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CoreCivic(CXW) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION ITEM 1. – FINANCIAL STATEMENTS. This section presents the unaudited consolidated financial statements of CoreCivic, Inc. and its subsidiaries for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, cash flows, and stockholders' equity, along with detailed notes Consolidated Balance Sheets The consolidated balance sheets show CoreCivic's financial position as of June 30, 2025, compared to December 31, 2024, indicating an increase in total assets and liabilities, while total stockholders' equity slightly decreased Consolidated Balance Sheet Summary (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $3,071,657 | $2,931,891 | | Total Liabilities | $1,594,125 | $1,438,540 | | Total Stockholders' Equity | $1,477,532 | $1,493,351 | Consolidated Statements of Operations CoreCivic reported significant increases in net income and revenue for both the three and six months ended June 30, 2025, compared to the same periods in 2024, driven by higher revenue and improved profitability Consolidated Statements of Operations (Three Months Ended June 30, in thousands) | Metric (in thousands) | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | | :-------------------- | :--------------------------------------- | :--------------------------------------- | | REVENUE | $538,165 | $490,109 | | NET INCOME | $38,543 | $18,954 | | BASIC EARNINGS PER SHARE | $0.35 | $0.17 | | DILUTED EARNINGS PER SHARE | $0.35 | $0.17 | Consolidated Statements of Operations (Six Months Ended June 30, in thousands) | Metric (in thousands) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------------- | :------------------------------------- | | REVENUE | $1,026,792 | $990,795 | | NET INCOME | $63,656 | $28,497 | | BASIC EARNINGS PER SHARE | $0.58 | $0.26 | | DILUTED EARNINGS PER SHARE | $0.58 | $0.25 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, CoreCivic generated increased cash from operating activities, while cash used in investing activities significantly increased, and cash used in financing activities decreased compared to the prior year Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity (in thousands) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash provided by operating activities | $141,196 | $138,413 | | Net cash used in investing activities | $(60,063) | $(21,374) |\ | Net cash used in financing activities | $(60,292) | $(178,312) |\ | Net increase (decrease) in cash, cash equivalents and restricted cash | $20,841 | $(61,273) |\ | Cash, cash equivalents and restricted cash, end of period | $142,951 | $67,683 | Consolidated Statement of Stockholders' Equity (2025) For the quarterly periods during 2025, CoreCivic's total stockholders' equity slightly decreased from December 31, 2024, to June 30, 2025, primarily due to common stock retirements offsetting net income and restricted stock compensation Consolidated Statement of Stockholders' Equity (in thousands) | Metric (in thousands) | As of December 31, 2024 | As of June 30, 2025 | | :-------------------- | :---------------------- | :------------------ | | Total Stockholders' Equity | $1,493,351 | $1,477,532 | | Common Stock Shares | 109,861 | 107,311 | Consolidated Statement of Stockholders' Equity (2024) For the quarterly periods during 2024, CoreCivic's total stockholders' equity decreased from December 31, 2023, to June 30, 2024, primarily due to common stock retirements, partially offset by net income and restricted stock compensation Consolidated Statement of Stockholders' Equity (in thousands) | Metric (in thousands) | As of December 31, 2023 | As of June 30, 2024 | | :-------------------- | :---------------------- | :------------------ | | Total Stockholders' Equity | $1,477,566 | $1,447,521 | | Common Stock Shares | 112,733 | 110,271 | Notes to Consolidated Financial Statements (Unaudited) This section provides detailed disclosures and explanations for the consolidated financial statements, covering the company's organization, accounting policies, real estate transactions, debt structure, stockholders' equity, earnings per share, commitments, contingencies, income taxes, and segment reporting 1. Organization and Operations CoreCivic operates as the largest owner and operator of partnership correctional, detention, and residential reentry facilities in the U.S. through three distinct segments - CoreCivic is the nation's largest owner and one of the largest operators of partnership correctional, detention, and residential reentry facilities in the U.S. through three segments: CoreCivic Safety, CoreCivic Community, and CoreCivic Properties24 - As of June 30, 2025, CoreCivic Safety operated 44 correctional and detention