管理層發言
Good day, and thank you for standing by. Welcome to the Q2 CoreCivic Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please limit yourself to one question and one follow-up. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today. Please go ahead.
Thank you, operator. Good morning, everyone, and welcome to CoreCivic's second quarter 2026 earnings call. Participating on today's call are Patrick Swindle, CoreCivic's President and Chief Executive Officer, and David Garfinkle, our Chief Financial Officer. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. On this call, we will discuss financial results for the second quarter of 2026 as well as updated financial guidance for the 2026 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 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 2026 earnings release issued after the market yesterday as well as in our Securities and Exchange Commission filings, including Forms 10-Ks, 10-Qs, and 8-K reports.
You are cautioned that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future. Management will discuss certain non-GAAP metrics. A reconciliation of the most comparable GAAP measurement is provided in the corresponding earnings release included in the company's quarterly supplemental financial data report posted on the Investors page of the company's website at corecivic.com. With that, it is my pleasure to turn the call over to our CEO, Patrick Swindle.
Thank you, Jeb. Good morning, and thank you for joining us for CoreCivic's second quarter 2026 earnings call. On this morning's call, we will discuss our second quarter operational results and provide updates on the latest developments with our government partners. Following my opening remarks, I will hand the call over to our CFO, David Garfinkle, who will provide greater detail on our second quarter 2026 financial results as well as our updated 2026 financial guidance. David will also provide an update on our capital structure, including recent actions to reduce our outstanding indebtedness and planned activities for remaining proceeds from our recent asset sale activities. Before we discuss this quarter's financial performance, I want to highlight the activity that has occurred subsequent to the end of the second quarter. In early July, we announced the sale of two facilities, the California City Detention Facility and Otay Mesa Detention Center, both located in California, to the Department of Homeland Security for gross proceeds of $1.5 billion.
Earlier this week, we announced the sale of two additional facilities, the Midwest Regional Reception Center located in Kansas and the Prairie Correctional Facility located in Minnesota, to our government partner for gross proceeds of $734 million. After estimated income taxes and transaction costs, we estimate our net proceeds from these four sales to be approximately $1.6 billion. At an average price per bed of approximately $307,000 and considering the location, size, cost, time, and effort to replace these facilities, we believe these sales were conducted at a fair valuation for both parties, support our continued work to be a dependable partner for government, and demonstrate the underlying value of the company's real estate portfolio. They also fortify our already strong financial position, create significant balance sheet flexibility for investments in our business, our capital allocation, and our growth strategies going forward.
As we have previously disclosed in the press releases regarding the facilities that we have sold, we will continue operating these four facilities under the terms of the existing management contracts. However, contract terms may be ultimately modified due to the transfer of ownership. We have adjusted fiscal 2026 guidance to account for the potential of modified terms, which David will discuss further. In addition to the asset sales completed to date, we have recently begun discussions with ICE about the potential acquisition of ten additional detention facilities. These discussions are in preliminary stages, and we can provide no assurance that any additional sales will occur. Also earlier this week, and just prior to closing on the sale of the Prairie Correctional Facility, we announced a new contract award to manage this 1.6-thousand-bed facility. Idle since 2010, we made significant investments in this facility over the last 18 months as we prepared it for occupancy, and we are pleased to reactivate another idle facility as we work to meet our government partner needs.
We currently expect this facility to have a minimal contribution to earnings in 2026, as we have just begun hiring staff and expect to begin receiving detainees at the facility in the fourth quarter. Bolstered by our strong cash position, we moved quickly to reduce our outstanding indebtedness to give us maximum flexibility as we consider how to best deploy remaining proceeds and continue our return of capital to our shareholders. A portion of the net sale proceeds was used to repay in full the outstanding balance under our $575 million revolving credit facility, which is available to be withdrawn, and our incremental term loan. We have also announced our intention to redeem on August 12, 2026, $138.5 million of senior notes due in 2027. Following these actions, on August 4, the board approved a $500 million increase to our existing share repurchase program, providing capacity for approximately $756 million in additional repurchases.
