Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Thursday, May 7, 2026 at 11 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Patrick Swindle
  • Chief Financial Officer — David M. Garfinkle
  • Vice President of Finance — Brian Hammonds

TAKEAWAYS

  • Total Occupancy (Safety and Community Segments) -- 79.6%, a 2.6-point increase compared with the first quarter of 2025.
  • Average Daily Population -- 57,243 individuals, up from 51,429; increase attributed to higher demand, new contracts, and the FarmVille acquisition.
  • Federal Revenue Share -- Federal partners, primarily ICE and U.S. Marshals Service, accounted for 58% of total revenue.
  • ICE Revenue Change -- Revenue from ICE rose $128.1 million, or 96.2%, while U.S. Marshals Service revenue declined $12.2 million, signaling a contract mix shift.
  • ICE Detainee Population -- ICE populations in CoreCivic (CXW +3.07%) care up roughly 4,500 individuals (45%) from the beginning of 2025 through March 31, 2026, but dropped by about 3,000 from January through April 30, 2026.
  • Idle Facility Activation -- Five idle facilities were activated to meet ICE demand during the period.
  • Key Facility Updates -- At California City Detention Facility: 1,817 individuals housed as of March 31, 2026; at Diamondback Correctional Facility: 735 individuals housed; Midwest Regional Reception Center began accepting detainees following special use permit approval.
  • Midwest Regional Reception Center Impact -- This facility is projected to add $0.05 to $0.06 incremental EPS for the rest of 2026, now included in revised guidance.
  • State Partner Revenue -- Revenue from state partners comprised 33% of total revenue and rose 3.6%; excluding the Trousdale transition, grew 5.2%.
  • Share Repurchase Program -- 2.3 million shares repurchased in the quarter for $44.7 million; cumulative repurchases since 2022 total 28.1 million shares at $444.2 million aggregate, average purchase price $15.82.
  • Adjusted EPS -- $0.40, an increase of 74% compared with $0.23 in the first quarter of 2025; adjusted EPS exceeded analyst estimates by $0.12 per share.
  • Adjusted EBITDA -- $110.1 million, up 36% from $81 million; exceeded analyst estimates by $13.3 million.
  • Liquidity Position -- $209.7 million cash, $131.3 million revolver availability with $425 million outstanding, totaling $341 million liquidity as of March 31, 2026.
  • Net Debt to Adjusted EBITDA -- 2.8x trailing twelve months at quarter end.
  • CSP Acquisition -- Clinical Solutions Pharmacy acquired post-quarter for $148 million, funded with cash and revolver borrowings; expected to deliver $215 million to $230 million in 2026 revenue and $0.03 to $0.05 EPS contribution, net of interest.
  • Incremental Term Loan -- $100 million term loan completed in April 2026 to replenish revolver draw for CSP acquisition; term loan has 364-day maturity and is prepayable without penalty.
  • 2026 Guidance (Revised) -- Adjusted EPS of $1.53 to $1.63 (previously $1.49 to $1.59); adjusted EBITDA of $453.8 million to $461.8 million (previously $437 million to $445 million); updated for Midwest facility and CSP, partially offset by lowered ICE outlook.
  • Maintenance and Growth Capex -- Projected $60 million to $70 million for maintenance, $15 million for other capex, and $40 million to $45 million for facilities being activated or reactivated in 2026.
  • 2026 Effective Tax Rate Guidance -- Expected annual rate of 25% to 30%, unchanged from prior guidance.
  • Availability of Idle Facilities -- Five idle facilities with 7,066 beds remain, providing potential for additional future activations.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • ICE populations in CoreCivic care declined by about 3,000 individuals between January and April 30, 2026, with management expecting a sequential decline in per-share results for the second quarter due to this reduction.
  • Updated 2026 guidance includes a reduction of $0.09 to $0.15 EPS for lower ICE populations compared with prior forecast, reflecting uncertainty in immigration enforcement and related government activity.
  • In late January 2026, nationwide ICE detention populations were at historic highs around 70,800 individuals, an increase of approximately 1,000 from the end of the fourth quarter. However, a government shutdown centered around Department of Homeland Security funding, a reorganization of DHS leadership, and a subsequent impact to enforcement activities, including redeployment of ICE agents to TSA checkpoints, led to a 10,500 decrease in detention populations by early April 2026.
  • Some revenue decrease attributed to a decline in U.S. Marshals populations, which management partially linked to fewer southern border apprehensions and shifting contract allocations to ICE.

SUMMARY

Management updated 2026 financial guidance to reflect higher earnings contributions from the Midwest Regional Reception Center activation and the recent CSP acquisition, while lowering expectations for ICE-related revenue in the near-term. The CSP transaction, valued at $148 million, immediately diversifies revenue with projected $215 million to $230 million in annual sales and introduces strategic adjacencies in correctional healthcare services. Management indicated ongoing share repurchases remain a near-term capital allocation priority, citing a belief that the company's equity is valued at a discount to underlying real estate and cash flow value relative to peer and historical standards. New facility activations, combined with steady state and growing federal partner demand, underpin a constructive long-term outlook despite transitory federal enforcement headwinds. Guidance for 2026 assumes ICE detention populations stabilize at lower levels through the second quarter before rebounding sequentially in the second half, with potential for additional contract wins from both state and federal partners if demand materializes.