facilities (40 owned/leased) with approximately 67,000 beds24 - CoreCivic Community operated 21 residential reentry centers (owned/leased) with approximately 4,000 beds, and CoreCivic Properties owned 5 properties with approximately 8,000 beds24 2. Basis of Presentation and Summary of Significant Accounting Policies The company is evaluating new accounting standards that will impact future disclosures, while providing details on cash and debt fair values - The company is evaluating ASU 2023-09, 'Improvements to Income Tax Disclosures', effective for annual periods beginning after December 15, 2024, and ASU 2024-03, 'Disaggregation of Income Statement Expenses', effective for annual periods beginning after December 15, 2026, both of which will impact disclosures2728 Cash, Cash Equivalents and Restricted Cash (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $130,524 | $107,487 | | Restricted cash | $12,427 | $14,623 | | Total cash, cash equivalents and restricted cash | $142,951 | $122,110 | Debt Carrying Amount vs. Fair Value (in thousands) | Debt (in thousands) | Carrying Amount (June 30, 2025) | Fair Value (June 30, 2025) | | :------------------ | :------------------------------ | :------------------------- | | Debt | $(1,031,405) | $(1,044,831) | 3. Real Estate and Other Transactions CoreCivic completed a significant acquisition, classified two residential reentry centers as held for sale, and resumed operations at a large immigration processing center - CoreCivic acquired the 736-bed Farmville Detention Center for $67.0 million on July 1, 2025, funded by cash and borrowings under its Revolving Credit Facility33 - Two residential reentry centers (Denver, CO and Live Oak, CA) with carrying values of $1.1 million and $2.7 million, respectively, were classified as held for sale as of June 30, 20253435 Idle Facility Net Carrying Value (June 30, 2025, in thousands) | Idle Facility | Design Capacity | Net Carrying Value (June 30, 2025, in thousands) | | :---------------------------- | :-------------- | :----------------------------------------------- | | Prairie Correctional Facility | 1,600 | $14,790 | | Huerfano County Correctional Center | 752 | $13,847 | | Diamondback Correctional Facility | 2,160 | $42,660 | | Marion Adjustment Center | 826 | $9,602 | | Kit Carson Correctional Center | 1,488 | $46,109 | | West Tennessee Detention Facility | 600 | $17,471 | | North Fork Correctional Facility | 2,400 | $58,307 | | Total | 9,826 | $202,786 | - Operations resumed at the 2,400-bed Dilley Immigration Processing Center in March 2025 under an amended IGSA with ICE, expiring in March 203042 4. Debt CoreCivic's total debt increased to $1.03 billion as of June 30, 2025, with significant availability under its Revolving Credit Facility and no major maturities until October 2027 Debt Outstanding (in thousands) | Debt Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Revolving Credit Facility | $40,000 | $— | | Term Loan | $115,625 | $118,750 | | 4.75% Senior Notes | $238,468 | $238,468 | | 8.25% Senior Notes | $500,000 | $500,000 | | Lansing Correctional Facility Non-Recourse Mortgage Note | $137,312 | $140,162 | | Total debt | $1,031,405| $997,380 | - As of June 30, 2025, CoreCivic had $216.4 million available under its Revolving Credit Facility and was in compliance with all financial covenants4546 Debt Maturity Schedule (in thousands) | Debt Maturity Year | Amount (in thousands) | | :----------------- | :-------------------- | | 2025 (remainder) | $6,098 | | 2026 | $15,701 | | 2027 | $257,823 | | 2028 | $137,995 | | 2029 | $507,985 | | 2030 | $8,073 | | Thereafter | $97,730 | | Total debt | $1,031,405 | 5. Stockholders' Equity The Board of Directors increased the share repurchase program authorization to $500.0 million, with significant repurchases made during the first half of 2025 - On May 15, 2025, the Board of Directors authorized an additional $150.0 million increase to the share repurchase program, bringing the total aggregate authorization to $500.0 million52 - During the six months ended June 30, 2025, the company repurchased 3.9 million shares of common stock at a total cost of $81.0 million ($20.52 per share)52 - As of June 30, 2025, $237.9 million of repurchase authorization remained available under the program52 - Issued approximately 1.2 million restricted common stock units (RSUs) with an aggregate value of $23.9 million during the six months ended June 30, 202553 6. Earnings Per Share CoreCivic reported increased basic and diluted earnings per share for both the three and six months ended June 30, 2025, compared to the prior year Earnings Per Share (Three Months Ended June 30) | EPS Metric | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | | :--------- | :--------------------------------------- | :--------------------------------------- | | Basic