GEO 10-K & 10-Q changes, risk factors and insider trading

Various state partners have or may choose in the future to undertake a review of their utilization of public-private partnerships. For example, California enacted legislation aimed at phasing out public-private partnership contracts for the operation of secure facilities within California and facilities outside of the state of California housing state of California inmates. We have public-private partnership contracts in place with ICE and the U.S. Marshals Service relating to facilities located in California. Also, the State of Washington has enacted legislation similar to the California law. Although GEO was able to prevail in legal actions challenging the constitutionality of such laws in California and Washington, these or other states may propose or adopt similar laws in the future. Immigration reform laws are currently a focus for legislators and politicians at the federal, state, and local level. Legislation has been passed in California, Colorado, and New Jersey, where we operate detention facilities, as well as Maryland, Illinois, Oregon and Washington, that prohibits state and local agencies from contracting to detain immigrants in ICE custody. In addition, legislation has been proposed in New Mexico, a state in which we own facilities, that would prohibit state and local agencies from contracting to detain immigrants in ICE custody. While recent court decisions in California and New Jersey have struck down these restrictions as to direct contracts between ICE and private companies, restrictions on state and local agency contracts to detain immigrants in ICE custody generally remain in place in the states where such laws have been passed.

In addition, the movement toward using public-private partnerships for such facilities and centers has encountered resistance from groups which believe that such facilities and centers should only be operated by governmental agencies. For example, several financial institutions, including some of our lenders, had announced that they will not be renewing existing agreements or entering into new agreements with companies that operate such facilities and centers pursuant to public-private partnerships. Some of these same institutions have ceased their equity analyst coverage of our company. Proposed and future legislation could indirectly impose additional financial restrictions with respect to our business. If other financial institutions or third parties that currently provide us with financing or that we do business with decide in the future to cease providing us with financing or doing business with us, such determinations could have a material adverse effect on our business, financial condition and results of operations. Furthermore, recently proposed legislation in California, Assembly Bill 1633, or AB1633, would impose an annual tax equal to 50% of the gross receipts of private detention facility operators beginning on January 1, 2027, if enacted into law. As a result, if enacted into law, AB1633 would impose the 50% tax on gross receipts we receive in connection with the operation of each of the detention facilities we operate in California. Although it is uncertain whether AB1633 will be enacted into law, we can provide no assurance that it will not be enacted, and if enacted, would not impact our results of operations and cash flows.

We have a significant amount of indebtedness. Our total consolidated indebtedness as of December 31, 20242025 and 20232024 was approximately $1.7 billion and $1.8 billion, respectively, excluding finance lease obligations of $0.6 million and $1.3 million, for the years ended December 31, 2024 and 2023, respectively.billion. As of December 31, 20242025 and 2023,2024, we had $62.9$44.4 million and $75.8$62.9 million, respectively, outstanding in letters of credit and $110.0$358.6 million and zero,$110.0 million, respectively, in borrowings outstanding under our revolver. As of December 31, 2024,2025, we had the ability to borrow $137.1$47.0 million under our revolver, after applying the limitations and restrictions in our debt covenants and subject to our satisfying the relevant borrowing conditions under our senior credit facility with respect to the incurrence of additional indebtedness. At December 31, 2024,2025, we also had approximately AUD53 million (or approximately $33$35 million based on exchange rates at December 31, 20242025) in letters of credit outstanding under our Australian letter of credit facility in connection with certain performance guarantees related to the Ravenhall facility.

If we are unable to meet our debt service obligations, we may need to reduce capital expenditures, restructure or refinance our indebtedness, obtain additional equity financingfinancing, suspend repurchases under our share repurchase program or sell assets. The term loan and revolving credit commitments under our credit agreement mature in April 2029. Our 8.625% senior secured notes due 2029 (“Secured Notes” or “8.625% Secured Notes Due 2029”) and our 10.250% senior notes due 2031 (“Unsecured Notes” or “10.250% Unsecured Notes due 2031”) mature in April 2029 and April 2031, respectively. Beginning in 2019, several financial institutions announced that they would not be renewing existing agreements or entering into new agreements with companies that operate secure services facilities and centers pursuant to public-private partnerships. Certain lenders also have publicly disclosed that they will no longer loan money to one of our key competitors. Although we successfully closed on a debt restructuring transaction that resulted in entering into a new credit agreement and the issuance of the Secured Notes and the Unsecured Notes, financial institutions may be unwilling to engage with us in the future and this may restrict our access to the debt and capital markets to support our operations or refinance our indebtedness, including by obtaining debt financing, equity financing or selling assets on satisfactory terms, or at all. This could materially increase the cost of capital and as a result have a material adverse effect on our business, financial condition and results of operations. In addition, our ability to incur additional indebtedness will be restricted by the terms of our credit agreement, and the indentures governing our Secured Notes and Unsecured Notes.

