The GEO Group Reports Second Quarter 2024 Results
Second Quarter 2024 Highlights
-
Total revenues of
$607.2 million -
Net Loss Attributable to GEO of
$0.25 per diluted share, reflects costs associated with the extinguishment of debt of$82.3 million , pre-tax, in connection with theApril 2024 debt refinancing -
Adjusted Net Income of
$0.23 per diluted share -
Adjusted EBITDA of
$119.3 million
For the second quarter 2024, we reported a net loss attributable to GEO of
We reported total revenues for the second quarter 2024 of
First Six Months 2024 Highlights
-
Total revenues of
$1.21 billion -
Net Loss Attributable to GEO of
$0.08 per diluted share, reflects costs associated with the extinguishment of debt of$82.4 million , pre-tax -
Adjusted Net Income of
$0.43 per diluted share -
Adjusted EBITDA of
$236.9 million
For the first six months of 2024, we reported a net loss attributable to GEO of
We reported total revenues for the first six months of 2024 of
Financial Guidance
Today, we updated our financial guidance for 2024. For the full year 2024, we expect net income Attributable to GEO to be in a range of
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
For the third quarter 2024, we expect net income attributable to GEO to be in a range of
For the fourth quarter 2024, we expect net income attributable to GEO to be in a range of
Recent Developments
During the second quarter 2024,
On
Balance Sheet
During the second quarter 2024, we completed the comprehensive refinancing of our debt, including the exchange and retirement of
As of
Conference Call Information
We have scheduled a conference call and webcast for today at
About
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 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 items, 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 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, third quarter, 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, and pursuing quality growth opportunities. 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
Second quarter and first six months 2024 financial tables to follow:
|
Condensed Consolidated Balance Sheets* (Unaudited) |
||||||
| As of | As of | |||||
| (unaudited) | (unaudited) | |||||
| ASSETS | ||||||
| Cash and cash equivalents | $ |
46,299 |
$ |
93,971 |
||
| Restricted cash and cash equivalents |
6,240 |
- |
||||
| Accounts receivable, less allowance for doubtful accounts |
384,072 |
390,023 |
||||
| Prepaid expenses and other current assets |
53,802 |
44,511 |
||||
| Total current assets | $ |
490,413 |
$ |
528,505 |
||
| Restricted Cash and Investments |
141,312 |
135,968 |
||||
| Property and Equipment, Net |
1,919,541 |
1,944,278 |
||||
| Operating Lease Right-of-Use Assets, Net |
95,365 |
102,204 |
||||
| Assets Held for Sale |
6,080 |
- |
||||
| Deferred Income Tax Assets |
8,551 |
8,551 |
||||
| Intangible Assets, Net (including goodwill) |
887,235 |
891,085 |
||||
| Other Non-Current Assets |
95,491 |
85,815 |
||||
| Total Assets | $ |
3,643,988 |
$ |
3,696,406 |
||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Accounts payable | $ |
76,287 |
$ |
64,447 |
||
| Accrued payroll and related taxes |
64,940 |
64,436 |
||||
| Accrued expenses and other current liabilities |
198,626 |
228,059 |
||||
| Operating lease liabilities, current portion |
24,568 |
24,640 |
||||
| Current portion of finance lease obligations, and long-term debt |
