CoreCivic’s third quarter results prompted a negative market reaction, with shares declining sharply after earnings. Management attributed the revenue growth to a surge in new federal contracts, notably with Immigration and Customs Enforcement (ICE), and the reactivation of previously idle facilities. However, CEO Damon Hininger acknowledged that start-up costs for these newly activated centers and a legal delay at the Midwest Regional Reception Center weighed on profitability, contributing to the shortfall in non-GAAP earnings per share versus Wall Street estimates. Hininger described the quarter as “very busy” due to the complexity of activating four facilities at once and noted the impact of associated operational losses.
Is now the time to buy CXW? Find out in our full research report (it’s free for active Edge members).
CoreCivic (CXW) Q3 CY2025 Highlights:
- Revenue: $580.4 million vs analyst estimates of $541.2 million (18.1% year-on-year growth, 7.3% beat)
- Adjusted EPS: $0.24 vs analyst expectations of $0.26 (7.7% miss)
- Adjusted EBITDA: $88.83 million vs analyst estimates of $90.96 million (15.3% margin, 2.3% miss)
- Management lowered its full-year Adjusted EPS guidance to $1.03 at the midpoint, a 6.8% decrease
- EBITDA guidance for the full year is $357 million at the midpoint, below analyst estimates of $368.1 million
- Operating Margin: 8.7%, in line with the same quarter last year
- Average available beds : 71,996, up 4,457 year on year
- Market Capitalization: $1.80 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From CoreCivic’s Q3 Earnings Call
- Joseph Gomes (NOBLE Capital): Asked about the pace of ICE detention population growth and start-up cost impacts. CEO Damon Hininger and President Patrick Swindle indicated that admission activity was steady and start-up costs were higher due to rapid contract wins but expected these to set up future growth.
- Marla Marin (Zacks): Inquired about payment delays from the government shutdown. CFO David Garfinkle confirmed CoreCivic expects to receive all payments with interest upon resumption of government operations.
- Kirk Ludtke (Imperial Capital): Asked about competition from alternative ICE detention sites and staffing. Hininger and Swindle explained that while ICE pursues various capacity solutions, CoreCivic’s facilities remain attractive and staffing progress has generally been ahead of schedule.
- Raj Sharma (Texas Capital): Sought detail on revenue and margin contributions from reactivated facilities and wage trends. Garfinkle projected higher margins on new contracts and said the wage environment was favorable with moderating labor cost pressures.
- Gregory Gibas (Northland Securities): Queried the timeline for start-up costs and facility profitability. Garfinkle replied that most start-up losses would occur in Q4 and Q1, with profitability for most sites expected during the first half of 2026.
Catalysts in Upcoming Quarters
In the coming quarters, our team will watch (1) the pace of facility ramp-ups and resolution of legal disputes affecting occupancy, (2) whether ICE and state partner demand translates into additional contract wins or further facility activations, and (3) the impact of ongoing start-up expenses on margins and cash flow. Execution on share repurchases and management transition will also be important indicators of strategic progress.
CoreCivic currently trades at $17.23, down from $18.62 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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