I will now move on to a high-level overview of our second quarter operational performance. Despite lower enforcement activity and reductions in nationwide ICE detention populations following leadership changes and funding uncertainty at the agency, our second quarter results exceeded average analyst estimates for adjusted EPS by $0.04 and adjusted EBITDA by $2 million. For purposes of reviewing results, we have redefined our operating and reportable segments during the second quarter to align financial reporting with the manner in which we manage the business. We now view operating results in three operating segments: CoreCivic Residential, CoreCivic Services, and CoreCivic Properties, which David will describe in more detail. Total occupancy for our residential segment for the quarter was 78.4%, up 1.6 percentage points since the year-ago quarter. The average daily population across all of the facilities we manage was 66.4 thousand individuals during the second quarter of 2026 compared with 54.0 thousand in the year-ago quarter.
The increase was driven by more demand for our services, new contracting activity, and the Farmville acquisition that was completed on July 1, 2025. Our federal partners, primarily ICE and the U.S. Marshals Service, comprised 53% of CoreCivic's total revenue in the second quarter. Revenue from our federal partners increased 27.2% during the second quarter of 2026 compared with the prior year quarter. Further breaking down our revenue mix, revenue from ICE increased $91.3 million or 51.6% while revenue from the U.S. Marshals Service decreased by $14.1 million versus the prior year quarter. Some of this decline is simply a mix shift where ICE and Marshals share a contract. Revenue in the second quarter of 2026 also benefited from the contribution of Clinical Solutions Pharmacy, which was in line with our expectations. Populations from ICE in our care increased by 6,000 individuals, or 59.6%, from the beginning of 2025 through June 30, 2026.
When we cared for 16,200 average daily population decreased by 1,180 individuals in the second quarter of 2026 from the first quarter of 2026, net of a 793 increase that occurred at the five facilities we have activated. In January 2026, nationwide ICE detention populations reached historical highs of around 70.8 thousand individuals. However, a government shutdown that centered around Department of Homeland Security funding, a reorganization of DHS leadership, and a subsequent impact to enforcement activities, including redeployment of ICE agents to TSA checkpoints, led to a 10.5-thousand decrease in detention populations by April 2026. Consistent with our internal forecast, populations have begun to rise again, reaching 65.5 thousand in early July. David will review our population assumptions at a high level reflected in our financial guidance. As demand from ICE returned, populations at activating facilities continued to increase.
We continue to receive detainee populations at our 2.56-thousand-bed California City detention facility where we signed a new contract effective September 1, 2025, and our 2.16-thousand-bed Diamondback Correctional Facility where we signed a new contract effective September 30, 2025. As of June 30, 2026, we cared for 1,674 and 1,522 individuals respectively at these two facilities. As mentioned last quarter, after obtaining a special use permit at the Midwest Regional Reception Center, we began accepting detainees at a previously idle facility in Marla. As of June 30, we cared for 379 individuals at this facility. We continue to maintain four idle correctional and detention facilities containing approximately 5.5 thousand beds to meet any federal or state increase in demand. We remain confident that the corrections and detention beds that we provide are the most humane, most efficient logistically, most compliant, most secure, readily available, and provide the best value to the government.
Since our last earnings call, our share price has begun to reflect the underlying value of our business and our assets. However, we believe that our current share price continues to imply a significant discount to fair value. Based on updated guidance, our enterprise value to EBITDA was actually contracted since last quarter after taking into consideration the cash on our balance sheet and we traded at a meaningful discount to our long-term average. Accordingly, we plan to continue prioritizing our share repurchase program taking into consideration our stock price and alternative opportunities to deploy capital. Additionally, recently completed facility sales provide meaningful proceeds that have been used to reduce outstanding debt and could be used for further debt repayments and investments to bolster our core business. Following on the successful acquisition of CSP, M&A could also provide opportunities for growth, but any potential transaction would need to be a strategic fit and compare favorably on a valuation basis with our other capital deployment targets.
With that, I will turn the call over to David to discuss our second quarter financial results in more detail, our capital allocation activities, and the assumptions underlying our updated 2026 financial guidance. David?