  • Patrick Swindle said, "our current share price implies a significant discount to the fair value of our real estate assets using just about any valuation methodology."
  • CFO David M. Garfinkle confirmed, "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 acquisitions and facility activations, to range from $250.4 million to $264.9 million for 2026."
  • The board-authorized share repurchase program retains $255.8 million available as of March 31, 2026, allowing flexibility for opportunistic buybacks.
  • Questions on ICE potentially acquiring CoreCivic facilities were addressed using replacement cost perspectives rather than asset sale comparables, emphasizing unique, specialized property values.
  • CSP will operate as a standalone subsidiary, with limited operating synergies anticipated, but management expects growth at above 10% CAGR based on historical patterns and pipeline visibility.
  • Staffing adjustments are possible when populations drop, with Garfinkle stating, "We have the ability to right-size staffing levels when populations decline," but expectation remains for full staffing to support likely growth in the latter half of 2026.
  • Guidance does not reflect impact from potential new contract awards or further acquisitions/dispositions due to inherent uncertainty in government procurement and deal timing.

INDUSTRY GLOSSARY

  • CARES Act Employee Retention Credits: Federal payroll tax credits provided for retaining employees during designated COVID-19 periods, affecting reported operating income.
  • Turnkey Facility: A detention or correctional facility provided to a government partner fully operational and ready for immediate use, sometimes with ownership transferred but management retained by the prior operator.
  • FF&E: Furniture, fixtures, and equipment—capital items necessary for property operations whose maintenance responsibility may affect margin structure in facility management contracts.
  • S.U.P. (Special Use Permit): A local government authorization required for specified facility operation or reactivation, often affecting facility opening timelines and revenue recognition.

Full Conference Call Transcript

Jeb Bachmann: Thank you, operator. Good morning, and welcome to CoreCivic, Inc.'s first quarter 2026 earnings call. Participating on today's call are Patrick Swindle, CoreCivic, Inc.'s President and Chief Executive Officer, and David M. 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 2026 as well as updated financial guidance for full-year 2026. 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 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 2026 earnings release issued after market yesterday as well as in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q, and 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 to the most comparable GAAP measurements 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, Patrick Swindle.

Patrick Swindle: Thank you, Jeb. Good morning, and thank you for joining us for CoreCivic, Inc.'s first quarter 2026 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, David M. Garfinkle, who will provide greater detail on our first quarter 2026 financial results as well as our updated 2026 financial guidance. David will also provide an update on our capital structure, including activity on our share repurchase program and other balance sheet initiatives.

Before we discuss this quarter's financial performance, I want to share some perspective on what I see every day in this role: the work our team does and why it matters. Every day, approximately 55,000 individuals are entrusted to our care by our government partners. That means that every day around the country, more than 13,000 CoreCivic, Inc. professionals are responsible for feeding, safeguarding, treating medical and mental health needs, facilitating religious and recreational activities, providing access to legal resources, and delivering programs that help prepare people for whatever comes next in their life's journey. Our colleagues carry out these responsibilities humanely, treating residents and each other with dignity and respect.

This is an incredible responsibility and a vital service for our government partners and the communities where we operate. I am extremely proud of our team and the professionalism and purpose with which they carry out their responsibilities, and I am deeply grateful for the trust our government partners place in CoreCivic, Inc. Through these tens of thousands of interactions each day, we have an opportunity to help build safer, healthier, and more productive communities one person at a time. Using that as a North Star enables us to achieve success for all of our stakeholders, including our shareholders. I will now move on to a high-level overview of our first quarter operational performance.

Total occupancy for our Safety and Community segments for the quarter was 79.6%, up 2.6 points since the year-ago quarter. The average daily population across all of the facilities we manage was 57,243 individuals during the first quarter of 2026, compared with 51,429 in the year-ago quarter. This increase was driven by more demand for our services, new contracting activity, and the FarmVille acquisition that was completed on July 1, 2025. This is a meaningful increase, and our teams continue to be focused on delivering the highest quality services and environment every day. Federal partners, primarily ICE and the U.S. Marshals Service, comprised 58% of CoreCivic, Inc.'s total revenue in the first quarter.

Revenue from our federal partners increased 48% during the first quarter of 2026 compared with the prior-year quarter. Further breaking down our federal mix, revenue from ICE increased $128.1 million, or 96.2%, while revenue from the U.S. Marshals Service decreased by $12.2 million versus the prior-year quarter. Some of this decline is simply a shift in mix where ICE and Marshals share a contract. Populations from ICE in our care increased by approximately 4,500 individuals, or 45%, from the beginning of 2025 through March 31, 2026. We cared for 14,689 individuals, and our average daily population increased by 6,822 individuals in the first quarter of 2026 from the first quarter of 2025.

However, since January 2026, when our ICE populations peaked, through April 30, ICE populations in our care have declined by roughly 3,000 individuals. We believe this decline is temporary and event-specific, and David will review our population assumptions at a high level reflected in our financial guidance. A key aspect of our ability to meet the increase in demand we have experienced from ICE has been the activation of five idle facilities. Activating idle facilities is challenging work, and activating numerous facilities simultaneously is particularly challenging, but I could not be more proud of our team's progress.

Occupancy at our 600-bed West Tennessee Detention Center, where we signed a new contract and began accepting detainees in 2025, has stabilized, and our daily operations are now fairly routine. We continue to receive detainee populations at our 2,560-bed California City Detention Facility, where we signed a new contract effective September 1, 2025, and at our 2,160-bed Diamondback Correctional Facility, where we signed a new contract effective September 30, 2025. As of March 31, 2026, we cared for 1,817 individuals and 735 individuals, respectively, at these two facilities. We received approval for a special use permit at our 1,033-bed Midwest Regional Reception Center in early March 2026 and immediately began accepting detainees.

