The GEO Group, Inc. (NYSE: GEO) (“GEO”), a leading
provider of support services for secure facilities, processing
centers, and reentry centers, as well as enhanced in-custody
rehabilitation, post-release support, and electronic monitoring
programs, reported today its financial results for the second
quarter and first six months of 2022 and increased its financial
guidance for the full year 2022.
Second Quarter 2022 Highlights
- Total revenues of $588.2 million
- Net Income Attributable to GEO of $53.7 million, or $0.37
per diluted share
- Adjusted Net Income of $0.42 per diluted share
- Adjusted EBITDA of $132.3 million
- Adjusted Funds From Operations (“AFFO”) of $0.69 per diluted
share
For the second quarter 2022, we reported net income attributable
to GEO of $53.7 million, compared to net income attributable to GEO
of $42.0 million for the second quarter 2021. We reported total
revenues for the second quarter 2022 of $588.2 million compared to
$565.4 million for the second quarter 2021. Excluding unusual
and/or nonrecurring items, we reported adjusted net income for the
second quarter 2022 of $51.0 million, or $0.42 per diluted share,
compared to $50.0 million, or $0.41 per diluted share, for the
second quarter 2021.
We reported second quarter 2022 Adjusted EBITDA of $132.3
million, compared to $118.4 million for the second quarter 2021. We
reported second quarter 2022 AFFO of $84.2 million, or $0.69 per
diluted share, compared to $85.5 million, or $0.71 per diluted
share, for the second quarter 2021.
George C. Zoley, Executive Chairman of GEO, said, “We are
pleased with our continued strong operational and financial
performance. Our diversified business units have delivered robust
results over the last two years, which has allowed us to reduce our
net recourse debt by approximately $375 million since the beginning
of 2020, significantly deleveraging our balance sheet. To
complement our efforts to reduce net recourse debt, we are pleased
to have recently announced several proposed transactions to
comprehensively address the substantial majority of our outstanding
debt maturities in 2023, 2024 and 2026.
We believe that addressing our upcoming debt maturities through
the successful completion of these proposed transactions is in the
best interests of all of our stakeholders and offers the best path
forward for the future of our Company. We intend to use most of our
free cash flows going forward to continue to significantly
deleverage our balance sheet for the foreseeable future, and we are
optimistic that the successful completion of these proposed
transactions, along with our continued focus on debt reduction,
will have the potential to unlock additional equity value for our
shareholders.”
First Six Months 2022 Highlights
- Total revenues of $1.14 billion
- Net Income Attributable to GEO of $91.9 million, or $0.63
per diluted share
- Adjusted Net Income of $0.73 per diluted share
- Adjusted EBITDA of $257.5 million
- AFFO of $1.33 per diluted share
For the first six months of 2022, we reported net income
attributable to GEO of $91.9 million, compared to net income
attributable to GEO of $92.5 million for the first six months of
2021. We reported total revenues for the first six months of 2022
of $1.14 billion compared to $1.14 billion for the first six months
of 2021. Excluding unusual and/or nonrecurring items, we reported
adjusted net income for the first six months of 2022 of $89.2
million, or $0.73 per diluted share, compared to $88.3 million, or
$0.73 per diluted share, for the first six months of 2021.
We reported Adjusted EBITDA of $257.5 million for the first six
months of 2022, compared to $226.9 million for the first six months
of 2021. We reported AFFO of $162.2 million, or $1.33 per diluted
share, for the first six months of 2022, compared to $163.5
million, or $1.36 per diluted share, for the first six months of
2021.
Balance Sheet and Liquidity
As of the quarter ended on June 30, 2022, we had approximately
$587.9 million in cash and cash equivalents on our balance sheet.
Accounting for our cash on hand, we have approximately $2.0 billion
in net recourse debt outstanding, not including non-recourse debt,
finance lease obligations, or the mortgage loan on our corporate
headquarters.
