Good day, and welcome to CoreCivic's Third Quarter 2025 Earnings Conference Call. As a reminder, this call may be recorded. I would now like to turn the call over to Jeb Bachmann, Managing Director, Investor Relations.

Thank you, operator. Good afternoon, everyone, and welcome to CoreCivic's third quarter 2025 earnings call. Participating on today's call are Damon Hininger, CoreCivic's Chief Executive Officer; Patrick Swindle, CoreCivic's President and Chief Operating Officer; and David 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 third quarter of 2025 as well as updated financial guidance for the 2025 year. We will also discuss developments with our government partners and provide you with other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our third quarter 2025 earnings release issued after market yesterday as well as in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q and also 8-K reports. You are cautioned that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future. Management will discuss certain non-GAAP metrics. A reconciliation of the most comparable GAAP measurement is provided in the corresponding earnings release and included in the company's quarterly supplemental financial data report posted on the Investors page of the company's website at corecivic.com. With that, it is my pleasure to turn the call over to our CEO, Damon Hininger.

Thank you, Jeb. Good afternoon and thank you for joining us for CoreCivic's third quarter 2025 earnings call. On this afternoon's call, I will discuss our near-term and long-term outlook and recent contracting activity. Following my opening remarks, I will hand the call over to Patrick Swindle, our President and Chief Operating Officer. Patrick will review the performance of our core portfolio, discuss in further detail our operational activities relating to facility activations during the quarter and how we are preparing for additional demand from our government partners. We will then turn the call over to our CFO, Dave Garfinkle, who will provide detail on our third quarter financial results as well as our updated 2025 financial guidance and provide an update on our capital allocation strategy. I will then conclude with some closing remarks before we open up the call for Q&A. First up, an update on our activation activities, where we've made substantial progress on contracting several idle facilities. Since our last earnings call, we announced new awards at the 600-bed West Tennessee Detention Facility, the 2,560-bed California City Immigration Processing Center, the 1,033-bed Midwest Regional Reception Center and the 2,160-bed Diamondback Correctional Facility. In aggregate, these 4 new contract awards are expected to generate annual revenue of approximately $320 million once we reach stabilized occupancy. Our updated full year 2025 financial guidance reflects significant earnings growth from 2024. Although these recently announced new contract awards negatively impact our financial guidance for the fourth quarter due to start-up related activities, which Dave will review in detail, these new awards set us up nicely for an even stronger 2026. Once we reach stabilized occupancy for these new awards, which we expect to occur during the first half of 2026, we expect our annual run rate revenue to be approximately $2.5 billion and annual run rate EBITDA to increase by $100 million to over $450 million, and this is not counting any additional contract awards. While staffing ramp continues at each of these facilities with some already accepting detainees, the intake process at our Midwest facility has been delayed by a lawsuit filed by the City of Leavenworth. Although we are optimistic, we cannot predict if or when a favorable resolution will be achieved. Patrick will provide further details on the progress of these activations. Moving to a discussion of the business climate. At the end of September 2025, nationwide ICE detention populations were at historical highs of around 60,000, an increase of a couple of thousand from the end of the second quarter. U.S. Immigration and Customs Enforcement or ICE has been our largest customer for over a decade. From the end of 2024 through the third quarter, ICE populations in our facilities increased by 3,700 to almost 14,000 or 37%. We believe that enforcement activity could gain additional momentum in the coming months as more agents are hired to meet ICE's target of 100,000-bed detention capacity. Nationwide populations from the United States Marshals Service, our second largest customer, have remained relatively flat, although we expect Marshals populations to increase in 2026 due to an anticipated increase in enforcement activities and as more U.S. attorneys are put in place. Our Marshals populations have declined slightly to just over 6,300 at the end of September. Many of our state partners continue to face complex correctional challenges either because of staffing shortages, overcrowding or outdated infrastructure. Our year-over-year state populations were up about 600 people driven most notably from new contracts with the State of Montana and increased populations in Georgia. We are in conversations with numerous existing and potential state partners to accommodate their additional demand. As we continue to look for additional ways to meet our government partners' needs, we believe that we can make available substantial capacity to meet future demand. Even after the earlier mentioned activations, we own 5 idle corrections and detention facilities containing approximately 7,000 beds. Along with surge capacity we have made available at certain facilities, partial capacity we have in facilities that are currently in operation and capacity we can make available through third-party leases like our great partnership with Target Hospitality I previously mentioned, we have close to 24,000 beds that we have informed ICE could be available. We continue to believe that detention beds like these represent the best value and are the most humane, most efficient logistically, have the highest audit compliance scores in their system, are more secure, weather-proof and readily available. One final comment before I pass the call over to Patrick. As you all know, the company has authorization for a share repurchase program for up to $500 million in the aggregate. During the 9 months ended September 30, 2025, we purchased 5.9 million shares of common stock under the share repurchase program at an aggregate cost of $121 million or $20.60 per share. Since the share repurchase program was authorized in May of 2022, through September 30, 2025, we have purchased a total of 20.4 million shares of our common stock at an aggregate cost of $302 million or $14.81 per share, excluding fees, commissions and other costs related to the repurchases. As of September 30, 2025, we had approximately $198 million of repurchase authorization available under the share repurchase program. Looking at the current stock price and our historical EBITDA trading multiples, the market is assuming a $300 million EBITDA run rate for the company, which is clearly a misalignment with our recent operating performance and anticipated forecast for 2026. With that, we expect to be executing an aggressive buyback plan this quarter, likely to be more than double the amount we have done in previous quarters. With that, I will pass the call over to Patrick Swindle for further review of our operations activities during the third quarter.

