Release Details

The GEO Group Reports Fourth Quarter and Full Year 2021 Results

February 17, 2022
BOCA RATON, Fla.--(BUSINESS WIRE)-- 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 fourth quarter and full year 2021.

Fourth Quarter 2021 Highlights

  • Total revenues of $557.5 million
  • Net Loss Attributable to GEO of $49.8 million or ($0.41) per diluted share, as a result of tax charges and expenses related to previously announced change in corporate tax structure
  • Adjusted Net Income of $45.5 million or $0.38 per diluted share
  • Adjusted EBITDAre of $124.1 million
  • Adjusted Funds From Operations (“AFFO”) of $0.65 per diluted share

As a result of the previously announced change in GEO’s corporate tax structure from a Real Estate Investment Trust to a taxable C corporation, effective for the fiscal year ended December 31, 2021, we incurred a one-time, non-cash deferred tax charge of $70.8 million in the fourth quarter 2021. Additionally, we incurred $29.3 million in incremental income tax expense in the fourth quarter 2021, due to the resulting higher corporate tax rate for 2021, including a catch-up income tax expense of approximately $16.8 million in connection with the first three quarters of 2021.

Due to the tax related corporate restructuring items, we reported a fourth quarter 2021 net loss attributable to GEO of $49.8 million, or ($0.41) per diluted share, compared to net income attributable to GEO of $11.9 million, or $0.10 per diluted share, for the fourth quarter 2020. We reported total revenues for the fourth quarter 2021 of $557.5 million compared to $578.1 million for the fourth quarter 2020.

Fourth quarter 2021 results also reflect a $0.7 million gain on real estate assets, pre-tax, $2.2 million in start-up expenses, pre-tax, $4.1 million in M&A related expenses, pre-tax, a $1.3 million loss and settlement, pre-tax, on the previously announced divestiture of GEO’s Youth Services contracts, $3.3 million in close-out expenses, pre-tax, and a $2.6 million benefit in the tax effect of adjustments to net income attributable to GEO. Excluding these items, the one-time, non-cash deferred tax charge, and the portion of additional income tax expense associated with the first three quarters of 2021, we reported fourth quarter 2021 Adjusted Net Income of $45.5 million, or $0.38 per diluted share, compared to $39.3 million, or $0.33 per diluted share, for the fourth quarter 2020.

We reported fourth quarter 2021 Adjusted EBITDAre of $124.1 million, compared to $108.0 million for the fourth quarter 2020. We reported fourth quarter 2021 AFFO of $78.4 million, or $0.65 per diluted share, compared to $74.6 million, or $0.62 per diluted share, for the fourth quarter 2020.

George C. Zoley, Executive Chairman of GEO, said, “We are pleased with our strong operational and financial results, which continue to be underpinned by our valuable real estate assets and quality contracts entailing essential government services. The decision made by our Board to change our corporate tax structure in 2021 is consistent with the multifaceted approach we have implemented to address our future debt maturities. We remain focused on allocating our free cash flow towards reducing our net recourse debt, and we are continuing to review potential sales of company-owned assets and businesses, as well as capital structure alternatives with the assistance of our financial and legal advisors. We believe all these steps are in the best interests of our shareholders and other stakeholders.”

Full Year 2021 Highlights

  • Total revenues of $2.26 billion
  • Net Income Attributable to GEO of $77.4 million, $0.58 per diluted share
  • Adjusted Net Income of $159.2 million, $1.32 per diluted share
  • Adjusted EBITDAre of $467.0 million
  • AFFO of $2.48 per diluted share

For the full year 2021, we reported net income attributable to GEO of $77.4 million, or $0.58 per diluted share, compared to $113.0 million, $0.94 per diluted share, for the full year 2020. We reported total revenues for the full year 2021 of $2.26 billion compared to $2.35 billion for the full year 2020.

Results for the full year 2021 reflect a one-time, non-cash deferred tax charge of $70.8 million, a $10.1 million gain on real estate assets, pre-tax, a $4.7 million gain on the extinguishment of debt, pre-tax, $2.2 million in start-up expenses, pre-tax, $8.1 million in M&A related expenses, pre-tax, a $6.3 million loss and settlement, pre-tax, on the previously announced divestiture of GEO’s Youth Services contracts, $7.5 million in one-time employee restructuring expenses, pre-tax, $3.3 million in close-out expenses, pre-tax, and a $1.7 million benefit in the tax effect of adjustments to net income attributable to GEO. Excluding these items, we reported Adjusted Net Income of $159.2 million, or $1.32 per diluted share, for the full year 2021, compared to $155.6 million, or $1.30 per diluted share, for the full year 2020.

