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CoreCivic, Inc. (CXW)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue rose 18.1% year over year to $580.4M, a clear top-line beat versus Wall Street ($544.4M), driven by surging ICE volumes and initial revenue from facility activations; EPS of $0.24 missed consensus ($0.265) as start-up losses and higher ramp costs compressed margins. Bold callouts: revenue beat; EPS miss . Q3 consensus: $544.4M revenue*, $0.265 EPS*.
  • ICE revenue jumped 54.6% YoY to $215.9M as California City, West Tennessee, Farmville and Dilley contributed, with ADP up to 55,236 and occupancy at 76.7% (79.3% ex new capacity) .
  • FY25 guidance was lowered across EPS, FFO, and Adjusted EBITDA, reflecting $10–$11M of expected start-up-related NOI/EBITDA headwinds in Q4 from four activations; management reiterated 2026 run-rate EBITDA “no less than $450M” post stabilization .
  • Capital return accelerates: 1.9M shares repurchased for $40.0M in Q3; management intends to double Q4 buybacks and may exceed leverage targets modestly given undervaluation .

What Went Well and What Went Wrong

  • What Went Well

    • ICE demand: “Nationwide ICE detention populations were at historical highs… ICE populations in our facilities increased 3,700… or 37%” and ICE revenue up 54.6% YoY to $215.9M .
    • Contracting wins: New awards at West Tennessee (600 beds), California City (2,560), Midwest (1,033), Diamondback (2,160) expected to generate ~$320M annual revenue when stabilized; CEO: “set us up nicely for an even stronger 2026” .
    • Cash returns: Repurchased 1.9M shares ($40.0M) and plan to “accelerate the pace of share repurchases” given misaligned valuation .

  • What Went Wrong

    • Start-up costs: Facility net operating losses of $3.4M at three activations weighed on margins; operating margin fell to 22.7% (24% ex activation losses) .
    • Guidance cut: FY25 Adj. EPS trimmed to $1.00–$1.06 (from $1.07–$1.14) and Adj. EBITDA to $355–$359M (from $365–$371M), reflecting $10–$11M start-up impact at four facilities .
    • Legal delay: Intake at Midwest Regional Reception Center remains enjoined by Leavenworth lawsuit, despite DOJ Statement of Interest supporting CoreCivic; timing remains uncertain .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$488.6 $538.2 $580.4
Diluted EPS ($)$0.23 $0.35 $0.24
Adjusted Diluted EPS ($)$0.23 $0.36 $0.24
EBITDA ($USD Millions)$81.0 $101.8 $89.0
Adjusted EBITDA ($USD Millions)$81.0 $103.3 $88.8

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q2 2025Q3 2025
Safety$503.3 $545.1
Community$30.1 $30.7
Properties$4.7 $4.7
Other$0.0 $0.0

Key KPIs:

KPIQ2 2025Q3 2025
Average Daily Population (ADP)54,026 55,236
Occupancy (Safety & Community)76.8% 76.7% (79.3% ex California City added capacity)
ICE Revenue ($USD Millions)$176.9 $215.9
Combined Operating Margin—22.7% (24% ex start-up losses)

Estimate comparison:

MetricQ1 2025 ConsensusQ1 ActualQ2 2025 ConsensusQ2 ActualQ3 2025 ConsensusQ3 Actual
Revenue ($USD Millions)478.5*488.6 499.0*538.2 544.4*580.4
EPS ($)0.124*0.23 0.208*0.36 0.265*0.24
# of Estimates (Revenue/EPS)5/5*—5/5*—4/4*—

