GEO

Forward-Looking Information This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking” statements are any statements that are not based on historical information. Statements other than statements of historical facts included in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, legal proceedings and potential steps to address our future debt maturities are “forward-looking” statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” or “continue” or the negative of such words or variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements and we can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, or “cautionary statements,” include, but are not limited to: •any adverse impact on our financial results caused by the most recent and any future federal government shutdown; •our ability to timely build and/or open facilities as planned, successfully manage such facilities and successfully integrate such facilities into our operations without substantial additional costs; •our ability to estimate the government’s level of utilization of public-private partnerships for secure services and the impact of any modifications or reductions by our government customers of their utilization of public-private partnerships; •our ability to accurately project the size and growth of public-private partnerships for secure services in the U.S. and internationally and our ability to capitalize on opportunities for public-private partnerships; •our ability to successfully respond to any challenges or concerns that our government customers may raise regarding their use of public-private partnerships for secure services, including finding other government customers or alternative uses for facilities where a government customer has discontinued or announced that a contract with us will be discontinued; •the impact of adopted or proposed executive action or legislation aimed at limiting public-private partnerships for secure facilities, processing centers and community reentry centers or limiting or restricting the business and operations of financial institutions or others who do business with us; •our ability to successfully respond to delays encountered by states pursuing public-private partnerships for secure services and cost savings initiatives implemented by a number of states; •our ability to activate the inactive beds at our idle facilities; •our ability to maintain or increase occupancy rates at our facilities and the impact of fluctuations in occupancy levels or participants in ISAP on our revenues and profitability; •our ability to expand, diversify and grow our secure services, reentry, community-based services, monitoring services, evidence-based supervision and treatment programs and secure transportation services businesses; •our ability to win management contracts for which we have submitted proposals, retain existing management contracts, prevail in any challenge or protest involving the award of a management contract and meet any performance standards required by such management contracts; •our ability to raise new project development capital given the often short-term nature of the customers’ commitment to use newly developed facilities; •our ability to develop long-term earnings visibility; •our ability to successfully conduct our operations in the United Kingdom and South Africa through joint ventures; •the instability of foreign exchange rates, exposing us to currency risks in Australia, the United Kingdom, and South Africa, or other countries in which we may choose to conduct our business; •an increase in unreimbursed labor rates; •our exposure to rising medical costs; 32 •our ability to manage costs and expenses relating to ongoing litigation arising from our operations; •the risks associated with the U.S. Supreme Court agreeing to hear our appeal in the Nwauzor case and our ability to prevail on the merits, our company being required to record an additional accrual for the judgments in the future, and our ability to defend similar other pending litigation and the effect such litigation may have on our company; •our ability to accurately estimate on an annual basis, loss reserves related to general liability, workers’ compensation and automobile liability claims; •our ability to fulfill our debt service obligations and its impact on our liquidity; •our ability to deleverage and repay, refinance or otherwise address our debt maturities in an amount or on the timeline we expect, or at all; •despite current indebtedness levels, we may still incur more indebtedness, which could further exacerbate the risks relating to our indebtedness; •the covenants in the indentures governing the Secured Notes and the Unsecured Notes and the Credit Agreement impose significant operating and financial restrictions which may adversely affect our ability to operate our business; •servicing our indebtedness will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control and we may not be able to generate the cash required to service our indebtedness; •because portions of our senior indebtedness have floating interest rates, an increase in interest rates would adversely affect cash flows; •we depend on distributions from our subsidiaries to make payments on our indebtedness and these distributions may not be made; •we may not be able to satisfy our repurchase obligations in the event of a change of control because the terms of our indebtedness or lack of funds may prevent us from doing so; •the Unsecured Notes and the guarantees on the Unsecured Notes will be effectively subordinated to our and the guarantors' senior secured indebtedness and structurally subordinated to the indebtedness of our subsidiaries that do not guarantee the Unsecured Notes; •the value of the collateral may not be sufficient to satisfy our obligations under the Secured Notes; •our ability to identify and successfully complete any potential acquisitions of assets and businesses or sales of Company-owned assets and businesses, including the potential sale of multiple facilities to ICE, on commercially advantageous terms on a timely basis, or at all; •from time to time, we may not have a management contract with a client to operate existing beds at a facility or new beds at a facility that we are expanding, and we cannot assure you that such a contract will be obtained. Failure to obtain a management contract for these beds will subject us to carrying costs with no corresponding management revenue; •negative conditions in the capital markets could prevent us from obtaining future financing on desirable terms, which could materially harm our business; •we are subject to the loss of our facility management contracts, due to executive orders, terminations, non-renewals or competitive re-bids, which could adversely affect our results of operations and liquidity, including our ability to secure new facility management contracts from other government customers; •our growth depends on our ability to secure contracts to develop and manage new secure facilities, processing centers and community-based facilities and to secure contracts to provide electronic monitoring services, community-based reentry services and