Is CapEx reimbursement from ICE new, and does it contribute to the CapEx guidance reduction?

CapEx reimbursement is relatively new. The reduction in CapEx guidance is due to significant CapEx already spent on facility reactivation over the last 1.5 years, with ongoing maintenance CapEx returning to normal levels. “It is relatively new, but -- the answer to the second question may be twofold that we've spent a lot of CapEx gearing up ready for this expansion for the reactivation of ICE facilities. And I think we'll be pretty much complete by the end of this year or early next year.”

Why has ISAP remained flat, and will it reach previous high levels (e.g., 400,000 participants) in the near future?

ICE's current focus is on increasing detention capacity, not ISAP. Policy shifts could lead to a dramatic increase in ISAP next year, but currently, detention capacity is the priority. “I think in general, the focus of ICE has been on increasing detention capacity. But there's a lot of policy shifts as to who will be subject to immigration enforcement. So at a later point, maybe next year, we could see ISAP increase dramatically. But right now, the focus is on increasing detention capacity.”

Is $60 million still a reasonable annualized revenue estimate for the skip tracing contract, and what are the trends?

Management expects to receive another contract this quarter, possibly this month, and confirmed the $60 million estimate is correct. “We do expect to receive another contract this quarter, possibly this month. And I think that number you quoted is correct.”

GEO

GEO Group (GEO) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 6, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full-year GAAP Net Income	$168 million to $175 million high materiality	FY26	High
Full-year GAAP Diluted EPS	$1.27 to $1.32 per diluted share high materiality	FY26	High
Full-year Annual Revenues	$2.95 billion to $3.05 billion high materiality	FY26	High
Full-year Effective Tax Rate	approximately 30% medium materiality	FY26	High
Full-year Adjusted EBITDA	$550 million to $560 million high materiality	FY26	High
Full-year Unreimbursed Capital Expenditures	$135 million and $145 million medium materiality	FY26	High
Capital Expenditures	below $100 million medium materiality	FY27	Medium
Q3 GAAP Net Income	$45 million to $48 million medium materiality	Q3 · FY26	High
Q3 GAAP Diluted EPS	$0.35 to $0.37 per diluted share medium materiality	Q3 · FY26	High
Q3 Quarterly Revenues	$755 million to $805 million medium materiality	Q3 · FY26	High
Q3 Adjusted EBITDA	$140 million and $145 million medium materiality	Q3 · FY26	High
Q4 GAAP Net Income	$37 million to $41 million medium materiality	Q4 · FY26	High
Q4 GAAP Diluted EPS	$0.28 to $0.31 per diluted share medium materiality	Q4 · FY26	High
Q4 Quarterly Revenues	$758 million to $808 million medium materiality	Q4 · FY26	High
Q4 Adjusted EBITDA	$137 million and $142 million medium materiality	Q4 · FY26	High
Bighorn Support Services Annual Revenues	approximately $85 million medium materiality	First full year of operations	High
Rivers Support Services Annual Revenues	approximately $80 million medium materiality	First full year of operations	High
Bighorn and Rivers Activation Completion	completed by the end of 2026 medium materiality	End of 2026 · FY26	High
Bighorn and Rivers Additional Annual Transportation Services Revenues	approximately $20 million combined low materiality	Annual	High
Graceville and Bay Contracts Transition	July 1, 2027 medium materiality	Q3 · FY27	Medium
Skip Tracing Contract Ramp-up	begin to ramp up low materiality	H2 2026 · FY26	Medium
Idle Beds Incremental Annual Revenues	approximately $250 million medium materiality	Annual	Medium
Proceeds from Facility Sales to ICE	reduce debt, continue stock repurchases and for other general corporate purposes high materiality	Ongoing	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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%	—	—