Thank you, Patrick, and good morning, everyone. In the second quarter of 2026, we generated GAAP EPS of $0.37 per share and FFO per share of $0.63. Special items in the second quarter of 2026 included $700 thousand of expenses associated with M&A activities reported in G&A expense for the acquisition of Clinical Solutions Pharmacy compared with $1.5 million of M&A expenses in the prior year quarter related to the acquisition of the Farmville Detention Center. Excluding M&A expenses from both periods, adjusted EPS was $0.38 compared with $0.36 in the second quarter of 2025. Normalized FFO per share was $0.64 per share compared with $0.59 per share in the prior year quarter. As a reminder, the prior year quarter included the collection of employee retention credits of $11.6 million, including interest, or $0.08 per share. Excluding this per-share impact from the prior year, adjusted EPS and normalized FFO per share increased 35.7% and 25.5%, respectively.
Adjusted EBITDA was $109.4 million compared with $103.3 million in the second quarter of 2025. Again, excluding the employee retention credits from the prior year quarter, adjusted EBITDA increased $17.7 million or 19.3%. We received the final payment we claimed for the employee retention credits in the first quarter of 2026. The increase in adjusted EBITDA from the prior quarter resulted from the activation of five previously idle facilities under new management contracts with ICE, the acquisition of the Farmville Detention Center on July 1, 2025, and Clinical Solutions Pharmacy on April 1, 2026. Our per-share results were also favorably impacted by an 8.9% decrease in weighted-average diluted shares outstanding as a result of our share repurchase program. Following the acquisition of CSP and to better reflect our operational strategy, beginning in the second quarter, we redefined our operating and reportable segments.
Our CoreCivic Residential segment consists of the 64 correctional, detention, and reentry facilities we manage. Our CoreCivic Services segment consists of the delivery of complementary services to the corrections industry, including pharmaceutical supplies and services through CSP, transportation through our subsidiary TransCor, and electronic monitoring and case management services as alternatives to incarceration through our subsidiary Recovery Monitoring Solutions. Finally, our CoreCivic Properties segment remains unchanged, currently consisting of five correctional facilities held for lease to government agencies. Operating margins in our residential segment, which generated 92.4% of our segment net operating income, decreased to 22.4% from 26.1% in the prior year quarter, primarily due to $8.2 million of employee retention credits reflected in facility operations during the second quarter of 2025.
The operating margin was 24.5% in the prior year quarter excluding the employee retention credits. The decline in ICE populations in the second quarter of 2026, which we believe was temporary, contributed to the margin decline. Further, although we generated operating income of $21.1 million at the four facilities we continue to activate, they were only 55% occupied during the second quarter of 2026. Operating margins are expected to increase in the second half of the year as occupancies increase at these facilities and as ICE populations portfolio-wide recover from the declines in the second quarter. However, margins could be negatively impacted at the facilities we sold and by start-up activities under a new management contract with ICE at the 1.6-thousand-bed Prairie Correctional Facility. The operating margin in our Services segment was 10.2% in the second quarter of 2026, in line with expectations.
The Services segment generated 6.1% of our segment net operating income in the second quarter of 2026, up from 0.5% in the prior year quarter due to the acquisition of CSP. Turning next to the balance sheet. During the second quarter, we funded the $148 million initial purchase price for CSP with cash on hand and borrowings under the revolving credit facility. We also obtained a $100 million incremental term loan shortly following the acquisition to replenish the borrowings under the revolving credit facility. We obtained the incremental term loan, which had a 364-day maturity and was prepayable without penalty, as a short-term solution to maintain our strong liquidity position as we assess potential asset sales that could further enhance our liquidity. As of June 30, our leverage measured by net debt to adjusted EBITDA was 2.9x using the trailing 12 months. As of June 30, we had $108.9 million of cash on hand and an additional $273.3 million of borrowing capacity on our revolving credit facility, which had a balance of $280 million outstanding, providing us with total liquidity of $382.2 million.
On July 2, 2026, we completed the sales of the 2.56-thousand-bed California City Detention Facility and our 1.99-thousand-bed Otay Mesa Detention Center, both located in California, to the Department of Homeland Security for a total gross sales price of $1.5 billion while retaining management of these facilities. After transaction costs and estimated federal and state income taxes, which will be paid next month, we estimate our net proceeds to be $1.1 billion. We used the net proceeds to pay down debt totaling $608.5 million as detailed in our press release, including $238.5 million of our 4.75% unsecured notes that will be repaid on August 12. Earlier this week, after entering into a new management contract with ICE to activate our Prairie Correctional Facility in Minnesota, we completed the sales of our Midwest Regional Reception Center and our Prairie facility for a total gross sales price of $734 million, again retaining management of these facilities.
