared to 23.7% in the prior year quarter. The slight decrease in our operating margin was due to the termination of the ICE contract at the Dilley facility. As we have previously mentioned, the margin at the Dilley 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 Dilley facility. Excluding the Dilley facility, operating margin was 22.2% in the prior year quarter. The increase in our operating margin excluding the Dilley 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.

Turning next to the balance sheet. During the first quarter, we repurchased 1.9 million shares of our common stock at an aggregate cost of $37.9 million under our $350 million 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 16.5 million shares of our stock at a total cost of $219 million or an average price of $13.30 per share. As of March 31, we had $131 million available under the Board authorization. Our leverage, measured by net debt to adjusted EBITDA was 2.5x using the trailing 12 months ended March 31, 2025, right in the middle of our target range of 2.25x to 2.75x. As of March 31, we had $75 million of cash on hand and an additional $256 million of borrowing capacity on our revolving credit facility, providing us with total liquidity of $331 million.

Our next debt maturity is October 2027 when $238.5 million 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 $1.50, up 23% at the midpoint and we expect EBITDA of $331 million to $339 million, up from $281 million to $293 million or 17% at the midpoint. The single largest factor in our increased guidance is the reactivation of the Dilley Immigration Processing Center effective March 5.

The new agreement for the Dilley 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 2025 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 1,033-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.

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 agreement 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 and 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. 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 million to $65 million on maintenance capital expenditures during 2025, unchanged from our prior guidance, and $9 million to $10 million for other capital expenditures, up slightly from our prior guidance. Our 2025 forecast also includes $65 million to $70 million of capital expenditures associated with potential idle facility activations and for additional transportation vehicles, including $12 million spent in the first quarter. We have increased this forecast by $25 million 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 2.25x to 2.75x.

Although, we continue to evaluate M&A opportunities, which if completed, would most likely include transactions in our core business. Our guidance does not include any M&A activity. However, we could deploy additional capital into M&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&A opportunities under evaluation, we would expect to finance such M&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. 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&A activity, and growth CapEx, such as facility activations, to range from $187.5 million to $200.5 million 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. We are forecasting G&A expenses in 2025 to be between $145 million and $150 million, 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’ll conduct the question-and-answer session. [Operator Instructions]. Our first question comes from Joe Gomes with Noble Capital. Your line is open.

Joe Gomes: 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: 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. 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.

So 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: Just I mean 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. And then the Cal City facility becoming available at the end of March of last year. And that’s in a strategic location. So a great facility for ICE could potentially even be used for the U.S. Marshals Service. But those are two key facilities we are really pleased to get under letter agreements. And then of course, the Dilley facility, which is not a letter agreement, it’s extended to the longer-term contract stage, between Cal City and Dilley, those were really two key facilities we were prioritizing at the beginning of the year. So good to get those across, at least Dilley across the finish line in the letter agreement with Cal City.

Damon Hininger: One thing I’ll also add, Joe, is that again I’ve been with the company almost 33 years, almost 16 years as CEO. I’ve never seen the intensity and activity on ICE’s part to secure capacity. Again these letter agreements are a new tool that are 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 got 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, but actually making efforts to tour the facilities, see our capabilities, see maybe some CapEx that could be deployed to be able to put not only additional transportation assets in place, but also maybe courts and other services to help support the mission. So a lot of activity is the bottom line.

Joe Gomes: Okay. And then the additional $25 million CapEx that you announced, how many more facilities could that stand up?

David Garfinkle: Yes, good question, Joe. I 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, that we’re investing in to have ready. They obviously depending on how long they’ve been idle, have different levels of CapEx. 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 million or maybe even as high as $50 million 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, that could include potential state contracts as well. So we want to position these facilities to be available for the next customer that would use them.

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

Damon Hininger: Yes, great question Joe. And the bottom line is we’re very interested. We’re very interested. We’ve been monitoring this very closely. As you’ve probably seen the press, 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 Dilley, we just again reactivated it in 31 days. But going back 10 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. And I think we did it within I think probably 80 to 90 days.

So we’ve got the capability to provide something very quickly that they’re anticipating on some of these military reservations. I also say that in addition to our experiences at Dilley, we’ve got obviously great capacity and ability to do transportation that may be needed on this site. So it’s very consistent with what we do on the detention side with our other facilities, but also again, we’ve got the capability to do it very, very quickly. I talked about Dilley, 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. So 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 site that we’ve seen from ICE here in the last 90 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 in 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 the country. But anything you can add to that, Dave?

David Garfinkle: 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, that as Damon just mentioned, we’d be interested in, could provide and could put up fairly quickly as well.

Damon Hininger: 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 250 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 anticipating for these military reservations. 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: Great, thanks. I’ll let someone else ask a couple questions.

Damon Hininger: Thank you, Joe.

David Garfinkle: Thanks Joe.

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

Jay McCanless: 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 doing more transportation work for ICE?

Damon Hininger: Yes, probably a little hard to put a number to it. We could maybe talk to you offline and give you a ballpark. But 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 of 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. But again, we can work with you a little bit offline and give you at least a ballpark.