We continue to focus on reducing net recourse debt. Since the
beginning of 2020, we have reduced net recourse debt by
approximately $375 million, including approximately $130 million in
the first half of 2022. We also continue to evaluate the potential
sale of company-owned assets and businesses. Over the last two
years, we have completed sales transactions involving facility
assets, business segment contracts, and land, totaling
approximately $70 million in proceeds.
On July 19, 2022, we announced a series of proposed transactions
(the “Proposed Transactions”) with certain of our secured and
unsecured creditors which will, if completed, comprehensively
address the substantial majority of our outstanding debt scheduled
to mature in 2023, 2024 and 2026. A key component of the Proposed
Transactions is an offer to exchange any and all of GEO’s 5.125%
Senior Notes due 2023 and 5.875% Senior Notes due 2024 for newly
issued 10.500% Senior Second Lien Secured Notes due 2028 and, if
elected, cash (the “Exchange Offers”). The Proposed Transactions
are conditioned upon receipt of certain creditor participation and
consents and are expected to close in 30 to 90 days, subject to
potential review by the U.S. Securities and Exchange Commission
(the “SEC”) of the Registration Statement relating to the Exchange
Offers (described in greater detail below) and customary closing
conditions.
For additional information on the mechanics of the Exchange
Offers and related consent solicitations, please refer to the
Registration Statement on Form S-4 filed by GEO with the SEC on
July 19, 2022 (the “Registration Statement”), including the
preliminary prospectus that forms a part of the Registration
Statement (the “Prospectus”). The Exchange Offers and consent
solicitations described in the Registration Statement are made only
by and pursuant to the terms and subject to the conditions set
forth in the Prospectus. The information in this news release is
qualified by reference to the Registration Statement and the
Prospectus. This news release is for informational purposes only
and does not constitute an offer to purchase or a solicitation of
an offer to buy any securities, nor shall there be any sale of
securities in any state or jurisdiction in which such offer or
solicitation or sale would be unlawful. Copies of the Registration
Statement may be obtained from D.F. King & Co., Inc., the
information agent and exchange agent for the Exchange Offers and
related consent solicitations. Requests for documentation and
questions regarding procedures for participating in the Exchange
Offers and the related consent solicitations can be directed to
D.F. King & Co., Inc. at (800) 290-6428 (for information U.S.
Toll-free), (212) 269-5550 (information for brokers) or
geo@dfking.com (email).
The Proposed Transactions will stagger our debt maturities
between 2023 and 2028, significantly reducing the total recourse
debt that is due between 2023 and 2024 from approximately $2
billion to approximately $600 million, based on creditor support as
of July 18, 2022, and minimum participation requirements. To the
extent final participation in the Proposed Transactions exceeds the
minimum participation requirements, the remaining 2023 and 2024
debt maturities could be less than $600 million. The staggering of
our debt maturities over a longer period of time will allow us to
continue to allocate our excess cash flow towards further reducing
our net recourse debt. Based on our current projections, we expect
to reduce our net recourse debt by a total of approximately $200
million in 2022, ending the year at under $2 billion in net
recourse debt and total net leverage of approximately 3.8
times.
Assuming consistent financial performance across our business
units, over the next two years, we would expect to be able to
reduce net recourse debt by at least $200 million to $250 million
annually. Based on this level of debt reduction, our goal would be
to decrease net leverage to below 3.5 times by the end of 2023 and
to below 3 times by the end of 2024.
We believe that the Proposed Transactions will place GEO in a
materially stronger financial position going forward by reducing
the risks that our near-term debt maturities pose to our ability to
refinance our debt in the ordinary course on satisfactory terms,
pursue future quality growth opportunities, and enhance long-term
shareholder value. Based on our historical and expected cash flows
and assuming reasonable future access to the capital markets on
satisfactory terms, we believe we will be able to address the new
staggered debt maturities in the ordinary course of business.
