Good day, and thank you for standing by. Welcome to the CoreCivic's 2 Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to David Gutierrez. You may now begin. David Gu

Thank you, operator. Good morning, everyone, and welcome to CoreCivic's Second 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 also are joined here in the room by our Vice President of Finance, Brian Hammonds. On this call, we will discuss financial results for the second 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 second 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 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 including it in the company's quarterly supplemental financial data report posted on the Investors page of the company website at corecivic.com. With that, it is my pleasure to turn the call over to our CEO, Damon Hininger.

Thank you, David. Good morning, and thanks, everyone, for joining us for CoreCivic's Second Quarter 2025 Earnings Call. . On this morning's call, I will provide an overview of the current environment, briefly review our second quarter financial highlights and discuss our outlook, contracting and acquisition activity and opportunities resulting from government funding initiatives at both the federal and state level. 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 related to facility activations during the quarter and how we are preparing for additional demand from our government partners. Finally, we will turn the call over to our CFO, Dave Garfinkle, who will provide greater detail on our second quarter financial results as well as our updated 2025 financial guidance. Dave will also provide an update on our capital allocation strategy. Moving first to a discussion of the business climate. Our business is to help solve tough government challenges in flexible, cost-effective ways and to provide safe environments where people in our care can reside temporarily as they go through their legal due process. Our business is perfectly aligned with the demands of this moment. We are in an unprecedented environment with rapid increases in federal detention populations nationwide and a continuing need for solutions we provide. At the end of June of 2025, nationwide ICE detention populations were 57,861. The highest detention populations ever recorded by ICE which has been our largest customer for over 10 years. From the end of 2024 through the end of the second quarter, ICE populations in our care increased to just over 13,000 or 28%. And we know the demand from ICE will increase. Just last month, Congress reached final resolution on federal funding for border security through the One Big Beautiful Act that is historically unmatched and will be available through September of 2029. I will elaborate more on the impact of this funding later in the call. Nationwide population from the United States Marshals Service, our second largest customer, have also begun to increase, although we expect the Marshals population to increase further towards the end of 2025 and into 2026. Our year-over-year Marshals population increased slightly to just over 7,700 at the end of June. 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 3.5%, driven most notably from new contracts with the State of Montana. The business environment contributed to the strength of our second quarter financial results. Total revenue increased by 9.8% from the second quarter of 2024 to the second quarter of 2025 and we generated double or even triple-digit percent increases in GAAP net income, adjusted net income or their corresponding per share amounts as disclosed in our earnings press release. Adjusted EBITDA for the quarter increased to $103.3 million, up $19.5 million or 23.2% from the prior year quarter. While the second quarter included certain payroll tax credits that Dave will explain further, even excluding these credits, we exceeded our internal projections for adjusted EPS and normalized FFO per share by $0.07 and adjusted EBITDA by $9.2 million. We have carried these favorable financial results to our updated full year 2025 financial guidance and further increased guidance for updated occupancy projections and new developments, which Dave will review in detail. During the second quarter, we repurchased 2 million shares of our common stock at an aggregate cost of $43.2 million, increasing our year-to-date repurchases to 3.9 million shares at an aggregate cost of $81 million. During the second quarter of 2025, we also announced that we had entered into a definitive agreement to acquire the Farmville Detention Center located in Virginia for a total purchase price of $67 million, which was completed on July 1 at an attractive EBITDA multiple and accretive to earnings. We believe the deployment of capital on these opportunities adds substantial value to our shareholders. Turning next to an update on our reactivation activities. As we disclosed in the first quarter, we entered into an agreement with ICE to resume operations at the Dilley Immigration Processing Center in Dilley, Texas, a 2,400-bed facility originally constructed in 2014 to provide a safe and secure environment appropriate for family populations. Before resuming operations in the first quarter, this facility, which we leased from Target Hospitality has been idle since August of 2024. We began receiving residents at this facility during the second quarter and we are on schedule to complete the full reactivation by the end of the third quarter of 2025. In the first quarter, we also announced we entered into a Letter Contract with ICE to reactivate our 2,560-bed California City Immigration Processing Center effective April 1, 2025. The Letter Contract provides funding to begin startup activities while we work to negotiate and execute a longer-term contract. As a result of the progress made on this reactivation, we expect to receive detainees in the third quarter. Based on the status of negotiations with ICE, we also believe we will be successful in entering into a longer-term contract before the end of the third quarter. Effective March 1, 2025, we entered into another Letter Contract with ICE to begin activation efforts at the 1,033-bed Midwest Regional Reception Center. The intake process has been delayed by a lawsuit filed by the city of Leavenworth alleging that a Special Use Permit is required to operate the facility, which we do not believe is required. ICE remains very intent on using the facility, and we are pursuing several avenues through the course to be able to accept detainees. The timing for resolution is currently uncertain. Patrick will provide further details on the progress of these activations. Looking forward, we are in advanced negotiations to activate a fourth idle facility and have just recently begun discussions to activate a fifth idle facility. Although it is difficult to predict if and when government actions might be taken on these potential contracts, we are optimistic that we will be successful obtaining contract awards to activate additional idle facilities especially now that historic funding levels for border security and immigration detention have been obtained. Let me also provide one other legal case update that I know many of you have been following. We are pleased that the Third Circuit Court of Appeals upheld a lower court's judgment that determined that New Jersey could not block private immigration detention facilities like Elizabeth Detention Center from operating in the state. The court again found New Jersey's law unconstitutional under the supremacy clause of the U.S. Constitution. We strongly believe that this was the right decision. We're very proud of our long partnership with ICE at Elizabeth, and as the filings in the case may clear, Elizabeth is absolutely critical to the successful execution of ICE's national mission. Before I turn the call over to Patrick, I want to provide some details of this government funding approved by Congress under the reconciliation process remind you of our detention bed capacity and close my remarks on additional business opportunities. On July 4, President Trump signed a One Big Beautiful Bill Act, a pivotal moment for funding related to our industry. This act appropriates $75 billion in mandatory funding to ICE for immigration enforcement activities and to increase detention capacity. Specifically, the act appropriates $45 billion of the $75 billion for single adult alien detention capacity and family residential center capacity represents more than 3x previous budgeted levels. The remaining $30 billion of the $75 billion to ICE was appropriated for among other expenditures, hiring and training of new ICE agents, transportation costs for alien removals and promoting family unity by detaining aliens that have been charged with a misdemeanor with the alien's children. This funding is a historic increase in funding provided to ICE for border security and immigration detention, which we know will further drive demand for the solutions we provide. It has been well reported in the press that the act is intended to fund approximately 100,000 beds, an increase from 41,500 that had been funded since late 2024, which was an increase from about 34,000 generally funded with a few exceptions over the past 15 years. The funding under the act will remain available through September 30, 2029, and will be in addition to base annual preparations during that time period. We also understand that these funds will be released from the treasury and available to ICE in the coming weeks. In addition to funding directly for ICE, the act also appropriates $23 billion in mandatory funding to the Department of Homeland Security, or DHS, for border support activities including $10 billion to the DHS Secretary for reimbursement of costs incurred in undertaking activities in support of DHS mission to safeguard U.S. borders. This funding is available for use at the discretion of the DHS Secretary. The act appropriates an additional $65 billion in mandatory funding to Customs and Border Protection, or CBP, for border control and security activities, including border infrastructure, personnel, fleet vehicles, facilities, border surveillance and technology. Finally, the act appropriated roughly $12 billion to Department of Justice or DOJ, for immigration enforcement and border security related activities and programs. These funds are used -- are to be used to combat drug trafficking, prosecution of immigration matters and hiring of immigration judges and staff to address backlogs of petitions, cases and removals. Law enforcement activities by DHS, ICE, CBP and DOJ often contribute to the demand and utilization of our bed capacity. On prior earnings calls, we have discussed the detention bed capacity we can make available to our federal partners to accommodate their needs. But as a reminder, we own 9 idled corrections and detention facilities containing 13,400 beds, including the 2 facilities under Letter Contracts that I mentioned earlier that contained 3,600 beds. By adding 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 have previously mentioned, we have close to 30,000 beds that we have informed to ICE we could make available. We also continue to evaluate additional opportunities for expansion that could be cost-effective and allow for greater efficiencies. We know that detention beds like these represent the best value and are the most humane, most efficient logistically have the highest audit-compliant scores in their system are more secure weatherproof and are readily available. Additionally, with 42 years of operating experience with ICE, private sector beds are the least likely to be legally challenged, particularly relative to international and some other options. Before I move on, let me reinforce these 2 points. First, the passage of the One Big Beautiful Bill has changed dramatically the activity of ICE and securing bed capacity. We did see very brisk contracting activity for detention bed capacity since the first of the year through the end of the second quarter. However, ICE didn't have enough funding for all this new capacity, so they knew that they would have to get several reprogrammings of funds to meet the increased utilization. And even with that, it was not enough funding because we knew that they were running a significant budget deficit over the last 60 days. But now with the passage of the One Big Beautiful Bill Act, contracting activity is running at a much faster pace. And not just for capacity, while on July 29, ICE launched a very aggressive nationwide hiring program for 10,000 employees. This is very important for 2 reasons. One, it is another sign of the intensity of ICE behavior with the passage of the One Big Beautiful Bill Act. And two, this increase in law enforcement personnel will obviously raise the level of individuals arrested and the requirement for detention capacity. My second point is to reinforce that all of the proposed or implemented detention solutions discussed publicly, soft-sided solutions at military bases or at locations like Alligator Alcatraz, capacity at Guantanamo Bay or traditional secured capacity that historically we have provided. ICE's view of all of these offerings is an all-the-above approach and not one solution is preferred over the others that are available in the near term. They have a need and funding for all of these solutions. But in addition to the superior benefits that I noted earlier in our solutions, it is important to note that ICE does not see soft-sided facilities as long-term solutions. And as you could see in these agreements that have been put in place, minimum standards and requirements have been incorporated, whereas our agreements have comprehensive requirements and mandate national detention standards that we have complied with over many, many years. Wrapping this section up, and as I previously mentioned, in addition to increasing utilization of beds under existing contracts we have experienced over the past couple of quarters, and the expansion of contracts at our Ohio, Mississippi, Nevada and Oklahoma facilities, we have previously disclosed, we are in various stages of negotiation on multiple idled facilities to provide additional bed capacity to ICE. In addition to these federal opportunities, we continue to have active dialogue with several existing state partners as well as new state partners that could result in additional populations including the possible use of the idled facilities. We have also responded to a proposal from the Florida Department of Corrections to manage one or more facilities they own and hope to hear results of that procurement in the near future. One final note on state budgeting activity. State budgets are typically approved and start annually on July 1. We are pleased with the level of funding approved by state legislatures for our state contracts, including per diem increases that were important for us to obtain. The increase has approved across our state portfolio average in the mid-single digits and were about double the increases that we were able to obtain last year. We are extremely grateful for the support of our state government partners. Now I'll pass the call over to Patrick Swindle for a further review of our operations activity during the second quarter. Patrick?

