CoreCivic, Inc. (CXW) Q4 2025 Earnings Call Transcript
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Overview
The company has strong revenue and EBITDA projections, and an active share repurchase program, which are positive indicators. The Q&A revealed confidence in staffing and liquidity, despite some declines in margins due to facility activations. The potential for significant revenue and EBITDA growth from ICE contracts and the expanded credit facility further support a positive outlook. The market cap suggests a moderate reaction, leading to a 'Positive' sentiment rating.
Key Financial Performance
Annual revenue from 3 new contract awards (excluding Midwest Regional) Approximately $260 million once operations normalize.
Annual revenue run rate (post-stabilized occupancy) Approximately $2.5 billion, with an annual EBITDA run rate increase of almost $100 million year-over-year to approximately $450 million.
ICE detention populations Historical highs of around 69,900 individuals in early January 2026, an increase of almost 10,000 individuals from the end of Q3 2025. ICE populations in CoreCivic's care increased by 5,903 individuals (58%) year-over-year to just over 16,000.
U.S. Marshals Service populations Declined by 1,235 individuals year-over-year in Q4 2025 due to fewer apprehensions at the southern border.
Federal revenue (Q4 2025) Increased 49% compared to Q4 2024. Revenue from ICE increased by $124.4 million (103.4%), while revenue from the U.S. Marshals Service decreased by $11.3 million.
State revenue (Q4 2025) Increased 5% year-over-year, driven by new contracts in Montana and population increases in Georgia and Colorado.
Total occupancy for Safety and Community segments (Q4 2025) 78.1%, up 2.6 points year-over-year.
Average daily population across all facilities (Q4 2025) 56,380 individuals, up from 50,202 year-over-year.
Adjusted EPS (Q4 2025) $0.27, up 69% from $0.16 in Q4 2024.
Normalized FFO per share (Q4 2025) $0.52, up 33% from $0.39 in Q4 2024.
Adjusted EBITDA (Q4 2025) $92.5 million, up 25% from $74.2 million in Q4 2024.
Operating margin for Safety and Community facilities (Q4 2025) 22.2%, down from 23.6% in Q4 2024. Excluding facilities in activation, margin was 24.1%.
Share repurchases (2025) 11.2 million shares repurchased at an aggregate cost of $218.4 million, reducing shares outstanding by 10.2%.
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Operating Highlights
New contract awards: CoreCivic announced new awards in the second half of 2025 for the 600-bed West Tennessee Detention Facility, the 2,560-bed California City Immigration Processing Center, the 1,033-bed Midwest Regional Reception Center, and the 2,160-bed Diamondback Correctional Facility. These facilities are expected to generate annual revenue of approximately $260 million once operations normalize.
Revenue growth from ICE: Revenue from ICE increased by $124.4 million or 103.4% in Q4 2025 compared to the prior year quarter.
ICE detention population growth: Nationwide ICE detention populations reached historical highs of around 69,900 individuals in early January 2026, an increase of almost 10,000 individuals from the end of Q3 2025. CoreCivic manages approximately 23% of total ICE populations.
State-level opportunities: CoreCivic is in discussions with several states in need of additional bed capacity, which could include the use of idle correctional facilities.
Facility activations: CoreCivic is moving towards stabilized occupancy in mid-2026 for three newly activated facilities, excluding the Midwest Regional Reception Center, which is delayed due to a special use permit application.
Operational efficiency: Total occupancy for Safety and Community segments increased to 78.1% in Q4 2025, up 2.6 points from the prior year quarter.
Share repurchase program: CoreCivic repurchased 5.3 million shares in Q4 2025 at an aggregate cost of $97.3 million, bringing year-to-date repurchases to 11.2 million shares at a cost of $218.4 million.
Idle facility capacity: CoreCivic owns five idle facilities with approximately 7,000 beds and has informed ICE of the availability of nearly 13,000 additional beds, including surge and partial capacity.
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Risk or Challenges
Midwest Regional Reception Center intake delay: The intake process at the Midwest Regional Reception Center is delayed due to a special use permit application filed in December 2025. This delay creates uncertainty in revenue generation and operational planning for 2026.
Decline in U.S. Marshals Service populations: Nationwide populations from the U.S. Marshals Service have declined, partially offsetting the increase in ICE populations. This decline impacts revenue from one of the company's largest customers.
Idle facilities and underutilized capacity: The company owns 5 idle correctional and detention facilities with approximately 7,000 beds, which are not generating revenue. Additionally, some facilities are incurring net operating losses during activation phases.
Dependence on ICE and U.S. Marshals Service: 57% of the company's revenue comes from federal partners, primarily ICE and the U.S. Marshals Service. This heavy reliance on a few customers poses a risk if demand from these partners decreases.
Regulatory and legal challenges: The company is involved in a lawsuit regarding the special use permit for the Midwest Regional Reception Center. Regulatory hurdles like these can delay operations and increase legal costs.