The facility has been undergoing reactivation since the new contract was awarded in 2025, but there was a temporary delay in the intake process as we worked through legal challenges in the SUP approval process. I want to reiterate our thanks to the Leavenworth City Commission for their collaboration and trust and look forward to bolstering our longstanding relationship with the Leavenworth community. Because of the uncertain timing of the resolution of the SUP matter, we did not include the financial impact of the activation in our initial guidance for 2026.

We currently expect this facility to contribute $0.05 to $0.06 in incremental earnings per share for the remainder of 2026, which is included in our updated financial guidance, as David will discuss further. Moving to a discussion of the macro business environment with ICE. In late January 2026, nationwide ICE detention populations were at historic highs around 70,800 individuals, an increase of approximately 1,000 from the end of the fourth quarter. However, a government shutdown centered around Department of Homeland Security funding, a reorganization of DHS leadership, and a subsequent impact to enforcement activities, including redeployment of ICE agents to TSA checkpoints, led to a 10,500 decrease in detention populations by early April 2026.

While we cannot predict how quickly population growth will resume, the administration continues to indicate a strong emphasis on border security and active ICE enforcement. What has potentially changed is how DHS plans to meet its detention bed needs going forward, including through the conversion of vacant warehouse facilities into immigration detention facilities and/or the acquisition of existing turnkey facilities. As the former has garnered a lot of attention for various reasons, we do not know the future of that strategy. However, as widely reported in the media and in numerous analyst reports, we do believe the potential of turnkey facility acquisitions remains as our government partners look to secure capacity throughout the United States. 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 have shared contracts with 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 declined by 1,360 individuals in the first quarter of 2026 from the first quarter of 2025, although we have experienced a steady increase in average daily Marshals populations the past few months. Revenue from our state partners, which comprised 33% of our total revenue in the first quarter, increased 3.6% from the prior-year quarter.

This increase includes per diem increases under a number of our state contracts, and population growth from the states of Georgia, Montana, and Colorado. This increase is net of a decline in revenue for the transition of populations at our Trousdale facility in Tennessee, which resulted in a decline in populations that we expect to recover in the coming quarters. Excluding the decline in revenue at Trousdale, revenue from state partners increased 5.2%. We continue to see an increase in opportunities at the state level. In addition to increases in populations in our existing contracts, we are in discussions with several states in need of additional bed capacity.

At the end of the first quarter, we began consolidating and expanding a state customer population into our Tallahatchie County Correctional Facility in order to provide single-location service for this customer while creating more marketable capacity for a potential new state customer in Arizona. We continue to maintain five idle corrections and detention facilities containing approximately 7,000 beds to meet any federal or state increase in demand. We remain confident that the corrections and detention beds that we provide are the most humane, most efficient logistically, most compliant, most secure, readily available, and provide the best value to the government.

Moving on to capital deployment, we remain focused on creating value for our shareholders through operational excellence and meaningful organic growth, an active share buyback program, and, at times, accretive acquisitions. In April 2026, we executed an agreement to acquire Clinical Solutions Pharmacy (CSP), one of the largest providers of mail-order pharmacy services to correctional facilities in the United States. This ancillary business complements our core mission of improving the lives of those in our care, while providing a diversifying revenue stream and meaningful growth opportunities as correctional populations age with more complex and chronic medical needs.

CSP's exclusive focus on the corrections market, serving over 600 correctional facilities, including CoreCivic, Inc., across 28 states, uniquely positions it to support the government agencies seeking reliable, clinically advanced pharmacy solutions. CSP is at the forefront of the correctional pharmacy business, with 50% of shipments being fully automated, which is a key differentiator in the industry, filling approximately 60,000 prescriptions per day with no single customer currently accounting for more than 15% of its annual revenue. CSP is headquartered and operates a centralized distribution center less than 30 miles from our Facility Support Center here in Greater Nashville and has nearly 300 employees. I want to welcome the CSP employees to the CoreCivic, Inc. team.

We are excited about the future with CSP and look forward to reporting on their progress. David will provide more details on the financial impact of the acquisition. Our first quarter results exceeded average analyst estimates for adjusted EPS by $0.12 and adjusted EBITDA by $13.3 million. While we are pleased with the first quarter results, we expect a sequential decline in per-share results in the second quarter as a result of the recent reduction in nationwide ICE detention population. However, for the reasons I mentioned earlier, we believe this reduction is temporary.

Even with this reduction, we are increasing our full-year guidance, reflecting our strategic investment in Clinical Solutions and the successful activation of our Midwest Regional Reception Center, which more than offset the decline in our updated forecast for ICE populations. As I noted on our last earnings call, despite full-year 2026 EBITDA guidance near record levels, our stock continues to trade at a discount to our historical trading multiples, which we believe does not reflect the cash flows of our business, particularly considering the ongoing activations of previously idle facilities, giving us visibility into our growth potential in 2026 and beyond. The acquisition of CSP further strengthens that growth outlook.

We also believe that our current share price implies a significant discount to the fair value of our real estate assets using just about any valuation methodology. Accordingly, we plan to continue prioritizing our cash flows towards share repurchases, taking into consideration our stock price and alternative opportunities to deploy capital, among other factors. Additionally, the recently completed $100 million term loan supports balance sheet flexibility as we navigate the partial government shutdown environment, and assessed potential asset sales could further enhance our liquidity, enabling us to continue to deploy capital in ways we believe create shareholder value.