Thanks, Damon. I'll start with a high-level overview of top line revenue and second quarter operational performance. Federal partners, primarily Immigration and Customs Enforcement in the U.S. Marshals Service comprised 50% of CoreCivic's total revenue in the second quarter. Revenue from our federal partners increased 11% during the second quarter of 2025, compared with the prior year quarter, including a reduction in revenue at the Dilley Immigration Processing Center, which closed in August 2024 that resumed operations in the first quarter of 2025 and continues to ramp towards full operations. Excluding the Dilley Immigration Processing Center from both years, our revenue from federal partners increased 19% versus the second quarter of 2024. Further breaking down our federal revenue. Revenue from ICE increased $25.9 million or 17%, while revenue from the U.S. Marshals Service was up $2.7 million or 3%. As Damon mentioned, we expect increases in U.S. Marshals populations later in 2025 and into 2026. Revenue from our state partners increased $9.9 million or 5% from the prior year quarter. These increases include additional revenue from the State of Montana resulting from 2 new contracts we signed with the state since the second quarter of 2024. We care for these additional populations at our Saguaro Correctional Facility in Arizona, and our Tallahatchie County Correctional Facility in Mississippi. Total occupancy for our Safety and Community segments for the quarter was 76.8%, up 2.5 points since the year ago quarter. Note that occupancy for the second quarter 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. This facility has been in our property segment because it was previously leased to the State of California at the lease expired in March 2024. We resumed operations at this facility in the second quarter of 2025 due to a letter contract signed with ICE effective April 1, 2025, although we have not yet received any detainees during the second quarter. Therefore, if we exclude this additional capacity from the calculation, making more apples-to-apples comparison with prior periods. Our reported occupancy would have been 79.7%. Occupancy has been on an upward trajectory since early 2023 when it stood at approximately 70%. Another way to look at occupancy is the average population we manage on a daily basis. The average daily population across all of the facilities we manage was 54,026 during the second quarter of 2025, compared with 51,541 in the year ago quarter. This increase was driven by more demand for our services and new contracting activity. Our teams have been very successful in working with our government partners and managing the additional people in our care, which we are focused on every day and do not take for granted. As Damon alluded, the second quarter was a very busy quarter with reactivation activities at several previously idled facilities. We resumed operations at the Dilley Immigration Processing Center in the first quarter under an amendment to an intergovernmental services agreement or IGSA, and we are on schedule to complete full activation by the end of the third quarter when we expect to generate the full fixed monthly revenue for the facility. We've activated 4 neighborhoods at the facility and have hired approximately 550 staff at this facility progressing towards 640 staff, and we expect all 5 neighborhoods to be fully activated. Effective April 1, 2025, we entered into a Letter Contract with ICE to begin activation efforts at our 2,560-bed California City immigration processing center. The letter contract provides funding for a 6-month period to begin start-up activities while we work to negotiate and execute a longer-term agreement. We've hired over 200 staff, held 10 preservice training academies and have invested $3.5 million in capital expenditures in preparation for receiving detainees from ICE. As a result of the progress made on this reactivation, and based upon communications from ICE, we currently expect to begin receiving detainees from ICE in the third quarter under the terms of Letter Contract. Along with the progress we believe we have made on the negotiations with ICE, this milestone gives us confidence that will be successful in entering to a longer-term contract before the end of the third quarter. Effective March 7, 2025, we entered into a Letter Contract with ICE to begin activation efforts at our 1,033-bed Midwest Regional Reception Center. We've hired approximately 130 of the approximately 300 staff that will be needed to operate a full facility. We've also held 12 pre-service training academies and invested $3.5 million in capital expenditures in preparation for receiving detainees from ICE. Based on the progress we have made, we are ready to begin accepting detainees at this facility under the terms of Letter Contract. However, the intake process has been delayed by the lawsuit with the City of Leavenworth that Damon mentioned. ICE is eager to begin utilizing this facility, and we are optimistic about successfully resolving the dispute. But ICE and we will both have to wait until the disagreement is resolved. In the meantime, we will continue to negotiate with ICE for a longer-term contract. As previously reported, on July 1, we completed the acquisition of the 736-bed Farmville Detention Center in Virginia and immediately began implementing the integration plan we designed during the due diligence period. . The facility provides transportation, care and civil detention services to adult male noncitizens through an IGSA between Prince Edward County, Virginia and ICE, which expires in March 2029. While we haven't exercised this integration muscle in several years, I'm pleased with the status of the integration of systems, processes and of course, the team, which is already substantially complete. We are excited to welcome the 200-plus employees at the Farmville Facility to the CoreCivic team and are pleased to expand our book of business with ICE at such a critical location, which ICE is used since the facility was constructed in 2010. I would like to extend my gratitude to our activation team that has worked so diligently on all of these activations and integrations, along with the countless professionals executing our activation plans to reserve credit for these activities. . These accomplishments have only been possible due to months of preplanning and hard work. We know there is more work to be done. While the activations of the Dilley, California City and Midwest Regional Reception Center facilities are not done, we continue to prepare for additional idle facility activations. We are in advanced negotiations to activate a fourth idle facility and have just begun discussions to activate the fifth idle facility. And we continue to lean forward on capital expenditures for additional facility activations demonstrating our confidence in future contracting activity. Including the capital expenditures previously mentioned, through June 30, we've incurred over $30 million associated with activations and new transportation vehicles and plan to spend $40 million to $45 million or more. With all of this activity, we remain focused on effectively managing our core portfolio. It is the stability of operations and financial results of these facilities that gives us the opportunity to grow our business. We're managing our costs prudently, making investments where we see needs. We're meeting with customers to help ensure we're meeting their needs and expectations, and we're tending to our residential populations, providing the programs and services they need to transition successfully upon the release from our care. And so as I turn it over to Dave to discuss our second quarter financial results in more detail, our capital allocation activities and assumptions included in our updated 2025 financial guidance, I'd like to express my appreciation to our 13,000 employees for their focus and commitment to our mission. Dave?