Thanks, Damon. I'll start with a high-level overview of our top line revenue and third quarter operational performance. Federal partners, primarily Immigration and Customs Enforcement and the U.S. Marshals Service, comprised 55% of CoreCivic's total revenue in the third quarter. Revenue from our federal partners increased by 28% during the third quarter of 2025 compared with the prior year quarter. Further breaking down our federal revenue, revenue from ICE increased by $76.2 million or 54.6%, while revenue from the U.S. Marshals Service decreased by 5% versus the prior year quarter. Some of this decline is simply a shift in mix where ICE and Marshals share a contract. As Damon mentioned, we expect increases in U.S. Marshals populations later in 2026. Revenue from our state partners increased by 3.6% from the prior year quarter. This increase includes additional revenue from the State of Montana, resulting from the 2 new contracts we signed with the state since the second quarter of 2024 and population increases in Georgia. Total occupancy for our Safety and Community segments for the quarter was 76.7%, up 1.5 points since the year-ago quarter. As we noted on our last quarter earnings call, total occupancy reflects the transfer of our 2,560-bed California City Immigration Processing Center from our Property segment, which isn't included in these occupancy statistics, to our Safety segment. Although this facility recently transitioned from a letter contract to a definitized contract, we have not yet begun receiving any detainees until late in the third quarter. Therefore, if we exclude this additional capacity from the calculation, making a more apples-to-apples comparison with prior periods, our reported occupancy would have been 79.3%. The average daily population across all of the facilities we manage was 55,236 during the third quarter of 2025 compared with 50,757 in the year-ago quarter. This increase was driven by more demand for our services and new contracting activity. Our teams continue to be successful in working with our government partners and managing the additional people in our care, which we are focused on every day. Our third quarter results exceeded our internal projections for adjusted EPS and normalized FFO per share by $0.03 and $0.04, respectively, and adjusted EBITDA by $4.8 million. As Damon alluded, the third quarter was a very busy quarter with reactivation activities at several previously idle facilities. We resumed operations in March at the 2,400-bed Dilley Immigration Processing Center under a new 5-year agreement and reached full operational capacity in September. Shortly after the second quarter earnings release, we announced a new IGSA contract for our 600-bed West Tennessee Detention Facility. This contract has a 5-year term and is expected to generate $30 million of annual revenue once fully activated. Full ramp is expected to be completed by the end of the first quarter of 2026. Effective September 1, 2025, we transitioned from a letter contract with ICE to a definitized contract at our 2,560-bed California City Immigration Processing Center. The new contract is for a 2-year period and is expected to generate annual revenue of approximately $130 million once fully activated. We began receiving detainees at the facility on August 27 and expect the activation to be completed in the first quarter of 2026. Effective September 7, 2025, we transitioned from a letter contract with ICE to a definitized contract at our 1,033-bed Midwest Regional Reception Center. This new contract is for a 2-year period and is expected to generate annual revenue of approximately $60 million once fully activated. However, the intake process continues to be delayed by the lawsuit with the City of Leavenworth that Damon mentioned earlier. Given the facility's centralized location, ICE is eager to begin fully utilizing this facility, and we're optimistic about successfully resolving the dispute. Effective September 30, 2025, we entered into a new IGSA between the Oklahoma Department of Corrections and ICE to resume operations at our 2,160-bed Diamondback Correctional Facility. This new contract has a 5-year term and is expected to generate approximately $100 million in annual revenues once fully activated, which we currently forecast to occur in the second quarter of 2026. In aggregate, these 4 recently announced contract awards are expected to generate annual revenue of $320 million. Despite visibility into annual run rate EBITDA, we do not believe the current stock valuation reflects the cash flows of our business, particularly considering these new contracts and our growth potential. Therefore, we plan to accelerate the pace of our share repurchases in future quarters, taking into consideration stock price and alternative opportunities to deploy capital, among other factors, as Dave will discuss further. The substantial progress made during the quarter in reactivating previously idle facilities couldn't have been accomplished without the hard work of our employees and the strong relationship with our government partners. However, we know there's more work to be done. Activations are complex, and activating 4 idle facilities simultaneously is particularly complex. But I'm confident we have the right plan and the right teams in place to be successful both in these and future activations. In the meantime, we continue to remain focused on effectively managing our core portfolio and ensuring we meet our high operational standards as well as those of our government partners. Without this focus and performance, these additional opportunities may not exist. And so as I turn it over to Dave to discuss our third quarter financial results in more detail, our capital allocation activities and assumptions included in our updated 2025 financial guidance, I'd like to again express my appreciation to our 13,000 employees for their focus and commitment to our mission.

