CoreCivic, Inc.

Good day, and thank you for standing by. Welcome to the Q4 2025 CoreCivic Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will 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 turn the call over to Jeb Backman. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to CoreCivic's fourth quarter 2025 earnings call. Participating on today's call are Patrick Swindle, CoreCivic's president and chief executive 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 fourth quarter of 2025, as well as financial guidance for the 2026 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 fourth 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. 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, Patrick Swindle.

Thank you, Jeb. Good morning, and thanks, everyone, for joining us for CoreCivic's fourth 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, I will hand the call over to our CFO, Dave Garfinkel, who will provide greater detail on our fourth quarter and full year 2025 financial results, as well as introduce our 2026 financial guidance. Dave will also provide an update on our capital structure, including activity on our share repurchase program and other balance sheet initiatives. First, I'd like to provide an update on our activation activities where we continue to move towards stabilized occupancy in mid-2026. As a reminder, we announced new awards in the second half of 2025 at the 600-bed West Tennessee Detention Facility, the 2,560-bed California City Immigration Processing Center, the 1,033-bed Midwest Regional Reception Center, and the 2,160-bed Diamondback Correctional Facility. While three of the four previously idle facilities continue to receive additional populations, the fourth, Midwest Regional, continues to experience a delay in the intake process as we rate the result of a special use permit application that we filed in December 2025. We've been engaged with the City on the application and the conversations have been productive. In aggregate, and excluding Midwest Regional, these three new contract awards are expected to generate annual revenue of approximately $260 million once our operations normalize. Once we reach stabilized occupancy on these previously idle facilities, which we expect to occur during the first half of 2026, we expect our annual revenue run rate to be approximately $2.5 billion and our annual EBITDA run rate to increase by almost $100 million year-over-year to approximately $450 million. This is not counting Midwest Regional or any additional contract awards. Let me emphasize that point. Our 2026 guidance is consistent with the commentary on our last earnings call, despite excluding Midwest Regional due to uncertainty around initial detainee intake. Once operational, that facility will provide upside to our initial 2026 guidance. Moving to a discussion of the business climate, in early January 2026, Nationwide ICE detention populations were at historical highs of around 69,900 individuals, an increase of almost 10,000 individuals from the end of the third quarter. ICE was our first customer 43 years ago and has been our largest customer for over a decade. From the end of 2024 through the end of 2025, ICE populations in our care increased 5,903 individuals to just over 16,000, or 58%. Nationwide populations from the U.S. Marshals Service, our second largest customer, have declined from the prior year, partially offsetting the increase from ICE as facilities that share contracts between the two agencies have extended the capacity to ICE due to the higher demand. Marshals populations are also down nationwide due to fewer apprehensions at the southern border. Our average daily marshals population has declined by 1,235 individuals from the fourth quarter of 2024. As we continue to look for additional ways to meet our government partners' needs, we believe we can make available substantial capacity to meet future demand. Even after the aforementioned activations, we own five idle corrections and detention facilities containing approximately 7,000 beds. Along with surge capacity we've made available at certain facilities and partial capacity we have in facilities that are currently in operation, we've informed ICE that we could provide it with nearly 13,000 additional beds. And this does not include additional capacity we may be able to provide through other means. We are confident that the detention beds that we provide are the most humane, most efficient logistically, most compliant, most secure, are readily available, and provide the best value to the government. Our Dilley Immigration Processing Facility is a great example. This is a purpose-built facility for family residential housing that we first operated in 2014 under the Obama administration. Last year, we entered into a new agreement that extends into 2030. As part of that contract, we must meet performance requirements based on a combination of rigorous accreditation and government-established performance standards. There are full-time federal monitors onsite to ensure accountability and compliance with the contract. This includes specific quality measures and standards for cleanliness, high-quality food and basic necessities, legal access, medical care, and translation services. For those of you interested in learning more about this facility, I would encourage you to visit our website at www.coursecivic.com where you can take a virtual guided tour. Beyond these federal opportunities, we are seeing an increase in opportunities at the state level as well. In addition to increases in populations under existing contracts, we're in discussions with several states in need of additional bed capacity. One or more of these opportunities could include the use of our idle correctional facilities. These opportunities could transpire in the coming quarters. I'll now move on to a high-level overview of our top-line revenue and fourth quarter operational performance. Federal partners, primarily Immigration and Customs Enforcement and the U.S. Marshals Service, comprise 57% of CoreCivic's total revenue in the fourth quarter. Revenue from our federal partners increased 49% during the fourth quarter of 2025 compared with the prior year quarter. Further breaking down our federal revenue, revenue from ICE increased 124.4 million, or 103.4%, while revenue from the U.S. Marshals Service decreased by 11.3 million versus the prior year quarter. As mentioned, some of this decline is simply a shift in mix where ICE and marshals share a contract. Revenue from our state partners increased 5% from the prior year quarter. This increase includes additional revenue from the state of Montana, resulting from two new contracts we signed with the state since the second quarter of 2024 and population increases in Georgia and Colorado. Total occupancy for our safety and community segments for the quarter was 78.1%, up 2.6 points since the year-ago quarter. The average daily population across all of the facilities we manage was 56,308 individuals during the fourth quarter of 2025, compared with 50,202 in the year-ago quarter. This increase was driven by more demand for our services, new contracting activity, and the Farm Bill acquisition that was completed July 1, 2025. Our teams continue to be successful in working with our government partners in managing the additional people in our care for which we are focused on delivering the highest quality services and environment every day. Our fourth quarter results exceeded our internal projections for adjusted EPS and normalized FFO per share by $0.08 each. and adjusted EBITDA by $8.6 million. Despite full-year 2026 EBITDA guidance near record levels, our stock is currently trading at a discount to our historical trading multiples, which we believe does not reflect the cash flows of our business, particularly considering the ongoing ramp of previously idle facilities giving us good visibility of our growth potential in 2026 and beyond. Therefore, we plan to continue to prioritize our cash flow and share repurchases, taking into consideration stock price and alternative opportunities to deploy capital, among other factors. That being said, we have the balance sheet flexibility to take advantage of other growth opportunities that we may identify. The substantial progress made during the year in reactivating previously idle facilities couldn't have been accomplished without the hard work of our employees and strong relationships with our government partners. I'm confident we have the right plan and the right teams in place to be successful both in these and future activations. In the meantime, we continue to remain focused on effectively managing our core portfolio and ensuring we meet our high operational standards as well as those of our government partners. Without this focus and strong performance, these additional opportunities would not exist. And so as I turn it over to Dave to discuss our fourth quarter financial results in more detail, our capital allocation activities and assumptions included in our 2026 financial guidance, I'd like to again express my appreciation to our 13,000 employees. I want to recognize their focus and commitment to ensuring that everyone in our care is provided a safe, secure, and humane environment, delivering industry-leading quality to every individual for which we are responsible. Dave?

