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Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 4, 2015

THE GEO GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

Florida

1-14260

65-0043078

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


621 NW 53rd Street, Suite 700, Boca Raton, Florida				33487
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s telephone number, including area code (561) 893-0101

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2

Financial Information

Item 2.02.

Results of Operations and Financial Condition.

On August 4, 2015, The GEO Group, Inc. (“GEO” or the “Company”) issued a press release (the “Earnings Press Release”) announcing its financial results for the quarter ended June 30, 2015, updating its financial guidance for full year 2015 and issuing its financial guidance for the third and fourth quarters of 2015. A copy of the Earnings Press Release is furnished hereto as Exhibit 99.1. GEO also held a conference call on August 4, 2015 to discuss these matters, a transcript of which is furnished hereto as Exhibit 99.3.

In the Earnings Press Release, GEO provided Net Operating Income, EBITDA, Adjusted EBITDA, Funds from Operations, Normalized Funds from Operations, Adjusted Funds from Operations and Adjusted Net Income for the quarter and six months ended June 30, 2015 and the comparable prior-year period that were not calculated in accordance with Generally Accepted Accounting Principles (the “Non-GAAP Information”) and are presented as supplemental disclosures. Generally, for purposes of Regulation G under the Securities Exchange Act of 1934, Non-GAAP Information is any numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The Earnings Press Release presents the financial measure calculated and presented in accordance with GAAP, which is the most directly comparable to the Non-GAAP Information, with a prominence equal to or greater than its presentation of the Non-GAAP Information. The Earnings Press Release also contains a reconciliation of the Non-GAAP Information to the financial measure calculated and presented in accordance with GAAP which is the most directly comparable to the Non-GAAP Information.

Net Operating Income is defined as revenues less operating expenses, excluding depreciation and amortization expense, general and administrative expenses and real estate related operating lease expense. Net Operating Income is calculated as net income attributable to GEO adjusted by subtracting equity in earnings of affiliates, net of income tax provision, and by adding income tax (benefit) provision, interest expense, net of interest income, depreciation and amortization expense, general and administrative expenses, and real estate related operating lease expense.

EBITDA is defined as Net Operating Income adjusted by subtracting general and administrative expenses and real estate related operating lease expense, and by adding equity in earnings of affiliates, pre-tax. Adjusted EBITDA is defined as EBITDA adjusted for net loss/income 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, and start-up expenses, pre-tax. Given the nature of GEO’s business as a real estate owner and operator, GEO believes that EBITDA and Adjusted EBITDA are helpful to investors as measures of its operational performance because they provide an indication of its 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 its business. GEO believes that by removing the impact of its 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 its 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 income from continuing operations. The adjustments GEO makes 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 GEO does not consider to be the fundamental attributes or primary drivers of its business plan and they do not affect GEO’s overall long-term operating performance. EBITDA and

Adjusted EBITDA provide disclosure on the same basis as that used by GEO’s management and provide consistency in its financial reporting, facilitate internal and external comparisons of its historical operating performance and its 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 M&A related expenses, net of tax, and start-up expenses, net of tax.

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 costs and other non-cash interest, and non-cash mark-to-market adjustments for derivative instruments and by subtracting recurring consolidated maintenance capital expenditures.

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 M&A related expenses, net of tax, and start-up expenses, net of tax.

Because of the unique design, structure and use of GEO’s correctional facilities, it believes that assessing the performance of its correctional facilities 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. GEO has modified FFO to derive Normalized FFO and AFFO that meaningfully reflect its operations. GEO’s assessment of its operations is focused on long-term sustainability. The adjustments GEO makes to derive the non-GAAP measures of Normalized FFO and AFFO exclude items which may cause short-term fluctuations in income from continuing operations but have no impact on GEO’s cash flows, or it does not consider them to be fundamental attributes or the primary drivers of GEO’s business plan and they do not affect GEO’s overall long-term operating performance.

GEO may make adjustments to FFO from time to time for certain other income and expenses that do not reflect a necessary component of GEO’s 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 GEO’s 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 income from continuing operations. GEO believes the presentation of FFO, Normalized FFO and AFFO provide useful information to investors as they provide an indication of GEO’s ability to fund capital expenditures and expand its business. FFO, Normalized FFO and AFFO provide disclosure on the same basis as that used by GEO’s management and provide consistency in its financial reporting, facilitate internal and external comparisons of its historical operating performance and its business units and provide continuity to investors for comparability purposes. Additionally, FFO, Normalized FFO and AFFO are widely recognized measures in GEO’s industry as a real estate investment trust.

The Earnings Press Release contains reconciliation tables for Net Operating Income, EBITDA and Adjusted EBITDA, Funds from Operations, Normalized Funds from Operations, Adjusted Funds from Operations and Adjusted Net Income.

GEO has presented in the Earnings Press Release certain forward-looking statements about GEO’s future financial performance that include non-GAAP financial measures, including, Net Operating Income, Adjusted EBITDA and Adjusted Funds from Operations. The determination of the amounts that are 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 GEO has provided a high level reconciliation for the guidance ranges for full year 2015, it is 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 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.

The Non-GAAP Information should be considered in addition to results that are prepared under current accounting standards but should not be considered a substitute for, or superior to, financial information prepared in accordance with GAAP. The Non-GAAP Information may differ from similarly titled measures presented by other companies. The Non-GAAP Information, as well as other information in the Earnings Press Release, should be read in conjunction with GEO’s financial statements filed with the Securities and Exchange Commission. The information set forth in Item 2.02 in this Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information set forth in Item 2.02 in this Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

Section 8

Other Events

Item 8.01.

Other Events.

On August 4, 2015, GEO issued a press release (the “Dividend Press Release”) announcing that on July 31, 2015, its Board of Directors declared a quarterly cash dividend of $0.62 per share which will be paid on August 24, 2015 to shareholders of record as of the close of business on August 14, 2015. A copy of the Dividend Press Release is attached as Exhibit 99.2.

Section 9

Financial Statements and Exhibits

Item 9.01.

Financial Statements and Exhibits.

(d)	Exhibits


Exhibit No.		Description

99.1		Press Release, dated August 4, 2015, announcing GEO’s financial results for the second quarter and six months ended June 30, 2015.

99.2		Press Release, dated August 4, 2015, announcing GEO’s declaration of a quarterly cash dividend.

99.3		Transcript of Conference Call discussing GEO’s financial results for the second quarter and six months ended August 4, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	THE GEO GROUP, INC.

August 10, 2015	By:	/s/ Brian R. Evans
Date		Brian R. Evans
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

EXHIBIT INDEX


Exhibit No.		Description

99.1		Press Release, dated August 4, 2015, announcing GEO’s financial results for the second quarter and six months ended June 30, 2015.

99.2		Press Release, dated August 4, 2015, announcing GEO’s declaration of a quarterly cash dividend.

99.3		Transcript of Conference Call discussing GEO’s financial results for the second quarter and six months ended June 30, 2015.

EX-99.1

Exhibit 99.1


		NEWS RELEASE
One Park Place, Suite 700 ● 621 Northwest 53^rd Street ● Boca Raton, Florida 33487 ● www.geogroup.com
CR-15-17

THE GEO GROUP REPORTS SECOND QUARTER 2015 RESULTS

•

2Q15 Normalized FFO of $0.63 per Diluted Share

•

2Q15 AFFO of $0.78 per Diluted Share

•

Updated 2015 AFFO Guidance of $3.30 to $3.34 per Diluted Share

•

Updated 2015 Guidance Reflects Additional Start-Up Expenses Related to Gradual Ramp-Up of North Lake Correctional Facility

Boca Raton, Fla. – August 4, 2015 — The GEO Group, Inc. (NYSE: GEO) (“GEO”), the first fully integrated equity real estate investment trust (“REIT”) specializing in the design, financing, development, and operation of correctional, detention, and community reentry facilities around the globe, reported today its financial results for the second quarter 2015.