EPS | $0.35 | $0.17 | | Diluted EPS | $0.35 | $0.17 | Earnings Per Share (Six Months Ended June 30) | EPS Metric | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--------- | :------------------------------------- | :------------------------------------- | | Basic EPS | $0.58 | $0.26 | | Diluted EPS | $0.58 | $0.25 | Weighted Average Shares (in thousands) | Weighted Average Shares (in thousands) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Basic | 109,056 | 111,630 | | Diluted | 109,812 | 112,509 | 7. Commitments and Contingencies CoreCivic is involved in several legal proceedings, including a class action lawsuit, a dispute with the City of Leavenworth, and a DOJ investigation - A class action lawsuit regarding ICE detainee labor at the Otay Mesa Detention Center is proceeding, alleging forced labor and minimum wage violations62 - The City of Leavenworth filed a lawsuit alleging a Special Use Permit is required to activate the Midwest Regional Reception Center, resulting in a temporary restraining order, which the company is appealing64 - A jury returned a $27.8 million verdict against CoreCivic in an inmate litigation matter, which is expected to be substantially covered by insurance65 - The U.S. Department of Justice commenced an investigation into conditions at the Trousdale Turner Correctional Center in August 202466 8. Income Taxes Income tax expense increased for both the three and six months ended June 30, 2025, with the company evaluating the impact of new tax reform legislation Income Tax Expense (in thousands) | Income Tax Expense (in thousands) | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Income tax expense | $13,716 | $8,625 | Income Tax Expense (in thousands) | Income Tax Expense (in thousands) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Income tax expense | $20,693 | $8,125 | - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, with various tax reform provisions effective 2025-2027; the company is evaluating its impact68 - The net income tax rate for the six months ended June 30, 2025, varied from the statutory rate primarily due to a $2.5 million tax benefit for stock-based compensation vesting69 9. Segment Reporting CoreCivic operates through three segments: Safety, Community, and Properties, with Safety contributing the largest share of net operating income and capital expenditures - CoreCivic operates through three reportable segments: CoreCivic Safety (correctional/detention facilities, transportation), CoreCivic Community (residential reentry centers, electronic monitoring), and CoreCivic Properties (leased properties)72 Segment Net Operating Income Contribution | Segment Net Operating Income Contribution | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :---------------------------------------- | :------ | :------ | :------ | :------ | | Safety | 92.1% | 92.1% | 91.9% | 89.1% | | Community | 4.7% | 5.3% | 4.9% | 5.0% | | Properties | 3.2% | 2.6% | 3.2% | 5.9% | Capital Expenditures (in thousands) | Capital Expenditures (in thousands) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------------- | :------------------------------------- | | Safety | $50,151 | $21,480 | | Community | $2,856 | $2,702 | | Properties | $698 | $727 | | Corporate and other | $5,686 | $4,436 | | Total capital expenditures | $59,391 | $29,345 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This section provides a comprehensive discussion of CoreCivic's financial condition, results of operations, and liquidity, highlighting key performance drivers, recent legislative and executive actions impacting the business, and future outlook Overview Recent executive actions and legislative changes have significantly impacted CoreCivic's operations, leading to increased demand for detention beds and substantial government funding - President Trump's executive actions (Jan 20, 2025) reversed restrictions on DOJ contracts with private detention facilities and directed DHS to increase detention of removable aliens, declaring a national emergency at the southern border8384 - The Laken Riley Act (Jan 29, 2025) mandates detention of certain non-U.S. nationals, estimated to require over 60,000 additional detention beds86 - The One Big Beautiful Bill Act (OBBBA) (July 4, 2025) appropriates $75 billion in mandatory funding to ICE, including $45 billion for detention capacity, available through September 30, 202987 - The number of people cared for under contracts with ICE increased by approximately 2,900 individuals (28.4%) from the beginning of the year through June 30, 202588 Critical Accounting Policies and Estimates No new critical accounting policies or material changes were reported, with key policies focusing