The GEO Group, Inc. (GEO) 2 Aug 222022 Q2 Earnings call transcript

Good morning and welcome to the GEO Group Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I now would like to turn the conference over to Mr. Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead.

operator. you, Thank and discussion everyone earnings for us joining Good the thank GEO today’s of XXXX Group’s for morning, you second results. quarter the Schlarb, Executive today Executive President Financial of us George Services; Board; GEO Black, of Jose and Care. Secure Ann With Officer; James Gordo, of Brian Officer; are Chief GEO Evans, President Chief Chairman Zoley, quarter This morning, outlook. our we will results discuss and our second

website This non-GAAP live A conclude will the Investor investors.geogroup.com. We press on the disclosure call webcast results also being reconciliation to release a will session. call we supplemental the basis is we conference question-and-answer information. our included discuss basis at Today, basis this in issued is and GAAP with non-GAAP information from morning.

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

and please results materially turn our filings, a in reports. call from as the statements factors forward-looking various Chairman, XX-K, of Executive that, to Zoley. over result Securities differ actual Form XX-Q the George and With Exchange our may including allow those Commission me in Our to X-K this contained George?

to of strengthen structure. to our trends business recent for for and segments, us transactions our our Thanks, to pleased Thank today for address announcement second guidance joined our on joining financial results XXXX and second XXXX our our Pablo quarter review morning quarter, call. senior increased for our good our debt maturities am capital be and you management the by the earnings I everyone. to proposed

underpinned continue Our to than is units. performance, financial of quarterly results which the strength our we business believe deliver by diversified expected operating better

our diversified investment leading strategy in us spectrum second years, XXXX. and programs in result over led services and develop a industry to we the the across unparalleled quality As quarterly history services. believe diversification And solutions GEO company’s able we allowed been during of business scope to industry our continued the several of of a government our growth of have of achieve growth. best some in have quarter apart financial has us set results achieve our to This and

revenue revenues Our the X% last year-over-year federal quarterly the increased years impacted our of pandemic $XXX declines that due X follows to and policy which contracts. million, by COVID changes to several over

$XX GEO quarterly attributable income approximately XX% to Our net to year-over-year million. increased by

June attributable XX the $XX XX, on income ending was our to For net trailing months GEO million.

Our million adjusted year-over-year second more the $XXX to year. EBITDA quarter XX% of increased this than in

the of This in June EBITDA our XX quarterly months and in history trailing adjusted the company’s run-rate highest is XX. for ending

million EBITDA ever. first totaled adjusted almost time the Our for $XXX

for to units our business performance increased financial diversified for our to expect balance We deliver guidance financial of and continue the the year year. strong have we the

of in full year We our approximately expect adjusted and EBITDA range $XXX in be year net be to full to million XXXX million to attributable $XXX to million. range to a of GEO our the million $XXX income $XXX XXXX

XX% each in increase ending of a experienced X second percentage compensated Secure at occupancy current of active at capacity. our points our of of at leased Looking facilities our quarter for and owned year-over-year year this trends rates Services segments, the

our the Customs is Marshals partners, U.S. Service Enforcement. government segment primarily comprised X contract agency Federal facilities the Our and Services Secure owned with and Immigrations Bureau U.S. of Prisons, federal of the under and leased

Prisons located this in quarter only second have Bureau the facility correctional owned one of with year, the Federal we company under contract Michigan. As direct of

September annualized generates scheduled Michigan of this of we to expire the million contract $XX in revenues. approximately as in at facility is disclosed, end correctional And have this Lake North year. Our previously

located continued generally rates federal be facilities are and have Marshals needed near our Service stable. defendants. services across federal and U.S. Occupancy Marshals bed Service provide to for U.S. courthouses facilities space pre-trial detention Our