Upon completion of the Proposed Transactions and based on
current commitments and minimum participation requirements, we
expect our interest expense to increase by approximately $27
million to $30 million, pre-tax, in 2022, and by an additional $37
million to $41 million, pre-tax, in 2023.
2022 Financial Guidance
Despite the expected increase in our interest expense, due to
our continued strong financial performance, we have increased our
financial guidance for the full year 2022 and have issued guidance
for the third and fourth quarters of 2022. We expect full year 2022
Net Income Attributable to GEO to be between $158 million and $166
million on annual revenues of approximately $2.35 billion.
Adjusting for unusual and/or nonrecurring items, we expect full
year 2022 Adjusted Net Income to be in a range of $1.28 to $1.34
per diluted share. We expect full year 2022 AFFO to be in a range
of $2.40 to $2.46 per diluted share and full year 2022 Adjusted
EBITDA to be in a range of $515 million to $530 million.
For the third quarter of 2022, we expect Net Income Attributable
to GEO to be between $39 million and $42 million on quarterly
revenues of $603 million to $608 million. We expect third quarter
2022 AFFO to be between $0.55 and $0.57 per diluted share and third
quarter 2022 Adjusted EBITDA to be between $131 million and $138
million.
For the fourth quarter of 2022, we expect Net Income
Attributable to GEO to be between $27 million and $32 million on
quarterly revenues of $600 million to $605 million. We expect
fourth quarter 2022 AFFO to be between $0.52 and $0.56 per diluted
share and fourth quarter 2022 Adjusted EBITDA to be between $127
million and $135 million.
Our updated 2022 guidance reflects the expected increase in our
interest expense and the previously expected non-renewal of our
contract with the Federal Bureau of Prisons for the company-owned,
1,800-bed North Lake Correctional Facility in Michigan, effective
September 30, 2022, which generated annualized revenues of
approximately $38 million.
We expect our effective tax rate for the full year 2022 to be
approximately 28%, exclusive of any discrete items.
COVID-19 Information
As the COVID-19 pandemic has impacted communities across the
United States and around the world, our employees and facilities
have also been impacted by the spread of COVID-19. Ensuring the
health and safety of our employees and all those in our care has
always been our number one priority. From the beginning of the
pandemic, we have implemented mitigation initiatives to address the
risks of COVID-19, consistent with the guidance issued for
correctional and detention facilities by the Centers for Disease
Control and Prevention (“CDC”).
We will continue to evaluate and refine the steps we take as
appropriate and necessary based on updated guidance by the CDC and
best practices. We are grateful for our frontline employees who
continue to make daily sacrifices to care for all those in our
facilities. Additional information on the COVID-19 mitigation
initiatives implemented by GEO can be found at
www.geogroup.com/COVID19.
Conference Call Information
We have scheduled a conference call and simultaneous webcast for
today at 11:00 AM (Eastern Time) to discuss our second quarter 2022
financial results as well as our outlook. The call-in number for
the U.S. is 1-877-250-1553 and the international call-in number is
1-412-542-4145. In addition, a live audio webcast of the conference
call may be accessed on the Webcasts section under the News, Events
and Reports tab of GEO’s investor relations webpage at
investors.geogroup.com. A replay of the webcast will be available
on the website for one year. A telephonic replay of the conference
call will be available until August 16, 2022, at 1-877-344-7529
(U.S.) and 1-412-317-0088 (International). The participant passcode
for the telephonic replay is 3959973.
About The GEO Group
The GEO Group, Inc. (NYSE: GEO) is a leading diversified
government service provider, specializing in design, financing,
development, and support services for secure facilities, processing
centers, and community reentry centers in the United States,
Australia, South Africa, and the United Kingdom. GEO’s diversified
services include enhanced in-custody rehabilitation and
post-release support through the award-winning GEO Continuum of
Care®, secure transportation, electronic monitoring,
community-based programs, and correctional health and mental health
care. GEO’s worldwide operations include the ownership and/or
delivery of support services for 102 facilities totaling
approximately 82,000 beds, including idle facilities and projects
under development, with a workforce of up to approximately 18,000
employees.
