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Good day, and welcome to the GEO Group First Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for today's discussion of the GEO Group's first quarter 2025 earnings results. With us today are Dave Donahue, Chief Executive Officer; and Mark Suchinski, Chief Financial Officer. This morning, we will discuss our first quarter results as well as our outlook. We will conclude the call with a question-and-answer session. This conference call is also being webcast live on our investor website at investors.geogroup.com. Today, we will discuss non-GAAP basis information. A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and the supplemental disclosure we issued this morning. Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall within the safe harbor provisions of the securities laws. Our actual results may differ materially from those in the forward-looking statements as a result of various factors contained in our securities and exchange commission filings, including the Form 10-K, 10-Q and 8-K reports. With that, please allow me to turn this call over to our CEO, Dave Donahue. Dave?

Thank you, Pablo, and good morning, everybody, and thank you for joining us on our first quarter 2025 earnings call. Our Executive Chairman, George

Thank you, Dave, and good morning, everyone. For the first quarter of 2025, we reported net income attributable to GEO of approximately $19.6 million or $0.14 per diluted share on quarterly revenues of approximately $605 million. This compares to net income attributable to GEO of approximately $22.7 million or $0.14 per diluted share in the first quarter of 2024 on revenues of approximately $606 million. Adjusted EBITDA for the first quarter of 2025 was approximately $100 million compared to approximately $118 million for the prior year's first quarter. Our first quarter revenue and adjusted EBITDA were in line with our internal expectations. Beginning with revenues, quarterly revenues in our owned and leased secure service facilities increased by approximately 3% year-over-year. This revenue increase was offset by lower quarterly revenue from our Electronic Monitoring and Supervision Services segment, which declined by approximately 10% compared to the prior year's first quarter. Combined quarterly revenues from our owned and leased reentry centers, managed only facilities, and non-residential service contracts were largely unchanged compared to the prior year's first quarter. Now let's turn to our operating expenses. During the first quarter of 2025, our operating expenses increased by approximately 3% compared to the prior year's first quarter. The increase in our operating expenses reflect higher labor costs in our Secure Services segment in part due to additional staffing and training costs as we continue to incur these in preparation for expected future growth. Our general and administrative expenses for the first quarter of 2025 increased by approximately 9% from the prior year's first quarter, in part due to recent reorganization of our senior management team and additional associated professional fees, which we incurred during the first quarter of 2025 in preparation for expected future growth, as well as higher employee related benefit costs. Compared to the fourth quarter of 2024, our first quarter 2025 results also reflect approximately $6 million in higher payroll related taxes, which are frontloaded in the first quarter of each year. Our first quarter 2025 results reflect a year-over-year decrease in net interest expense of approximately $8 million as a result of our debt reduction and refinancing efforts taken over the last year. Our effective tax rate for the first quarter of 2025 was approximately 9%. Income taxes for the first quarter of 2025 were lower than expected as a result of the increased value of equity awards, which vested during the quarter. Now let's move to our updated financial guidance for 2025. As previously noted, our financial guidance for 2025 reflects a tale of two halves of the year. The first half of 2025 reflects higher overhead and operating expenses as well as higher capital expenditures to position our company for anticipated future revenue growth without the corresponding revenues, with growth beginning to layer in during the second half of 2025. Also importantly, consistent with our longstanding practice, our guidance does not include any new contract awards that have not been previously announced. For the full year 2025, we expect net income attributable to GEO to be in the range of $0.77 to $0.89 per diluted share on revenues of approximately $2.53 billion and based on an effective tax rate of an approximately 27% inclusive of known discrete tax items. We expect our full year 2025 adjusted EBITDA to be between $465 million and $490 million. For the second quarter of 2025, we expect net income attributable to GEO to be in the range of $0.15 to $0.17 per diluted share on quarterly revenues of $615 million to $625 million. We expect the second quarter of 2025 adjusted EBITDA to be between $110 million and $114 million. Our guidance does not include any assumption for new contract awards that have not been previously announced nor any material census growth at either existing facilities or the ISAP contract. However, we anticipate that several upside opportunities could materialize during the year, including additional contract awards, which we expect to be announced in the second quarter of 2025. As we progress through the year and these growth opportunities materialize, we will continue to adjust our financial guidance accordingly. As a reminder, as contract awards are announced and we begin to reactivate idle facilities, we would expect to incur startup expenses during the initial 60 to 90 day activation period. Startup expenses for any facility activations not previously announced are not included currently in our guidance. We expect total capital expenditures for the full year of 2025 to be between $120 million and $135 million including the impact of the $70 million investment, we announced in December to expand our ICE service capabilities. Moving to our capital structure, we ended the first quarter of 2025 with total net debt of approximately $1.68 billion, $65 million in cash on hand and approximately $235 million in total available liquidity. As of the first quarter of 2025, fixed rate debt represents approximately 77% of our total indebtedness, which meaningfully insulates GEO from potential interest rate volatility. In April of 2025, we were pleased to have Fitch initiate ratings on GEO with a B plus issuer rating, a BB plus rating on our secured debt, a BB minus rating on our unsecured debt and a stable outlook. We have no substantial debt maturities due before April of 2029, which continues to give our company significant runway to grow our business and focus on reducing our debt and eventually be able to return capital to shareholders. Based on our current 2025 guidance, we expect to reduce our net debt by between $150 million and $175 million this year, bringing our total net debt to approximately $1.54 billion by the end of the year. Our debt reduction could be augmented by the sale of one of our state correctional facilities in Oklahoma, which we estimate could generate gross proceeds of approximately $312 million. In addition to allocating capital towards debt reduction to support our capital growth needs, our goal remains to explore options for returning capital to our shareholders in the future. At this time, I'd like to turn the call back to Dave for closing remarks. Dave?