After estimated federal and state income taxes and transaction costs, we estimate our net proceeds to be approximately $522 million. After income taxes and debt repayments, we will have approximately $1.0 billion of cash on hand, total debt outstanding of $739.1 million, and $553.3 million of borrowing capacity under our revolving credit facility. This is more liquidity than the company has ever had and provides us with significant flexibility to execute our capital allocation strategy and growth plans. On August 4, the Board of Directors authorized an increase to our existing share repurchase program pursuant to which we may purchase up to an additional $500 million in shares of our common stock, increasing the total repurchase authorization to $1.2 billion. Since the share repurchase program was authorized in May 2022, we have repurchased a total of 28.1 million shares at an aggregate cost of $444.2 million or $15.82 per share.
Including the increased authorization, therefore, we have $755.8 million authorized and available under the share repurchase program. We expect to utilize a substantial portion of the remaining net proceeds from the facility sales to repurchase shares of our common stock under the recently expanded authorization. While these facility sales have created significant balance sheet flexibility, following the sales, we still retain ownership of a vast real estate portfolio consisting of 56 correctional, detention, and reentry facilities with a design capacity of 63.7 thousand beds, containing 12.3 million square feet, including nine facilities contracted and dedicated fully to ICE with a design capacity of 10.8 thousand beds, containing 2.2 million square feet. Stated differently, even after these sales, we are not simply a services company. We remain a significant owner of specialized mission-critical real estate infrastructure that is very difficult to replace, with the operating expertise to manage those assets effectively for federal, state, and local government agencies, providing steady, predictable cash flows.
Moving lastly to a discussion of our updated 2026 financial guidance. Because of the significant gain on sale, we expect to generate diluted EPS of $15.15 to $15.20 and adjusted diluted EPS, which excludes special items, of $1.62 to $1.70, up from $1.53 to $1.63 in our previous guidance. We expect to generate normalized FFO per share of $2.61 to $2.70 from $2.60 to $2.70. We expect adjusted EBITDA of $440.5 million to $445.5 million compared with $453.8 million to $461.8 million. Our updated guidance reflects our best estimate of the financial impact of the aforementioned four facility sales and our expected continued management of these facilities. Although we have not yet modified the management contracts for these facilities to reflect the change in ownership, the range of our guidance incorporates our best estimate of the financial impact of the change in ownership. Updated guidance reflects the repayment of $608.5 million of debt, including $238.5 million of 4.75% unsecured notes that will be repaid August 12.
Our updated guidance for adjusted net income, FFO, and EBITDA were each favorably impacted by interest income associated with the residual cash balance after the repayment of debt resulting from the facility sales. Unlike net income and FFO, EBITDA excludes the benefit of the reduction in interest expense resulting from the repayment of debt. Our updated guidance does not include the impact of any share repurchases we may make during the second half of 2026, which could negatively impact net income, FFO, and EBITDA due to a reduction in interest income associated with any cash used to repurchase shares but could favorably impact their corresponding per-share measures due to the reduction in our weighted-average shares outstanding. In addition to the financial impact associated with the facility sales, our updated guidance reflects modestly higher residential populations based on recent trends compared with our previous forecast, which already contemplated higher populations in the second half of 2026.
The average daily ICE populations in our care declined by 6.6% during the second quarter from the first quarter of 2026 and nationwide ICE detention populations declined from a high of 70.8 thousand at the end of January to 60.3 thousand in early April, a decline of 14.8%. We believe these declines were for temporary reasons including a partial government shutdown that centered around DHS funding, a reorganization of DHS leadership, and the subsequent impact to enforcement activities, including redeployment of ICE agents to TSA checkpoints, each of which has since resolved. Since early April, nationwide ICE detention populations increased to 65.8 thousand, or 9%, in mid July. ICE populations in our care increased by 17.7% during the same period. Although the updated guidance includes the new management contract at the Prairie facility, taking into account start-up activities and a phased commencement of intake operations at the facility, the updated guidance reflects an immaterial impact to earnings for the remainder of 2026.