monitoring and supervision services, the demand for which is outside our control; •we may not be able to meet state requirements for capital investment or locate land for the development of new facilities, which could adversely affect our results of operations and future growth; •we partner with a limited number of governmental customers who account for a significant portion of our revenues. The loss of, or a significant decrease in revenues from, these customers could seriously harm our financial condition and results of operations; •efforts to reduce the U.S. federal deficit could adversely affect our liquidity, results of operations and financial condition; •State budgetary constraints may have a material adverse impact on us; •competition for contracts may adversely affect the profitability of our business; 33 •we are dependent on government appropriations, which may not be made on a timely basis or at all and may be adversely impacted by budgetary constraints at the federal, state, local and foreign government levels; •public and political resistance to the use of public-private partnerships for secure facilities, electronic monitoring and supervision as alternatives to detention, processing centers and community reentry centers could result in our inability to obtain new contracts or the loss of existing contracts, impact our ability to obtain or refinance debt financing or enter into commercial arrangements, which could have a material adverse effect on our business, financial condition, results of operations and the market price of our securities; •adverse publicity may negatively impact our ability to retain existing contracts and obtain new contracts; •we may incur significant start-up and operating costs on new contracts before receiving related revenues, which may impact our cash flows and may not be recouped; •failure to comply with extensive government regulation and applicable contractual requirements could have a material adverse effect on our business, financial condition or results of operations; •we may face community opposition to facility locations, which may adversely affect our ability to obtain new contracts; •our business operations expose us to various liabilities for which we may not have adequate insurance, including legal claims and proceedings, and may have a material adverse effect on our business, financial condition or results of operations; •we may not be able to obtain or maintain the insurance levels required by our government contracts; •our exposure to rising general insurance costs; •natural disasters, pandemic outbreaks, global political events and other serious catastrophic events could disrupt operations and otherwise materially adversely affect our business and financial condition; •our international operations expose us to risks that could materially adversely affect our financial condition and results of operations; •we conduct certain of our operations through joint ventures or consortiums, which may lead to disagreements with our joint venture partners or business partners and adversely affect our interest in the joint ventures or consortiums; •we are dependent upon our senior management and our ability to attract and retain sufficient qualified personnel; •our profitability may be materially adversely affected by inflation; •various risks associated with the ownership of real estate may increase costs, expose us to uninsured losses and adversely affect our financial condition and results of operations; •risks related to facility construction and development activities may increase our costs related to such activities; •the rising cost and increasing difficulty of obtaining adequate levels of surety credit on favorable terms could adversely affect our operating results; •adverse developments in our relationship with our employees could adversely affect our business, financial condition or results of operations; •the interruption, delay or failure of the provision of our services or information systems could adversely affect our business; •the failure to comply with data privacy, security and exchange legal requirements could have a material adverse impact on our business, financial position, results of operations, cash flows and reputation; •technological changes could cause our electronic monitoring products and technology, including our BI VeriWatch™ wrist-worn device, to become obsolete or require the redesign of our electronic monitoring products, which could have a material adverse effect on our business; •any negative changes in the level of acceptance of or resistance to the use of electronic monitoring products, including our BI VeriWatch™ wrist-worn device, and services by governmental customers could have a material adverse effect on our business, financial condition and results of operations; •we depend on a limited number of third parties to manufacture and supply quality infrastructure components for our electronic monitoring products. If our suppliers cannot provide the components or services we require and with such quality and at such cost as we expect, our ability to market and sell our electronic monitoring products and services could be harmed; •an inability to acquire, protect or maintain our intellectual property and patents in the electronic monitoring space could harm our ability to compete or grow; 34 •our electronic monitoring products could infringe on the intellectual property rights of others, which may lead to litigation that could itself be costly, could result in the payment of substantial damages or royalties, and/or prevent us from using technology that is essential to our products; •we license intellectual property rights in the electronic monitoring space, including patents, from third party owners. If such owners do not properly maintain or enforce the intellectual property underlying such licenses, our competitive position and business prospects could be harmed. Our licensors may also seek to terminate our license; •we may be subject to costly product liability claims from the use of our electronic monitoring products, which could damage our reputation, impair the marketability of our products and services and force us to pay costs and damages that may not be covered by adequate insurance; •as a result of our acquisitions, we have recorded and will continue to record a significant amount of goodwill and other intangible assets. In the future, our goodwill or other intangible assets may become impaired, which could result in material non-cash charges to our results of operations; •federal, state and local tax rules can adversely affect our results of operations and financial position; •we are subject to risks related to corporate social responsibility; •the market price of our common stock may vary substantially; •expectations about growth in the utilization of detention beds by the federal government may not be realized, which could negatively impact our stock price; •future sales of shares of our common stock or securities convertible into common stock could adversely affect the market price of our common stock and may be dilutive to current shareholders; •our ability to execute on the Share Repurchase Program on the anticipated timeline; •various anti-takeover protections applicable to us may make an acquisition of us more difficult and reduce the market value of our common stock; •failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our business and the trading price of our common stock; •we may issue additional debt securities that could limit our operating flexibility and negatively affect the value of our common stock; •a “short squeeze” due to a sudden increase in demand for shares of our common stock that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in shares of our common stock; •failure to comply with anti-bribery and anti-corruption laws could subject us to penalties and other adverse consequences; and •other factors contained in our filings with the SEC, including, but not limited to, those detailed in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed with the SEC. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q. Introduction The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors including, but not limited to, those described above under “Forward-Looking Information”, and under “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. This discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. We specialize in the ownership, leasing and management of secure facilities, processing centers and reentry facilities and the provision of community-based services in the United States, Australia and South Africa. We own, lease and operate a broad range of secure facilities including maximum, medium and minimum-security facilities, processing centers, as well as community-based reentry 35 facilities. We develop new facilities based on contract awards, using our project development expertise and experience to design, construct and finance what we believe are state-of-the-art facilities. We provide innovative technologies, industry-leading monitoring services, and evidence-based supervision and treatment programs for community based programs. We also provide secure transportation services domestically and in the United Kingdom through our joint venture GEOAmey. At June 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. We provide a diversified scope of services on behalf of our government agency partners: •our secure facility management services involve the provision of security, administrative, rehabilitation, education, and food services at secure services facilities; •our reentry services involve supervision of individuals in community-based programs and re-entry centers and the provision of temporary housing, programming, employment assistance and other services with the intention of the successful reintegration of residents into the community; •we provide comprehensive electronic monitoring and supervision services; •we develop new facilities, using our project development experience to design, construct and finance what we believe are state-of-the-art facilities; •we provide secure transportation services; and •our services are provided at facilities which we either own, lease or are owned by our government agency partners. For the six months ended June 30, 2026 and 2025, we had consolidated revenues of $1,437.3 million and $1,241.5 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 91% including 68,245 active beds and excluding 6,646 idle beds, which includes those being marketed to potential customers, for the six months ended June 30, 2026, and approximately 89% including 69,793 active beds and excluding 6,785 idle beds, which includes those being marketed to potential customers, for the six months ended June 30, 2025. Reference is made to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 25, 2026, for further discussion and analysis of information pertaining to our financial condition and results of operations as of and for the year ended December 31, 2025. Contract Developments On July 29, 2026, we announced that we have entered into a five-year support services contract with U.S. Immigration and Customs Enforcement (“ICE”) for the activation of a federal immigration processing center at the company-owned 1,320-bed Rivers Facility (the “Rivers Facility”) in Winton, North Carolina. Our support services are expected to include the exclusive use of the Rivers Facility by ICE, along with security, maintenance, and food services, as well as access to recreational amenities, medical care, and legal counsel. On July 13, 2026, we announced that we have entered into a five-year support services contract with ICE for the activation of a federal immigration processing center at the 1,188-bed Big Horn Facility (the “Big Horn Facility”) in Hudson, Colorado. We have entered into a lease agreement with the Big Horn Facility owner. Our support services are expected to include the exclusive use of the Big Horn Facility by ICE, along with security, maintenance, and food services, as well as access to recreational amenities, medical care, and legal counsel. Business Segments We conduct our business through four reportable business segments: our U.S. Secure Services segment; our Electronic Monitoring and Supervision Services segment; our Reentry Services segment and our International Services segment. We have identified these four reportable segments to reflect our current view that we operate four distinct business lines, each of which constitutes a material part of our overall business. Our U.S. Secure Services segment primarily encompasses our U.S.-based public-private partnership secure services business. Our Electronic Monitoring and Supervision Services segment, which conducts its services in the U.S., consists of our electronic monitoring and supervision services. Our Reentry Services segment consists of various community-based and reentry services. Our 36 International Services segment primarily consists of our public-private partnership secure services operations in Australia and South Africa. Idle Facilities We are currently marketing (or awaiting activation) 6,646 vacant beds at eight idle facilities to potential customers. The carrying values of these idle facilities totaled $188.1 million as of June 30, 2026, excluding equipment and other assets that can be easily transferred for use at other facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion. Critical Accounting Estimates The accompanying unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates based on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. During the six months ended June 30, 2026, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our significant accounting policies is contained in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the notes to our unaudited consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. Comparison of Second Quarter 2026 and Second Quarter 2025 Revenues 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) U.S. Secure Services $ 520,472 71.1 % $ 441,665 69.4 % $ 78,807 17.8 % Electronic Monitoring and Supervision Services 76,160 10.4 % 78,925 12.4 % (2,765 ) (3.5 )% Reentry Services 72,433 9.9 % 71,310 11.2 % 1,123 1.6 % International Services 63,007 8.6 % 44,269 7.0 % 18,738 42.3 % Total $ 732,072 100.0 % $ 636,169 100.0 % $ 95,903 15.1 % U.S. Secure Services Revenues for U.S. Secure Services increased by $78.8 million in the second quarter ended June 30, 2026 (the "Second Quarter 2026") compared to the second quarter ended June 30, 2025 (the "Second Quarter 2025") due to increases of $60.6 million related to the activations of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center and new transportation contracts. There were also aggregate net increases of $35.0 million due to increases in occupancies, transportation, rates and/or per diem amounts in connection with contract modifications. Partially offsetting these increases were decreases of approximately $16.8 million related to contract terminations. The number of compensated mandays in U.S. Secure Services facilities was approximately 4.4 million in Second Quarter 2026 compared to approximately 4.2 million in Second Quarter 2025. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Secure Services facilities was approximately 91% and 88% of capacity in Second Quarter 2026 and Second Quarter 2025, respectively, excluding idle facilities. 37 Electronic Monitoring and Supervision Services Revenues for Electronic Monitoring and Supervision Services decreased in Second Quarter 2026 compared to Second Quarter 2025 primarily due to a decrease in average participant counts under the Intensive Supervision and Appearance Program ("ISAP"). Reentry Services Revenues for Reentry Services increased by $1.1 million in Second Quarter 2026 compared to Second Quarter 2025 primarily due to aggregate net increases of $3.5 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals due to new day reporting center contracts. These increases were partially offset by decreases due to contract terminations of $2.4 million. International Services Revenues for International Services increased by $18.7 million in Second Quarter 2026 compared to Second Quarter 2025. We experienced a net increase of $12.6 million primarily due to new health care contracts and increased populations at our Australian subsidiary. We also experienced an increase due to foreign exchange rate fluctuations of $6.1 million. Operating Expenses 2026 % of Segment Revenues 2025 % of Segment Revenues $ Change % Change (Dollars in thousands) U.S. Secure Services $ 382,629 73.5 % $ 342,305 77.5 % $ 40,324 11.8 % Electronic Monitoring and Supervision Services 39,034 51.3 % 40,123 50.8 % (1,089 ) (2.7 )% Reentry Services 53,399 73.7 % 52,242 73.3 % 1,157 2.2 % International Services 55,641 88.3 % 40,548 91.6 % 15,093 37.2 % Total $ 530,703 72.5 % $ 475,218 74.7 % $ 55,485 11.7 % U.S. Secure Services Operating expenses for U.S. Secure Services increased by $40.3 million in Second Quarter 2026 compared to Second Quarter 2025 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and additional staffing and training costs of $24.2 million. We also experienced an increase of approximately $29.6 million related to the activations of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center and new transportation contracts. Partially offsetting these increases were decreases of approximately $13.5 million related to contract terminations. Electronic Monitoring and Supervision Services Operating expenses for Electronic Monitoring and Supervision Services decreased in Second Quarter 2026 compared to Second Quarter 2025 primarily due to a decrease in average participant counts under the Intensive Supervision and Appearance Program ("ISAP"). Reentry Services Operating expenses for Reentry Services increased by $1.2 million during Second Quarter 2026 compared to Second Quarter 2025. We experienced an aggregate net increase of $3.0 million due to increased programming needs and referrals due to new day reporting center contracts which was partially offset by a decrease of $1.8 million due to contract terminations. International Services Operating expenses for International Services increased in Second Quarter 2026 compared to Second Quarter 2025 by $15.1 million. We experienced an increase of $9.7 million primarily due to new health care contracts and increased populations at our Australian subsidiary. We also experienced an increase of $5.4 million related to foreign exchange rate fluctuations. 38 Depreciation and Amortization 2026 % of Segment Revenue 2025 % of Segment Revenue $ Change % Change (Dollars in thousands) U.S. Secure Services $ 24,430 4.7 % $ 22,444 5.1 % $ 1,986 8.8 % Electronic Monitoring and Supervision Services 6,029 7.9 % 6,283 8.0 % (254 ) (4.0 )% Reentry Services 3,042 4.2 % 3,427 4.8 % (385 ) (11.2 )% International Services 695 1.1 % 578 1.3 % 117 20.2 % Total $ 34,196 4.7 % $ 32,732 5.1 % $ 1,464 4.5 % U.S. Secure Services U.S. Secure Services depreciation and amortization expense increased in Second Quarter 2026 compared to Second Quarter 2025 primarily due to renovations at certain of our company-owned and leased facilities. Electronic Monitoring and Supervision Services Electronic Monitoring and Supervision Services depreciation and amortization expense decreased slightly in Second Quarter 2026 compared to Second Quarter 2025 primarily due to certain assets becoming fully depreciated. Reentry Services Reentry Services depreciation and amortization expense decreased slightly in Second Quarter 2026 compared to Second Quarter 2025 primarily due to certain assets becoming fully depreciated. International Services International Services depreciation and amortization expense increased slightly in Second Quarter 2026 compared to Second Quarter 2025 primarily due to certain asset additions. General and Administrative Expenses 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) General and Administrative Expenses $ 65,470 8.9 % $ 56,246 8.8 % $ 9,224 16.4 % General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes, corporate management salaries and benefits, professional fees and other administrative expenses. General and administrative expenses increased by $9.2 million in Second Quarter 2026 compared to Second Quarter 2025 primarily due to higher employee related benefit costs and support for the revenue growth from our new contract awards. Non-Operating Expenses Interest Income and Interest Expense 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Interest Income $ 3,228 0.4 % $ 2,466 0.4 % $ 762 30.9 % Interest Expense $ 38,556 5.3 % $ 41,907 6.6 % $ (3,351 ) (8.0 )% Interest income increased by $0.8 million in Second Quarter 2026 compared to Second Quarter 2025 primarily due to higher cash balances on hand internationally and the effect of foreign exchange rates. Interest expense decreased by $3.4 million in Second Quarter 2026 compared to Second 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 39 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. Loss on Extinguishment of Debt 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Loss on Extinguishment of Debt $ — (— )% $ 595 0.1 % $ (595 ) (100.0 )% During Second Quarter 2025, we made a mandatory quarterly payment on our Term Loan. In connection with the repayment, we wrote off the related deferred loan costs. Loss on Asset Divestitures/Impairment 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Loss