We currently have several active projects that we anticipate spending approximately $125$120 to $145$155 million on capital expenditures in 2025.2026. Included in these projects are planned expenditures to deliver expanded detention capacity, secure transportation and electronic monitoring services to ICE. Of these projects, we estimate that approximately $40$80 to $45$95 million are related to facility maintenance costs. We intend to finance these and future projects using our own funds, including cash on hand, cash flow from operations and borrowings under the revolver. In addition to these current estimated capital requirements for 2025,2026, we are currently in the process of bidding on, or evaluating potential bids for the design, construction and management of a number of new projects. In the event that we win bids for these projects and decide to self-finance their construction, our capital requirements in 20252026 could materially increase. As of December 31, 2024,2025, we had the ability to borrow $137.1$47.0 million under the revolver after applying the limitations and restrictions in our debt covenants and subject to our satisfying the relevant borrowing conditions under the senior credit facility. In addition, we have the ability to increase the senior credit facility by an additional $450 million, subject to lender demand and prevailing market conditions and satisfying the relevant borrowing conditions thereunder. While we believe we currently have adequate liquidity from cash on hand, cash flow from operations and borrowing capacity under our senior credit facility to fund our operations and all of our committed capital expenditure projects, we may need additional borrowings or financing from other sources in order to complete potential capital expenditures related to new projects in the future. We cannot assure you that such borrowings or financing will be made available to us on satisfactory terms, or at all. In addition, the large capital commitments that these projects will require over the next 12-18 month period may materially strain our liquidity and our borrowing capacity for other purposes. Capital constraints caused by these projects may also cause us to have to entirely refinance our existing indebtedness or incur more indebtedness. Such financing may have terms less favorable than those we currently have in place, or not be available to us at all. In addition, the concurrent development of these and other large capital projects exposes us to material risks. For example, we may not complete some or all of the projects on time or on budget, which could cause us to absorb any losses associated with any delays.

incur additional indebtedness or issue preferred stock ;

These restrictions could limit our ability to finance our future operations or capital needs, make acquisitions or pursue available business opportunities. In addition, our Credit Agreement requires us to maintain specified financial ratios and satisfy certain financial covenants, including maintaining a maximum total leverage ratio, a maximum first lien coverage ratio, a minimum interest coverage ratio and a cap on the amount of unrestricted cash that our foreign subsidiaries may hold as of the last day of any fiscal quarter. We may be required to take action to reduce our indebtedness or to act in a manner contrary to our business objectives to meet these ratios and satisfy these covenants. We could also incur additional indebtedness having even more restrictive covenants. Our failure to comply with any of the covenants under our Credit Agreement, the Secured Notes and the Unsecured Note,Notes, or any other indebtedness could prevent us from being able to draw on the Revolver, cause an event of default under such documents and result in an acceleration of all of our outstanding indebtedness. If all of our outstanding indebtedness were to be accelerated, we likely would not be able to simultaneously satisfy all of our obligations under such indebtedness, which would materially adversely affect our financial condition and results of operations.

Our business may not be able to generate sufficient cash flow from operations or future borrowings may not be available to us under our Credit Agreement or otherwise in an amount sufficient to enable us to pay our indebtedness or debt securities, including the Secured Notes and the Unsecured Notes, or to fund our other liquidity needs. As a result, we may need to refinance all or a portion of our indebtedness on or before maturity. However, we may not be able to complete such refinancing on commercially reasonable terms or at all. If for any reason we are unable to meet our debt service obligations, we would be in default under the terms of the agreements governing our outstanding debt. If such a default were to occur, the lenders under the Credit Agreement, and holders of the Secured Notes and the Unsecured Notes could elect to declare all amounts outstanding immediately due and payable, and the lenders would not be obligated to continue to advance funds under the Credit Agreement. If the amounts outstanding under the Credit Agreement or other agreements governing our outstanding debt, were accelerated, our assets may not be sufficient to repay in full the money owed to our lenders and holders of the Secured NotesNotes, the Unsecured Notes and any other debt holders.

We currently derive, and expect to continue to derive, a significant portion of our revenues from a limited number of governmental agencies. Of our governmental partners, three federal governmental agencies with correctional and detention responsibilities, the BOP, ICE, and the U.S. Marshals Service, accounted for 61.8%66.6% and 62.2%61.8% of our total consolidated revenues for the year ended December 31, 20242025 and 2023,2024, respectively, through multiple individual contracts, with the BOP accounting for 3.1%2.6% and 2.9%3.1% of our total consolidated revenues for 20242025 and 2023,2024, respectively, ICE accounting for 41.5%47.6% and 42.7%41.5% of our total consolidated revenues for 20242025 and 2023,2024, respectively, and the U.S. Marshals Service accounting for 17.2%15.9% and 16.7%17.2% of our total consolidated revenues for 20242025 and 2023,2024, respectively. However, noNo individual contract with these clients accounted for more than 10.0% of our total consolidated revenues for 2025. However, in 2024 and 2023 except for our ISAP contract that accounted for approximately 10% and 14% of our total consolidated revenues, respectively. Our ISAP contract may be subject to competitive re-bid in 2025.revenues.

