GEO Group (GEO) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Executive Vice President of Corporate Relations - Pablo Paez
• Chairman, Chief Executive Officer and Founder - George C. Zoley
• Senior Vice President and Chief Financial Officer - Shayn March

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TAKEAWAYS

• Revenue -- $761.1 million, representing a 12% increase year over year driven by new facility activations and expanded service contracts.
• Adjusted EBITDA -- $145.3 million, a 21% increase compared to the third quarter 2025, marking the highest quarterly level in the company's history.
• Adjusted Net Income -- $51.8 million, or $0.39 per diluted share, reflecting a 48% increase from $35 million in the prior year's third quarter.
• Full Year 2026 Revenue Guidance -- $2.975 billion to $3.025 billion, updated to reflect strong performance in the first three quarters.
• Full Year 2026 Adjusted EBITDA Guidance -- $568 million to $573 million, representing a 23% increase at the midpoint over full year 2025 results.
• Full Year 2026 Adjusted Net Income Guidance -- $185 million to $190 million, or $1.40 to $1.44 per diluted share.
• Adelanto Complex Sale -- $950 million gross sales price for the three-facility complex, yielding approximately $705 million in net proceeds after taxes and transaction costs.
• Senior Secured Notes Redemption -- $650 million, representing the full redemption of the 8.625% notes due 2029 using proceeds from the Adelanto facility sale.
• Total Outstanding Corporate Debt -- $625 million, consisting of the 10.250% senior unsecured notes due 2031 following the recent debt redemptions.
• Net Leverage -- 1.0 times Adjusted EBITDA, a target level management intends to maintain or remain below for its future capital strategy.
• Share Repurchase Authorization -- $1.25 billion, following a Board-approved increase of $750 million to the existing program.
• Shares Repurchased -- 10.1 million shares at an aggregate cost of $177 million under the current authorization as of Nov. 5, 2026.
• New ICE Incremental Revenue -- $500 million in combined annual value from new and expanded service contracts entered into during 2026.
• Bighorn Facility Contract -- $85 million in annual revenue expected for the 1,190-bed facility, with operations beginning in the first quarter 2027.
• Rivers Facility Contract -- $80 million in annual revenue expected for the 1,320-bed facility, with operations beginning in the first quarter 2027.
• Big Spring Complex Contract -- $200 million in annual revenue expected for the 2,330-bed complex starting in the second quarter 2027.
• Northwest ICE Processing Center Contract -- $140 million in total annual revenue under a new 10-year management agreement extending through Oct. 27, 2036.
• Adelanto Staffing Modification -- $60 million in incremental annual revenue resulting from an increased scope of services at the facility.
• Active ICE Census -- 24,000 individuals, representing approximately one-third of the total national ICE population of 73,000.
• Idle Bed Capacity -- 2,900 beds at four company-owned facilities, which management estimates could generate $170 million in incremental annual revenue if activated.
• ISAP Participant Count -- 190,000 individuals, reflecting an increase from 184,000 participants three months ago.
• ISAP Case Management -- 121,000 individuals, representing a shift toward more staff-intensive and higher-margin service tiers.
• Capital Expenditures -- $140 million to $150 million for full year 2026, primarily driven by facility reactivations for ICE.
• Managed Only Contracts Revenue -- $194 million, representing a 19% increase year over year driven by a joint venture agreement in North Florida and transportation growth.
• ICE Enforcement Funding -- $45 billion allocated for detention services through September 2029, with less than $10 billion spent to date according to management.

SUMMARY

The GEO Group, Inc. (NYSE:GEO) reported record-breaking quarterly financial performance, achieving its highest-ever levels of quarterly revenue and Adjusted EBITDA. Management stated that the results were driven by the activation of new facility contracts signed in 2025 and an expanded scope of services for federal agencies. The company completed the $950 million sale of the Adelanto complex to the federal government while retaining a multiyear contract to provide support services at the site. This divestiture enabled the redemption of $650 million in senior secured notes, significantly reducing corporate debt and lowering net leverage to approximately 1.0 times Adjusted EBITDA. Management also increased its share repurchase authorization to $1.25 billion, signaling a shift in capital allocation toward shareholder returns as the company transitions toward a support services-focused business model.

