The GEO Group, Inc. (NYSE: GEO) (“GEO”), a leading
provider of contracted 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
third quarter and first nine months of 2024.
Third Quarter 2024 Highlights
- Total revenues of $603.1 million
- Net Income Attributable to GEO of $0.19 per diluted
share
- Adjusted Net Income of $0.21 per diluted share
- Adjusted EBITDA of $118.6 million
For the third quarter 2024, we reported net income attributable
to GEO of $26.3 million, or $0.19 per diluted share, compared to
net income attributable to GEO of $24.5 million, or $0.16 per
diluted share, for the third quarter 2023. Third quarter 2024
results reflect costs associated with the extinguishment of debt of
$2.9 million, pre-tax, $0.4 million in transaction fees, pre-tax,
and $0.5 million in close-out expenses, pre-tax. Excluding the
costs associated with the extinguishment of debt and other unusual
and/or nonrecurring items, we reported adjusted net income for the
third quarter 2024 of $29.1 million, or $0.21 per diluted share,
compared to $23.6 million, or $0.19 per diluted share, for the
third quarter 2023.
We reported total revenues for the third quarter 2024 of $603.1
million compared to $602.8 million for the third quarter 2023. We
reported third quarter 2024 Adjusted EBITDA of $118.6 million,
compared to $118.7 million for the third quarter 2023.
Third quarter 2024 results reflect lower-than-expected revenues
in our Electronic Monitoring and Supervision Services segment,
primarily due to the decline in participant counts under the
federal government’s Intensive Supervision Appearance Program
(“ISAP”). Participant counts under ISAP averaged approximately
177,000 individuals during the third quarter 2024, compared to
average ISAP participant counts of approximately 184,000 during the
second quarter 2024.
George C. Zoley, Executive Chairman of GEO, said, “While our
third quarter results were below our expectations due to
lower-than-expected revenues in our Electronic Monitoring and
Supervision Services segment, we believe we have several potential
sources of upside to our current quarterly run rate, with possible
future growth opportunities across our diversified services
platform. We have 18,000 available beds across contracted and idle
secure services facilities, which if fully activated, would provide
significant potential upside to our financial performance. We also
believe we have the necessary resources to materially scale up the
service levels in our ISAP and air and ground transportation
contracts.”
“As we evaluate and pursue future growth opportunities, we
remain focused on the disciplined allocation of capital to further
reduce our debt, deleverage our balance sheet, and position our
company to evaluate options to return capital to shareholders in
the future,” Zoley added.
First Nine Months 2024 Highlights
- Total revenues of $1.82 billion
- Net Income Attributable to GEO of $0.11 per diluted share,
reflects costs associated with the extinguishment of debt of $85.3
million, pre-tax
- Adjusted Net Income of $0.63 per diluted share
- Adjusted EBITDA of $355.5 million
For the first nine months of 2024, we reported net income
attributable to GEO of $16.5 million, or $0.11 per diluted share,
compared to net income attributable to GEO of $82.1 million, or
$0.55 per diluted share, for the first nine months of 2023. Results
for the first nine months of 2024 reflect costs associated with the
extinguishment of debt of $85.3 million, pre-tax.
Excluding the costs associated with the extinguishment of debt
and other unusual and/or nonrecurring items, we reported adjusted
net income for the first nine months of 2024 of $82.8 million, or
$0.63 per diluted share, compared to $79.8 million, or $0.65 per
diluted share, for the first nine months of 2023.
We reported total revenues for the first nine months of 2024 of
$1.82 billion compared to $1.80 billion for the first nine months
of 2023. We reported Adjusted EBITDA for the first nine months of
2024 of $355.5 million, compared to $378.6 million for the first
nine months of 2023.
Financial Guidance
Today, we updated our financial guidance for the fourth quarter
and full year 2024. While participant counts under ISAP have been
increasing subsequent to the end of the third quarter 2024 to
approximately 182,500 currently, and while it is possible ISAP
participant counts and utilization of ICE processing center beds
may further increase this year, we have updated our fourth quarter
2024 guidance to be largely consistent with our third quarter 2024
results. We expect fourth quarter 2024 Net Income Attributable to
GEO to be in a range of $0.19 to $0.22 per diluted share on
quarterly revenues of $600 million to $610 million. We expect
fourth quarter 2024 Adjusted EBITDA to be in a range of $114
million to $124 million.