With that, I will turn the call over to David to discuss our first quarter financial results in more detail, our capital allocation activities, and the assumptions underlying our updated 2026 financial guidance. David?

David M. Garfinkle: Thank you, Patrick, and good morning, everyone. In the first quarter of 2026, we generated GAAP EPS of $0.38 per share and FFO per share of $0.64. Special items in the quarter included $2.4 million of expenses associated with M&A activities reported in G&A expense for the acquisition of Clinical Solutions completed subsequent to quarter end. Excluding M&A expenses, adjusted EPS was $0.40 compared with $0.23 in the first quarter of 2025, an increase of 74%. Normalized FFO per share was $0.65, compared with $0.45 per share in the prior-year quarter, an increase of 44%. Adjusted EBITDA was $110.1 million compared with $81 million in the first quarter of 2025, an increase of 36%.

Adjusted EPS exceeded average analyst estimates by $0.12 per share and adjusted EBITDA exceeded average analyst estimates by $13.3 million. The increase in adjusted EBITDA from the prior-year quarter of $29.1 million resulted from the activation of four previously idle facilities since 2025 under new management contracts with ICE and the acquisition of the Farmville Detention Center on July 1, 2025. The number of ICE detainees in our care followed national trends, which reached record highs again during the first quarter of 2026, although they dipped at the end of the quarter for what we believe are transitory reasons.

We managed approximately 24% of total ICE populations at quarter end, compared with 23% at year end and 25% at March 31, 2025. The increase in adjusted EBITDA also resulted from an increase of $4.6 million in employee retention credits available under the CARES Act during the first quarter of 2026 compared with the first quarter of 2025. During the first quarter of 2026, we collected the final amount we previously claimed. Higher state populations also contributed to the increase in EBITDA. Revenue from our state partners grew 3.6% and included notable increases from Georgia, Montana, and Colorado.

Other factors affecting adjusted EBITDA and per-share results included higher G&A expense for one-time transitional expenses related to executive leadership changes, offset by a 10.1% decrease in weighted average diluted shares outstanding as a result of our share repurchase program. Operating margin in our Safety and Community facilities combined was 24% in the first quarter of 2026 compared with 23.6% in the prior-year quarter. Excluding the employee retention credits from each quarter, operating margin was 23% for both quarters.

Revenue during the first quarter of 2026 from the four previously idle facilities we have activated since 2025 totaled $100.8 million, which, when annualized, is approximately 93% of the total annual revenue we expect to generate from these four facilities at stabilized occupancy. As these facilities reach expected occupancy, we anticipate a slight increase in operating margin. Turning next to the balance sheet. During the first quarter, we repurchased 2.3 million shares of our common stock at an aggregate cost of $44.7 million. Although lower than the fourth quarter, the reduction does not reflect a change in our capital allocation strategy.

Many factors can affect the magnitude of our share repurchases during any particular quarter, including share price, liquidity, earnings trajectory, alternative opportunities to deploy capital, as well as legal restrictions on trading windows impacted by potential strategic transactions such as acquisitions, dispositions, new contracts, and capital markets transactions. Since the share repurchase program was authorized in 2022, through March 31, we have repurchased a total of 28.1 million shares at an aggregate price of $444.2 million, at an average price of $15.82 per share. As of March 31, we had $255.8 million available under our board authorization.

After taking into consideration these share repurchases, our leverage, measured by net debt to adjusted EBITDA, was 2.8x using the trailing twelve months ended March 31, 2026. As of March 31, we had $209.7 million of cash on hand and an additional $131.3 million of borrowing capacity on a revolving credit facility, which had a balance of $425 million outstanding, providing us with total liquidity of $341 million. Just after quarter end, we completed the acquisition of Clinical Solutions, one of the largest providers of mail-order pharmacy services to correctional facilities in the United States. The initial purchase price of $148 million, excluding transaction-related expenses, was funded with cash on hand and borrowings under the revolving credit facility.

As Patrick mentioned, we believe this was a unique acquisition opportunity of a segment-leading company in a growing market complementary to our existing business, at a purchase price generating a return on capital deployed that equals or exceeds the accretion resulting from share repurchases, reflecting a lower multiple than our forward EV-to-EBITDA trading multiple. To replenish the borrowings under the revolving credit facility used to finance the acquisition, on April 10 we amended our bank credit facility to obtain a $100 million incremental term loan.

We obtained the incremental term loan, which has a 364-day maturity and is prepayable without penalty, as a short-term solution to maintain our strong liquidity position as we assess the debt capital markets and potential asset sales that could further enhance our liquidity, enabling us to deploy capital in ways that we believe will create shareholder value. Moving lastly to a discussion of our updated 2026 financial guidance, we expect to generate diluted EPS of $1.51 to $1.61 and adjusted diluted EPS of $1.53 to $1.63, up from $1.49 to $1.59 in our previous guidance. We expect to generate FFO per share of $2.58 to $2.68 and normalized FFO per share of $2.60 to $2.70, up from $2.54 to $2.64.

We expect adjusted EBITDA of $453.8 million to $461.8 million, up from $437 million to $445 million.

The most notable changes to our guidance reflect Q1 results beating our internal forecast by about $0.05 per share; an increase from our prior guidance of $0.05 to $0.06 per share for the activation of our Midwest Regional Reception Center that we announced on March 11, which was not in our initial guidance; and the acquisition of Clinical Solutions, which we expect to generate $215 million to $230 million of revenue in 2026 and contribute $0.03 to $0.05 per share, net of interest incurred to finance the acquisition, partially offset by a reduction of $0.09 to $0.15 per share for lower ICE populations compared with our previous forecast.