Second Quarter 2015 Highlights

•

Net Income Attributable to GEO of $0.38 per Diluted Share

•

Adjusted Net Income of $0.43 per Diluted Share; Reflects M&A Related Expenses and Start-Up Expenses

•

Net Operating Income of $118.5 million

•

Normalized FFO of $0.63 per Diluted Share

•

AFFO of $0.78 per Diluted Share

For the second quarter 2015, GEO reported Normalized Funds From Operations (“Normalized FFO”) of $46.4 million, or $0.63 per diluted share, compared to $51.9 million, or $0.72 per diluted share, for the second quarter 2014. GEO reported second quarter 2015 Adjusted Funds From Operations (“AFFO”) of $57.5 million, or $0.78 per diluted share, compared to $60.9 million, or $0.85 per diluted share, for the second quarter 2014. For the second quarter 2015, GEO reported Net Operating Income (“NOI”) of $118.5 million compared to $119.2 million for the second quarter 2014.

George C. Zoley, Chairman and Chief Executive Officer of GEO, said, “We are pleased with our second quarter results as well as our outlook for the balance of the year, which reflect the opening of several projects resulting in significant start-up activity. During the second quarter, we completed the activation of 4,320 company-owned beds at three facilities in Oklahoma, Michigan, and California, and we’re scheduled to complete a 626-bed, company-owned expansion in Texas before the end of the year. These important project activations are indicative of the continued need for correctional and detention bed space across the United States as well as our company’s ability to provide tailored real estate, management, and programmatic solutions to our diversified customer base. We have also integrated 6,500 owned beds acquired in the beginning of the year. We remain optimistic about our company’s continued growth opportunities, and we expect all of these milestones will continue to drive enhanced value for our shareholders.”

—More—


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

NEWS RELEASE

GEO reported total revenues for the second quarter 2015 of $445.9 million up from total revenues of $412.8 million for the second quarter 2014. Second quarter 2015 revenues reflect $20.4 million in construction revenues associated with GEO’s contract for the development and operation of the new 1,300-bed Ravenhall Prison Facility in Australia (the “Ravenhall, Australia project”). GEO reported second quarter 2015 net income attributable to GEO of $28.3 million, or $0.38 per diluted share, compared to $38.9 million, or $0.54 per diluted share, for the second quarter 2014. GEO’s second quarter 2015 results reflect approximately $0.7 million, net of tax, in mergers and acquisition related expenses and approximately $2.9 million, net of tax, in start-up costs. Adjusting for these items, GEO reported second quarter 2015 adjusted net income of $0.43 per diluted share.

Compared to the second quarter 2014, GEO’s second quarter 2015 results reflect significant start-up expenses related to the activation of 4,320 company-owned beds at two existing company-owned facilities, North Lake Correctional Facility in Michigan and Great Plains Correctional Facility in Oklahoma, and a company-owned expansion at the Adelanto Detention Facility in California.

First Six Months 2015 Highlights

•

Net Income Attributable to GEO of $0.77 per Diluted Share

•

Adjusted Net Income of $0.84 per Diluted Share; Reflects M&A Related Expenses and Start-Up Expenses

•

Net Operating Income of $234.6 million

•

Normalized FFO of $1.23 per Diluted Share

•

AFFO of $1.49 per Diluted Share

For the first six months of 2015, GEO reported Normalized FFO of $90.6 million, or $1.23 per diluted share, compared to $93.3 million, or $1.30 per diluted share, for the first six months of 2014. GEO reported AFFO for the first six months of 2015 of $110.4 million, or $1.49 per diluted share, compared to $112.3 million, or $1.56 per diluted share, for the first six months of 2014. For the first six months of 2015, GEO reported Net Operating Income of $234.6 million compared to $226.7 million for the first six months of 2014.

GEO reported total revenues for the first six months of 2015 of $873.3 million up from total revenues of $806.0 million for the first six months of 2014. Revenues for the first six months of 2015 reflect $42.2 million in construction revenues associated with GEO’s contract for the development and operation of the Ravenhall, Australia project. GEO reported net income attributable to GEO of $57.1 million, or $0.77 per diluted share, for the first six months of 2015, compared to $66.9 million, or $0.93 per diluted share for the first six months of 2014. GEO’s results for the first six months of 2015 reflect approximately $2.2 million, net of tax, in mergers and acquisition related expenses and approximately $2.9 million, net of tax, in start-up costs. Adjusting for these items, GEO reported adjusted net income of $0.84 per diluted share for the first six months of 2015.

—More—


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

NEWS RELEASE

NOI, Funds From Operations (“FFO”), Normalized FFO, and AFFO are widely used non-GAAP supplemental financial measures of REIT performance. Please see the section of this press release 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 as well as Adjusted Net Income.

2015 Financial Guidance

GEO updated its financial guidance for 2015 to primarily reflect additional start-up costs in the third and fourth quarters related to the reactivation of the previously idle North Lake Correctional Facility in Michigan (the “North Lake Facility”) during the second quarter 2015.

The reactivation of the North Lake Facility and the previously announced signing of contracts with the State of Vermont and the State of Washington for the out-of-state housing of up to 675 inmates and up to 1,000 inmates, respectively, are expected to result in a gradual ramp-up in population at the North Lake Facility. As a result of this gradual ramp-up, GEO’s guidance reflects quarterly start-up expenses representing approximately $0.02 per diluted share in each of the third and fourth quarters of 2015 as GEO expects to bring additional staff on-board to accommodate increases in the population at the North Lake Facility.

GEO expects full-year 2015 total revenues to be in a range of $1.855 billion to $1.865 billion, including approximately $125 million in construction revenue associated with GEO’s contract for the development and operation of the Ravenhall, Australia project. GEO’s full-year 2015 NOI is expected to be in a range of $512 million to $516 million and full-year 2015 Adjusted EBITDA to be in a range of $372 million to $376 million.

GEO expects its full-year 2015 AFFO to be in a range of $3.30 to $3.34 per diluted share. GEO expects adjusted earnings for the full year 2015 to be in a range of $1.90 to $1.94 per diluted share. GEO’s full-year 2015 guidance reflects $0.11 per diluted share in mergers and acquisitions related expenses and start-up expenses.

For the third quarter 2015, GEO expects total revenues to be in a range of $473.0 million to $478.0 million, including approximately $24.0 million in construction revenue associated with GEO’s contract for the development and operation of the Ravenhall, Australia project. GEO expects third quarter 2015 AFFO to be in a range of $0.89 to $0.91 per diluted share. GEO expects third quarter 2015 adjusted earnings to be in a range of $0.52 to $0.54 per diluted share. GEO’s third quarter 2015 guidance reflects $0.02 per diluted share in start-up expenses.

For the fourth quarter 2015, GEO expects total revenues to be in a range of $509.0 million to $514.0 million, including approximately $59.0 million in construction revenue associated with GEO’s contract for the development and operation of the Ravenhall, Australia project. GEO expects fourth quarter 2015 AFFO to be in a range of $0.91 to $0.93 per diluted share. GEO expects fourth quarter 2015 adjusted earnings to be in a range of $0.54 to $0.56 per diluted share. GEO’s fourth quarter 2015 guidance reflects $0.02 per diluted share in start-up expenses.

—More—


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

NEWS RELEASE

Quarterly Dividend

On July 31, 2015, GEO’s Board of Directors declared a quarterly cash dividend of $0.62 per share. The quarterly cash dividend will be paid on August 24, 2015 to shareholders of record as of the close of business on August 14, 2015. The declaration of future quarterly cash dividends is subject to approval by GEO’s Board of Directors and to meeting the requirements of all applicable laws and regulations. GEO’s Board of Directors retains the power to modify its dividend policy as it may deem necessary or appropriate in the future.

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, EBITDA, and Adjusted EBITDA, and Net Income Attributable to GEO to FFO, Normalized FFO and AFFO along with supplemental financial and operational information on GEO’s business segments and other important operating metrics. A reconciliation table of Net Income Attributable to GEO to Adjusted Net Income is also presented herein. Please see the section of this press release 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 which is available on GEO’s Investor Relations webpage at www.geogroup.com.

Conference Call Information

GEO has scheduled a conference call and simultaneous webcast for today at 11:00 AM (Eastern Time) to discuss GEO’s second quarter 2015 financial results as well as its progress and 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 Conference Calls/Webcasts section of GEO’s investor relations webpage at www.geogroup.com. A replay of the webcast will be available on the website for one year. A telephonic replay of the conference call will be available until August 18, 2015 at 1-877-344-7529 (U.S.) and 1-412-317-0088 (International). The participant passcode for the telephonic replay is 10070335.