Thank you, Patrick, and good morning, everyone. In the second quarter of 2025, we generated GAAP EPS of $0.35 per share and FFO per share of $0.58. Excluding special items, adjusted EPS in the second quarter was $0.36 and compared with $0.20 in the second quarter of 2024, an increase of $0.16 per share or 80%, and normalized FFO per share was $0.59 per share compared with $0.42 per share in the prior year quarter an increase of $0.17 per share or 40.5%. Special items for the second quarter of 2025 included $1.5 million of charges associated with our acquisition of the Farmville Detention Center reported in G&A expenses. Special items in the prior year quarter included $4.1 million of expenses associated with debt payments and refinancing transactions. Adjusted EBITDA was $103.3 million, exceeding average analyst estimates by $21 million and compared with $83.9 million in the second quarter of 2024. The increase in adjusted EBITDA from the prior year quarter of $19.5 million resulted from higher federal and state populations as well as higher average per diem rates across much of our portfolio, which contributed approximately $20 million in incremental facility net operating income over the prior year quarter. The increase also resulted from the recognition of employee retention credits available under the CARES Act, amounting to $8.3 million or $0.08 per share, including $3.2 million of interest on the credits. These increases were net of the financial impact of the termination of the contract with ICE at the Dilley Immigration Processing Center effective August 9, 2024. However, we began reactivating the Dilley facility during March 2025 under a new 5-year agreement and accepted our first residents at this facility April 8. This facility accounted for a net decrease in facility net operating income of $11.4 million or $0.07 per share from the second quarter of 2024. As Damon and Patrick both mentioned, we expect this facility to be fully operational by the end of the third quarter of 2025 when we expect to generate revenue for the full fixed monthly payment from ICE. Other factors affecting EBITDA and per share results included higher G&A expenses and the favorable impact of our capital allocation strategy, contributing to increases in per share earnings of $0.02 per share through reductions in gross interest expense and common shares outstanding. We exceeded our internal forecasted adjusted EBITDA by $20.7 million and both adjusted EPS and normalized FFO per share by $0.15 per share. Even after excluding the employee retention credits, we exceeded adjusted EBITDA by $9.2 million and our per share results by $0.07 and reflecting the strength of the quarter, driven primarily by higher federal populations under existing contracts, combined with new contracting activity. The number of ICE populations in our care followed national trends, which reached a record high at the end of June. Operating margin in our safety and community facilities combined, was 26.2% in the second quarter of 2025 compared with 23.7% in the prior year quarter. Again, the increase in our operating margin was due to higher occupancy as well as the employee retention credits, which are reflected as a reduction to operating expenses. Excluding employee retention credits, our operating margin was 24.6%, a 90 basis point increase from the prior year quarter. Turning next to the balance sheet. During the second quarter, our Board of Directors authorized an increase to our share repurchase program by $150 million, increasing the total aggregate authorization up to $500 million. During the second quarter, we repurchased 2 million shares of our common stock at an aggregate cost of $43.2 million, increasing our year-to-date repurchases to 3.9 million shares at an aggregate cost of $81 million. Since our share repurchase program was announced in May 2022 through June 30, we have repurchased 18.5 million shares of our stock at a total cost of $262.1 million or an average price of $14.19 per share. As of June 30, we had $237.9 million available under the updated Board authorization. After taking into consideration these share repurchases, our leverage measured by net debt to adjusted EBITDA was 2.3x using the trailing 12 months ended June 30, 2025. As of June 30, we had $130.5 million of cash on hand and an additional $216.4 million of borrowing capacity on our revolving credit facility, which had a balance of $40 million outstanding, providing us with total liquidity of $346.9 million. On July 1, 2025, we used our existing liquidity to acquire the Farmville Detention Center, a 736-bed facility located in Virginia for a total purchase price of $67 million. ICE has been using this facility since it was constructed in 2010. Our strong balance sheet and cash flows provide us with significant flexibility to implement our capital allocation strategy of returning capital to shareholders and to take advantage of unique tuck-in acquisition opportunities like this with favorable investment returns. Moving lastly to a discussion of our updated 2025 financial guidance. We expect to generate adjusted diluted EPS of $1.07 to $1.14, up from $0.83 to $0.92 in our previous guidance and normalized FFO per share of $1.99 to $2.07, up from $1.72 to $1.82. We expect adjusted EBITDA of $365 million to $371 million, up from $331 million to $335 million. Our updated guidance reflects the favorable results for the second quarter, updated occupancy projections consistent with current trends, the acquisition of the Farmville Detention Center on July 1 and as well as the reactivation of the California City immigration processing center based on the expectation of receiving detaining populations during the third quarter of 2025. Our guidance reflects a range of assumptions pertaining to the activation of our California City facility, which is still operating under terms of letter contract. There could be upside to our guidance if the timing or terms of a longer-term contract at our California City facility, including the pace of receiving detainees is more favorable than our forecast. Our guidance does not include the impact of a potential longer-term contract at our 1,033-bed Midwest Regional Reception Center as the intake process has been delayed by the lawsuit, Damon and Patrick mentioned, as we have not yet completed negotiations on a long-term contract. The timing of any resolution on this legal matter is difficult to predict. We have updated our guidance to reflect the reduction in facility net operating income at this facility in the second half of 2025 compared with our previous guidance as we continue to ramp up our staffing levels and other operating expenses which are expected to exceed the revenue available under the letter contract. There could be upside to our guidance if the litigation is resolved expeditiously. As a reminder, the new agreement reached in March to activate the Dilley facility provides for a fixed monthly revenue payment in accordance with the graduated schedule to correlate with the activation of each neighborhood within the facility. Our guidance reflects revenue for the full facility beginning September 2025, which is unchanged from our previous guidance. Consistent with our past practice, our guidance does not include the impact of new contract awards not previously announced because the timing of government actions on new contracts is always difficult to predict. We are in advanced negotiations to activate a fourth idle facility and have just begun discussions on activating a fifth idle facility. Although it is difficult to predict if and when government actions might be taken on these potential contracts, we are optimistic that we will be successful in obtaining contract awards to activate additional idle facilities especially now that historic funding levels for border security and immigration detention have been obtained under the One Big Beautiful Bill Act. We expect to revise our financial guidance throughout the year if and when new contracts are signed. In addition to our 2,560-bed California City immigration processing center and our 1,033-bed Midwest Regional Reception Center, we own 7 idle correctional and detention facilities that have 9,826 available beds or a total of 13,419 available beds as of June 30. We -- the activation of an idle facility involves hiring, training and preparing the facility to accept residential populations, which depending on contract structure, could result in substantial start-up expenses before we realize additional revenue. To the extent any new contract requires the activation of an idle facility before we begin to recognize revenue, our guidance could be negatively impacted by the start-up expenses until the revenue we generate offsets these expenses. For modeling purposes, when bridging results from Q2 to Q3, it is important to take into consideration the $11.5 million of EBITDA or $0.08 per share associated with the employee retention credits recognized in the second quarter. Further, during Q3, we expect to continue to increase staffing levels to prepare for the receipt of detainees under both letter contracts without a proportionate increase in revenue negatively impacted Q3 by approximately $0.06 per share compared with Q2. The negative impact of the letter contracts in Q3 is more than offset in the fourth quarter by the assumption of a longer-term contract at our California City facility and a continuing increase in detainee populations at that facility as well as a fully operational billing facility. We plan to spend $60 million to $65 million on maintenance capital expenditures during 2025 and $9 million to $10 million for other capital expenditures, both unchanged from our prior guidance. Our 2025 forecast also includes $70 million to $75 million of capital expenditures associated with potential idle facility activations and for additional transportation vehicles, up $5 million from our prior guidance. During the first half of the year, we spent $30.7 million on potential idle facility activations and additional transportation vehicles. Our guidance includes a similar level of share repurchases as we purchased during the first 2 quarters. Our share repurchases will take into consideration our stock price, earnings trajectory, liquidity and alternative opportunities to deploy capital. Our guidance does not include any additional capital expenditures beyond those mentioned that could be needed in connection with the reactivation of our idle facilities, which may depend on customer needs and preferences. 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 $216 million to $227 million for 2025. We expect our normalized 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, and we are forecasting G&A expenses in 2025 to be approximately $160 million, excluding expenses associated with M&A transactions. I will now turn the call back to the operator to open up the lines for questions.

