GEO GROUP INC

Previous wording

any adverse impact on our financial results caused by the federal government shutdown;

Current wording

any adverse impact on our financial results caused by the most recent and any future federal government shutdown;

Previous wording

our ability to identify and successfully complete any potential sales of additional Company-owned assets and businesses on commercially advantageous terms on a timely basis, or at all;

Current wording

our ability to identify and successfully complete any potential acquisitions of assets and businesses or sales of additional Company-owned assets and businesses, including the potential sale of multiple facilities to ICE, on commercially advantageous terms on a timely basis, or at all;

Previous wording

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors including, but not limited to, those described above under “Forward-Looking Information”, and under “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and under “Part II - Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. This discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors including, but not limited to, those described above under “Forward-Looking Information”, and under “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. This discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

Previous wording

At September 30, 2025, our worldwide operations include the management and/or ownership of approximately 75,000 beds at 95 secure services and community based facilities, including idle facilities, and also include the provision of community supervision services for individuals through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.

Current wording

At March 31, 2026, our worldwide operations include the management and/or ownership of approximately 75,000 beds at 96 secure services and community based facilities, including idle facilities, and also include the provision of community supervision services for individuals through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.

Previous wording

For the nine months ended September 30, 2025 and 2024, we had consolidated revenues of $1,923.9 million and $1,816.0 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 89% including 68,157 active beds and excluding 6,646 idle beds, which includes those being marketed to potential customers, for the nine months ended September 30, 2025, and approximately 88% including 68,004 active beds and excluding 11,275 idle beds, which includes those being marketed to potential customers, for the nine months ended September 30, 2024.

Current wording

For the three months ended March 31, 2026 and 2025, we had consolidated revenues of $705.2 million and $604.6 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 91% including 68,185 active beds and excluding 6,646 idle beds, which includes those being marketed to potential customers, for the three months ended March 31, 2026, and approximately 88% including 69,125 active beds and excluding 7,453 idle beds, which includes those being marketed to potential customers, for the three months ended March 31, 2025.

Previous wording

We are currently marketing (or awaiting activation) 6,646 vacant beds at eight idle facilities to potential customers. The carrying values of these idle facilities totaled $181.1 million as of September 30, 2025, excluding equipment and other assets that can be easily transferred for use at other facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

Current wording

We are currently marketing (or awaiting activation) 6,646 vacant beds at eight idle facilities to potential customers. The carrying values of these idle facilities totaled $189.8 million as of March 31, 2026, excluding equipment and other assets that can be easily transferred for use at other facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

Previous wording

The accompanying unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates based on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. During the nine months ended September 30, 2025, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our significant accounting policies is contained in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

The accompanying unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates based on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. During the three months ended March 31, 2026, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our significant accounting policies is contained in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Revenues for U.S. Secure Services increased by $80.7 million in the third quarter ended September 30, 2025 (the "Third Quarter 2025") compared to the third quarter ended September 30, 2024 (the "Third Quarter 2024") due to increases of $55.8 million related to the activations of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center. There were also aggregate net increases of $42.4 million due to increases in occupancies, transportation, rates and/or per diem amounts in connection with contract modifications. Partially offsetting these increases were decreases of approximately $17.5 million related to contract terminations.

Current wording

Revenues for U.S. Secure Services increased by $96.9 million in the first quarter ended March 31, 2026 (the "First Quarter 2026") compared to the first quarter ended March 31, 2025 (the "First Quarter 2025") due to increases of $79.1 million related to the activations of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center and new transportation contracts. There were also aggregate net increases of $37.2 million due to increases in occupancies, transportation, rates and/or per diem amounts in connection with contract modifications. Partially offsetting these increases were decreases of approximately $19.3 million related to contract terminations.

Previous wording

The number of compensated mandays in U.S. Secure Services facilities was approximately 12.7 million in each of Nine Months 2025 and Nine Months 2024. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Secure Services facilities was approximately 88% of capacity in Nine Months 2025 and Nine Months 2024, excluding idle facilities.