The updated guidance also includes an increase in general and administrative expenses for higher incentive compensation associated with the facility sales. As Patrick mentioned, in addition to the facility sales completed to date, we have recently begun discussions with ICE about the potential acquisition of additional detention facilities from us. These discussions are in preliminary stages and our updated guidance does not include the impact of any potential additional facility sales. We plan to spend $65 million to $75 million on maintenance capital expenditures during 2026 and $15 million for other capital expenditures, up $5 million from our prior guidance. Our 2026 forecast also includes $35 million to $40 million for capital expenditures associated with previously idle facilities, which are activating and for additional potential facility activations, down $5 million from our prior guidance.
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 acquisitions and facility activations, to range from $257.5 million to $271.5 million for 2026. We expect our annual effective tax rate to be 25% to 28%, substantially unchanged from our prior guidance. The full-year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense. We are forecasting G&A expenses in 2026 to range from $173 million to $175 million. I will now turn the call back to the operator to open up the lines for questions.
分析師問答
Thank you. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. Please limit yourself to one question and one follow-up question. Please stand by while we compile the Q&A roster. First question comes from the line of Gregory Gibas of Northland Securities. Gregory, please go ahead.
Hey. Good morning, Patrick and David. Thanks for taking the questions.
Are you able to provide how much of the adjusted EBITDA guidance delta reflects the anticipated contract adjustments to the facilities sold? And maybe when does that imply contract changes were or will be effective? Hey, Gregory, it is David. Good question. Yeah, we have incorporated the range of outcomes from those negotiations into our guidance, but we are not specifically quantifying them for obvious reasons. Those negotiations are not yet complete. But we felt like incorporating our best estimate into the range would provide investors with what the run rate could be. I do not yet know the effective date of those contract negotiations when they would be effective either as of yet.
Got it. Got it. And then, also, as it relates to guidance, could you maybe discuss what it assumes with respect to ICE populations in Q3 and Q4 and maybe how that has changed since you last provided guidance?
Yeah. Sure. If you recall last quarter, we expected ICE populations to decline in the second quarter of 2026 and then increase in the second half of the year. So that was already baked into our guidance, but we did increase—probably the range is $5 million to $10 million—for seeing those increases sooner than what we had in our previous guidance. And I think, you know, you have seen the nationwide detention populations have now been published and they have reflected an increase. So that is probably coming a little bit faster than what we had anticipated last quarter.
Understood. Thanks very much.
You are welcome.
Thank you. One moment for your next question. The next question comes from the line of Marla Marin of Zacks. Marla, please go ahead.
Thank you. So given that you are currently engaged in early-stage discussions with ICE regarding additional potential asset sales of facilities, is it reasonable for us to think that there might be a temporary pause on share repurchases during this current quarter, which presumably would not indicate any change in your prioritization of capital allocation?
Yes. I will tag-team Patrick on that maybe. It all depends on the status of negotiations. You will see we changed the tone of those discussions to be very preliminary at this point. So, you know, we have been in deep discussions and due diligence on both Prairie and Midwest for a large part of the last quarter or maybe even beyond that. So that did create some restrictions on our ability to buy back stock. So it all depends on the facts and circumstances of what we know at the time the window is open. Obviously, we are closed for earnings currently until next week when our window would normally open up. But based on discussions right now, you know, I think we feel pretty good about being able to buy back stock in the second half of the year, but it will all depend on the status of those discussions.
And the only thing that I would add is, obviously, we have seen meaningful price movement in the second quarter. We did not repurchase shares in the second quarter. That was not because we do not believe our stock is undervalued. And so we certainly see the value of being able to be in the market and initiate or continue our repurchase program. So certainly looking for those opportunities as they present themselves.
Understood. And as your consolidated occupancy, which reflects ICE and other government partners, continues to rise, can you please remind us of what the historical peak was from prior years?
Yeah. I have been with the company since 2001. That was probably the last time we were in the mid-90% occupancies. It has been a long time—since it was over 90%. Pre-pandemic, I think we were in the upper 80s in terms of total occupancy. So we have not yet hit that percentage as of yet.