Thank you, Patrick, and good morning, everyone. In the fourth quarter of 2025, we generated GAAP EPS of $0.26 per share and FFO per share of $0.51. Special items in the fourth quarter of 2025 included a $1.5 million net loss on the sale of assets and 0.7 million of M&A charges reported in G&A expense. Excluding special items, adjusted EPS was 27 cents compared with 16 cents in the fourth quarter of 2024, an increase of 69%. And normalized FFO per share was 52 cents per share compared with 39 cents per share in the prior quarter, an increase of 33%. Adjusted EBITDA was $92.5 million compared with $74.2 million in the fourth quarter of 2024, an increase of 25%. Adjusted EPS exceeded average analyst estimates by $0.09 per share, and adjusted EBITDA exceeded average analyst estimates by $9 million. The increase in adjusted EBITDA from the prior quarter of $18.3 million resulted from higher demand and utilization of our solutions by our federal and state partners, including revenue from ICE that more than doubled The number of ICE detainees in our care followed national trends, which reached record highs during the fourth quarter of 2025. We managed approximately 23% of total ICE populations as of both December 31st and September 30th, 2025, compared with approximately 25% at year end 2024. Revenue from our state partners grew 5% and included notable increases from Georgia, Colorado, and Montana. Results for the fourth quarter of 2025 reflect the full activation of the 2,400-bed Dilley Immigration Processing Center, which was completed in the third quarter of 2025. Funding for this facility was previously terminated effective August 9th, 2024, and the facility remained idle until its reactivation in the first quarter of 2025. Fourth quarter results also included startup activities for new contracts at our 2,560-bed California City Immigration Processing Center and our 2,160-bed Diamondback Correctional Facility, where we signed new management contracts during the year. Both of these facilities were idle at the beginning of the year and are expected to reach stabilized occupancy in the first and second quarters of 2026, respectively. These two facilities incurred facility net operating losses totaling $3.6 million in the fourth quarter of 2025. Other factors affecting EBITDA and per share results included higher G&A expense, more than offset by the favorable impact of our share repurchase program and the acquisition of the Farm Bill Detention Center on July 1, 2025. Collectively, these three items accounted for an increase in adjusted EPS and normalized FFO per share of $0.03. Operating margin in our safety and community facilities combined was 22.2% in the fourth quarter of 2025, compared with 23.6% in the prior year quarter. Excluding the four facilities and various stages of activation, operating margin was 24.1% for Q4 2025. As these facilities reach stabilized occupancy, we anticipate further margin growth. Turning next to the balance sheet, on December 1st, we amended our bank credit facility to increase the size of the accordion feature that provides for uncommitted incremental extensions of credit and expanded the capacity under our revolving credit facility from $275 million to $575 million. including the original $125 million term loan, commitments under our bank credit facility total $700 million, which reflects the strength of our accessibility to bank capital and our deep banking relationships. Expanding the size of our revolving credit facility provides us with enhanced balance sheet flexibility while remaining positioned for strategic investments and long-term value creation, such as through our share repurchase program. During the fourth quarter, we repurchased 5.3 million shares of our common stock at an aggregate cost of $97.3 million, increasing our year-to-date repurchases to 11.2 million shares at an aggregate cost of $218.4 million. These repurchases represent 10.2% of our outstanding shares at the beginning of the year and reduced the number of shares outstanding to 100 million as of December 31, 2025. Since the share repurchase program was authorized in 2022, through December 31st, we have repurchased a total of 25.7 million shares at an aggregate price of $399.5 million, or $15.52 per share. As of December 31st, we had 300.5 million available under our Board authorization, which includes an increase of 200 million authorized by our Board in the fourth quarter of 2025, increasing the cumulative repurchase authorization to up to $700 