Seasonal and operational cost fluctuations: Seasonal factors such as higher utilities and unemployment taxes in Q1 negatively impact operating margins. Additionally, facilities in activation phases incur start-up costs, affecting profitability.
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Guidance & Outlook
Revenue Expectations: Annual revenue run rate expected to reach approximately $2.5 billion in the first half of 2026, with an annual EBITDA run rate increase of nearly $100 million year-over-year to approximately $450 million. This excludes potential contributions from the Midwest Regional Reception Center and other new contract awards.
Facility Activations: Three previously idle facilities are expected to reach stabilized occupancy in the first half of 2026, contributing to the revenue and EBITDA growth. Midwest Regional Reception Center's activation is delayed due to a special use permit application, but discussions are ongoing.
ICE Detention Populations: Nationwide ICE detention populations are at historical highs, with CoreCivic managing approximately 23% of total ICE populations. This trend is expected to drive demand for additional detention capacity.
Idle Facility Utilization: CoreCivic owns five idle facilities with approximately 7,000 beds and has informed ICE of the availability of nearly 13,000 additional beds. Incremental demand for these facilities is anticipated.
State-Level Opportunities: Discussions with several states in need of additional bed capacity are ongoing, with potential opportunities to utilize idle correctional facilities in the coming quarters.
Capital Expenditures: Planned capital expenditures for 2026 include $60-$70 million for maintenance, $15 million for other projects, and $35-$40 million for facility activations and potential new activations.
Share Repurchase Program: CoreCivic plans to prioritize cash flow for share repurchases, with $300.5 million remaining under the current authorization. This is expected to enhance shareholder value.
2026 Financial Guidance: Diluted EPS projected at $1.49-$1.59, FFO per share at $2.54-$2.64, and EBITDA at $437-$445 million. Guidance excludes potential new contract awards and Midwest Regional Reception Center contributions.
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Shareholder Return Plan
Share Repurchase Program: During the fourth quarter, CoreCivic repurchased 5.3 million shares of its common stock at an aggregate cost of $97.3 million, increasing year-to-date repurchases to 11.2 million shares at an aggregate cost of $218.4 million. These repurchases represent 10.2% of the outstanding shares at the beginning of the year, reducing the number of shares outstanding to 100 million as of December 31, 2025. Since the program's authorization in 2022, a total of 25.7 million shares have been repurchased at an aggregate price of $399.5 million. The Board increased the cumulative repurchase authorization to $700 million, with $300.5 million still available as of December 31, 2025. The company plans to continue prioritizing cash flow for share repurchases, considering stock price and alternative capital deployment opportunities.
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Key Q&A
Q:Why were there no new reactivations in Q4?
A:There were no new contracts entered into in Q4 due to the ebb and flow of demand. The company has 7,000 beds available in idle facilities and an additional 5,000 beds within existing facilities that are immediately available for use. The lack of new awards in Q4 is not indicative of a lack of potential demand.
Q:Is the decline in safety margins due to the activation of facilities like California City and Diamondback?
A:Yes, the decline in margins is due to the activation of facilities. Excluding the three facilities being activated, the margin was around 24%. Margins are expected to grow as these facilities reach stabilized occupancy in the first half of 2026.
Q:What is the confidence level in staffing new facilities?
A:The company is confident in its ability to staff new facilities. They have successfully staffed facilities like South Texas and Diamondback quickly and do not see staffing as a limitation for activating bed capacity.
Q:What is the current contracting environment with ICE and DHS?
A:The company is in constant dialogue with ICE and DHS to assess needs and evaluate how to support them. There is no specific update on pipeline opportunities, but the company remains actively engaged.
Q:What are the plans for share buybacks?
A:The company was active in share buybacks in Q4, purchasing shares at an average price of $18.25. They plan to continue buybacks at current prices, supported by the Board, and see the shares as undervalued.
Q:Does the $450 million EBITDA run rate include the two new contracts but not the Midwest Regional Facility?
A:Yes, the $450 million EBITDA run rate includes the two new contracts but excludes the Midwest Regional Facility.
Q:What is the potential EBITDA upside from activating the Midwest Regional Facility?
A:The company did not disclose the EBITDA for the Midwest Regional Facility but mentioned it has $60 million in annual revenue. The guidance assumes no new incremental contract wins, including Midwest Regional.
Q:What is the total room for additional population with surge capacity?
A:The company has 7,000 beds in idle facilities and an additional 5,000 beds with surge capacity, totaling 13,000 beds.
Q:Will the revolving credit facility be used for share repurchases?
A:The company has $200 million in annual cash flow available for growth opportunities and buybacks without increasing leverage. The revolving credit facility, which was expanded to $700 million, can also be used for share repurchases.
Q:Are there any potential acquisitions similar to Farmville on the horizon?