• Management reported a strategic focus on separating facility ownership from service provision, with CEO Zoley stating, "We are pursuing additional potential sales of the buildings but we want to retain the business of providing support services."
• The company is engaged in active negotiations for the sale of up to four additional facilities to the federal government, which could potentially close before the end of 2026.
• Electronic monitoring services saw a reversal of a multiyear revenue decline, driven by a shift toward higher-priced ankle monitors and increased case management participation.
• Three additional facilities, the Aurora, Moshannon Valley, and Broward processing centers, are currently involved in procurement processes for potential 10-year contract awards.
• Management scheduled the transition of managed-only contracts for the Graceville and Bay facilities in Florida for July 1, 2027, which is expected to provide further revenue upside.

INDUSTRY GLOSSARY

• ISAP: Intensive Supervision Appearance Program, an ICE initiative providing electronic monitoring and case management for non-detained individuals.
• Adjusted EBITDA: A non-GAAP measure of earnings before interest, taxes, depreciation, and amortization, adjusted for one-time costs and non-cash items.
• Net Leverage: A financial ratio calculated as total debt minus cash, divided by Adjusted EBITDA.
• IGSA: Intergovernmental Service Agreement, a contract between a federal agency and a local government for facility use and services.
• Skip Tracing: The process of locating individuals for legal or court compliance purposes.
• GEO Continuum of Care: A proprietary platform for providing rehabilitation, vocational training, and post-release support to individuals in the justice system.

Full Conference Call Transcript

Operator: Good day, and welcome to the GEO Group Third Quarter 26 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead.

Pablo Paez: Thank you, operator. Good afternoon, everyone, and thank you for joining us for today's discussion of The GEO Group's Third Quarter 2026 Earnings Results With us today are George C. Zoley, Chairman, Chief Executive Officer and Founder and Shayn March, senior vice president and chief financial officer. This afternoon, we will discuss our third quarter results as well as our outlook. We will conclude the call with a question-and-answer session. This conference call is also being webcast live on our Investor website at investors.geogroup.com. Today, we will discuss non GAAP basis information. A reconciliation from non GAAP basis information to GAAP basis results is included in the press release and the supplemental disclosure we issued this morning.

Additionally, much of the information we will discuss today including the answers we give in response to your questions, may include forward looking statements. Regarding our beliefs and current expectations with respect to various matters. These forward looking statements are intended to fall within the safe harbor provisions of the securities laws. Our actual results may differ materially from those in the forward looking statements, as a result of various factors, contained in our Securities and Exchange Commission filings including the Form 10-Ks, 10-Q, and 8-K reports. With that, please allow me to turn this call over to our Chairman, CEO and Founder, George C. Zoley. George?

George C. Zoley: Thank you, Pablo, and good afternoon, everyone, and thank you for joining us. Our diversified business units have continued to deliver strong financial and operational performance through 2026. And our third quarter 2026 results marked a record breaking quarter for GEO. Compared to the same period in 2026, our third quarter 2020 revenues increased 12% to approximately $761.1 million. While our third quarter 2026 net income attributable to GEO operations was approximately $49.2 million. Compared to the same period in 2025 our third quarter 2026 adjusted EBITDA increased 21% to approximately $145.3 million. And our adjusted net income increased 48% to approximately $51.8 million.

These results represent the highest level of quarterly revenues and adjusted EBITDA ever reported in our company's history. Even better than expected performance in 2026 has been driven by the significant revenue growth from the new contracts that we entered into throughout 2025. They included the activation of 4 facilities to house ICE detainees totaling 6 thousand beds. Valued at approximately $280 million in annual revenues. So far in 2026, we have had an even more successful year for the new expanded services entering into new contracts for the activation of 4 additional facilities to house ICE detainees totaling approximately 4.8 thousand beds.

These contracts, along with the expanded scope of services at existing facilities created an overall value of approximately $500 million in incremental annual revenues. First, we entered into a 5 year support services contract with ICE for the activation of a federal immigration processing center at the 1.19 thousand-bed Bighorn facility in Hudson, Colorado while also entering into a lease agreement with the facility owner. The Bighorn support services contract is expected to generate approximately $85 million in annual revenues in the first full year of operations. Starting in the first quarter of 2027.

