By M. Marin
NYSE:CXW
READ THE FULL CXW RESEARCH REPORT
Reactivating idled facilities adds capacity to meet ICE’s growing needs
CoreCivic (NYSE:CXW) has reactivated several idled facilities as new ICE contracts have closed, including the:
- 2,560-bed California City Immigration Processing Center
- 2,400-bed leased South Texas Family Residential Center
- 600-bed West Tennessee Detention Facility
- 2,160-bed Diamondback Correctional Facility
- 1,033-bed Midwest Regional Reception Center in Leavenworth, Kansas, shortly
CXW announced today that its application for a Special Use Permit (SUP) at the 1,033- bed Midwest Regional Reception Center in Leavenworth, Kansas, has been approved. The company entered into a Letter Contract with ICE effective March 7, 2025, to re-activate the facility, but activities, including staff hiring efforts, were interrupted by a lawsuit the City of Leavenworth filed alleging that a SUP is required to operate the center. With the SUP approval, CXW expects to begin the occupancy process shortly.
CXW’s agreement with ICE provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations, and the company expects Midwest Regional to contribute about $0.05 to $0.06 in added EPS over the balance of 2026, including start-up costs and phased intake operations. We expect this to be back-half weighted. CXW had previously indicated that annual revenue is expected to be about $60 million once the center is fully ramped.
We are raising our estimates and valuation to include the anticipated contribution from the Midwest Regional Reception Center. The company’s recent operating results have also benefited from higher ICE, federal, and state populations and higher average per diem rates at many locations, combined with multiple new contracts coming online over the past few quarters. New business has closed at a pace the company has not experienced in some time, and CXW is also in discussions with ICE and other government partners for other contracts, including to reactivate additional idle facilities.
We also believe the reopening of these facilities underscores ICE’s need for capacity and CXW’s longstanding role in supplying capacity and services to ICE, its largest government partner. The company has a long history of providing capacity and related services to ICE, the federal government’s highest-funded law enforcement agency, according to the New York Times and other government partners.
The company’s strong pipeline and recent new business wins, or contract extensions, reflect CXW’s ability to provide flexible solutions to government customers, in our view. Government entities and ICE need to house the prison populations and detainees, and also face budgetary issues that likely constrain construction of new facilities in the near-term. We believe the facility reactivations and multiple new contracts position CXW for strong performance going forward. CXW still has additional idled capacity that it can bring back online.
Enhanced financial flexibility; amended credit agreement increases liquidity
In addition, CXW has strengthened its balance sheet and has substantial liquidity to support operations, buybacks, and growth measures, in our view. To enhance its financial flexibility, CXW recently amended its credit agreement to expand the revolving credit facility to $575 million, effective December 1, 2025, from $275 million. CXW had $97.9 million of cash at the end of 2025.
As of year end 2025, CXW had $300.5 million of repurchase authorization available under its share repurchase program, having expanded the authorization. CXW has no major debt maturities coming due in 2026, and we expect share buybacks to remain a capital allocation priority. We remain optimistic about operating trends going forward. Moreover, we view CXW’s enhanced financial flexibility with a recent amended credit agreement and increased share buyback authorization as positives.
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