on idle facilities, asset impairments, and various reserves - No newly identified critical accounting policies or material changes to existing critical accounting policies and estimates were reported during the first six months of 202591 - Key critical accounting policies include those related to idle facilities and asset impairments, self-funded insurance reserves, and legal reserves91 Results of Operations Net income significantly increased for both Q2 and H1 2025, driven by improved facility net operating income, partially offset by acquisition-related expenses - Net income increased to $38.5 million ($0.35 diluted EPS) for Q2 2025 from $19.0 million ($0.17 diluted EPS) for Q2 2024, and to $63.7 million ($0.58 diluted EPS) for H1 2025 from $28.5 million ($0.25 diluted EPS) for H1 202493 - Financial results for H1 2025 include $1.5 million of expenses associated with mergers and acquisitions, with a $0.4 million income tax benefit93 - Financial results for H1 2024 included $31.3 million of expenses associated with debt repayments and refinancing transactions, and a $0.6 million gain on sale of real estate assets93 Our Current Operations CoreCivic Safety consistently contributes the vast majority of net operating income, with Community and Properties segments making smaller contributions Segment Net Operating Income Contribution | Segment Net Operating Income Contribution | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :---------------------------------------- | :------ | :------ | :------ | :------ | | Safety | 92.1% | 92.1% | 91.9% | 89.1% | | Community | 4.7% | 5.3% | 4.9% | 5.0% | | Properties | 3.2% | 2.6% | 3.2% | 5.9% | Facility Operations Facility operations showed improved revenue and operating income per compensated man-day, leading to higher operating margins and average compensated occupancy in 2025 Facility Operating Metrics | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Revenue per compensated man-day | $106.68 | $101.67 | $104.76 | $101.25 | | Operating expenses per compensated man-day | $78.78 | $77.53 | $78.63 | $77.23 | | Operating income per compensated man-day | $27.90 | $24.14 | $26.13 | $24.02 | | Operating margin | 26.2% | 23.7% | 24.9% | 23.7% | | Average compensated occupancy | 76.8% | 74.3% | 76.9% | 74.7% | | Average compensated population | 54,026 | 51,541 | 52,735 | 51,859 | Revenue Total revenue increased by 9.8% in Q2 2025 and 3.6% in H1 2025, driven by higher federal and state contracts, increased per diem rates, and growth in average compensated population Revenue by Source (in millions) | Revenue (in millions) | Q2 2025 | Q2 2024 | $ Change | % Change | | :-------------------- | :------ | :------ | :------- | :------- | | Federal | $287.6 | $258.8 | $28.8 | 11.1% | | State | $199.6 | $189.7 | $9.9 | 5.2% | | Local | $12.3 | $12.5 | $(0.2) | (1.6%) | | Other | $34.0 | $24.7 | $9.3 | 37.7% | | Total management revenue | $533.5 | $485.7 | $47.8 | 9.8% | | Lease revenue | $4.7 | $4.4 | $0.3 | 6.8% | | Total revenue | $538.2| $490.1| $48.1 | 9.8% | Revenue by Source (in millions) | Revenue (in millions) | H1 2025 | H1 2024 | $ Change | % Change | | :-------------------- | :------ | :------ | :------- | :------- | | Federal | $528.9 | $521.2 | $7.7 | 1.5% | | State | $398.2 | $378.5 | $19.7 | 5.2% | | Local | $24.5 | $24.9 | $(0.4) | (1.6%) | | Other | $65.8 | $48.7 | $17.1 | 35.1% | | Total management revenue | $1,017.4| $973.3 | $44.1 | 4.5% | | Lease revenue | $9.3 | $17.4 | $(8.1) | (46.6%) | | Total revenue | $1,026.8| $990.8| $36.0 | 3.6% | - The increase in total management revenue was primarily due to a 4.9% (Q2) and 3.5% (H1) increase in average revenue per compensated man-day, driven by per diem increases and revenue from ICE letter agreements97 - Average daily compensated population increased by 4.8% in Q2 2025 and 1.7% in H1 2025, primarily due to increased occupancy at ICE facilities and new management contracts with the state of Montana9899 Operating Expenses Total operating expenses increased due to wage hikes, higher staffing, and facility activation costs, partially offset by Employee Retention Credits Total Operating Expenses (in thousands) | Operating Expenses (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Total Operating Expenses | $398,342| $375,735| $773,079| $753,838| - Operating expenses increased by 6.4% in Q2 2025 and 2.9% in H1 2025, primarily due to wage increases, higher staffing levels driven by federal demand, and activation efforts at new facilities105106 - The increase was partially offset by $8.3 million (Q2) and $11.0 million (H1) in Employee Retention Credits (ERCs)108 - Total expenses per compensated man-day increased to $78.78 in Q2 2025 from $77.53 in Q2 2024, driven by labor shortages, wage pressures, and