For the full year 2021, we reported Adjusted EBITDAre of $467.0 million, compared to $439.8 million for the full year 2020. For the full year 2021, we reported AFFO of $299.3 million, or $2.48 per diluted share, compared to $300.6 million, or $2.51 per diluted share, for the full year 2020.

Balance Sheet and Liquidity

At the end of 2021, we had approximately $506 million in cash on hand, primarily resulting from the previously announced drawdown of our Revolving Credit Facility. Our decision to draw on our Revolving Credit Facility was a conservative precautionary step to preserve liquidity, maintain financial flexibility, and obtain additional funds for general corporate purposes. Accounting for our $506 million of cash on hand, we have approximately $2.1 billion in net recourse debt outstanding, not including non-recourse debt, finance lease obligations, or the mortgage loan on our corporate headquarters.

We are continuing to examine our options to address our funded recourse debt, including our nearer term maturities which encompass our 2023 and 2024 senior unsecured notes and our senior credit facility, which may include, subject to market conditions, additional capital markets transactions, repurchases, redemptions, exchanges, or other refinancing of our existing debt, and/or evaluating the potential sale of additional company-owned assets and businesses. Between January of 2021 and February of 2022, we have entered into contracts for or have completed eight sales transactions with combined proceeds of approximately $64 million.

2022 Financial Guidance

We have issued our initial financial guidance for 2022. We expect full year Net Income Attributable to GEO and Adjusted Net Income both to be in a range of $0.99 to $1.07 per diluted share on annual revenues of approximately $2.17 billion. We expect full year 2022 AFFO to be in a range of $2.05 to $2.13 per diluted share, and full year 2022 Adjusted EBITDA to be in a range of $422 million to $438 million.

For the first quarter 2022, we expect Net Income Attributable to GEO and Adjusted Net Income both to be between $0.21 and $0.23 per diluted share, and AFFO to be between $0.48 and $0.50 per diluted share, on quarterly revenues of $550 million to $555 million.

Our 2022 guidance reflects the normalization of the non-renewal of seven U.S. Department of Justice direct contracts during 2021, with combined annualized revenues of approximately $259 million. Our guidance also does not include the continuation of two additional U.S. Department of Justice direct contracts that have contract option periods scheduled to expire during 2022, with combined annualized revenues of $90 million.

Our guidance also reflects higher operating expenses, primarily related to wage increases and bonuses for our facility staff. Our guidance also reflects a higher effective corporate income tax rate, which we expect to be approximately 29 percent, as result of our transition to a taxable C corporation.

Finally, as previously disclosed, we are engaged in discussions with our banks and the advisors of ad-hoc groups representing our term loan lenders and bondholders to amend and extend our senior credit facility and our 2023, 2024, and 2026 senior unsecured notes. We will update our financial guidance accordingly if we are able to complete a transaction to reflect the expected increase in interest expense. For each one percent increase in our weighted average cost of debt, our interest expense would increase by approximately $18 million to $20 million on an annualized basis based on our current net recourse debt.

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. During 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 have taken 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 fourth quarter and full year 2021 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 March 3, 2022, at 1-877-344-7529 (U.S.) and 1-412-317-0088 (International). The participant passcode for the telephonic replay is 3524243.

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 106 facilities totaling approximately 86,000 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 Net Operating Income, Net Income to EBITDAre (EBITDA for real estate) and Adjusted EBITDAre (Adjusted EBITDA for real estate), and Net Income Attributable to GEO to FFO, Normalized FFO and Adjusted FFO, along with supplemental financial and operational information on GEO’s business and other important operating metrics, and in this press release, Net Income Attributable to GEO to Adjusted Net Income. 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
Net Operating Income, EBITDAre, Adjusted EBITDAre, Funds from Operations, Normalized Funds from Operations, Adjusted Funds from Operations, and Adjusted Net Income 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 EBITDAre, Adjusted Net Income, 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.