Current wording

The number of compensated mandays in U.S. Secure Services facilities was approximately 4.4 million in First Quarter 2026 compared to approximately 4.1 million in First Quarter 2025. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Secure Services facilities was approximately 91% and 87.6% of capacity in First Quarter 2026 and First Quarter 2025, respectively, excluding idle facilities.

Previous wording

Revenues for Electronic Monitoring and Supervision Services increased slightly in Third Quarter 2025 compared to Third Quarter 2024 primarily due to a slight increase in average participant counts under the Intensive Supervision and Appearance Program ("ISAP").

Current wording

Revenues for Electronic Monitoring and Supervision Services decreased in First Quarter 2026 compared to First Quarter 2025 primarily due to a decrease in average participant counts under the Intensive Supervision and Appearance Program ("ISAP").

Previous wording

Revenues for Reentry Services increased by $2.5 million in Third Quarter 2025 compared to Third Quarter 2024 primarily due to aggregate net increases of $3.3 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals due to new day reporting center contracts. These increases were partially offset by decreases due to contract terminations of $0.8 million.

Current wording

Revenues for Reentry Services increased slightly by $0.9 million in First Quarter 2026 compared to First Quarter 2025 primarily due to aggregate net increases of $1.9 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals due to new day reporting center contracts. These increases were partially offset by decreases due to contract terminations of $1.0 million.

Previous wording

Revenues for International Services decreased by $4.5 million in Third Quarter 2025 compared to Third Quarter 2024. We experienced a net decrease of $5.4 million primarily due to the transition of our managed-only contract for the Junee Correctional Centre in Australia to the government effective March 31, 2025. Partially offsetting this decrease was an increase due to foreign exchange rate fluctuations of $0.9 million.

Current wording

Revenues for International Services increased by $6.2 million in First Quarter 2026 compared to First Quarter 2025. We experienced a net increase of $0.6 million primarily due to new health care contracts which was partially offset by the transition of our managed-only contract for the Junee Correctional Centre in Australia to the government effective March 31, 2025. We also experienced an increase due to foreign exchange rate fluctuations of $5.6 million.

Previous wording

Operating expenses for U.S. Secure Services increased by $76.4 million in Third Quarter 2025 compared to Third Quarter 2024 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and additional staffing and training costs we continue to incur in preparation of expected future growth of $54.1 million. We also experienced an increase of approximately $32.2 million related to the activations of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center. Partially offsetting these increases were decreases of approximately $9.9 million related to contract terminations.

Current wording

Operating expenses for U.S. Secure Services increased by $63.7 million in First Quarter 2026 compared to First Quarter 2025 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and additional staffing and training costs of $36.1 million. We also experienced an increase of approximately $44.6 million related to the activations of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center and new transportation contracts. Partially offsetting these increases were decreases of approximately $17.0 million related to contract terminations.

Previous wording

Operating expenses for International Services decreased in Third Quarter 2025 compared to Third Quarter 2024 by $5.3 million. We experienced a net decrease of $4.5 million primarily due to the transition of our managed-only contract for the Junee Correctional Centre in Australia to the government effective March 31, 2025. We also experienced a decrease of $0.8 million related to foreign exchange rate fluctuations.

Current wording

Operating expenses for International Services increased in First Quarter 2026 compared to First Quarter 2025 by $2.4 million. We experienced a net decrease of $2.4 million primarily due to the transition of our managed-only contract for the Junee Correctional Centre in Australia to the government effective March 31, 2025. This was partially offset by an increase of $4.8 million related to foreign exchange rate fluctuations.

Previous wording

U.S. Secure Services depreciation and amortization expense increased in Third Quarter 2025 compared to Third Quarter 2024 primarily due to renovations at certain of our company-owned and leased facilities.

Current wording

U.S. Secure Services depreciation and amortization expense increased in First Quarter 2026 compared to First Quarter 2025 primarily due to renovations at certain of our company-owned and leased facilities.