Thank you, Patrick, and good afternoon, everyone. In the third quarter of 2025, we generated GAAP EPS of $0.24 per share and FFO per share of $0.48. Special items in the third quarter of 2025 included a $2.5 million gain on the sale of assets, a $1.5 million asset impairment and $0.8 million of M&A charges, including our acquisition of the Farmville Detention Center on July 1, reported in G&A expenses. Excluding special items, adjusted EPS in the third quarter was $0.24 compared with $0.20 in the third quarter of 2024, an increase of 20%. And normalized FFO per share was $0.48 per share compared with $0.43 per share in the prior year quarter, an increase of 11.6%. Adjusted EBITDA was $88.8 million compared with $83.3 million in the third quarter of 2024, an increase of 6.6%. Adjusted EPS and normalized FFO per share exceeded our internal forecast by $0.03 and $0.04 per share, respectively, and adjusted EBITDA exceeded our internal forecast by $4.8 million. The increase in adjusted EBITDA from the prior year quarter of $5.5 million resulted from higher federal and state populations as well as higher average per diem rates across much of our portfolio, partially offset by start-up activities in the third quarter of 2025 and some one-time benefits in the prior year quarter. The number of ICE detainees in our care followed national trends, which remained at or near record highs throughout the third quarter of 2025. As Damon and Patrick both mentioned, the third quarter was a very busy quarter for idle facility activations. We completed our reactivation of the Dilley Immigration Processing Center in September and are now generating revenue under a fixed monthly payment for the full 2,400-bed facility. During the third quarter, however, this facility accounted for a net decrease in facility net operating income of $3.4 million or $0.02 per share compared with the third quarter of 2024 as the facility was fully operational during the third quarter of 2024 until the contract with ICE was terminated effective August 9, 2024. As we previously disclosed last year, we also accelerated recognition of deferred revenue of $5.7 million in the third quarter of 2024 due to the contract termination. Shortly after last quarter's earnings release, we announced a new contract under an IGSA between the City of Mason, Tennessee and ICE to activate our previously idled 600-bed West Tennessee Detention Center, where we began receiving detainees on September 8. In September, we announced that we transitioned from short-term letter contracts at our 1,033-bed Midwest Regional Reception Center and our 2,560-bed California Immigration Processing Center into newly signed longer-term contract structures. We began receiving detainees at the California City facility on August 27. While obviously good news, we did incur facility operating losses at these 3 facilities during the third quarter of $3.4 million or $0.02 per share for start-up related activities. Although not impacting the third quarter, on October 1, we announced a new contract award under an IGSA between the Oklahoma Department of Corrections and ICE to activate our 2,160-bed Diamondback Correctional Facility, which commenced on September 30. Other factors affecting EBITDA and per share results included higher G&A expenses, the favorable impact of our share repurchase program and the acquisition of the Farmville Detention Center on July 1, 2025. Operating margin on our Safety and Community facilities combined was 22.7% in the third quarter of 2025 compared to 24.9% in the prior year quarter. Excluding the aforementioned operating losses at the 3 facilities in various stages of activation, operating margin was 24% for Q3 2025. Again, the margin in the prior year quarter was favorably impacted by the accelerated recognition of deferred revenue at the Dilley facility and a ramp down of populations at the facility in July 2024 despite generating a fixed revenue payment for the full facility through the August 9 termination date. Turning next to the balance sheet. During the third quarter, we repurchased 1.9 million shares of our common stock at an aggregate cost of $40 million, increasing our year-to-date repurchases to 5.9 million shares at an aggregate cost of $121 million. As of September 30, we had $197.9 million available under our $500 million Board authorization. As mentioned last quarter, on July 1, 2025, we acquired the Farmville Detention Center, a 736-bed facility located in Virginia for a total purchase price of approximately $71 million, including the acquisition of working capital accounts at an attractive return. After taking into consideration these share repurchases and this acquisition, our leverage measured by net debt to adjusted EBITDA was 2.5x using the trailing 