Okay. Thanks very much.
One moment for your next question. The next question comes from the line of Jordan Neil Hymowitz of Philadelphia Financial. Jordan, please go ahead.
Thank you. Couple things. So the $500 million buyback is not in the FFO guidance. So if you would buy that back, the FFO guidance should be, like, 15% or 16% higher on a per-share basis. Correct?
Well, correct. We did not include any share buybacks in our guidance. You would have to wait—it is a weighted-average calculation, so we would not get the immediate benefit for a full year. But yeah, I mean, depending on what price you are buying back at, you know, at current prices, I think it is around 15% to 17% of total shares outstanding if we were to execute on the full $500 million.
Is there any program you could explain that is automatic buying? Like, is there a 10b5-1 program? You said, automatically sell, and there is no blackouts. Is there any such thing that a bank could structure that automatically buys a certain amount every month so even if you were aware of material non-public information it would still execute?
Well, you would have to be in an open window when you gave those instructions. I mean, nothing really better than a 10b5-1 that would enable us to trade through closed windows. But again, you have to be in an open window when you enter into those agreements, and then they could extend through a closed window. Last question is: how much stock could you buy back? Or, said a different way, what is the binding debt level to become an investment-grade company, which I assume is your goal, and so what ratios do you hope to retain that would enable you to achieve an upgrade that would define how much stock you could buy back? If I understand you, Jordan, I think you are referring to the restricted payment covenant we have in our 2029 notes that limits our buyback. We have a restricted payment basket unless we are below 2.0x leverage. And so, you know, using current metrics, we could buy around $1 billion and still be below that 2.0x leverage.
You answered it a different way to the same place. Thank you.
Okay.
Well, maybe to add on that just a bit. So what we have stated previously is our leverage policy is 2.25x to 2.75x leverage. We are below that currently. We want to make sure that we are in a position where we are able to deploy capital at the levels that we believe would be advantageous to our shareholders and give us that flexibility, which is under 2.0x. We have not established a target of investment grade necessarily, and so we are always looking at what is optimal leverage from a value-creation standpoint. We have been through periods of investment-grade ratings and periods of non-investment-grade ratings, and so that is always a calculus that we consider when we are looking at our leverage policy and how we approach that. So I think today, we should look at 2.0x as being a limiter, but at the same time, it is somewhat a function of the amount of capital available to deploy as well as additional capital that may result from additional future asset sales if they do occur because there is a point at which leverage could drop further to the extent that there are sufficient available proceeds to give us that flexibility while availing ourselves of a repurchase program or other investments.
As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. One moment for your next question. The next question comes from the line of William Sutherland of Benchmark. Bill, please go ahead.
Thank you. Hey, good morning. When you have Prairie up and running under contract at stable occupancy and $75 million in revenue, how should we think about the incremental EBITDA from that facility?
I would say the margins on that facility are consistent with our other ICE contracts, or consistent with the portfolio average as well.
Okay. And is there anything we should know about the quarterly cadence for the rest of the year given the puts and takes that you talked about with the model?
I think the only fluctuations you are going to see are we are still ramping up our California City facility and our Diamondback facility. Those are two large facilities that continue to ramp. I think I mentioned in my prepared remarks the four facilities that were ramping during Q2 were 55% occupied. So we do expect them to continue ramping in the second half of the year. If you back out our annual EBITDA guidance from year-to-date EBITDA, you get to a run rate around $450 million of total adjusted EBITDA. Obviously that does not include the Prairie facility because the Prairie facility will not be able to accept the first detainees until late this year, and it will not have reached full activation until the second quarter of 2027.
That's helpful. Thanks.