Additionally, considerable uncertainty exists regarding how future budget and program decisions will develop,continue to evolve, including the spending priorities of the new U.S. presidential administration and Congress and what challenges any budget reductions will present for us and our industry generally. For example, on November 12, 2024, President Trump announced a planned advisory commission, the “Department of Government Efficiency” to reform federal government processes and reduce expenditures. Pressures on and uncertainty surrounding the U.S. federal government’s budget, and potential changes in budgetary priorities and spending levels, could adversely affect the funding for and delay or eliminate the ability for additional contracting or increased bed capacity.

Long-running pressure on state budgets had eased in the years prior yearsto the COVID-19 pandemic, amid widespread economic growth and tax revenue gains that resulted in the first budget surpluses in years for many states. The COVID-19 pandemic adversely impacted the economic expansion and budget surpluses enjoyed by numerous states. Still, some states were in a stronger position than others as they began to experience a public health emergency and their greatest fiscal and economic tests since the Great Recession of 2007-09. GEO has numerous state clients across the country. If state budgetary conditions deteriorate, our state customers’ ability to pay us may be impaired and/or we may be forced to renegotiate our management contracts with those customers on less favorable terms and our financial condition, results of operations or cash flows could be materially adversely impacted. In addition, budgetary constraints in states that are not our current customers could prevent those states from using public-private partnerships for secure facilities, processing centers or community based service opportunities that we otherwise could have pursued.

From time to time, we may not have a management contract with a customer to operate existing beds or new beds at facilities that we are currently in the process of renovating and expanding. While we will always strive to work diligently with a number of different customers for the use of these beds, we cannot assure you that a contract for the beds will be secured on a timely basis, or at all. While a facility or new beds at a facility are vacant, we incur carrying costs. In our U.S. Secure Services segment, as of December 31, 2024,2025, we were marketing 10,4865,896 vacant beds with a net book value of approximately $260.6$180.9 million at sevensix of our idle facilities to potential customers. In our Reentry Services segment, as of December 31, 2024,2025, we were marketing 1,189750 vacant beds with a net book value of approximately $26.8$11.6 million at fourtwo of our idle facilities to potential customers. The combined annual carrying cost of these idle facilities in 20252026 is estimated to be $33.0$23.4 million, including depreciation expense of $16.8$12.0 million. Failure to secure a management contract for a facility or expansion project could have a material adverse impact on our financial condition, results of operations and/or cash flows. We review our facilities for impairment whenever events or changes in circumstances indicate the net book value of the facility may not be recoverable. Impairment charges taken on our facilities could require material charges to our results of operations. In addition, in order to secure a management contract for these beds, we may need to incur significant capital expenditures to renovate or further expand the facility to meet potential clients’ needs.

As of December 31, 2024,2025, 1829 of our facility management contracts, as well as certain of our other management contracts, may be subject to competitive re-bid in 2025.2026. These contracts in the aggregate represented 21%approximately 18% and approximately $498$469 million of our 20242025 consolidated revenues. We cannot in fact assure you that we will prevail in future re-bid situations or that any competitive re-bids we win will be on terms more favorable to us than those in existence with respect to the applicable expiring contract.

Our federal, state or local governmental partners may in the future choose to undertake a review of their utilization of public-private partnerships, or may re-negotiate, cancel or decide not to renew our existing contracts with them. For example, on January 26, 2021, President Biden signed an Executive Order directing the United States Attorney General not to renew Department of JusticeDOJ contracts with privately operated criminal detention facilities. While this Executive Order has been revoked, a future administration may implement further executive orders or directives relating to federal criminal justice policies and immigration policies which may impact the federal government’s use of public-private partnerships with respect to correctional and detention needs, including with respect to our contracts, and/or may impact the budget and spending priorities of federal agencies, including ICE.

Our growth is primarily dependent upon our ability to obtain new contracts to develop and/or manage secure, processing, and community based facilities under public-private partnerships. Additionally, our growth is generally dependent upon our ability to obtain new contracts to offer electronic monitoring services, provide community-based reentry services and provide monitoring and supervision services. Demand for new public-private partnership facilities in our areas of operation may decrease and our potential for growth will depend on a number of factors we cannot control, including overall economic conditions, governmental and public acceptance of public-private partnerships, government budgetary constraints, and the number of facilities available for public-private partnerships.