24,442 |
55,882 |
||||
| Total current liabilities | $ |
388,863 |
$ |
437,464 |
||
| Deferred Income Tax Liabilities |
72,604 |
77,369 |
||||
| Other Non-Current Liabilities |
87,869 |
83,643 |
||||
| Operating Lease Liabilities |
74,924 |
82,114 |
||||
| Long-Term Debt |
1,739,191 |
1,725,502 |
||||
| Total Shareholders' Equity |
1,280,537 |
1,290,314 |
||||
| Total Liabilities and Shareholders' Equity | $ |
3,643,988 |
$ |
3,696,406 |
||
| * all figures in '000s | ||||||
|
Condensed Consolidated Statements of Operations* (Unaudited) |
||||||||||||||||
| Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Revenues | $ |
607,185 |
|
$ |
593,891 |
|
$ |
1,212,857 |
|
$ |
1,202,100 |
|
||||
| Operating expenses |
443,529 |
|
428,128 |
|
885,204 |
|
861,620 |
|
||||||||
| Depreciation and amortization |
31,313 |
|
31,691 |
|
62,678 |
|
63,614 |
|
||||||||
| General and administrative expenses |
52,198 |
|
41,692 |
|
105,268 |
|
91,826 |
|
||||||||
| Operating income |
80,145 |
|
92,380 |
|
159,707 |
|
185,040 |
|
||||||||
| Interest income |
1,992 |
|
1,297 |
|
4,466 |
|
2,465 |
|
||||||||
| Interest expense |
(50,644 |
) |
(55,046 |
) |
(101,939 |
) |
(109,304 |
) |
||||||||
| Loss on extinguishment of debt |
(82,339 |
) |
(1,618 |
) |
(82,378 |
) |
(1,754 |
) |
||||||||
| Gain/(loss) on asset divestitures/impairment |
(2,907 |
) |
2,175 |
|
(2,907 |
) |
2,175 |
|
||||||||
| Income/(loss) before income taxes and equity in earnings of affiliates |
(53,753 |
) |
39,188 |
|
(23,051 |
) |
78,622 |
|
||||||||
| Provision for/(benefit from) income taxes |
(20,379 |
) |
11,153 |
|
(12,308 |
) |
23,515 |
|
||||||||
| Equity in earnings of affiliates, net of income tax provision |
811 |
|
1,490 |
|
839 |
|
2,412 |
|
||||||||
| Net income/(Loss) |
(32,563 |
) |
29,525 |
|
(9,904 |
) |
57,519 |
|
||||||||
| Less: Net loss attributable to noncontrolling interests |
50 |
|
46 |
|
59 |
|
55 |
|
||||||||
| Net income/(loss) attributable to |
$ |
(32,513 |
) |
$ |
29,571 |
|
$ |
(9,845 |
) |
$ |
57,574 |
|
||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||
| Basic |
130,518 |
|
122,045 |
|
125,631 |
|
121,740 |
|
||||||||
| Diluted |
130,518 |
|
123,278 |
|
125,631 |
|
123,496 |
|
||||||||
| Net income per Common Share Attributable to |
||||||||||||||||
| Basic: | ||||||||||||||||
| Net income/(loss) per share — basic | $ |
(0.25 |
) |
$ |
0.20 |
|
$ |
(0.08 |
) |
$ |
0.39 |
|
||||
| Diluted: | ||||||||||||||||
| Net income/(loss) per share — diluted | $ |
(0.25 |
) |
$ |
0.20 |
|
$ |
(0.08 |
) |
$ |
0.39 |
|
||||
| * | All figures in '000s, except per share data | |||||||||||||||
| ** | In accordance with |
|||||||||||||||
|
Reconciliation of Net Income to EBITDA and Adjusted EBITDA, and Net Income Attributable to GEO to Adjusted Net Income* (Unaudited) |
|||||||||||||||||
| Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | ||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
| Net Income/(Loss) | $ |
(32,563 |
) |
$ |
29,525 |
|
$ |
(9,904 |
) |
$ |
57,519 |
|
|||||
| Add: | |||||||||||||||||
| Income tax provision/(benefit) ** |
(20,193 |
) |
11,487 |
|
(11,994 |
) |
24,029 |
|
|||||||||
| Interest expense, net of interest income *** |
130,991 |
|
55,366 |
|
179,851 |
|
108,593 |
|
|||||||||
| Depreciation and amortization |
31,313 |
|
31,691 |
|
62,678 |
|
63,614 |
|
|||||||||
| EBITDA | $ |
109,548 |
|
$ |
128,069 |