[Operator Instructions] And our first question will come from the line of Joe Gomes of NOBLE Capital.

Can you hear me?

Yes, we can hear you.

Okay. Congrats on the quarter on the raised guidance, I did want to start with you talked, Damon, about alternative solutions like the soft side and international, things of that nature. And I guess, the kind of to multipart question here is. One, as I start to look at the solutions, is it slowing down the process with discussions with you guys and your type of solutions. And secondly, what would be your interest in either participating in some of these soft-sided spaces or maybe just managing them, if not actually constructing them?

Yes. Great question, Joe, and thank you for that, and thank you for the comments. Let me start with the first part. And as I indicated on the call or in my script, I should say, the intensity has really picked up here in the last couple of weeks with the passage of the One Big Beautiful Bill Act. So we obviously saw a lot of activity, as I mentioned, from kind of January through end of June after we've got the letter contracts. We got the new contract at Dilley, so a lot of activity for sure. But with the funding now in place, we clearly are seeing a lot of intensity, both at the national level with DHS and ICE leadership but also seen to play out in field offices where they're engaging us on tours, contract negotiations as we all alluded to, we've got multiple facilities that are in some level of discussion relative to activation and final and long-term contracts. But maybe if I could, let me just step back for a minute and just give you kind of big picture, how we see things and then kind of answer the second part of your question about these other alternatives. Let me just first just give you a kind of reminder for you and the rest of the folks on the call just the demand as we see it today. So it's been reported in the press over the last 12 months, there is about 14 million people in the country illegally, about half of that amount is what we call 9-10 docket or people in the immigration proceedings. So these are folks as we understand it from my is the $7.5 million that they're focusing on, especially ones that have a criminal record. And so $7.5 million, and if they've got a goal with this administration to do deep rotations at a clip of 1 million a year, that's obviously a lot of people that they're going to have to work through here in the next 3, 4, 5 years. So that's -- those are big, big numbers. And now it's going to be a multiyear effort. So that would be number one, as I think about the demand. The second thing I would say about the demand is that resources obviously had to be recalibrated here in the last few months. So first of this year, most of the resources, no surprise. We're focused on the Southwest border. And if you look at the detention population at that time, about 90% of all people detained and facilities at the first of the year were people that were arrested at the Southwest border. That has now completely flipped. If you look at the detention population today, which is, again, about 56,000 people, about 70% of those individuals were arrested in the interior. So it's completely flipped here in the last 7, 8 months. It's gotten some press on that, but I think it's important to note that ICE has been working hard along with DHS leadership to recalibrate their resources for enforcement, within the interior and again, focus on that 7.5 million people that are in immigration proceedings or maybe have removal orders. The last thing I'll just say on the demand side is that, as reported in the press, the last 2 or 3 months, and basically, the Southwest border has been completely closed down. The apprehensions are at record lows. But we know that ICE and even Custom Border Patrol, they can recalibrate as appropriate if that changes. So that's the demand side. So now let's flip over to the supply side. Again, while we reported and we noted some of these things in my script, there was this Big Beautiful Bill Act, $175 billion under that act for border security, that's going to take many different personnel levels within the federal government to higher levels. It's obviously going to put a lot of resources in place, but I get a couple of things I'd point to of note. One of which is there's 6,000 frontline officers, law enforcement officers on ICE today, they want to take that to 16,000. So 6,000 to 16,000. So a lot more people he'll be able to do these enforcement actions within the United States. Secondly, there's a lot of resources for Custom Border Patrol. I touched on that in my script. -- a lot of resources for immigration judges and ports, a lot of resources for technology, especially on Southwest border, vehicles, et cetera, et cetera. So they're clearly doing a ton of investment, what I'd say kind of in the front of the funnel to get the ability to have more enforcement efforts around the United States. But coming back to us and then going back to your second part of your question, if you look at just the dollars that were appropriated for detention capacity. So again, in my script, there's been widely reported, that's about $45 billion. That's just for detention. If you take that over the next 4 to 5 years and layer that on top of the $3.5 billion that's been appropriate last couple years for ICE detention at round numbers, that's about $13.5 billion on an annual basis over the next 4 to 5 years. And if you take their per day average, ICE's average per day for the detention beds in the United States, which is about $165. That's about 200,000 beds that they could purchase either from the private sector, from state and local governments or other offers that they have, who made solutions available to them. The 200,000 beds is capability if you look at just purely from a dollars perspective. And so to answer your question, we've got the 30,000 beds that we've offered to ICE. Those are in the facilities that we've talked about, and Dave noted 13,400 in vacant facilities. But we've also got surge capacity that we've made available in our facilities that are currently operational, but where we reconfigured the operational capacity where we've added some beds. The third is what we've added some partial capacity in places where we've got maybe lower occupancy where we can provide solutions for ICE and it's already taken place in places like Nevada and Oklahoma. And then finally, the third-party leases through Target, we've got either opportunities with a vendor like them where they could do a complete new activation or do an expansion. And an example of expansion would be at our Dilley facility, which we've talked previously, that's got a lot of capabilities for expansions. So we've got 30,000 beds available today. Some of this is already under contract or letter contracts with like Cal City and Midwest, but also a lot of other capabilities to provide capacity in a very short term. So to your last part of your question, if that comes through a solution with a state government or is that a solution that we do on a military base, we're all of the above are very interested. We've got the capabilities. Obviously, we've been working with state governments for almost 42 years. We've been in constant conversations with them as they then kind of the for the federal government. And as you're seeing, there is some interest from states to partner. So we think there's a great kind of win-win. We'll work a partner with someone like that to provide these solutions. So let me talk in a little bit and see if Patrick, anything you'd add to that.