GEO operating KPIs by quarter

GEO operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Beds under contract ICE	~26K These facility activations represent annual revenues of approximately $300 million and increased our total beds under contract with ICE to approximately 26,000 beds. Source: earnings call transcript	~27K In our Secure Services segment, we entered into new contracts to house ICE detainees at 4 facilities valued at approximately $280 million in annual revenues and totaling approximately 6,000 beds, increasing our total active ICE beds to approximately 27,000. Source: earnings call transcript	—
Detention census ICE	~21K The census across our ICE facilities reached a high of 24,000 early this year but has since declined to approximately 21,000, but still representing more than 1/3 of the national ICE population of approximately 58,000. Source: earnings call transcript	~24K Our current centers across our active ICE facilities is approximately 24,000, representing more than 1/3 of the current national ICE population of approximately 68,000, which has distributed over 225 separate locations that are primarily short-term GEO facilities. Source: earnings call transcript	—
ISAP participants on GPS ankle monitors	48K+ The number of ISAP participants on GPS ankle monitors has increased to more than 48,000 currently from 17,000 in early 2025. Source: earnings call transcript	~54K The number of ISAP participants on GPS ankle monitors has increased to approximately 54,000 currently from 17,000 early 2025. Source: earnings call transcript	—
ISAP participants assigned to case management services	~111K We also continue to experience a steady increase in the number of ISAP participants assigned to case management services, which involve staff interaction and monitoring for approximately 111,000 individuals currently. Source: earnings call transcript	~116K We also continue to experience a steady increase in the number of ISAP participants assigned to case management services which involves staff interaction and monitoring for approximately 116,000 individuals currently. Source: earnings call transcript	—
Idle beds	~6,000 We have approximately 6,000 idle beds at 6 company-owned facilities, which are primarily former US Bureau of Prisons facilities, and therefore, high security, making them ideally suited for the current needs of the federal government. Source: earnings call transcript	~4,500 We have also approximately 4,500 idle beds that remain available at 5 company-owned facilities, which are designed for high security and therefore, well suited for the current needs of the federal government. Source: earnings call transcript	—
Idle facilities	6 We have approximately 6,000 idle beds at 6 company-owned facilities, which are primarily former US Bureau of Prisons facilities, and therefore, high security, making them ideally suited for the current needs of the federal government. Source: earnings call transcript	5 We have also approximately 4,500 idle beds that remain available at 5 company-owned facilities, which are designed for high security and therefore, well suited for the current needs of the federal government. Source: earnings call transcript	-16.7%
Owned beds	50K Given the intrinsic value of our assets, including 50,000 owned beds at 70 facilities and our current and expected future growth, we believe that our stock is significantly undervalued and offers a very attractive investment opportunity. Source: earnings call transcript	50K Given the intrinsic value of our assets, including 50,000 owned beds, our strong financial performance and providing diversified secure support services and our expected future growth, we believe our stock continues to be significantly undervalued and offers a very attractive investment opportunity. Source: earnings call transcript	0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

New business wins (2025 contracts) $520 million FY25

Largest amount in company history

Represents annual revenues from new or expanded contracts.

ICE detainee contracts (2025) $280 million FY25

Added 6,000 beds

Annual revenues for housing ICE detainees at 4 facilities.

Bighorn facility support services contract $85 million Q2 FY26

New contract

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

Rivers facility support services contract $80 million Q2 FY26

New contract

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

Graceville and Bay managed-only contracts $100 million Q2 FY26

Rescheduled from early 2026

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

Deals & partnerships

ICE New 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 Service New 5-year contract for secure transportation services 5 years

Signed in 2025.

ICE 5-year support services contracts for activation of federal immigration processing centers at previously idled facilities Bighorn: $85 million annual revenues; Rivers: $80 million annual revenues 5 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.

ICE Potential sale of several turnkey facilities to ICE, with GEO retaining support services contracts Long-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

Bighorn and Rivers Facility Activation underway

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

Rescheduling of Graceville and Bay managed-only contracts Until 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 contract Q2 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 actions Ongoing

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

Skip tracing contract revenue ramp-up

H2 2026

Current No revenues in Q2 FY26

Target Begin 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.

Find out whether GEO delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.