Geo Group (GEO) Q1 2026 Earnings Transcript

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Date

Wednesday, May 6, 2026 at 11 a.m. ET

Call participants

• Chairman, CEO, and Founder — George C. Zoley
• Executive Vice President, Corporate Relations — Pablo E. Paez

Takeaways

• Total revenue -- $705.2 million, up 17% compared to the prior year's first quarter.
• Net income -- $38.3 million, or $0.29 per diluted share, up 96% year over year.
• Adjusted EBITDA -- $131.4 million, a 32% increase year over year.
• Secure services revenue -- Increased by $70 million, or 23%, driven by three reactivated facilities for ICE, offset by sales and depopulation at two other sites.
• Managed-only contracts revenue -- Up $33 million, or 22%, due to a new joint venture for the North Florida Detention Facility and increased transportation segment revenue.
• Reentry services revenue -- Increased by 5% with a corresponding 5% decline in non-residential services.
• Electronic monitoring and supervision services revenue -- Decreased by 4%, attributed to reduced ISAP 5 pricing, partially offset by greater case management and skip tracing mix.
• ICE facilities census -- Declined from a peak of 24,000 beds early in the year to about 21,000, representing more than one-third of the national ICE detainee population.
• ISAP 5 program participation -- Remained between 180,000 and 181,000, with GPS ankle monitors growing to more than 48,000 from 17,000 a year ago while SmartLink usage dropped to about 131,000.
• Case management in ISAP 5 -- Assigned population rose to approximately 111,000.
• Share repurchases -- 3.6 million shares repurchased in Q1 for $50 million; cumulative total of 8.5 million shares for $141 million, with $359 million remaining on the $500 million authorization.
• Liquidity actions -- Revolving credit facility expanded by $100 million, with $80 million cash and $1.61 billion total debt at quarter-end.
• Net debt -- $1.53 billion, with net leverage below 3.2x adjusted EBITDA.
• Guidance for 2026 -- Revenue projected at $2.95 billion to $3.1 billion, GAAP net income of $153 million to $166 million ($1.10 to $1.25 per share), and adjusted EBITDA of $525 million to $545 million, assuming a 30% tax rate.
• Capital expenditures (CapEx) -- Full-year guidance raised to $137.5 million to $162.5 million, primarily for facility retrofitting related to idle beds.
• Second quarter guidance -- Revenue expected between $715 million and $725 million, net income between $33 million and $39 million ($0.25 to $0.29 per share), and adjusted EBITDA between $130 million and $135 million.
• Skip tracing contract -- $60 million per year potential awarded; operations began in March, early volumes described as modest.
• Potential ICE facility sales -- Discussions ongoing for possible sale of multiple company-owned facilities to ICE, with future use of proceeds aimed at debt reduction and repurchases.
• New contracts not yet activated -- $100 million of new annual revenue from two Florida DOC contracts scheduled to start July 1, 2026.

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Risks

• Chairman Zoley stated, "the timing of payments and collections has been somewhat delayed, requiring us to carefully manage our liquidity and working capital needs" due to the partial government shutdown at DHS.
• Reduced ICE facility census and intake have slowed the ramp-up of new facilities and lessened expansion activity as management described a "holding pattern" due to changes in administration and immigration policy funding.
• Revenue in electronic monitoring and supervision services fell approximately 4% year over year due to reduced pricing for the ISAP 5 contract.

Summary

The GEO Group (NYSE:GEO) emphasized record new contract wins totaling up to $520 million annualized, significant expansion in ICE and U.S. Marshals Service business, and robust earnings leverage in the face of shifting policy and government appropriations. Management is actively pursuing additional growth by reactivating idle beds and optimizing the technology mix on monitoring contracts, while simultaneously implementing a large-scale share repurchase program. The call clarified the company's strategy for potential asset sales to ICE, which could unlock further liquidity and accelerate capital returns.