incremental staffing costs109 Facility Management Contracts CoreCivic anticipates high renewal rates for its management contracts due to bed supply constraints and cost-effectiveness, with a key contract extension in New Jersey - CoreCivic expects high renewal rates for its facility management contracts due to constrained bed supply, company ownership of beds, and cost-effectiveness of services117 - The management contract at the 300-bed Elizabeth Detention Center was extended through June 30, 2025, with an RFP for up to 600 beds in New Jersey submitted116 - The Elizabeth Detention Center generated $5.7 million in revenue during Q2 2025 and $11.3 million during H1 2025116 CoreCivic Safety The Safety segment experienced significant revenue and net operating income growth, driven by per diem increases, Employee Retention Credits, and the resumption of operations at key facilities CoreCivic Safety Financial Performance (in millions) | Metric (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------- | :------ | :------ | :------ | :------ | | Total Revenue | $503.3 | $455.4 | $957.5 | $913.1 | | Facility Net Operating Income | $130.7 | $107.3 | $236.9 | $214.9 | CoreCivic Safety Operating Metrics (per compensated man-day) | CoreCivic Safety Facilities (per compensated man-day) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :---------------------------------------------------- | :------ | :------ | :------ | :------ | | Revenue | $107.90 | $102.89 | $105.87 | $102.53 | | Operating expenses | $79.88 | $78.66 | $79.68 | $78.40 | | Operating income | $28.02 | $24.23 | $26.19 | $24.13 | | Operating margin | 26.0% | 23.5% | 24.7% | 23.5% | | Average compensated occupancy | 77.5% | 75.1% | 77.6% | 75.6% | - Operating margins were positively impacted by per diem increases and Employee Retention Credits (ERCs) of $7.9 million (Q2) and $10.6 million (H1) in 2025119 - The company resumed operations at the 2,400-bed Dilley Facility in March 2025, expected to generate approximately $180 million in annual revenue when fully activated120 - Acquired the 736-bed Farmville Detention Center on July 1, 2025, expected to result in approximately $40.0 million in total annual incremental revenue125 CoreCivic Community The Community segment maintained stable revenue and improved net operating income, benefiting from increased average revenue per compensated man-day and Employee Retention Credits CoreCivic Community Financial Performance (in millions) | Metric (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------- | :------ | :------ | :------ | :------ | | Total Revenue | $30.1 | $30.3 | $59.8 | $60.2 | | Facility Net Operating Income | $6.6 | $6.2 | $12.7 | $11.9 | CoreCivic Community Operating Metrics (per compensated man-day) | CoreCivic Community Facilities (per compensated man-day) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------------------- | :------ | :------ | :------ | :------ | | Revenue | $84.12 | $81.17 | $84.57 | $79.85 | | Operating expenses | $58.18 | $58.50 | $59.55 | $57.62 | | Operating income | $25.94 | $22.67 | $25.02 | $22.23 | | Operating margin | 30.8% | 27.9% | 29.6% | 27.8% | | Average compensated occupancy | 66.4% | 62.3% | 66.6% | 62.7% | - Operating margins were positively impacted by an increase in average revenue per compensated man-day and $0.4 million in ERCs during both Q2 and H1 2025128 - The 60-bed Columbine Facility in Denver, Colorado, was classified as held for sale as of June 30, 2025, with the sale expected to close in Q3 2025131 CoreCivic Properties The Properties segment experienced a decrease in H1 2025 revenue and net operating income primarily due to a lease termination and facility transition CoreCivic Properties Financial Performance (in millions) | Metric (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------- | :------ | :------ | :------ | :------ | | Total Revenue | $4.7 | $4.4 | $9.3 | $17.5 | | Facility Net Operating Income | $2.5 | $1.0 | $4.1 | $10.2 | - The decrease in H1 2025 revenue and facility net operating income was primarily due to the termination of the California City Facility lease agreement on March 31, 2024, and its subsequent transition to the Safety segment for ICE operations133 General and administrative expenses General and administrative expenses increased due to higher corporate salaries, benefits, incentive compensation, and acquisition-related costs General and Administrative Expenses (in millions) | G&A Expenses (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------- | :------ | :------ | :------ | :------ | | General and administrative expenses | $43.9 | $33.9 | $79.9 | $70.4 | - The increase was primarily due to higher corporate salaries and benefits, including incentive-based compensation, and $1.5 million