Net Operating Income is defined as revenues less operating expenses, excluding depreciation and amortization expense, general and administrative expenses, real estate related operating lease expense, gain/loss on real estate assets, pre-tax, and start-up expenses, pre-tax. Net Operating Income is calculated as net income adjusted by subtracting equity in earnings of affiliates, net of income tax provision, and by adding income tax provision, interest expense, net of interest income, gain on extinguishment of debt, depreciation and amortization expense, goodwill impairment charge, general and administrative expenses, real estate related operating lease expense, gain/loss on real estate assets, pre-tax, and start-up expenses, pre-tax.

EBITDAre (EBITDA for real estate) is defined as net income adjusted by adding provisions for income tax, interest expense, net of interest income, depreciation and amortization, goodwill impairment charge, pre-tax, and gain/loss on real estate assets, pre-tax. Adjusted EBITDAre (Adjusted EBITDA for real estate) is defined as EBITDAre adjusted for net loss attributable to non-controlling interests, stock-based compensation expenses, pre-tax, and certain other adjustments as defined from time to time, including for the periods presented M&A related expenses, pre-tax, loss and settlement on asset divestiture, pre-tax, one-time employee restructuring expenses, pre-tax, start-up expenses, pre-tax, COVID-19 expenses, pre-tax, close-out expenses, pre-tax, and other non-cash revenue and expense, pre-tax.

Given the nature of our business as a real estate owner and operator, we believe that EBITDAre and Adjusted EBITDAre 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, EBITDAre and Adjusted EBITDAre 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 attributable to GEO.

The adjustments we make to derive the non-GAAP measures of EBITDAre and Adjusted EBITDAre 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. EBITDAre and Adjusted EBITDAre 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.

Funds From Operations, or FFO, is defined in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income/loss attributable to common shareholders (computed in accordance with United States Generally Accepted Accounting Principles), excluding real estate related depreciation and amortization, excluding gains and losses from the cumulative effects of accounting changes, extraordinary items and sales of properties, and including adjustments for unconsolidated partnerships and joint ventures.

Normalized Funds from Operations, or Normalized FFO, is defined as FFO 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 goodwill impairment charge, pre-tax, start-up expenses, pre-tax, M&A related expenses, pre-tax, loss and settlement on asset divestiture, pre-tax, gain on the extinguishment of debt, pre-tax, one-time employee restructuring expenses, pre-tax, COVID-19 expenses, pre-tax, close-out expenses, pre-tax, change in tax structure to C corporation, and tax effect of adjustments to FFO. Adjusted Funds From Operations, or AFFO, is defined as Normalized FFO adjusted by adding non-cash expenses such as non-real estate related depreciation and amortization, stock based compensation expense, the amortization of debt issuance costs, discount and/or premium and other non-cash interest, and by subtracting consolidated maintenance capital expenditures and other non-cash revenue and expenses.

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, goodwill impairment charge, pre-tax, start-up expenses, pre-tax, M&A related expenses, pre-tax, loss and settlement on asset divestiture, pre-tax, change in tax structure to C corporation, gain on the extinguishment of debt, pre-tax, one-time employee restructuring expenses, pre-tax, COVID-19 expenses, pre-tax, close-out 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 GEO Care 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. Although NAREIT has published its definition of FFO, companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations. We have modified FFO to derive Normalized FFO and AFFO that meaningfully reflect our operations. Our assessment of our operations is focused on long-term sustainability. The adjustments we make to derive the non-GAAP measures of Normalized FFO and 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 FFO 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 FFO, Normalized FFO and AFFO exclude 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 FFO, Normalized FFO and AFFO provide useful information to investors as they provide an indication of our ability to fund capital expenditures and expand our business. FFO, Normalized FFO and AFFO 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.

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 first quarter of 2022 and GEO’s proposed steps to address its future debt maturities. 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 deleverage and repay, refinance or otherwise address its debt maturities in an amount or on the timeline it expects, or at all; (3) 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; (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) 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; (8) 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; (9) fluctuations in our operating results, including as a result of contract terminations, contract renegotiations, changes in occupancy levels and increases in our operating costs; (10) GEO's ability to realize the anticipated benefits of terminating its REIT election and becoming a taxable C corporation for the year ended December 31, 2021; (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; (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.