• The shift toward higher-margin case management and GPS-based monitoring in the ISAP 5 program contributed to revenue quality despite headline segment contraction.
• First-quarter general and administrative expense declined as a percentage of revenue to 8.6%, down from 9.6% the prior year.
• Chairman Zoley said, "We have approximately 6,000 idle high-security beds that remain available, which could generate in excess of $300 million in annual revenues at full occupancy."
• Government funding for ICE operations remains supported by long-term appropriations, with $45 billion for detention through 2029 under the reconciliation bill, mitigating direct shutdown exposure but impacting cash flows.
• Asset sale negotiations with ICE may necessitate contract restructurings to reflect a shift from facility ownership to a support services model.
• The call noted a pause in ICE's warehouse conversion project and ongoing federal consideration of turnkey purchases, with no assurance or timeline for facility sales.
• Guidance does not yet include potential revenue from further activations of idle beds, incremental skip tracing volumes, or an accelerated technology shift in electronic monitoring.

Industry glossary

• ISAP: Intensive Supervision Appearance Program, a contract with ICE delivering electronic monitoring and case management for non-detained immigration participants.
• Skip tracing: The process of locating individuals who are missing or have absconded from court-ordered supervision or programs.
• ICE: U.S. Immigration and Customs Enforcement, the government agency for which GEO provides detention, monitoring, and transportation services.
• CBP: Customs and Border Protection, a federal agency occasionally referenced in context of federal appropriations and contract opportunities.
• CapEx: Capital expenditures, meaning funds used for facility improvements, retrofits, or construction.
• Net leverage: Ratio of total net debt to adjusted EBITDA, indicating the company's financial leverage and risk profile.
• Managed-only contracts: Facility management contracts where The GEO Group operates but does not own the underlying real estate.

Full Conference Call Transcript

George C. Zoley: Thank you, Pablo. Good morning, everyone, and thank you for joining us on this call. I will conduct the entire conference call due to Shane being out for a couple of weeks. Our diversified five business units delivered strong financial and operational performance during 2026. Our better-than-expected performance reflects significant revenue growth from the contracts that we entered into throughout 2025. As we have previously discussed, in 2025 we were awarded new or expanded contracts that represent up to approximately $520 million in incremental annual revenues, the most in a single year in our company's history.

In our Secure Services segment, we entered into new contracts to house ICE detainees at four facilities totaling approximately 6,000 beds, including three previously idled company-owned facilities in New Jersey, Michigan, and Georgia, and a management services contract in Florida. We also reactivated our company-owned Adelanto ICE Processing Center in California, which was already under contract but had been severely underutilized due to a longstanding COVID-related court case. These facility activations represent annual revenues of $300 million and increased our total beds under contract with ICE to approximately 26,000 beds.

The census across our ICE facilities reached a high of 24,000 early this year but has since declined to approximately 21,000, still representing more than one-third of the national ICE population of approximately 58,000. We believe that this recent decline is likely due to several factors including the recent transition in leadership at the Department of Homeland Security and the 82-day partial government shutdown of DHS resulting in a lapse in annual appropriations for ICE.

During this lapse in annual appropriations, we believe ICE detention operations have been supported with funding from the “one big beautiful bill.” As a reminder, under the budget reconciliation bill, ICE received approximately $45 billion for detention available through 09/30/2029, and this funding is not impacted by the partial government shutdown. Congress has approved legislation that reopened most of DHS, excluding ICE and Customs and Border Protection, through an annual appropriations bill while proposing legislation through reconciliation for $70 billion to fund ICE and CBP through the next three and a half years. Consistent with prior shutdowns, the services rendered under our contracts with ICE have continued uninterrupted as they are considered essential public safety services.

However, the timing of payments and collections has been somewhat delayed, requiring us to carefully manage our liquidity and working capital needs. With the expansion of our revolving credit facility by $100 million earlier this year, we believe we have substantial liquidity. Our first quarter 2026 results also reflected significant expansion in our Secure Transportation services on behalf of both ICE and the U.S. Marshals Service. In 2025, we entered into new or amended contracts to expand secured ground transportation services at four existing ICE facilities and at our three newly activated ICE facilities, and the support services that we provide under our ICE Air subcontract have continued to steadily increase.