in expenses related to the Farmville Detention Center acquisition in Q2 2025134 Depreciation and amortization Depreciation and amortization expense decreased due to certain assets becoming fully depreciated and increased investments in SaaS technology Depreciation and Amortization Expense (in millions) | Depreciation and Amortization (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Depreciation and amortization expense | $31.1 | $32.1 | $61.6 | $63.9 | - The decrease was primarily due to certain assets becoming fully depreciated and increased investments in 'software as a service' (SaaS) technology135 Interest expense, net and expenses associated with debt repayments and refinancing transactions Net interest expense decreased due to lower average outstanding debt and variable interest rates, with H1 2024 including significant debt refinancing charges Net Interest Expense (in millions) | Interest Expense (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------- | :------ | :------ | :------ | :------ | | Net Interest Expense | $(12.5) | $(17.1) | $(27.8) | $(35.7) | - Net interest expense decreased due to lower average outstanding debt balances and a decrease in variable interest rates136 - H1 2024 included $31.3 million in charges associated with the cash tender offer and redemption of senior notes137 - Interest income for H1 2025 included $3.7 million collected from the IRS on Employee Retention Credits136 Gain on sale of real estate assets, net No gain on sale of real estate assets was recognized in H1 2025, compared to a $0.6 million gain in H1 2024 from facility and land sales Gain on Sale of Real Estate Assets (in millions) | Gain on Sale of Real Estate Assets (in millions) | H1 2025 | H1 2024 | | :----------------------------------------------- | :------ | :------ | | Gain on sale of real estate assets, net | $0 | $0.6 | - The H1 2024 gain included $0.5 million from the sale of the Dahlia Facility and $0.1 million from an unused land parcel in Texas139 Income tax expense Income tax expense increased in both Q2 and H1 2025, with H1 2025 benefiting from an acquisition-related tax benefit and H1 2024 from debt refinancing benefits Income Tax Expense (in millions) | Income Tax Expense (in millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------- | :------ | :------ | :------ | :------ | | Income tax expense | $13.7 | $8.6 | $20.7 | $8.1 | - Income tax expense for H1 2025 was net of a $0.4 million tax benefit associated with the Farmville Detention Center acquisition140 - Income tax expense for H1 2024 was net of a $9.6 million tax benefit for expenses associated with debt repayments and refinancing transactions and the gain on sale of real estate assets140 Liquidity and Capital Resources CoreCivic maintains strong liquidity with cash on hand and available credit, primarily funding working capital, capital expenditures, and debt service, with no major debt maturities until 2027 - CoreCivic's principal capital requirements are for working capital, capital expenditures, and debt service payments, with potential use of free cash flow for debt repurchases or shareholder returns142 - As of June 30, 2025, the company had $130.5 million in cash on hand and $216.4 million available under its Revolving Credit Facility148 - The company expects to meet cash expenditure requirements using cash on hand, cash flows from operations, and the Revolving Credit Facility, with no debt maturities until October 2027148 Share Repurchase Program The Board of Directors increased the share repurchase program authorization to $500.0 million, with significant repurchases made during the first half of 2025 - The Board of Directors increased the share repurchase program authorization to $500.0 million on May 15, 2025143 - During the six months ended June 30, 2025, CoreCivic repurchased 3.9 million shares for $81.0 million ($20.52 per share)143 - As of June 30, 2025, $237.9 million of repurchase authorization remained available144 Growth Opportunities CoreCivic is pursuing growth through strategic acquisitions and significant capital expenditures for facility activations and transportation services - CoreCivic acquired the 736-bed Farmville Detention Center for $67.0 million on July 1, 2025, expected to generate approximately $40.0 million in annual incremental revenue145 - Internally approved $70.0 million to $75.0 million in capital expenditures for activating previously idled facilities and for additional transportation services146 - Through June 30, 2025, $30.7 million of capital expenditures related to facility activations and transportation vehicles have been invested146 Debt CoreCivic's total debt outstanding was $1.03 billion as of June 30, 2025, with a weighted average effective interest rate of 