Thank you, Mark. We are pleased with the progress we've made towards meeting our growth and capital allocation objectives. The additional time we've spent with our federal partners have positioned us very well for the remainder of 2025. During the first quarter of 2025, we announced two important contract awards for the reactivation of two company-owned facilities totaling 2,800 beds and representing in excess of $130 million in annualized revenues. We believe we have an unprecedented opportunity to assist the federal government in meeting its expanded immigration enforcement priorities. We have taken several important steps to be prepared to meet that opportunity, and we are very well positioned. We have made a significant investment commitment of $70 million to strengthen our capabilities to deliver expanded detention capacity, secure transportation, and electronic monitoring services to ICE and the federal government. We've also completed a reorganization of our senior management team to oversee the operational execution of this expected future growth. As a result of these steps, our guidance for 2025 reflects a tale of two halves of the year. The first half of the year is expected to be impacted by higher overhead and operating expenses as well as increased capital expenditures to position our company for future growth, which is expected to begin to layer in during the second half of 2025 and normalize in 2026. GEO is the single largest contractor to ICE with four decades of partnership and are currently we provide approximately 40% of the detention beds to ICE. We believe we are well positioned to significantly scale up our secure residential care housing price from the current 16,000 utilized beds. In GEO's 100% management of the ISAP program, we believe we can quickly scale up from the present 185,000 participants to several hundreds of thousands or even millions of participants if called upon. GEO's contractual partnership with CSI Aviation has allowed us to become the largest provider of secured transportation services for ICE. We believe we can scale up materially for domestic and international travel for 500,000 individuals or more, if called upon. This is a unique moment in our company's history, and we believe we are well positioned to meet this unprecedented opportunity and to continue to enhance value for our shareholders. With that, this completes our remarks, and we will be glad to handle any questions. Thank you.

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Joe Gomes with NOBLE Capital. Please go ahead.