In addition, in 2025, we signed a new five-year contract with the U.S. Marshals Service covering 26 federal judicial districts and spanning 14 states. Overall, these new and expanded transportation contracts are valued at approximately $60 million in incremental annual revenue. Importantly, in 2025, we also secured a new two-year contract for the ISAP 5 program. ISAP is the only ICE program currently in place to provide electronic monitoring and case management services for individuals on the non-detained docket.

The program relies on several forms of monitoring, including GPS ankle bracelets or a wrist-worn device that provide real-time tracking, as well as the SmartLink phone app, which relies on facial recognition, voice ID, and GPS to confirm a person's location during predetermined check-ins. ISAP counts remained relatively stable during 2026 at approximately 180,000 to 181,000 participants. Consistent with the trend we highlighted last quarter, we have continued to see a steady technology shift to more intensive and higher-priced monitoring devices such as ankle monitors. The number of ISAP participants on GPS ankle monitors has increased to more than 48,000 currently from 17,000 in early 2025.

Correspondingly, the number of ISAP participants on the SmartLink mobile app has declined to approximately 131,000 today from approximately 159,000 in early 2025. We also continue to experience a steady increase in the number of ISAP participants assigned to case management services, which involve staff interaction and monitoring for approximately 111,000 individuals currently. If this trend continues, the technology and case management mix shift would continue to increase the revenues and earnings generated under the ISAP 5 contract even if overall volume remains constant. Thus, we continue to be optimistic about the importance and growth potential of the ISAP 5 contract, and we believe that it is well positioned to scale up to higher overall counts.

In the fourth quarter, we were also awarded a new two-year contract by ICE for the provision of skip tracing services valued at up to $60 million in revenues per year. We began providing skip tracing services under this new two-year contract in the month of March and are optimistic that the contract can ramp up to higher volumes later this year. Finally, at the state level, we were awarded two new management-only contracts in 2025 from the Florida Department of Corrections valued at approximately $100 million in combined annual revenues. They include the 1,884-bed Graceville facility and the 985-bed Bay facility and are scheduled to transition to The GEO Group, Inc. management on 07/01/2026.

Moving to our updated guidance, we have increased our outlook for 2026 to reflect the strength of our first quarter results, and we believe there are still several sources of potential upside that are not currently included in our guidance. On the revenue side, sources of potential upside include additional growth in our Secure Services segment from the reactivation of additional idle facilities and/or higher overall populations across our active facilities; additional volume increases and/or accelerated technology service mix in our ISAP 5 contract; additional revenue from higher utilization of our skip tracing contract; and additional growth potential in our Secure Transportation segment. On the expense side, our guidance assumes more moderate contribution from labor savings in subsequent quarters.

Moving to our outlook for new business opportunities in 2026, we will continue to be in active discussions with ICE and the U.S. Marshals Service regarding the potential reactivation of additional idle facilities. It is our understanding that the present ICE detention is approximately 58,000 distributed over approximately 225 separate locations, which are primarily short-term jail facilities. We believe the federal government is continuing to pursue the priority of increasing immigration detention capacity to approximately 100,000 beds or more and consolidating to fewer, larger facilities. As a 40-year partner to ICE, we expect to be part of the solution. We have approximately 6,000 idle beds at six company-owned facilities, which are primarily former U.S.

Bureau of Prisons facilities and therefore high security, making them ideally suited for the current needs of the federal government. At full capacity, these 6,000 beds could generate more than $300 million in combined incremental revenues. Before moving on to a more detailed review of the first quarter results, I would like to highlight our continued progress towards strengthening our capital structure and enhancing shareholder value. During the first quarter, we purchased approximately 3.6 million shares for approximately $50 million, bringing the total number of shares repurchased to 8.5 million for approximately $141 million. Our current total outstanding share count is approximately 133.7 million shares, and we have approximately $359 million still available under our $500 million share repurchase authorization.