We then entered into a 5 year support services contract with ICE for the activation of a federal immigration processing center in the geo owned 1.32 thousand-bed Rivers facility in Winton North Carolina. The Rivers support services contract is expected to generate approximately $80 million in annual revenues in the first full year of operations, also starting in the first quarter of 2027. More recently, we announced earlier this week the city of Big Spring in Texas has entered into a 10 year intergovernmental service agreement with ICE for the activation of a federal immigration processing center at the 2.33 thousand-bed Big Spring complex comprised of 1.4 thousand-bed flight line facility and the 925-bed Cedar Hills facility.

GEO will provide support services at the Big Spring complex which is expected to generate approximately $200 million in annual revenues for GEO in the first full year of operations. Starting in the second quarter of 2027. Under all 3 of these contracts, ICE will reimburse GEO for the capital expenditures needed to reactivate these 4 facilities as well as providing funding for start up expenses during the activation period. Following the activation of these 4 facilities, our total ICE beds under contract will increase to approximately 33 thousand beds at 29 facilities. The current census across our active ICE facilities is approximately 24 thousand representing approximately 1/3 of the current national ICE population of approximately 73 thousand.

Over the past 2 quarters, we have also entered into new or modified contracts for the continued provision of support services at existing ICE processing centers. First, during the third quarter, we entered into a contract modification to increase staffing levels at the 1.94 thousand-bed Adelanto ICE processing center to support the increase in the scope of services at the facility adding $60 million in incremental annual revenues. More recently, last week, we announced that we have entered into a new 10 year management contract with expanded support services at incremental annual revenue value of $50 million at the GEO owned 1.64 thousand-bed Northwest ICE Processing Center in Tacoma, Washington.

The new 10-year contract is expected to generate approximately $140 million in total annual revenues for GEO and continue through 10/27/2036, making it the first contract we have entered into ICE with a full base term of 10 years. This new contract was awarded under ongoing procurement that involves 3 other geo owned facilities, the Aurora facility, the Moshannon Valley facility, and Broward ICE Processing Center. Which are also expected to receive new 10-year contract awards. ICE enforcement initiatives nationwide are supported by significant funding that has already been approved by the United States Congress. ICE was allocated $45 billion for the detention under the 1 big beautiful bill which is available through 9/30/2029.

We believe that less than $10 billion of $45 billion has been spent so far. Under the Secure America Act, ICE also received $38.5 billion in baseline appropriations funding as well as an additional $30 billion for other priorities under the 1 Big Beautiful bill all of which is also available through 9/30/2029. As ICE continues to pursue these enforcement initiatives, we expect GEO to continue to be part of the solution as a 40-year partner to the agency. Following our recent contract announcements, we now have approximately 2.9 thousand idle beds that remain available at 4 company owned facilities, which are well suited for the needs of the federal government.

At full capacity, these 2.9 thousand idle beds could generate approximately $170 million in combined incremental revenues. Additionally, we have expansion capacity of several thousands of beds at existing geo managed ICE facilities. Our third quarter 2026 results also reflect a significant expansion in our secure transportation services on behalf of ICE, and the US Marshals Service. As a result of new or amended contracts we entered into in 2025. The support services that we provide under ICE Air transportation subcontract have continued To Steadily Grow Driven By The Increase In The Number Of Removable Flights.

Additionally, Our New Bighorn Rivers and Big Spring contracts with ICE are expected to generate approximately $28 million in combined additional annual transportation services revenues once normalized in 2027. Importantly, during the third quarter of 2 thousand 26, our ISAP contract continued to experience a steady technology shift to more intensive and higher price monitoring devices such as ankle monitors. 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 wrist worn devices 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 the predetermined check-in. The current overall ISAP count is approximately 190 thousand participants up from 184 thousand participants 3 months ago. The number is 58 thousand currently, from 17 thousand early in 2025. We also continue to experience a steady increase in the number of ISAP participants assigned to case management services, which involves staff interaction and monitoring for approximately 121 thousand individuals currently.