Our cash flow is subject to the receipt of sufficient funding of and timely payment by contracting governmental entities. If the contracting governmental agency does not receive sufficient appropriations to cover its contractual obligations, it may terminate our contract or delay or reduce payment to us. Any delays in payment, including as a result of the most recent government shutdown or a future government shutdown, or the termination of a contract, could have a material adverse effect on our cash flow and financial condition, which may make it difficult to satisfy our payment obligations on our indebtedness, including the Secured Notes, Unsecured Notes and the Credit Agreement, in a timely manner. In addition, domestically, federal, state and local governments have encountered, and may continue to encounter, unusual budgetary constraints. As a result, a number of federal, state and local governments may be under pressure to control additional spending or reduce current levels of spending which could limit or eliminate appropriations for the facilities that we operate. Additionally, as a result of these factors, we may be requested in the future to reduce our existing per diem contract rates or forego prospective increases to those rates. Budgetary limitations may also make it more difficult for us to renew our existing contracts on favorable terms or at all. Further, a number of states and foreign governments in which we operate may experience budget constraints for fiscal year 2025.2026. We cannot assure you that these constraints would not result in reductions in per diems, delays in payment for services rendered or unilateral termination of contracts.

We are dependent upon the continued service of each member of our senior management team, including George C. Zoley, Ph.D., our current Executive Chairman,Chairman J.and DavidChairman Donahue, ourand Chief Executive Officer,Officer effective March 1, 2026, Mark J. Suchinski, our Chief Financial Officer, Wayne Calabrese, our President and Chief Operating Officer, Paul Laird, our Senior Vice President and President, Secure Services, Matthew Albence, our Senior Vice President, Client Relations and also our other executive officers. The unexpected loss of Dr. Zoley, Mr. Donahue, Mr. Suchinski or any other key member of our senior management team could materially adversely affect our business, financial condition or results of operations.

If our suppliers fail to supply components in a timely manner that meets our quantity, quality, cost requirements, or technical specifications, we may not be able to access alternative sources of these components within a reasonable period of time or at commercially reasonable rates. Recently we have been affected by the current microchip shortage which has caused us to pivot to other technology solutions. A reduction or interruption in the supply of components, or a significant increase in the price of components, could have a material adverse effect on our marketing and sales initiatives, which could adversely affect our financial condition and results of operations.

We are subject to complex and evolving U.S. federal and state privacy laws and regulations, which sometimes conflict among the various jurisdictions where we do business. For example, we are subject to HIPAA, which requires us to protect the privacy and security of individually identifiable health information, known as “protected health information” and recognize individual rights related to understanding and controlling how health information is used or disclosed. Various states have passed laws pertaining to the processing of personal data that require companies, including us, to provide new disclosures and options to such persons about data collection, use and sharing practices. Some of these laws are already in effect, while others will go into effect during 2025.2026 and 2027. HIPAA and state laws require us to report data breaches to affected individuals, government regulators, and in certain cases involving large breaches, the media. Further, the U.S. federal government and a significant number of additional states are considering expanding or passing privacy laws in the near term. We are also subject to increasing legal requirements with respect to the use of artificial intelligence and machine learning applications and tools (including in relation to hiring and employment practices) and biometric information. These legal requirements are rapidly changing and are subject to uncertain application, interpretation and enforcement standards. Our current or future use of artificial intelligence or machine learning tools in our business operations could expose us to new or additional costs and risks, including the potential introduction of new vulnerabilities or cybersecurity risks within our information technology systems and the potential inadvertent or unauthorized release of confidential or protected health information resulting from the use (whether or not authorized) of artificial intelligence or machine learning tools by our employees, contractors, agents, representatives or affiliates. In addition, the artificial intelligence tools we may incorporate into certain aspects of our operations may not generate the intended efficiencies and may impact our business results.

We have a substantial amount of goodwill and other intangible assets resulting from business acquisitions. As of December 31, 2024,2025, we had $882.6$873.4 million of goodwill and other intangible assets. At least annually, or whenever events or changes in circumstances indicate a potential impairment in the carrying value (as defined by Generally Accepted Accounting Principles in the United States of America, or U.S. GAAP), we will evaluate this goodwill for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Estimated fair values could change and/or decline if there are changes in our capital structure, cost of debt, interest rates, capital expenditure levels, operating cash flows, market capitalization, and the political and regulatory environment. For example, our stock price has experienced volatility and periods of a significant decline over the course of the last several years. A future decline or prolonged decline in the value of our stock price may result in material impairment charges. Impairments of goodwill or other intangible assets could require material non-cash charges to our results of operations.