Thank you, Damon. The only thing that I would add is I think it's really important to look at prioritization of the different solutions or alternatives that ICE is considering. And as you can imagine, as they shifted from the border to enter enforcement, there are gaps that present across the country. And so you may see, for example, a private sector solution like our California City facility contracted for. You might see a state solution like is presented in Florida, where military based solutions like is presented with Ford Blitz. And I think it's important to contextualize all those because in the beginning is ensuring that it has the capacity to need locations across the country. And so it isn't necessarily an either/or but a prioritization in terms of filling out the resource gaps or needs across the country. And so if you see a solution, for example, that might be a military-based solution or a state level solution that doesn't mean necessarily that it would displace a private sector solution or vice versa, it may be a function of timing and location and resource needs. So we believe that is considering all of those alternatives, and we continue to believe that the investments that we've made in our capacity position it well to meet ICE needs at the appropriate time.

And thanks for that, Patrick. I mean, that's a really important point. Again, you go back to the dollars, then you've got the funding capabilities to go to 200,000 beds today and their current population is 6,000. So they really, to Patrick's point, have opportunities to say, okay, where is the near-term need and demand at and then look at the alternative they've gotten us various locations. So I think that's an important point. And lastly, I'll just say when you think about our financial performance today, you think about our guidance for the rest of the year, that just assumes obviously South Texas, which we've announced as part of our guidance, but also Cal City and also a couple of smaller contracts where they've had increased utilization. Our financial performance, which has been pretty significant this year, only incorporates really kind of very small part of the opportunity that's going to be, I think, near term for us as we go to end of this year into 2026.

Great. And then you brought up the non-detained docket. So how many people are there. So I'll switch gears for a second. It's common knowledge, the ISAP contract is coming up for renewal here. Your competitors got an extension on it for right now. that we're hoping to get at least a 6 months to a year on it. But I think after that, it would come up for rebid. One, is that something you'd be interested in to kind of capabilities do you have for that? Do you think given the potential size we're talking about here, again, the $7 million 900 docket is something maybe in your view, I would look into split multiple contracts out there like they do on the retention side, given that the past highs here was roughly 375,000 people.

Yes, great question. And let me first just say, and I think we've been pretty consistent on this, is that really, in the days since the election, the message has been pretty darn clear from an administration DHS leadership and ICE leadership that the tension is going to be the priority. So -- we've been working around the clock at that really almost for a year on getting ourselves ready with capital improvement to facilities that are currently either partially utilized or completely vacant leaning forward on buying buses and vans for transportation needs, making sure that we've got strong pipelines for the labor that we'll need for these activations or additional staff for facilities that go up to a higher occupancy. So detention has been the priority. It's been maker to us from, again, from leadership, administration, DHS and ICE -- and so again, that's what we've been focusing on. Having said that, obviously, we've been watching to see what's going on with the subcontract. Obviously, we heard some of the comments from Gio's leadership yesterday on their call. and we are interested. And so we're going to watch out closely what plays out relative to their extension and then the RFP once it comes out, which, I guess, could be a later this year or maybe early next year. But to answer the second part of your question, we absolutely got the capability plan I think this came out a little bit yesterday on the geo call, if they go to more of an active monitoring solution, I mean that is right in our wheelhouse. Our community division has been doing those types of solutions for nearly 30 years. with jurisdictions all over the country. So we clearly have got that capability and competency and also we've got the leadership. And also we've got the financial worth and the technology to scale up. So we're monitoring it very closely. We'd be interested, but I'll say again, we know right now, in this moment, the attention is the priority, and that's been our focus since the first of this year or late last year.

Okay. Great. And one more for me, and I'll pass it on. The Midwest facility, unfortunately, we're kind of the lagerhads here right now hopefully gets dissolved quickly. But given its location and ICE's interest in it, are there other potential facilities in that location that this continue to drag along could decide to move their interest too.

I would say -- I mean, ICE has always been very -- I'd say always recently in the last couple of years, they've been very interested in the facility. I mean for all the points you just made, the location is ideal is near a major Metropolitan airport. It's close to I-70. So from a transportation perspective, it's very good location-wise. I'm confident I don't want to speak to any kind of pending legal matters. You heard what we said in our script, so I really can't add more than that. But I'm confident we're going to get through a resolution on this near term and that facility will be made avail with ICE.

Next question. our next question will be coming from the line of Jason Weaver of JonesTrading.

It was great to see the updated guidance. As you're well on your way to activating these new facilities, are you seeing any efficiency gains in the expected time line of staff and get everything you prepared for intake. I know Dilley is a unique case here, but just overall.

This is Patrick. I guess the way I would answer that is we started preparing for activations in the fourth quarter of last year. And the time line, as we talked about being somewhat funding-driven has given us a window in the first half of 2025 to really invest resources and making sure that our facilities are positioned to activate quickly. So we've had strong visibility on where the initial demand would man test and we've made preemptive investments to make sure that we can meet that demand as quickly as possible. And so I think because of the preparation work that we did, it really has made the nations that we've initiated so far in Midwest, Cal City and in South Texas, very smooth. Now I think one of the things we're obviously sensitive to is the ramp-up in activity nationwide after the passage of the funding of One Big Beautical Bill Act. So we do believe that there may be an acceleration. But we also believe that the work that we've already done in our existing sites. And it is helpful with our existing facilities that those facilities are already in place. They don't have to be constructed on a very rapid time line. The ready. We can have them prepared the physical plant prime for activation, puts us in a great position to activate those quickly. So again, the time lines, the resource investments we made early we think position us really well depending on where demand does shift and manifest to be able to meet that within our existing portfolio.

Great. And then I believe we touched on it in the past, but do you have any new visibility into? Or have you had any incremental discussion regarding the [indiscernible] Texas facility that was formerly managed by HHS?

Yes. We -- nothing new to report. Obviously, we're, again, monitoring kind of more globally the needs are there in the Southwest border and kind of recalibration of where the needs are based on kind of enforcement actions there. And again, the focus more on the interior versus Southwest border. So again, we're well aware of that facility and its capabilities and then continue to kind of monitor based on what the needs are for ICE and that moment in time in that part of the country.

Got it. And just one more. I think you might have mentioned in your prepared remarks, but just to clarify, Farmville, can you talk about the timing of that when you expect that incremental $40 million revenue run rate?

Yes. I can take that one, so immediately. So we closed on July 1. It was a $40 million annual revenue. And so it was a contract in place. So I would expect approximately $20 million for the second half of the year.

And the next question will come from the line of M. Marin of Zacks.