For the full year 2024, we expect Net Income Attributable to GEO
to be in a range of $0.30 to $0.34 per diluted share, which
reflects costs associated with the extinguishment of debt of $87
million, pre-tax. Excluding the costs associated with the
extinguishment of debt and other unusual and/or nonrecurring items,
we expect full year 2024 Adjusted Net Income to be in a range of
$0.80 to $0.84 per diluted share, on annual revenues of
approximately $2.42 billion and reflecting an effective tax rate of
approximately 23 percent, inclusive of known discrete items. We
expect our full year 2024 Adjusted EBITDA to be between $470
million and $480 million.
Recent Developments
On October 4, 2024, we announced that U.S. Immigration and
Customs Enforcement (“ICE”) exercised the first five-year option
period extending the contract for the GEO-owned 1,940-bed Adelanto
ICE Processing Center in California (the “Adelanto Center”) through
December 19, 2029. ICE and GEO entered into a 15-year contract on
December 19, 2019, for the provision of secure residential housing
and support care services at the Adelanto Center, consisting of a
five-year base period followed by two five-year option periods. The
Adelanto Center employs approximately 350 employees.
Balance Sheet
At the end of the third quarter 2024, our net debt totaled
approximately $1.69 billion, and our net leverage was approximately
3.5 times Adjusted EBITDA. We ended the third quarter 2024 with
approximately $71 million in cash and cash equivalents and
approximately $280 million in total available liquidity.
Conference Call Information
We have scheduled a conference call and webcast for today at
11:00 AM (Eastern Time) to discuss our third quarter 2024 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 through November 14, 2024, at 1-877-344-7529
(U.S.) and 1-412-317-0088 (International). The participant passcode
for the telephonic replay is 7169822.
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 99 facilities totaling
approximately 80,000 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, and Net Income to EBITDA and Adjusted EBITDA, 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, and Adjusted EBITDA 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 Net Debt, Net Leverage, and Adjusted EBITDA.
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 2024, 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.
Net Debt is defined as gross principal debt less cash from
restricted subsidiaries. Net Leverage is defined as Net Debt
divided by Adjusted EBITDA.
EBITDA is defined as net income adjusted by adding
provisions/(benefit) for income tax, interest expense, net of
interest income, and depreciation and amortization. Adjusted EBITDA
is defined as EBITDA adjusted for (gain)/loss on asset
divestitures/impairment, pre-tax, net loss attributable to
non-controlling interests, stock-based compensation expenses,
pre-tax, start-up expenses, pre-tax, ATM equity program expenses,
pre-tax, transaction fees, pre-tax, close-out expenses, pre-tax,
other non-cash revenue and expenses, pre-tax, and certain other
adjustments as defined from time to time.
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/(loss) 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 asset divestitures/impairment, pre-tax, loss on the
extinguishment of debt, pre-tax, start-up expenses, pre-tax,
transaction fees, pre-tax, ATM equity program expenses, pre-tax,
close-out expenses, pre-tax, discrete tax benefit, and tax effect
of adjustments to net income attributable to GEO.
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 and fourth quarter of 2024, statements regarding
GEO’s focus on reducing net debt, deleveraging its balance sheet,
positioning itself to explore options to return capital to
shareholders in the future, and pursuing a disciplined allocation
of capital to enhance long-term value for shareholders, executing
on GEO’s strategic priorities, pursuing quality growth
opportunities, and the upside this could have on GEO’s quarterly
run-rate, and GEO’s ability to scale up the delivery of diversified
services to support the future needs of its government agency
partners. 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
2024 given the various risks to which its business is exposed; (2)
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; (3)
GEO’s ability to identify and successfully complete any potential
sales of company-owned assets and businesses or potential
acquisitions of assets or businesses on commercially advantageous
terms on a timely basis, or at all; (4) 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;
(5) changes in federal immigration policy; (6) public and political
opposition to the use of public-private partnerships with respect
to secure correctional and detention facilities, processing centers
and reentry centers; (7) any continuing impact of the COVID-19
global pandemic on GEO and GEO's ability to mitigate the risks
associated with COVID-19; (8) GEO’s ability to sustain or improve
company-wide occupancy rates at its facilities; (9) fluctuations in
GEO’s operating results, including as a result of contract
terminations, contract renegotiations, changes in occupancy levels
and increases in GEO’s operating costs; (10) 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; (11) GEO’s ability to address inflationary
pressures related to labor related expenses and other operating
costs; (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 opportunities 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.