Reconciliation Tables and Supplemental Information
GEO has made available Supplemental Information which contains
reconciliation tables of Net Income Attributable to GEO to Adjusted
Net Income, Net Income to EBITDA and Adjusted EBITDA, and Net
Income Attributable to GEO to AFFO, along with supplemental
financial and operational information on GEO’s business and other
important operating metrics. The reconciliation tables are also
presented herein.
Please see the section below titled “Note to Reconciliation
Tables and Supplemental Disclosure - Important Information on GEO’s
Non-GAAP Financial Measures” for information on how GEO defines
these supplemental Non-GAAP financial measures and reconciles them
to the most directly comparable GAAP measures. GEO’s Reconciliation
Tables can be found herein and in GEO’s Supplemental Information
available on GEO’s investor webpage at investors.geogroup.com.
Note to Reconciliation Tables and Supplemental Disclosure
–
Important Information on GEO's Non-GAAP Financial
Measures
Adjusted Net Income, EBITDA, Adjusted EBITDA, and AFFO are
non-GAAP financial measures that are presented as supplemental
disclosures. GEO has presented herein certain forward-looking
statements about GEO's future financial performance that include
non-GAAP financial measures, including Adjusted Net Income,
Adjusted EBITDA, and AFFO. The determination of the amounts that
are included or excluded from these non-GAAP financial measures is
a matter of management judgment and depends upon, among other
factors, the nature of the underlying expense or income amounts
recognized in a given period.
While we have provided a high level reconciliation for the
guidance ranges for full year 2022, we are unable to present a more
detailed quantitative reconciliation of the forward-looking
non-GAAP financial measures to their most directly comparable
forward-looking GAAP financial measures because management cannot
reliably predict all of the necessary components of such GAAP
measures. The quantitative reconciliation of the forward-looking
non-GAAP financial measures will be provided for completed annual
and quarterly periods, as applicable, calculated in a consistent
manner with the quantitative reconciliation of non-GAAP financial
measures previously reported for completed annual and quarterly
periods.
EBITDA is defined as net income adjusted by adding provisions
for income tax, interest expense, net of interest income, and
depreciation and amortization. Adjusted EBITDA is defined as EBITDA
adjusted for (gain)/loss on real estate assets, pre-tax, net loss
attributable to non-controlling interests, stock-based compensation
expenses, pre-tax, other non-cash revenue and expenses, pre-tax,
and certain other adjustments as defined from time to time,
including for the periods presented one-time employee restructuring
expenses, pre-tax. Given the nature of our business as a real
estate owner and operator, we believe that EBITDA and Adjusted
EBITDA are helpful to investors as measures of our operational
performance because they provide an indication of our ability to
incur and service debt, to satisfy general operating expenses, to
make capital expenditures, and to fund other cash needs or reinvest
cash into our business. We believe that by removing the impact of
our asset base (primarily depreciation and amortization) and
excluding certain non-cash charges, amounts spent on interest and
taxes, and certain other charges that are highly variable from year
to year, EBITDA and Adjusted EBITDA provide our investors with
performance measures that reflect the impact to operations from
trends in occupancy rates, per diem rates and operating costs,
providing a perspective not immediately apparent from net
income.
The adjustments we make to derive the non-GAAP measures of
EBITDA and Adjusted EBITDA exclude items which may cause short-term
fluctuations in income from continuing operations and which we do
not consider to be the fundamental attributes or primary drivers of
our business plan and they do not affect our overall long-term
operating performance. EBITDA and Adjusted EBITDA provide
disclosure on the same basis as that used by our management and
provide consistency in our financial reporting, facilitate internal
and external comparisons of our historical operating performance
and our business units and provide continuity to investors for
comparability purposes.