As you may recall, our initial 2026 financial guidance contemplated stable or rising ICE populations at facilities where we have federal contracts. Our forecast reflects the reduction in nationwide ICE populations reported by ICE during the second quarter and the related reduction in our ICE populations that Patrick mentioned. We believe the reduction in nationwide ICE populations in the second quarter is transitory, reflecting the short-term redeployment of ICE agents to augment TSA security personnel during the government shutdown and overall enforcement strategy adjustments within DHS. Therefore, our guidance reflects growth in ICE populations under existing contracts during the second half of the year.

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. We still have five remaining idle facilities containing 7,066 beds, and we believe incremental demand for more idle facilities will likely be needed once ICE absorbs the recently contracted beds and nationwide ICE populations grow during the second half of the year as we expect. Our guidance does not include additional acquisitions or dispositions, including the impact on EBITDA, such as pricing adjustments, if any, that could result from dispositions.

For modeling our quarterly results, Q2 will reflect a reduction of $0.06 per share for the employee retention credits recognized in Q1; the reduction in ICE populations compared with Q1, aside from activations, amounting to $0.05 to $0.07 per share; partially offset by a seasonally stronger Q2 versus Q1 because we incur approximately 75% of our unemployment taxes during the first quarter, resulting in a collective per-share increase from Q1 to Q2 of $0.01 to $0.02. Our Q2 forecast also includes growth from the CSP acquisition and assumes higher occupancy at our California City, Diamondback, and Midwest Regional facilities.

We plan to spend $60 million to $70 million on maintenance capital expenditures during 2026 and $15 million for other capital expenditures, unchanged from our prior guidance. Our 2026 forecast also includes $40 million to $45 million for capital expenditures associated with previously idle facilities we are activating and for additional potential facility activations, up $5 million from our prior guidance. 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 acquisitions and facility activations, to range from $250.4 million to $264.9 million for 2026.

We do not believe the price of our common stock reflects the value of the cash flows of our business. We are trading below historical multiples despite visibility of cash flow growth in 2026 driven by recent contract awards, which is now further enhanced by the acquisition of CSP. 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, as well as legal restrictions on trading windows that I previously mentioned.

We expect our annual effective tax rate to be 25% to 30%, unchanged from our prior guidance. 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 million to $165 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 will conduct the question and answer session. We kindly request that each participant ask one question and one follow-up question. You may re-queue if you have more questions. As a reminder, please mute your line when not speaking. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Raj Sharma of Texas Capital. Your line is now open.

Raj Sharma: Yes. Thank you for taking my questions. I wanted to try to understand the sale of facilities to ICE and what would be a valuation level that you would consider, and just, you know, some color on would this be a great scenario for you with or without a contract on the facility.

Patrick Swindle: Good morning, Raj. Thank you for the question. I would say, and I will address that in two parts. One of them is we try to be a very good partner for all of our customers. And in trying to be a good partner, we evaluate the way that we can best support their mission and their strategy. And so that may be our providing turnkey services and managing a facility that we operate. It may be managing a facility that they own. It may be leasing a facility to them. It might be selling them a facility.

And as we have conversations with each of our partners, we think about what is the optimal way for us to deliver that service. ICE has expressed the desire that they own certain of the assets that are managed on a turnkey basis nationally. That has been publicly reported. You have seen it in a number of sources. It is clear that part of their strategy that they are considering is whether it makes sense to own some of those assets. Strategically, in thinking about the way that they would approach locations and individual facilities, you have seen references to warehouses, you have seen references to turnkey operations, and what a consolidated ICE operation might look like nationally.

In thinking about that, we have some of the largest facilities that provide service for ICE nationally, as do some of our competitors. Some of those would be a natural fit for ICE if they were working to build out that network. They ultimately would have to make that decision. When you think about valuation, that is an interesting question because there really is not a comp for what these facilities are worth. In a more actively traded market for assets, you could look at comparable sales and get a reasonable sense of value. I would argue in this case, we have special-purpose assets. They are highly improved properties. They have been prepared for utilization by ICE.

Many of them are in markets or in areas of the country where cost of construction is very high. We have seen significant increases in inflation in the cost of building detention facilities. So you really cannot look at what I would call comp sales as a guide for what we believe the value of our assets are. I look at it through the lens of what does it cost to build a facility today and what would that be on a depreciated replacement cost basis. I think that generally gives the guide for how we would think about what those facilities might be worth in a hypothetical conversation. I would hesitate to pinpoint a value range at this point.

And then your follow-up question, which was, would we consider an asset sale without a management contract? We certainly believe it would be the intent of ICE, to the extent they were to purchase assets, to have the private sector continue to manage facilities. But we have to consider the duration of that management contract long term in terms of how we might think about or approach a sale process. At this moment, we would expect that we would continue to operate. We would expect that we would adjust our pricing based on their ownership of the asset versus our ownership of the asset, in the event there were to be a transaction.

But the idea generally that ICE owning an asset would be appropriate strategically for us to consider, I would say our answer to that would be yes, depending on the value that we would derive from selling a potential asset to them or any other customer.

Raj Sharma: Great. Thank you. Thank you for that. It is very helpful. And just one follow-on question: what facility utilization levels would you expect to see at the end of the first half and also the end of the year?

David M. Garfinkle: I will take a stab at that one. Patrick mentioned in his remarks, from the peak in January through late April, we saw a decline in our ICE populations of about 3,000. We are projecting that to sustain around those levels through the end of the second quarter and then grow back sequentially in Q3 and Q4. Hard to put a specific population number on it, but that is the trajectory as we see it.