12 months ended September 30, 2025. At September 30, we had $56.6 million of cash on hand and an additional $191.4 million of borrowing capacity on our revolving credit facility, which had a balance of $65 million outstanding, providing us with total liquidity of $248 million. Moving lastly to a discussion of our updated 2025 financial guidance. We expect to generate adjusted diluted EPS of $1 to $1.06 compared with $1.07 to $1.14 in our previous guidance and normalized FFO per share of $1.94 to $2 compared with $1.99 to $2.07 in our previous guidance. We expect adjusted EBITDA of $355 million to $359 million compared with $365 million to $371 million in our previous guidance. Our updated guidance reflects the favorable results for the third quarter, updated occupancy projections consistent with current trends as well as updated assumptions for start-up activities related to new contracts signed during the third quarter at our West Tennessee Detention Facility, our California Immigration Processing Center, our Midwest Regional Reception Center and our Diamondback Correctional Facility. Our revised guidance reflects a reduction in EBITDA at these 4 facilities of $10 million to $11 million compared with our prior guidance. In other words, the reduction in our guidance is essentially attributable to the updated assumptions for the start-up activities at these 4 facilities. These start-up activities will also negatively impact Q4 margins. We are currently preparing our 2026 budget and expect to provide financial guidance for 2026 in conjunction with our fourth quarter earnings release in February. However, as Damon mentioned, upon reaching stabilized occupancy at these 4 facilities, we currently expect our run rate EBITDA to be no less than $450 million. We currently expect to reach stabilized occupancy of the last activation of these 4 facilities in the second quarter of 2026, so we will not reach a full year run rate in 2026. Also keep in mind, activating facilities is a complex and challenging process with certain factors like the pace of intake and resolution of the legal dispute at our Midwest facility, to name a couple, not always within our control. We still have 5 remaining idle facilities containing 7,066 beds. We believe incremental demand for more idle facilities will likely be needed once ICE absorbs the recently contracted beds. With historic funding levels for border security and immigration detention obtained under the One Big Beautiful Bill Act, ICE's publicly stated intention to reach 100,000 detention beds nationwide as well as growing demand from existing and potential new state government partners, we believe there are numerous opportunities to activate additional idle facilities we own. We also believe there could be opportunities to manage additional bed capacity not currently in our portfolio. These opportunities would be incremental to the aforementioned run rate EBITDA levels after considering any start-up expenses. We plan to spend $60 million to $65 million on maintenance capital expenditures during 2025, unchanged from our prior guidance, and $14 million to $15 million for other capital expenditures increased primarily for preplanned investments at the newly acquired Farmville Detention Center. Our 2025 forecast also includes $97.5 million to $99.5 million of capital expenditures associated with potential facility activations and additional transportation vehicles, up from our prior guidance for requests from ICE in connection with the new contracts at the California City and Diamondback facilities. During the first 3 quarters of the year, we spent $51.6 million on potential idle facility activations and additional transportation vehicles. Finally, with respect to our capital allocation strategy, we do not believe the price of our common stock reflects the value of the cash flows of our business, particularly considering recent contract wins. We, therefore, expect to accelerate the pace of our share repurchases in future quarters. Our Q4 guidance contemplates double the pace of the previous quarter. Our share repurchases will take into consideration our stock price, liquidity, earnings trajectory and alternative opportunities to deploy capital. We expect adjusted funds from operations or AFFO, which we consider a proxy for our cash flow available for capital allocation decisions such as share repurchases and growth CapEx such as facility activations, to range from $210 million to $219 million for 2025. We expect our normalized 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 2025 to be approximately $167 million, excluding expenses associated with M&A transactions. Before we turn the call back to the operator for Q&A, I'd like to turn the call back to Damon for his closing remarks.