million. After taking into consideration these share repurchases, our leverage measured by net debt to adjusted EBITDA was 2.8 times using the trailing 12 months ended December 31st, 2025. As of December 31st, we had $97.9 million of cash on hand and an additional $311.4 million of borrowing capacity on our expanded revolving credit facility which had a balance of $245 million outstanding, providing us with total liquidity of $409.3 million. Moving lastly to a discussion of our 2026 financial guidance, we expect to generate diluted EPS of $1.49 to $1.59, FFO per share of $2.54 to $2.64, and EBITDA of $437 to $445 million. Consistent with our past practice, guidance does not include the impact of new contract awards not previously announced because the timing of government actions on new contracts is always difficult to predict. Even though we entered into a new management contract with ICE at our Midwest Regional Reception Center last year, our guidance does not contemplate the ramp up of detainee populations at this facility as the intake process continues to be delayed by a claim that a special use permit is required to operate the facility. Although we dispute this claim and consequently filed a lawsuit in state court which remains under appeal, we have nonetheless filed an application for the SUP. Although we can provide no assurance, discussions have been collaborative and we are optimistic in a favorable outcome, which would be upside to our guidance. We still have five remaining EIDL facilities containing 7,066 beds, and we believe incremental demand for more EIDL facilities will likely be needed once ICE absorbs the recently contracted beds. With historic funding levels for border security and immigration detention obtained under the One Big Beautiful Bill Act secured through September 2029, and an expectation of a continued increase in detention bed demand nationwide, as well as growing demand from existing and potentially new state government partners, we believe there are numerous opportunities to activate additional EIDL facilities we own. We also believe there could be opportunities to manage additional bed capacity not currently in our portfolio. These opportunities would also be incremental to our guidance after considering any startup expenses. We plan to spend $60 to $70 million on maintenance capital expenditures during 2026 and $15 million for other capital expenditures. Our 2026 forecast also includes $35 to $40 million for capital expenditures associated with previously idle facilities we are activating and for additional potential facility activations in order to prepare these facilities to quickly accept residential populations if opportunities arise. Approximately $23.5 million of the CapEx associated with activations represents capital expenditures included in our 2025 forecast that was not spent by year end and therefore has been carried over to be spent in 2026. 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 and growth capex such as facility activations to range from $245 million to $259.3 million for 2026. We do not believe the share price of our common stock reflects the value of the cash flows of our business as we are trading below historical multiples despite visibility of cash flow growth in 2026 driven by recent contract awards. Therefore, we expect to prioritize our cash flows to continue executing on our share repurchase program, which has been incorporated into the range of our guidance. The amount of our share repurchases will take into consideration our stock price, liquidity, earnings trajectory, and alternative opportunities to deploy capital. We expect our annual effective tax rate to be 25% to 30%. 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 2026 to range from $160 to $165 million. For modeling our quarterly results, as a reminder, compared to the fourth quarter, Q1 is seasonally weaker because of two fewer days in the quarter, higher utilities, and because we incur approximately 75% of our unemployment taxes during the first quarter, resulting in a collective $0.04 per share decline from Q4 to Q1 and negatively impacting our operating margins. In Q1, 2026, these negative effects are expected to be offset by facility net operating income generated at our California City and Diamondback facilities, which are projected to reach profitability in the first quarter due to the continued intake of detainee populations. I will now turn the call back to the operator to open up the lines for questions.