Previous wording

Electronic Monitoring and Supervision Services depreciation and amortization expense increased in Third Quarter 2025 compared to Third Quarter 2024 primarily due to increases in monitoring equipment.

Current wording

Electronic Monitoring and Supervision Services depreciation and amortization expense increased in First Quarter 2026 compared to First Quarter 2025 primarily due to increases in monitoring equipment.

Previous wording

General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes, corporate management salaries and benefits, professional fees and other administrative expenses. General and administrative expenses increased by $15.0 million in Third Quarter 2025 compared to Third Quarter 2024 primarily due to the reorganization of our senior management team at the end of 2024, higher employee related benefit costs and support for the revenue growth from our new contract awards.

Current wording

General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes, corporate management salaries and benefits, professional fees and other administrative expenses. General and administrative expenses increased by $2.8 million in First Quarter 2026 compared to First Quarter 2025 primarily due to higher employee related benefit costs and support for the revenue growth from our new contract awards.

Previous wording

Interest income decreased by $0.6 million in Third Quarter 2025 compared to Third Quarter 2024 primarily due to lower cash balances on hand internationally and the effect of foreign exchange rates.

Current wording

Interest income decreased by $0.3 million in First Quarter 2026 compared to First Quarter 2025 primarily due to lower cash balances on hand internationally and the effect of foreign exchange rates.

Previous wording

Interest expense decreased by $7.3 million in Third Quarter 2025 compared to Third Quarter 2024. On July 14, 2025, we amended our Credit Agreement which increased our borrowing capacity and lowered the applicable interest rate. We also paid off our Term Loan under the credit agreement in July 2025. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10Q for further discussion.

Current wording

Interest expense decreased by $4.1 million in First Quarter 2026 compared to First Quarter 2025 primarily due to lower overall principal balances and lower interest rates. On July 14, 2025, we amended our Credit Agreement which increased our borrowing capacity and lowered the applicable interest rate. We also paid off our Term Loan under the credit agreement in July 2025. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

Previous wording

The provision for income taxes increased and the effective tax rate decreased in Third Quarter 2025 compared to Third Quarter 2024 principally due to significant discrete tax expenses and an increase in pre-tax income. In Third Quarter 2025, there was a $54.9 million net discrete tax expense as compared to a $0.3 million net discrete tax benefit in Third Quarter 2024. In the Third Quarter 2025 and Third Quarter 2024 there was no discrete tax expense or benefit related to stock compensation that vested during the respective quarters. Included in the net discrete tax expense for Third Quarter 2025 was a $56.4 million discrete tax expense related to the sale of our Lawton Facility. We estimate our 2025 annual effective tax rate to be in the range of approximately 29% to 31%, exclusive of any discrete items.

Current wording

The provision for income taxes and the effective tax rate increased in First Quarter 2026 compared to First Quarter 2025 principally due to an increase in pre-tax income and a decrease in discrete tax benefits. In First Quarter 2026, there was a $0.9 million net discrete tax benefit as compared to a $4.2 million net discrete tax benefit in First Quarter 2025. Included in the discrete tax benefit in First Quarter 2026 was a $0.9 million discrete tax benefit related to stock compensation as compared to a $4.2 million discrete tax benefit in

Previous wording

The provision for income taxes and the effective tax rate increased in Nine Months 2025 compared to Nine Months 2024 principally due to significant discrete tax expenses and pre-tax income compared to pre-tax losses, respectively. In Nine Months 2025, there was a $50.5 million net discrete tax expense as compared to a $5.4 million net discrete tax benefit in Nine Months 2024. Included in the tax provision for income taxes in Nine Months 2025 was a $4.5 million discrete tax benefit as compared to a $1.0 million discrete tax benefit in Nine Months 2024 related to stock compensation that vested during the respective periods. Also included in the net discrete tax expense in the Nine Months 2025 was a $56.4 million discrete tax expense related to the sale of our Lawton Facility and in the Nine Months 2024 was a $3.5 million discrete tax benefit from the interest deduction related to GEO shares provided to the holders of our 6.5% Exchangeable Senior Notes due 2026. We estimate our 2025 annual effective tax rate to be in the range of approximately 29% to 31%, exclusive of any discrete items.