Adjusted Net Income is defined as net income attributable to GEO
adjusted for certain items which by their nature are not comparable
from period to period or that tend to obscure GEO’s actual
operating performance, including for the periods presented
gain/loss on real estate assets, pre-tax, gain on the
extinguishment of debt, pre-tax, one-time employee restructuring
expenses, pre-tax, and tax effect of adjustments to net income
attributable to GEO.
AFFO is defined as net income attributable to GEO adjusted by
adding depreciation and amortization, stock based compensation
expense, the amortization of debt issuance costs, discount and/or
premium and other non-cash interest, (gain)/loss on real estate
assets, pre-tax, and by subtracting facility maintenance capital
expenditures and other non-cash revenue and expenses. From time to
time, AFFO is also adjusted for certain items which by their nature
are not comparable from period to period or that tend to obscure
GEO’s actual operating performance, including for the periods
presented gain on the extinguishment of debt, pre-tax, one-time
employee restructuring expenses, pre-tax, and tax effect of
adjustments to net income attributable to GEO.
Because of the unique design, structure and use of our GEO
Secure Services and Reentry Services facilities, we believe that
assessing the performance of our secure facilities, processing
centers, and reentry centers without the impact of depreciation or
amortization is useful and meaningful to investors. Our assessment
of our operations is focused on long-term sustainability. The
adjustments we make to derive the non-GAAP measure of AFFO exclude
items which may cause short-term fluctuations in net income
attributable to GEO but have no impact on our cash flows, or we do
not consider them to be fundamental attributes or the primary
drivers of our business plan and they do not affect our overall
long-term operating performance.
We may make adjustments to AFFO from time to time for certain
other income and expenses that do not reflect a necessary component
of our operational performance on the basis discussed above, even
though such items may require cash settlement. Because AFFO
excludes depreciation and amortization unique to real estate as
well as non-operational items and certain other charges that are
highly variable from year to year, they provide our investors with
performance measures that reflect the impact to operations from
trends in occupancy rates, per diem rates, operating costs, and
interest costs, providing a perspective not immediately apparent
from Net Income Attributable to GEO.
We believe the presentation of AFFO provides useful information
to investors as they provide an indication of our ability to fund
capital expenditures and expand our business. AFFO provides
disclosure on the same basis as that used by our management and
provide consistency in our financial reporting, facilitate internal
and external comparisons of our historical operating performance
and our business units and provide continuity to investors for
comparability purposes.
Safe-Harbor Statement
This press release contains forward-looking statements regarding
future events and future performance of GEO that involve risks and
uncertainties that could materially and adversely affect actual
results, including statements regarding GEO’s financial guidance
for the full year, third quarter, and fourth quarter of 2022, the
Proposed Transactions to address GEO’s debt maturities, and GEO’s
expected targets for net recourse debt reductions and net leverage
decreases. Forward-looking statements generally can be identified
by the use of forward-looking terminology such as “may,” “will,”
“expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,”
“estimate,” or “continue” or the negative of such words and similar
expressions. Risks and uncertainties that could cause actual
results to vary from current expectations and forward-looking
statements contained in this press release include, but are not