During the fourth quarter of 2021, we received an unfavorable jury verdict and combined $23.2 million judgments in the retrial of two cases, State of Washington v. GEO Group and Nwauzor et al. v. GEO Group, in U.S. District Court for the Western District of Washington, which judgment amounts were subsequently increased by a further award against the Company of attorney’s fees, costs, and pre-judgment interest in the amount of $14.4 million. On January 16, 2025, the Ninth Circuit Court of Appeals issued an Opinion by a 2-1 vote affirming the lower court’s decision. That Opinion includes a 24-page dissenting opinion. On February 6, 2025, GEO timely filed its Petition for Rehearing En Banc. On August 13, 2025, the Ninth Circuit issued an order denying GEO’s Petition for Rehearing En Banc. That order included six dissenting opinions. On September 2, 2025, the Ninth Circuit granted GEO’s motion to stay the issuance of the Court’s mandate pending GEO’s Petition for Writ of Certiorari to the Supreme Court. A final mandate has not been issued by the Ninth CircuitCircuit, and the appeal remains pending until resolution of theGEO's Petition for Rehearing.Writ Onof FebruaryCertiorari 12, 2025,to the UnitedSupreme States Department of Justice filed a Motion for 30-day extension of time to file an Amicus Brief supporting GEO’s Petition for Rehearing En Banc.Court.

These policies, practices and reports, whether it be the standards we set for ourselves or ESG criteria established by third parties, whether or not we meet such standards, and the level of disclosure we provide in our reports may influence our reputation. For example, the perception held by our governmental partners, vendors, suppliers, shareholders, other stakeholders, the communities in which we do business or the general public may depend, in part, on the standards we have chosen to aspire to meet, whether or not we meet these standards on a timely basis or at all, whether or not we meet external ESG factors they deem relevant and the level of disclosure we provide relating to human rights, ESG, and our political and lobbying activities. The subjective nature and wide variety of frameworks and methods used by various stakeholders, including investors, to assess a company with respect to ESG criteria can result in the application or perception of negative ESG factors or a misrepresentation of our corporate social responsibility or ESG policies and practices. Our failure to achieve progress on our human rights and ESG policies and practices on a timely basis, or at all, meet human rights or ESG criteria set by third parties, or provide the disclosure relating to human rights, ESG, political and lobbying activities which any third parties may believe is necessary or appropriate could adversely affect our business, financial condition and/or results of operations.

ByWhen electingwe elect to publicly share our Human Rights and ESG report andon ourcorporate Politicalsocial Activityresponsibility andor Lobbying Report,ESG, our business may face increased scrutiny related to our human rights and ESG activities and our political contributions and lobbying activities.scrutiny. As a result, our reputation could be adversely impacted if we fail to act responsibly in the areas in which we report, such as human rights, the development of our workforce, safety and security, addressing recidivism, engaging with our stakeholders, ethics and governance, oversight and contract compliance, energy and environmental sustainability, financial management and performance and political contributions and lobbying activities.report. Any harm to our reputation resulting from setting these standards or our failure or perceived failure to meet such standards or resulting from the reporting of our political contributions and lobbying activities could impact: the willingness of our governmental partners, vendors and suppliers to do business with us or the quality of our relationships with our governmental partners, vendors and suppliers; our ability to access capital in the debt or equity markets; our investors willingness or ability to purchase or hold our securities; and employee retention and the quality of relations with our employees, any of which could adversely affect our business, financial condition and/or results of operations.

For each of the years ended December 31, 20242025 and 2023,2024, we had consolidated revenues of $2.6 billion and $2.4 billionbillion, respectively and we maintained an average company-wide facility occupancy rate of 89.2% including 68,157 active beds and excluding 6,646 idle beds for the year ended December 31, 2025, and 87.2% including 67,604 active beds and excluding 11,675 idle beds for the year ended December 31, 2024, and 85.8% including 69,834 active beds and excluding 11,421 idle beds for the year ended December 31, 2023.2024.

Idle Facilities/Asset Impairments

[21] We had entered into a purchase and sale agreement in the second quarter of 2024 for these facilities that was less than the net carrying values. As such, we recorded a total impairment loss for both facilities of approximately $2.3 million during the second quarter of 2024 which is included in gain (loss) gain on asset divestitures/impairment in the accompanying consolidated statements of operations. The purchase and sale agreement was later rescinded.terminated. There was no indication of impairment related to our idle facilities during the yearsyear ended December 31, 20232025 or 2022.2023.

