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    GEO
    Earnings call· Jun 2026(Q2 FY26)

    GEO GROUP Q2 FY26 earnings call GEO

    Aug 6, 2026 Source

    Executive summary

    The GEO Group Q2 FY26 — Strong Performance Driven by New Contracts and ICE Funding

    The GEO Group delivered strong second-quarter results, driven by significant revenue growth from new contracts secured in 2025 and increased ICE populations. The company is actively pursuing the reactivation of idle facilities and potential sales of turnkey facilities to ICE, aiming to retain support services contracts and use proceeds for debt reduction and share repurchases. Despite some contract delays, the outlook remains positive with potential for further upside from ISAP program mix shifts and transportation services.

    Highlights

    5

    • Revenues increased 15% to approximately $732.1 million from Q2 FY25.

    • Net income increased 63% to approximately $47.5 million from Q2 FY25.

    • Adjusted EBITDA increased 20% to approximately $142 million from Q2 FY25.

    • New ICE contracts for Bighorn and Rivers facilities expected to generate approximately $165 million in annual revenues.

    • Repurchased approximately 1.6 million shares for approximately $37 million in Q2 FY26, with $323 million remaining authorization.

    Concerns

    2

    • Florida managed-only contracts for Graceville and Bay facilities, valued at $100 million combined annual revenues, rescheduled for implementation to July 1, 2027.

    • Skip tracing contract did not generate revenues in Q2 FY26 due to lapse in ICE appropriations funding.

    Guidance & targets

    23
    CategoryTargetConfidence
    Full-year GAAP Net Income
    $168 million to $175 million
    high materiality
    High
    Full-year GAAP Diluted EPS
    $1.27 to $1.32 per diluted share
    high materiality
    High
    Full-year Annual Revenues
    $2.95 billion to $3.05 billion
    high materiality
    High
    Full-year Effective Tax Rate
    approximately 30%
    medium materiality
    High
    Full-year Adjusted EBITDA
    $550 million to $560 million
    high materiality
    High
    Full-year Unreimbursed Capital Expenditures
    $135 million and $145 million
    medium materiality
    High
    Capital Expenditures
    below $100 million
    medium materiality
    Medium
    Q3 GAAP Net Income
    $45 million to $48 million
    medium materiality
    High
    Q3 GAAP Diluted EPS
    $0.35 to $0.37 per diluted share
    medium materiality
    High
    Q3 Quarterly Revenues
    $755 million to $805 million
    medium materiality
    High
    Q3 Adjusted EBITDA
    $140 million and $145 million
    medium materiality
    High
    Q4 GAAP Net Income
    $37 million to $41 million
    medium materiality
    High
    Q4 GAAP Diluted EPS
    $0.28 to $0.31 per diluted share
    medium materiality
    High
    Q4 Quarterly Revenues
    $758 million to $808 million
    medium materiality
    High
    Q4 Adjusted EBITDA
    $137 million and $142 million
    medium materiality
    High
    Bighorn Support Services Annual Revenues
    approximately $85 million
    medium materiality
    High
    Rivers Support Services Annual Revenues
    approximately $80 million
    medium materiality
    High
    Bighorn and Rivers Activation Completion
    completed by the end of 2026
    medium materiality
    High
    Bighorn and Rivers Additional Annual Transportation Services Revenues
    approximately $20 million combined
    low materiality
    High
    Graceville and Bay Contracts Transition
    July 1, 2027
    medium materiality
    Medium
    Skip Tracing Contract Ramp-up
    begin to ramp up
    low materiality
    Medium
    Idle Beds Incremental Annual Revenues
    approximately $250 million
    medium materiality
    Medium
    Proceeds from Facility Sales to ICE
    reduce debt, continue stock repurchases and for other general corporate purposes
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Owned and Leased Secured Services
    Revenue increased by approximately $55 million compared to prior year's second quarter, driven by the activation of 3 company-owned facilities under new contracts with ICE, partly offset by revenue loss from the sale of the Lawton, Oklahoma facility and the depopulation of the Lea County, New Mexico facility.
    		—16%——
    Managed-Only Contracts
    Revenue increased by approximately $44 million from prior year second quarter, primarily driven by the joint venture agreement for the management of the North Florida ICE detention facility as well as certain transportation revenue increases.
    		—30%——
    Electronic Monitoring and Supervision Services
    Revenues decreased by less than $3 million or approximately 3.5% from the prior year second quarter, despite reduced pricing on the ISAP 5 contract, demonstrating strength from continued favorable technology and case management mix shift.
    		—-3.5%——

    Operational metrics

    36
    Revenue growth
    15%YoY
    Q2 FY26

    Compared to Q2 FY25 revenue of $636.2 million.

    Net income growth
    63%YoY
    Q2 FY26

    Compared to Q2 FY25 net income of $29.1 million.

    EPS growth
    71%YoY
    Q2 FY26

    Compared to Q2 FY25 EPS of $0.21.

    Adjusted EBITDA
    $142 millionup 20% YoY
    Q2 FY26

    Up from approximately $118.6 million in Q2 FY25.