Thank you, Dave. Well, as you all know, in August, we announced that Patrick will succeed me as CEO effective on January 1, 2026. I have had the great honor and the privilege of holding the CEO title for over 16 years, and I'm humbled by the opportunity to have served this great company since I started my career as a correctional officer in the summer of 1992. I still clearly remember working my first post, which seems like yesterday. And I never would have, in my wildest dream, thought that I would be someday the CEO of this great company. It has truly been an amazing ride. And so as I close out my prepared remarks for my 65th and last quarterly earnings call, I want to express my gratitude to you, our investors, both new and long-term for your confidence, support, and ideas. Also to our government partners, to my fellow Board members, mentors, and colleagues, both current and retired, and all the other people with whom I have had the honor and privilege to work with, many of whom I call very dear friends. My sincere thanks to each and every one of you. I am tremendously excited and very proud of Patrick, and I know he will steer our company to new heights and tremendous success. Beyond my transition agreement, I do not know yet what the next chapter in my life will bring. But I do know it will be shaped by my experiences at CoreCivic, which has ingrained in me a call to continuous public service and improving people's lives. Best of luck to each and every one of you. And with that, I turn the call over to the operator for questions.

Our first question comes from Joe Gomez with NOBLE Capital.

Before I start, let me just say, Damon, it's been a pleasure working with you, and good luck on your future endeavors. And Patrick, I'm looking forward to seeing you fill Damon's shoes going forward.

Thank you, Joe. It means a lot. You've been a tremendous friend and always grateful for your advice and support perspective. So I'm going to miss you, my friend.

So, to the questions. We obviously, in the news is the government shutdown ICE looking to hire 10,000 people. And I think there's some concern out there that the level and pace of ICE detentions has slowed significantly from where originally people were thinking they would be. I think at one point, 3,000 a day, they were talking about. And I just wanted to kind of get your thoughts, Damon, on where the pace of ICE population detentions are for you guys? Is it meeting your goals or how far below has it been your expectations? And how you see that maybe playing out the rest of this year?

Great question, and I'll probably tag team with Patrick a little bit on this. But the shorter answer is that, as you know, we're a 24/7 essential service for the government. And so on our side, on the contractor side, I mean, we're seeing the pace, admissions, discharges and activity in our facilities pretty much status quo, I mean, pretty much what we expected. In fact, I'd say, it's increased a little bit not just on the detention side, but we're also being asked to do a lot more transportation. We are expecting that with the demands and expectations and the priorities for this administration after the inauguration. But I'd say, even that's picked up a little bit more than what we expected. And not quite to your question, but I would say also on the contracting side. So again, we've had probably the fastest clip of 4 contracts in a period of time that I've ever seen in the company history with the 4 that we've announced here in the last 90 days. And so all the activation activities around those 4 facilities, obviously, a lot of that's on our shoulders. But I'd say, on the government side, clearances, helping people getting situated that are obviously going to be monitors and other support staff that are going to help the mission of these facilities, I'd say none of that has slowed down at all. But Patrick, add and amplify to that, if you don't mind.

Sure. The only thing that I would add, Joe, is that really 2 things. One of them is the scale of increase in enforcement activity that has been implemented is really unprecedented and it's of a level that we really have not seen previously. And the consequence of that is you're going to see, I'll call it, an uneven or non-linear growth path. And so I wouldn't expect that you're going to see steady increases progressively. But what we do know is our Department of Homeland Security has been very committed to hiring additional officers to help them implement the mission. We've seen no indication that there's been any change in terms of policy or policy approach that would cause us to believe that what we've experienced more recently is anything other than the natural ebb and flow of ramping up to a scale that, again, we haven't seen previously. And so, as a consequence of that, I think it's really difficult to predict exact timing. But to Damon's point, we've signed 4 contracts. We're executing those and ramping them very quickly. We're going to be bringing those online but certainly wouldn't interpret pace as being an indication of any indicator of a lessening of long-term demand potential.

Okay. Can you provide more details on the guidance and updated occupancy projections? It seems they are lower than what was initially projected, and the assumptions for start-up costs might also be higher than originally anticipated. I would like to understand more about these comments and how they relate to the updated guidance.

Yes, Joe, I'll take the second part of that question. Our updated guidance really reflects the start-up activities in Q4 relative to our last guidance. So last guidance, remember, we hadn't signed the West Tennessee contract. We didn't sign the Diamondback contract. So neither of those 2 contracts were in our guidance for the year, the fourth quarter. So incorporating those new contracts into our guidance does result in some operating losses at those facilities as well as hiring staff, continuing to ramp up staff before we start receiving detainees. Now we have started receiving detainees at the West Tennessee facility, but the Diamondback facility is really just beginning its ramp-up. So that did take the guidance down in Q4, which I don't take as bad news. I mean, I'd rather have the contracts with start-up activities than leaving the guidance where it was without those contracts. And what was the first part of your question, Joe?

Just we talked about some of the updated occupancy projections...

Yes, occupancy, we expect that to increase because we are ramping up California City, our West Tennessee facilities, as I mentioned, are both taking on detainees. I would say that the rest of the core portfolio is at or near capacity. So I wouldn't expect a large increase from existing facilities. So as we ramp up additional idle capacity, the only opportunity is really to bring on new capacity and activate additional facilities with higher populations.

And Dave, maybe I can follow it up with the increased CapEx spend for ICE ask. What is ICE asking for that is going to increase the CapEx that you weren't originally anticipating?

Yes. So Diamondback and Cal City both asked for renovations to parts of the facility. That was really the increase in our CapEx guidance. I think it was intake areas. They want to expand the intake areas because ICE is a transient population. So typically, you have a higher volume of activity compared with a state population, which is what we had previously at both of those facilities.

I have one more question regarding the buyback. You mentioned your leverage goal is between 2.25 and 2.75, and I believe you indicated it would be around 2.5 at the end of the quarter. Given the current stock price and your intention to be more aggressive, would you consider going beyond your leverage targets to potentially acquire additional shares? How aggressive do you plan to be?