We test idle facilities for impairment upon notification that the facilities will no longer be utilized by the customer. If a long-lived asset is part of a group that includes other assets, the unit of accounting for the long-lived asset is its group. Generally, we group assets by facility for the purpose of considering whether any impairment exists. The estimates of recoverability are based on projected undiscounted cash flows associated with actual marketing efforts where available or, in other instances, projected undiscounted cash flows that are comparable to historical cash flows from management contracts achieved in the past at that facility or at similar facilities and probability weighted cash flows. Our probability weighted cash flows include adjustments to projected cash flows compared to the historical cash flows due to current business conditions which impact per diem rates as well as labor and other operating costs, changes related to facility mission due to changes in prospective clients, and changes in projected capacity and occupancy rates. We perform the impairment analysis on an annual basis for each of the idle facilities, or more frequently if needed, and take into consideration updates each quarter for market developments affecting the potential utilization of each of the facilities in order to identify events that may cause the Company to reconsider the most recent assumptions. Such events could include negotiations with a prospective customer for the utilization of an idle facility at terms significantly less favorable than the terms used in our most recent impairment analysis, or changes in legislation surrounding a particular facility that could impact our ability to house certain types of individuals at such facility. Further, a substantial increase in the number of available beds at other facilities we own, or in the marketplace, could lead to deterioration in market conditions and projected cash flows. Although they are not frequently received, an unsolicited offer to purchase any of our idle facilities, at amounts that are less than their carrying value could also cause us to reconsider the assumptions used in the most recent impairment analysis. We have identified marketing prospects to utilize each of the remaining currently idled facilities and have determined that no current impairment exists. We also received valuations from a third party on certain facilities. However, we can provide no assurance that we will be able to secure management contracts to utilize our idle facilities, or that we will not incur impairment charges in the future. In all cases, the undiscounted cash flows in our analysis as of December 31, 2024,2025, exceeded the carrying amounts of each facility, therefore no impairment charges were recorded.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires an entity to disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. It also requires an entity to include certain amounts that are already required to be disclosed under current GAAP in the same disclosure. Additionally, it requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. An entity may apply the amendments prospectively for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. WhileWe expect this ASU will impact only our disclosures and not our financial condition and results of operations, we are currently evaluating when we will adopt the ASU.operations.

Revenues for ReentryU.S. Secure Services increased by $2.5$222.6 million in 20242025 compared to 2023 primarily2024 due to aggregate net increases of $4.5$152.4 million duerelated to the activations of our new daycontracts reportingat centerour 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. We also experienced aan aggregate net aggregate increase of $12.1$121.3 million primarily related to increased census levels at certain of our community-based and reentry centers due to increasedincreases programmingin needsoccupancies, transportation services, rates and/or referrals.per diem amounts in connection with contract modifications. Partially offsetting these increases were decreases of $14.1approximately $51.1 million duerelated to contract terminations.

Revenues for InternationalReentry Services increased by $15.0$9.0 million in 20242025 compared to 20232024 primarily due to a net increaseincreases of $27.0$6.9 million due to new day reporting center contracts. We also experienced a net aggregate increase of $5.4 million primarily related to increased populationscensus levels at certain of our Australian subsidiarycommunity-based and ourreentry newcenters healthdue careto contractincreased inprogramming Australia.needs and referrals. Partially offsetting thisthese increaseincreases waswere adecreases decreaseof $3.3 million due to foreigncontract exchange rate fluctuations of $12.0 million.terminations.

Operating expenses for Electronic Monitoring and Supervision Services decreasedincreased by $24.0$9.6 million in 20242025 compared to 20232024 primarily due to decreasesan increase in variablefixed costs related to decreasesour inconversion averageto participanta countscloud underbased ISAP.data platform and employee severance costs as part of our efficiency initiative.

Operating expenses for Reentry Services decreasedincreased by $4.1$6.5 million during 20242025 compared to 20232024 primarily due toan decreasesincrease of $9.8$5.7 million due to contractnew terminations.day Thisreporting decreasecenter wascontracts. partiallyWe offsetalso byexperienced an aggregate net increase of $2.59.1 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals and the associated variable costscosts. asPartially welloffsetting asthese anincreases increasewere decreases of $3.2$8.3 million due to thecontract new day reporting center contracts.terminations.

Operating expenses for International Services increased by $12.0 milliondecreased in 20242025 compared to 20232024 primarilyby due$13.9 tomillion. We experienced a net increasedecrease of approximately $9.9$10.8 million primarily due to expensesthe associatedtransition with increased populations andof our new health caremanaged-only contract for the Junee Correctional Centre in Australia.Australia to the government effective March 31, 2025. We also experienced ana increasedecrease of $3.1 million related to foreign exchange rate fluctuations of $2.1 million.fluctuations.

U.S. Secure Services depreciation and amortization expense increased in 20242025 compared to 20232024 primarily due to renovations at certain of our company-owned and leased facilities.facilities as well as the impact of our purchase of the Western Region Detention Center offset by the sale of our company-owned Lawton Correctional Facility in July 2025.