As a result of these trends, revenue and net operating income for our electronic monitoring and supervision services increased during the third quarter of 2026 compared to the same period a year ago, reversing a multiyear trend of revenue and net operating income declines. Additionally, during the third quarter of 2 thousand 26, we generated revenues of approximately $3 million from our skip tracing contract. Moving to our outlook, we have increased our net income and adjusted EBITDA guidance for 2026 to reflect the strength of our results in the first 3 quarters of the year. Our fourth quarter 2020 revenue and adjusted EBITDA guidance exceeds our third quarter 2 thousand and 26 results.

Positioning GEO to set another record breaking quarter. Looking forward to 2027, there are several sources of future upside compared to our 2026 guidance. They include the expected activation of 4 new ICE facilities at Bighorn, Rivers, and the Big Spring Complex. Comprised of 2 facilities. Additional growth in our additional secure services segment from the reactivation of additional idle facilities and or higher overall populations across our active facilities. The expected transition of our previously announced managed only contracts for the 1.88 thousand-bed Graceville facility and the 985-bed Bay facility in the state of Florida, which are expected to occur on 07/01/2027.

Additional volume increases and/or accelerated technology service mix in our ISAP contract, additional growth in our secured transportation services business, and additional revenue from higher utilization of our skip tracing contracts. Before I turn the call over to our CFO, Shayn March for a more detailed review of our third quarter results and guidance I would like to provide you with an update regarding the plan by ICE and DHS to purchase existing privately owned turnkey ICE processing centers. As we announced last month, we completed the sales of our 1.28 thousand-bed Adelanto West ICE processing center 660-bed Adelanto East, 704-bed Desert View Annex to DHS.

For an aggregate gross sales price of $950 million and net proceeds after taxes and transaction fees and expenses of approximately $705 million. We expect to continue providing support services at the Adelanto complex under our existing contract with ICE, which has a full effective term through 12/19/2034. We used proceeds from the sales of the Adelanto complex for the redemption of our $650 million 2029 senior secured notes and we also entered into an amended and restated credit agreement extending the maturity of our $550 million revolving credit facility to July 2031. And also increasing our restricted pay payment capacity, including share repurchases.

Following the redemption of the 2029 senior secured notes, our total outstanding corporate debt consists of our 2031 senior unsecured notes totaling $625 million. As we previously announced, our Board of Directors has increased our share repurchase authorization, which is effective through 12/31/2029 by $750 million to $1.25 billion. Based on our current leverage and so long as we remain below specified leverage levels, GEO is permitted to make unlimited restricted payments, including share repurchases under both the amended credit facility agreement and the senior unsecured note indenture.

Given the intrinsic value of our assets including 48 thousand owned beds, our strong financial performance in providing diversified secured support services and our expected future growth we believe that our stock continues to be significantly undervalued and offers a very attractive investment opportunity. Therefore, in addition to further debt reduction and other general corporate purposes, we intend to allocate a substantial portion of future facility sales proceeds and recurring free cash flow toward our expanded share repurchase authorization, which may include structured share repurchases on an accelerated basis. Following the recently completed asset sales, ICE now uses approximately 34 existing detention sites nationwide that are owned and operated by private contractors.

CoreCivic now owns and operates approximately 12 ICE detention facilities. While GEO owns and operates 20 ICE detention facilities. In addition to the facility sales we completed last month, we remain engaged in active processes for the sale of multiple other company owned facilities to ICE subject to mutual agreement on price and GEO's continued management of those facilities under long term support services contract. We believe we have 2 types of assets, the building and the businesses of providing support services. We are pursuing additional potential sales of the buildings but we want to retain the business of providing support services.

We continue to consider ourselves primarily a support services operator and will place particular importance on our ability to continue our support services at any additional facilities sold to ICE. Specifically, we believe that our current active negotiations could result in additional sales before the end of 2026 for up to 4 additional facilities. We believe that the future sales are likely to have similar valuations to the transactions that have already been completed by ICE. With standard adjustments with respect to geography, facility size, and age. And it is possible that the number of facilities targeted for acquisition by ICE could continue to grow in the future.