A:The company is actively evaluating opportunities but does not have any imminent acquisitions. They will consider opportunities that are a good strategic fit and offer compelling multiples.
Q:Can the company support its initiatives with its current liquidity?
A:Yes, the company has over $300 million available on its revolving credit facility and close to $100 million in cash. They are not liquidity-constrained and have expanded their revolving credit facility by $300 million.
Q:What is the expected growth trajectory for the company over the next 3-4 years?
A:The company expects growth to come in periods of demand from specific customers. They have the greatest visibility a year out and are focused on future growth opportunities with federal and state partners.
Q:How is the company planning to use AI?
A:The company is exploring AI for back-office efficiency, enhancing educational opportunities, improving security tools, and making cameras smarter. They have hired a Chief Information and Digital Officer to lead these efforts.
Q:What is the potential revenue and EBITDA upside if ICE contracts for all 13,000 beds?
A:If ICE contracts for all 13,000 beds at an average per diem of $125, it could generate $593 million in incremental revenue and $136 million in incremental EBITDA.
Q:What is the company's view on the pace of ICE detentions?
A:The company sees the pace of ICE detentions as slower than expected but notes a significant increase in funded beds from 45,000 to over 70,000. They expect continued growth as enforcement infrastructure builds out.
Q:How many people are detained in facilities other than those operated by the company or its competitors?
A:Approximately 5,000 people are detained in alternative facilities, such as repurposed industrial spaces or state capacity.
Q:What factors influence ICE's use of alternative facilities?
A:ICE's use of alternative facilities depends on geographical demand and the availability of traditional capacity. Some demand is national, while other demand requires localized solutions.
Q:What could facilitate a ramp in ICE detentions?
A:A ramp in ICE detentions would likely result from the build-out of enforcement infrastructure and the deployment of trained personnel.
Q:Review of Unclear Management Responses
A:Management avoided providing specific updates on pipeline opportunities, EBITDA details for the Midwest Regional Facility, and precise growth trajectories beyond the current year. They also used vague language when discussing the potential for acquisitions and the pace of ICE detentions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Administration agreement
CEO CoreCivic
CFO Garfinkle
Colorado occupancy
Diamondback Correctional
Facility example
Facility facility
Farmville acquisition
Garfinkle detail
Georgia Colorado
Marshals population
Obama Administration
Processing Facility
Regional contract
Regional delay
Regional uncertainty
access care
accountability compliance
accreditation government
acquisition team
activity Farmville
activity occupancy
activity share
addition increase
agency capacity
aggregate Midwest
agreement contract
application city
application conversation
award point
bed Diamondback
border Marshals
capacity mean
capital structure
care environment
care individual
care quality
care translation
contract state
end ICE
individual increase
use
CXW Transcript
CoreCivic, Inc. (CXW) Q4 2025 Earnings Call Transcript
Positive2-12
The company has strong revenue and EBITDA projections, and an active share repurchase program, which are positive indicators. The Q&A revealed confidence in staffing and liquidity, despite some declines in margins due to facility activations. The potential for significant revenue and EBITDA growth from ICE contracts and the expanded credit facility further support a positive outlook. The market cap suggests a moderate reaction, leading to a 'Positive' sentiment rating.
CoreCivic, Inc. (CXW) Q3 2025 Earnings Call Transcript
Positive11-7
The earnings call summary shows strong revenue growth, increased occupancy, and multiple facility activations, supported by significant government funding. The Q&A section highlights positive hiring conditions, strong capital allocation strategies, and optimistic guidance for future revenue and EBITDA growth. Despite some uncertainties in legal matters and vague management responses, the overall sentiment is positive, with favorable financial metrics and strategic initiatives likely to boost the stock price.
CoreCivic, Inc. (CXW) Q2 2025 Earnings Call Transcript
Positive8-11
The earnings call highlights several positive aspects: strong financial guidance, increased demand for CoreCivic's services, and potential for significant revenue growth from activating idle facilities. The Q&A session reveals high confidence in resolving legal issues and meeting demand shifts, although some management responses were unclear. Overall, the anticipation of new contracts, strategic investments in transportation, and the potential for substantial revenue from idle beds contribute to a positive outlook. Given the company's market cap, a positive stock price movement of 2% to 8% is likely over the next two weeks.
CoreCivic, Inc. (CXW) Q1 2025 Earnings Call Transcript
Unknown5-8
The earnings call presents a mixed picture: positive financial results with revenue growth and exceeding analyst estimates, but there are concerns about operational risks, supply chain challenges, and reliance on short-term contracts. The share repurchase program is a positive signal, but the lack of long-term contract stability with ICE and unclear management responses in the Q&A section temper the overall sentiment. Given the company's market cap and the balance of positive and negative factors, the stock price reaction is likely to remain neutral in the short term.
CXW Report
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