The GEO Group Reports First Quarter 2023 Results
First Quarter 2023 Highlights
-
Total revenues of
$608.2 million -
Net Income of
$28.0 million -
Net Income Attributable to GEO of
$0.19 per diluted share -
Adjusted Net Income of
$0.22 per diluted share -
Adjusted EBITDA of
$130.9 million -
Reduced net debt by approximately
$70 million in 1Q23
For the first quarter 2023, we reported net income of
First quarter 2023 results reflect a year-over-year increase of
We reported first quarter 2023 Adjusted EBITDA of
Recent Developments
On
2023 Financial Guidance
Today, we updated our financial guidance for 2023. We expect full year 2023 Net Income to be between
We expect our full year 2023 Adjusted EBITDA to be between
For the second quarter of 2023, we expect Net Income to be between
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, Adjusted Net Income, 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 2023, 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 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, 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. 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 the extinguishment of debt, pre-tax, 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 second quarter of 2023 and GEO’s expected targets for net 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 2023 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 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
First quarter 2023 financial tables to follow:
|
Condensed Consolidated Balance Sheets* (Unaudited) |
||||||
| As of | As of | |||||
| (unaudited) | (unaudited) | |||||
| ASSETS | ||||||
| Cash and cash equivalents | $ |
110,916 |
$ |
95,073 |
||
| Accounts receivable, less allowance for doubtful accounts |
349,337 |
416,399 |
||||
| Prepaid expenses and other current assets |
40,995 |
43,536 |
||||
| Total current assets | $ |
501,248 |
$ |
555,008 |
||
| Restricted Cash and Investments |
129,832 |
111,691 |
||||
| Property and Equipment, Net |
1,972,859 |
2,002,021 |
||||
| Operating Lease Right-of-Use Assets, Net |
85,294 |
90,950 |
||||
| Assets Held for Sale |
14,594 |
480 |
||||
| Deferred Income Tax Assets |
8,005 |
8,005 |
||||
| Intangible Assets, Net (including goodwill) |
899,435 |
902,887 |
||||
| Other Non-Current Assets |
90,717 |
89,341 |
||||
| Total Assets | $ |
3,701,984 |
$ |
3,760,383 |
||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Accounts payable | $ |
78,851 |
$ |
79,312 |
||
| Accrued payroll and related taxes |
69,020 |
53,225 |
||||
| Accrued expenses and other current liabilities |
182,768 |
237,369 |
||||
| Operating lease liabilities, current portion |
20,723 |
22,584 |
||||
| Current portion of finance lease obligations, long-term debt, and non-recourse debt |
44,736 |
44,722 |
||||
| Total current liabilities | $ |
396,098 |
$ |
437,212 |
||
| Deferred Income Tax Liabilities |
75,849 |
75,849 |
||||
| Other Non-Current Liabilities |
76,232 |
74,008 |
||||
| Operating Lease Liabilities |
69,698 |
73,801 |
||||
| Finance Lease Liabilities |
1,102 |
1,280 |
||||
| Long-Term Debt |
1,883,956 |
1,933,145 |
||||
| Total Shareholders' Equity |
1,199,049 |
1,165,088 |
||||
| Total Liabilities and Shareholders' Equity | $ |
3,701,984 |
$ |
3,760,383 |
||
| * all figures in '000s | ||||||
|
Condensed Consolidated Statements of Operations* (Unaudited) |
||||||||
| Q1 2023 | Q1 2022 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenues | $ |
608,209 |
|
$ |
551,185 |
|
||
| Operating expenses |
433,492 |
|
385,161 |
|
||||
| Depreciation and amortization |
31,923 |
|
35,938 |
|
||||
| General and administrative expenses |
50,134 |
|
48,560 |
|
||||
| Operating income |