    Operating expenses growth
    12%YoY
    Q2 FY26

    As a result of ICE facility contract activation and increased occupancy.

    General and administrative expenses as % of revenue
    9%steady YoY
    Q2 FY26

    Remained steady compared to prior year's second quarter.

    Net interest expense change
    $4 milliondecrease YoY
    Q2 FY26

    Year-over-year decrease as a result of reduction in total net debt.

    Effective tax rate
    28.7%
    Q2 FY26

    For the second quarter of 2026.

    Cash and cash equivalents
    $55 million
    Q2 FY26

    Balance at the end of the second quarter of 2026.

    Total debt
    $1.54 billion
    Q2 FY26

    Balance at the end of the second quarter of 2026.

    Total net debt
    $1.5 billion
    Q2 FY26

    Balance at the end of the second quarter of 2026.

    Total net leverage
    below 3x
    Q2 FY26

    At the end of the second quarter of 2026.

    Total available liquidity
    $300 million
    Q2 FY26

    At the end of the second quarter, to support capital needs.

    Shares repurchased
    1.6 million
    Q2 FY26

    Repurchased during the second quarter of 2026.

    Total shares repurchased
    10.1 million
    Since Aug 2025

    Since the current share repurchase program was authorized in August 2025.

    Current total outstanding share count
    132 million
    Q2 FY26

    Approximately.

    Remaining share repurchase authorization
    $323 million
    Q2 FY26

    Still available under the $500 million share repurchase authorization.

    New business wins (2025)
    $520 millionlargest amount in company history
    FY25

    Represents the largest amount of new business won in a single year in the company's history.

    ICE beds under new contracts (2025)
    6,000
    FY25

    From new contracts to house ICE detainees at 4 facilities.

    Total active ICE beds
    27,000
    Q2 FY26

    Before activation of Bighorn and Rivers facilities.

    Current centers across active ICE facilities
    24,000
    Q2 FY26

    Representing more than 1/3 of the current national ICE population.

    Current national ICE population
    68,000
    Q2 FY26

    Distributed over 225 separate locations.

    ICE population increase
    20%
    Last 6 weeks

    Experienced over the last 6 weeks.

    ICE funding (Secure America Act)
    $38.5 billion
    Through Sep 30, 2029

    Available through September 30, 2029, following passage of the Secure America Act.

    ICE funding (One Big Beautiful Bill)
    $75 billion
    Through Sep 30, 2029

    Available through September 30, 2029.

    Federal government ICE bed target
    100,000 beds or more
    Future

    Federal government is pursuing the priority of increasing immigration detention capacity.

    Total ICE beds under contract
    29,500
    Post-Bighorn/Rivers activation

    Will increase following the activation of Bighorn and Rivers facilities.

    Idle beds available
    4,500
    Q2 FY26

    Designed for high security and well suited for federal government needs.

    ISAP overall count
    100
    Current

    The current overall ISAP count. (Note: This figure appears unusually low and may be a transcription error, but is reported verbatim.)

    ISAP participants on GPS ankle monitors
    54,000up from 17,000 early 2025
    Current

    Increased from 17,000 early 2025.

    ISAP participants assigned to case management services
    116,000
    Current

    Steady increase in the number of participants.

    CoreCivic facilities acquired by ICE
    4 facilities
    Recently

    As disclosed by CoreCivic.

    Total existing detention sites nationwide owned/operated by private contractors
    36
    Current

    Following recently completed sales to ICE.

    CoreCivic ICE detention facilities owned/operated
    11
    Current

    Approximately.

    GEO ICE detention facilities owned/operated
    23
    Current

    Approximately.

    ICE funding for new facilities (remaining)
    $36 billion
    Current

    Approximately, for the buildup of new facilities, allocated for about 3 years.

    Orderbook & backlog

    5
    New business wins (2025 contracts)$520 millionFY25

    Largest amount in company history

    Represents annual revenues from new or expanded contracts.

    ICE detainee contracts (2025)$280 millionFY25

    Added 6,000 beds

    Annual revenues for housing ICE detainees at 4 facilities.

    Bighorn facility support services contract$85 millionQ2 FY26

    New contract

    Expected annual revenues in the first full year of operations (early 2027).

    Rivers facility support services contract$80 millionQ2 FY26

    New contract

    Expected annual revenues in the first full year of operations (early 2027).

    Graceville and Bay managed-only contracts$100 millionQ2 FY26

    Rescheduled from early 2026

    Combined annual revenues, expected to transition July 1, 2027.

    Deals & partnerships

    5
    ICENew or expanded contracts to house ICE detainees at 4 facilities$280 million annual revenues

    Part of $520 million in new business won in 2025, the largest amount in company history.

    U.S. Marshals ServiceNew 5-year contract for secure transportation services5 years

    Signed in 2025.

    ICE5-year support services contracts for activation of federal immigration processing centers at previously idled facilitiesBighorn: $85 million annual revenues; Rivers: $80 million annual revenues5 years

    Increases total ICE beds under contract to approximately 29,500 beds.