So wanted to start off, I’m looking in the supplement presentation. And you noted that during the quarter or the electronic monitoring segment during the quarter revenues were down 10.5% year over year, but then operating income fell almost 20%. And I’m just wondering what was behind that bigger than fall in the revenues were?

Yes. Joe, I can address that. When we compare electronic monitoring revenues and profitability first quarter of this year compared to last year, it's a bit of, as you just indicated, the ISAP counts were down, but the bigger impact on the profitability was a mix shift. When we think about the products that we offer, we saw a larger reduction in the phones as part of the program the first quarter of this year compared to last year. So, it's really -- it's a mix shift away from phones and more to GPS monitoring devices, which puts a little bit of pressure on the margins.

And then you guys mentioned the house funding bill are in the reconciliation talking about adding $45 billion for ICE detention. They talk about adding a significant amount of money also for transportation. But one of the things, at least in the articles that I have read, nothing really mentioned on ATD. Now is that included in that $45 billion or is there something else going on there with the funding bills potential funding bills?

Well, Joe, this is Dave. Let me speak to that. The funding activity right now, as you identified, I think Homeland Security and Immigration Customs Enforcement are obviously focusing on interior enforcement and detention is a priority. So, we've seen as a result of the agency's efforts to secure the border, at the southern side of our country, that detention focus has become the reality. And so, we spend additional time with our clients working through our facilities, so they have a better understanding to maximize the available detention space in the country. As the interior enforcement matures and the detention space is utilized, the non-detained docket is very robust as you know. And the alternative to detention and specifically ISAP is the valuable solution that provides accountability for the immigration population as they're moving through their judicial review. So again, we have a high degree of confidence that as the budget process unfolds, as that becomes clear, you'll see greater utilization on the electronic monitoring side to enhance the detention availability.

And Joe, I would just add, I think that as the funding bill matures, I think more specifics and details will merge around the ICE needs and where those funds will be allocated. So, I think, we just need to wait and let the process in Congress work out, and I think all of that will become more clear to all of us.

And then you guys mentioned ICE detainees and obviously working with the ICE numbers, which are delayed, I think the most recent one I saw was from early April. The number of detainees has significantly increased from government fiscal year from, call it, 38,000-ish to 48,000-ish. But it's been relatively flat the last couple of months. And I don't know if that's your guys' thoughts. Is that just due to funding? Is there other things going on there? And how does that kind of play into your expectations that there's likelihood that all of your idle facilities would be reactivated this year?

So relative to the budget conversation, as Mark said, Joe, I think that what you're seeing right now is the agency being supported by the congressional initiatives to really meet their mission. And the transition from 2024 to 2025, the agency's objectives have significantly changed. And the executive office obviously has provided greater clarity on the expectations for interior enforcement. So, we're very impressed with ICE's focus, with their due diligence associated with how they're going to handle this mission. And we do believe that as the funding streams become defined, we are very well positioned to help them meet their mission. And we're excited about the second half of the year because of that.

And I think I would add that they rapidly increase the number of people detained, and so they're using up very quickly the amount of space that they have. And so, when you think about the back half of the year, our Delaney contract and the Northlake contract, that will help them increase the number of detainees. So it's a budget, but I also think as they're letting these contracts and increasing the capacity, you'll start to see those go up. It just very quickly they used the capacity that they had on contract and now they're going to have to open up new contracts to expand that capacity.

And one last one for me. Pardon me. Given what we discussed today about the selling the one -- potentially selling the one state facility and repurposing another state facility for ICE uses. Recently, you think in the last week or so, Alabama put out RFI, I think, about interest for people building a new facility for them. Given where you guys are today and the expected growth from ICE, would Alabama make sense for you guys to look at? Or is that something that would be on a back burner, so to speak, given the demand expected demand coming from the federal government?

Well, Joe, as you used the phrase back burner, we obviously want to be in a position to support any governmental client that potentially has a need. And we would look at those opportunities, but our primary focus today is supporting our federal partners and the mission at hand. So, we don't have adverse opinion about the Alabama opportunity, but to your point, it's definitely a back burner issue.