About The GEO Group

The GEO Group, Inc. (NYSE: GEO) is the first fully integrated equity real estate investment trust specializing in the design, financing, development, and operation of correctional, detention, and community reentry facilities around the globe. GEO is the world’s leading provider of diversified correctional, detention, community reentry, and electronic monitoring services to government agencies worldwide with operations in the United States, Australia, South Africa, and the United Kingdom. GEO’s worldwide operations include the ownership and/or management of 106 facilities totaling approximately 85,500 beds, including projects under development, with a growing workforce of approximately 20,000 professionals.

—More—


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

NEWS RELEASE

Note to Reconciliation Tables and Supplemental Disclosure –

Important Information on GEO’s Non-GAAP Financial Measures

Net Operating Income, EBITDA, Adjusted EBITDA, Funds from Operations, Normalized Funds from Operations and 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, Net Operating Income, EBITDA, Adjusted EBITDA, FFO, Normalized FFO, and AFFO. The determination of the amounts that are 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 2015, 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 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, and real estate related operating lease expense. Net Operating Income is calculated as net income attributable to GEO adjusted by subtracting equity in earnings of affiliates, net of income tax provision, and by adding income tax (benefit) provision, interest expense, net of interest income, depreciation and amortization expense, general and administrative expenses, and real estate related operating lease expense.

EBITDA is defined as Net Operating Income adjusted by subtracting general and administrative expenses and real estate related operating lease expense, and by adding equity in earnings of affiliates, pre-tax. Adjusted EBITDA is defined as EBITDA adjusted for net loss/income 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, and start-up expenses, pre-tax. Given the nature of our business as a real estate owner and operator, we believe that EBITDA and Adjusted EBITDA are helpful to investors as measures of our operational performance because they provide an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We believe that by removing the impact of our asset base (primarily depreciation and amortization) and excluding certain non-cash charges, amounts spent on interest and taxes, and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide our investors with performance measures that reflect the impact to operations from trends in occupancy rates, per diem rates and operating costs, providing a perspective not immediately apparent from income from continuing operations. 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.

—More—


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

NEWS RELEASE

Because of the unique design, structure and use of our correctional facilities, we believe that assessing the performance of our correctional facilities 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 income from continuing operations 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 income from continuing operations. 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. Additionally, FFO, Normalized FFO and AFFO are widely recognized measures in our industry as a real estate investment trust.

—More—


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

NEWS RELEASE

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 affect actual results, including statements regarding financial guidance for the third and fourth quarters of 2015 and full year 2015, the assumptions underlying such guidance, and statements regarding future project activations and growth opportunities. Factors 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 2015 given the various risks to which its business is exposed; (2) GEO’s ability to declare future quarterly cash dividends and the timing and amount of such future cash dividends; (3) GEO’s ability to successfully pursue further growth and continue to create shareholder value; (4) risks associated with GEO’s ability to control operating costs associated with contract start-ups; (5) 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; (6) GEO’s ability to win management contracts for which it has submitted proposals and to retain existing management contracts; (7) GEO’s ability to obtain future financing on acceptable terms; (8) GEO’s ability to sustain company-wide occupancy rates at its facilities; (9) GEO’s ability to access the capital markets in the future on satisfactory terms or at all; (10) GEO’s ability to remain qualified as a REIT; (11) the incurrence of REIT related expenses; and (12) other factors contained in GEO’s Securities and Exchange Commission periodic filings, including its Form 10-K, 10-Q and 8-K reports.


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

NEWS RELEASE

Second quarter 2015 financial tables to follow:

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	*Q2 2015*			*Q2 2014*			*YTD 2015*			*YTD 2014*
Revenues	$	445,945		$	412,843		$	873,314		$	805,980
Operating expenses		333,930			300,058			651,839			591,981
Depreciation and amortization		26,560			23,748			51,501			47,890
General and administrative expenses		32,174			28,148			64,022			56,650

*Operating income*		53,281			60,889			105,952			109,459
Interest income		2,868			824			4,941			1,556
Interest expense		(26,651	)		(20,602	)		(51,297	)		(41,254	)

*Income before income taxes and equity in earnings of affiliates*		29,498			41,111			59,596			69,761
Provision for income taxes		2,369			3,387			5,196			5,525
Equity in earnings of affiliates, net of income tax provision		1,124			1,174			2,610			2,658

*Net income*		28,253			38,898			57,010			66,894
Less: Net loss/(income) attributable to noncontrolling interests		38			—			58			(6	)

*Net income attributable to The GEO Group, Inc.*	$	28,291		$	38,898		$	57,068		$	66,888

*Weighted Average Common Shares Outstanding:*
Basic		73,665			71,749			73,607			71,599
Diluted		73,903			71,994			73,894			71,875

*Income per Common Share Attributable to The GEO Group, Inc. :*
*Basic:*

Net income per share — basic	$	0.38		$	0.54		$	0.78		$	0.93

*Diluted:*

Net income per share — diluted	$	0.38		$	0.54		$	0.77		$	0.93

Reconciliation of Net Income Attributable to GEO to Adjusted Income

(In thousands, except per share data)

(Unaudited)


	Q2 2015		Q2 2014		YTD 2015		YTD 2014
Net Income attributable to GEO	$	28,291	$	38,898	$	57,068	$	66,888
Add:
Start-up expenses, net of tax		2,912		—		2,912		—
M&A related expenses, net of tax		673		—		2,232		—

Adjusted Net Income	$	31,876	$	38,898	$	62,212	$	66,888

Weighted average common shares outstanding - Diluted		73,903		71,994		73,894		71,875
Adjusted Net Income Per Diluted Share	$	0.43	$	0.54	$	0.84	$	0.93

— More —


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

NEWS RELEASE

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)


	As of
	*June 30, 2015*		*December 31, 2014*
	*(Unaudited)*
ASSETS
*Current Assets*
Cash and cash equivalents	$	47,044	$	41,337
Restricted cash and investments		7,946		4,341
Accounts receivable, less allowance for doubtful accounts		270,131		269,038
Current deferred income tax assets		25,921		25,884
Prepaid expenses and other current assets		32,672		36,806

Total current assets	$	383,714	$	377,406

*Restricted Cash and Investments*		21,047		19,578
*Property and Equipment, Net*		1,919,266		1,772,166
*Contract Receivable*		110,176		66,229
*Direct Finance Lease Receivable*		5,339		9,256
*Non-Current Deferred Income Tax Assets*		5,873		5,873
*Intangible Assets, Net (including goodwill)*		850,705		649,165
*Other Non-Current Assets*		105,331		102,535

Total Assets	$	3,401,451	$	3,002,208

LIABILITIES AND SHAREHOLDERS’ EQUITY

*Current Liabilities*
Accounts payable	$	59,567	$	58,155
Accrued payroll and related taxes		45,113		38,556
Accrued expenses and other current liabilities		134,783		140,612
Current portion of capital lease obligations, long-term debt, and non-recourse debt		16,822		16,752

Total current liabilities	$	256,285	$	254,075

*Non-Current Deferred Income Tax Liabilities*		15,769		10,068
*Other Non-Current Liabilities*		85,919		87,429
*Capital Lease Obligations*		9,286		9,856
*Long-Term Debt*		1,844,763		1,462,819
*Non-Recourse Debt*		172,852		131,968
*Shareholders’ Equity*		1,016,577		1,045,993

Total Liabilities and Shareholders’ Equity	$	3,401,451	$	3,002,208

— More —


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

NEWS RELEASE

Reconciliation of Net Income Attributable to GEO to FFO, Normalized FFO, and AFFO

(In thousands, except per share data)

(Unaudited)


	*Q2 2015*			*Q2 2014*			*YTD 2015*			*YTD 2014*
Net Income attributable to GEO	$	28,291		$	38,898		$	57,068		$	66,888
Add:
Real Estate Related Depreciation and Amortization		14,492			12,985			28,377			26,366