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Aug 6, 2025)Current Guidance (Nov 5, 2025)Change
Net Income ($USD Millions)FY 2025$116.4–$124.4 $107.0–$113.0 Lowered
Adjusted Net Income ($USD Millions)FY 2025$115.5–$123.5 $108.0–$114.0 Lowered
Diluted EPS ($)FY 2025$1.08–$1.15 $0.99–$1.05 Lowered
Adjusted Diluted EPS ($)FY 2025$1.07–$1.14 $1.00–$1.06 Lowered
FFO per diluted share ($)FY 2025$1.98–$2.06 $1.92–$1.98 Lowered
Normalized FFO per diluted share ($)FY 2025$1.99–$2.07 $1.94–$2.00 Lowered
EBITDA ($USD Millions)FY 2025$366.3–$372.3 $353.7–$357.7 Lowered
Adjusted EBITDA ($USD Millions)FY 2025$365.0–$371.0 $355.0–$359.0 Lowered
Maintenance Capex ($USD Millions)FY 2025$60–$65 $60–$65 Maintained
Activation/Transport Capex ($USD Millions)FY 2025$70–$75 $97.5–$99.5 Raised (ICE requests at Cal City & Diamondback)
Tax Rate (normalized)FY 202525%–30% 25%–30% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
ICE demand and bed needQ1: Initiated Dilley reactivation; letter contracts at Midwest & Cal City; ICE contract modifications to add beds . Q2: Detention at all-time high; raised FY25 guidance .ICE detainees at record highs; four awards expected to add ~$320M annual revenue; DOJ supports CoreCivic in Midwest case .Improving/accelerating
Government shutdown impactQ1: Flagged risk of potential government shutdowns . Q2: Budget strength from “One Big Beautiful Bill Act” .Collections will include interest (~low 4%); operations unaffected as essential services .Manageable risk
Legal/regulatoryQ1: Midwest letter contract; activation delayed by lawsuit . Q2: Midwest intake enjoined; pursuing appeal .DOJ Statement of Interest backing CoreCivic; hearings upcoming; timing uncertain .Progress, timing uncertain
Capex and facility activationsQ1: $65–$70M activation capex planned . Q2: $70–$75M activation capex .Raised to $97.5–$99.5M; intake area expansions requested by ICE; total ~ $150M all-in across facilities .Higher near term spend
Labor and staffingQ1: Cost containment; payroll tax credits .Wage environment moderating; ahead of staffing targets .Improving
Capital allocation/buybacksQ1/Q2: Ongoing repurchases (Q1: $37.9M; Q2: $43.2M) .Plan to double Q4 buybacks; willing to exceed leverage targets modestly given valuation .Accelerating
2026 outlookQ2: FY25 guidance raised; benefits more impactful to 2026 .Run-rate EBITDA “no less than $450M” upon stabilization; revenue ~$2.5B .Stronger growth expected

Management Commentary

  • CEO on 2026 trajectory: “Once we reach stabilized occupancy… we expect our annual run rate revenue to be approximately $2.5 billion and annual run rate EBITDA to increase by $100 million to over $450 million” .
  • CEO on buybacks/valuation: “Looking at the current stock price and our historical EBITDA trading multiples, the market is assuming a $300 million EBITDA run rate… we expect to be executing an aggressive buyback plan” .
  • CFO on margin impacts: “Operating margin… was 22.7%… Excluding… operating losses at the three facilities in various stages of activation, operating margin was 24% for Q3 2025” .
  • COO on occupancy optics: “If we exclude [added] capacity… our reported occupancy would have been 79.3%” .
  • CFO on shutdown collections: “When they do process [payments], they do pay with interest… low 4%… automatic under the Prompt Payment Act” .

Q&A Highlights

  • Start-up costs will weigh primarily in Q4, with some carryover to Q1 2026; majority of facilities (Cal City, West Tennessee) expected to flip to profitability during Q1 .
  • Management may exceed leverage targets near term to opportunistically repurchase stock; board supportive; potential to seek increased authorization .
  • Occupancy outlook: low-to-mid 80s in 2026 as activations mature .
  • Activation capex: ICE requested intake area expansions at Cal City & Diamondback; total activation capex ~$150M all-in across facilities (incl. carryover into 2026) .
  • Midwest legal timeline: hearings expected within 30–45 days; DOJ support noted; still uncertain timing .

Estimates Context

  • Q3 2025: Revenue beat (+$36.1M; +6.6%), but EPS missed (-$0.025) as start-up losses ($3.4M) and higher G&A weighed on margins despite strong ICE demand. Revenue estimate $544.4M*, EPS estimate $0.265*; actual $580.4M revenue, $0.24 EPS .
  • Q2 and Q1 both delivered revenue and EPS beats versus consensus, supported by higher federal/state populations and per diem rates, ERC recognition in Q2, and repurchases .
  • Implication: Near-term models likely need lower Q4 margin assumptions and higher activation capex; medium-term estimates may move higher on 2026 run-rate visibility (> $450M EBITDA) .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Strong demand backdrop: ICE volumes at record highs and state demand rising (Montana, Georgia); contracted activations (~$320M annual revenue) position CXW for a materially higher 2026 earnings base .
  • Near-term headwinds are transitory: Q4 margins will be pressured by start-up activities ($10–$11M impact), but stabilization in H1 2026 should unlock run-rate EBITDA “no less than $450M” .
  • Capital return accelerates: Expect buybacks to double in Q4; management open to modestly exceeding leverage targets given valuation misalignment .
  • Legal overhang manageable: DOJ support in Midwest case is a constructive signal; hearings imminent, but timing still uncertain—model cautious intake ramp for Midwest .
  • Capex stepping up with ROI: Activation/transport capex raised to $97.5–$99.5M for 2025; intake area expansions requested by ICE indicate deeper utilization; all-in activation capex ~$150M across facilities .
  • Operational efficiency improving: Wage pressures moderating; staffing ahead of schedule; core portfolio at or near capacity .
  • Narrative likely to support multiple expansion: Visibility to 2026 growth with contracted ramps, ongoing state pipeline, and aggressive buybacks present catalysts as start-up costs roll off .