Thank you. The next question comes from Jason Weaver with Jones Trading. Please go ahead.

So first, we've heard about some requisitions for semi-permanent detainment facilities on military properties around the country. Do you have any context on that and whether GEO might be retained or approached as an operating partner for anything like that?

Sure, Jason. Good question.

This is Fort Bliss for one we've heard of.

Right. As you may know, the government has retracted the Fort Bliss objective and that's no longer a competitive procurement. So that's been pulled off the table by the government and I'm sure they're evaluating other opportunities. We are very well positioned to provide additional capacity and operating support on an as needed basis. We are focusing presently on our idle facilities and several of our current facilities have opportunity for expansion by way of soft sided capacity, if in fact the government wants to pursue that. So, we're working directly with our clients to understand what their needs are. And as those needs become identifiable, then we're going to stand in the corner with them to create the solution. So, we're not opposed to operating any environment that ICE feels is necessary for them to meet their mission.

All right. Thank you for that. And also on the same topic, I believe in your prepared remarks, you mentioned U.S. Marshals interest in one of your Texas facilities, which is Flightline, I believe. Have you engaged in any discussions around reopening the George or Ray James facility with any federal partners?

Again, all of our Jason, all of our current idle inventory is under review and in discussions with our federal partners.

Go for it. Got it. And finally, when do you think you would be would be the earliest you'd be in a position to engage in share repurchase?

Good question, Jason. I think first things first, when we at our Investor Day, we talked about the priorities of capital allocation. Right now, the big focus is on supporting our clients and the reactivation and expanding of the services that we have in place here, which we believe will lead to substantial increase in revenues and profitability. And that's both from an expansion and a capital standpoint. And what I would tell you is, as we move into the back half of this year, we have this potential opportunity in Oklahoma, which could help accelerate debt pay down. I think that becomes returning capital back to shareholders becomes a closer priority as that happens. And so, I think it's something that we'll look at. The first priority is execution and supporting our clients. Back half of the year, we expect the financials to reflect those opportunities. And so, I think it's we'll start to look at it more meaningfully in the back half of 2025, and then I think it becomes a very serious conversation in 2026.

The next question comes from Greg Gibas with Northland Securities. Please go ahead.

As it relates to the Karnes facility, and that decision or the reversal back to single adults, what spurred that change?

Greg, I think it's a reflection of our partnership with Immigration Customs Enforcement and our flexibility and ability to respond to their needs. As they evaluate their objectives, they're looking obviously for mission specific solutions. And when they completed that assessment, after that announcement was made, a reevaluation was completed and we worked directly with ICE to meet that objective. So, it's really about making sure that we are nimble and flexible enough to meet the agency's objectives and help them meet their mission.

And I believe kind of last quarter and at the Investor Day, the expectation was all these facilities ramping by the end of the year, as it relates to your idle facilities that is, but primarily be contracted by the end of Q2. Is there an updated timeframe you estimate from a contracting timing perspective with the idle facilities?

I think we're still on plan, Greg. We envision this quarter to be very active for contract awards and engagements with our federal partners. So, again, consistent with where we were at the beginning of the year, we're optimistic that the second half of the year is really the layover year or layover period for those additional projects being brought online.

And then lastly, to follow up on kind of the U.S. Marshals Service, saw a couple RFPs out there for facilities and pretty closely aligned with a couple of years, a couple of your idle facilities that is. How are you kind of -- I know you can't provide specifics, but just kind of weighing, do you expect maybe those RFPs to, I guess, are you expecting timing with the Marshalls service maybe to come through sooner than anything with ICE? And kind of how you're aware like weighing, which facilities for either kind of service, right? Like I think pricing is pretty similar. So any color you can share on developments with the Marshals Service?