And lastly, I was just thinking about what DHS is trying to get done here with capacity and curious what you have heard about anything other than obviously the facilities they would like to buy from you and a few others. But where is the warehouse strategy at this point in their plans? Well, the public statements from DHS have been that there has been a de-emphasis of the warehouse strategy. There were four of the warehouses of the eleven that they had purchased where they were continuing to explore whether they would convert those into operations. We believe they are still exploring that for some of those facilities. But again, we have seen pivots in strategy multiple times under the current administration. Whether we look back to the beginning with the Fort Bliss concept or other concepts, there have been a number of shifts in demand, and we have been there consistently through that process. We continue to believe we provide an optimal solution for ICE to the extent they wish to use it. And certainly, you are seeing that evidenced through the award at our Prairie facility and awards to our competitors as well. So I think we provide a high-quality solution that provides great value to the government and we are very well positioned to be able to meet any additional demand to the extent that it presents.
Okay. Thanks, Patrick. Appreciate it.
One moment for your next question. The next question comes from the line of Edwin Groshans of Compass Point Research and Trading. Edwin, please go ahead.
Thank you for taking my call. You kind of talked about the outlook and detentions. There were reports that July was a record for apprehensions for ICE that followed the record in June. There is talk that ICE has a target of 100,000 to 120,000 beds, and you mentioned you have four or five still idle facilities. Can you just talk about what you are seeing in detentions and then expectations for the idle facilities whether that is reactivation? I know you have discussed preliminary discussions on potential sales, but really looking at reactivation given ICE activity.
So I would answer that through two lenses. As you mentioned, there has been an increase in enforcement activity the last couple of months that we have seen reflected in increases in detention populations in our facilities and in the national statistics. I believe we have seen three contract awards just in the last month for activation of new capacity that was previously idled within the industry, both ourselves and our competitors. So that clearly is an indication of anticipated additional demand needs. I think it is difficult to project what the pace would be for bringing on additional capacity beyond those contracts that have already been awarded. We have and continue to market our available capacity. As mentioned in our disclosures, we have another 5.5 thousand beds that are traditional turnkey facilities that are available today across four facilities. So we have an ability to provide additional capacity as needed, and we are very well positioned to do that. We made significant investments in that idle capacity to make it ready. Again, we have seen increased demand recently. If that continues, I think we are very well positioned for more, but I would be reticent to provide any sense of timing at this point.
Fantastic, Patrick. Appreciate that. I guess if we look at ICE's target of 100,000-plus beds, I think there has been some commentary out there that system-wide maybe there are 85,000 beds available. Do you have a sense of how they can get to their goal, especially now given the prior comments about putting the warehouse program on ice?
At present, my view on that would be the goal is organic; it is based on what the ultimate detention bed needs are at a given point in time. What I would say right now is we believe demand for additional capacity has increased with the awards that have already been made. We believe we are well positioned with already existing turnkey capacity to the extent there is more, and I believe there is other turnkey capacity available in the industry. As we have said on prior calls, we have also looked at a number of alternatives in terms of expansions of our existing facilities or different ways that we could provide capacity to the extent demand manifested. I can see pathways for the provision of up to 100,000 beds in the industry through a variety of different scenarios. Turnkey solutions are the best initial option and there is capacity to meet that demand initially, but we have done a number of scenario analyses and believe there are alternatives that could leverage capacity higher to the extent demand presented.
Good. And what are those alternatives? I have heard potential discussions of doing sort of soft-sided facilities on the sites. Is that when you talk about expansion, is that one of the potential alternatives?
There are a number of ways that you can flex up capacity and do it in a very humane and dignified way on locations that are already operational. So that would certainly be one pathway to achieving the additional capacity goal, and having capacity colocated can be very helpful for both the agency and for us operationally. As we try to deliver the highest-quality service possible, concentrating at a single location allows us to also concentrate resources. So absolutely, that could be one form. There could be a variety of forms of providing that capacity, but co-located expansions would be an optimal way to scale up capacity.
One moment for your next question. The next question comes from the line of Jordan Neil Hymowitz of Philadelphia Financial. Jordan, please go ahead.
I just want to follow up on Edwin's very thoughtful question. You have now gone down the path of being willing to sell your facilities to others, and you have sold them to the government. But would you be willing to sell them to event centers or apartments—thinking of conversions like the San Francisco Armory which was a prison at one point and became other uses. In other words, are you willing to evaluate your assets at different price points to see what is there as opposed to just the use that they are currently in?