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. We also ask that you wait for your name and company to be announced before proceeding with your question, and limit yourself to one question and one follow-up. If you wish to rejoin the queue to ask additional questions, you may do so. One moment while we compile the Q&A roster. And our first question for the day will be coming from Raj Sharma of Texas Capital Bank. Your line is open.

Hi. Thank you for taking my questions. So there were no new reactivations in 4Q. Was that because of the government shutdown or, you know, the year end? Also, there's been a lot of talk of warehouses.

So to answer your question, this is Patrick. There were no new contracts that we entered into in the fourth quarter. We have been in active dialogue with our customer, and we're always exploring different ways to support their desired enforcement approach. And so I would really look at the pacing of additional capacity as driven by bed demand. We obviously have available demand within facilities already activating, as we believe our peers do as well. And so you would expect that additional capacity would be added as needed to reflect that. And so I certainly wouldn't take the fourth quarter not having a new award as indicative of lack of potential additional demand. It's more reflective of, I think, the ebb and flow of demand that's presenting. And certainly we're well positioned with 7,000 beds that are presently available in idle facilities, additional 5,000 beds within existing facilities. that are immediately available for use. So, again, we think we're very well positioned both with existing contracts and potentially idle facilities as that demand manifests in a way that requires additional contract actions.

Got it. Thank you. Thank you for answering my question. I'll take it offline. Thanks. Thanks, Raj.

Thank you. One moment for the next question. The next question is coming from the line of Matthew. Arvinder of Jones Trading, please go ahead.

Hey, guys. Thanks for taking the question. You know, you talked a little bit about the safety margins and kind of the expectation for those to improve. You know, is the decline in margin there just kind of as you guys activate these facilities, bring them online like you were talking about with California City and Diamondback?

Yes, absolutely, Dave. So absolutely, that's correct. I think if you backed out the three facilities that were being activated during the quarter, our margin was around 24%. So as those facilities do reach a stabilized occupancy in the first half of 2026, we would expect that margin to continue to grow.

Got it. That's helpful. And then, you know, as a follow-up, you talked a little bit about, you know, the increased opportunities specifically, you know, to manage other facilities. You know, what's your confidence on, I guess, gaining the capacity, you know, for you guys to bring in employees, get it staffed up, you know? Are there any concerns there with staffing that? Just, I guess, what's the dynamic right there at the moment?

So we reactivated our DILI facility very quickly. We're able to staff that rapidly, being able to deliver our activation sooner than we had expected or modeled initially. In our other locations, we've been very successful in being able to staff up. And so we do not believe that our ability to staff would be a limiter in terms of our ability to offer or use our bed capacity. The team is very well structured. They developed operating plans coming into 2025 that would allow them to be able to respond quickly when a new facility activated. We've made preemptive investments across our portfolio to prepare those facilities for use, so really we don't see an inhibitor in our ability to activate either through capital needs or through staffing challenges our ability to quickly respond to demand if it presents.

And I'd add Diamondback, we actually didn't expect that to start taking detainees in until January, but we actually activated that one earlier or began accepting detainees earlier in late December. It didn't have a big impact on the quarter. It was very late December, but it was indicative of our ability to hire and meet the demands of our partner in that case. Yeah, that's great.

Thank you, guys.

Thank you. Thank you. One moment for the next question. Our next question is coming from the line of Greg Gibbous of Northland Securities. Your line is open.