My short answer is yes, but I see we've got a couple of other people anxious to answer that question. So I'll flip it over to Damon and Patrick.

Joe, we're all nodding yes. Yes, yes, yes. I mean, if you think about it this way, and this is a pretty sweet way to end as a CEO. I mean, we look at our forecast next year, as I said in my script, $2.5 billion forecast in revenue, over $450 million in forecasted run rate EBITDA. And you look at the stock price, and that's ridiculous. I mean, so I think absolutely, we are looking at this quarter and then going into next year. If the price is going to sit around this level, this is a tremendous opportunity to buy back shares. And so I'm saying it obviously as CEO, we've got obviously the management team here, but I know I'm very confident our Board feels the same way, and this will be a conversation we'll have in the coming days and weeks, not just the aggressiveness of the plan, but also if we need potentially more authorization. But anything to add to that, Patrick.

The only thing that I would add is our leverage target has been based on a trailing leverage basis. And so when you look at the growth that we're expecting for 2026, it's one of the fastest growth years year-over-year that we've experienced in a very long time as a company. And so when you think about that scale, we have to consider trailing leverage, but we can also look at it already identified cash flows. And so it's awarded contracts that would drive us to a $450 million or greater run rate. So it's not speculative in terms of our ability to achieve that level of cash flow. And so certainly, we have to consider trailing leverage. We're not going to not think about that. But we also do have to compare that with an expectation of rapid known cash flow growth that gives us the ability to be more aggressive on the margin.

Our next question comes from M. Marin with Zacks.

I want to follow up on something you mentioned in your remarks. We're hearing a lot about the government shutdown and how payments to various entities are being delayed or not processed as quickly as before. Can you provide some insight on what that means for you regarding when you expect to collect the cash? Will it be a one-time payment? Will you receive interest on that? How will that process work for your team?

Yes, I'll take that one, M. Thanks for the question. Yes, we expect when the government resumes operations that we will get paid in full for all the services that we've provided in the past. I don't exactly know the mechanics of how they process those. I imagine it goes into a queue. As we submitted our invoices, there'll be in a queue at ICE and Department of Homeland Security, and they'll process those invoices according to due date. But I don't have visibility into exactly how they process them. But when they do process them, they do pay with interest. I think that interest is in the low-4% today. So that's not something we have to ask for. It's automatic under the Federal Acquisition Regulations of the Prompt Payment Act. So we will collect interest with the payments when they resume operations and make their payments to us.

Okay, great. You have a lot happening, and there is some confusion in the third-quarter numbers due to start-up costs and the reactivation of idled facilities. You still have a few idled facilities even after reopening those that are currently being reactivated. Earlier, you mentioned future activations and suggested that it wouldn't be surprising if demands arise that would lead to reactivating more facilities. Is it accurate to say that there have been any very preliminary discussions about these other facilities?

Absolutely. Yes, this is Damon. I'll take that question. And the short answer is absolutely. So if you rewind the last quarter, we were looking at the rest of this year, there was a couple of facilities we didn't talk about on the call, but we were having conversations. One of those is Diamondback, the one in Oklahoma. So obviously, those things happen discretely with the partner based on kind of what their needs and expectations and timing and how much capacity and whatnot. So we're having similar conversations today. So I think that's one question that's important to answer right now because you've got the government shutdown, and I think there's probably assumption that all that activity is shut down. That's not the case. We're still seeing active requests for information on facilities where we could expand, where we've got maybe a small allotment of vacant beds that they may want to contract for and then vacant facilities. We still have people or still have customers indicating interest not only about those facilities but actively going out, touring, inspecting the facilities, and determining how we can meet their mission. So all that activity is still very active even though with the government shutdown.

Our next question comes from Kirk Ludtke with Imperial Capital.

Damon, congratulations on a great run.

Thank you, Kirk. It's been a real blessing. I appreciate that.

I wish you the best of luck. Regarding the 100,000 beds, I've noticed that there seems to be less discussion about fewer alternative sites being opened by ICE. Could you provide some insight on whether you are in competition with those alternative sites such as military bases? If that's the case, how many beds are available at those locations that you believe you might be competing with?

Yes. Great question. And I think we've indicated or have alluded to anyway in the last couple of quarters, we think it's kind of the all of the above approach. So clearly, there's been some activity of both DHS leadership and ICE leadership to look at some of these alternatives for various different reasons. But indicating our value proposition here last 90 days, again, we signed 4 contracts with facilities where we had vacant capacity. So the value proposition and the location of our facility is obviously very attractive with these new contract awards. And so I think to get to 100,000, I think, as I said earlier, I think it's going to be a little bit of all of the above approach. And I think it's also going to be a case of as they look at our capacity being more secure, but I think also maybe a little longer-term solution and then these alternatives, especially the soft-side ones where they're more short-term in nature, again, I think it will just be determined on the mission and the location. But anything to add there, Patrick?

