CoreCivic, Inc. (CXW) Income Statement

The 27.3% YoY revenue growth in Q2 2026 marks the fourth consecutive quarter of accelerating expansion, up from 9.8% in Q2 2025. This appears driven by increased detention populations, particularly from ICE, as CEO commentary attributes the upside to 'slightly higher populations.' While the trend is robust, the reliance on federal policy introduces volatility; investors should monitor occupancy rates and contract renewals for signs of deceleration.

The sharp decline in NOI margin from 26.0% in Q2 2025 to 16.5% in Q2 2026 is notable, despite revenue growth. This may indicate higher operating expenses, such as labor or healthcare costs, that are not fully offset by per-diem rate escalators. The margin compression appears concentrated in the Safety segment, which is more operationally intensive. If this trend persists, it could signal structural margin pressure, though the Q1 2026 margin of 18.5% suggests some recovery.

FFO growth of 4.7% in Q2 2026 is modest compared to revenue growth, suggesting that operating leverage is not fully translating to FFO. The gap between FFO and AFFO is wide—AFFO of $33.1M is less than half of FFO—implying significant recurring capital expenditures or tenant improvements. This may indicate that maintenance capex is consuming a large portion of cash flow, which could limit dividend capacity. Investors should monitor the sustainability of FFO growth relative to AFFO.

The substantial gap between net income and FFO underscores the heavy depreciation burden typical of real estate assets. With FFO at $73.0M versus net income of $37.1M, depreciation and amortization likely exceed $35M quarterly. This distortion is expected for a REIT, but the magnitude suggests that the company's assets are aging, potentially requiring higher maintenance capex. The AFFO figure of $33.1M, which accounts for such capex, may be a more accurate reflection of distributable cash flow.

While same-store metrics are not explicitly disclosed, the 37.6% YoY NOI growth in Q2 2026 suggests strong organic performance, likely from increased occupancy in existing facilities. The revenue growth of 27.3% indicates that per-diem rates may also be rising. However, the NOI margin compression suggests that expense growth is outpacing revenue, which could temper same-store NOI growth if not addressed. Investors should look for same-store NOI disclosures in the MD&A to confirm the organic trend.