Great. Good morning, Patrick, Dave. Congrats on the results. You know, wondering if you maybe speak to the current contracting environment and how your dialogue with ICE and the DHS has trended of late. And, you know, also maybe wondering along those lines if you could or would be willing to opine on the recent headlines related to the Minnesota pullback that Homan announced and

know possibly uh investors misinterpreting that as a national mandate change sure so um for with your first question uh the way i would answer that is we we are a constant dialogue with our customer as we assess what their needs are and try to evaluate how we can participate in that and so uh that dialogue is very consistent today as it's been all along with both current and prior administrations so we would expect to be actively engaged at all times in discussing What is the need? How can we best support that need? Is that a need that we can deliver high-quality outcomes in a way that we believe we can be successful in supporting their mission? So that's something that we're obviously always focused on, always ensuring that we're well-positioned to be able to step into those places where we believe we can be helpful to our government partners. If opportunities present in a specific way that we give you more detail, we're certainly going to do that at this moment. There isn't a specific update I'd give you in terms of pipeline opportunity, but I can assure you that we remain in ongoing dialogue around how we can best support our partners' mission. Second part of that question is I think you really have to pan back to national enforcement activity and approach. At any given time, ICE is taking different enforcement approaches across the country. And so I think if you were to look at Minnesota specifically as a discrete example, that was a larger scale discrete enforcement action that obviously is a bit different than what we've seen around the country. And so I think to extrapolate the activity or the action that was discussed this morning nationally I think is difficult because I think that was a unique enforcement action. And so if I look across the country, I at this point don't see meaningful changes in enforcement style or approach as that approach has not been consistent with what we saw in Minneapolis because it was a large-scale discrete initiative.

Great. That makes sense. And if I could just maybe ask if you're willing to share any more color on buybacks and intentions there. You know, 10% in terms of shares bought back the year and like five percent in q4 um you know pretty impressive and i just wanted to see if you could provide any um you know additional color on maybe your your how aggressive you'll be with buybacks um going forward yeah sure greg this dave i'll take that one yeah it was a pretty active quarter we had indicated we were going to double the pace of the first three quarters of 2025 in the fourth quarter in fact we we bought back more than double the pace in the fourth quarter

We bought back an average, I think it was $18.25 in the fourth quarter. We're obviously trading lower than that this morning. So we fully expect to continue to buy back shares at this price. Even at the 18th quarter, we felt like it was a good buy, trading at a significant discount to our historical EBITDA multiples. So, yeah, I mean, we have full support of the board, so expect... we would continue to buy back shares subject to any legal limitations that there are.

Got it. Thanks very much.

You're welcome. Thank you. One moment for the next question, please. Our next question is coming from the line of Ben Briggs of StoneX Financial. Please go ahead.

Good morning, guys. Thank you for taking the questions and congratulations on the quarter and the guidance. Um, I've got a couple of quick ones here. So fiscal year guidance is for about 441 million. And I know you said, uh, during the scripted portion of the call that four 50 ish is kind of the new EBITDA run rate. Can you just, can you just clarify, does that 450 EBITDA run rate include the two new contracts that you discussed at the beginning of the call, but not the Midwest regional facility?

Yeah, you've got it exactly right.

Okay. All right, great. And then over and above that, if you were to activate the Midwest regional facility, what do you think the potential EBITDA upside from that would be?

Well, we didn't disclose the EBITDA associated with that facility. I think we did disclose the revenue associated with that facility, so that's probably the best data I could give you. As you look at our full-year guidance for 2026, we do expect still to be at the $450 million run rate in the second half of the year, so if you just back off half of that minus the or 441 is the midpoint of our guidance, minus 225 million for the second half of the year, you get to a little over 100 million per quarter in Q1 and Q2. So that's pretty detailed. There is that dip, as I mentioned in my prepared remarks, from Q4 to Q1. The 4 cent decline from Q4 to Q1 for unemployment taxes and utilities. So, yeah, and Midwest was a $60 million annual revenue.

And just to reinforce, just to add a bit, I would say, you know, when you look at the guidance that we have provided, it assumes no new incremental contract wins. So whether that's Midwest Regional and the ability to activate that facility under the final approval of the SUP, which we're optimistic regarding, but also any other new business opportunities that present would also provide incremental upside. So in terms of visibility into the guidance, this is probably the greatest visibility that we've had in providing guidance in a number of years, given the pace of growth that we're anticipating in 2026.

Understood. Understood. I appreciate that. So I guess my follow-up was going to be, so you have these – So you've got five idle facilities that you said have 7,000 beds over and above these new contract wins. And then did I hear you correctly when you said with surge capacity, the total room for additional population you could have is up to 13,000 beds?

That's correct.