The only thing I would add is 100,000 beds is really a guidepost more than a hard target. And so it's going to be really somewhat dependent also on enforcement. And so if you were to look at all of the beds available in the sector today and you look at the potential demand opportunity that can result from the higher enforcement rate activity, all of our beds could be used, and you could still have a scenario where many more beds are needed. And so we've talked on past calls about our having thought about how we might provide capacity in addition to our existing facilities of the 7,000 beds that we talked about being available. And again, we want to be flexible and nimble and help our partner meet the need that they have at any moment in time. And I certainly wouldn't interpret all of our facilities not having been contracted for as an indication that, that may not be coming, because again, growth isn't going to be linear. And as the number of officers are put in place and out in our communities enforcing the law, you would expect you're going to see an ebb and flow in demand that will ultimately result in more bed need. And so I would say, from our perspective, we think that it is a both-end solution.

Got it. That's very helpful. And have you staffing issues, any issues there finding people to work at your facilities you're ramping up?

No, we're having a very strong experience from a hiring perspective. As you can see in the broader economy, there has been some broader economic weakness, and we're certainly experiencing that as we hire. And so the backdrop that we've encountered as we've gone out to activate these facilities has helped us activate very efficiently, approaching our staffing targets ahead of schedule in most all cases and really don't see ourselves inhibited by our ability to hire.

Got it. Great. And then last one. Are there any limitations on share repurchases in your credit agreements?

No.

Our next question comes from Raj Sharma with Texas Capital.

My first question is about your guidance for fiscal '26. How much of the revenue is included in 2026? What is the status of the five facilities? How much are they contributing in revenues and EBITDA to the fiscal '26 guidance?

If we focus on the four facilities we just announced in the third quarter, it's approximately $321 million in revenue. For 2026 compared to 2025, that likely translates to around $250 million in additional revenue since we're already generating some revenue at these locations and had earlier revenue from the Midwest Regional Reception Center and Cal City under letter contracts. Therefore, I would estimate the revenue increase at about $250 million. While it’s challenging to pinpoint exact numbers, I believe we’re not quite ready to disclose an EBITDA figure for these facilities. However, I think it's reasonable to say that the margins will be similar to those of other contracts we've announced, considering both their geographical locations and facility sizes.

Right. Is it also fair to say that those margins on the reactivated facilities are higher than the overall company EBITDA margins?

Well, I'd say, we've got some state contracts that we've had for a long time and perhaps haven't kept up with per diems. In a portfolio of our size, you don't have all contracts that are as profitable as they would be if you're entering into a new contract. So I'd say, on average, across the whole portfolio, when you're taking into consideration state contracts, local contracts and so forth, they're probably slightly higher.

Great. So we're assuming that these reactivated facilities will be fully functional and normalized by mid-2026. What occupancy levels are you targeting for mid-2026?

Well, I'd say yes, we're still in the process of preparing our 2026 budget. So I wouldn't put a number out there just yet. As a reference point, we were at about 76.7% occupancy combined with safety in Q4. This includes all of our idle capacity, including the facilities that we're activating. So I could easily see us reaching the low-80s and perhaps mid-80s on average in 2026.

Great, that's very helpful. Regarding the 7,000 idle facilities, what level of ICE demand do you anticipate, or will it strictly be ICE needed to reactivate those remaining 7,000? Do you think there could also be some state demand, especially considering the federal shutdown affecting operational matters?

So this is Patrick. Much of the focus in this conversation so far has been ICE because ICE contracted for the 4 additional facilities that we're presently ramping. But our pipeline is much broader than just ICE. And so we're having ongoing conversations with state customers and other federal partners around potential bed utilization. And so we are not a single customer story. And again, going back to the outlook that we talked about in terms of our run rate, that's only reflective of contracts that have already been awarded. And so when you look at the discussion around EBITDA run rate in excess of $450 million, utilization of any additional capacity would certainly be in excess of that. And so again, we think we have opportunities with ICE. I don't want to diminish that, but we do also have a much broader pipeline than conversations that we're having with non-ICE partners.

And looping back, Raj, on the question you asked regarding revenue, I was talking about the contracts that we announced in the third quarter. Don't forget, we also have the Dilley Immigration Processing Center. That one became fully ramped as of September. So there's probably another, I don't know, $70 million, $60 million in incremental revenue in 2026 versus '25 since it will be on a full run rate basis here beginning in Q4. But Damon, back to...

Patrick makes an excellent point. I just want to underline one of his comments. On the state side, we've got probably about half a dozen states that are engaging us. Some of them are existing, some of them are potentially new ones that are looking for capacity. And that's probably the strongest kind of engagement we've had from our state partners or at least state portfolio in probably 12 or 24 months. So absolutely, it's a story that touches both federal and state opportunities.