Current wording

First Quarter 2025. We estimate our 2026 annual effective tax rate to be in the range of approximately 29% to 31%, exclusive of any discrete items.

Previous wording

Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates increased during Nine Months 2025 compared to Nine Months 2024 primarily due to favorable performance at SACS.

Current wording

Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased slightly during First Quarter 2026 compared to First Quarter 2025 primarily due to less favorable performance at SACS.

Previous wording

We currently have contractual commitments for a number of projects using Company financing. We estimate that the cost of these existing active capital projects will be approximately $71.8 million of which $45.6 million was spent through September 30, 2025. We estimate that the remaining capital requirements related to these capital projects will be $26.2 million which will be spent through the remainder of 2025.

Current wording

We currently have contractual commitments for a number of projects using Company financing. We estimate that the cost of these existing active capital projects will be approximately $45.0 million of which $27.8 million was spent through March 31, 2026. We estimate that the remaining capital requirements related to these capital projects will be $17.2 million which will be spent through the remainder of 2026.

Previous wording

We plan to fund all of our capital needs, including capital expenditures, from cash on hand, cash from operations, borrowings under our Credit Agreement (as defined below) and any other financings which our management and Board, in their discretion, may consummate. Currently, our primary source of liquidity to meet these requirements is cash flow from operations and borrowings under our Credit Agreement. Our management believes that our financial resources and sources of liquidity will allow us to manage our business, financial condition, results of operations and cash flows. We completed our annual budgeting process, and for 2025, we will continue to strategically manage our capital expenditures to maintain both short and long term financial objectives. Additionally, we may from time to time pursue transactions for the potential sale or acquisition of assets and businesses and/or other strategic transactions. Taking into account the impact of the federal government shutdown, our management believes that cash on hand, cash flows from operations and availability under our Credit Agreement will be adequate to support our capital requirements for 2025 as disclosed under “Capital Requirements” above and the next twelve months.

Current wording

We plan to fund all of our capital needs, including capital expenditures, from cash on hand, cash from operations, borrowings under our Credit Agreement (as defined below) and any other financings which our management and Board, in their discretion, may consummate. Currently, our primary source of liquidity to meet these requirements is cash flow from operations and borrowings under our Credit Agreement. Our management believes that our financial resources and sources of liquidity will allow us to manage our business, financial condition, results of operations and cash flows. We completed our annual budgeting process, and for 2026, we will continue to strategically manage our capital expenditures to maintain both short and long term financial objectives. Additionally, we may from time to time pursue transactions for the potential sale or acquisition of assets and businesses and/or other strategic transactions. Taking into account the impact of the federal government shutdown, that recently ended on April 30, 2026, our management believes that cash on hand, cash flows from operations and availability under our Credit Agreement will be adequate to support our capital requirements for 2026 as disclosed under “Capital Requirements” above and the next twelve months.

Previous wording

We consider opportunities for future business and/or asset acquisitions or dispositions as we deem appropriate when market conditions present opportunities. If we are successful in our pursuit of any new projects, our cash on hand, cash flows from operations and borrowings under the new Credit Agreement may not provide sufficient liquidity to meet our capital needs and we could be forced to seek additional financing or refinance our existing indebtedness. There can be no assurance that any such financing or refinancing would be available to us on terms equal to or more favorable than our current financing terms, or at all. In the future, our access to capital and ability to compete for future capital-intensive projects will also be dependent upon, among other things, our ability to meet certain financial covenants in the indenture governing the Secured Notes, the indenture governing the Unsecured Notes, the indenture governing our Convertible Notes and our Credit Agreement. A substantial decline in our financial performance could limit our access to capital pursuant to these covenants and have a material adverse effect on our liquidity and capital resources and, as a result, on our financial condition and results of operations. In addition to these foregoing potential constraints on our capital, and including the impact of the federal government shutdown, a number of state government agencies have been suffering from budget deficits and liquidity issues. While we were in compliance with our debt covenants as of September 30, 2025 and we expect to continue to be in compliance with our debt covenants, if these constraints were to intensify, our liquidity could be materially adversely impacted as could our ability to remain in compliance with these debt covenants.