Understood. Okay. I just wanted to clarify that. And then finally, just want to touch on... on the revolver that you guys upsized in the share purchases. Does drawing the revolver remain an option for share repurchases, or are you more likely to fund those repurchases with cash flow operations?

Well, if you take our annual guidance, we always like to use AFFO as kind of the proxy for cash flow available for growth opportunities and buybacks. And if you back out the growth capex that we have for the activations of the idle facilities, you're somewhere in the neighborhood of 200 million of annual cash flow. So that would be available throughout the year without increasing leverage, but certainly, you know, the revolving credit facility can be used for whatever we wish it to be used for. So, yes, it is available.

Okay. Understood. I appreciate it. Thank you guys for the call, and congratulations again.

Thank you. One moment for the next question, please. And the next question will be coming from the line of M. Marin of Vax. Your line is open.

Thank you. So I have a couple of housekeeping questions because you've answered a lot of things on the call and in the Q&A. You did say during the prepared remarks that between the idled facilities that could be reactivated and other means, you have significant capacity for if and when new contracts come online. So in 2025, you've made that one acquisition of Farmville. Are there any other potential small tokens that you've seen come up that might be on the horizon or it's very remote that that would be an opportunity?

We have a business development team that's always actively out looking at opportunities that may be available, and so certainly there's nothing that I would say that's imminent today, but we are going to evaluate opportunities that present, and from time to time there may be opportunities to look at circumstances or situations that would be similar to Farm Bill. we recognize where our stock is trading and it's incredibly valuable at the current trading multiple. So a multiple would have to be pretty compelling to be better than our current stock price. But we do on occasion see those opportunities. And if they do, and we think it's a good strategic fit, we would avail ourselves.

Okay, thanks. And then one other question, which is, and I think other callers, you know, other participants have tried to get at this as well. You have substantial liquidity, and I think that there's, you know, potentially a sense on the street that, you know, your liquidity cannot support everything you're trying to accomplish, you know, between satisfying, you know, new demands for capacity, potentially, you know, increasing capacity through reactivating idle facilities. the share buybacks, and other potential growth initiatives. Could you just touch upon that, you know, particularly in light of the potential for delayed payments from some of your government partners?

I think I know where you're going with that, Em. So, yeah, I mean, we had, you know, at December 31st, over $300 million available on our revolving credit facility. So, really feel like we've got plenty of liquidity to execute our strategy, even despite a slowdown in some collections of receivables. So that, you know, we had, gosh, it was close to $100 million in cash on top of that. So we are not liquidity constrained in executing our strategy. So, yeah, and also during the fourth quarter expanded our revolving credit facility by $300 million through a supportive bank group. So, That bank credit absolutely is now up to $700 million. So we don't feel like we're constrained at all by liquidity.

And maybe to build off that, we've maintained a conservative leverage approach as well. And our EBITDA is certainly growing faster than our debt at this point. And so when you think about leverage policy, we're certainly going to continue to maintain a conservative approach. We're going to maintain appropriate levels of liquidity. We did make meaningful investments in the facilities, our idle facilities, in anticipation of activation. So we did a bit of preloading in terms of the capital that would be necessary to support activation. So we're going to continue to make measured investments as appropriate, take advantage of opportunities to buy back stock based on its attractiveness. But at this moment, there's nothing that we see on the horizon that would cause us to believe we're capacity limited from a capital perspective.

All right. Thanks very much.

Thank you, Em.

Thank you. One moment for the next question, please. And our next question will come from the line of Bill Sutherland of Benchmark. Your line is open.

Hey, good morning. Thanks for taking the question. I thought I'd zoom out a little bit here, just thinking about what the growth trajectory might be over a multiyear period for you guys, given the visibility you have with ICE to 29. and some of the emerging state demand. You know, I look back at EBITDA, even back to 2009, and it's kind of been a very steady range, but no discernible CAGR. So I just wonder, you know, how should we think about a potential CAGR here for the next three or four years? Thanks.

It's a great question. I think, as you've said, you've gone back and done a historical review of the growth rates of the company over multiple years. And I think that's important in that what you typically see is that growth will come in periods of demand with very specific customers. So if you look back over the history of our organization, we've gone through periods where we would see significant demand from the state of California, for example, or significant demand with the Bureau of Prisons, or at present we're seeing meaningful demand from Immigration and Customs Enforcement. What we know is that you've got large aging infrastructure for many of our state and federal partners. You have demand needs that are presenting as both populations grow and service offerings are changing, and we believe we're in a position to provide that. And so I would say we're always going to be in a position where we've got the greatest visibility a year out. but our team is obviously focused well beyond this year and future periods. So I'd love to give you a more precise answer in terms of what would be sustainable growth after the current period, but obviously that's something that we continue to be focused on and we'll give updates as our pipeline develops, both with other federal and state partners, as well as we consider potentially other ways to deliver services to our customers, as we mentioned earlier.