We believe our stock continues to trade at historically low multiples despite the intrinsic value of our assets and our significant growth opportunities, and we recognize that this imbalance creates a unique opportunity to enhance value for our shareholders through share repurchases. Moving to a more detailed review of our financial results, revenues for the first quarter of 2026 increased to approximately $705.2 million, up from approximately $604.6 million in the prior year's first quarter, reflecting a 17% increase. For the first quarter of 2026, we reported net income attributable to The GEO Group, Inc. operations of approximately $38.3 million, or $0.29 per diluted share.

This compares to net income attributable to The GEO Group, Inc. operations of approximately $19.6 million, or $0.14 per diluted share, for the first quarter of 2025, reflecting a 96% increase year over year. Our adjusted EBITDA for the first quarter of 2026 increased to approximately $131.4 million, up from approximately $99.8 million in the prior year's first quarter, reflecting a 32% increase. Looking at revenue trends, our owned and leased Secure Services revenues increased by approximately $70 million, or 23%, compared to the prior year's first quarter.

This increase was driven by the activation of our three company-owned facilities under new contracts with ICE, which was offset by revenue loss from the sale of the Lawton, Oklahoma facility and the depopulation of the Lea County, New Mexico facility. Quarterly revenues for our managed-only contracts increased by approximately $33 million, or 22%, from the prior year's first quarter. This increase was driven by the joint venture agreement for the management of the North Florida Detention Facility, as well as certain transportation revenue increases that are reported in this segment. Quarterly revenues for our reentry services increased by approximately 5%, offset by a 5% decline in non-residential services revenues compared to the prior year's first quarter.

Finally, first quarter 2026 revenues for our electronic monitoring and supervision services decreased by approximately 4% from the prior year's first quarter. This decrease was driven by the reduced pricing for our ISAP 5 contract, which was offset by favorable technology and case management mix shift and some modest skip tracing revenues. Turning to expenses, during the first quarter of 2026, our operating expenses increased by approximately 15% as a result of the activation of our new ICE facility contracts and increased occupancy compared to the prior year's first quarter. Operating expenses were favorably impacted by lower-than-expected labor costs compared to our prior guidance for 2026.

Our general and administrative expenses for the first quarter of 2026 declined to 8.6% of revenue as compared to 9.6% of revenue in the prior year's first quarter. Our first quarter 2026 results reflect a year-over-year decrease in net interest expense of approximately $4 million as a result of the reduction of our total net debt. Our effective tax rate for the first quarter of 2026 was approximately 28.5%. Moving to our outlook, we have increased our guidance for the full year of 2026 and issued guidance for the second quarter of 2026.

We expect full year 2026 GAAP net income to be $153 million to $166 million, or a range of $1.10 to $1.25 per diluted share, on annual revenues of $2.95 billion to $3.1 billion, based on an effective tax rate of approximately 30%, inclusive of known discrete items. We expect full year 2026 adjusted EBITDA to be in the range of $525 million to $545 million. We expect total capital expenditures for the full year of 2026 to be between $137.5 million and $162.5 million.

For the second quarter of 2026, we expect GAAP net income to be $33 million to $39 million, or a range of $0.25 to $0.29 per diluted share, on quarterly revenues of $715 million to $725 million. We expect second quarter 2026 adjusted EBITDA to be between $130 million and $135 million. Moving to our balance sheet, we closed the first quarter of 2026 with approximately $80 million in cash on hand and approximately $1.61 billion in total debt. At the end of the first quarter of 2026, our total net debt was approximately $1.53 billion, and our total net leverage was below 3.2 times adjusted EBITDA.

With the expansion of our revolving credit facility by $100 million, which we announced in January, we believe we have substantial liquidity to support our diverse capital needs as we manage through the current partial government shutdown. In closing, we are very pleased with our first quarter results and improved full year outlook. Our strong performance has been driven by the new growth opportunities we captured in 2025 and are normalizing in 2026. Last year was the most successful period for new business wins in our company's history, and we expect 2026 to be a very active year as well. We therefore believe we have upside potential across our diversified business segments.