Current wording

We consider opportunities for future business and/or asset acquisitions or dispositions as we deem appropriate when market conditions present opportunities. If we are successful in our pursuit of any new projects, our cash on hand, cash flows from operations and borrowings under the new Credit Agreement may not provide sufficient liquidity to meet our capital needs and we could be forced to seek additional financing or refinance our existing indebtedness. There can be no assurance that any such financing or refinancing would be available to us on terms equal to or more favorable than our current financing terms, or at all. In the future, our access to capital and ability to compete for future capital-intensive projects will also be dependent upon, among other things, our ability to meet certain financial covenants in the indenture governing the Secured Notes, the indenture governing the Unsecured Notes and our Credit

Previous wording

(a) Includes amounts due from non-guarantor subsidiaries of $52.7 million and $55.9 million as of September 30, 2025 and December 31, 2024, respectively.

Current wording

(a) Includes amounts due from non-guarantor subsidiaries of $53.4 million and $52.8 million as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

(b) Includes amounts due to non-guarantor subsidiaries of $42.3 million and $46.8 million as of September 30, 2025 and December 31, 2024, respectively.

Current wording

(b) Includes amounts due to non-guarantor subsidiaries of $41.3 million and $42.1 million as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

Cash, cash equivalents and restricted cash and cash equivalents as of September 30, 2025 was $231.6 million compared to $118.4 million as of September 30, 2024.

Current wording

Cash, cash equivalents and restricted cash and cash equivalents as of March 31, 2026 was $141.8 million compared to $117.2 million as of March 31, 2025.

Previous wording

Net cash provided by operating activities amounted to $189.9 million for the nine months ended September 30, 2025 versus net cash provided by operating activities of $223.8 million for the nine months ended September 30, 2024. Cash provided by operating activities during the nine months ended September 30, 2025 was positively impacted by non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, discount and/or premium and other non-cash interest, loss on extinguishment of debt, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax, gain on asset divestitures, and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets increased in total by $63.4 million, representing a negative impact on cash. The increase was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities increased by $142.8 million which positively impacted cash. The increase was primarily driven by the timing of payments.

Current wording

Net cash provided by operating activities amounted to $156.5 million for the three months ended March 31, 2026 versus net cash provided by operating activities of $71.2 million for the three months ended March 31, 2025. Cash provided by operating activities during the three months ended March 31, 2026 was positively impacted by non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures, realized/unrealized loss on investments, loss on disposal of property and equipment, net and stock-based compensation expense. Equity in earnings of affiliates negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $31.2 million, representing a positive impact on cash. The decrease was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities increased by $37.4 million which positively impacted cash. The increase was primarily driven by the timing of payments.

Previous wording

Net cash provided by operating activities during the nine months ended September 30, 2024 was positively impacted by non-cash expenses such as depreciation and amortization, loss on asset divestitures/impairment, loss on extinguishment of debt, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $7.3 million, representing a positive impact on cash. The decrease was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities increased by $3.6 million which positively impacted cash. The increase was primarily driven by the timing of payments.

Current wording

Net cash provided by operating activities during the three months ended March 31, 2025 was positively impacted by non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures, loss on sale/disposal of property and equipment, net and stock-based compensation expense. Equity in earnings of affiliates, net of tax and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets increased in total by $9.0 million, representing a negative impact on cash. The increase was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities increased by $21.0 million which positively impacted cash. The increase was primarily driven by the timing of payments.