Okay. And I You can't get through a conference call now without a question about AI. So are you all, you know, I guess, what are some of the ways you can apply it to your business model? Obviously, I think, you know, this kind of business is going to be a net beneficiary or just pure beneficiary in terms of efficiencies. How do you think it can be used in your organization?

Well, there are a number of ways that we have contemplated use of AI in our organization. I think the most obvious and straightforward is in back office efficiency. So as we think about our ERP systems and we think about the ways that we support our facility operations from an administrative perspective, we're certainly seeing opportunities to enhance the way that we currently deliver those services. Out in our facilities, there are always opportunities to enhance what we're providing. So whether that be educational opportunities for the individuals in our care, whether that be security tools that we can use both to actively monitor and make our facilities more safe, whether that be making our cameras smarter as we're trying to evaluate activities that are occurring in the facility. There are a number of pilots that we have underway across the organization to explore how we manage may be able to use AI to enhance our services, but I would say we're also very sensitive to the fact that we are in an environment where we're managing care for individuals and want to be sensitive to what we use and how we use it so we can ensure that it's being used effectively. So we do hope to give updates in future quarters. We did make a meaningful investment this year in our team. We hired an executive leader, Laura Groschen, to step in as our chief information and digital officer. I would view that as indicative of the investment that we're making to bolster our technology team and grow and build out our capabilities. We do believe that's part of our future. And again, we'll have more to update on future quarters as we are able to talk more specifically around some of those opportunities, some of which may be ultimately commercializable.

Got it. Thanks so much.

Thank you. One moment for the next question. And our next question is coming from the line of Joe Gomez of Noble Capital. Your line is open.

Good morning. Thanks for taking my question.

Good morning, Joe.

So let's go a little blue sky here. You talked about potential upside for Midwest markets. Let's assume ICE has got the 10,000 new enforcement employees up and running, increasing the pace of detainees out there. I think you talked about 12,000 or 13,000 beds between existing contracts and idle facilities. If we got to the point where ICE was to contract for those or fill all of those beds, what could that mean for upside in terms of revenue in EBITDA?

Well, it's a tough question to answer. I guess if you took 13,000 beds, an average per diem, I don't know, just say $125 a day, that's $593 million of of incremental revenue. And if you assume we're on a 23% margin in the fourth quarter, that's $136 million of incremental EBITDA, just to kind of use publicly available numbers in our reports.

Okay. So it's potential nice upside. Again, blue sky, but just be nice to see that. And then, you know, the One of the big questions I think are concerns for investors out there has been the pace of detention by ICE, that it's been below what, you know, people out, you know, investors had thought was going to be. I think people thought, you know, we'd be at that 100,000 level. We're at, you know, 70, a little over 70,000 here. And what is your kind of viewpoint here? What are you seeing in terms of the pace of detention? Have you seen it starting to crawl back up here? We're still waiting to kind of see more of a measured pace here in terms of detentions.

I would answer that through a couple lenses. I guess one of them is if you go back to the end of the prior administration, coming into the current administration, you were looking at roughly 45,000 funded beds that were operational. And so you now have increased to just over 70,000 beds in a fairly short period of time. I think one of the things that at least has been apparent to me throughout this process is the expectation that one can see a significant change in the infrastructure and ecosystem occur immediately. And when you're looking at the way that ICE approaches enforcement action, nothing occurs immediately. And I think as maybe you or someone else noted, the organization had not fully ramped its team until really the end of the year last year. As we think about timing, it does take time because it is a very complex ecosystem, and as that ecosystem grows, it's going to result in additional bed demand. It has been slower than I think some thought might occur, but certainly when you take a step back at the 30,000-foot level and look at the magnitude of the scale that's already increased, as well as the timing of when the additional enforcement infrastructure was put in place, one can reasonably expect you would see continued growth.

Okay, great. Thank you. Congrats on the quarter.

Thank you.

Thank you. One moment for the next question. The next question is coming from the line of Kirk Letick of Imperial Capital.