Equals: NAREIT defined FFO	$	42,783		$	51,883		$	85,445		$	93,254

Add:
Start-up expenses, net of tax		2,912			—			2,912			—
M&A related expenses, net of tax		673			—			2,232			—

Equals: FFO, normalized	$	46,368		$	51,883		$	90,589		$	93,254

Add:
Non-Real Estate Related Depreciation & Amortization		12,068			10,763			23,124			21,524
Consolidated Maintenance Capital Expenditures		(5,425	)		(4,961	)		(12,086	)		(9,381	)
Stock Based Compensation Expenses		2,956			2,067			5,578			4,533
Amortization of debt issuance costs, discount and/or premium and other non-cash interest		1,521			1,175			3,216			2,399

Equals: AFFO	$	57,488		$	60,927		$	110,421		$	112,329

Weighted average common shares outstanding - Diluted		73,903			71,994			73,894			71,875

FFO/AFFO per Share - Diluted

Normalized FFO Per Diluted Share	$	0.63		$	0.72		$	1.23		$	1.30

AFFO Per Diluted Share	$	0.78		$	0.85		$	1.49		$	1.56

— More —


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

NEWS RELEASE

Reconciliation of Net Income Attributable to GEO to Net Operating Income and Adjusted EBITDA

(In thousands)

(Unaudited)


	*Q2 2015*			*Q2 2014*			*YTD 2015*			*YTD 2014*
Net income attributable to GEO	$	28,291		$	38,898		$	57,068		$	66,888
Less
Net loss/(income) attributable to noncontrolling interests		38			—			58			(6	)

Net Income	$	28,253		$	38,898		$	57,010		$	66,894
Add (Subtract):
Equity in earnings of affiliates, net of income tax provision		(1,124	)		(1,174	)		(2,610	)		(2,658	)
Income tax provision		2,369			3,387			5,196			5,525
Interest expense, net of interest income		23,783			19,778			46,356			39,698
Depreciation and amortization		26,560			23,748			51,501			47,890
General and administrative expenses		32,174			28,148			64,022			56,650

Net Operating Income, net of operating lease obligations	$	112,015		$	112,785		$	221,475		$	213,999

Add: Operating lease expense, real estate		6,510			6,406			13,076			12,701

Net Operating Income (NOI)	$	118,525		$	119,191		$	234,551		$	226,700

Subtract (Add):
General and administrative expenses		32,174			28,148			64,022			56,650
Operating lease expense, real estate		6,510			6,406			13,076			12,701
Equity in earnings of affiliates, pre-tax		(1,640	)		(1,828	)		(3,738	)		(3,861	)

EBITDA	$	81,481		$	86,465		$	161,191		$	161,210

Adjustments
Net loss/(income) attributable to noncontrolling interests		38			—			58			(6	)
Stock based compensation expenses, pre-tax		2,956			2,067			5,577			4,533
Start-up expenses, pre-tax		2,808			—			2,808			—
M&A related expenses, pre-tax		818			—			2,992			—

Adjusted EBITDA	$	88,101		$	88,532		$	172,626		$	165,737

— More —


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

NEWS RELEASE

2015 Outlook/Reconciliation

(In thousands, except per share data)

(Unaudited)


	Full Year 2015
Net Income	$	134,000		to	$	138,000
Real Estate Related Depreciation and Amortization		59,000				59,000

Funds from Operations (FFO)	$	193,000		to	$	197,000

Adjustments
M&A Related Expenses, Net of Tax		2,000				2,000
Start-Up Expenses, Net of Tax		6,000				6,000

Normalized Funds from Operations	$	201,000		to	$	205,000

Non-Real Estate Related Depreciation and Amortization		49,000				49,000
Consolidated Maintenance Capex		(22,000	)			(22,000	)
Non-Cash Stock Based Compensation and Non-Cash Interest Expense		17,000				17,000

Adjusted Funds From Operations (AFFO)	$	245,000		to	$	249,000

Net Cash Interest Expense		90,000				90,000
Consolidated Maintenance Capex		22,000				22,000
Income Taxes		15,000				15,000

Adjusted EBITDA	$	372,000		to	$	376,000

G&A Expenses		125,000				125,000
Non-Cash Stock Based Compensation		(10,000	)			(10,000	)
Real Estate Related Operating Lease Expense		25,000				25,000

Net Operating Income	$	512,000		to	$	516,000

FFO Per Share (Normalized)	$	2.71		to	$	2.75
AFFO Per Share	$	3.30		to	$	3.34
Weighted Average Common Shares Outstanding-Diluted		74,300		to		74,500

- End -


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

EX-99.2

Exhibit 99.2


		NEWS RELEASE
One Park Place, Suite 700 ● 621 Northwest 53^rd Street ● Boca Raton, Florida 33487 ● www.geogroup.com
CR-15-18

THE GEO GROUP DECLARES QUARTERLY

CASH DIVIDEND OF $0.62 PER SHARE

Boca Raton, Fla. – August 4, 2015 — The GEO Group, Inc. (NYSE: GEO) (“GEO”) announced that on July 31, 2015, its Board of Directors declared a quarterly cash dividend of $0.62 per share. The quarterly cash dividend will be paid on August 24, 2015 to shareholders of record as of the close of business on August 14, 2015.

George C. Zoley, Chairman and Chief Executive Officer of GEO, said: “We are pleased to declare our quarterly cash dividend of $0.62 per share, or $2.48 per share annualized, which is indicative of our continued commitment to return value to our shareholders.”

This press release contains forward-looking statements regarding future events and the future performance of GEO that involve risks and uncertainties that could materially affect actual results, including statements regarding the timing and amount of dividends. Factors 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 declare future quarterly cash dividends and the timing and amount of such future dividends; (2) GEO’s ability to successfully pursue further growth and continue to enhance shareholder value; (3) GEO’s ability to access the capital markets in the future on satisfactory terms or at all; (4) risks associated with GEO’s ability to control operating costs associated with contract start-ups; (5) 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; (6) GEO’s ability to win management contracts for which it has submitted proposals and to retain existing management contracts; (7) GEO’s ability to obtain future financing on acceptable terms; (8) GEO’s ability to sustain company-wide occupancy rates at its facilities; and (9) other factors contained in GEO’s Securities and Exchange Commission filings, including its Form 10-K, 10-Q and 8-K reports.

-End-


Contact:	Pablo E. Paez	1-866-301-4436
	Vice President, Corporate Relations

EX-99.3

Exhibit 99.3

2Q15 Earnings Call - August 4, 2015


Participants

CORPORATE PARTICIPANTS

Pablo E. Paez		John M. Hurley
Vice President-Corporate Relations, The GEO Group, Inc.		Senior VP, President-GEO Corrections & Detention, The GEO Group, Inc.

George C. Zoley		Ann M. Schlarb
Chairman & Chief Executive Officer, The GEO Group, Inc.		Senior Vice President and President, GEO Care, The GEO Group, Inc.

Brian R. Evans
Chief Financial Officer & Senior Vice
President, The GEO Group, Inc.

OTHER PARTICIPANTS

Michael Kodesch		Kevin D. McVeigh
Analyst, Canaccord Genuity, Inc.		Analyst, Macquarie Capital (USA), Inc.

Tobey Sommer
Analyst, SunTrust Robinson Humphrey, Inc.

Management Discussion Section

Operator

Good morning, and welcome to The GEO

Group Second Quarter 2015 Earnings Call. All participants will be in listen-only mode.

[Operator Instructions] After today’s presentation, there will be an opportunity to ask questions.

[Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference

over to Pablo Paez, Vice President of Corporate Relations. Please go ahead.

Pablo E. Paez

Vice President-Corporate Relations, The GEO Group, Inc.

Thank you, operator. Good morning, everyone, and thank you for joining us for today’s discussion of The GEO Group’s second quarter 2015 earnings results. With us today is George Zoley, Chairman and Chief Executive Officer; Brian Evans, Chief Financial Officer; John Hurley, President of GEO Corrections & Detention; and Ann Schlarb, President of GEO Care.

This morning, we will discuss our second quarter performance and current business development activities. We will conclude the call with a question-and-answer session. This conference call is also being webcast live on our website at www.geogroup.com.

Today, we will discuss non-GAAP basis information. A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and supplemental disclosure we issued this morning.

Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall within the Safe Harbor provisions of the securities laws.

Our actual results may differ materially from those in the forward-looking statements as a result of various factors contained in our Securities and Exchange Commission filings, including the Forms 10-K, 10-Q and 8-K reports.

With that, please allow me to turn this call over to our Chairman and CEO, George Zoley. George?

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

Thanks, Pablo, and good morning to everyone. Thank you for joining us on this call. As we disclosed in our earnings announcement this morning, we reported $0.78 per share in adjusted funds from operation for the second quarter of 2015.

Our second quarter results reflect the impact of approximately $0.04 per share in start-up costs associated with the activation of 4,300 beds at three company-owned facilities as well as approximately $0.01 per share in M&A-related expenses.

As we look into the third quarter, we have several reasons to be optimistic. First, the 1,940-bed company-owned Great Plains Correctional Facility in Oklahoma intake began in June under a new 10-year contract with the U.S. Bureau of Prisons and is expected to be completed by October 1, at which time a fixed monthly payment will begin for the duration of the 10-year contract.

You may recall that this contract was one under CAR 15 along with our Moshannon Valley Facility rebid, which was also awarded a 10-year contract as the only Northeast U.S. CAR facility for the BOP.

Also, in the second quarter, we activated a $45 million, 640-bed expansion of the Adelanto ICE Detention Facility in California. This is the second expansion of the Adelanto facility since the first 650-bed contract in 2011 with the City of Adelanto and U.S. Immigration & Customs Enforcement. The 640-bed expansion increases the capacity to 1,940 beds and includes a new fixed monthly payment by September 15, following a 75-day in take schedule.

Also during the second quarter, we activated our 1,740-bed company-owned North Lake Correctional Facility in Baldwin, Michigan. We recently relocated to North Lake approximately 300 Vermont inmates from a prior vendor’s facilities and are awaiting further intake from the State of Vermont under a five-year agreement for up to 675 inmates.

Under our contract with the State of Vermont, GEO will also provide industry-leading evidence-based offender rehabilitation programs under the GEO Continuum of Care. We believe that this key differentiating factor led to our successful bid with Vermont as well as the State of Washington for the out-of-state housing of up to 1,000 inmates, as we announced in May.

Additionally, on December 1, we expect to complete a $36 million, 626-bed expansion to the Karnes, Texas Residential Center, which is company-owned. The new facility capacity will be 1,158-beds and will result in a new fixed monthly payment estimated to take place on December 1 of this year.

In Australia, we are continuing to develop the $615 million Ravenhall Correctional Facility for the State of Victoria. GEO’s consortium is the developer of the facility, which will include an $88 million investment by GEO.

The 1,300-bed facility is on schedule for completion in the fourth quarter of 2017. Subsequently, we will begin operating the facility under a 25-year contract, providing secure residential care and state-of-the-art offender rehabilitation services in custody and post-release. Once operational, the Ravenhall facility is expected to generate approximately $75 million a year in revenues per year, including payments for improved offender rehabilitation.

The Ravenhall Prison will be the premier GEO Continuum of Care offender rehabilitation facility in the world. As the world’s largest provider of detention and correctional services in prison as well as in the community, we are pleased to have been successful in combining investments in governmental infrastructure with best-in-class social services.

At this time, I would like to turn the call over to Brian Evans.

Brian R. Evans

Chief Financial Officer & Senior Vice President, The GEO Group, Inc.

Thank you, George, and good morning to everyone. As disclosed in our press release today, we reported adjusted funds from operations for the second quarter of $0.78 per share. Our adjusted EPS for the second quarter 2015 was $0.43, which reflects an adjustment for $3.6 million net of tax, for start-up costs and M&A-related expenses. On a GAAP basis, we reported second quarter 2015 net income attributable to GEO of $0.38 per share.

Our revenues for the second quarter 2015 increased to approximately $446 million from $413 million a year ago. Our quarterly revenues include approximately $20 million in construction revenue associated with our contract for the development and operation of the Ravenhall Prison project in Australia.

For the second quarter 2015, we reported net operating income of approximately $119 million. Compared to second quarter 2014, our second quarter 2015 results reflect the reactivation of the 300-bed company-owned McFarland Community Reentry Facility in California during August 2014; the opening of the 400-bed company-owned Alexandria Transfer Center in Louisiana in November 2014; the reactivation of the 400-bed MesaVerde Detention Facility in California in March of 2015; approximately $20 million in construction revenue as I just discussed; $0.04 per share in start-up costs related to the activation of three company-owned facilities totaling approximately 4,300 beds during the second quarter 2015; and $0.01 per share in M&A-related expenses.

Moving to our outlook for the balance of the year, we have updated our guidance to reflect several factors. First, the reactivation of our North Lake facility in Michigan and the announced signing of our out-of-state contracts with Vermont and Washington will result in a gradual ramp-up at the facility. We expect the population at the facility to increase from its current census of approximately 300 offenders to approximately 500 offenders by the fourth quarter with a gradual ramp-up expected in 2016.

As a result of this gradual ramp-up, we have now accounted for ongoing quarterly start-up costs which were not included in our previous guidance, representing approximately $0.02 per share in both the third and fourth quarters of this year, as we expect to bring additional staff on board to accommodate increases in the population.

When we provided guidance last quarter, we had not yet been awarded either contract for the North Lake facility, and therefore only accounted for our start-up assumptions in the second quarter. With the contracts now signed, we have a better sense of the pace of ramp-up at the facility.

Second, we have taken meaningful steps to improve the occupancy of the recently acquired facilities from LCS. We have already seen improvement at three of the five large facilities, which have experienced an increase in census of almost 30%. We are aggressively marketing the remaining beds at the two other large LCS facilities and expect additional improvements in the overall occupancy throughout the year.

Our total revenue for the year is expected to be approximately $1.86 billion, including approximately $125 million in construction revenue related to the Ravenhall, Australia project. Our 2015 AFFO per share is expected to be in a range of $3.30 to $3.34. We expect 2015 adjusted EPS to be between $1.90 and $1.94 per share, which reflects $0.11 per share in M&A-related expenses and start-up costs.

For the third quarter 2015, we expect total revenues to be in a range of $473 million to $478 million, including $24 million in construction revenue related to the Ravenhall project. Third quarter AFFO is expected to be in arrange of $0.89 to $0.91 per share. Adjusted EPS for the third quarter is expected to be between $0.52 and $0.54 per share, which reflects the $0.02 in start-up costs.

For the fourth quarter 2015, we expect total revenues to be in a range of $509 million to $514 million, including $59 million in construction revenue related to the Ravenhall project. Fourth quarter AFFO is expected to be in a range of $0.91 to $0.93 per share and adjusted EPS for the fourth quarter is expected to be between $0.54 and $0.56 per share, which reflects $0.02 in start-up costs.

With respect to our liquidity position, we continue to have ample borrowing capacity of approximately $200 million under our revolving credit facility and an accordion feature of $350 million and approximately $47 million in cash on hand.

With respect to our uses of cash, we expect our project and growth CapEx to be approximately $55 million in 2015 and we have approximately $20 million in scheduled annual principal payments of debt.

With respect to our dividend payment, as we announced today, our board has declared a quarterly cash dividend of $0.62 per share, which currently represents a payout of less than 75% of our guided quarterly run rate of AFFO for the second half of 2015. As we expressed to you in the past, our board remains committed to returning value to our shareholders by targeting a 75% to 80% dividend payout, and we will review our dividend payment on an annual basis during our November board meeting.

Finally, for those investors new to GEO, I’d like to briefly touch upon our company’s attractive investment characteristics, which are underpinned by our real estate portfolio of company-owned facilities which have a physical useful life of as long as 75 years. We currently own or lease approximately 70% of our facilities worldwide, and we have stable and sustainable income through increasingly longer-term contract arrangements. We have a diversified base of investment-grade government customers and have historically enjoyed occupancy rates in the mid-to high-90s and customer retention rates in excess of 90%.

With that, I will turn the call to John Hurley for a review of our market opportunities. John?

John M. Hurley

Senior VP, President-GEO Corrections & Detention, The GEO Group, Inc.