Jay McCanless: Okay. That sounds great. And then also wanted to you guys talked about looking at some different facilities, and your partner — you guys have partnered with Target Hospitality, I 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: Yes, probably be a little inappropriate for me to give a lot of clarity on that. We — again, we 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 type of mission. So I wouldn’t want to necessarily say we’re looking at these various facilities around the country for obvious competitive reasons. But again, we’re — 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. Anything you’d add to that, Dave?

David Garfinkle: 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 contract. 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: That’s great. And then, the last question I had, you guys said in the prepared comments that BOP starting to get more active on the community side, I guess. What — anything you can tell us there? Have you seen any more push out of Pam Bondi or justice in terms of the First Step Act?

Damon Hininger: Yes, great, 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’s 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. Not only on the community side, but also maybe on the secure side that they’ll start making those kind of priorities and goals known out to the private sector. 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 to 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 anything you’d add to that, Dave.

David Garfinkle: Yes, 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. 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.

Jay McCanless: That’s great. Thanks, guys. Appreciate it.

Damon Hininger: Yes, sir.

Operator: Thank you. Our next question comes from M. Marin with Zacks. Your line is open.

M. Marin: Thank you. So in your prepared remarks and now in the Q&A, you’ve mentioned some of the competitive advantages that you see with your facilities versus other options for government partners, 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: 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 MAR service in 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 MAR 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. And so ICE, they may want the tension capacity, but they also may want transportation or they want a specialized medical component that’s got infirmary beds. And 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 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 themselves, 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 U.S. and if you look at those numbers, I mean, we are really, really, really cost competitive 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 service we provide. I don’t know if you can add to that, Dave.

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

M. Marin: 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 started 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 specifically for ICE’s needs. If you look at your overall portfolio, the facilities that are currently idle, and you’re thinking in terms of strategic location, you’ve been talking about the Kansas, 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: Yes, that’s a 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. And I think ICE would find that very attractive just because of proximity to Memphis and obviously the transportation hub there with I-40 going through Memphis. So that would be one. Second, this is an obvious one, but Oklahoma, I mean centrally located, period. So our capacity at both our Diamondback facility and our Norfolk facility, which again right there on I-40 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. And again, I 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, Montana, makes our Kit Carson and our Warefield facilities very attractive to ICE. So I’d say those were probably the next one is kind of top of the list. We obviously 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. So that would be a great location. And 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 I think will be very attractive. But anything you add to that, Dave?

David Garfinkle: Just the beds in Oklahoma, they’re sizable, they’re scaled so Diamondback’s 2,160, North Fork’s 2,400. So those are very large facilities. And when you get large facilities like that, if they need that type of demand, if the demand’s there, can certainly offer a more competitive per diem compared with a smaller facility where per diem could be — wouldn’t be able to compete as well as large facility like those two.

M. Marin: Okay. Thank you very much.

Damon Hininger: Appreciate your question.

David Garfinkle: Thanks, M.

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

Greg Gibas: Hey, good morning, Damon, Dave, Patrick, thanks for taking the questions. Congrats on the quarter. I wanted to ask on the puts and takes, I guess of the $48 million EBITDA range increase at the midpoint, Dilley obviously being the primary one. But could you maybe discuss the drivers or pieces of the increase in your guidance assumptions?

David Garfinkle: Sure, I’ll take that one, Greg. Certainly, the Q1 beat was like I think we were $13 million higher than our internal forecast $10 million higher than average analyst estimates. So that’s obviously being carried through. You mentioned the Dilley facility that will be ramping up, 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 increase 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. So those are really impactful as well. On the expense side, I’d say probably status quo.

On the expense side, 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 Cal City facility, the longer-term contracts are not baked in. 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’ll — we’re in discussions with most state legislatures right now or legislatures are in session and we’ll see where we come out on that. There potentially could be upside with per diem increases there, but that, that we won’t know that for another couple months.

Greg Gibas: Got it. That’s helpful, Dave. And guessing there’s nothing specific that you can share here, but do 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? And do you think it would have to be post budget reconciliation?

Damon Hininger: Yes. Great. 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 10 days. And so we’re thumbing through it and making notes. 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 finalized terms. So hard to say today exactly the timing, but I think it’s going to be days and weeks, not — 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 again 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. But Patrick, let me — let you kind of add or amplify to this.

Patrick Swindle: Sure. Thank you, Damon. Thank you for the question. I’d offer two additional thoughts. One of them is normal activation for a mothball facility would be 120 to 180 days. And so the value of a letter contract is it really allows us to go fully into activation mode for those facilities. And over the six months, we’re under the letter contractor agreement; put ourselves in a place where when the final agreement is in place, we’re able to begin ramping up the facility operations very quickly. In other words, we can be ready for receipt of the first group of detainees even in 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 need.

So 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. And 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. And so I think certainly that is one pathway toward a contract and an activation. There are also others that are available to us as well. And 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: 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 the potential rebidding of the ISAP contract and positioning CoreCivic for that and maybe anything you’ve heard on it.