We have approximately 6,000 idle high-security beds that remain available, which could generate in excess of $300 million in annual revenues at full occupancy. The continued shift in technology and case management mix and potential increases in counts under our ISAP 5 contract could also provide additional upside through 2026. We are also well positioned to continue to expand our delivery of secure ground and air transportation services for ICE and the U.S. Marshals Service beyond the significant growth we have already experienced. Finally, as we discussed last quarter, ICE has purchased 11 commercial warehouses that were to be retrofitted as detention facilities while contracting with private sector companies for operations.

These purchases were part of a plan to acquire 24 warehouses and retrofit them as detention facilities using funds from the $40 billion provided for detention in the “one big beautiful bill.” At this time, the warehouse project has been paused, and DHS is evaluating how to proceed with this initiative to increase and consolidate detention capacity. It has also been widely reported that ICE is considering the purchase of approximately 10 privately owned turnkey ICE Processing Centers. ICE uses approximately 40 existing detention sites nationwide that are owned and operated by private contractors. CoreCivic owns and operates approximately 15 detention facilities, while The GEO Group, Inc. owns and operates 23 ICE detention facilities.

I can respectfully acknowledge that we have been in discussions with ICE regarding the potential sale of multiple facilities, subject to mutual agreement on price and our continued management of those facilities under long-term support services contracts. We consider ourselves primarily a support services operator and will place particular importance on our ability to continue our support services at any facility sold to ICE. There will also be a need to renegotiate select contracts so as to eliminate the ownership costs such as depreciation and property taxes embedded in our present contracts in the event of ICE ownership.

At this time, there is no definitive agreement in place with ICE and no precise timeline for the closing of any such transactions, and of course, we can give no assurances that these transactions will take place at all. But if select facilities are sold to ICE, The GEO Group, Inc. would use the proceeds to reduce debt and continue stock repurchases as well as other corporate purposes. The potential sale of multiple facilities to ICE could represent a significant liquidity and shareholder value-enhancing event for our company. While the exact timing of government actions is always difficult to estimate, we remain focused on pursuing new growth opportunities and allocating capital to enhance our long-term value for our shareholders.

Given the intrinsic value of our assets, including 50,000 owned beds at 70 facilities, and our current and expected future growth, we believe that our stock is significantly undervalued and offers a very attractive investment opportunity. That completes my remarks, and I would be glad to take any questions from our audience. Thank you.

Pablo E. Paez: Thank you.

Operator: We will now open the call for questions. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble the roster. The first question will come from Gregory Thomas Gibas with Northland Securities. Please go ahead.

Gregory Thomas Gibas: Hey, good morning. Thanks for taking the questions, and congrats on the execution there. I wanted to follow up on the potential facility sales and maybe how we should think about potential valuations in relation to the Lawton facility sale last year at, I believe, approximately $130,000 per bed.

George C. Zoley: Thank you for the question. I think the Lawton per-bed valuation is a good baseline, to be followed by several other factors that should result in a meaningfully higher valuation for our ICE facilities. First, the physical plant at an ICE Processing Center is much more complicated, with the addition of courtrooms and office space requirements for ICE personnel, which adds to the cost. Second, the ICE facility locations are in or near urban areas, which add to the land and construction costs. And third, several of the ICE facility locations are in blue states, which makes their development very difficult to establish and very problematic to replicate, thus adding to their value.

So, again, the Lawton sale in Oklahoma is a good baseline, but there are many things to consider beyond that which would drive the price to a higher level.

Gregory Thomas Gibas: Got it. That makes sense. Appreciate that. I know you mentioned it is difficult to predict the timing of these sales, but do you believe initial sales could still be realized or announced within Q2, or is Q3 a more likely time frame?

George C. Zoley: I would guess late Q2, maybe early Q3, but that is just a guess.