Thank you, Brian, and good morning to everyone. I would like to address recent project activations, major contract rebids and select publicly-known business development opportunities.

GEO is the largest detention operator for the U.S. federal government agencies, including the U.S. Bureau of Prisons, the U.S. Immigration & Customs Enforcement, more commonly referred to as ICE, and the United States Marshals Service. Our business relationship with the three federal agencies now spans three decades.

Additionally, we provide correctional facilities for 11 states, including Florida, Georgia, Louisiana, Texas, Oklahoma, Arizona, New Mexico, California, Vermont, Virginia and Indiana. Our business relationships with our state customers began in the mid-1980s and now involve more than 20 facilities that are almost all medium security or higher.

With respect to international business, GEO is the only U.S. publicly-traded company providing corrections and detention services overseas. We presently operate in the United Kingdom, Australia, and South Africa.

With respect to our recent project activations in March, we began the intake process at our 400-bed company-owned Mesa Verde Detention Facility in California under an agreement with ICE. We had previously completed a $10 million renovation of the Mesa Verde facility, which is expected to generate approximately $17 million in annualized revenues.

In early June, we activated our 1,940-bed company-owned Great Plains Correctional Facility in Oklahoma under a new 10-year contract with the Federal Bureau of Prisons, which is expected to generate approximately $35 million in annualized revenues. We expect to complete intake on October 1. The Oklahoma contract was under the CAR 15 procurement by the BOP and will house criminal aliens.

In California, we activated a $45 million expansion of our company-owned Adelanto ICE Detention Facility on July 1. GEO is a subcontractor to the city of Adelanto, which has an intergovernmental agreement with ICE to provide secure housing for primarily criminal aliens. This important expansion has increased the facility’s capacity from 1,300 to 1,940 beds, and is expected to generate approximately $21 million in additional annual revenues.

In late June, we began the intake of Vermont inmates at our 1,740-bed company-owned North Lake Correctional Facility under a five-year contract with the Vermont Department of Corrections for the out-of-state housing of up to 675 offenders. Additionally, we have entered into a five-year agreement with the Washington Department of Corrections for the out-of-state housing of up to 1,000 inmates at our North Lake Facility.

On a combined basis, these two contracts would be expected to generate approximately $37 million in annualized revenues at full occupancy.

In California, we also recently executed new contract amendments at our three modified community correctional facilities to incorporate the provision of additional rehabilitation programs, which represents a further expansion of our GEO Continuum of Care platform.

Finally, in Texas we are on schedule to complete the development of a $36 million expansion to our company-owned Karnes ICE Residential Center by December 1. The Karnes expansion will add 626 beds, bringing the center’s capacity to 1,158 beds, and generating an additional $20 million in annual revenues under a fixed monthly payment.

GEO is subcontractor to Karnes County, which has an intergovernmental agreement with ICE to provide secured family residential housing. As you may be aware, there’s an ongoing case in federal court related to the government’s family detention policies, in particular the length of stay at family residential centers. While we cannot speculate on pending legal proceedings, we believe that the Department of Homeland Security and ICE have an interest in the continued use of the family residential centers, which comply with ICE’s family residential standards, including our Karnes center.

Additionally, on June 24, Department of Homeland Security implemented policy changes specifically aimed at reducing the length of stay at family residential centers. Our Karnes residential center serves an important role in helping meet the government’s policies and complies with the highest standards in our industry. We look forward to our continued partnership with ICE, which dates back to 1980.

Moving now to major contract rebids. First, with respect to ICE, we’ve recently signed a new seven-year contract for the continued management of the company-owned 700-bed Broward Transition Center in Broward County, Florida. This new contract was awarded through a competitive procurement process and provides for fixed monthly payments, generating approximately $24 million in annualized revenues.

Our company-owned 1,575-bed Northwest ICE Detention Center in Tacoma, Washington has also been in a competitive procurement process. We have been negotiating a final new 10-year contract with ICE, which is expected to generate approximately $53 million in annualized revenues.

All these important projects are supported by a continued budget funding price. Under the House budget bill for the Department of Homeland Security for the fiscal year starting on October 1, ICE would be fully funded for more than 34,000 detention beds.

With respect to the Bureau of Prisons, as we have previously discussed, GEO won both awards under the CAR 15 procurement, which included a rebid of our company-owned 1,800-bed Moshannon Valley Facility in Pennsylvania and our company-owned 1,940-bed Great Plains Correctional Facility in Hinton, Oklahoma. Both of these facilities have a new 10-year contract with the U.S. Bureau of Prisons.

More recently, the Bureau of Prisons has issued Criminal Alien Requirement 16, or better known as CAR 16. The CAR 16 procurement involves the rebid of several contract facilities, totaling more than 10,000 beds with contracts that expire during 2017.

A restriction under CAR 16 limits any single contract not to exceed 1,800 beds, although a facility may propose and be awarded more than one contract. The CAR 16 procurement includes our company-owned 3,500-bed Big Spring Correctional Center in Big Spring, Texas. This detention complex comprised of several buildings has been providing services to the BOP since 1997 and will necessitate that GEO submit two separate 1,800-bed proposals.

CAR 16 also includes the 3,600-bed Reeves County Detention Complex, which is owned by Reeves County, Texas. Reeves County has two separate contracts with the BOP involving the 3,600 beds. GEO is a subcontractor to Reeves County and provides management services under a fee-only arrangement for the provision of approximately two dozen management positions. All other employees of the Reeves Complex are employees of Reeves County.

CAR 16 proposals were submitted in June of this year with contract awards expected in late 2016 and with new contracts that go into effect in the first half of 2017. In Texas, there was a rebid involving five facilities, two of which were GEO-managed facilities, the Lockhart Correctional Facility of 1,000 beds and Cleveland Correctional Facility of 500 beds. Unfortunately, we did not retain these managed-only facilities.

With respect to future growth opportunities, we currently have approximately 3,000 beds in idle facilities and have several active efforts to redeploy this available capacity. There are a number of publicly known opportunities in the U.S and overseas, and we are currently pursuing total several thousand beds and we are also exploring a number of non-public opportunities that relate to both new project development and potential asset purchases.

At the federal level, ICE has recently issued a procurement for a 1,000-bed detention center in the Houston, Texas area. This is a rebid of the Houston ICE processing center operated by CCA. The RFP requires proposed facilities to be within 50-mile radius of the ICE Houston office, comply with the most recent ICE Detention standards and provide extensive ICE offices and support areas. Additionally, ICE is expected to issue a procurement later this year for a new 800-bed detention facility in the Chicago area.

I’d like to move to public opportunities at the state level. Several states continue to face capacity constraints and inmate population growth, and many of our state customers require additional beds as their aging and inefficient prisons need to be replaced with new, more cost-efficient facilities. As an example, in the states where we currently operate, the average age of state prisons ranges from 30 to 60 years old. In Arizona, the Department of Corrections has a pending procurement for up to 2,000 correctional beds.

Additionally, there are several states, including Oklahoma, Ohio and others, which are considering public-private partnerships for the housing of inmates as well as the development and operation of new and replacement correctional facilities. In Oklahoma, the state had previously issued a request for proposal for up to 2,000 beds at in-state facilities. While this particular procurement did not move forward, we believe that the State of Oklahoma continues to have a need for correctional beds and we are continuing to monitor this opportunity.

In Ohio, the legislature recently passed legislation approving the sale of the state-owned prison totaling approximately 2,700 beds. This opportunity represents a second such sale of a corrections asset for the State of Ohio.

With respect to our international markets, our GEO Australia subsidiary is continuing to work on our project for the development and operation of the new 1,300-bed Ravenhall Prison near Melbourne. This large scale project is expected to be completed in late 2017 and will provide an unprecedented level of in-prison and post-release rehabilitation programs. The Ravenhall facility will have a unified commitment to providing innovative approaches to reducing re-offending, including the establishment of the world’s first fully integrated Good Lives Model delivered through the GEO Continuum of Care.

The project is being developed under a public-private partnership structure, with GEO making an investment of $88 million, with expected returns on investment consistent with our company-owned facilities. The contract is expected to generate approximately $75 million in annualized revenues for GEO under a 25-year contract with the State of Victoria.