7.3% and no debt maturities until October 2027 - As of June 30, 2025, total debt outstanding was $1,031.4 million, with a weighted average effective interest rate of 7.3% and a weighted average maturity of 4.8 years150 - Debt includes $238.5 million of 4.75% Senior Notes, $500.0 million of 8.25% Senior Notes, $137.3 million of Kansas Notes, $115.6 million Term Loan, and $40.0 million Revolving Credit Facility150 - No debt maturities are scheduled until October 2027150 Operating Activities Net cash provided by operating activities increased in H1 2025, primarily due to a favorable increase in facility net operating income Net Cash Provided by Operating Activities (in millions) | Cash Flow from Operating Activities (in millions) | H1 2025 | H1 2024 | | :------------------------------------------------ | :------ | :------ | | Net cash provided by operating activities | $141.2 | $138.4 | - Cash provided by operating activities was favorably impacted by a $16.7 million increase in facility net operating income in H1 2025152 Investing Activities Net cash used in investing activities significantly increased in H1 2025, driven by capital expenditures for facility development, maintenance, IT, and activations Net Cash Used in Investing Activities (in millions) | Cash Flow from Investing Activities (in millions) | H1 2025 | H1 2024 | | :------------------------------------------------ | :------ | :------ | | Net cash flow used in investing activities | $(60.1) | $(21.4) | - H1 2025 investing activities were primarily attributable to $2.6 million for facility development/expansions and $58.3 million for facility maintenance/IT capital expenditures, including $30.7 million for facility activations and transportation vehicles153 Financing Activities Net cash used in financing activities decreased significantly in H1 2025, primarily due to lower debt redemption costs compared to the prior year, despite increased share repurchases Net Cash Used in Financing Activities (in millions) | Cash Flow from Financing Activities (in millions) | H1 2025 | H1 2024 | | :------------------------------------------------ | :------ | :------ | | Net cash flow used in financing activities | $(60.3) | $(178.3)|\ | Purchase and retirement of common stock | $(93.9) | $(69.2) | - H1 2025 financing activities included $93.9 million for share repurchases and $6.0 million for scheduled debt repayments, partially funded by $40.0 million of net borrowings under the Revolving Credit Facility154 - H1 2024 financing activities included $593.1 million for debt redemption and $34.9 million for related costs, partially offset by $500.0 million from new 8.25% Senior Notes issuance155 Supplemental Guarantor Information All domestic subsidiaries unconditionally guarantee the Senior Notes, with no material restrictions on fund transfers or asset access, subject to customary debt covenants - All domestic subsidiaries of CoreCivic provide full and unconditional guarantees of the Senior Notes, which are joint and several obligations156 - As of June 30, 2025, there were no material restrictions on CoreCivic's ability to obtain funds or transfer assets from its subsidiary guarantors157 - The indentures governing the Senior Notes contain customary covenants restricting liens, mergers, asset transfers, and limiting indebtedness and restricted payments158 Funds from Operations Funds From Operations (FFO) and Normalized FFO, non-GAAP measures, significantly increased in both Q2 and H1 2025, reflecting improved operating performance - Funds From Operations (FFO) and Normalized FFO are non-GAAP measures used to evaluate the operating performance of real estate companies161162 Funds From Operations (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Net income | $38,543 | $18,954 | $63,656 | $28,497 | | Funds From Operations | $63,463 | $43,797 | $113,174| $77,734 | | Normalized Funds From Operations | $64,574 | $46,594 | $114,285| $99,237 | Material Cash Requirements CoreCivic's total contractual cash obligations amount to over $1.6 billion, primarily comprising long-term debt, interest payments, and lease commitments Contractual Cash Obligations (in thousands) | Contractual Cash Obligations (in thousands) | Total | | :------------------------------------------ | :---- | | Long-term debt | $1,031,405 | | Interest on senior and mortgage notes | $245,169 | | Contractual facility developments and other commitments | $2,985 | | Dilley Facility lease | $238,594 | | Acquisition of Farmville Detention Center | $67,000 | | Other leases | $27,882 | | Total contractual cash obligations | $1,613,035 | - As of June 30, 2025, CoreCivic had $18.6 million of letters of credit outstanding, primarily to support workers' compensation and debt service reserve requirements167 