At this time, there is no definitive agreement in place and no precise timeline for the closing of any additional transactions. And GEO can provide no assurance that any additional transactions will in fact occur. 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 long term value for our shareholders. At this time, I will turn the call over to Shayn to review our quarterly results and increase guidance.

Shayn March: Thank you, George. Good afternoon, everyone. The third quarter of 2026 set all time highs for GEO in quarterly revenues and adjusted EBITDA, and also an all time high in quarterly adjusted net income under a non REIT corporate structure. Revenues for the third quarter of 2026 increased by approximately $761.1 million up from approximately $682.3 million for the prior year's third quarter. Reflecting a 12% increase. For the third quarter of 2026, we reported net income attributable to GEO operations of approximately $49.2 million or $0.37 per diluted share. This compares to net income attributable to GEO operations of approximately $173.9 million or $1.24 per diluted share in the third quarter of 2025.

Which included the $228 million gain on the sale of the Lund, Oklahoma facility. Adjusting for unusual and nonrecurring items, third quarter 2026 adjusted net income increased to approximately $51.8 million or $0.39 per diluted share up from approximately $35 million or $0.25 per diluted share in the prior year's third quarter. Our adjusted EBITDA for the third quarter of 2026 increased to approximately $145 million up from approximately $120.1 million in the prior year's third quarter reflecting a 21% increase. Driving this historical quarterly performance, our owned and leased secured services revenues increased by approximately $46 million or 13% compared to prior year's third quarter.

This increase was driven by the activation of 3 company owned facilities under new contracts with ICE, which was partly offset by revenue lost from the sale of the Lawton Oklahoma facility. Quarterly revenues for our managed only contracts increased by approximately $31 million or 19% from the prior year's third quarter. This increase was primarily 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 owned and leased reentry services increased by approximately $3.5 million partly offset by a $3 million decline in nonresidential services revenues compared to the prior year's third quarter.

Finally, third quarter 26 revenues for our electronic monitoring and supervision services increased by approximately 1.6% compared to the third quarter of 25, reversing a multiyear trend of quarterly revenue declines for this important segment and demonstrating the strength of the continued favorable technology and case management mix shift in our ISAP contract, which more than offset some price reductions previously reported. Turning to expenses. During the third quarter of 2026, our operating expenses increased by approximately 8.5% as a result of the activation of our ICE facility contracts and increased occupancy compared to prior year's third quarter. Our general and administrative expenses for the third quarter of 2026 increased modestly to approximately 9.5% of revenue.

Approximately 9.1% of the prior year's third quarter revenue the result of additional business development expenses. Our third quarter 26 net interest expense remained steady at approximately $36 million compared to the prior year's third quarter. Our effective tax rate for the third quarter of 2026 was approximately 27%. Moving to our outlook. We have updated our guidance for the fourth quarter and the full year 2026. For the fourth quarter of 2026, we have increased our GAAP net income guidance to a range of $591 million to $595.5 million which includes the gain on the sale of the Adelanto, California ICE complex.

We have also increased fourth quarter 2026 adjusted net income guidance to a range of $46 million to $51 million or a range of $0.35 to $0.39 per diluted share on a quarterly revenue of $777 million to $827 million We have increased our fourth quarter 2026 adjusted EBITDA guidance to a range of $149 million to $154 million If this guidance is achieved, the fourth quarter of 2026 would set another record breaking quarter for GEO. While also positioning our company for a strong 2027 outlook.

For the full year 2026, we have increased GAAP net income guidance to a range of $726.3 million to $730.5 million which includes the gain on sale of the Adelanto, California, ICE complex in the fourth quarter of 2026. We have also increased full year 2027 adjusted net income guidance to a range of $185 million to $190 million a range of $1.40 to $1.44 per diluted share on annual revenues of $2.975 billion to $3.025 billion and based on an effective tax rate of approximately 28% inclusive of known discrete items.

This represents a 56% increase over 2025 adjusted net income at the midpoint of $187.5 million We have increased our full year 2026 adjusted EBITDA guidance to a range of $568 million to $573 million representing a 23% increase at the midpoint of $570.5 million We expect total unreimbursed capital expenditures for the full year 2026 to be between $140 million and $150 million and expect normal unreimbursed CapEx to decline to approximately $100 million in 2027. Moving to our balance sheet.