on Asset Divestitures/Impairment $ 673 0.1 % $ — (— )% $ 673 100.0 % In Second Quarter 2026, we received a sale contract for two buildings in Pennsylvania and a sale contract for a parcel of land located in Illinois that were less than their carrying values which resulted in an impairment charge. We also experienced a loss on assets divested in connection with certain closed day reporting centers. Other Income 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Other Income $ — (— )% $ 5,514 0.9 % $ (5,514 ) (100.0 )% In Second Quarter 2025, we received an aggregate of $5.5 million under the Employee Retention Tax Credit provisions of the CARES Act. This amount was recognized as other income in the consolidated financial statements. Income Tax Provision 2026 Effective Rate 2025 Effective Rate $ Change % Change (Dollars in thousands) Provision for Income Taxes $ 18,878 28.7 % $ 10,554 28.2 % $ 8,324 78.9 % The provision for income taxes increased in Second Quarter 2026 compared to Second Quarter 2025 principally due to an increase in pre-tax income. In Second Quarter 2026, there was a $0.5 million as compared to a $0.3 million net discrete tax benefit in Second Quarter 2025. Included in the discrete tax benefit in Second Quarter 2026 was $0.4 million as compared to a $0.3 million discrete tax benefit in Second Quarter 2025. We estimate our 2026 annual effective tax rate to be in the range of approximately 29% to 31%, exclusive of any discrete items. Equity in Earnings of Affiliates, net of Income Tax Provision 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Equity in Earnings of Affiliates, net of Income Tax Provision $ 636 0.1 % $ 2,177 0.3 % $ (1,541 ) (70.8 )% Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased slightly during Second Quarter 2026 compared to Second Quarter 2025 primarily due to less favorable performance at SACS. 40 Comparison of Six Months 2026 and Six Months 2025 Revenues 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) U.S. Secure Services $ 1,023,130 71.2 % $ 847,381 68.3 % $ 175,749 20.7 % Electronic Monitoring and Supervision Services 150,404 10.5 % 156,638 12.6 % (6,234 ) (4.0 )% Reentry Services 143,671 10.0 % 141,686 11.4 % 1,985 1.4 % International Services 120,080 8.3 % 95,808 7.7 % 24,272 25.3 % Total $ 1,437,285 100.0 % $ 1,241,513 100.0 % $ 195,772 15.8 % U.S. Secure Services Revenues for U.S. Secure Services increased by $175.7 million in the six months ended June 30, 2026 (the "Six Months 2026") compared to the six months ended June 30, 2025 (the "Six Months 2025") due to increases of $144.0 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 $70.3 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 $38.6 million related to contract terminations. The number of compensated mandays in U.S. Secure Services facilities was approximately 8.9 million in Six Months 2026 compared to approximately 8.3 million in Six Months 2025. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Secure Services facilities was approximately 91% and 88% of capacity in Six Months 2026 and Six Months 2025, respectively, excluding idle facilities. Electronic Monitoring and Supervision Services Revenues for Electronic Monitoring and Supervision Services decreased in Six Months 2026 compared to Six Months 2025 primarily due to a decrease in average participant counts under the Intensive Supervision and Appearance Program ("ISAP"). Reentry Services Revenues for Reentry Services increased by $2.0 million in Six Months 2026 compared to Six Months 2025 primarily due to aggregate net increases of $6.0 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 $4.0 million. International Services Revenues for International Services increased by $24.3 million in Six Months 2026 compared to Six Months 2025. We experienced a net increase of $12.5 million primarily due to new health care contracts and increased populations at our Australian subsidiary. We also experienced an increase due to foreign exchange rate fluctuations of $11.8 million. Operating Expenses 2026 % of Segment Revenues 2025 % of Segment Revenues $ Change % Change (Dollars in thousands) U.S. Secure Services $ 760,514 74.3 % $ 656,515 77.5 % $ 103,999 15.8 % Electronic Monitoring and Supervision Services 80,958 53.8 % 81,985 52.3 % (1,027 ) (1.3 )% Reentry Services 106,840 74.4 % 104,074 73.5 % 2,766 2.7 % International Services 103,900 86.5 % 87,119 90.9 % 16,781 19.3 % Total $ 1,052,212 73.2 % $ 929,693 74.9 % $ 122,519 13.2 % U.S. Secure Services Operating expenses for U.S. Secure Services increased by $104.0 million in Six Months 2026 compared to Six Months 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 $78.1 million. We also experienced an increase of approximately $59.6 million related to the 41 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 $33.7 million related to contract terminations. Electronic Monitoring and Supervision Services Operating expenses for Electronic Monitoring and Supervision Services decreased in Six Months 2026 compared to Six Months 2025 primarily due to a decrease in average participant counts under the Intensive Supervision and Appearance Program ("ISAP"). Reentry Services Operating expenses for Reentry Services increased by $2.8 million during Six Months 2026 compared to Six Months 2025. We experienced an aggregate net increase of $5.9 million due to increased programming needs and referrals due to new day reporting center contracts which was partially offset by a decrease of $3.1 million due to contract terminations. International Services Operating expenses for International Services increased in Six Months 2026 compared to Six Months 2025 by $16.8 million. We experienced an increase of $6.6 million primarily due to new health care contracts and increased populations at our Australian subsidiary. We also experienced an increase of $10.2 million related to foreign exchange rate fluctuations. Depreciation and Amortization 2026 % of Segment Revenue 2025 % of Segment Revenue $ Change % Change (Dollars in thousands) U.S. Secure Services $ 47,992 4.7 % $ 44,719 5.3 % $ 3,273 7.3 % Electronic Monitoring and Supervision Services 12,585 8.4 % 12,145 7.8 % 440 3.6 % Reentry Services 6,098 4.2 % 6,869 4.8 % (771 ) (11.2 )% International Services 1,351 1.1 % 1,135 1.2 % 216 19.0 % Total $ 68,026 4.7 % $ 64,868 5.2 % $ 3,158 4.9 % U.S. Secure Services U.S. Secure Services depreciation and amortization expense increased in Six Months 2026 compared to Six Months 2025 primarily due to renovations at certain of our company-owned and leased facilities. Electronic Monitoring and Supervision Services Electronic Monitoring and Supervision Services depreciation and amortization expense increased slightly in Six Months 2026 compared to Six Months 2025 primarily due to equipment additions. Reentry Services Reentry Services depreciation and amortization expense decreased in Six Months 2026 compared to Six Months 2025 primarily due to certain assets becoming fully depreciated. International Services International Services depreciation and amortization expense increased slightly in Six Months 2026 compared to Six Months 2025 primarily due to certain asset