GEO GROUP INC

Previous 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;

Current wording

our ability to identify and successfully complete any potential acquisitions of assets and businesses or sales of 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

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.

Current wording

For the six months ended June 30, 2026 and 2025, we had consolidated revenues of $1,437.3 million and $1,241.5 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 91% including 68,245 active beds and excluding 6,646 idle beds, which includes those being marketed to potential customers, for the six months ended June 30, 2026, and approximately 89% including 69,793 active beds and excluding 6,785 idle beds, which includes those being marketed to potential customers, for the six months ended June 30, 2025.

Previous wording

Our U.S. Secure Services segment primarily encompasses our U.S.-based public-private partnership secure services business. Our Electronic Monitoring and Supervision Services segment, which conducts its services in the U.S., consists of our electronic monitoring and supervision services. Our Reentry Services segment consists of various community-based and reentry services. Our International Services segment primarily consists of our public-private partnership secure services operations in Australia and South Africa.

Current wording

Our U.S. Secure Services segment primarily encompasses our U.S.-based public-private partnership secure services business. Our Electronic Monitoring and Supervision Services segment, which conducts its services in the U.S., consists of our electronic monitoring and supervision services. Our Reentry Services segment consists of various community-based and reentry services. Our

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 $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.

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 $188.1 million as of June 30, 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 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.

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 six months ended June 30, 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 $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.

Current wording

Revenues for U.S. Secure Services increased by $78.8 million in the second quarter ended June 30, 2026 (the "Second Quarter 2026") compared to the second quarter ended June 30, 2025 (the "Second Quarter 2025") due to increases of $60.6 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. There were also aggregate net increases of $35.0 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 $16.8 million related to contract terminations.

Previous 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.

Current wording

The number of compensated mandays in U.S. Secure Services facilities was approximately 4.4 million in Second Quarter 2026 compared to approximately 4.2 million in Second 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 88% of capacity in Second Quarter 2026 and Second Quarter 2025, respectively, excluding idle facilities.

Previous 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.

Current wording

Revenues for Reentry Services increased by $1.1 million in Second Quarter 2026 compared to Second Quarter 2025 primarily due to aggregate net increases of $3.5 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 $2.4 million.

Previous 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.

Current wording

Revenues for International Services increased by $18.7 million in Second Quarter 2026 compared to Second Quarter 2025. We experienced a net increase of $12.6 million primarily due to new health care contracts and increased populations at our Australian subsidiary. We also experienced an increase due to foreign exchange rate fluctuations of $6.1 million.

Previous 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.

Current wording

Operating expenses for U.S. Secure Services increased by $40.3 million in Second Quarter 2026 compared to Second 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 $24.2 million. We also experienced an increase of approximately $29.6 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 $13.5 million related to contract terminations.

Previous wording

Operating expenses for Reentry Services increased by $1.6 million during First Quarter 2026 compared to First Quarter 2025. We experienced an aggregate net increase of $2.5 million due to increased programming needs and referrals due to new day reporting center contracts which was partially offset by a decrease of $0.9 million due to contract terminations.

Current wording

Operating expenses for Reentry Services increased by $1.2 million during Second Quarter 2026 compared to Second Quarter 2025. We experienced an aggregate net increase of $3.0 million due to increased programming needs and referrals due to new day reporting center contracts which was partially offset by a decrease of $1.8 million due to contract terminations.

Previous 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.

Current wording

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

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 $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.

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 $9.2 million in Second Quarter 2026 compared to Second 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 $0.3 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.

Current wording

Interest income increased by $0.8 million in Second Quarter 2026 compared to Second Quarter 2025 primarily due to higher cash balances on hand internationally and the effect of foreign exchange rates.

Previous 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

Current wording

The provision for income taxes increased in Second Quarter 2026 compared to Second Quarter 2025 principally due to an increase in pre-tax income. In Second Quarter 2026, there was a $0.5 million as compared to a $0.3 million net discrete tax benefit in Second Quarter 2025. Included in the discrete tax benefit in Second Quarter 2026 was $0.4 million as compared to a $0.3 million discrete tax benefit in Second 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 decreased slightly during First Quarter 2026 compared to First Quarter 2025 primarily due to less 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 Second Quarter 2026 compared to Second Quarter 2025 primarily due to less favorable performance at SACS.

Previous wording

Reentry Services depreciation and amortization expense decreased in First Quarter 2026 compared to First Quarter 2025 primarily due to certain assets becoming fully depreciated.

Current wording

Reentry Services depreciation and amortization expense decreased in Six Months 2026 compared to Six Months 2025 primarily due to certain assets becoming fully depreciated.