Condensed
Consolidated Balance Sheets*
(Unaudited)
As of As of September 30, 2024
December 31, 2023 (unaudited) (unaudited)
ASSETS
Cash and cash equivalents $
70,635
$
93,971
Accounts receivable, less allowance for doubtful accounts
367,504
390,023
Prepaid expenses and other current assets
46,359
44,511
Total current assets $
484,498
$
528,505
Restricted Cash and Investments
147,774
135,968
Property and Equipment, Net
1,910,554
1,944,278
Operating Lease Right-of-Use Assets, Net
96,718
102,204
Deferred Income Tax Assets
8,551
8,551
Intangible Assets, Net (including goodwill)
884,944
891,085
Other Non-Current Assets
100,253
85,815
Total Assets $
3,633,292
$
3,696,406
LIABILITIES AND SHAREHOLDERS' EQUITY Accounts
payable $
64,532
$
64,447
Accrued payroll and related taxes
86,280
64,436
Accrued expenses and other current liabilities
210,309
228,059
Operating lease liabilities, current portion
25,408
24,640
Current portion of finance lease obligations, and long-term debt
55,109
55,882
Total current liabilities $
441,638
$
437,464
Deferred Income Tax Liabilities
72,604
77,369
Other Non-Current Liabilities
90,594
83,643
Operating Lease Liabilities
75,232
82,114
Long-Term Debt
1,638,686
1,725,502
Total Shareholders' Equity
1,314,538
1,290,314
Total Liabilities and Shareholders' Equity $
3,633,292
$
3,696,406
* all figures in '000s
Condensed
Consolidated Statements of Operations*
(Unaudited)
Q3 2024 Q3 2023 YTD 2024 YTD 2023
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $
603,125
$
602,785
$
1,815,982
$
1,804,885
Operating expenses
441,917
440,667
1,327,121
1,302,287
Depreciation and amortization
31,756
31,173
94,434
94,787
General and administrative expenses
47,081
47,356
152,349
139,182
Operating income
82,371
83,589
242,078
268,629
Interest income
3,168
1,320
7,634
3,785
Interest expense
(45,498
)
(55,777
)
(147,437
)
(165,081
)
Loss on extinguishment of debt
(2,920
)
(91
)
(85,298
)
(1,845
)
Gain/(loss) on asset divestitures/impairment
-
1,274
(2,907
)
3,449
Income before income taxes and equity in earnings of
affiliates
37,121
30,315
14,070
108,937
Provision for/(benefit from) income taxes
11,664
6,521
(644
)
30,036
Equity in earnings of affiliates, net of income tax
provision
832
709
1,671
3,121
Net income
26,289
24,503
16,385
82,022
Less: Net loss attributable to noncontrolling
interests
31
16
90
71
Net income attributable to The GEO Group, Inc. $
26,320
$
24,519
$
16,475
$
82,093
Weighted Average Common Shares Outstanding:
Basic
135,961
122,066
129,682
121,850
Diluted
138,130
123,433
132,022
123,479
Net income per Common Share Attributable to The GEO
Group, Inc.** : Basic: Net income per share —
basic $
0.19
$
0.17
$
0.12
$
0.56
Diluted: Net income per share — diluted $
0.19
$
0.16
$
0.11
$
0.55
* 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.