additions. General and Administrative Expenses 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) General and Administrative Expenses $ 126,045 8.8 % $ 113,995 9.2 % $ 12,050 10.6 % 42 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 $12.1 million in Six Months 2026 compared to Six Months 2025 primarily due to higher employee related benefit costs and support for the revenue growth from our new contract awards. Non-Operating Expenses Interest Income and Interest Expense 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Interest Income $ 4,900 0.3 % $ 4,463 0.4 % $ 437 9.8 % Interest Expense $ 76,857 5.3 % $ 84,348 6.8 % $ (7,491 ) (8.9 )% Interest income increased by $0.4 million in Six Months 2026 compared to Six Months 2025 primarily due to higher cash balances on hand internationally and the effect of foreign exchange rates. Interest expense decreased by $7.5 million in Six Months 2026 compared to Six Months 2025 primarily due to lower overall principal balances and lower interest rates. On July 14, 2025, we amended our Credit Agreement which increased our borrowing capacity and lowered the applicable interest rate. We also paid off our Term Loan under the credit agreement in July 2025. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion. Loss on Extinguishment of Debt 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Loss on Extinguishment of Debt $ — 0.0 % $ 595 0.0 % $ (595 ) (100.0 )% During Six Months 2025, we made a mandatory quarterly payment on our Term Loan. In connection with the repayment, we wrote off the related deferred loan costs. Loss on Asset Divestitures/Impairment 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Loss on Asset Divestitures/Impairment $ 673 0.0 % $ — (— )% $ 673 100.0 % In Six Months 2026, we received a sale contract for two buildings in Pennsylvania and a sale contract for a parcel of land located in Illinois that were less than their carrying values which resulted in an impairment charge. We also experienced a loss on assets divested in connection with certain closed day reporting centers. Other Income 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Other Income $ — (— )% $ 5,514 0.4 % $ (5,514 ) (100.0 )% In Six Months 2025, we received an aggregate of $5.5 million under the Employee Retention Tax Credit provisions of the CARES Act. This amount was recognized as other income in the consolidated financial statements. Income Tax Provision 2026 Effective Rate 2025 Effective Rate $ Change % Change (Dollars in thousands) Provision for Income Taxes $ 33,904 28.6 % $ 12,380 21.3 % $ 21,524 173.9 % The provision for income taxes and the effective tax rate increased in Six Months 2026 compared to Six Months 2025 principally due to an increase in pre-tax income and a decrease in discrete tax benefits. In Six Months 2026, there was a $1.3 million as compared to a $4.5 million net discrete tax benefit in Six Months 2025. Included in the discrete tax benefit in Six Months 2026 was a $1.3 million as 43 compared to a $4.5 million discrete tax benefit in Six Months 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, net of Income Tax Provision 2026 % of Revenue 2025 % of Revenue $ Change % Change (Dollars in thousands) Equity in Earnings of Affiliates, net of Income Tax Provision $ 1,298 0.1 % $ 3,005 0.2 % $ (1,707 ) (56.8 )% 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 Six Months 2026 compared to Six Months 2025 primarily due to less favorable performance at SACS. Financial Condition Capital Requirements Our current cash requirements consist of amounts needed for working capital, debt service, supply purchases, research and development costs related to new electronic monitoring products, investments in joint ventures, and capital expenditures related to either the development of new secure, processing and reentry facilities, or the maintenance of existing facilities. In addition, some of our management contracts require us to make substantial initial expenditures of cash in connection with opening or renovating a facility. Generally, these initial expenditures are subsequently fully or partially recoverable as pass-through costs or are billable as a component of the per diem rates or monthly fixed fees to the contracting agency over the original term of the contract. Additional capital needs may also arise in the future with respect to possible acquisitions, other corporate transactions or other corporate purposes. We currently have contractual commitments for a number of projects using Company financing. We estimate that the cost of these existing active capital projects will be approximately $52.9 million of which $32.9 million was spent through June 30, 2026. We estimate that the remaining capital requirements related to these capital projects will be $20.0 million which will be spent through the remainder of 2026. We plan to fund all of our capital needs, including capital expenditures, from cash on hand, cash from operations, borrowings under our Credit Agreement (as defined below) and any other financings which our management and Board, in their discretion, may consummate. Currently, our primary source of liquidity to meet these requirements is cash flow from operations and borrowings under our Credit Agreement. Our management believes that our financial resources and sources of liquidity will allow us to manage our business, financial condition, results of operations and cash flows. We completed our annual budgeting process, and for 2026, we will continue to strategically manage our capital expenditures to maintain both short and long term financial objectives. Additionally, we may from time to time pursue transactions for the potential sale or acquisition of assets and businesses and/or other strategic transactions. Taking into account the impact of the federal government shutdown, that ended on April 30, 2026, our management believes that cash on hand, cash flows from operations and availability under our Credit Agreement will be adequate to support our capital requirements for 2026 as disclosed under “Capital Requirements” above and the next twelve months. Liquidity and Capital Resources Indebtedness Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. We consider opportunities for future business and/or asset acquisitions or dispositions as we deem appropriate when market conditions present opportunities. If we are successful in our pursuit of any new projects, our cash on hand, cash flows from operations and borrowings under the new Credit Agreement may not provide sufficient liquidity to meet our capital needs and we could be forced to seek additional financing or refinance our existing indebtedness. There can be no assurance that any such financing or refinancing would be available to us on terms equal to or more favorable than our current financing terms, or at all. In the future, our access to capital and ability to compete for future capital-intensive projects will also be dependent upon, among other things, our ability to meet certain financial covenants in the indenture governing the Secured Notes, the indenture governing the Unsecured Notes and our Credit 44 Agreement. A substantial