Fourth quarter and full year 2021 financial tables to follow:

 
Condensed Consolidated Balance Sheets*

(Unaudited)

             
      As of     As of
      December 31, 2021     December 31, 2020
      (unaudited)     (unaudited)
ASSETS            
             
Cash and cash equivalents   $

506,491

  $

283,524

Restricted cash and cash equivalents    

20,161

   

26,740

Accounts receivable, less allowance for doubtful accounts    

365,573

   

362,668

Contract receivable, current portion    

6,507

   

6,283

Prepaid expenses and other current assets    

45,176

   

32,108

Total current assets   $

943,908

  $

711,323

             
Restricted Cash and Investments    

76,158

   

37,338

Property and Equipment, Net    

2,037,845

   

2,122,195

Contract Receivable    

367,071

   

396,647

Operating Lease Right-of-Use Assets, Net    

112,187

   

124,727

Assets Held for Sale    

7,877

   

9,108

Deferred Income Tax Assets    

-

   

36,604

Intangible Assets, Net (including goodwill)    

921,349

   

942,997

Other Non-Current Assets    

71,013

   

79,187

             
Total Assets   $

4,537,408

  $

4,460,126

             
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Accounts payable   $

64,073

  $

85,861

Accrued payroll and related taxes    

67,210

   

67,797

Accrued expenses and other current liabilities    

200,712

   

202,378

Operating lease liabilities, current portion    

28,279

   

29,080

Current portion of finance lease obligations, long-term debt, and non-recourse debt    

18,568

   

26,180

Total current liabilities   $

378,842

  $

411,296

             
Deferred Income Tax Liabilities    

80,768

   

30,726

Other Non-Current Liabilities    

87,073

   

115,555

Operating Lease Liabilities    

89,917

   

101,375

Finance Lease Liabilities    

1,977

   

2,988

Long-Term Debt    

2,625,959

   

2,561,881

Non-Recourse Debt    

297,856

   

324,223

Total Shareholders' Equity    

975,016

   

912,082

             
Total Liabilities and Shareholders' Equity   $

4,537,408

  $

4,460,126

             
* all figures in '000s            
             
 
Condensed Consolidated Statements of Operations*

(Unaudited)

 
      Q4 2021     Q4 2020     FY 2021     FY 2020
      (unaudited)     (unaudited)     (unaudited)     (unaudited)
                         
Revenues   $

557,539

 

  $

578,116

 

  $

2,256,612

 

  $

2,350,098

 

Operating expenses    

395,986

 

   

431,584

 

   

1,629,046

 

   

1,771,495

 

Depreciation and amortization    

34,871

 

   

34,291

 

   

135,177

 

   

134,680

 

General and administrative expenses    

50,664

 

   

47,402

 

   

204,306

 

   

193,372

 

Goodwill impairment charge    

-

 

   

21,146

 

   

-

 

   

21,146

 

                         
                         
Operating income    

76,018

 

   

43,693

 

   

288,083

 

   

229,405

 

                         
Interest income    

5,830

 

   

6,026

 

   

24,007

 

   

23,072

 

Interest expense    

(33,038

)

   

(31,300

)

   

(129,460

)

   

(126,837

)

Gain on extinguishment of debt    

-

 

   

2,283

 

   

4,693

 

   

5,319

 

Net gain/(loss) on dispositions of assets    

1,209

 

   

(5,680

)

   

5,499

 

   

(6,831

)

                         
Income before income taxes and equity in earnings of affiliates    

50,019

 

   

15,022

 

   

192,822

 

   

124,128

 

                         
Provision for income taxes ***    

101,336

 

   

5,106

 

   

122,730

 

   

20,463

 

Equity in earnings of affiliates, net of income tax provision    

1,495

 

   

1,968

 

   

7,141

 

   

9,166

 

                         
Net income/(loss)    

(49,822

)

   

11,884

 

   

77,233

 

   

112,831

 

                         
Less: Net loss attributable to noncontrolling interests    

26

 

   

27

 

   

185

 

   

201

 

                         
Net income/(loss) attributable to The GEO Group, Inc. ***   $

(49,796

)

  $

11,911

 

  $

77,418

 

  $

113,032

 

                         
                         
Weighted Average Common Shares Outstanding:                        
Basic    

120,553

 

   

119,844

 

   

120,384

 

   

119,719

 

Diluted **    

120,553

 

   

120,105

 

   

120,732

 

   

119,991

 

                         
Net income/(loss) per Common Share Attributable to The GEO Group, Inc. **:                        
                         
Basic:                        
Net income/(loss)per share — basic   $

(0.41

)

  $

0.10

 

  $

0.59

 

  $

0.94

 

                         
Diluted:                        
Net income/(loss) per share — diluted   $

(0.41

)

  $

0.10

 

  $

0.58

 

  $

0.94

 

                         
Regular Dividends Declared per Common Share   $

-

 