|
$ |
220,631 |
|
$ |
253,755 |
|
|||||
| Add (Subtract): | |||||||||||||||||
| Gain/(loss) on asset divestitures/impairment, pre-tax |
2,907 |
|
(2,175 |
) |
2,907 |
|
(2,175 |
) |
|||||||||
| Net loss attributable to noncontrolling interests |
50 |
|
46 |
|
59 |
|
55 |
|
|||||||||
| Stock based compensation expenses, pre-tax |
3,132 |
|
3,357 |
|
8,788 |
|
8,935 |
|
|||||||||
| Start-up expenses, pre-tax |
15 |
|
- |
|
507 |
|
- |
|
|||||||||
| ATM equity program expenses, pre tax |
- |
|
- |
|
264 |
|
- |
|
|||||||||
| Transaction fees, pre-tax |
3,097 |
|
- |
|
3,097 |
|
- |
|
|||||||||
| Close-out expenses, pre-tax |
1,386 |
|
- |
|
1,874 |
|
- |
|
|||||||||
| Other non-cash items, pre-tax |
(885 |
) |
(331 |
) |
(1,234 |
) |
(687 |
) |
|||||||||
| Adjusted EBITDA | $ |
119,250 |
|
$ |
128,966 |
|
$ |
236,893 |
|
$ |
259,883 |
|
|||||
| Net Income/(Loss) attributable to GEO | $ |
(32,513 |
) |
$ |
29,571 |
|
$ |
(9,845 |
) |
$ |
57,574 |
|
|||||
| Add (Subtract): | |||||||||||||||||
| Gain/(loss) on asset divestitures/impairment, pre-tax |
2,907 |
|
(2,175 |
) |
2,907 |
|
(2,175 |
) |
|||||||||
| Loss on extinguishment of debt, pre-tax |
82,339 |
|
1,618 |
|
82,378 |
|
1,754 |
|
|||||||||
| Start-up expenses, pre-tax |
15 |
|
- |
|
507 |
|
- |
|
|||||||||
| ATM equity program expenses, pre tax |
- |
|
- |
|
264 |
|
- |
|
|||||||||
| Close-out expenses, pre-tax |
1,386 |
|
- |
|
1,874 |
|
- |
|
|||||||||
| Discrete tax benefit (1) |
(4,519 |
) |
- |
|
(4,519 |
) |
- |
|
|||||||||
| Transaction fees, pre-tax |
3,097 |
|
- |
|
3,097 |
|
- |
|
|||||||||
| Tax effect of adjustment to net income attributable to GEO (2) |
(22,568 |
) |
140 |
|
(22,891 |
) |
106 |
|
|||||||||
| Adjusted Net Income | $ |
30,144 |
|
$ |
29,154 |
|
$ |
53,772 |
|
$ |
57,259 |
|
|||||
| Weighted average common shares outstanding - Diluted |
130,518 |
|
123,278 |
|
125,631 |
|
123,496 |
|
|||||||||
| Adjusted Net Income/(loss) per Diluted share |
0.23 |
|
0.24 |
|
0.43 |
|
0.46 |
|
|||||||||
|
* |
all figures in '000s, except per share data. | ||||||||||||||||
|
** |
including 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) |
$ |
55,000 |
to |
$ |
70,000 |
|
| Net Interest Expense |
|
185,000 |
|
|
186,000 |
|
| Loss on Extinguishment of Debt, pre-tax |
|
82,000 |
|
|
82,000 |
|
| Income Taxes(1) (including income tax provision on equity in earnings of affiliates) |
|
15,000 |
|
|
17,000 |
|
| Depreciation and Amortization |
|
126,000 |
|
|
127,500 |
|
| Non-Cash Stock Based Compensation |
|
16,000 |
|
|
16,500 |
|
| Other Non-Cash |
|
6,000 |
|
|
6,000 |
|
| Adjusted EBITDA |
$ |
485,000 |
to |
$ |
505,000 |
|
|
|
||||||
| Net Income Attributable to GEO Per Diluted Share |
$ |
0.40 |
to |
$ |
0.51 |
|
| Adjusted Net Income Per Diluted Share |
$ |
0.82 |
to |
$ |
0.93 |
|
| Weighted Average Common Shares Outstanding-Diluted |
|
137,000 |
|
|
137,000 |
|
|
|
||||||
|
|
||||||
|
|
||||||
| CAPEX |
|
|||||
| Growth |
|
10,000 |
to |
|
12,000 |
|
| Technology |
|
25,000 |
|
|
30,000 |
|
| Facility Maintenance |
|
45,000 |
|
|
48,000 |
|
| Capital Expenditures |
|
80,000 |
to |
|
90,000 |
|
|
|
||||||
| Total Debt, Net |
$ |
1,675,000 |
to |
$ |
1,625,000 |
|
| Total Leverage, Net |
|
3.4 |
to |
|
3.3 |
|
| (1) Net of |
||||||
|
* 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/20240806966373/en/
Executive Vice President, Corporate Relations
Source: