Brian Evans: Yes, we have. The last couple of years in particular, because I think I guess there’s two forces at play. Because of COVID, there was a labor shortage, and there was a need to increase labor costs. And fortunately, for the states, they got a lot of COVID funding that allowed them to do just that in part is how they use those monies. So we’ve been able to fairly consistently increase the pricing in our state contract primarily to cover the increase in labor costs and medical costs.
Kirk Ludtke: You were recovering monies that were already being spent?
Brian Evans: Yes, and improving our financial position through that process.
Kirk Ludtke: Can you quantify the magnitude of the price increases you got for this fiscal year?
Brian Evans: I thought about how much have we increased wages in the last two or three years, I think it’s 20%. It’s pretty significant because all prior years, I think the average increase was like the 2% CPI that we’ve seen for years and years and years, and going into the COVID years from ‘20 to now, it’s required almost a 20% increase in labor costs, and probably a similar increase in healthcare costs.
Operator: The next question comes from Jordan Hymowitz with Philadelphia Financial. Please go ahead.
Jordan Hymowitz: First of all, I don’t know if you’re aware that actually on this call what was going on that ICE stats came out and they’re up to 36.8 beds, the highest level ever in the — well, not ever, in the last four years or so. So, I mean, I assume that your guidance in the fourth quarter wasn’t in any way based on those higher numbers?
Brian Evans: No. As I said earlier, our guidance is based on where we’ve been running at approximately for the third quarter.
Jordan Hymowitz: So not only did the quarter end higher, but the fourth quarter is beginning much higher than, quote, the average?
George Zoley: And it’s different than prior years. In prior years, the fourth quarter is usually a lower population, because of the weather changing on the southern border and it getting colder, lots of people coming across. That’s the way it was historically for decades. This year, it seems it could be different.
Jordan Hymowitz: And I know it’s not as much as CXW, but the incremental margin at these levels is higher than the average margin, correct?
Brian Evans: It varies by facility depending on how the contract is priced, but it should be incrementally better.
Jordan Hymowitz: Okay. And next, of the 9,000, roughly 12% beds that are unoccupied, should we think about if they do get occupied the earnings and margin are about average with what’s out there, in other words, but not substantially better or worse?
Brian Evans: Well, they’re owned facilities, so they should be — the margin should be — the EBITDA margin should be in line with our historical average for owned facilities, which is in that 25% to 35% range. So, it would be a little higher than our average margins because our average margins include international operations and managed-only facilities that have lower margins.
Jordan Hymowitz: And just to mention, with this new proposal for ISAP, I mean, we’re talking 5 million people that could potentially be monitored. I mean, that’s like multiples of the 100 to 200 you currently are monitoring. You don’t get all of them or half of them, but that business which has 50% margins, could be substantially higher next year, if this comes through, is that correct?
Jose Gordo: Yes, quantitatively. But as we’ve discussed, there’s different pricing levels for different programs of intensity as far as monitoring. As I said, the most intensive would be monitoring on a daily basis and throughout the day, but it could be as little as, once every month or a few months or a couple of times a year.
Jordan Hymowitz: And final question is, could you remind me of the number of beds that were in place during the last Republican administration?
Jose Gordo: I think they got over 50,000, maybe 52,000.
Jordan Hymowitz: I think 52 is the right number. So, again, if we head towards an election year, if the Republicans should win, the number of beds could be 30% higher.
Jose Gordo: It could be.
Jordan Hymowitz: Okay. Thanks for taking my questions.
Jose Gordo: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to George Zoley, Executive Chairman for The GEO Group.
George Zoley: Thank you for joining us on this call, and we look forward to speaking to you on the next call in February. Thank you.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