  $

0.34

 

  $

0.25

 

  $

1.78

 

                         
* All figures in '000s, except per share data
** Q4 2021 basic and diluted weighted common shares outstanding are the same because the Company generated a net loss available to common stockholders and common stock equivalents are excluded from diluted net loss per share as they have an antidilutive impact.
*** As a result of GEO’s restructuring to a taxable C Corporation in fiscal year 2021, during the fourth quarter the Company incurred a one-time, non-cash deferred tax charge of approximately $70.8 million. GEO also incurred approximately $29.3 million in incremental income tax expense in the fourth quarter of 2021 due tothe resulting higher corporate tax rate for 2021, including a catch-up tax expense of approximately $16.8 million in connection with the first three quarters of 2021.
                         

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.

 
Reconciliation of Net Income/(Loss) Attributable to GEO to Adjusted Net Income

(In thousands, except per share data)(Unaudited)

                   
      Q4 2021   Q4 2020   FY 2021   FY 2020
                   
Net Income (Loss) attributable to GEO    

$

(49,796

)

 

$

11,911

 

 

$

77,418

 

 

$

113,032

 

                   
Add:                  
(Gain)/Loss on real estate assets, pre-tax    

 

(735

)

 

 

5,680

 

 

 

(10,056

)

 

 

6,831

 

M&A related expenses, pre-tax    

 

4,141

 

 

 

-

 

 

 

8,118

 

 

 

-

 

Loss and settlement on asset divestiture, pre-tax    

 

1,302

 

 

 

-

 

 

 

6,333

 

 

 

-

 

Change in tax structure to C Corp    

 

87,611

 

 

 

-

 

 

 

70,813

 

 

 

-

 

One-time employee restructuring expenses, pre-tax    

 

-

 

 

 

-

 

 

 

7,459

 

 

 

-

 

Start-up expenses, pre-tax    

 

2,242

 

 

 

-

 

 

 

2,242

 

 

 

4,413

 

Close-out expenses, pre-tax    

 

3,291

 

 

 

-

 

 

 

3,291

 

 

 

5,895

 

Gain on extinguishment of debt, pre-tax    

 

-

 

 

 

(2,283

)

 

 

(4,693

)

 

 

(5,319

)

COVID-19 expenses, pre-tax    

 

-

 

 

 

2,478

 

 

 

-

 

 

 

9,883

 

Goodwill impairment charge, pre-tax    

 

-

 

 

 

21,146

 

 

 

-

 

 

 

21,146

 

Tax effect of adjustments to Net Income attributable to GEO    

 

(2,575

)

 

 

320

 

 

 

(1,722

)

 

 

(300

)

                   
Adjusted Net Income    

$

45,481

 

 

$

39,252

 

 

$

159,203

 

 

$

155,581

 

                   
Weighted average common shares outstanding - Diluted    

 

120,553

 

 

 

120,105

 

 

 

120,732

 

 

 

119,991

 

                   
Adjusted Net Income Per Diluted Share    

$

0.38

 

 

$

0.33

 

 

$

1.32

 

 

$

1.30

 

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.

 
Reconciliation of Net Income/(Loss) Attributable to GEO to FFO, Normalized FFO, and AFFO*

(Unaudited)

                         
      Q4 2021     Q4 2020     FY 2021     FY 2020
      (unaudited)     (unaudited)     (unaudited)     (unaudited)
                         
Net Income/(Loss) attributable to GEO   $

(49,796

)

  $

11,911

 

  $

77,418

 

  $

113,032

 

Add (Subtract):                        
Real Estate Related Depreciation and Amortization    

18,978

 

   

18,520

 

   

75,622

 

   

73,659

 

(Gain)/Loss on real estate assets, pre-tax    

(735

)

   

5,680

 

   

(10,056

)

   

6,831

 

                         
Equals: NAREIT defined FFO   $

(31,553

)

  $

36,111

 

  $

142,984

 

  $

193,522

 

                         
Add (Subtract):                        
                         
Goodwill impairment charge, pre-tax    

-

 

   

21,146

 

   

-

 

   

21,146

 

Gain on extinguishment of debt, pre-tax    

-

 

   

(2,283

)

   

(4,693

)

   

(5,319

)

Start-up expenses, pre-tax    

1,723

 

   

-

 

   

1,723

 

   

4,401

 

M&A related expenses, pre-tax    

4,141

 

   

-

 

   

8,118

 

