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    GEO
    Earnings call· Mar 2026(Q1 FY26)

    GEO GROUP Q1 FY26 earnings call GEO

    May 6, 2026 Source

    Executive summary

    The GEO Group Q1 FY26 — Strong Performance and Increased Outlook Driven by New Contracts

    The GEO Group delivered strong Q1 FY26 results, exceeding expectations due to significant revenue growth from new contracts secured in 2025. Despite a decline in ICE populations and payment delays from a partial government shutdown, the company raised its full-year outlook, driven by operational efficiencies and a strategic mix shift in its ISAP 5 program. Management also highlighted potential upside from idle bed reactivation and ongoing discussions for facility sales to ICE.

    Highlights

    5

    • Secured new or expanded contracts in 2025 representing up to approximately $520 million in new incremental annual revenues, the largest in company history.

    • Net income attributable to GEO operations increased 96% to $38.3 million ($0.29 per diluted share) in Q1 FY26 from $19.6 million ($0.14 per diluted share) in Q1 FY25.

    • Adjusted EBITDA increased 32% to $131.4 million in Q1 FY26 from $99.8 million in Q1 FY25.

    • Increased full-year 2026 GAAP net income guidance to $1.15-$1.25 per diluted share and Adjusted EBITDA to $525M-$545M.

    • Repurchased 3.6 million shares for approximately $50 million in Q1 FY26, with $359 million remaining under authorization.

    Concerns

    3

    • ICE census across facilities declined from a high of 24,000 early this year to approximately 21,000.

    • Partial government shutdown of DHS resulted in delayed payments and collections, requiring careful liquidity management.

    • The DHS warehouse project to increase detention capacity has been paused, with the department evaluating how to proceed.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year 2026 GAAP Net Income
    $153M-$166M
    high materiality
    High
    Full-year 2026 GAAP EPS
    $1.15-$1.25 per diluted share
    high materiality
    High
    Full-year 2026 Annual Revenues
    $2.95B-$3.1B
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $525M-$545M
    high materiality
    High
    Full-year 2026 Total Capital Expenditures
    $137.5M-$162.5M
    medium materiality
    High
    Full-year 2026 Effective Tax Rate
    ~30%
    low materiality
    High
    Q2 2026 GAAP Net Income
    $33M-$39M
    medium materiality
    High
    Q2 2026 GAAP EPS
    $0.25-$0.29 per diluted share
    medium materiality
    High
    Q2 2026 Quarterly Revenues
    $715M-$725M
    medium materiality
    High
    Q2 2026 Adjusted EBITDA
    $130M-$135M
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Secure Services (owned and leased)
    Increase driven by activation of 3 company-owned facilities under new contracts with ICE, offset by revenue loss from the sale of Lawton, Oklahoma facility and depopulation of Lea County, New Mexico facility.
    		$70M increase23%——
    Managed-only contracts
    Increase driven by joint venture agreement for the management of the North Florida ICE detention facility and certain transportation revenue increases.
    		$33M increase22%——
    Reentry services
    Revenue increased year-over-year.
    		—5%——
    Nonresidential services
    Revenue declined year-over-year.
    		—-5%——
    Electronic Monitoring and Supervision services
    Decrease driven by reduced pricing for ISAP 5 contract, offset by favorable technology and case management mix shift and modest skip tracing revenues.
    		—-4%——

    Operational metrics

    34
    New incremental annual revenues (2025 contracts)
    $520M
    Annual

    Represents new or expanded contracts entered into throughout 2025.

    Annual revenues from ICE facility activations
    $300M
    Annual

    From new contracts to house ICE at four facilities, including three previously idle company-owned facilities and one management services contract.

    Total beds under contract with ICE
    26,000
    Current

    Increased due to recent facility activations.

    ICE census (peak early year)
    24,000
    Early 2026

    High point of census across ICE facilities.

    ICE census (current)
    21,000down from 24,000
    Current

    Represents more than 1/3 of the national ICE population.

    National ICE population
    58,000
    Current

    Distributed over 2025 separate locations, primarily short-term GL facilities.

    Incremental annual revenue from transportation contracts
    $60M
    Annual

    From new or amended contracts to expand secured ground transportation services and a new 5-year contract with U.S. Marshals Service.

    ISAP 5 participants
    180,000-181,000relatively stable
    Q1 FY26

    Counts remained relatively stable during the first quarter of 2026.

    ISAP 5 participants on GPS ankle monitors
    48,000increased from 17,000
    Current

    Reflects a technology shift to more intensive and higher priced monitoring devices.