So I have a couple of questions. We've touched upon both of the topics that I'd sort of like to get a little bit more color on given what you've said, ICE is extremely well funded at the moment and has significant need, you have a strong relationship with ICE and a long-term relationship and you have significant ongoing discussions. All that said, we still hear in the news, as you mentioned, Alligator Alcatraz and other solutions. Can you give us a little bit more color on what you see as the possible advantages of course facilities compared to some of these other solutions we're hearing about?

Absolutely. So thank team on this one also, but I appreciate your question. So again, as I said in my script, if you think about our facilities, they're very secure made with hardened construction. They have been tested by ICE or INS for the last 40 years. They have got the most superior ICE courts versus any alternative they've ever had in the United States, even more recent solutions that you just noted, they got great capabilities, so many of our facilities to have courtrooms and other solutions on site to make the mission a lot more efficient and they're extremely cost effective. I mean you look at our per day rate versus some of the alternatives that were recently procured. I mean there are dozens, if not hundreds of dollars cheaper for us versus the other alternatives, a lot more cost effective. The other thing that we're watching closely on some of these other solutions, as you mentioned like Alligator Alcatraz, what we're seeing, once these contracts are in place, they've got really minimum standards, both for the operation facility but also for the staff. And what we're hearing kind of back channel is that they kind of see these solutions at very short term that there is -- it's kind of Patrick said, there's maybe a very unique in a short period of time in a third part of the country and these facilities can be rapidly deployed, but they don't want to do a huge investment, both on not only the physical asset but also the standards and requirements some of the infrastructure and also the personnel. And so flip it back to us, our solutions and the contracts that we've had like Dilley and some of the others that we've been working on last couple of months like Cal City and Midwest, they're going to have a comprehensive set of terms and conditions and requirements. They're going to have all the newest detention standards and requirements, again, that we've been doing for decades and we can comply with very easily and quickly. And then also they're going to have the highest standards from a personnel perspective. And so I think the better way to say it or kind of think about this is that not only our facilities, more cost effective and have all these other benefits. But I think they see our facilities is now a more secure, but also a longer-term solution, more permanent solution versus these others where we're hearing privately, that they could be only for 6 to 12 months. I don't know anything you add to that, Patrick.

Yes. The only thing that I would add is, I think, again, this is back to my comments earlier, which is I think ICE is in the process at this moment identifying where it has the greatest geographic needs. And so that might be a focus on an area of the country where you have significant needs for internal enforcement support, but there isn't existing capacity. Obviously, you can't pick up one of our facilities and drop it in Florida, for example. And so there are very specific geographic needs or support needs for the emission in various parts of the country that are going to require alternatives to our capacity to be used that again, as Damon said, our facilities are both our facilities and our operations very well understand the standards that ICE has for its operations our ability to scale those is very rapid in a way that's consistent with the way that we performed with ICE for 40 years of operations. And so we feel like our assets are very well positioned they meet all applicable standards. We can activate those very quickly. And again, I look at the prioritization right now being a function of where the geographic need is and the mission support need is for ICE, but ultimately, funding as such that we would expect our facilities are very well positioned to meet the interim long-term needs for ICE as they ramp up their activities nationwide.

Okay. So that's one segues into my next question, which is about occupancies. And you talked in your prepared remarks about how occupancy is on an upward trajectory. I think you gained about 200 basis points year-over-year in the second quarter. Please just -- I went back and I looked at some of your metrics prior to the pandemic. And it looked like at one point, and this might not be the high, but it looked like occupancy was close to 87%. I'm wondering what you see as your potential runway here.

Yes, this is Dave. Yes, absolutely, we've got a lot of runway on occupancy. We do include our idle bed capacity in our occupancy statistics. So even as we activate the vital facilities, that's going to improve our occupancy statistics dramatically. That obviously has a big impact on our margins, although I'd say the margin improvement is more impacted by higher utilization at existing facilities, but getting back to occupancy as we fill idle capacity and provide other bed capacity available to ICE and the U.S. Marshals Service as we get into later 2025 and into 2026. Certainly, we could see high 80s in a relatively short term. It is not the high. I think the high -- I've been with the company since 2001, and I think we were in the mid-90s back then. So we certainly have the capability to go higher.

The only thing I'd add to that is that, again, going back to pre-COVID, 87% sounds rise again, we had several vacant facilities, I think, in that period of time. But it's crystal clear to us that ICE is interested in every single bed that we've got in the enterprise. So to Dave's point, and going back to pre-COVID, they sitting here today, knowing what we know and know what the demand is and also know what the financial capability of it. I think every single bed that we've got in our enterprise is very attractive to for multiple reasons.

And our next question is coming from the line of Ben Briggs of StoneX Financial.

Congratulations on the quarter and the guidance, and thank you for taking the call. So a couple of things. First of all, and maybe I missed this. I know you said you've got 30,000 idle beds. If those were to get activated theoretically immediately. What can you put some number on the revenue potential for that? I'm not sure if you already gave it or if I missed it.

Yes. I'll let Dave tackle that one.

Yes, we did not. But if you took the $165 per DM that Damon mentioned, that's kind of the average across the country for ICE that and applied that to the 30,000 beds, you're at $1.8 billion of incremental revenue. And again, not all of that is capacity in our portfolio today. As Damon mentioned, some of that's relationships with other parties to lease facilities. But I think we've said if you activated all of our idle 13,419 beds, we get around $500 million in annual revenue, and that would translate around $200 million to $225 million in incremental EBITDA.

Okay. Got it. So $500 million, $200 million to $225 million of additional EBITDA. Got it. And then next thing for me. So you were talking a little about how a lot of the apprehensions are no longer happening on borders. But they're now happening in the interior. And obviously, there are detention facilities located around the country. It could have to get transported from where they're attained to those detention facilities. Can you talk a little bit about what your transportation capabilities are and how they might be expanding and any opportunities that you guys see there?

Yes. Great question and tanking with Dave and Patrick on that. But let me just say at a high level, as I mentioned earlier, I guess it was probably October, November of last year, we started leaning way far forward on buying bands and buses because the clear message was, as I said earlier, was the detention. But the second message was we need real help on transportation, too. So we're starting pretty far forward on getting ourselves in the queue for the purchase of vans and buses that were being constructed to different manufacturers around the country. So we have seen a dramatic increase in the use of our transportation assets around the country. And the last thing I'll say before I give it over to Patrick is that we've gotten ourselves capability-wise where if someone is being arrested in a certain geographical location where we don't necessarily have an intention facility, we are positioning assets around the country where we can quickly go ahead and pick them up from a local gel or a local facility and then move them to one of our facilities. And so that's worked out pretty well. And that's the capability of competencies that we've had for over 30 years, but Patrick, what would you add to that?

I just had a couple of things. So obviously, our transit core operation supports our ICE and Marshal operations all across the country. And so the transport network allows us to support most of the geographies in the country to the extent that that's needed. Obviously, key focus around our existing facility operations. This year, the investment that we're making in vehicles is over 5x what we would normally spend for CapEx for our TransCore operations. As Damon mentioned, we wanted to be ahead of the curve, knowing that there is a long lead time on purchases for buses and vans to be able to get the inventory in place so we could ramp our operations in a timely way when that was needed. So gave us an ability to ensure that we would be able to meet those needs. And we continue to receive delivery on those vehicles. The last thing I'd say is from an experience perspective, we're just celebrating our 35th year anniversary of operations at our TransCore facility this year. So again, we've been able to flex up or down our transportation support needs needed by our customers. And I think what you're seeing this year is an indication of both our capability to do that and the knowledge and expertise that allow us to be able to meet that mission in addition to the housing mission.