   

-

 

One-time employee restructuring expenses, pre-tax    

-

 

   

-

 

   

7,459

 

   

-

 

Loss & settelment on asset divestiture, pre-tax    

1,302

 

   

-

 

   

6,333

 

   

-

 

COVID-19 expenses, pre-tax    

-

 

   

2,478

 

   

-

 

   

9,883

 

Close-out expenses, pre-tax    

1,475

 

   

-

 

   

1,475

 

   

5,935

 

Change in tax structure to C Corp    

87,611

 

   

-

 

   

70,813

 

   

-

 

Tax effect of adjustments to funds from operations **    

(1,711

)

   

320

 

   

(26

)

   

(300

)

                         
Equals: FFO, normalized   $

62,988

 

  $

57,772

 

  $

234,186

 

  $

229,268

 

                         
Add (Subtract):                        
Non-Real Estate Related Depreciation & Amortization    

15,893

 

   

15,771

 

   

59,555

 

   

61,021

 

Consolidated Maintenance Capital Expenditures    

(4,812

)

   

(4,684

)

   

(16,769

)

   

(19,729

)

Stock Based Compensation Expenses    

3,444

 

   

4,734

 

   

19,199

 

   

23,896

 

Other non-cash revenue & expenses    

(1,102

)

   

(735

)

   

(4,408

)

   

(735

)

Amortization of debt issuance costs, discount and/or premium and other non-cash interest    

1,939

 

   

1,738

 

   

7,498

 

   

6,892

 

                         
                         
Equals: AFFO   $

78,350

 

  $

74,596

 

  $

299,261

 

  $

300,613

 

                         
Weighted average common shares outstanding - Diluted    

120,553

 

   

120,105

 

   

120,732

 

   

119,991

 

                         
FFO/AFFO per Share - Diluted                        
                         
Normalized FFO Per Diluted Share   $

0.52

 

  $

0.48

 

  $

1.94

 

  $

1.91

 

                         
AFFO Per Diluted Share   $

0.65

 

  $

0.62

 

  $

2.48

 

  $

2.51

 

                         
                         
Regular Common Stock Dividends per common share   $

-

 

  $

0.34

 

  $

0.25

 

  $

1.78

 

                         
* all figures in '000s, except per share data
** tax adjustments related to gain/loss on real estate assets, goodwill imapirment charge, gain on extinguishment of debt, start-up expenses, M&A related expenses, one-time employee restructuring expenses, loss & settelment on asset divestiture, COVID-19 expenses, and close-out expenses.
 
                         
 
Reconciliation of Net Income/(Loss) Attributable to GEO to
Net Operating Income, EBITDAre and Adjusted EBITDAre*

(Unaudited)

                         
      Q4 2021     Q4 2020     FY 2021     FY 2020
      (unaudited)     (unaudited)     (unaudited)     (unaudited)
Net Income/(Loss) attributable to GEO   $

(49,796

)

  $

11,911

 

  $

77,418

 

  $

113,032

 

Less                        
Net loss attributable to noncontrolling interests    

26

 

   

27

 

   

185

 

   

201

 

                         
Net Income/(Loss)   $

(49,822

)

  $

11,884

 

  $

77,233

 

  $

112,831

 

                         
Add (Subtract):                        
Equity in earnings of affiliates, net of income tax provision    

(1,495

)

   

(1,968

)

   

(7,141

)

   

(9,166

)

Income tax provision    

101,336

 

   

5,106

 

   

122,730

 

   

20,463

 

Interest expense, net of interest income    

27,208

 

   

25,274

 

   

105,453

 

   

103,765

 

Gain on extinguishment of debt    

-

 

   

(2,283

)

   

(4,693

)

   

(5,319

)

Depreciation and amortization    

34,871

 

   

34,291

 

   

135,177

 

   

134,680

 

Goodwill impairment charge    

-

 

   

21,146

 

   

-

 

   

21,146

 

General and administrative expenses    

50,664

 

   

47,402

 

   

204,306

 

   

193,372

 

Net Operating Income, net of operating lease obligations   $

162,762

 

  $

140,852

 

  $

633,065

 

  $

571,772

 

                         
Add:                        
Operating lease expense, real estate    

4,102

 

   

4,529

 

   

16,481

 

   

18,783

 

(Gain)/Loss on real estate assets, pre-tax    

(735

)

   

5,680

 

   

(10,056

)

   

6,831

 