Turning quarter of to ICE to detainee levels restrict facilities, our year-over-year remain XXXX, historic have of court continue continued facilities. populations facilities orders which outstanding increase rates to utilize to Population below second impacted ICE the while levels. a ability in capacity pandemic, during operational federal by at ICE’s occupancy we these certain COVID been related saw to full

place restrictions by – today In restrictions would the in litigation. this The the May were year, had that in Court first Federal administration in March place be continue XXXX, enacted XX, Title which addition, at decision to Southwest that Title under lifted COVID-related border. in of of but and XX be announced stopped these to was remains

lifting Title of the to we well While services to future. the Department GEO be continues restrictions help of Security the deliver and to believe Homeland remain predict, diversified solutions positioned assist U.S. difficult XX impact timing the in and to

utilization guidance assume ICE only rates updated across XXXX to facilities. our in Our for gradual improvements continues

and levels, or below populations seen Program, increases in Alternatives While Homeland Department called program ICE historical Intensive have remain ISAP. the we detainee Supervision Appearance the Detention conversely Security’s of continued to

BI subsidiary services process. and compliance Immigration contract a ensure the technology for individuals provides the Our ISAP to Review monitoring full under undergoing suite of

approximately in ISAP has As program increase to participants. the number publicly data individuals available shows, continues the of the XXX,XXX and currently enrolled

during our rates business, XXXX. XX% of Moving quarter remained capacity at second of to the our occupancy stable managed-only

mitigating primarily in to difficult of labor contributed COVID is other pandemic, focus state among has segment on business been which market. this managed-only level correctional facilities a factors Our the our has challenges comprised and

state challenges staffing are We to address government closely faced agency and have with country. our wage across pleased worked the the in facilities correctional to partners

reentry wage percentage and levels, several below facilities, states. for increase efforts, provide have respect in of sequential quarter services With to As occupancy to these of at occupancy our been a rates ended our increases employees the we able XX% a remain of while experience points we across X rates did second result historic capacity.

of including slowed centers agencies residential second furloughs, Despite these down confinement XXXX. reentry programs. contracts XX at quarter pandemic we challenges, home entry residential during reporting intakes and day alternatives, new the for reminder, as successfully during renewed governmental non-residential COVID a As the opted

to residential grow Additionally, this Monitoring to in in compensated approximately non-risk mandates quarter growth segment continued with increasing reentry second as quarter deliver and by Electronic strong our year, Supervision second the our And of of continued XX% well. year-over-year. the year business this

debt XXXX, deleverage continued to year. has net recourse the reduce approximately and significantly Our performance allowed have our strong Since debt million, the during balance us including $XXX reduced beginning we of our approximately recourse sheet. $XXX this net million by our half first of

over total of year billion approximately debt current a maturities cash in debt net have will XXXX net debt net several debt approximately debt expect significantly proposed and on $XXX of our continue the leverage recourse our that allow the further ending to excess stagger XXXX in reduce announced reducing EBITDA. total flows longer projections, to majority transactions XXXX net just $X allocate billion is to the therefore of period transactions due maturities. and approximately X.Xx. Based reducing XXXX, XXXX between at million focus significant will time our amount us pleased by to comprehensively approximately under of address debt, proposed to The $X we net we toward between continue to maturities As reducing recourse to recourse recourse a our from our our on outstanding substantial $XXX debt. debt of we our staggering recourse are recently and million. The

be to our $XXX address consistent next by million performance are net net would reduce leverage the the to our our to Based end debt at maturities this be debt least across expect Assuming proposed to the expected XX over goal to XXXX close we end would by below reduction, business on level in to annually. below X.Xx $XXX of to debt by recourse years, Xx X The next to to of able transactions and XXXX. million of GEO decrease significantly a our our sheet XX will these for transactions XX% look in approval materially of believe of future. the Brian majority financial discuss participation our ‘XX foreseeable loan to from the proposed consent substantial senior cash term the using current a deleverage lenders levels stronger the notes. his our and of ‘XX will more presentation. balance and majority to We position. days place We detail in free of require flows and forward of ‘XX, in holders the and

comprehensive potential of We of businesses, continue sales enhance undertake to to review debt owned assets and also which reduction efforts. our plan to company we expect

net We our debt in shareholders I detail review recourse proposed debt the shareholders. and the our to to of our results for the After evaluate updated of reducing deleveraging, potential cash additional growth are free equity plan of will optimistic Brian guidance. opportunities these to completion potentially At and focus return to over value that quality the more this to will reduction allocation financial have fund portion recourse our capital net we to our transactions on and address continued future. unlock our objective flow turn proposed comprehensive transactions call the successful Evans attaining in and time, in

Good you, George. Thank morning, everyone.