Previous 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.

Current wording

Interest expense decreased by $7.5 million in Six Months 2026 compared to Six Months 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

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.

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 $52.9 million of which $32.9 million was spent through June 30, 2026. We estimate that the remaining capital requirements related to these capital projects will be $20.0 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 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.

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 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

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, that recently ended on April 30, 2026, 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 March 31, 2026 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

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, that ended on April 30, 2026, 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 June 30, 2026 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.

Previous 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.

Current wording

(a) Includes amounts due from non-guarantor subsidiaries of $54.2 million and $52.8 million as of June 30, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

(b) Includes amounts due to non-guarantor subsidiaries of $41.8 million and $42.1 million as of June 30, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

Cash, cash equivalents and restricted cash and cash equivalents as of June 30, 2026 was $111.2 million compared to $120.6 million as of June 30, 2025.

Previous 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.

Current wording

Net cash provided by operating activities amounted to $236.5 million for the six months ended June 30, 2026 versus net cash provided by operating activities of $110.4 million for the six months ended June 30, 2025. Cash provided by operating activities during the six months ended June 30, 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, loss on disposal of property and equipment, net and stock-based compensation expense. Equity in earnings of affiliates and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $68.9 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 decreased by $4.9 million which negatively impacted cash. The decrease was primarily driven by the timing of payments.

Previous 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.

Current wording

Net cash provided by operating activities during the six months ended June 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, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax, gain on sale/disposal of property and equipment, net, and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets increased in total by $4.5 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 decreased by $6.8 million which negatively impacted cash. The decrease was primarily driven by the timing of payments.

Previous 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.

Current wording

Net cash used in investing activities of $50.4 million during the six months ended June 30, 2026 was primarily the result of capital expenditures of $42.3 million, purchases of marketable securities of $40.7 million and proceeds from sales of marketable securities of $32.1 million. Net cash used in investing activities of $81.8 million during the six months ended June 30, 2025 was primarily the result of capital expenditures of $67.6 million, purchases of marketable securities of $16.9 million and proceeds from sales of marketable securities of $2.7 million.

Previous 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.

Current wording

Net cash used in financing activities during the six months ended June 30, 2026 was approximately $200.2 million compared to net cash used in financing activities of $37.6 million during the six months ended June 30, 2025. Net cash used in financing activities during the six months ended June 30, 2026 was primarily the result of proceeds from the revolver of $117.0 million, payments on the revolver of $226.6 million, payments on long-term debt of $0.7 million, proceeds from the exercise of stock options of $3.0 million, payment for the repurchase of common stock of $86.7 million and taxes paid related to net share settlement of equity awards of $6.2 million. Net cash used in financing activities during the six months ended June 30, 2025 was primarily the result of payments on the revolver of $30.0 million, proceeds from the revolver of $35 million, payments on long-term debt of $24.7 million, proceeds from the exercise of stock options of $4.2 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, 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.

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, start-up costs, pre-tax, litigation costs and settlements, pre-tax, employee restructuring expenses, pre-tax, close-out expenses, pre-tax, loss on asset divestitures/impairment, pre-tax and other non-cash revenues and expenses, pre-tax, and certain other adjustments as defined from time to time.

Previous wording

Given the nature of our business as a real estate owner and operator, we believe that EBITDA and Adjusted EBITDA are helpful to investors as measures of our operational performance because they provide an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures, and to fund other cash needs or reinvest cash into our business.

Current wording

Given the nature of our business as a real estate owner and support services provider, we believe that EBITDA and Adjusted EBITDA are helpful to investors as measures of our operational performance because they provide an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures, and to fund other cash needs or reinvest cash into our business.

Previous 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):

Current wording

Our reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 is as follows (in thousands):

Previous 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.

Current wording

Any positive trends in the industry may be offset by several factors, including the impact of the federal government shutdown that 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 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.

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 six months ended June 30, 2026 and 2025, respectively. Additional operating expenses include food, utilities and medical costs. During the six months ended June 30, 2026 and 2025, operating expenses totaled approximately 73% 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 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.

Current wording

General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees and other administrative expenses. During each of the six months ended June 30, 2026 and 2025, general and administrative expenses totaled approximately 9% 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 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.

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 June 30, 2026, these eight facilities had a combined net book value of $188.1 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 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 June 30, 2026, we would expect to receive incremental annualized revenue of approximately $264 million and an annualized increase in earnings per share of approximately $0.25 to $0.30 per share based on our average operating margins.