CoreCivic, Inc.

Good day and thank you for standing by. Welcome to the CoreCivic first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 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 Grand, Managing Director of Investor Relations.

Thank you, Operator. Good morning, everyone, and welcome to CoreCivic's first quarter 2025 earnings call. Participating on today's call are Damon Heiniger, CoreCivics Chief Executive Officer, Patrick Swindle, CoreCivics 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 2025, as well as updated financial guidance for the 2025 year. 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 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 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 investor's page of the company's website at CoreCivic.com. With that, it is my pleasure to turn the call over to our CEO, Damon Heiniger.

Thanks, Mike. Good morning, and thanks, everyone, for joining us for CoreCivic's 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 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 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 DILI 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 27th, we announced contract modifications for our 2016-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 5th, 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 priority. 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 10th, 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 9th, 2024. We did not operate the Dilley facility from August 9th of 2024 until the resumption of operations at the facility on March 5th, 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 our initial population at the DILI facility just 31 days after amending the contract, an accomplishment only possible due to months of pre-planning 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 course of it to begin activation efforts while we engage collaboratively with ICE to negotiate and execute a longer term contract. On March 7th, we commenced a letter contract at our 1,033-bed Midwest Regional Reception Center in Leavenworth, Kansas. On April 1st, 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 capbacks 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 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 7th 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 one million aliens annually. In contrast, ICE's budget currently funds 41,500 beds. In this document, ICIS 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 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 a budget reconciliation process. Republicans are currently aiming for reconciliation by Memorial Day, but that could slide to July 4th. 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 three times 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 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 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 state side, 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 1st. 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 RFPs for several different facilities with the Florida Department of Corrections. Now I'll pass it over to Patrick Swindoll for an overview of operations during the first quarter.