limited to: (1) GEO’s ability to meet its financial guidance for
2022 given the various risks to which its business is exposed; (2)
GEO’s ability to successfully consummate the Proposed Transactions
within the anticipated timeline; (3)GEO’s ability to deleverage and
repay, refinance or otherwise address its debt maturities in an
amount and on terms commercially acceptable to GEO, and on the
timeline it expects or at all; (4) GEO’s ability to identify and
successfully complete any potential sales of additional
company-owned assets and businesses on commercially advantageous
terms on a timely basis, or at all; (5) changes in federal and
state government policy, orders, directives, legislation and
regulations that affect public-private partnerships with respect to
secure, correctional and detention facilities, processing centers
and reentry centers, including the timing and scope of
implementation of President Biden's Executive Order directing the
U.S. Attorney General not to renew the U.S. Department of Justice
contracts with privately operated criminal detention facilities;
(6) changes in federal immigration policy; (7) public and political
opposition to the use of public-private partnerships with respect
to secure correctional and detention facilities, processing centers
and reentry centers; (8) the magnitude, severity, and duration of
the current COVID-19 global pandemic, its impact on GEO, GEO's
ability to mitigate the risks associated with COVID-19, and the
efficacy and distribution of COVID-19 vaccines; (9) GEO’s ability
to sustain or improve company-wide occupancy rates at its
facilities in light of the COVID-19 global pandemic and policy and
contract announcements impacting GEO’s federal facilities in the
United States; (10) fluctuations in our operating results,
including as a result of contract terminations, contract
renegotiations, changes in occupancy levels and increases in our
operating costs; (11) general economic and market conditions,
including changes to governmental budgets and its impact on new
contract terms, contract renewals, renegotiations, per diem rates,
fixed payment provisions, and occupancy levels; (12) GEO’s ability
to timely open facilities as planned, profitably manage such
facilities and successfully integrate such facilities into GEO’s
operations without substantial costs; (13) GEO’s ability to win
management contracts for which it has submitted proposals and to
retain existing management contracts; (14) risks associated with
GEO’s ability to control operating costs associated with contract
start-ups; (15) GEO’s ability to successfully pursue growth and
continue to create shareholder value; (16) GEO’s ability to obtain
financing or access the capital markets in the future on acceptable
terms or at all; and (17) other factors contained in GEO’s
Securities and Exchange Commission periodic filings, including its
Form 10-K, 10-Q and 8-K reports, many of which are difficult to
predict and outside of GEO’s control.
Second quarter and first six months of 2022 financial tables
to follow:
Condensed
Consolidated Balance Sheets*
(Unaudited)
As of As of June 30, 2022 December
31, 2021 (unaudited) (unaudited)
ASSETS Cash and
cash equivalents $
587,861
$
506,491
Restricted cash and cash equivalents
21,134
20,161
Accounts receivable, less allowance for doubtful accounts
371,851
365,573
Contract receivable, current portion
7,246
6,507
Prepaid expenses and other current assets
35,321
45,176
Total current assets $
1,023,413
$
943,908
Restricted Cash and Investments
81,392
76,158
Property and Equipment, Net
2,007,636
2,037,845
Contract Receivable
344,151
367,071
Operating Lease Right-of-Use Assets, Net
105,972
112,187
Assets Held for Sale
2,570
7,877
Intangible Assets, Net (including goodwill)
910,181
921,349
Other Non-Current Assets
80,008
71,013
Total Assets $
4,555,323
$
4,537,408
LIABILITIES AND SHAREHOLDERS' EQUITY Accounts
payable $
79,569
$
64,073
Accrued payroll and related taxes
66,956
67,210
Accrued expenses and other current liabilities
196,916
200,712
Operating lease liabilities, current portion
28,125
28,279
Current portion of finance lease obligations, long-term debt, and
non-recourse debt
17,639
18,568
Total current liabilities $
389,205
$
378,842
Deferred Income Tax Liabilities
80,768
80,768
Other Non-Current Liabilities
77,936
87,073
Operating Lease Liabilities
83,522
89,917
Finance Lease Liabilities
1,632
1,977
Long-Term Debt
2,574,061
2,625,959
Non-Recourse Debt
278,367
297,856
Total Shareholders' Equity
1,069,832
975,016
Total Liabilities and Shareholders' Equity $
4,555,323
$
4,537,408
* all figures in '000s
Condensed
Consolidated Statements of Operations*
(Unaudited)
Q2 2022 Q2 2021 YTD 2022 YTD 2021
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $
588,177
$
565,419
$
1,139,362
$
1,141,796
Operating expenses
411,791
405,009
796,952
833,160
Depreciation and amortization
32,016
33,306
67,954
67,423
General and administrative expenses
49,296
54,688
97,856
103,167
Operating income
95,074
72,416
176,600
138,046
Interest income
5,562
5,985
11,190
12,187
Interest expense
(33,225
)
(32,053
)
(64,846
)
(63,897
)
Gain on extinguishment of debt
-
1,654
-
4,693
Net gain/(loss) on dispositions of assets
3,680
(2,950
)
3,053
10,379
Income before income taxes and equity in earnings of
affiliates
71,091
45,052
125,997
101,408
Provision for income taxes
18,898
5,063
36,860
12,999
Equity in earnings of affiliates, net of income tax
provision
1,480
1,942
2,715
4,007
Net income
53,673
41,931
91,852
92,416
Less: Net loss attributable to noncontrolling
interests
54
28
94
88
Net income Attributable to The GEO Group Inc. $
53,727
$
41,959
$
91,946
$
92,504
Weighted Average Common Shares Outstanding:
Basic
121,119
120,426
120,918
120,225
Diluted **
121,881
120,470
121,650
120,431
Net income per Common Share Attributable to The GEO Group,
Inc. **:
Basic: Net income per share — basic $
0.37
$
0.29
$
0.63
$
0.71
Diluted: Net income per share — diluted $
0.37
$
0.29
$
0.63
$
0.70
* All figures in '000s, except per share data ** In
accordance with U.S. GAAP, diluted earnings per share attributable
to GEO available to common stockholders is calculated under the
if-converted method or the two-class method, whichever calculation
results in the lowest diluted earnings per share amount, which may
be lower than Adjusted Net Income Per Diluted Share.
Reconciliation of
Net Income Attributable to GEO AFFO*
(Unaudited)
Q2 2022 Q2 2021 YTD 2022 YTD 2021
(unaudited) (unaudited) (unaudited) (unaudited)
Net
Income attributable to GEO $
53,727
$
41,959
$
91,946
$
92,504
Add (Subtract): Depreciation and amortization
32,016
33,306
67,954
67,423
Facility maintenance capital expenditures
(4,277
)
(2,900
)
(9,005
)
(5,567
)
Stock based compensation expenses
3,556
4,023
9,869
11,426
Other non-cash revenue & expenses
-
(1,102
)
-
(2,204
)
Amortization of debt issuance costs, discount and/or premium and
other non-cash interest
1,907
1,903
3,755
3,586
(Gain)/Loss on real estate assets, pre-tax
(3,680
)
2,950
(3,053
)
(10,379
)
Other Adjustments: Add (Subtract): Gain on
extinguishment of debt, pre-tax
-
(1,654
)
-
(4,693
)
One-time employee restructuring expenses, pre-tax
-
7,459
-
7,459
Tax effect of adjustments to net income attributable to GEO **
926
(454
)
768
3,939
Equals: AFFO $
84,175
$
85,490
$
162,234
$
163,494
Weighted average common shares outstanding - Diluted
121,881
120,470
121,650
120,431
AFFO per Diluted Share
0.69
0.71
1.33
1.36
* All figures in '000s, except per share data ** Tax
adjustments related to gain/loss on real estate assets, one-time
employee restructuring expenses, and gain on extinguishment of
debt. In connection with the termination of the Company’s REIT
status effective for the year ended December 31, 2021, the tax
effect of adjustments to net income attributable to GEO have been
presented for second quarter and year to date 2021 to reflect the
applicable effective tax rates that GEO would have been subject to
as a taxable C Corporation.