Great. That's very helpful. I had a question about any indication of rising labor costs. How are your wage trends tracking across activated facilities? Do you have rate escalators with ICE or state contracts?

We do have rate escalators in many of our contracts, but the wage environment is very much moderating across our markets. And so if you were to look at the staffing environment that we're experiencing today, I would say, it's the most favorable that we've experienced since before COVID. And so it's not something that we take for granted, and we're out actively working to hire additional employees. So we're very actively in the market. But at this point, we do not see either market pressure or wage pressure that causes us concern.

Great. And just lastly, on any cash collection delays. I know that you addressed this question a little earlier due to the government shutdown. I know you mentioned credit line availability. Could you comment on that again, please, how long you're good for and what the working capital impact?

Yes. Given a revenue from the federal government, it's probably about $40 million per month. So who knows how long the government shutdown is going to last. Lord help us. We hope it doesn't go through all of November. But if it does, I know we've got a very supportive bank group. We do have an accordion feature on our bank credit facility. So we could always exercise that. I've been in contact with banks as I always have been in contact with our banking group, and I know they would be very supportive.

Our next question comes from Greg Gibas with Northland Securities.

Damon, I wanted to wish you luck on your future endeavors.

Yes, sir. Thank you very much for that. Let me know if you know anybody who is hiring.

Well, I was going to ask about capital allocation but really appreciate your commentary on accelerating share repurchases given the stock's valuation. I had a few kind of modeling-related questions. And I guess, first, maybe Dave, like to what degree do you expect start-up costs from the ramping up facilities to carry into the first half of 2026, if at all?

There will definitely be some costs carried over into 2026 because Diamondback is expected to reach stabilized occupancy last, and that's in the second quarter. Our Midwest Regional Reception Center is currently on hold pending the resolution of a legal matter, so it's unclear how long that will take. We're hopeful for a favorable resolution in the fourth quarter, but we can't control the timing. There will be some start-up expenses in the first quarter. When I mention start-up, I'm also referring to an operating loss at the facility. We will be generating revenue since we are already accepting detainees at Cal City and West Tennessee, and these facilities should become profitable, at least those three, during the first quarter, probably in that timeframe.

Okay. That's fair. And probably fair to say the majority of the, I guess, impact of these start-up costs for those 4 awards in Q4?

Yes, that is correct.

Yes, makes sense. Great. And then I guess I would just ask, what is a fair EBITDA run rate exiting the year, excluding those one-time and start-up costs? I think last quarter you previously spoke to expectations of close to $100 million run rate ending the year. And wondering if any assumptions have changed around that.

No assumptions have changed, except for a couple of new contracts being added because the $400 million did not account for our West Tennessee facility or our Diamondback facility. The Diamondback facility has 2,160 beds, making it quite large. Therefore, I would say that we provided a soft guidance of at least $450 million once they achieve stabilized occupancy, which is likely the most accurate figure I can give you at this time.

Yes, makes sense. And yes, that's what I was asking kind of prior to those awards. So great. And I guess, just to clarify from your previous commentary, you were saying that about $250 million or so of the $320 million expected to be recognized in 2026, excluding Dilley?

No, no. That was the increment in '26 over '25 because we recognized some revenue from those activations in 2025. So I was talking about the 4 facilities that we announced in the third quarter. So that revenue is probably $250 million 2026 over 2025 and then another $60 million if you include the Dilley facility, incremental revenue 2026 over 2025.

There are no further questions at this time. I'd like to turn the call back over to Damon Hininger for closing remarks.

Thank you so much. Well, this has been a really fun call. Thank you for all the well wishes. And again, as I kind of wrap up, 16 years of service as CEO, almost 33 years as a member of this great company. I'm deeply grateful for all of you on the call and also previous investors that have given me a lot of support and guidance over the years. I also want to say to every single employee in our company, 14,000 strong and also the ones that have worked with us previously, I'm deeply honored and grateful to work alongside you all during these 33 years. You all have inspired me in so many different ways and it has made me a better person and have made this a better company. And really going into this year has given us a very strong 2025. I mean, this year, it is really breathtaking the amount of activity we've seen in the organization to meet the needs of not just one customer. Also, we've talked a lot about ICE, but also other federal partners and a lot of activity on the state side. So 2025 has been a great year. But boy, as I said earlier, next year with a forecast of $2.5 billion in revenue, over $450 million in annual run rate and EBITDA. Those would be 2 record numbers for us as an organization. So again, thank you for the organization, for the company, employees and also for our customers to give us that trust and confidence to provide that type of service to have these type of milestones. So with that, we adjourn. Enjoy the rest of your day. Thank you for calling in today.

This concludes the program. You may now disconnect.