Got it. Got it. What percentage -- I'm not sure if you disclose this, what percentage of, call it, I guess, LTM or 2024 revenue is transport?

Well, most of our transportation revenue is kind of intercompany. So we do a lot of the transportation among our own facilities. I don't have the breakout of -- but we do mass moves for certain states like Hawaii, Vermont, et cetera. So that is third-party revenue that shows up in our in our financial statements as incremental revenue. But a lot of our transportation, it comes in various forms. So we have some of our contracts have fixed monthly amounts that they pay us to provide a minimum number of miles of transportation and then other contracts will get paid on a per month basis. So our -- I don't have our third-party transportation revenue is not a material number, but most of the transportation revenue that we really generate is through the management contracts where it's eliminated in but kind of like part of the embedded in the per DM.

Understood. Got it. So it's kind of baked into the rest of the contract.

Right. That's right.

The next question I have is coming from the line of Mason Bourne of AWH Capital.

More point of clarification, but I just wanted to ask about the reported beds from ICE. And so I think the current level like you mentioned, is about 57,000. At the beginning of the year, it was pretty easy to see where those beds were occupied by facility. And more recently, that gap has really widened. And so I think most recently, I'm kind of calling on Phantom beds, it's about 15,000 of the 56,000 are not broken out by facility. It seems like you're capturing them given your financial results, but just hope you could talk about that if that's a reporting issue, if it's just due to the activity water you might think might be going on there?

Yes. Appreciate the question. I'm not sure I've got an answer for you. But yes, again, to go to the high-level number I'm looking at the most recent report, you 66,945 that ICE reported. Again, that was on July 27. And -- and as of yesterday, I think we were at about 13,500 within our facilities. But I don't know you had anything to add to that, Patrick?

I don't know. But we do track where growth is occurring really by facility nationally. And so -- and we can -- we're certainly willing to share with you our approach for gathering that data. If you want to touch base with us offline.

Great. One other quick one. I appreciate your conservatism in the guidance. I just want to make sure that I understand it right. So I think it's not very well understood between you and your main public competitor. But you're basically at or above all of your contractual minimums, right? So as you capture an incremental bed, you're getting the incremental economics of that, which I think maybe isn't necessarily the case with your competitors. Is that fair?

Yes. Absolutely is fair. I would say -- oh, gosh, I'd say during the pandemic, we were below some of the fixed monthly guarantees. But nowadays, we have a couple of contracts that can bounce around that level. But for the most part, yes, every incremental detainee is contributing to additional revenue.

And the next question is coming from the line of Jay McCanless of Wedbush.

So the first question, and apologies, it's a pretty basic modeling question. But if you look at the -- the 66,100 beds that were in safety at the end of the quarter, does that include both Dilley and Cal City? Or are those going to get included later in the year?

It now includes both Dilley and Cal City, that's correct.

Okay. And then so when Farmville comes on, that's an immediate add of 736 for that number. I believe that facility was full when you all bought it correct.

Yes. Definitely, we'll come into that number in the third quarter, and it was about full. That gave some capacity, wasn't equal but high occupancy.

Okay. Great. All right. And then, David, I want to go back to what you said about occupancy potentially getting into the mid-80s. Is that something that happens this year? Is that more of type of probability just maybe give us some guidepost for that.

Yes. I think even if we're activating facilities like we talked about Cal City in our guidance because we think we could accept detainees with in the coming days and weeks. It will take some time to ramp those up. So I think that's really before we get to the mid-80s. But certainly, I mean, we're already in the high 70s. We could be low 80s by the end of the year depending on our ability to sign new contracts. I think if you exclude any new contracts, we're probably going to be -- still be in the upper 70s, maybe low 80s. But as we expect these new contracts to come online will ramp up to the mid-80s.

Okay. Great. And then just the last question. You all referenced some, I think, $10 billion in border funds that was allocated to DHS. Are there any revenue opportunities for CoreCivic inside that pool of money?

Yes. So the $10 billion -- this is Damon. The $10 billion is referring to, yes, that's the dollars of the total $175 billion for border security under the Big Beautiful Bill Act that's for detention. So absolutely, that's the money. So again, $10 billion, and again, that's on top of the $3.5 billion that's in the base of preparation that Congress does on an annual basis. So you add those 2 numbers together, at $13.5 billion on an annual basis. And again, this money is multiyear money that goes through 2029. So that is going to be the money that ICE is going to look to fund existing capacity, but also new capacity they get on the contract in the coming days and weeks.

And then -- of the $40 billion, $45 billion, exactly right. carving out by year.

That's exactly right. So that's a good clarification. So yes, that's prorated. So again, $40 billion, we're saying $40 billion, it's actually $45 billion. There's going to be some money as we understand it, to have fixed a couple of deficits here and there within DHS. But yes, $40 billion is probably a good number for the next 4-plus years on top of the 3.5% to get from Congress on an annual basis. .

All right. And so I mean, since the letter contracts, something you all have been receiving this year, there's a potential if they wanted to do something that they could with that $10 billion per year, issuing some new letter contracts, potential revenue appetite for CoreCivic down the road? Is that the right way to think about it?

Pretty darn close. I guess one thing I would say is that -- the letter contracts that we got in Cal City and Midwest, that was during early this year. And the way we thought about those agreements as they were basically a bridge to help with activation activities but also get on the other side of the Big Beautiful Bill Act. We think now that, that has been passed. And as we said earlier, we think in -- probably by the end of August, the actual dollars will be transferred to accounts within DHS. We think now they're going to go straight into direct contracts or IGAs with us, they're not going to use letter contracts because now they've got the funding, they don't need a bridge. They don't need to wait for kind of funding as they were earlier this year. So we think that's going to not only accelerate contracting activity, but also they're going to go straight into agreements and not do these letter agreements.

Our next question is coming from the line of Greg Gibas of Northland Securities.

Congrats on the quarter. You mentioned expectations for U.S. Marshals service population growth towards the end of 2025 into 2026. What, I guess, are you hearing that supports those expectations? And what the facilities in the portfolio are maybe best positioned to meet their needs kind of based on what they're looking for from a regional capacity perspective?

Yes, great question. The first part is that just history indicates that will happen. So if you look over the last 10, 15 years, when you have a new administration, it usually takes a year, maybe 18 months, maybe a little longer for every individual U.S. attorney that is needed in different court districts around the country to get nominated and get through the process, through the Senate. And again, there's probably about 94 U.S. attorneys around the country. So again, that's going to take a while. Once those U.S. attorneys get in place in different core districts around the country, then obviously, they can start implementing the direction from administration from relative to focus on prosecution in certain crimes and offenses. And so history indicates that once that happens, and these people get in place, they build their staff, they're getting direction from kind of behavior and prioritization relative to prosecutions in certain parts of the country, you'll start to see an increase in the federal prison population for the Marshals Service. And so we're already seeing that a little bit. But once I think to get fully staffed and get through all these nominations, you'll see a increase pretty dramatically. I don't know I think you add to that, Patrick.

The only thing I would add is that, obviously, in addition to the staffing changes, their enforcement changes that take time to work their way through the system. And so a combination of the potent in the U.S. attorneys combined with a shift in enforcement priorities toward the administration's priorities result in a bit of a lag. But as Damon said, we typically see during the second year of administration and increase in need. Now in terms of magnitude of demand, initially, I would expect that would be additional utilization of existing contracts in existing facilities, more than it would be need for a substantial expansion of new capacity that's not already in place. And to the second part of your question, I think we've got really good opportunities in Arizona. Oklahoma, potentially Mississippi and New Mexico, all those states -- we have facilities in those states with existing U.S. Marshals contracts that have capacity.