    Not stated (joint venture partner)Joint venture agreement for the management of the North Florida ICE detention facility

    Part of managed-only contracts segment.

    ICEPotential sale of several turnkey facilities to ICE, with GEO retaining support services contractsLong-term support services contracts

    GEO owns and operates 23 ICE detention facilities. ICE has initiated a procurement process involving 4 facilities for new long-term support services contracts.

    Capital programs

    1
    Bighorn and Rivers Facility Activationunderway
    Funding: ICE reimbursement
    Start: Q2 FY26

    Benefit: 1,188-bed Bighorn, 1,320-bed Rivers activated; total 2,508 beds

    ICE will reimburse GEO for capital expenditures and start-up expenses during activation period. Normalized operations and earnings contribution expected in early 2027.

    Risks & headwinds

    3
    Rescheduling of Graceville and Bay managed-only contractsUntil July 1, 2027

    $100 million in combined annual revenues deferred

    Mitigation: Unresolved budgetary issues are being addressed, but no specific mitigation from GEO stated beyond the delay.

    Lapse in ICE appropriations funding impacting skip tracing contractQ2 FY26

    No revenues received in Q2 FY26

    Mitigation: Optimistic that the contract will begin to ramp up during the second half of 2026 with restoration of ICE funding.

    Uncertainty in timing of government actionsOngoing

    No definitive agreement in place, no precise timeline for closing any transactions for facility sales to ICE.

    Mitigation: Focused on pursuing new growth opportunities and allocating capital to enhance long-term value.

    What to watch in Q3 FY26

    5

    Skip tracing contract revenue ramp-up

    H2 2026
    CurrentNo revenues in Q2 FY26
    TargetBegin to ramp up

    Why it matters

    Indicates recovery from ICE funding lapse and potential for $60M annualized revenue.

    With the restoration of ICE funding, we are optimistic that the contract will begin to ramp up during the second half of 2026.

    Q&A highlights

    7

    Why were the Florida contracts delayed, and does the raised guidance imply even stronger performance if not for the delay?

    The delay was due to unresolved budgetary issues, pushing implementation to July 1, 2027. Management confirmed that the raised guidance would have been even higher without this delay.

    “Yes, there were some budgetary issues that remain unresolved that required the extension to July 1 of next year.”

    asked by Joe Gomes · answered by George Zoley

    2 min read6 chapters

    Detailed Narrative

    01

    ICE Funding and Capacity Expansion

    The Secure America Act provided $38.5 billion in funding for ICE available through September 30, 2029, supplementing $75 billion previously allocated under the One Big Beautiful Bill, which included $45 billion for retention. The federal government's ongoing priority is to increase immigration detention capacity to 100,000 beds or more, consolidating into fewer, larger facilities. The GEO Group, as a 40-year partner to ICE, expects to be a key part of this solution.

    02

    Facility Activations and Idle Capacity

    GEO announced two new 5-year support services contracts with ICE for the activation of the 1,188-bed Bighorn facility in Colorado and the 1,320-bed Rivers facility in North Carolina. These facilities are expected to generate $85 million and $80 million in annual revenues, respectively, once normalized in early 2027. ICE will reimburse GEO for capital expenditures and start-up expenses. The company still has approximately 4,500 idle beds at 5 company-owned facilities, which could generate $250 million in incremental annual revenues at full capacity.

    03

    ISAP Program Evolution and Mix Shift

    The ISAP 5 contract is experiencing a steady technology shift towards more intensive and higher-priced monitoring devices, such as ankle monitors. The number of participants on GPS ankle monitors has increased significantly from 17,000 in early 2025 to 54,000 currently. Additionally, 116,000 individuals are assigned to case management services. This mix shift is expected to increase revenues and earnings under the ISAP contract, even if overall participation counts remain stable, with potential for scaling up to higher overall counts in the future.

    04

    Potential Sale of Turnkey Facilities to ICE

    ICE is actively considering purchasing existing privately-owned turnkey processing centers, with CoreCivic having already sold 4 facilities for over $2.2 billion. The GEO Group is engaged in an active process for the potential sale of several of its turnkey facilities to ICE, with the intent to retain the support services business under long-term contracts. Proceeds from any sales would be used for debt reduction, stock repurchases, and general corporate purposes, representing a potential significant liquidity and shareholder value-enhancing event.

    05

    Capital Structure and Shareholder Value Initiatives

    During Q2 FY26, GEO repurchased approximately 1.6 million shares for $37 million, bringing the total repurchased to 10.1 million shares or $177 million since August 2025. The company has $323 million remaining under its $500 million share repurchase authorization. Management believes the stock is significantly undervalued, offering an attractive investment opportunity to enhance shareholder value through these repurchases and other capital allocation strategies.

    06

    Florida Contracts Rescheduled

    The implementation of managed-only contracts for the 1,884-bed Graceville facility and 985-bed Bay facility in Florida, which represent approximately $100 million in combined annual revenues, has been rescheduled. These contracts are now expected to transition to GEO on July 1, 2027, due to unresolved budgetary issues, impacting the timing of📎 expected revenue contributions.

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