Damon Hininger: Yes. Thank you for that question. I 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 years of couple of years for the rebid of this contract. We’ve 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. Anything to add to that, Dave?

David Garfinkle: No. I think you covered it, Damon.

Greg Gibas: Got it. Thanks very much.

Damon Hininger: Yes, sir.

Operator: Thank you for your questions. [Operator Instructions]. Our next question is from Benjamin Briggs with StoneX Financial. Your line is open.

Benjamin Briggs: Hey guys, thank you for 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: Well, we currently don’t have a contract with ICE for ISAP. That’s again completely under the contract that GEO and BI’s got at the moment. So we’ve got contracts but with other jurisdictions.

Benjamin Briggs: Okay. So I guess under — that’s what I’m referring to, under those jurisdictions, how many individuals are you monitoring?

Damon Hininger: Oh, keep me on with your, Dave, I want to say it’s a probably 20,000 to 30,000.

David Garfinkle: Yes. I was thinking more towards the 20,000, but it may have grown. So yes, that’s probably about right.

Benjamin Briggs: 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: It’s relatively fast. And again, we’ve been watching this agreement and this requirement for, gosh, probably going on six, seven years. And so we’ve got again the 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. We know where we have to kind of ramp up leases for probably storefront office space. And again, from a 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 eyesight to help support that activation. So yes, we got — 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: Yes, something we do differently. 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 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 ISAP contract or potentially larger. So we’re very comfortable with our ability to scale there.

Benjamin Briggs: 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: Yes, correct. That’s a good way to frame it.

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

David Garfinkle: Well, I’d say I know I get back into that, but I think last call we said it was probably anywhere from $250 million to $275 million. We’ve activated Dilley, probably without putting any further pen to paper, it’s probably, oh gosh, the $200 million to $225 million in EBITDA as well, if we activated all of them at this point, that would be the upside.

Benjamin Briggs: Okay, got it. $200 million to $225 million 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. There have to be budget appropriations and you’re waiting for some government sign offs. But as far as what the pace is for a ramp, when do you think is a fair time to model to you guys sitting, call it a run rate peak EBITDA. Do you think by second half of 2026 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: Yes, 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 off the contract with Dilley, we’ve talked about the letter contracts leading into permanent contracts in 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 being the next round of most attractive capacity to ICE. 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. They 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 then will be a catalyst especially to get if it’s a letter contract going into a permanent contract because I think again they’ll want to 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 come 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, definitely the August, August Recess.

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

Patrick Swindle: Thank you, Damon. Only thing that I would add is I think 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 2026.

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 2026 is a reasonable assumption for when we could hit peak EBITDA run rate based on the demand level that ultimately presents.

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

Damon Hininger: Yes, sir. Thank you.

Operator: Thank you for your question. Our next question comes from Kirk Ludtke with Imperial Capital. Your line is open.

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

Damon Hininger: Thanks, Kirk. No problem.

Kirk Ludtke: I just had a assuming — let’s assume 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 1 million a year. You mentioned 100,000 beds. Is that roughly the relationship there?

Damon Hininger: 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 1 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 the funding through reconciliation, but at the moment feels like a pretty good number. Patrick, I don’t know if there’s anything you’d add to that.

Patrick Swindle: Nothing to add, Damon.

Kirk Ludtke: Great. Thank you. And do you have a sense for when they’ll get to 1 million, a run rate of a million a year?

Damon Hininger: Oh, 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 a ramp plan.

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

Damon Hininger: Yes, exactly right. We don’t see them as competition. And I think there’s probably strategic and political reasons why some of those locations makes sense. But again, for all the reasons, we’ve talked about, 42 years in business, highest quality, best audit scores, logistically more favorable. We’re 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 yes, don’t see it as competition.

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

Damon Hininger: Yes, sir.

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

Jordan Hymowitz: Thanks, guys. Couple questions. If the numbers you’re talking about come to fruition, it seems like in the second half of 2026, you guys could be in a place to initiate a close to a double-digit dividend yield if you don’t do M&A. Is that a reasonable thought process? You’re not going to take the debt down any more than 2x to 2.25x, are you?

David Garfinkle: 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 repurchases more compelling at this point. But if we were to execute on a number of contracts and the stock price responds, obviously, we don’t want to overpay for shares. So at that point, a dividend might make sense.

Jordan Hymowitz: 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&A candidate? They were approached by a different private equity. But might that potentially fit with your M&A potential list of things?

Damon Hininger: Wow, what a direct question, Jordan. This never crossed our mind. They’re a great, great partner and obviously 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: 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: 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. And 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: Okay, thank you.

Damon Hininger: Yes, sir.

David Garfinkle: Thanks, Jordan.

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

Damon Hininger: 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 Officers and 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 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 and they are obviously executing really, really effective like 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 the CoreCivic. With that, we’re adjourned. Thank you so much for participating in today’s call and thank you again for your continued support of the company.

Operator: This does conclude the program. You may now disconnect.