Sure. Very helpful. And I guess, simply because I don't think it was asked yet. Are you able to provide any color? Or is there anything you can share on the fourth and fifth idle facility discussions and maybe more particularly, the fourth that you're in advanced discussions for?

Nothing more than we shared already. Yes, we're having discussions, but not at a point yet to reveal of so we're going to get a little further down the road with Ice on those discussions.

Fair enough. And I guess, lastly, just as we think about kind of quarterly cadence, I as Cal City begins intake this quarter, Dilley ramps to full occupancy by the end of this quarter. Do you kind of see Q4 as a fair run rate of maybe the currently contracted facilities going forward, obviously, with the exclusion of Midwest regional?

Yes, we do. Yes, I'd say if you look at Q4 on a run rate basis, you're probably no less than $400 million in on an annual basis, and that does not include any of the additional contracts like the fourth and fifth idle facilities. We just mentioned that we're in discussions with on the advanced stages of discussions one is kind of in the earlier stages. And that's just 2 of them. And we've got additional opportunities after that. So as we look -- obviously, we're not putting out guidance for 2026, but as we look out to 2026 based on the book of business that we have in 2025 and as these contracts ramp up and some of them will be fully ramped like Dilley, in Q4, we don't see -- well, we see a minimum EBITDA of $400 million going into $26 million without new contracts.

And the next question comes from the line of Raj Sharma of Texas Capital.

Congratulations on a solid quarter and raised guidance. My first question is, can we go back to the electronic monitoring business, if you could comment on what do you think the cadence of it is, it does the supervision sort of monitoring business? Does it stay at current levels here as your competitors indicated? And then when should it pick back up once retention sort of goals are reached. And my question really is that if ice levels of ICAP go back to 375,000 in Europe for a contract 6 months or a year, how much of that business are you ready to take get? What is the capacity of how much you can handle in the electronic monitoring and supervision?

Yes. Thank you so much. I appreciate that question. And again, just to reinforce, I mean, the laser focus from DHS ICE leadership administration is attention. And again, as I said earlier, I mean we're working to accommodate that. And again, if you look at our occupancy today, we've got a lot of runway to help support that prioritization of using detention capacity. So will rehash that, but that's our focus. And so to answer your question, yes, I think we would agree with GEO, kind of our view is that the current program and its size is probably where it's going to be for the foreseeable future. Again, we're going to watch closely on kind of the timing of RFP. As GEO said yesterday, they've got the 1-month extension through August. They're waiting to see and they do a 6- or 12-month extension after that, to allow time for RFP. And again, as I said earlier, we've got the competency and the capability and also if they kind of shift more to active monitoring, which is the anchor bracelet, a GP type solution. We've been doing that for 30-plus years. So we've definitely got -- we check all the boxes relative to our ability and being very competitive in that procurement, but anything you'd add to that, Patrick.

Yes. The only thing that I would add is that I think it's really important to contextualize the program overall, which is it isn't a singular service. It's a program that's actually evolved over time based on the needs of ICE and the type of monitoring that might be required during a particular period, and those priorities may shift. And so clearly, the prioritization is around detention services through the end of the year. That is very clear. I think the question beyond that, and it really goes back to Damian's answer earlier to one of the questions, which is the funding that's available under the One Big Beautiful Bill Act is actually in excess of 100,000 beds that gets talked about a lot right now. as a targeted bed number. And I think really to think about what the world looks like in 6 months or 12 months of being different than today is somewhat difficult at this point because funding is variable to utilize more beds than 100,000 beds that that's ultimately needed. So you have to see a shift from -- in priority from ICE to focus on something other than detention, and we haven't seen that yet. Then in terms of capacity, obviously, this is a program that we've looked at for some time. We've built the capacity and the partnerships that we believe would allow us to compete very effectively for that program at current funded levels. And so we are in a place where we would hope to be in a position to be considered as an alternative. I think we've positioned ourselves well. And certainly, at the current level and capabilities that we think we're very well positioned to compete at the appropriate time. But again, in the short run, we believe the focus of ICE today is on intention, ramping up the tension in meeting the needs of their current priorities.

That's really helpful. And then my next question is on the contribution of EBITDA from the reactivated facilities? How much -- what's the current contribution from reactivated facilities right now in your EBITDA number? And when would you -- will you think you'd reach mature margin profile on these facilities and we can -- I know that David has talked about the potential add-on in EBITDA once they turn on fully? Could you talk about that, please? .

So first of all, we typically don't parse the economics of our individual contracts from a contribution perspective. And so I know that's something that would be helpful from an external modeling perspective. But it's something that we typically don't do and have not done. And we've talked about what the contribution could be from a revenue perspective around our new contracts. From a time line standpoint, we do expect our South Texas facility will hit normalized run rate for the fourth quarter. So you would expect that facility would be fully contributing and fully ramped in the fourth quarter. You would expect our Cal City facility would be ramping up and achieving normalized run rate at some point during the fourth quarter. And as Dave said, during his most recent question, we would expect our run rate would be north of $400 million as we exit this year. And obviously, you can look at the puts and takes that have contributed to our outperformance this year. But again, we typically don't and wouldn't expect to parse the individual contract economics.

And the next question is coming from the line of Jordan Hymowitz of Philadelphia Financial Management of San Francisco.

A couple of questions. The last time your occupancy was above 80%. Could you remind us of the EBITDA margins? And would it actually be higher than that now given the ICE mix is a little higher profit margin or the federal more specifically than the state?

I would say we were around 25%, if I recall correctly. I have to go back to check to confirm for sure. But I think we are on 25%, 26% total operating margin that's across the whole portfolio. So again, as we've mentioned, not in a portfolio of our size, you have some better margins and some worse margins, but that's the average cost of portfolio. I don't -- I wouldn't say our margin profile would change materially. Just with an increase in ICE business. I think they're consistent with the overall margin profile of the safety segment. So I'd expect us as we increase occupancy, to approach and perhaps exceed that 25% margin, again, just because of higher occupancy, not necessarily because of the specific customer.

Okay. Second question, could you remind people, you bid on the ISAP contract last time. And I believe you were the lower bidder in when the contract, do you see this administration possibly ignoring the lower bid, if that was the case again?

Yes. It's hard to say to get into the heads of people that evaluate the proposal through a procurement process. So it'd be really kind of hard to answer that as your question. So again, we're waiting to see when the procurement comes out, again, GEO said it could be a 6-month or 12-month extension that they get after this current extension through the in August. And then, we'll have to evaluate when it comes down to the kind of new requirements. And also to your question about kind of weighting of price, if that changes how they consider the overall arching kind of cost of the contract with the proposal from us in the overall kind of scoring of the proposal.

Okay. And final question is, do you see yourself initiating a dividend in '26 given the increased cash flow and buyback already ongoing? .

Not at the current prices, no. not at the current stock price.

Thank you. That does conclude today's Q&A session. I would like to go ahead and turn the call back over to Damon Hininger for closing remarks. Please go ahead.

All right. Thank you so very much,. Thank you so much for your interest in the company. I know we went a little over, but also we had a lot to talk about. On behalf of the team here in the room and throughout the organization, we're deeply grateful for the interest of the company, but more importantly, your support and investment in our company. We have had a tremendous, tremendous first half of 2025, as you see from the financial performance, but also the year we're going to have a very strong year as we end 2025 and go into 2026. So we look forward to talking to you at our next call in early fall. Thank you so much.

This does conclude today's conference. You may all disconnect.