At this time, I’ll turn the call over to Ann for a review of our GEO Care segment. Ann?

Ann M. Schlarb

Senior Vice President and President, GEO Care, The GEO Group, Inc.

Thank you, John, and good morning, everyone. As you may remember from prior calls, our GEO Care segment is comprised of four divisions.

Our GEO Reentry division manages 21 halfway houses totaling 3,000 beds and 70-day reporting centers with approximately 5,000 participants. Our Youth Services division oversees 12 residential facilities with approximately 1,300 beds and six non-residential programs with approximately 1,200 participants. Our BI division tracks more than 115,000 offenders under community supervision, including 75,000 individuals through an array of technology products, including radio frequency, GPS and alcohol monitoring devices. Finally, our GEO Continuum of Care division oversees the integration of our industry-leading evidence-based rehabilitation programs, both in prison and through our community-based and post-release services.

As we have discussed in the past, we are enthusiastic about the opportunity to expand our delivery of offender rehabilitation services through the GEO Continuum of Care, which we believe is in line with current federal criminal justice reform efforts to divert low-level offenders into rehabilitation and reentry programs. We view these efforts as positive and we believe that the emphasis on offender rehabilitation and community reentry programs as part of criminal justice reform will create significant growth opportunities for our company.

Each of our divisions continues to pursue several new growth opportunities. GEO Reentry continues to work with existing and prospective local and state correctional customers to leverage new opportunities in the provision of community-based reentry services in both residential facilities and non-residential day reporting centers.

We activated six new day reporting centers in Louisiana and Illinois as well as two new in-custody treatment programs in North Carolina during the first half of the year. These new contracts are expected to generate approximately $4 million in annualize revenues.

With respect to our residential reentry centers, our second quarter 2015 results reflect our new company-leased 240-bed residential reentry center in Newark. This new center was activated under a contract with the State of New Jersey late last year and is expected to generate approximately $5.5 million in annualized revenues.

Additionally, we are currently competing in several new residential reentry center opportunities for state and federal agencies in California and Florida, totaling more than 300 beds, new day reporting centers in California and additional in-custody programs in North Carolina. These new opportunities totaled more than $10 million of potential annualized revenues.

Our Youth Services division continues to work towards maximizing the utilization of our existing asset base and has continued to undertake several marketing and consolidation initiatives to increase the overall utilization of our existing Youth Services facilities.

Our Ohio and Texas facilities continued to experience a strong census, consistent with the higher occupancy rates experienced last year. We are also in the process of pursuing additional referrals to our Pennsylvania facilities from the City of Philadelphia and are looking to expand our community programs in Ohio, specifically in Cleveland, Columbus and Cincinnati.

Finally, our BI subsidiary continues to market its supervision and electronic monitoring services to local, state and federal correctional agencies nationwide. In May of this year, BI successfully retained its electronic monitoring contract with the State of North Carolina, which represents approximately $4 million in annual revenues.

Additionally, during the second quarter, BI completed the acquisition of SOBERLINK, a leading provider of mobile breath alcohol monitoring devices. BI is currently bidding on new business opportunities in the State of Virginia and the District of Columbia.

With respect to our contract for the Intensive Supervision Appearance Program or ISAP, ICE has been ramping up the program from approximately 23,000 participants in early 2014 to a planned 53,000 participants by the end of 2016 according to recent Congressional testimony. While the ramp-up in the program was slightly slower than expected in the first half of 2015, we have already begun to see a steadier ramp-up in the second half of the year.

Additionally, the alternative to detention program, which encompasses ISAP, is expected to receive full funding under the current Department of Homeland Security budget bills in Congress for the fiscal year that begins on October 1. These are positive developments which support the expected growth in the program into next year.

At this time, I’ll turn the call back to George for his closing remarks. George?

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

Thank you, Ann. During the second quarter, we activated more than 4,300 beds at three company-owned facilities located in California, Oklahoma and Michigan. These facilities are expected to achieve normal occupancy by the end of the third quarter.

In the fourth quarter, we are scheduled to activate the 626-bed expansion at the Karnes Texas Residential Center under a new fixed price monthly payment. In Victoria, Australia, we are developing a $615 million 1,100-bed facility that will have the most expansive offender rehabilitation program in the world and will generate approximately $75 million in annual revenues.

GEO Care has added several new contracts with the opening of a residential center late last year and new day reporting centers and in-custody treatment programs in the first half of this year. GEO Care is also well-positioned to provide rehabilitation services as a result of criminal justice reform efforts at the federal level. This new organic growth activity is the most significant that we have experienced in some time and is indicative of our company’s ability to provide tailored, real estate, management and programmatic solutions to our diversified customer base.

Additionally, we continue to make significant steps to improve the utilization of the 6,500 beds acquired in the LCS acquisition in our overall real estate portfolio.

GEO’s continued growth of this year has positioned the company well for the annual third quarter dividend review by the board of directors in November. We believe that our diversified growth and investment strategies have positioned GEO as the world’s leading provider of corrections, detention and offender rehabilitation services. We expect that all of these efforts will continue to drive growth for our company and we remain focused on effectively allocating capital to enhance value for our shareholders.

We also remain enthusiastic about the opportunity to expand our delivery of offender rehabilitation services. As we announced at the beginning of this year, we have made an additional annual investment of $5 million to expand our GEO Continuum of Care platform.

As a REIT, GEO remains focused on providing essential real estate solutions to government agencies in the fields of detention, corrections and post-release facility. But additionally, as a service provider, our commitment is to be the world’s leader in the delivery of offender rehabilitation and community reentry programs, which is in line with criminal justice reform efforts which emphasize rehabilitation and community reentry programs for offenders. We view these efforts as positive and believe that our diversified platform of correctional and rehabilitation services positions GEO to capture future growth opportunities.

This concludes our presentation, and we would now like to open the call to your questions. [Operator Instructions]

Question And Answer Section

Operator

Our first comes from Michael Kodesch at Canaccord Genuity.

Michael Kodesch

Analyst, Canaccord Genuity, Inc.

Hey. Good morning, guys. Thanks for taking my questions. Just first off on guidance. So this is the second consecutive quarter where guidance is lowered. And in you prepared remarks, we heard it was largely related to the fact that the Vermont and Washington contracts weren’t really signed yet.

Maybe just could you help us understand why a faster ramp-up of this facility would be anticipated and included in the 1Q guidance update? You previously disclosed an idea of what the procurements would look like on a bed basis. So I guess maybe just provide a little color on what you’re expecting in 1Q that didn’t come to fruition during 2Q and subsequent to quarter end?

Brian R. Evans

Chief Financial Officer & Senior Vice President, The GEO Group, Inc.

Well, in the second quarter, we didn’t have any activity from North Lake – or at North Lake. So our second quarter guidance only reflected the addition of staff in the second quarter in June approximately.

In our third quarter, we hadn’t provided any inclusion of revenue for North Lake in the third or fourth quarter. In other words, it was still considered to be an idle facility, maybe some modest additional staff. But with the award of the contracts, we’ve actually added more staff. And then, there’s only been 300 inmates added thus far.

So, typically, a facility startup for us would have start-up costs in the court of proceeding the receipt of inmates and normally a normal ramp-up is 75 to 90 days, whereas this facility is taking a longer period to ramp-up. So, while it’s in that slower ramp-up phase, there’s negative cash flows or neutral cash flows, if you will. So there’s actually a longer start-up period associated with this contract. And that’s what the guidance revision reflects.

Michael Kodesch

Analyst, Canaccord Genuity, Inc.

Okay. Great. Thanks. So I guess maybe with regard to the slower ramp-up, is that more just due to slower prisoner populations or perhaps related to maybe like to get employees or its staff fast enough to justify more prison transfers? Is there anything like that?

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

I think it’s slower decision-making by the agencies to send the prisoners than when we previously expected.

Michael Kodesch

Analyst, Canaccord Genuity, Inc.

Okay. Great. And I guess, moving on, just – so margins were down a good amount on the non-residential business. And apologies if I missed this in your prepared remarks, but can you maybe just comment on what’s happening there and what might be driving that? Thanks.

Brian R. Evans

Chief Financial Officer & Senior Vice President, The GEO Group, Inc.