Yes, Greg. The Marshals Service, obviously a very important client of ours, no different than Immigration Customs Enforcement. Both agencies are governed by the congressional efforts to create the budget. And so, as we watch Congress manage the funding necessary for the law enforcement initiatives, the U.S. Marshals Service will, I think, be very well positioned commensurate with that funding authority to execute their needs. And we are working very closely with them. The facilities that you referenced, we have frequent communication with our clients and we're having good pace discussions right now in anticipation of future use.

The next question comes from Jay McCanless with Wedbush. Please go ahead.

So, the first question I had, if you do sell Oklahoma and the say $150 million of what you talked about for additional debt paydown, at that point, your debt to equity is going to be sitting at about a one-to-one ratio. How low would you want that to go? And again, I guess, how much lower would it need to go for you guys to start buying back stock?

Well, we get to that point, as you said, one to one. We've significantly reduced our overall leverage. And as we talked at our Investor Day, we're very comfortable with debt levels being 2x to 2.5x. So that all comes to fruition. I think then we have the opportunity to focus on returning capital maybe faster than the timeline that I previously discussed. But that would be a good place for us to be and I think it'd be a real good opportunity for us to start to reward our shareholders.

Great. And then the second question I had, how should we think about the Northlake contract? Is the government covering the OpEx and CapEx related to starting up that facility so that it's basically budget neutral for you guys or how should we think about the progression on that?

Yes. So, when you think about when we get a contract like that, our contracts typically don't have the government funding the capital upfront. And so the capital investment that we make is recovered over the course of our contract timeline, whether it's a two year contract or a five year contract, and that's built into the pricing. And Northlake, when we talked about the $70 million investment that was included in our overall guidance for the year, we focused on making those investments ahead of these contract awards and getting them prepared so that we could react very quickly for our clients' needs. So, what I would say is that, that investment on that facility from a CapEx standpoint is included in our overall guidance as well as the revenues that will start to take hold in the back half of the year. So that investment that we made is covered in the guidance and will be accretive over the course of that contract award.

The next question comes from Brendan McCarthy with Sidoti & Co. Please go ahead.

Just wanted to start off on the Q2 guidance, the top line revenue of $620 million at the midpoint. Does that include any contribution from, I guess, any of the three idle facility contract awards that were previously announced? And also what does that assume as it relates to ISAP participant count?

So, thanks Brendan. The revenue guidance for the second quarter will factor in the benefits of the Delaney contract that activated and started on May 1. So, we'll have a couple of months' worth of revenue related to that new contract award. We talked about the North Lake facility. Really, the revenue contribution on that is more will more so start in the third quarter. From an ISAP count standpoint, we're monitoring that very closely, at least from a second quarter standpoint. We don't expect significant increase in the second quarter, but as Dave had mentioned earlier, we're starting to slowly increase the ISAP counts that will help from a revenue standpoint. And I would also say this, when you think about our existing contracts in the beds and we talked about 48,000, we're seeing nice upticks in our existing contracts and the utilization of those facilities. And so, all of those items will help contribute to the revenue growth over the first quarter.

Great. That's helpful. I appreciate the detail. And then as it relates to the budget reconciliation process, I think you mentioned in your prepared remarks, The House is aiming to complete their work by Memorial Day. The Senate is aiming for closer to July. Just curious as to what do you think is the most likely outcome here regarding the timing of funding ultimately being appropriated?

Well, Brendan, I submit to you that once the chambers complete their work, obviously, the budget gets reconciled and the agency has clear runway to focus on the mission, and I submit to you that's going to be the second half of the year when you see what I call the momentum associated with interior enforcement and the work that immigration customs enforcement has laid upon them to really become meaningful. So, it is a matter of concert with the budget approval before I think the agency really commits to extending themselves into the interior.

Understood. And one more question for me just on the Lea County facility in New Mexico. I think you had mentioned that that is being depopulated at the moment and maybe repurposed or sold. Can you just comment on that scenario and how that developed?