Depreciation and amortization expense increased slightly in 20242025 compared to 20232024 primarily due to foreignrenovations exchangeat ratecertain fluctuations.of our leased centers.

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 $22.3$22.9 million in 20242025 compared to 20232024 primarily due to increasesthe inreorganization certain transaction fees related toof our privatesenior exchangemanagement transactionsteam involvingat ourthe convertible notesend of $3.62024, million,other employee restructuring expenses ofin $2.12025, million,higher stock-basedemployee compensationrelated ofbenefit $3.0 millioncosts and certainsupport compensation adjustment decreases during 2023 of $4.1 million, withfor the remainingrevenue increasegrowth duefrom toour increasesnew incontract employee benefits and related insurance, professional fees, consulting and other administrative expenses.awards.

Interest income increased in 20242025 compared to 20232024 primarily due to the effect of foreign exchange rate fluctuations and higher cash balances at our international subsidiaries.fluctuations.

Interest expense decreased by $27.7$30.1 million in 20242025 compared to 20232024 primarily due to our Senior Notes Offering and new Term Loan under our new credit agreement that closed on April 18, 2024 which resulted in overall lower interest expense due to lower interest rates. We also retired the majority of our 6.50% Exchangeable Senior Notes due 2026 during 2024 and had lower overall principal balances in 2025 compared to 2024. Additionally, on July 14, 2025, we amended our Credit Agreement which increased our borrowing capacity and lowered the applicable interest rate. Lastly, we paid off our Term Loan under the credit agreement in July 2025. Refer to Note 11 - Debt of the notes to the audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

During 2025, we paid off our Term Loan under our Credit Agreement. In connection with the repayment, we wrote off the related deferred financing costs and paid call premiums. During 2024, we completed a Senior Note Offering and also made mandatory prepayments on our Term Loan which resulted in a loss on extinguishment of debt of approximately $86.6 million which consisted of the write-off of existing deferred financing costs and net discountdiscounts/premiums and the payment of call premiums. Refer to Note 11- Debt of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

During 2025, we experienced a gain on asset divestitures of approximately $232.4 million related to the sale of our company-owned 2,388-bed Lawton Correctional Facility located in Lawton Oklahoma to the State of Oklahoma. Also included in the gain is the sale of our company-owned and previously idled 139-bed Hector Garza Center in San Antonio, Texas. During 2024, we experienced an impairment loss of approximately $2.3 million related to two of our Company-owned facilities. We also donated a parcel of undeveloped land in Kern County, California which resulted in a loss on asset divestiture of approximately $0.6 million.

The provision for income taxes in 20242025 decreasedincreased compared to 20232024 along with the effective tax rate. In 20242025 and 2023,2024, there was a $4.8$53.4 million net discrete tax expense and $3.8$4.8 million net discrete tax benefit, respectively. Included in the provision for income taxes in 20242025 and 20232024 was a $1.1$3.2 million discrete tax benefit and a $1.0$1.1 million discrete tax expensebenefit related to stock compensation that vested during the respective periods. Also included in the provision for income taxes in 2025 was a $56.6 million discrete tax expense related to the sale of our Lawton Facility and in the provision for income taxes in 2024 was a $3.5 million discrete tax benefit from the interest deduction related to GEO shares issued to the holders of our 6.50% Exchangeable Senior Notes due 2026 that participated in private exchange transactions. We estimate our 20252026 annual effective tax rate to be in the range of approximately 28% to 30%, exclusive of any discrete items.

Equity in earnings of affiliates, presented net of income taxes, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates in 20242025 compared to 20232024 decreasedincreased primarily due to unfavorablefavorable performance at SACS.SACS and GEOAmey.

We plan to fund all of our capital needs, including capital expenditures, from cash on hand, cash from operations, borrowings under our Credit Agreement 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. We completed our annual budgeting process, and for 2025,2026, 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 of additional assets and businesses and/or other strategic transactions.transactions including potential acquisitions. 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 20252026 as disclosed under “Capital Requirements” above.

We also entered into a credit agreement, dated April 18, 2024 (the "Credit Agreement") to, among other things, evidence and govern a first-lien senior secured revolving credit facility and the commitments thereunder, and a first-lien senior secured term loan facility. The aggregate principal amount of revolving credit commitments under the senior revolving credit facility iswas originally $310 million (including a $175 million letter of credit subfacility) and the aggregate principal amount of the senior secured term loan facility iswas originally $450.0 million.

We used the net proceeds of the senior notes offering, borrowings under the new term loan, and cash on hand to refinance approximately $1.5 billion of existing indebtedness,indebtedness at that time, including to fund the repurchase, redemption or other discharge of our existing Tranche 1 Term Loan and Tranche 2 Term Loan under our prior senior credit facility, the 9.50% senior second lien secured notes due 2028, the 10.50% senior second lien secured notes due 2028, and the 6.00% senior notes due 2026, to pay related premiums, transaction fees and expenses, and for general corporate purposes of the Company.