Start-up expenses, pre-tax    

1,723

 

   

-

 

   

1,723

 

   

4,401

 

Net Operating Income (NOI)   $

167,852

 

  $

151,061

 

  $

641,213

 

  $

601,787

 

                         
      Q4 2021     Q4 2020     FY 2021     FY 2020
      (unaudited)     (unaudited)     (unaudited)     (unaudited)
Net Income/(Loss)   $

(49,822

)

  $

11,884

 

  $

77,233

 

  $

112,831

 

Add (Subtract):                        
Income tax provision **    

101,523

 

   

5,455

 

   

123,766

 

   

22,247

 

Interest expense, net of interest income ***    

27,208

 

   

22,990

 

   

100,760

 

   

98,446

 

Depreciation and amortization    

34,871

 

   

34,291

 

   

135,177

 

   

134,680

 

Goodwill impairment charge, pre-tax    

-

 

   

21,146

 

   

-

 

   

21,146

 

(Gain)/Loss on real estate assets, pre-tax    

(735

)

   

5,680

 

   

(10,056

)

   

6,831

 

EBITDAre   $

113,045

 

  $

101,446

 

  $

426,880

 

  $

396,181

 

Add (Subtract):                        
Net loss attributable to noncontrolling interests    

26

 

   

27

 

   

185

 

   

201

 

Stock based compensation expenses, pre-tax    

3,444

 

   

4,734

 

   

19,199

 

   

23,896

 

Start-up expenses, pre-tax    

1,723

 

   

-

 

   

1,723

 

   

4,401

 

M&A related expenses, pre-tax    

4,141

 

   

-

 

   

8,118

 

   

-

 

One-time employee restructuring expenses, pre-tax    

-

 

   

-

 

   

7,459

 

   

-

 

Loss & settlement on asset divestiture, pre-tax    

1,302

 

   

-

 

   

6,333

 

   

-

 

COVID-19 expenses, pre-tax    

-

 

   

2,478

 

   

-

 

   

9,883

 

Close-out expenses, pre-tax    

1,475

 

   

-

 

   

1,475

 

   

5,935

 

Other non-cash revenue & expenses, pre-tax    

(1,102

)

   

(735

)

   

(4,408

)

   

(735

)

Adjusted EBITDAre   $

124,054

 

  $

107,950

 

  $

466,964

 

  $

439,762

 

                         
* all figures in '000s
** including income tax provision on equity in earnings of affiliates
*** includes (gain)/loss on extinguishment of debt
 
 
2022 Outlook/Reconciliation
(In thousands, except per share data)

(Unaudited)

     
    FY 2022
         
Net Income Attributable to GEO  

$

120,000

 

to

$

130,000

 

Depreciation and Amortization  

 

136,000

 

 

 

136,000

 

Consolidated Maintenance Capex  

 

(31,000

)

 

 

(32,000

)

Non-Cash Stock Based Compensation  

 

17,000

 

 

 

17,000

 

Non-Cash Interest Expense  

 

7,500

 

 

 

7,500

 

Adjusted Funds From Operations (AFFO)  

$

249,500

 

to

$

258,500

 

         
Net Interest Expense  

 

104,000

 

 

 

106,000

 

Non-Cash Interest Expense  

 

(7,500

)

 

 

(7,500

)

Facility Maintenance Capex  

 

31,000

 

 

 

32,000

 

Income Taxes (incl. income tax provision on equity in earnings of affiliates)  

 

45,000

 

 

 

49,000

 

Adjusted EBITDA  

$

422,000

 

to

$

438,000

 

         
G&A Expenses  

 

187,000

 

 

 

189,000

 

         
Net Income Attributable to GEO Per Diluted Share  

$

0.99

 

to

$

1.07

 

Adjusted Net Income Per Diluted Share  

$

0.99

 

 

$

1.07

 

AFFO Per Diluted Share  

$

2.05

 

to

$

2.13

 

Weighted Average Common Shares Outstanding-Diluted  

 

121,500

 

to

 

121,500

 

         
Capital Expenditures        
Growth  

$

4,000

 

to

$

5,000

 

Technology  

 

41,000

 

 

 

42,000

 

Facility Maintenance  

 

31,000

 

 

 

32,000

 

Total Capital Expenditures  

$

76,000

 

to

$

79,000

 

         

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.

Pablo E. Paez
Executive Vice President, Corporate Relations
(866) 301 4436

Source: The GEO Group, Inc.