Reconciliation of
Net Income to EBITDA and Adjusted EBITDA,
and Net Income
Attributable to GEO to Adjusted Net Income*
(Unaudited)
Q3 2024 Q3 2023 YTD 2024 YTD 2023
(unaudited) (unaudited) (unaudited) (unaudited)
Net Income $
26,289
$
24,503
$
16,385
$
82,022
Add: Income tax provision/(benefit) **
11,861
6,588
(132
)
30,617
Interest expense, net of interest income ***
45,250
54,548
225,101
163,141
Depreciation and amortization
31,756
31,173
94,434
94,787
EBITDA $
115,156
$
116,812
$
335,788
$
370,567
Add (Subtract): (Gain)/loss on asset
divestitures/impairment, pre-tax
-
(1,274
)
2,907
(3,449
)
Net loss attributable to noncontrolling interests
31
16
90
71
Stock based compensation expenses, pre-tax
3,534
3,116
12,322
12,052
Start-up expenses, pre-tax
-
-
507
-
Transaction fees,pre-tax
371
-
3,468
-
ATM equity program expenses, pre tax
-
-
264
-
Close-out expenses, pre-tax
472
-
2,345
-
Other non-cash revenue & expenses, pre-tax
(928
)
-
(2,161
)
(687
)
Adjusted EBITDA $
118,636
$
118,670
$
355,530
$
378,554
Net Income attributable to GEO $
26,320
$
24,519
$
16,475
$
82,093
Add (Subtract): (Gain)/loss on asset
divestitures/impairment, pre-tax
-
(1,274
)
2,907
(3,449
)
Loss on extinguishment of debt, pre-tax
2,920
91
85,298
1,845
Start-up expenses, pre-tax
-
-
507
-
Transaction fees,pre-tax
371
-
3,468
-
ATM equity program expenses, pre tax
-
-
264
-
Close-out expenses, pre-tax
472
-
2,345
-
Discrete tax benefit (1)
(85
)
-
(4,605
)
-
Tax effect of adjustment to net income attributable to GEO (2)
(946
)
297
(23,837
)
(687
)
Adjusted Net Income $
29,052
$
23,633
$
82,822
$
79,802
Weighted average common shares outstanding - Diluted
138,130
123,433
132,022
123,479
Adjusted Net Income per Diluted share
0.21
0.19
0.63
0.65
* All figures in '000s, except per share data. ** Includes
income tax provision on equity in earnings of affiliates. ***
Includes loss on extinguishment of debt. (1) Discrete tax benefit
primarily relates to interest deduction related to shares of common
stock issued to note holders as a result of our private convertible
note exchange transactions. (2) Tax adjustment related to gain/loss
on asset divestitures/impairment, loss on extinguishment of debt,
start-up expenses, ATM equity program expenses,
close-out expenses, and transaction
fees.
2024
Outlook/Reconciliation*
(In thousands, except per share data)
(Unaudited)
FY 2024
Net Income Attributable to GEO(1)
$
40,000
to
$
45,000
Net Interest Expense
182,000
184,000
Loss on Extinguishment of Debt, pre-tax
87,000
87,000
Income Taxes(1)(including income tax provision on equity in
earnings of affiliates)
12,500
14,500
Depreciation and Amortization
126,000
127,000
Non-Cash Stock Based Compensation
16,000
16,000
Other Non-Cash
6,500
6,500
Adjusted EBITDA
$
470,000
to
$
480,000
Net Income Attributable to GEO Per Diluted Share
$
0.30
to
$
0.34
Adjusted Net Income Per Diluted Share
$
0.80
$
0.84
Weighted Average Common Shares Outstanding-Diluted
134,000
to
134,000
CAPEX Growth
12,000
to
13,000
Technology
25,000
27,000
Facility Maintenance
43,000
45,000
Capital Expenditures
80,000
to
85,000
Total Debt, Net
$
1,675,000
$
1,650,000
Total Leverage, Net
3.5
3.5
(1) Net of ~$26M of tax benefits related to loss on
extinguishment of debt and interest deduction for shares of common
stock as a result of the convertible note exchange
* Total Net Leverage is calculated using
the midpoint of Adjusted EBITDA guidance range.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106486473/en/
Pablo E. Paez (866) 301 4436 Executive Vice President, Corporate
Relations
Geo (NYSE:GEO)
Historical Stock Chart
From Nov 2024 to Dec 2024
Geo (NYSE:GEO)
Historical Stock Chart
From Dec 2023 to Dec 2024