Following the sale of the Adelanto complex in October, we completed the redemption of our $650 million senior secured notes and executed an amendment to our $550 million revolving credit facility extending its maturity and increasing our restricted payments capacity including share repurchases. Our total outstanding corporate debt consists of our 2031 senior unsecured notes totaling $625 million. Our available liquidity is approximately $600 million including cash on hand and revolver availability. Net of cash, our current leverage is approximately 1x adjusted EBITDA, And based on our current outlook, we have reset our capital strategy to remain at or below this net leverage level going forward.

Based on our current leverage and so long as we remain below specified leverage levels, GEO is permitted to make unlimited restricted payments including share repurchases under both the amended credit facility agreement and the senior unsecured note indenture. Given what I believe is a significant discount in our stock valuation, our Board of Directors previously reported, increased our share repurchase authorization which is effective through 12/31/2029, by $750 million to $1.25 billion We plan to remain active under this program regardless of future asset sales. At this time, will turn the call back to George.

George C. Zoley: Thank you, Shayn. To recap our third quarter 2026 was a historic quarter for our company, setting new all time highs for GEO for quarterly revenues and adjusted EBITDA. And based on our increased guidance, we expect the fourth quarter of 2026 to be another record setting quarter. This historic financial performance in 2006 will position GEO for a very strong outlook in 2027 with several sources of potential further upside heading into next year. Including the expected activation of 4 new ICE facilities at Bighorn, Rivers, and the Big Spring Complex, additional growth in our secured services segment from the reactivation of additional idle facilities, and overall higher populations across our active facilities.

The expected transition of our previously announced managed only contracts for the 1.88 thousand-bed Graceville facility. And the 985-bed Bay facility in the state of Florida. Which are expected to transition on 07/01/2027. The additional volume increases and or accelerated technology and service mix in our ISAP contract. Additional growth in our secured transportation services business, and additional revenue from higher utilization of our skip tracing contracts. In addition to our strong financial performance and significant expected future growth, we believe that additional asset sales could be completed before the end of 2026.

Having already completed the sale of the Adelanto complex for $950 million, we believe it is possible that up to 4 additional facilities owned by GEO could be sold in the fourth quarter of 2026. These potential asset sales would represent another significant liquidity and shareholder value creation event for our company. Given the intrinsic value of our assets, 48 thousand owned beds, our strong financial performance in providing diversified secure support services and our expected future growth. We believe that our stock continues to be significantly undervalued and share repurchases are therefore a paramount capital allocation priority for our company. That completes our remarks, and we will be glad to take any questions.

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touch tone phone. If you are using a speaker phone, 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 our roster. The first question today comes from Joe Gomes with Noble Capital. Please go ahead.

Joe Gomes: Good afternoon. Thanks for taking my questions.

George C. Zoley: Good afternoon. So I wanted to start out, George. Looking at 93% occupancy at the end of the quarter, you know, how much additional utilization upside remains in your view? At existing facilities mathematically, it would be 7%. But we are now transitioning 4 new facilities as I discussed. 2 of which will open by January 1, representing about 2.5 thousand beds and 2 more facilities by March 1, representing about 2.3 thousand beds. Those are major increases in our capacity.

Joe Gomes: Okay. Thanks for that. And then maybe you could talk a little bit more about the ISAP contract. Obviously, it has not gone as the government had said, looking at numbers significantly higher than where we are today. I think there is about 1 year left on that contract. You know, obviously, you guys have been have won that contract on multiple occasions, but just want to get your view or your thoughts on, ISAP and, is ICE going to eventually start to use that contract and your expectations when it comes up for renewal.

George C. Zoley: Okay. Well, remember, the ISAP contract is under a program called alternatives to detention. The focus has obviously been under this administration to increase detention capacity, and we have participated in that initiative in increasing our contracted bed space at this point to 33 thousand beds, which is almost the entirety of the number of beds that was under the Biden administration. So it is been very significant. The ISAP contract did not develop as we expected 2 years ago, but we are very pleased that the technology mix has shifted towards these more intensive electronic devices, but in including increasing case management.