So, as we had previously communicated, those facilities were being evaluated for either an asset sale or repurposing. After discussions with the New Mexico leadership, we've reached the decision to pursue demobbing or depopulating that project and that will be done by the June. And then, we began -- commensurate with that decision, we began providing the information to our federal partners on the potential availability of that project, obviously, the second half of the year. So that's where it's being staged today and we're optimistic that we'll see that project become fruitful once again.

And Brendan, I would only add that Lea County facility for us from a return on investment was a challenged contract. And so, we tried to work with the state, with the county there to support our client there, but also get an appropriate return. And so, I think we'll move forward here and the depopulation and the impact on revenue and profitability has been factored into the guidance that I provided. But I think it will give us an opportunity here to pivot to a new client and provide those needs to the different agencies around the country that need the beds.

Understood. And as a follow-up, do you see further opportunity for similar state facilities that may be lower margin?

Well, I think really the two facilities that we have shared with you previously, which is the Lawton facility in Oklahoma and Lea County were the two that were really challenged for us. The other contracts that we have, we feel like we're in a good place, both from a client relationship standpoint and from a profitability standpoint. So, I think we're focused on meeting our clients' objectives. I think the two that we needed to focus on are the ones that we're working on right now, and I'd leave it at that.

The next question comes from Kirk Ludtke with Imperial Capital. Please go ahead.

Hello, Dave, Mark, Pablo, appreciate the call. Just a couple of follow-ups. With respect to demand, I'm sure you have a much better perspective on how interior enforcement is ramping. And just curious, how would you describe how it's going? And are there any events on the horizon that we should have on our calendars that might be inflection points?

Well, Kurt, I guess from my perspective how things are going on in Interior Enforcement, I'm extremely impressed with Homeland Security and Immigration Customs Enforcement leadership and commitment to the mission. They are very focused, very engaging and the pace by which they're working is remarkable. So from my perspective, I couldn't be more impressed than watching the agency shift, if you will, or pivot into this new mission because as you know for a number of years, their objectives were either not sufficiently clear or had been diluted in such a way that the agency wasn't able to really even meet the needs of Homeland Security from an immigration perspective. So, it has become laser focused and we are obviously very excited to support the mission that's at hand. I'm not recognizing any trigger dates for lack of better terms. I think the objective that's the short order is the congressional work that's being done to properly fund the law enforcement community at the federal level so that they can actually do the job. And of course, we're positioning ourselves to support those agencies to meet their mission. So, we're excited about the task at hand and very optimistic with the leadership and the focus that's provided currently out of Homeland Security and Immigration Customs Enforcement.

On the share potential for share buybacks, do you need resolution of the ATD contract before you move forward with that?

Well, I think it would be important for us to have a line of sight to that before we would launch that share buyback. And as I had indicated earlier, we've got some constraints currently. There are certain leverage levels that we need to get to before we can even consider the share buybacks. But for us, it's executing, it's meeting the commitments that we have out there and meeting the guidance that we've put forth. We talked about the Oklahoma opportunity to accelerate the debt pay down. We get those things in place. I think, as I said earlier, I think we can have a much more robust conversation around returning capital to shareholders.

And Kurt, to that end, we do anticipate obviously a contract extension for the ISAP service level. So that should be resolved in short order.

There's quite a disparity in your unsecured ratings and congratulations on the Fitch BB minus. Is or do you have target ratings for that you want to get to before you launch something? Do you need to be BB at all three agencies or…

I wouldn't necessarily say we have to be. I would just say that I think that Fitch's ratings on us is appropriate when you think about our balance sheet, our leverage and the amount of cash that we generate. And I also think that we spend an enormous amount of time with Fitch explaining to them our business and the opportunities. And so, we try to do the same with both S&P and Moody's as well. And as we execute and we pay down the debt, I think S&P is close behind Fitch from a rating standpoint. I think we got a little bit more work to go do on the Moody side of things. But as you said, I think we're very pleased and we think that the ratings that Fitch has come out with are very fair based on our actual business model today.