decline in our financial performance could limit our access to capital pursuant to these covenants and have a material adverse effect on our liquidity and capital resources and, as a result, on our financial condition and results of operations. In addition to these foregoing potential constraints on our capital, and including the impact of the federal government shutdown, that ended on April 30, 2026, a number of state government agencies have been suffering from budget deficits and liquidity issues. While we were in compliance with our debt covenants as of June 30, 2026 and we expect to continue to be in compliance with our debt covenants, if these constraints were to intensify, our liquidity could be materially adversely impacted as could our ability to remain in compliance with these debt covenants. Guarantor Financial Information GEO’s Secured Notes and Unsecured Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis (except on a senior secured basis in the case of the Secured Notes) by certain of our wholly owned domestic subsidiaries (the “Subsidiary Guarantors”). Summarized financial information is provided for GEO and the Subsidiary Guarantors on a combined basis in accordance with SEC Regulation S-X Rules 3-10 and 13-01. The accounting policies used in the preparation of this summarized financial information are consistent with those elsewhere in the consolidated financial statements of the Company, except that intercompany transactions and balances of GEO and the Subsidiary Guarantor entities with non-guarantor entities have not been eliminated. Intercompany transactions between GEO and the Subsidiary Guarantors have been eliminated and equity in earnings from and investments in non-guarantor subsidiaries have not been presented. Summarized statement of operations (in thousands): Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Net operating revenues $ 1,310,809 $ 1,139,342 Income from operations 168,606 115,028 Net income 66,406 24,578 Net income attributable to The GEO Group, Inc. 66,406 24,578 Summarized balance sheets (in thousands): June 30, 2026 December 31, 2025 Current assets $ 556,776 $ 645,982 Noncurrent assets (a) 2,944,747 2,971,002 Current liabilities 247,423 257,936 Noncurrent liabilities (b) 1,910,974 2,021,019 (a) Includes amounts due from non-guarantor subsidiaries of $54.2 million and $52.8 million as of June 30, 2026 and December 31, 2025, respectively. (b) Includes amounts due to non-guarantor subsidiaries of $41.8 million and $42.1 million as of June 30, 2026 and December 31, 2025, respectively. Off-Balance Sheet Arrangements Except as discussed in the notes to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements. Cash Flow Cash, cash equivalents and restricted cash and cash equivalents as of June 30, 2026 was $111.2 million compared to $120.6 million as of June 30, 2025. 45 Operating Activities Net cash provided by operating activities amounted to $236.5 million for the six months ended June 30, 2026 versus net cash provided by operating activities of $110.4 million for the six months ended June 30, 2025. Cash provided by operating activities during the six months ended June 30, 2026 was positively impacted by non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures, loss on disposal of property and equipment, net and stock-based compensation expense. Equity in earnings of affiliates and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $68.9 million, representing a positive impact on cash. The decrease was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities decreased by $4.9 million which negatively impacted cash. The decrease was primarily driven by the timing of payments. Net cash provided by operating activities during the six months ended June 30, 2025 was positively impacted by non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax, gain on sale/disposal of property and equipment, net, and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets increased in total by $4.5 million, representing a negative impact on cash. The increase was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities decreased by $6.8 million which negatively impacted cash. The decrease was primarily driven by the timing of payments. Investing Activities Net cash used in investing activities of $50.4 million during the six months ended June 30, 2026 was primarily the result of capital expenditures of $42.3 million, purchases of marketable securities of $40.7 million and proceeds from sales of marketable securities of $32.1 million. Net cash used in investing activities of $81.8 million during the six months ended June 30, 2025 was primarily the result of capital expenditures of $67.6 million, purchases of marketable securities of $16.9 million and proceeds from sales of marketable securities of $2.7 million. Financing Activities Net cash used in financing activities during the six months ended June 30, 2026 was approximately $200.2 million compared to net cash used in financing activities of $37.6 million during the six months ended June 30, 2025. Net cash used in financing activities during the six months ended June 30, 2026 was primarily the result of proceeds from the revolver of $117.0 million, payments on the revolver of $226.6 million, payments on long-term debt of $0.7 million, proceeds from the exercise of stock options of $3.0 million, payment for the repurchase of common stock of $86.7 million and taxes paid related to net share settlement of equity awards of $6.2 million. Net cash used in financing activities during the six months ended June 30, 2025 was primarily the result of payments on the revolver of $30.0 million, proceeds from the revolver of $35 million, payments on long-term debt of $24.7 million, proceeds from the exercise of stock options of $4.2 million and taxes paid related to net share settlement of equity awards of $22.2 million. Non-GAAP Measures EBITDA is defined as net income adjusted by adding provision for income tax, interest expense, net of interest income and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for net loss attributable to non-controlling interests, stock-based compensation expenses, pre-tax, transaction fees, pre-tax, start-up costs, pre-tax, litigation costs and settlements, pre-tax, employee restructuring expenses, pre-tax, close-out expenses, pre-tax, loss on asset divestitures/impairment, pre-tax and other non-cash revenues and expenses, pre-tax, and certain other adjustments as defined from time to time. Given the nature of our business as a real estate owner and support services provider, we believe that EBITDA and Adjusted EBITDA are helpful to investors as measures of our operational performance because they provide an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures, and to fund other cash needs or reinvest cash into our business. We believe that by removing the impact of our asset base (primarily depreciation and amortization) and excluding certain non-cash charges, amounts spent on interest and taxes, and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide our investors with performance measures that reflect the impact to operations from trends in occupancy rates, per diem rates and operating costs, providing a perspective not immediately apparent from net income. The adjustments we make to derive the non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in income from continuing operations and which we do not consider to be the fundamental attributes or primary drivers of our business plan and they do not affect our overall long-term operating performance. 