CoreCivic Resumes Operations at South Texas Family Residential Center: A Significant Revenue Opportunity

CoreCivic (NYSE: CXW), a leading government solutions company, has announced the resumption of operations at the South Texas Family Residential Center in Dilley, Texas, under an amended intergovernmental services agreement with ICE. The facility, which can accommodate up to 2,400 individuals, will restart operations after being idle since August 2024. This development represents a significant revenue opportunity for CoreCivic, with expected annual revenue of approximately $180 million once fully activated.

The company has signed a new lease agreement with Target Hospitality, the facility owner, over a period co-terminus with the ICE agreement. The amended IGSA expires in March 2030 and may be further extended through bilateral modification. The agreement provides for a fixed monthly payment structure based on the gradual activation of facility neighborhoods, with pre-activation activities already underway. CoreCivic anticipates that this award will be accretive to earnings beginning in the second quarter of 2025.

Damon T. Hininger, CoreCivic's Chief Executive Officer, commented on the announcement, stating, "With this award and the additional capacity provided to ICE through four contract modifications we announced last week, we are grateful for the trust our government partner has placed in us. We have an extensive supply of available beds, either owned directly or provided by third parties like Target, that provides our government partners the flexibility to satisfy their immediate and long-term needs in a cost-effective manner. We are entering a period when our government partners -- particularly our federal government partners -- are expected to have increased demand. We anticipate continued robust contracting activity throughout 2025 that will help meet their growing needs."

Patrick Swindle, CoreCivic's President and Chief Operating Officer, added, "We are offering our staff the opportunity to transfer to the Dilley Facility and expect many who accept transfer opportunities will be professionals who previously provided services at the facility prior to its closure last year, expediting the activation process. We are also pleased to again work with Target, which has been a fantastic partner since our relationship began in 2014."

The resumption of operations at the South Texas Family Residential Center is a materially important development for CoreCivic, as this single contract represents roughly 9% of the company's $1.98 billion market capitalization. The contract structure includes several positive elements, such as a fixed monthly payment schedule, a five-year term with extension possibilities, and a graduated activation approach that mitigates operational risks. Management explicitly states that this contract will be accretive to earnings beginning in Q2 2025.

CoreCivic's flexible approach of utilizing both owned and third-party facilities, such as Target Hospitality's, enhances their ability to capture market opportunities without capital-intensive new construction, potentially improving return on invested capital. The company's strategic decision to rehire former staff and leverage existing relationships at the facility contributes to operational efficiency and service quality, as experienced staff can expedite the activation process, control training costs, and maintain high-quality services.



In conclusion, CoreCivic's resumption of operations at the South Texas Family Residential Center represents a significant revenue opportunity, with expected annual revenue of approximately $180 million once fully activated. This contract is materially important to the company's financial outlook, as it represents roughly 9% of CoreCivic's market capitalization. The contract structure includes several positive elements, and the company's flexible approach to facility utilization and strategic decision to rehire former staff contribute to operational efficiency and service quality. Investors should closely monitor CoreCivic's progress in activating the facility and generating revenue from this contract throughout 2025.