Yes, agreed. And then lastly, on the monitoring, you mentioned the shift from phones to GPS. Is there how should we think about that? Is that going to be something we should expect going forward and or do you see it as stabilizing?

I think stabilizing, right. I think our client is going to utilize all the technology that we have and they do use it today. And so, we've got a variety of technology that's being deployed out there, and I think that right now with the stability in the accounts that we have, I think that the mix of products are have been fairly consistent probably over the last month or so. And so, I think we're in a good place and I think that the mix of our product should hold and continue as we move forward here.

And then lastly, on Oklahoma, what has to happen for that to move forward? Does the state legislature need to approve something? Or is there something on the horizon there?

Yes. There is, Kurt, there is a processing of an asset purchased by the jurisdiction. And to your point, the legislature would need to support that in the funding stream. And we've had robust and deliberate conversations with leadership. Everything is tracking forward with that expectation understood. And we are looking for, as we indicated in our remarks, a potential July closing commensurate with the legislative authority.

Fantastic. That's a big number, $312 million, is that what did I hear that correctly?

That's correct.

Is there something about that facility that makes it particularly valuable? And then that's it for me.

It is the largest most secure facility in the state and provides the greatest level of flexibility based on the design and the capacity considerations for enhancing public safety. So, it's a very well-designed and well-maintained project. And obviously, as a result of that, Oklahoma has significant interest in it.

The next question comes from Raj Sharma with Texas Capital Bank. Please go ahead.

I wanted to ask, what do you think -- when do you think we would you would reasonably get to the $370,000 monitoring number that you were doing just 1.5 years ago. That was about 3,500 to 4,000 a week. Is there a timeline you get to that? And just sort of in addition to that, the congressional funding approval expected by second half, is that you're expecting that to help with the number to go up?

Raj, yes, good question. And obviously, the direct correlation is the congressional budget to support the agency's objective on how they want to manage interior enforcement. As Mark alluded to earlier, right now, what we see is a high reliance on the need for detention space that's being managed appropriately and assertively by the federal government and obviously we're partnering with them on that. And then we would anticipate as that detention capacity is either utilized to its fullest extent or potentially even exceeded, then ICE would have the value statement to bring about the alternatives to detention as intended and historically been used. So, we see that congressional funding is essential to the agency's mission. And once that occurs, then we anticipate the second half of the year for the layover of additional support in all of our business lines.

And then just if I'm understanding this correctly, there were higher expenses in Q1, higher G&A expenses. I know that you had higher payroll was front loaded. So, you expected are they expected to still stay at those levels for the second half? And are the second half results higher largely from the increase in revenues?

Yes. When we think about our guidance with the activation of several idle facilities, the back half of the year profitability is that the main driver is going to be the revenue growth. We will see the expenses come down as 1% of our revenue. As we talked before, we've hired up ahead of time. We're training. We're making that investment right now. The G&A cost should tick down in the quarters to come here, but profitability will largely be driven by the revenue growth in the back half of the year.

And then just lastly for me, on the secured services side, what is the assumption on the number of net beds you're adding this year underlying the guidance for the year?

Well, what we've stated is the guidance reflects beds under current contract as well as the wins of Delaney Hall and Northlake. And those two contracts are going to add roughly 2,800 additional beds to our portfolio. And then, we continue to look at other opportunities with our clients to reactivate other facilities that we have. And I think we've mentioned in our remarks, we've got another 6,000 to 7,000 beds available with our existing idle facility. So that's what we have in play and that's what's included in our guidance.

This concludes our question-and-answer session. I would like to turn the conference back over to Dave Donahue, Chief Executive Officer of The GEO Group for any closing remarks.

Thank you very much, operator, and thank all of you for being on the call today. We look forward to talking to you at the end of the next quarter.