Operator: Thank you. Our next question comes from the line of Gregory Thomas Gibas of Northland Securities. Your line is now open.

Gregory Thomas Gibas: Great. Good morning, Patrick, David. Congrats on the quarter. I wanted to follow up on that last one. It is related to the implied guidance. Maybe if we could get a little bit deeper in terms of what you are implying as the current run rate for Q2, noting that you expect populations to remain somewhat flat with where they are now, versus the ramp-up you are assuming in the back half. If you could bridge the quarterly expectations implied by guidance, that would be very helpful.

David M. Garfinkle: Thanks, Greg. As I mentioned in my prepared remarks, to bridge Q1 to Q2: we had the $0.06 in Q1 for the employee retention credits that would not be present in Q2, and then there was the decline in ICE populations that we are expecting to sustain through Q2. Rough numbers, with a lot of puts and takes, that is around a $0.06 decline from Q1 to Q2—$0.06 to $0.07 down Q1 to Q2—and then sequentially increasing from there. We do have the acquisition of CSP that will be in for a full quarter beginning April 1, so that will be in for a full quarter in Q2. We also continue to ramp our California City, Midwest, and Diamondback facilities.

Those will be tailwinds to the decline in ICE populations. That is the way we are thinking about it. And we still see the potential to get to the previously mentioned $450 million adjusted EBITDA run-rate in the second half of the year.

Gregory Thomas Gibas: Understood. That is helpful. And if I could follow up on CSP, could you discuss any synergies or growth opportunities related to that acquisition and provide a little bit more detail in terms of its financial profile—growth rate, margin profile, etc.?

Patrick Swindle: Thank you for that question. CSP is going to be a standalone subsidiary of CoreCivic, Inc., so the opportunities for operating synergies are fairly limited. Our goal is to maintain Clinical Solutions as it operates today, support the platform, provide it with resources, and enable it to grow. This is not a tuck-in acquisition; it is an adjacent expansion of our business. In terms of growth rate, the company has seen exceptional growth historically. I would rather not disclose a specific rate.

The way I would frame growth rates for Clinical Solutions, at least for the intermediate term, would be to look at the growth built into our guidance for 2026 and calculate the five-year compound annual growth rate, which would be just over 10%. If I were to look at the growth potential for Clinical Solutions, it is probably twice that. It is a rapidly growing platform that has evidenced stable, sustained growth rates in excess of that for an extended period of time. Our goal is to continue to support that platform, give it the space to grow, and take advantage of some administrative opportunities for synergies that might be available—for example, consolidation onto our ERP platform.

There are revenue synergies in terms of our customer relationships versus theirs. They do not presently do business with the federal agencies outside of contracting with us, so that is an opportunity for growth. There are a number of overlapping customers and a number of non-overlapping customers. We want to be able to support them and maximize their capability. We feel good about the pipeline in place for them. We have a lot of visibility into growth into 2027 and think they are well positioned beyond that.

David M. Garfinkle: Nothing to add, other than a clarification on the prior comment: the $450 million run-rate in the second half of the year excludes Clinical Solutions. We are still confident, even with the ICE reduction that we are seeing in Q2, that the second half of the year will be at a run rate of $450 million, and then CSP would be on top of that.

Operator: Our next question comes from the line of Benjamin Briggs of Stonex Financial Inc. Your line is now open.

Benjamin Briggs: Hey. Good morning, guys. Thank you for taking the question. Congratulations on the quarter. I just wanted to ask a follow-up on your acquisition strategy. Obviously, CSP happened in early April of this year. As you are thinking about potential acquisitions going forward—I know you listed acquisitions as one of the potential uses of cash of the incremental term loan—any color on the type of additional acquisitions that you might make? Is there any chance that you might build new facilities? Technology platforms for alternatives to detention programs? Any clarity on your thinking there would be appreciated. Thanks.

Patrick Swindle: Sure. We have always been opportunistic in looking at opportunities for acquisitions. If you think about the criteria that I would use at this moment, obviously we believe that our share price is undervalued. That is a very attractive use of capital for us. So for an acquisition, the hurdle to justify buying a business instead of our stock would have to be very attractive, valued at equal to or less than the return we can deploy via share repurchases. That is necessarily going to impact the scope and volume of acquisitions that we might consider or make. There is not an acquisition that is currently planned or in the pipeline.

Although, again, we will continue to be opportunistic and look for acquisitions that might be a good fit for us. Strategically, we are looking at adjacent transactions that supplement our growth, leverage our competencies and theirs, and give us the ability to grow on a sustainable long-term basis. We go through seasons. This has been a season with a lot of ICE growth; we will go through seasons that do not have that volume of growth, and we are preparing the platform to grow sustainably long term. CSP fits within that. In terms of prioritization, I would revert back to David's comments: prioritization right now would be toward share repurchases.

We will consider other business acquisitions as appropriate, but I do not see anything as imminent from a cash flow prioritization perspective.

Operator: Our next question comes from the line of Analyst of Noble Capital. Your line is now open.

Analyst: Good morning. Thanks for taking my questions. Just to follow up and put a little bow tie on CSP, I think it was said they are in 28 states, so either 22 they are not in. Would there be the potential for a similar type of purchase of another operator that may be in those 22 states as opposed to slowly going organically through those states? Is there others out there like a CSP that might be of interest at some point?