Gregory Thomas Gibas: Fair enough. And last one for me related to some reports that ICE was activating the Central Valley Annex facility in California, next to the Golden State Annex. Is that a transfer facility, or is that new? Any color you can provide there would be helpful.

George C. Zoley: The Central Valley facility actually was under ICE to begin with in 2020, and it was lent to the U.S. Marshals Service up until only recently, and then ICE has taken it over since then. It is a 700-bed facility located in the McFarland, California area, next to another ICE facility, adjacent to it. So it is part of a complex that is entirely ICE controlled.

Operator: The next question will come from Joseph Anthony Gomes with Noble Capital. Please go ahead.

Joseph Anthony Gomes: Good morning, and thanks for the detailed overview, George, much appreciated. I wanted to circle back on the Q1 performance, especially given the decline in ICE populations over the period — they were down roughly from 24,000 at the end of the fourth quarter to 21,000 at the end of the first quarter or today. Maybe give a little more color on how that progressed through the quarter, and also some color on the ramp-up of the reactivated facilities. Is that going as expected, or slower than expected given the decline in ICE populations recently? And what that possibly means for getting those facilities up to normalized occupancy levels.

George C. Zoley: Two very good questions. Let me take the first regarding lower populations, which actually promoted an increase in our EBITDA. With respect to lower populations, it required less intake duties, less housing assignments, less off-site travel, and less labor and overtime. At one point, these facilities were extremely active as to the intake and outflow of detainees, which was very costly, often bringing people in on an overtime basis to handle intake, housing, and off-site requirements. It has stabilized at this point, and we think it will be fairly stable through the second quarter as well, with a pickup starting probably in the second half of the year.

Regarding the new facilities, we had very rapid intakes at one point, and that has slowed down because of the general scale-down of ICE populations nationally. We are in a holding pattern to a large extent because of the change in administration, the lack of specific funding for ICE, and the reevaluation of immigration enforcement policies and programs.

Joseph Anthony Gomes: Thank you for that. You also talked about lower-than-anticipated labor costs. Can you provide a little more color on where that is coming from and what is driving it?

George C. Zoley: As I said, it is the lower number of intakes and lower overall population that drive it, primarily in overtime costs — additional people in the intake area and additional people serving in special needs cases, particularly in mental health cases, require additional staff and, in many cases, overtime. We are seeing a population that is more sickly than we have historically had, and these individuals require more off-site visits, more staff involvement, and more overtime expense. With the pause in overall population levels and intake activity, it has given us a welcome breather from the very rapid intake and outflow processing that we experienced last year.

Joseph Anthony Gomes: One more for me, if I may. Last quarter you talked about looking at additional opportunities in the mental health area. How are those efforts progressing?

George C. Zoley: We do have a pending proposal with the State of Florida Department of Children and Families for a forensic facility in the state that we at one time developed, constructed, and operated for eight years. We expect there will be a decision on that procurement in the next 30 days, I imagine.

Operator: The next question will come from Brendan Michael McCarthy with Sidoti & Company. Please go ahead.

Brendan Michael McCarthy: Great, good morning. Thanks for taking my questions. I wanted to start off on the skip tracing business. You are only about two months or so into operations there. Can you give us any detail on the current volume in that program and the revenue model associated with the program?

George C. Zoley: Our guidance reflects some modest improvement in that program. We received an initial contract assignment and delivered it very quickly. There are other contractors that were awarded similar contracts; they are still working on their assignments. We are waiting for them to catch up so we can get our next assignment.

Brendan Michael McCarthy: Understood. On the updated 2026 guidance, the low end of the revenue guide was brought up, but there was a more meaningful uplift in adjusted EBITDA and EPS for the year. What is the read-through there? Is it really in line with your prior comments on a lower cost structure at these new facilities?

George C. Zoley: It really is at this point. That is our view of what is taking place in the financials of these facilities. We have had one month of activity to reflect on, and we think we are on track as to our guidance and the underlying assumptions. We believe we have given you good guidance.