92,660 |
|
81,526 |
|
||||
| Interest income |
1,168 |
|
5,628 |
|
||||
| Interest expense |
(54,258 |
) |
(31,621 |
) |
||||
| (Loss) on extinguishment of debt |
(136 |
) |
- |
|
||||
| Gain on asset divestitures |
- |
|
(627 |
) |
||||
| Income before income taxes and equity in earnings of affiliates |
39,434 |
|
54,906 |
|
||||
| Provision for income taxes |
12,362 |
|
17,962 |
|
||||
| Equity in earnings of affiliates, net of income tax provision |
922 |
|
1,235 |
|
||||
| Net income |
27,994 |
|
38,179 |
|
||||
| Less: Net loss attributable to noncontrolling interests |
9 |
|
40 |
|
||||
| Net income attributable to |
$ |
28,003 |
|
$ |
38,219 |
|
||
| Weighted Average Common Shares Outstanding: | ||||||||
| Basic |
121,432 |
|
120,714 |
|
||||
| Diluted |
125,139 |
|
121,394 |
|
||||
| Net income per Common Share Attributable to |
||||||||
| Basic: | ||||||||
| Net income per share — basic | $ |
0.19 |
|
$ |
0.26 |
|
||
| Diluted: | ||||||||
| Net income per share — diluted | $ |
0.19 |
|
$ |
0.26 |
|
||
| * 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) |
||||||
| Q1 2023 | Q1 2022 | |||||
| (unaudited) | (unaudited) | |||||
| Net Income | $ |
27,994 |
$ |
38,179 |
||
| Add: | ||||||
| Income tax provision ** |
12,541 |
18,074 |
||||
| Interest expense, net of interest income *** |
53,226 |
25,993 |
||||
| Depreciation and amortization |
31,923 |
35,938 |
||||
| EBITDA | $ |
125,684 |
$ |
118,184 |
||
| Add (Subtract): | ||||||
| (Gain)/Loss on asset divestitures, pre-tax |
- |
627 |
||||
| Net loss attributable to noncontrolling interests |
9 |
40 |
||||
| Stock based compensation expenses, pre-tax |
5,578 |
6,313 |
||||
| Other non-cash revenue & expenses, pre-tax |
(355) |
- |
||||
| Adjusted EBITDA | $ |
130,916 |
$ |
125,164 |
||
| Net Income attributable to GEO | $ |
28,003 |
$ |
38,219 |
||
| Add (Subtract): | ||||||
| (Gain)/Loss on extinguishment of debt, pre-tax |
136 |
- |
||||
| Tax effect of adjustment to net income attributable to GEO (1) |
(34) |
- |
||||
| Adjusted Net Income | $ |
28,105 |
$ |
38,219 |
||
| Weighted average common shares outstanding - Diluted |
125,139 |
121,394 |
||||
| Adjusted Net Income per Diluted share |
0.22 |
0.31 |
||||
| * 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 adjustment related to gain/loss on extinguishment of debt. | ||||||
|
2023 Outlook/Reconciliation (1) (In thousands, except per share data) (Unaudited) |
||||||||
| FY 2023 | ||||||||
| Net Income Attributable to GEO |
$ |
105,000 |
to |
$ |
125,000 |
|||
| Net Interest Expense |
|
214,000 |
|
|
217,000 |
|||
| Income Taxes (including income tax provision on equity in earnings of affiliates) |
|
43,000 |
|
|
49,000 |
|||
| Depreciation and Amortization |
|
128,500 |
|
|
129,500 |
|||
| Non-Cash Stock Based Compensation |
|
16,500 |
|
|
16,500 |
|||
| Adjusted EBITDA |
$ |
507,000 |
to |
$ |
537,000 |
|||
|
|
||||||||
| Adjusted Net Income Per Diluted Share |
$ |
0.84 |
|
$ |
1.00 |
|||
| Weighted Average Common Shares Outstanding-Diluted |
|
125,300 |
to |
|
125,300 |
|||
|
|
||||||||
|
|
||||||||
|
|
||||||||
| CAPEX |
|
|||||||
| Growth |
|
8,000 |
to |
|
10,000 |
|||
| Technology |
|
25,000 |
to |
|
30,000 |
|||
| Facility Maintenance |
|
45,000 |
to |
|
50,000 |
|||
| Capital Expenditures |
|
78,000 |
to |
|
90,000 |
|||
| Total Debt, Net |
$ |
1,815,000 |
$ |
1,775,000 |
||||
| Total Leverage, Net |
|
3.49 |
|
3.41 |
||||
|
(1) Total Net Leverage is calculated using the midpoint of Adjusted EBITDA guidance range. |
||||||||
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Executive Vice President, Corporate Relations
(866) 301 4436
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