Non-residential in total or do you speak of a specific...

Michael Kodesch

Analyst, Canaccord Genuity, Inc.

Yes.

Brian R. Evans

Chief Financial Officer & Senior Vice President, The GEO Group, Inc.

...segment.

Michael Kodesch

Analyst, Canaccord Genuity, Inc.

Well, in total, but if there’s color on the segment that would be great as well.

Brian R. Evans

Chief Financial Officer & Senior Vice President, The GEO Group, Inc.

I think the main driver of that is going to be the start-up costs. There’s no revenue to offset the start-up costs. You also have a full quarter of the LCS facilities in place, which recall are at a lower occupancy level. And while that’s improving, they’re below our average typical margins for owned facilities.

So, as that factored into our full quarter, that’s had an impact from a negative perspective on margins. And then – but the main driver is going to be the start-up cost, no revenue and about $0.5 million – or $5 million, I’m sorry – in pre-tax start-up expenses.

Michael Kodesch

Analyst, Canaccord Genuity, Inc.

Okay. But was there anything with specific regard to the non-residential side of the business or is that more of just – I think those margins were down a little bit more in the quarter than maybe the past five or six quarters were trending towards?

Ann M.

Schlarb

Senior Vice President and President, GEO Care, The GEO Group, Inc.

That would have been a result of the six non-residential day reporting centers that Brian was referencing as part of our start-up.

Michael Kodesch

Analyst, Canaccord Genuity, Inc.

Got you. Okay. Okay. Thank you. And then, I guess maybe just finally, there’s some news that came out about the Texas ICE populations in jails. Those populations were kind of plummeting and then several of those jails are going to go under as a result. Can you maybe just talk a little bit more about what you’re seeing with your facilities and maybe just commenting on that situation in general?

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

I didn’t see the specific article, so I can’t comment to that directly. But I think it’s fair to say that, in general, ICE has been proceeding on the basis of a consolidation of facilities into larger facilities that meets the new detention standards and some of these small rural jails that were previously used are going to have difficulty in meeting those standards.

Michael Kodesch

Analyst, Canaccord Genuity, Inc.

All right. Great. Thanks. That’s all for me.

Operator

Our next question is from Tobey Sommer at SunTrust.

Tobey Sommer

Analyst, SunTrust Robinson Humphrey, Inc.

Thank you. I’m curious, are you seeing any of your state customers consider or implement any kind of innovative actions to reducing the populations to more of those that California has utilized to lower its own in-state population?

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

Well, California did something called realignment in pushing down low-level security prisoners to the counties. And no, we’ve not seen any of our state customers authorize such a radical policy change.

Tobey Sommer

Analyst, SunTrust Robinson Humphrey, Inc.

Sure. But what about some of the other actions they’re taking aside for the realignment, which for me it’s probably the most dramatic of the action?

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

So, remember, California was in a very unusual situation that pushed them to that kind of dramatic reform. They were so overcrowded that they really couldn’t build themselves out of the situation in a timely manner. All other states have, this year as well as all prior years, discussed correctional reforms as they will in future years. I think that’s just part of their responsibilities to continually discuss how they can run their correctional systems better and more effectively.

Tobey Sommer

Analyst, SunTrust Robinson Humphrey, Inc.

Okay. Do you expect a pick-up in asset sales now that Ohio is back at it or is this still going to be an episodic theme rather than kind of an increasing news flow near- or medium-term? Thanks.

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

I think it’s the latter. I still think it’s episodic. There are one-offs here and there. There isn’t any systemic trend in that area, but we would welcome it obviously. But states watch what other states are doing and hopefully this will develop into a trend eventually.

Tobey Sommer

Analyst, SunTrust Robinson Humphrey, Inc.

And regarding LCS, where are you in the ramp of trying to increase utilization? Could you refresh me on where it was when you acquired the assets and where it is now, and where you ultimately hope to drive occupancy? Thank you.

Brian R. Evans

Chief Financial Officer & Senior Vice President, The GEO Group, Inc.

When we acquired it, it was – I think we announced it at that point in time – it was right around 50% average occupancy at the facilities. That number I think we said has increased at several of the facilities, so that it’s – some of the facilities are closer to 80% to 90% now – and then a few of the facilities still need work.

So we’re moving along on our plan. I don’t think we have encountered any surprises. The customers, especially the federal customers, have improved their utilization at the facilities and we’re going to continue to work at some of the other facilities to improve the utilization as well.

Tobey Sommer

Analyst, SunTrust Robinson Humphrey, Inc.

Okay.

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

And I think we’ve said at the outset of the acquisition, that this process was going to take one year or two years. Although there’s relatively few facilities, unfortunately several of them have federal contracts and we’re the largest federal detention service provider. We have to take the facilities on a case-by-case basis as to what their turnaround plan needs to be, and in some cases, it involves federal clients; in other cases, it involves state clients. And sometimes it requires tweaking the management structure and improving physical plant. And as a whole, to turnaround one of these smaller companies is one-year to two-year process.

Tobey Sommer

Analyst, SunTrust Robinson Humphrey, Inc.

Okay, Thank you. And my last question, I’ll get back into queue, has to do with seasonality. Have you seen the seasonality of federal inmate populations kind of rebounding and did that play out as you anticipated after some slowness a couple of quarters ago? Thanks.

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

Well, the seasonality primarily occurs with the ICE Detention beds. And yes, we’ve had a ramp-up over this last quarter, consistent with prior years. The population at the state facilities and the BOP facilities remains fairly constant.

Tobey Sommer

Analyst, SunTrust Robinson Humphrey, Inc.

Thank you very much. [Operator Instructions]

Operator

Our next question comes from Kevin McVeigh at Macquarie.

Kevin D. McVeigh

Analyst, Macquarie Capital (USA), Inc.

Great. Thanks. So, Brian, is it fair to say the accretion assumptions on LCS are still in place in terms of, I think it was $0.10 a share and then at targeted utilization would be around $0.25, is it still a fair way to think about it?

Brian R. Evans

Chief Financial Officer & Senior Vice President, The GEO Group, Inc.

Yeah. I mean, I think we’re on track for this year. I think our guidance next year will provide more clarity about where we think the facilities are moving towards. But at the top of the range, that’s probably what that they could do.

Kevin D. McVeigh

Analyst, Macquarie Capital (USA), Inc.

Got it. And then, just at a higher level, not to harp, but again this is the second consecutive guide down. I appreciate the incremental startups, but was there anything else that maybe didn’t come in that you would have expected that could have offset some of that weakness? Or is this just purely the incremental step-up as a result of the facility start-up cost?

Brian R. Evans

Chief Financial Officer & Senior Vice President, The GEO Group, Inc.

Well, as John mentioned during his discussion, it’s not what I would call material, but it certainly negatively impacts the third quarter and fourth quarter. We had the two managed-only contracts in Texas that we’re no longer operating. That’s about probably $15 million or so in revenue for the second half of the year.

And there still continues to be some erosion in FX rates against what we have previously guided. We looked to the forward estimates, but some of that – that eroded some as well. So we factored both of those and I don’t think either of them are material in any way to speak of, but combined, I guess, those had some negative impact as well.

Kevin D. McVeigh

Analyst, Macquarie Capital (USA), Inc.

Got it. And then just in terms of managed-only – it seems like – is there still a primary focus there or just given the incremental benefit from the REIT, you focus on areas elsewhere, particularly given what it sounds like is some renewed activity for potential acquisitions in terms of direct acquisitions from state facilities and things like that?

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

I think our primary focus is on owned or leased facilities, not on the managed-only. The managed-only facilities have the lowest margin of financial performance available for anybody else. So, as a REIT, we’ve grown primarily because of the ownership and leasing of facilities and that’s where our primary focus remains.

Kevin D. McVeigh

Analyst, Macquarie Capital (USA), Inc.

Thank you.

Operator

At this time, there are no further questions. And I would like to turn the conference back over to George Zoley for closing remarks.

George C. Zoley

Chairman & Chief Executive Officer, The GEO Group, Inc.

Okay. Thank you, everyone, for joining us on this call. We hope to address you on our third quarter conference call.

Operator

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.