Brendan Michael McCarthy: Got it. One more on the updated guidance for CapEx — it was up 10% to 11% at the midpoint. Any insight into that increase and which specific segment will consume that incremental capital?

George C. Zoley: We have 6,000 idle beds, and some of those facilities need retrofitting to bring them up to date and revise them according to the updated needs of ICE. As we get these new contracts, ICE is typically asking for more office space and areas for their use for more staff, and we have to pay for those improvements to the capital structure of the facility.

Operator: The next question will come from Raj Sharma with Texas Capital. Please go ahead.

Raj Sharma: Hi, congratulations on the results and raising the guidance, and thank you for taking my questions. I wanted clarity on the $520 million of revenues from wins last year. They do not seem to be fully reflected in the increase in the revenue guidance. Could you please help bridge how much of these wins will be fully ramped versus still to come, and also comment on utilization at Adelanto and the three activated ICE facilities by year-end?

George C. Zoley: A $100 million of the new $520 million was related to two facilities in the State of Florida. Those facilities have not yet been activated; they start 07/01/2026, so only half of the $100 million will take place this year. Then we had an offset of two facilities with the discontinuation of the Lawton, Oklahoma facility, which was approximately 2,400 beds, and the Lea County facility, which was approximately 1,200 beds.

Raj Sharma: Got it. How soon do you see a pickup in ICE detention stats, and has your outlook on ICE achieving approximately 100,000 detentions changed with the change in the DHS administration and the laws?

George C. Zoley: We do not have any special insight into how the administration is reassessing the initiative to convert warehouses to detention facilities. I think there is still an objective of trying to increase nationwide capacity as close as possible to 100,000 and to consolidate from approximately 250 locations now to fewer, larger-scale facilities. As I said, we have 6,000 beds that can be activated within a few months. I think CoreCivic has maybe 10,000 beds. Both of us have expansion capabilities on those beds — we could expand our 6,000 to maybe 10,000 — and the private sector with the two major providers can provide a very meaningful increase in nationwide capacity at a very favorable, comparable cost.

Operator: The next question will come from Kirk Ludtke with Imperial Capital. Please go ahead.

Kirk Ludtke: Hello, everyone. Thank you for the call. George, you mentioned the 100,000 beds and fewer facilities. Do you have a sense for how many of those 100,000 beds ICE would want to own?

George C. Zoley: Probably as many as possible. But I think they are starting to look at the price tags of each of the facilities and doing comparisons as to whether the existing turnkey facilities may be a better play financially and operationally than some of these other locations, which have been politically problematic. All of the plans are being reviewed and assessed, and I am sure they will come up with some reasonable conclusions.

Kirk Ludtke: Why do they want to own the facilities rather than contract with third parties?

George C. Zoley: It has been reported that through federal ownership there are more protections from unwarranted litigation that infringes upon the activities of ICE Processing Centers. There has been litigation regarding oversight of medical services, food services, general cleanliness, etc. It is really unprecedented and, I believe, fundamentally unconstitutional. As some blue states are considering more active involvement in oversight of facilities, I think the logical solution to much of that is federal ownership of the facilities. They are federal facilities to begin with, in my opinion.

It is the federal government that is paying for the operations of the facilities, but the ownership of the buildings will provide stronger credibility in the courts as to the Supremacy Clause in the Constitution — that these are federal facilities carrying out the congressional priorities of immigration programs and policies that Congress has passed — and that states can only have very limited involvement in those policies and programs.

Kirk Ludtke: Interesting. Thank you. How many beds are in your 23 ICE facilities?

George C. Zoley: We have 25,000 beds in those 23 owned facilities.

Kirk Ludtke: Great. Lastly, you mentioned the $45 billion. Would ICE need any type of incremental approval to do this, or is the $45 billion at their discretion?

George C. Zoley: The $45 billion is at their discretion.

Operator: This concludes our question and answer session. I would like to turn the conference back over to George C. Zoley for any closing remarks.

George C. Zoley: Thank you for being on this call. We look forward to addressing you on the next one.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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