So we do think that contract will continue to grow and expand as the capacity or the detention capacity is achieved by this administration in this country. So once that is achieved, we think ISAP will continue to grow as it has, and particularly with regard to the technology mix.

Joe Gomes: Okay. Great. Thanks for that. I will pass it on.

Operator: The next question comes from Greg Gibas with Northland Securities. Please go ahead.

Greg Gibas: Hey. Good afternoon, George and Shayn. Thanks for taking the questions. Wondering how you are thinking about ICE's timeframe for additional facility sales if they were to occur? And maybe if you could discuss kind of how you expect the split incremental proceeds for debt pay down versus repurchases? And would you consider an ASR like we have seen from your public peer?

George C. Zoley: Well, I will take the first part of that question. We do think there is a reasonable chance of multiple sales occurring before the end of this year involving our company And it is a complicated process because, you know, these facilities are located in different states. There are different designs, different cost of replacement construction for each facility. And we have required that the facilities contracts continue for a significant period of time which further complicates and lengthens the process. But we are reasonably optimistic as I say that 1 or multiple facilities could be purchased by ICE from our company before the end of this quarter.

With regards to the use of proceeds, I will defer to Shayn March.

Shayn March: Regarding proceed application, we really do not have that much debt left. So it is a $625 million of unsecured notes. So any significant asset sale, we would definitely use to reduce our indebtedness, and we would absolutely consider any type of return of capital back to shareholders, including accelerated type structure transaction. So we are evaluating all the different options and we will act accordingly once those sales were to occur.

Greg Gibas: Got it. that is very helpful. And to follow-up on the previous question as it relates to ISAP, and I know ICE is very detention focused, but wondering if you could touch on how populations have trended with respect to the ISAP contract?

George C. Zoley: Well, the population is slightly trended up. it is gone from, I think, 185 thousand to approximately 190 thousand. But importantly, within that mix, are the changes as I have been discussing in the electronic devices that are used. They have gone to the more costly and more secure ankle monitors rather than phones. And the other part is the increase in case management, which involves our staff being involved on an interactive basis with people in the program to make sure we know who they are, where they are, and that they are going to be attending their meetings on-site with our company as well as the court hearings that will adjudicate their cases.

Greg Gibas: Got it. Thanks very much. I will pass it on.

Operator: The next question comes from Brendan McCarthy with Sidoti. Please go ahead.

Brendan McCarthy: Greg. Good afternoon. Appreciate you taking my questions. Just wanted to start off on the new Adelanto management contract. I think you mentioned there was a contract modification there that added roughly $60 million in annual revenue. I believe it was due to staffing level increases. Is that baked into the guidance at this point for this year?

Shayn March: Yes, sir. Yep, that is baked in for the rest of this year.

Brendan McCarthy: Got it. Okay. that is helpful. And could you remind us of the contract economics there and talk about the margin profile of that management contract and compare it to the margin profile of how it looked under ownership?

George C. Zoley: Well, it was an owned facility. it is now an acquired facility. Normally, you would expect that there will be a price reduction on the ownership cost issues that are still to be negotiated. They have not occurred yet. But concurrently, we have had as a as the process of renegotiation of that facility and expanded scope of services that was desired by ICE to add several more staff for several more purposes. And that will offset any decrease in the ownership funding of the facility.

Brendan McCarthy: Understood. I appreciate the detail. Last question. It looks like there is a large implied step up for capital expenditures for Q4 of this year. I hesitate to assume that is mostly reactivation spending that will be reimbursed by ICE.

Shayn March: Yeah. that is correct. it is that plus, obviously, just we have pushed some CapEx scheduled for earlier in the year to the fourth quarter. So it is a combination of both, but it is predominantly going to be tied to activations of the ICE facilities.

Brendan McCarthy: Understood. that is all for me. Congrats on a good quarter.

Operator: Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to George C. Zoley, Chairman, CEO and Founder of The GEO Group for any closing remarks.

George C. Zoley: Okay. Thank you, everyone, for joining us today. We look forward to our next call.

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

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