    ISAP 5 participants on SmartLink mobile app
    131,000declined from 159,000
    Current

    Reflects a technology shift away from the mobile app to more intensive monitoring.

    ISAP 5 participants assigned to case management services
    111,000steady increase
    Current

    Involves staff interaction and monitoring.

    Skip tracing services annual revenue potential
    $60M
    Annual

    New 2-year contract awarded by ICE, began providing services in March.

    Florida Department of Corrections management contracts annual revenues
    $100M
    Annual

    Two new management-only contracts awarded in 2025, scheduled to transition July 1, 2026.

    Idle beds available
    6,000
    Current

    Ideally suited for current needs of the federal government.

    Potential incremental annual revenues from idle beds
    $300M
    Annual

    At full capacity, these 6,000 idle beds could generate more than $300 million in combined incremental revenues.

    Shares repurchased (Q1 FY26)
    3.6M
    Q1 FY26

    Part of the share repurchase authorization.

    Total shares repurchased (to date)
    8.5M
    To date

    Cumulative shares repurchased under the authorization.

    Total outstanding share count
    133.7M
    Current

    Current total outstanding share count.

    Remaining share repurchase authorization
    $359M
    Current

    Amount still available under the $500 million share repurchase authorization.

    Revenues
    $705.2Mup from $604.6M in Q1 FY25
    Q1 FY26

    Reflecting a 17% increase year-over-year.

    Net income attributable to GEO operations
    $38.3Mup from $19.6M in Q1 FY25
    Q1 FY26

    Reflecting a 96% increase year-over-year.

    Adjusted EBITDA
    $131.4Mup from $99.8M in Q1 FY25
    Q1 FY26

    Reflecting a 32% increase year-over-year.

    Operating expenses growth
    15%YoY
    Q1 FY26

    Increased as a result of new facility contracts and occupancy, but favorably impacted by lower labor costs.

    General and administrative expenses as % of revenue
    8.6%vs 9.6% in Q1 FY25
    Q1 FY26

    Declined year-over-year.

    Net interest expense
    $4M decreaseYoY
    Q1 FY26

    Decrease due to reduction of total net debt.

    Effective tax rate
    28.5%
    Q1 FY26

    Effective tax rate for the first quarter.

    Cash on hand
    $80M
    End Q1 FY26

    Cash balance at the end of the first quarter.

    Total debt
    $1.61B
    End Q1 FY26

    Total debt at the end of the first quarter.

    Total net debt
    $1.53B
    End Q1 FY26

    Total net debt at the end of the first quarter.

    Total net leverage
    <3.2x
    End Q1 FY26

    Total net leverage ratio.

    Revolving credit facility expansion
    $100M
    Early 2026

    Expanded earlier this year to support diverse capital needs and manage through current partial government shutdown.

    Owned beds
    50,000
    Current

    Total owned beds across facilities.

    GEO ICE detention facilities
    23
    Current

    Number of ICE detention facilities owned and operated by GEO.

    Central Valley facility capacity
    700
    Current

    Facility previously under ICE, then US Marshals, now taken over by ICE again. Located next to another ICE facility.

    Deals & partnerships

    6
    ICENew contracts for housing ICE detainees$300M annual revenues

    New contracts to house ICE detainees at four facilities, totaling approximately 6,000 beds. This includes three previously idle company-owned facilities in New Jersey, Michigan, Georgia, and a management services contract in Florida. Also reactivated the company-owned Adelanto ICE Processing Center in California.

    ICE and U.S. Marshals ServiceExpanded secure transportation services$60M incremental annual revenue5-year contract with U.S. Marshals Service

    New or amended contracts in 2025 to expand secured ground transportation services at four existing ICE facilities and add three newly activated ICE facilities. Also, a new 5-year contract with U.S. Marshals Service covering 26 federal judicial districts in 14 states.

    ICENew 2-year contract for ISAP 5 program2 years

    New 2-year contract for the ISAP 5 program, providing electronic monitoring and case management services for non-detained individuals. The program relies on GPS ankle bracelets, risk-worn devices, and the SmartLink phone app.

    ICENew 2-year contract for skip tracing servicesUp to $60M per year2 years

    New 2-year contract for the provision of skip tracing services.

    Florida Department of CorrectionsTwo new management-only contracts$100M combined annual revenues

    Two new management-only contracts for the 1,884-bed Graceville facility and the 985-bed Bay facility. Scheduled to transition to GEO management on July 1, 2026.