Previous wording

Net cash provided by investing activities of $143.8 million during the nine months ended September 30, 2025 was primarily the result of proceeds from the sale of real estate and other assets of $321.1 million, capital expenditures of $161.3 million, purchases of marketable securities of $18.8 million and proceeds from sales of marketable securities of $2.8 million. Net cash used in investing activities of $80.3 million during the nine months ended September 30, 2024 was primarily the result of capital expenditures of $57.9 million, purchases of marketable securities of $31.7 million and proceeds from sales of marketable securities of $9.4 million.

Current wording

Net cash used in investing activities of $22.2 million during the three months ended March 31, 2026 was primarily the result of proceeds from the sale of real estate and other assets of $0.5 million, capital expenditures of $21.7 million, purchases of marketable securities of $2.6 million and proceeds from sales of marketable securities of $1.7 million. Net cash used in investing activities of $31.1 million during the three months ended March 31, 2025 was primarily the result of capital expenditures of $30.8 million, purchases of marketable securities of $1.0 million and proceeds from sales of marketable securities of $0.6 million.

Previous wording

Net cash used in financing activities during the nine months ended September 30, 2025 was approximately $232.2 million compared to net cash used in financing activities of $186.1 million during the nine months ended September 30, 2024. Net cash used in financing activities during the nine months ended September 30, 2025 was primarily the result of payments on revolver of $30.0 million, proceeds from revolver of $182.6 million, payments on long-term debt of $321.9 million, proceeds from the exercise of stock options of $4.4 million, payment of call premiums of $1.3 million, payment for the repurchase of common stock of $41.6 million and taxes paid related to net share settlement of equity awards of $24.4 million. Net cash used in financing activities during the nine months ended September 30, 2024 was primarily the result of payments on long-term debt of $1,873.9 million, proceeds from the issuance of long-term debt of $1,720.5 million, proceeds from the revolver of $40.0 million, debt issuance costs of $30.6 million, payments for call premiums of $35.6 million and taxes paid related to net share settlement of equity awards of $7.5 million.

Current wording

Net cash used in financing activities during the three months ended March 31, 2026 was approximately $117.3 million compared to net cash used in financing activities of $49.4 million during the three months ended March 31, 2025. Net cash used in financing activities during the three months ended March 31, 2026 was primarily the result of proceeds from the revolver of $60.0 million, payments on the revolver of $121.0 million, payments on long-term debt of $0.4 million, proceeds from the exercise of stock options of $0.4 million, payment for the repurchase of common stock of $50.1 million and taxes paid related to net share settlement of equity awards of $6.2 million. Net cash used in financing activities during the three months ended March 31, 2025 was primarily the result of payments on the revolver of $30.0 million, payments on long-term debt of $0.6 million, proceeds from the exercise of stock options of $3.3 million and taxes paid related to net share settlement of equity awards of $22.2 million.

Previous wording

EBITDA is defined as net income adjusted by adding provision for income tax, interest expense, net of interest income and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for net loss attributable to non-controlling interests, stock-based compensation expenses, pre-tax, non-cash contingent liability and litigation costs and settlement costs, pre-tax, (gain) loss on asset divestitures/impairments, pre-tax, transaction expenses, pre-tax, ATM equity program expenses, pre-tax, employee restructuring expenses, pre-tax, start-up expenses, pre-tax, close-out expenses, pre-tax and other non-cash revenues and expenses, pre-tax, and certain other adjustments as defined from time to time.

Current wording

EBITDA is defined as net income adjusted by adding provision for income tax, interest expense, net of interest income and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for net loss attributable to non-controlling interests, stock-based compensation expenses, pre-tax, transaction fees, pre-tax, employee restructuring expenses, pre-tax, close-out expenses, pre-tax and other non-cash revenues and expenses, pre-tax, and certain other adjustments as defined from time to time.

