Brian Violino: Okay. Thanks. And then appreciate all the details on the indentures and the credit agreements for the bonds. Just curious if you could give us a bit more thought in terms of timing as it relates to capital returns. Would you potentially want to wait until the cash flow sweep steps down later next year? Or if your leverage gets lower into your target range, could you think about repurchases earlier than that?
Brian Evans: I think at a minimum we have to wait until the leverage steps down towards the middle of next year. So, we’re locked in on the 75% ECF through that point, and then it could step down based on leverage, and we can access those covenants at that point in time.
Brian Violino: Okay. Thanks. And then just one more from me. It looked like the NOI margins in the monitoring segment were a bit lower sequentially, year-over-year. Anything to note there, one-time or seasonal? And if not, should we expect those margins to improve over the course of the year otherwise?
Shayn March: The margins in that segment are obviously being impacted, as we’ve discussed on the call, by the change in the utilization of the ISAP contract predominantly. So – if as George discussed earlier, if the guidance, if the numbers move up later in the year in ISAP, similar to may occur with the ICE detention beds, then we should see some nominal improvement in those margins.
Brian Violino: Got it. Thanks for answering my questions.
Operator: The next question comes from Brendan McCarthy with Sidoti. Please go ahead.
Brendan McCarthy: Hi, good morning. Thanks for taking my questions. I just wanted to start off looking at the idle facilities. It looks like there was an increase in the secure idle facility bed count, by roughly 900 beds. I think it was driven by reclassification of the, or related to the Delaney Hall asset. Can you just discuss what drove that increase?
George Zoley: It was a thousand bed facility that was previously a reentry facility. And we are looking at that facility for marketing in the near future.
Brendan McCarthy: Got it. Okay. And then I just kind of wanted to touch on the guidance. It looked like the assumption for shares outstanding increased, I think, was like $137,000 from about $126,000 from the initial guidance. Obviously, that assumes, you know, sorry, go ahead?
George Zoley: No, it’s millions yes.
Brendan McCarthy: Yes. Oh, right, right, yes.
George Zoley: [$126 million to $137 million] approximately.
Brendan McCarthy: Right. Yes. Sorry about that. Obviously, I assume that does not include any share repurchase activity. But driving that increase is likely related to the exchangeable notes. Is that correct?
George Zoley: Yes.
Brendan McCarthy: Got it. Okay. One last question from me. Do you have any comment on potential executive action from the Biden administration that’s just been, making headlines in recent days, as it relates to the border?
George Zoley: I’m unclear as to what your question is.
Brian Evans: Executive action policies, changing the border.
George Zoley: I’ve heard that he’s thinking about changing some policy, but I’m unclear as to what policy they’re talking about.
Brendan McCarthy: Got it. Understood. That’s all from me. Thanks.
Operator: The next question comes from Greg Gibas with Northland Securities. Please go ahead.
Greg Gibas: Hi, good morning, guys. Thanks for taking the questions. Just as with respect to Q2 guidance, what do you expect that uplift in EBITDA to be driven by given, the expectation for roughly flat revenue?
Shayn March: Yes, that’s going to be primarily caused, by the cost of payroll tax that we have in the first quarter, which is typical for our business. And then in the second quarter, you don’t necessarily see a repeat of that expense. That’s roughly $5 million, $6 million of added payroll expense in the first quarter relative to the second.
Greg Gibas: Okay. Makes sense. And as it relates to maybe just more general cost structure dynamics, could you address just any favorable, or unfavorable trends that you’re seeing on, any whether it relates to, payroll, obviously there’s some seasonality like you just said, but any trends you’re seeing on those line items?
Shayn March: No, I don’t think so, over the last several years, we had to give some fairly significant adjustments at certain contracts, which we were able to negotiate with our clients. Revenue increases to offset that. So I think that’s slowed down. There’s still pressure in the labor markets, but it’s more, steady than it was. We did see previously also impacts to food and utilities, but I think those have also stabilized some more recently. So not seeing any real significant pressures in those major cost categories other than, what’s normal in the market.
Greg Gibas: Sure. Okay. And more high level, why do you, I know it’s been just kind of slight declines here, but why is the ISAP populations, what do you attribute that to in terms of why they’ve kind of continued to decline sequentially?
George Zoley: Well, part of it was certainly the budget deficits that were being experienced, within ICE. It’s my understanding that they had an overall budget deficit of approximately $700 million. So they had to cut back in certain areas, which included detention capacity as well as ISAP.
Greg Gibas: Okay. Got it. And I guess last one from me, just as it relates to full year guidance. Are there any contract renewals this year or other factors that could kind of swing it one way or another, or is it mostly just kind of fluctuations in those ICE populations?
George Zoley: With regard to our Adelanto facility in California, I believe that the current performance period is now extended to June 19. And we’ve been in discussions and have made a request to extend that period for the balance of the year, if possible. If not, through at least September 30. And we’re awaiting a response to that. And we would just expect for the balance of the year that it will continue. So if for some reason it didn’t, then that could have a downward impact.