Inflation Inflationary indexing in many contracts may mitigate adverse impacts, but significant cost increases could still affect financial results - Many of CoreCivic's contracts include provisions for inflationary indexing, which may mitigate the adverse impact of inflation on net income169 - Substantial increases in personnel costs, workers' compensation, utilities, food, and medical expenses could adversely impact results if they increase faster than per diem or fixed rates169 Seasonality and Quarterly Results Quarterly financial results are influenced by the number of calendar days, timing of unemployment taxes, government funding, and new facility operations - Financial results are impacted by the number of calendar days in a fiscal quarter, with Q3 and Q4 typically having more days than Q1 and Q2170 - Significant portions of unemployment taxes are recognized during the first quarter170 - Quarterly results are also affected by government funding initiatives, acquisitions, and the timing of new facility openings or contract commencements170 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. CoreCivic's primary market risk is exposure to changes in U.S. interest rates, particularly affecting its variable-rate Bank Credit Facility. A hypothetical 100 basis point change in interest rates would impact interest expense by $0.3 million (Q2) and $0.6 million (H1) for 2025. Fixed-rate debt is not materially affected - Primary market risk exposure is to changes in U.S. interest rates, affecting the variable-rate Bank Credit Facility171 - A hypothetical 100 basis point increase or decrease in interest rates would change interest expense by $0.3 million for Q2 2025 and $0.6 million for H1 2025171 - Fixed-rate Senior Notes and Kansas Notes are not materially impacted by hypothetical interest rate changes172 ITEM 4. CONTROLS AND PROCEDURES. CoreCivic's senior management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting of information required under the Exchange Act. No material changes to internal control over financial reporting occurred during the period - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025174 - No material changes in internal control over financial reporting occurred during the period covered by the report174 PART II – OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. This section incorporates by reference the detailed discussion of legal proceedings from Note 7 to the financial statements, covering various claims and litigation the company is involved in - Information on legal proceedings is incorporated by reference from Note 7 to the financial statements176 ITEM 1A. RISK FACTORS. There have been no material changes to the risk factors previously disclosed in CoreCivic's 2024 Form 10-K - No material changes in risk factors were identified from those previously disclosed in the 2024 Form 10-K177 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. CoreCivic repurchased approximately 2.01 million shares of common stock for $43.2 million during Q2 2025 under its share repurchase program, which was increased to a total authorization of $500.0 million in May 2025 Share Repurchase Activity (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | | :-------------------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 162,199 | $19.51 | $127,851,499 | | May 1, 2025 - May 31, 2025 | 726,000 | $22.20 | $261,736,254 | | June 1, 2025 - June 30, 2025 | 1,124,400 | $21.24 | $237,852,297 | | Total | 2,012,599 | $21.45 | $237,852,297 | - On May 15, 2025, the Board of Directors authorized an additional $150.0 million increase to the share repurchase program, raising the total aggregate authorization to $500.0 million178 ITEM 3. DEFAULTS UPON SENIOR SECURITIES. CoreCivic reported no defaults upon senior securities during the period - No defaults upon senior securities were reported179 ITEM 4. MINE SAFETY DISCLOSURES. CoreCivic reported no mine safety disclosures - No mine safety disclosures were reported180 ITEM 5. OTHER INFORMATION. No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025181 ITEM 6. EXHIBITS. This section lists the exhibits filed with the Form 10-Q, including certifications, guarantor subsidiaries list, and Inline XBRL taxonomy documents - Exhibits include certifications from the CEO and CFO (31.1, 31.2, 32.1, 32.2), a list of Guarantor Subsidiaries (22.1), and Inline XBRL documents182 SIGNATURES The report was signed on August 7, 2025, by the Chief Executive Officer and the Executive Vice President, Chief Financial Officer, and Principal Accounting Officer - The report was signed on August 7, 2025, by Damon T. Hininger, Chief Executive Officer, and David M. Garfinkle, Executive Vice President, Chief Financial Officer, and Principal Accounting Officer188