Previous wording

Our reconciliation of net income to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024 is as follows (in thousands):

Current wording

Our reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2026 and 2025 is as follows (in thousands):

Previous wording

The following discussion contains statements that are not limited to historical statements and, therefore, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated or implied in the forward-looking statements. Please refer to “Part I - Item 1A. Risk Factors” and the "Forward Looking Statements - Safe Harbor" sections in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and “Part II - Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 for further discussion on forward-looking statements and the risks and other factors that could prevent us from achieving our goals and cause the assumptions underlying the forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements.

Current wording

The following discussion contains statements that are not limited to historical statements and, therefore, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated or implied in the forward-looking statements. Please refer to “Part I - Item 1A. Risk Factors” and the "Forward-Looking Statements - Safe Harbor" sections in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 for further discussion on forward-looking statements and the risks and other factors that could prevent us from achieving our goals and cause the assumptions underlying the forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements.

Previous wording

We continue to be encouraged by the current landscape of growth opportunities. We are preparing for what we believe is an unprecedented opportunity to help the federal government meet its expanded immigration enforcement priorities. We are taking several important steps to meet this opportunity, including making a previously announced significant investment in capital expenditures to strengthen our capabilities to deliver expanded detention capacity, secure transportation, and electronic monitoring and related services to U.S. Immigration and Customs Enforcement and the federal government. Additionally, in the first weeks of the new Administration, President Trump issued an Executive Order reversing the prior Administration's Executive Order that had directed the U.S. Attorney General to not renew U.S. Department of Justice contracts with privately-operated criminal detention facilities.

Current wording

We continue to be encouraged by the current landscape of growth opportunities. We are preparing for what we believe is an unprecedented opportunity to help the federal government meet its expanded immigration enforcement priorities. We are taking several important steps to meet this opportunity, including making a previously announced significant investment in capital expenditures to strengthen our capabilities to deliver expanded detention capacity, secure transportation, and electronic monitoring and related services to U.S. Immigration and Customs Enforcement and the federal government. We have also been in discussions with ICE regarding the potential sale of multiple facilities, subject to mutual agreement on price and our continued management of those facilities under long-term support services contracts. At this time, there is no definitive agreement in place with ICE and no precise timeline for the closing of any such transactions. Also, we can give no assurance that these transactions will take place at all.

Previous wording

Any positive trends in the industry may be offset by several factors, including the impact of the federal government shutdown, budgetary constraints, contract modifications, contract terminations, contract non-renewals, contract re-bids and/or the decision to not re-bid a contract after expiration of the contract term and the impact of any other potential changes to the willingness or ability to maintain or grow public-private partnerships on the part of other government agencies.

Current wording

Any positive trends in the industry may be offset by several factors, including the impact of the federal government shutdown that recently ended on April 30, 2026 and any future federal government shutdown, budgetary constraints, contract modifications, contract terminations, contract non-renewals, contract re-bids and/or the decision to not re-bid a contract after expiration of the contract term and the impact of any other potential changes to the willingness or ability to maintain or grow public-private partnerships on the part of other government agencies.

Previous wording

Operating expenses consist of those expenses incurred in the operation and management of our contracts to provide services to our governmental clients. Labor and related costs represented approximately 70% and 69% of our operating expenses during the nine months ended September 30, 2025 and 2024, respectively. Additional operating expenses include food, utilities and medical costs. During the nine months ended September 30, 2025 and 2024, operating expenses totaled approximately 75% and 73%, respectively, of our consolidated revenues. We expect our operating expenses as a percentage of revenues in 2025 will be impacted by the opening of any new or existing idle facilities as a result of the cost of transitioning and/or start-up operations related to a facility opening. We also expect that our operating expenses will be impacted by the effect of inflation on costs related to personnel, utilities, insurance, and medical and food, among other operational costs. During 2025, we will incur carrying costs for facilities that are currently vacant.