Patrick Swindle: There are other providers in the market, and I can see that as being an attractive way to scale the CSP platform. To the extent that those opportunities present, we would consider them. In terms of timelines, I do not see something as imminent, but I do think there is an opportunity for consolidation within the space.

Analyst: And then, Patrick, we have talked a number of quarters that you are in discussions with other states—some that are not existing customers. Any more color you can provide as to timing on whether you might get a new contract from a state that is not an existing customer?

Patrick Swindle: Timelines with any state procurement, and particularly with new state procurements, can vary widely. You can go through periods of intense discussion and have that ebb and flow based on relative priorities or alternatives, and it also links to individual state budget cycles. You are going to see periods where you think that you are close to an agreement and you find out that it lags a bit. In other cases, you are going to see demand accelerate quickly based on an imminent need and funding through the legislative cycle. I do not have an update today on timing of what some of those might be.

We have a very strong state partnership development team that is quick to accommodate the needs of our customers when they present, and a number of those organic conversations continue. As it warrants, we will provide updates on timing, but historically we have not given a lot of specificity outside of active RFPs.

Operator: Our next question comes from the line of William Sutherland of Benchmark Stonex. Your line is now open.

William Sutherland: Thanks. Good morning, everybody. David, I want to make sure I am clear on the source of growth for ICE populations in the second half. That is based simply on the buildouts you are doing. You are assuming the national census levels change as well. Is that correct?

David M. Garfinkle: Yes, exactly right. We are ramping the three facilities I mentioned—California City, Midwest, and Diamondback—but the growth we are contemplating in the second half of the year would be on top of that. Nationwide ICE detention populations are about 10,500 lower from the peak in January. We would expect growth to resume in the second half of the year. Part of that could be around reconciliation; we did see the redeployment of ICE agents toward TSA checkpoints and other factors that contributed to the decline. So we would see nationwide populations growing during the second half of the year, which would include not just the activation facilities but broader demand.

William Sutherland: I have been reading about the interest ICE has in owning facilities and the greater kind of protection they have in terms of the kinds of things facilities can run into. Are there any states where they are particularly focused on trying to acquire?

Patrick Swindle: We would rather not speak specifically to where ICE might be focused. The broader vision appears to be to develop a nationwide network that consolidates populations in relatively larger facilities but allows them to service the needs of the entire country. As they map that, they will have to make decisions between purchasing facilities outright, continuing to contract with the private sector, and considering alternatives like warehouses. Ultimately, they will settle on a strategy that makes sense for them. I would not limit the scope to any particular subset of markets.

William Sutherland: Is this a process that feels like it will be determined over a long period of time, or do you feel a sense from the agency that they want to get some decisions made in the relatively near term?

Patrick Swindle: The first articles referencing the strategy broadly were around the end of last year, with discussion around 85,000 beds total—some mix of warehouses and turnkey facilities. Since then, they have had to consider what has happened in the market and how that would impact various purchases. It has been publicly reported that they have made a number of warehouse purchases, but also that they are actively considering turnkey facilities. If that process was initiated last year, that would be an ongoing conversation. It is difficult to speculate on timing with government processes, which can accelerate or decelerate. They have pointed publicly to turnkey assets as a critical part of their strategy.

Operator: Our next question comes from the line of Marla Marin of Zacks. Your line is now open.

Marla Marin: Thank you. I have a couple of follow-up questions related to CSP. With this acquisition, you now have several business lines that are adjacent or complementary to the core business. Should we be thinking that there are any potential cross-promotional opportunities you see that could lift some of the other business lines now that you have CSP on board, or are they all extremely distinct?

Patrick Swindle: The individual service delivery aspects are distinct, but there is meaningful overlap. The more interactions that we have with a particular partner meeting their needs, the better trusted partner we can be for them. Cross-selling opportunities will be available between the various businesses, and relationship leveraging between those is important. One attractive thing about Clinical Solutions is that their values and culture are aligned with ours. They have a very strong customer relationship focus and are well respected by their customers. We can leverage capabilities across customer relationships to deliver great quality service every day through two or three services instead of just one.

Marla Marin: You talked before about potential for consolidation within that particular space. Very back-of-the-envelope, it looks like CSP as the largest provider in that segment has slightly under a 10% market share, which would suggest a significant opportunity to grow that business and potentially consolidate. Is that roughly the right neighborhood to think about—10%-ish?

Patrick Swindle: It depends on how you define the market, but I would answer by saying there is significant runway available to Clinical Solutions, whether through consolidation or through outsourcing by customers who presently provide that service in-house. Clinical Solutions has a technically advanced pharmacy and an industry-leading, scalable service delivery approach. As customers consider the economics and desirability of self-operating versus outsourcing, they will weigh both quality and cost. In terms of overall market opportunity, you are in the right ZIP code, and that could manifest through new outsourcing of currently self-operated facilities as well as through acquisitions.

David M. Garfinkle: I would add that beyond market share, it is a growing industry with aging prison populations that have medical needs, which supports growth for that business as well.

Operator: Our next question comes from the line of Analyst of Park West. Your line is now open.

Analyst: Hello. Can you hear me?

Patrick Swindle: Yes. Good morning.

Analyst: Good morning. I just wanted to understand some of the recent population changes. We understand there have been declines in the population post Q1 and want to understand the band of outcomes if it does not ramp. Do we have room to change our expense on either the fixed or variable side of the business? And what are you hearing that would give us confidence that the ramp will continue post Q2? How much of a ramp do we need in those census numbers to get to the guide?