46 EBITDA and Adjusted EBITDA provide disclosure on the same basis as that used by our management and provide consistency in our financial reporting, facilitate internal and external comparisons of our historical operating performance and our business units and provide continuity to investors for comparability purposes. Our reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 is as follows (in thousands): Three Months Ended Six Months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Net Income $ 47,460 $ 29,074 $ 85,766 $ 48,616 Add: Income tax provision * 19,107 10,723 34,349 12,779 Interest expense, net of interest income ** 35,328 40,036 71,957 80,480 Depreciation and amortization 34,196 32,732 68,026 64,868 EBITDA $ 136,091 $ 112,565 $ 260,098 $ 206,743 Add (Subtract): Net loss attributable to noncontrolling interests 43 34 71 50 Stock-based compensation expenses, pre-tax 4,923 5,506 12,689 11,994 Litigation costs and settlements, pre-tax — 532 — 532 Loss on asset divestitures/impairment, pre-tax 673 — 673 — Transaction fees, pre-tax 156 — 322 55 Employee restructuring expenses, pre-tax 392 332 592 332 Start-up expenses, pre-tax 509 — 509 — Close-out expenses, pre-tax — 676 20 676 Other non-cash revenues and expenses, pre-tax (788 ) (1,048 ) (1,563 ) (2,019 ) Adjusted EBITDA $ 141,999 $ 118,597 $ 273,411 $ 218,363 * includes income tax provision on equity in earnings of affiliate ** includes loss on extinguishment of debt 47 Outlook The following discussion contains statements that are not limited to historical statements and, therefore, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated or implied in the forward-looking statements. Please refer to “Part I - Item 1A. Risk Factors” and the "Forward-Looking Statements - Safe Harbor" sections in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 for further discussion on forward-looking statements and the risks and other factors that could prevent us from achieving our goals and cause the assumptions underlying the forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements. We continue to be encouraged by the current landscape of growth opportunities. We are preparing for what we believe is an unprecedented opportunity to help the federal government meet its expanded immigration enforcement priorities. We are taking several important steps to meet this opportunity, including making a previously announced significant investment in capital expenditures to strengthen our capabilities to deliver expanded detention capacity, secure transportation, and electronic monitoring and related services to U.S. Immigration and Customs Enforcement and the federal government. We have also been in discussions with ICE regarding the potential sale of multiple facilities, subject to mutual agreement on price and our continued management of those facilities under long-term support services contracts. At this time, there is no definitive agreement in place with ICE and no precise timeline for the closing of any such transactions. Also, we can give no assurance that these transactions will take place at all. Any positive trends in the industry may be offset by several factors, including the impact of the federal government shutdown that ended on April 30, 2026 and any future federal government shutdown, budgetary constraints, contract modifications, contract terminations, contract non-renewals, contract re-bids and/or the decision to not re-bid a contract after expiration of the contract term and the impact of any other potential changes to the willingness or ability to maintain or grow public-private partnerships on the part of other government agencies. Operating Expenses Operating expenses consist of those expenses incurred in the operation and management of our contracts to provide services to our governmental clients. Labor and related costs represented approximately 72% and 70% of our operating expenses during the six months ended June 30, 2026 and 2025, respectively. Additional operating expenses include food, utilities and medical costs. During the six months ended June 30, 2026 and 2025, operating expenses totaled approximately 73% and 75%, respectively, of our consolidated revenues. We expect our operating expenses as a percentage of revenues in 2026 will be impacted by the opening of any new or existing idle facilities as a result of the cost of transitioning and/or start-up operations related to a facility opening. We also expect that our operating expenses will be impacted by the effect of inflation on costs related to personnel, utilities, insurance, and medical and food, among other operational costs. During 2026, we will incur carrying costs for facilities that are currently vacant. General and Administrative Expenses General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees and other administrative expenses. During each of the six months ended June 30, 2026 and 2025, general and administrative expenses totaled approximately 9% of our consolidated revenues. We expect general and administrative expenses as a percentage of revenues in 2026 to remain consistent or decrease as a result of cost savings initiatives. Idle Facilities We are currently marketing (or awaiting activation) 6,646 vacant beds at six U.S. Secure Services and at two of our Reentry Services idle facilities to potential customers. One of our U.S. Secure Services idle facilities, the 700-bed Cheyenne Mountain Recovery Center, is currently under a contract that has not yet been activated. The annual net carrying cost of our idle facilities in 2026 is estimated to be $26.7 million, including depreciation expense of $15.2 million. As of June 30, 2026, these eight facilities had a combined net book value of $188.1 million. We currently do not have any firm commitment or agreement in place to activate the idle facilities (except for the Cheyenne Mountain Recovery Center). Historically, some facilities have been idle for multiple years before they received a new contract award. These idle facilities are included in the U.S. Secure Services and Reentry Services segments. The per diem rates that we charge our clients often vary by contract across our portfolio. However, if the remaining idle facilities were to be activated using our U.S. Secure Services and Reentry Services average per diem rates in 2026 (calculated as the U.S. Secure Services and Reentry Services revenue divided by the number of U.S. Secure Services and Reentry Services mandays) and based on the average occupancy rate in our facilities through June 30, 2026, we would expect to receive incremental annualized revenue of approximately $264 million and an annualized increase in earnings per share of approximately $0.25 to $0.30 per share based on our average operating margins. 48