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;

At MarchJune 31,30, 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.

For the threesix months ended MarchJune 31,30, 2026 and 2025, we had consolidated revenues of $705.2$1,437.3 million and $604.6$1,241.5 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 91% including 68,18568,245 active beds and excluding 6,646 idle beds, which includes those being marketed to potential customers, for the threesix months ended MarchJune 31,30, 2026, and approximately 88%89% including 69,12569,793 active beds and excluding 7,4536,785 idle beds, which includes those being marketed to potential customers, for the threesix months ended MarchJune 31,30, 2025.

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$188.1 million as of MarchJune 31,30, 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.

Critical Accounting PoliciesEstimates

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 threesix months ended MarchJune 31,30, 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.

Comparison of FirstSecond Quarter 2026 and FirstSecond Quarter 2025

Revenues for U.S. Secure Services increased by $96.9$78.8 million in the firstsecond quarter ended MarchJune 31,30, 2026 (the "FirstSecond Quarter 2026") compared to the firstsecond quarter ended MarchJune 31,30, 2025 (the "FirstSecond Quarter 2025") due to increases of $79.1$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 $37.2$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 $19.3$16.8 million related to contract terminations.

The number of compensated mandays in U.S. Secure Services facilities was approximately 4.4 million in FirstSecond Quarter 2026 compared to approximately 4.14.2 million in FirstSecond 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%88% of capacity in FirstSecond Quarter 2026 and FirstSecond Quarter 2025, respectively, excluding idle facilities.

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

Revenues for Reentry Services increased slightly by $0.9$1.1 million in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025 primarily due to aggregate net increases of $1.9$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 $1.0$2.4 million.

Revenues for International Services increased by $6.2$18.7 million in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025. We experienced a net increase of $0.6$12.6 million primarily due to new health care contracts whichand wasincreased partiallypopulations offset by the transition ofat our managed-onlyAustralian contract for the Junee Correctional Centre in Australia to the government effective March 31, 2025.subsidiary. We also experienced an increase due to foreign exchange rate fluctuations of $5.6$6.1 million.

Operating expenses for U.S. Secure Services increased by $63.7$40.3 million in FirstSecond Quarter 2026 compared to FirstSecond 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$24.2 million. We also experienced an increase of approximately $44.6$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 $17.0$13.5 million related to contract terminations.

Operating expenses for Electronic Monitoring and Supervision Services were relatively consistentdecreased in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025.2025 primarily due to a decrease in average participant counts under the Intensive Supervision and Appearance Program ("ISAP").

Operating expenses for Reentry Services increased by $1.6$1.2 million during FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025. We experienced an aggregate net increase of $2.5$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 $0.9$1.8 million due to contract terminations.

Operating expenses for International Services increased in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025 by $2.4$15.1 million. We experienced aan net decreaseincrease of $2.4$9.7 million primarily due to thenew transitionhealth ofcare contracts and increased populations at our managed-onlyAustralian contractsubsidiary. forWe thealso Junee Correctional Centre in Australia to the government effective March 31, 2025. This was partially offset byexperienced an increase of $4.8$5.4 million related to foreign exchange rate fluctuations.

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

ReentryElectronic Monitoring and Supervision Services depreciation and amortization expense decreased slightly in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025 primarily due to certain assets becoming fully depreciated.

InternationalReentry Services depreciation and amortization expense wasdecreased relatively consistentslightly in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025.2025 primarily due to certain assets becoming fully depreciated.

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$9.2 million in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025 primarily due to higher employee related benefit costs and support for the revenue growth from our new contract awards.

Interest income decreasedincreased by $0.3$0.8 million in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025 primarily due to lowerhigher cash balances on hand internationally and the effect of foreign exchange rates.

Interest expense decreased by $4.1$3.4 million in FirstSecond Quarter 2026 compared to FirstSecond 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.

The provision for income taxes and the effective tax rate increased in FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025 principally due to an increase in pre-tax income and a decrease in discrete tax benefits.income. In FirstSecond Quarter 2026, there was a $0.9$0.5 million net discrete tax benefit as compared to a $4.2$0.3 million net discrete tax benefit in FirstSecond Quarter 2025. Included in the discrete tax benefit in FirstSecond Quarter 2026 was a $0.9$0.4 million discrete tax benefit related to stock compensation as compared to a $4.2$0.3 million discrete tax benefit in FirstSecond 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.

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 FirstSecond Quarter 2026 compared to FirstSecond Quarter 2025 primarily due to less favorable performance at SACS.