    ICEPotential sale of multiple facilities to ICE

    Discussions are ongoing with ICE regarding the potential sale of multiple facilities. GEO would prioritize continued management of these facilities under long-term support services contracts. No definitive agreement or precise timeline.

    Risks & headwinds

    3
    Decline in ICE detention censusEarly 2026 to current

    From 24,000 to 21,000 participants

    Mitigation: Expects stabilization in Q2 and pickup in H2; ISAP 5 mix shift provides revenue upside; 6,000 idle beds available for activation.

    Partial government shutdown of DHSCurrent

    Delayed payments and collections

    Mitigation: Expanded revolving credit facility by $100 million to manage liquidity and working capital needs; essential public safety services continue uninterrupted.

    Uncertainty regarding DHS immigration enforcement policiesOngoing

    Warehouse project paused; reevaluation of immigration enforcement policies

    Mitigation: GEO is a 40-year partner to ICE and expects to be part of the solution; has 6,000 idle high-security beds ideally suited for federal needs.

    What to watch in Q2 FY26

    5

    Timing of potential facility sales to ICE

    Late Q2, maybe early Q3
    CurrentDiscussions ongoing, no definitive agreement
    TargetAnnouncement of initial sales

    Why it matters

    Potential for significant liquidity and shareholder value enhancement for the company.

    I would guess at late Q2, maybe early Q3. But that's just the guess.

    Q&A highlights

    5

    How should we think about potential valuations for facility sales to ICE, compared to the Lawton facility sale at $130,000 per bed?

    The Lawton valuation is a good baseline, but ICE facilities should command a meaningfully higher valuation due to more complex physical plants, urban locations, and being in 'blue states' which makes replication difficult.

    “Lawton bed valuation is a good baseline to be followed by several other factors that should be the result in a meaningful higher valuation of our ICE facilities.”

    asked by Greg Gibas · answered by George Zoley

    2 min read6 chapters

    Detailed Narrative

    01

    Record New Business Wins in 2025

    GEO Group secured new or expanded contracts in 2025 totaling approximately $520 million in incremental annual revenues, marking the largest amount of new business in the company's history. These include contracts for 6,000 ICE beds across four facilities, $60 million in expanded secure transportation services, and a new 2-year ISAP 5 program contract. Additionally, a new 2-year skip tracing services contract valued at up to $60 million per year and two Florida Department of Corrections management contracts totaling $100 million annually were awarded.

    02

    ICE Operations and Funding Dynamics

    The company's ICE facilities saw a peak census of 24,000 early in the year, declining to 21,000, still representing over a third of the national ICE population of approximately 58,000. Management attributes this decline to a recent transition in DHS leadership and a partial government shutdown. However, $45 billion in detention funding through September 2029 is available under the budget reconciliation bill, ensuring continued operations for essential public safety services despite payment delays.

    03

    ISAP 5 Program Evolution and Mix Shift

    The ISAP 5 program, providing electronic monitoring and case management services, maintained stable participant counts around 180,000-181,000 in Q1 FY26. A significant technology shift is occurring, with GPS ankle monitors increasing to over 48,000 from 17,000 in early 2025, while SmartLink app users declined to 131,000 from 159,000. This mix shift towards more intensive and higher-priced monitoring, alongside increased case management services for 111,000 individuals, is expected to boost revenues and earnings under the ISAP contract.

    04

    Strategic Capital Structure and Share Repurchases

    GEO Group continues to strengthen its capital structure, repurchasing 3.6 million shares for approximately $50 million in Q1 2026. This brings the total repurchased shares to 8.5 million for approximately $141 million, with $359 million remaining under the $500 million authorization. The company believes its stock is significantly undervalued, presenting a unique opportunity to enhance shareholder value through these buybacks.

    05

    Potential Facility Sales to ICE

    Discussions are underway with ICE regarding the potential sale of multiple facilities, though no definitive agreement or timeline exists. GEO Group would prioritize continued management of these facilities under long-term support service contracts. Proceeds from any sales would be used for debt reduction, share repurchases, and other corporate purposes. Management suggests federal ownership could offer greater protection from litigation compared to private ownership.

    06

    Idle Bed Capacity and Future Growth Opportunities

    The company possesses approximately 6,000 idle beds across six company-owned facilities, primarily former U.S. Bureau of Prisons sites, which are high-security and ideally suited for current federal needs. These beds could generate over $300 million in incremental annual revenues at full capacity. Management expects to be part of the solution for ICE's objective to increase detention capacity to 100,000 beds and consolidate to fewer, larger facilities.

    AI-generated summary of the company’s earnings call. Not investment advice.