Reconciliation of
Net Income to EBITDA, Adjusted EBITDA,
and Net Income
Attributable to GEO to Adjusted Net Income*
(Unaudited)
Q2 2022 Q2 2021 YTD 2022 YTD 2021
(unaudited) (unaudited) (unaudited) (unaudited)
Net Income $
53,673
$
41,931
$
91,852
$
92,416
Add (Subtract): Income tax provision **
19,061
5,354
37,136
13,630
Interest expense, net of interest income ***
27,663
24,414
53,656
47,017
Depreciation and amortization
32,016
33,306
67,954
67,423
EBITDA $
132,413
$
105,005
$
250,598
$
220,486
Add (Subtract): (Gain)/Loss on real estate assets, pre-tax
(3,680
)
2,950
(3,053
)
(10,379
)
Net loss attributable to noncontrolling interests
54
28
94
88
Stock based compensation expenses, pre-tax
3,556
4,023
9,869
11,426
One-time employee restructuring expenses, pre-tax
-
7,459
-
7,459
Other non-cash revenue & expenses, pre-tax
-
(1,102
)
-
(2,204
)
Adjusted EBITDA $
132,343
$
118,363
$
257,508
$
226,876
Net Income attributable to GEO $
53,727
$
41,959
$
91,946
$
92,504
Add (Subtract): (Gain)/Loss on real estate assets, pre-tax
(3,680
)
2,950
(3,680
)
(10,379
)
(Gain) on extinguishment of debt, pre-tax
-
(1,654
)
-
(4,693
)
One-time employee restructuring expenses, pre-tax
-
7,459
-
7,459
Tax effect of adjustments to net income attributable to GEO (1)
926
(731
)
926
3,384
Adjusted Net Income $
50,973
$
49,983
$
89,192
$
88,275
Weighted average common shares outstanding - Diluted
121,881
120,470
121,650
120,431
Adjusted Net Income per Diluted share
0.42
0.41
0.73
0.73
* all figures in '000s, except per share data ** including
income tax provision on equity in earnings of affiliates ***
includes (gain)/loss on extinguishment of debt (1) Tax adjustments
related to gain on real estate assets, gain on extinguishment of
debt, and one-time employee restructuring expenses. In connection
with the termination of the Company’s REIT status effective for the
year ended December 31, 2021, the tax effect of adjustments to net
income attributable to GEO have been presented for second quarter
and year to date 2021 to reflect the applicable effective tax rates
that GEO would have been subject to as a taxable C Corporation.
2022
Outlook/Reconciliation
(In thousands, except per share data)
(Unaudited)
FY 2022 Net Income Attributable to GEO
$
158,000
to
$
166,000
Depreciation and Amortization
136,000
136,000
Gain/Loss on Real Estate
(2,800
)
(2,800
)
Facility Maintenance Capex
(24,000
)
(24,000
)
Non-Cash Stock Based Compensation
16,500
16,500
Non-Cash Interest Expense
8,500
8,500
Adjusted Funds From Operations (AFFO)
$
292,200
to
$
300,200
Net Interest Expense
145,000
147,000
Non-Cash Interest Expense
(8,500
)
(8,500
)
Facility Maintenance Capex
24,000
24,000
Income Taxes (including income tax provision on equity in
earnings of affiliates)
62,300
67,300
Adjusted EBITDA
$
515,000
to
$
530,000
Net Income Attributable to GEO Per Diluted Share
$
1.30
to
$
1.36
Adjusted Net Income Per Diluted Share
$
1.28
$
1.34
AFFO Per Diluted Share
$
2.40
to
$
2.46
Weighted Average Common Shares Outstanding-Diluted
121,700
to
121,700
CAPEX Growth
43,000
to
47,000
Technology
44,000
to
46,000
Facility Maintenance
24,000
to
24,000
Capital Expenditures
111,000
to
117,000
Total Debt, Net
$
1,975,000
$
2,000,000
Total Leverage, Net
3.78
3.83
In accordance with GAAP, diluted earnings per share attributable
to GEO available to common stockholders is calculated under the
if-converted method or the two-class method, whichever calculation
results in the lowest diluted earnings per share amount, which may
be lower than Adjusted Net Income Per Diluted Share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220801005831/en/
Pablo E. Paez (866) 301 4436 Executive Vice President, Corporate
Relations
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