We are always evaluating ways to maximize the value of our assets and looking at alternatives that might present. I can say we have not at this moment actively considered alternative uses for our facilities. We believe the highest and best use is what they are purpose-built for and that generates the highest value for those assets. To the extent that we are approached by a buyer that has interest in our capacity for an alternative use, we would certainly not turn away that conversation. So we are open to dialogue, but at this time we believe the best value we can capture from our assets is for the purpose they were originally built.
Thank you.
One moment for your next question. The next question comes from the line of Joseph Anthony Gomes of Noble Capital. Joe, please go ahead.
Good morning, Patrick and David.
Morning, Joe.
Had a lot of discussion today on ICE. Let's switch gears here. Maybe Dave, you could talk a little bit, and Patrick, on the state opportunities, the U.S. Marshals, where those populations have been. I know this time of year is normally when you get your per-diem increases. Maybe you could talk a little bit about how that unfolded this year.
So at the state level, we made our way through the state legislative process. Our team was effective at getting the traditional inflation-related per-diem increases that we would expect to get. We saw adjustments in some markets for additional compensation for wages for our staff as we have provided significant wage increases in recent years. So I would say from a state perspective, very consistent with what you would expect; no anomalies. That portion of our business continues to perform well, and the outlook for the balance of the year continues to be solid in our state operations. We find out later in the year after the legislative sessions have resolved and budgets begin to be spent what additional demand may present, so it is possible we could see additional demand from those customers, but we do not have anything notable to share at this time. Regarding the Marshals Service, one of the things we referenced is that in a number of our facilities where the Marshals Service and ICE share capacity, you see a mix shift from Marshals to ICE. We have seen positive movement in Marshals populations in the last quarter, but overall trends are consistent with the seasonal expectations we would normally see at this time of year.
Okay. Patrick, 10,000-foot level question here. We made the sales, got the proceeds, increased the stock buyback. The stock's up 70% year-to-date. What gives you confidence that the stock today is still a great value for the share repurchase program?
Thank you for that question. I would go back to look at the cash on the balance sheet. Because with the cash that we have on our balance sheet and it not having been deployed, you do not see the value of that cash reflected yet in our per-share metrics. The consequence is when you look at EPS or price-to-earnings or free cash flow per share at this moment, we believe it understates the value of the cash that sits on our balance sheet. For our purposes, the way I have looked at the value of our company at this moment is from an enterprise value to EBITDA perspective. If I think about the dynamics since the beginning of the year, we've seen north of a 60% increase in our share price but we are actually trading more cheaply today than we did coming into the year. From a multiple perspective, our multiple today is approximately 6x EBITDA, which is well below our historical EBITDA multiple average over the last 20 years of 9.5x.
So objectively, we believe we are cheap. Looking at the four transactions we completed, $1.6 billion in net after-tax proceeds is about $16 per share in cash. So considering the beginning of the year, the additional cash from these transactions, the performance and visibility we have with our guidance, which we believe reflects the impact to our operating contracts, you are looking at a stock that despite the movement is still significantly undervalued. Using enterprise value to EBITDA and our guidance and the debt level David described, at 9.5x our shares would trade just north of $48. At 8x, about $41.50. At 7x, $37. And today we are trading approximately $32. We think the stock is still very attractively valued, and that is based on the value we have captured this year and how we can redeploy it to create value over time.
Thank you for that, Patrick. Much appreciated.
This concludes the question-and-answer session. We will now turn the call back over to Patrick Swindle for any closing remarks.
Thank you, operator, and thank you everyone who joined our second quarter earnings call today. In closing, our overall operational performance affirms that the goals we set are translating into meaningful results. Strong operating and financial performance, successful facility activations, and continued demand from our government partners reflect the confidence we have earned by delivering quality, compliant service and care. These outcomes also demonstrate the strength of our people and our ability to respond to change with integrity, excellence, teamwork, service, and impact. Just as important, our progress confirms that we are well positioned to lead our industry's evolution—adapting, innovating, and expanding our capabilities while strengthening our culture and our relationships. When we improve operations, support our employees, and deliver better outcomes for those in our care and the partners and communities we serve, we turn performance into purpose. That is how we advance our strategic ambition of building safer, healthier, more productive communities one person at a time. Again, thank you all for joining today.
This concludes today's conference call. You may now disconnect.