David M. Garfinkle: We have the ability to right-size staffing levels when populations decline. That said, we always want to be adequately staffed to accommodate demand. With lower populations, you have less churn within a facility, less overtime, and lower variable expenses, so there is an opportunity to reduce expenses. Patrick can speak to why we expect growth in the second half.

Patrick Swindle: There has been national disruption in the ICE enforcement approach and transition within Homeland Security. If I pan back and look at the variables: we believe there continues to be a strong commitment to maintaining strong border and interior enforcement. We continue to see actions that indicate an expectation toward increasing need for beds. Those conversations manifest in a variety of ways, including discussions around currently non-contracted facilities. As mentioned, we have 7,000 beds available that can meet that need. Public conversations have pointed to 85,000 to as many as 100,000 beds nationwide. We have seen no lessening of intensity and no change in expected supply need.

We have seen the recent disruption, but I believe it is more anomalous than the broader arc. There have also been meaningful conversations around funding for ICE and CBP. Homeland Security funding broadly has passed reconciliation, which is in process. We have seen initial language out of Senate committees around funding for ICE and CBP that would fund ICE through the remainder of the current administration. I will not handicap Congress, but funding appears to be trending toward sufficient levels for ICE operations at enhanced or higher population levels for the remainder of the administration. With funding in place and new leadership establishing priorities, you are likely to see an increase in populations.

We are in a great position to meet that. Regarding cost structure, you do see adjustments on the margin, typically reductions in overtime rather than outright staffing reductions. There is a long process for getting staff cleared and facilities ramped, and we believe the right stance is to maintain a growth-focused position with full staffing to accommodate the growth we expect in the second half.

David M. Garfinkle: On guidance, we feel the range incorporates a range of population growth during the second half. It is hard to pinpoint what the nationwide population would have to be to hit the midpoint of our guidance. At a high level, if you get back to around 70,000 nationally in the second half (we are slightly under 60,000 today and the peak was around 70,000 in January), our guidance would probably be right in the middle. Timing matters—if they get to 70,000 sooner or go higher, there is upside; if they do not get to 70,000 until late in the year, you are toward the low end.

Operator: Our next question comes from the line of Kirk Ludtke of Imperial Capital. Your line is now open.

Kirk Ludtke: Hello, Patrick, David, Brian, Jeb. Thank you for the call. Is ICE full steam ahead with their plans to convert warehouses to detention centers, or has that slowed down?

Patrick Swindle: We have seen the same things you have seen in the press around individual warehouse opportunities. There have been purchases completed. We have not yet seen one of those opportunities be fully built out and ramped. In terms of feasibility, that is something only ICE can assess. We have looked at those opportunities. Our strong capabilities are in traditional detention capacity. We have a great network of traditional facilities nationwide and 7,000 additional beds available today. We could scale that up significantly if needed. Warehouse conversions are challenging, difficult, and would have to be done on an expedited timeline. For us, partnering on turnkey asset sales or activation of new traditional facilities is a better fit.

Looking at what has actually occurred, we have not seen a great deal of movement in terms of activation of new warehouse facilities.

Kirk Ludtke: What is the timing on a warehouse conversion? Even if they get all the permits and local approvals, how long does it take to convert something like that?

Patrick Swindle: It is very difficult for me to assess broadly. Through our lens, we would struggle to do that on an expedited timeline. Community relationships are very complex—water, sewer, utilities. The construction buildout to meet requirements is complex and takes time. Others may do it more quickly, but for us it would be an extended timeline to complete a conversion.

Kirk Ludtke: If you were to sell a facility to ICE and then operate it, how might we think about the margins on a contract like that? Would they be similar to your managed-only contracts now, or higher because it is a more complicated role?

Patrick Swindle: I would look at that as being more managed-only-like in terms of components. Some negotiation components are straightforward—daily operating costs and reimbursement level. Other components differ from a capital perspective: who is responsible for roof or HVAC replacements or other FF&E. Depending on responsibility, the margin profile could be meaningfully different than our traditional managed-only contracts. That would be resolved through negotiation. Ongoing capex for facility operations is significant, and responsibility would impact operating margin. On a cash flow basis, it would be neutral over time because pricing would reflect additional margin needed to cover required investments. From an operating margin perspective, you would be looking at higher margins to the extent we are responsible for ongoing capital.

Operator: Our next question comes from the line of Gregory Thomas Gibas of Northland Securities. Your line is now open.

Gregory Thomas Gibas: Thanks for taking the follow-up. I wanted to follow up on how your discussions or interest levels have trended with idle facilities. Do you expect any additional contracting would likely occur after appropriations are in place or made available?

Patrick Swindle: We continually market all of our available bed capacity to both federal and state partners. We are in constant dialogue around use of those beds. Funding being in place is obviously helpful, and having visibility that the department is funded through the end of the administration is particularly helpful, to the extent that is what occurs. The recent decline in populations could impact timing of new awards. That said, the entire network has not been built out, and we believe there are opportunities for additional awards. I would be surprised if there are not awards within the sector during the balance of this year, but timing is variable.

Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to Patrick Swindle for closing remarks.

Patrick Swindle: Thank you, operator, and thank you all for joining our call today. In closing, as we, along with our public sector government partners and private sector peers, celebrate National Correctional Officers and Employees Week, I would like to again express my appreciation to our over thirteen thousand employees. Their focus and commitment help ensure that everyone in our care is provided with a safe, secure, and humane environment, and that we deliver the highest quality services to every individual for whom we are responsible. We are proud of our team, and we want to celebrate them today with all of you as they make what we do possible.

Thank you all for joining the call today, and have a great day.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.