Patrick, David, can you hear me? Hi, Kirk. morning in your repaired remarks I think you said at year-end ice detained what sixty nine thousand nine hundred and of which you detained sixteen thousand occasionally you see press reports that that ice is exploring other ways of housing detainees repurposing industrial spaces, warehouses, things like that. I'm just curious where that stands. Do you know offhand how many people are detained in facilities other than the facilities, your facilities or GEO's facilities?

Yeah, I'll take that one, Kirk. Yeah, correct. The administration has pursued a number of alternatives since the beginning of the administration. You had... you know, facilities like Guantanamo Bay, Alligator Alcatraz, some international options, some state capacity, blocks of state capacity. And I would say, I think the last time I looked at the total number of people in detention in those alternatives was somewhere in the 5,000 range.

Okay. Is that pretty stable or maybe, you know, I hate to ask you to provide guidance on something like that, but do you see that increasing? Do you think that's a viable alternative for ICE?

Ice is going to continue to look at different ways to meet their capacity requirements. As you look at, obviously, the bed need and availability, we have beds available in specific parts of the country. Our competitors have beds available in specific parts of the country. Sometimes the demand can be national, sometimes it needs to be more localized. And so depending on locationally where that demand is manifesting, you could see traditional capacity used or you could see other alternatives used. I think there's certainly a lot of exploration in terms of different ways that the goal in Michigan can be accomplished and we believe we could be part of some of those and some of those are probably not best suited for our business model. But certainly I think that will be an ongoing conversation the administration thinks about how they can best innovate service delivery and make sure that they have the right beds in the right location they need to support their mission.

Interesting. Thank you. So it's not that the populations are different. It's more of a geography, geographical consideration?

We don't see meaningful differences in populations across the facilities that we operate. Obviously, there are classification differences within each facility, but facility type is really less about having a dedicated specific type of facility for a particular population then it is about being appropriately located geographically based on where demand is presenting. Again, some demand is national, so it doesn't matter the location as long as you have a transportation infrastructure that's in place to be able to support that mission. In other cases, there's a preference that it be in specific areas where incremental need may be higher, which may make a distant facility not as viable.

Got it, okay, that's very helpful, I appreciate it, thank you. And I don't know of anywhere that ICE actually discloses the level of actual deportations or detentions, but did you, if that's available, I'd love to know, or any way to back into that, but do you see anything on the horizon that would allow detentions to step up other than just building out the network incrementally? Do you see any big events that facilitate a ramp in detentions?

I believe it's really the build-out of the enforcement infrastructure and the completion of training of those individuals who are being hired and then those folks being deployed to go out and enforce the mission. So I don't view it as much sort of a singular event as I do a progressive build of infrastructure that results in higher levels of enforcement, assuming that the policy remains static.

Got it. Okay. I appreciate it. Thank you. You're welcome.

Thank you. And this does conclude today's Q&A session. I would like to turn the call back over to Patrick Swindle for closing remarks. Please go ahead.

Thank you, operator. Since there are no further questions, I'd like to thank you all for joining our call today. We take very seriously the responsibility that we have in managing care of more than 55,000 individuals each day. We're grateful for the confidence our partners place in us as our 13,000 employees strive to deliver the highest quality services and programming for those in our care. Just this last weekend, we were able to celebrate the exemplary service of three of our correctional facilities and three of our residential reentry facilities at their triennial ACA reaccreditation hearings with near perfect scores. This is just a small example of the work our team does, but it's indicative of the excellence that we aspire to every day. Our team has also done an exceptional job delivering positive results in our core portfolio and successfully ramping our activating facilities. Our guidance, with assumed EBITDA and EPS growth of 21% and 40% respectively, both as a midpoint, is the most significant annual growth of our organization as forecast in many years. As a reminder, this growth assumes only already awarded contracts, excluding Midwest Regional, which is successfully activated would be additive to this initial guidance, as would any additional opportunities that present to provide additional services to our federal, state, or local partners. Lastly, we believe that our shares remain significantly undervalued. Using the midpoint of EBITDA guidance, our shares are currently trading at roughly six times for EBITDA, well below our historical trading ranges. We're obviously evidencing our view of value with an active share repurchase program that increased in intensity during the fourth quarter while maintaining our consistent balanced leverage position. We're optimistic that as we successfully deliver on our outlook for this year, we'll see this value recognized in our shares. With that operator, we'll close out our call for today. Have a great day, everyone.

Thank you. This concludes today's conference call. You may now disconnect.