Current wording

Operating expenses consist of those expenses incurred in the operation and management of our contracts to provide services to our governmental clients. Labor and related costs represented approximately 72% and 70% of our operating expenses during the three months ended March 31, 2026 and 2025, respectively. Additional operating expenses include food, utilities and medical costs. During the three months ended March 31, 2026 and 2025, operating expenses totaled approximately 74% and 75%, respectively, of our consolidated revenues. We expect our operating expenses as a percentage of revenues in 2026 will be impacted by the opening of any new or existing idle facilities as a result of the cost of transitioning and/or start-up operations related to a facility opening. We also expect that our operating expenses will be impacted by the effect of inflation on costs related to personnel, utilities, insurance, and medical and food, among other operational costs. During 2026, we will incur carrying costs for facilities that are currently vacant.

Previous wording

General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees and other administrative expenses. During the nine months ended September 30, 2025 and 2024, general and administrative expenses totaled approximately 11% and 8%, respectively, of our consolidated revenues. We expect general and administrative expenses as a percentage of revenues in 2025 to remain consistent or decrease as a result of cost savings initiatives.

Current wording

General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees and other administrative expenses. During the three months ended March 31, 2026 and 2025, general and administrative expenses totaled approximately 9% and 10%, respectively, of our consolidated revenues. We expect general and administrative expenses as a percentage of revenues in 2026 to remain consistent or decrease as a result of cost savings initiatives.

Previous wording

We are currently marketing (or awaiting activation) 6,646 vacant beds at six U.S. Secure Services and at two of our Reentry Services idle facilities to potential customers. One of our U.S. Secure Services idle facilities, the 700-bed Cheyenne Mountain Recovery Center, is currently under a contract that has not yet been activated. The annual net carrying cost of our idle facilities in 2025 is estimated to be $17.5 million, including depreciation expense of $12.0 million. As of September 30, 2025, these eight facilities had a combined net book value of $181.1 million. We currently do not have any firm commitment or agreement in place to activate the idle facilities (except for the Cheyenne Mountain Recovery Center). Historically, some facilities have been idle for multiple years before they received a new contract award. These idle facilities are included in the U.S. Secure Services and Reentry Services segments. The per diem rates that we charge our clients often vary by contract across our portfolio. However, if the remaining idle facilities were to be activated using our U.S. Secure Services and Reentry Services average per diem rates in 2025 (calculated as the U.S. Secure Services and Reentry Services revenue divided by the number of U.S. Secure Services and Reentry Services mandays) and based on the average occupancy rate in our facilities through September 30, 2025, we would expect to receive incremental annualized revenue of approximately $245 million and an annualized increase in earnings per share of approximately $0.20 to $0.25 per share based on our average operating margins.

Current wording

We are currently marketing (or awaiting activation) 6,646 vacant beds at six U.S. Secure Services and at two of our Reentry Services idle facilities to potential customers. One of our U.S. Secure Services idle facilities, the 700-bed Cheyenne Mountain Recovery Center, is currently under a contract that has not yet been activated. The annual net carrying cost of our idle facilities in 2026 is estimated to be $26.7 million, including depreciation expense of $15.2 million. As of March 31, 2026, these eight facilities had a combined net book value of $189.8 million. We currently do not have any firm commitment or agreement in place to activate the idle facilities (except for the Cheyenne Mountain Recovery Center). Historically, some facilities have been idle for multiple years before they received a new contract award. These idle facilities are included in the U.S. Secure Services and Reentry Services segments. The per diem rates that we charge our clients often vary by contract across our portfolio. However, if the remaining idle facilities were to be activated using our U.S. Secure Services and Reentry Services average per diem rates in 2026 (calculated as the U.S. Secure Services and Reentry Services revenue divided by the number of U.S. Secure Services and Reentry Services mandays) and based on the average occupancy rate in our facilities through March 31, 2026, we would expect to receive incremental annualized revenue of approximately $300 million and an annualized increase in earnings per share of approximately $0.25 to $0.30 per share based on our average operating margins.