the adjusted XXXX, income by share more $XXX estate gain we on quarter adjusted the of for than attributable per AFFO million. on revenues Adjusting to quarterly of run-rate net highest million a quarter second For our GEO represents real for approximately $X.XX million, reported and reported to we the quarter second per of GAAP reported We XXXX. assets, of XXXX diluted in $XXX $XX share of history. increased our net which second approximately diluted EBITDA income of $X.XX XX%

our in non-residential our our company’s in million and by continued adjusted ended increases in surpassing first trailing our quarterly this occupancy XX-month and results rates business, during in history. has exceeded Our owned XX, been time June leased have Monitoring months reentry facilities. any our almost XX expectations the And financial in EBITDA XXXX. period in the compensated Electronic period, mandates underpinned for our financial performance the reached growth over other segment, on $XXX Supervision and strong This improvements

Our the we hand by better-than-expected quarter Since XXXX. ended have the on $XXX net the $XXX performance approximately debt. first $XXX has during significantly debt reduce recourse reduced our to net XX million including allowed of half approximately our as increase of cash on approximately of and recourse our unrestricted million XXXX XXXX, beginning June to million, us

the we address which ago. weeks financial commencement to proactively us Our engage debt with a our of to proposed strong maturities, led of the announced couple also our transactions allowed performance creditors to

a with certain we announced transactions. of and $XXX time, not we agreement, these forward. debt address approximately XXXX, would revised Since $XXX XXXX have our XXXX, of amounts a debt These become debt outstanding support reflect longer existing our importantly, to million credit are the transaction holders in XXXX, and pursue over $XXX we the are to maturities reduction in additional in Under XX, minimum previously our agreement committing proposed million of outstanding and XX, maturities. do in approximately well proposed our certain million million as proposed levels in million on thereby several and between amounts $XXX million maturities, approximately proposed the support based requirements, transactions be near-term XXXX, as notes. XXXX, participation July current These on to support $XXX Under in our period to agreements under our $XXX final party XXXX. significant transactions. to XX going debt subject July approximately approximately and entered billion As And continue July commitments participation under XXXX a $XXX as maturities debt reducing in to will to XXXX into intend expected lenders stagger $X in transaction XXXX. had creditors approximately these have debt to million and debt approximately transactions significantly XXXX, XXXX

our billion million $X We less and expect us to by in recourse net with to end approximately which reduce of net the around a would debt net total X.Xx. in XXXX, lower debt our year recourse allow $XXX to leverage than

by to consistent to reduce over annually. $XXX financial Assuming at million expect X net million recourse next our the debt to performance further able $XXX least remains years, be we

are debt, our to end recourse X.Xx XXXX rapidly. recourse decrease and net more our by by As state. our these would projected conditioned in a by the closing receipt in The end our our our goal to proposed predicated to net of the reflect on These decline ‘XX days loan participation XXXX. commitments term transactions the our ‘XX. and would in our net of holders leverage the of majority transactions improvements next of ‘XX of ‘XX, only proposed and we registration continue the of SEC below our adjusted to debt below is are to leverage EBITDA XX projections to review to loan upon holding term of consent, ahead in maturities, take be address our run-rate of the ‘XX subject reduce and assumptions Xx and expected including lenders to place EBITDA XX notes. If grows the debt These expectations, creditor certain senior adjusted net XX% modest of which

XX% As and our XX% our XX% support the of senior ‘XX term pursuant of of senior the of ‘XX to agreement proposed our transaction today, XX% notes, support transactions. notes, – holders approximately pursuant of loans have committed proposed to of XXXX to the our notes,

exploring and participation risks support we to the required interest proposed million as by transaction able of to of facility on believe the since expect segment to Through million as and senior XXXX Upon we July ability to term the totaling July land XXXX. our including business. to our and of have years. based requirements, flows to pre-tax expected our historical of transactions future opportunities, additional in the $XX debt involving our completed maturities consents, over in agreement. also committed noted, of shareholders. we that been staggered is towards thresholds to $XX notes that expect to commitments debt assuming the pursue business refinance and respect our Solicitation will address by we on To efforts, our additional reduce our businesses near-term sales XXXX last the assets, transactions, assets XXXX, value have company-owned future participation in executed increase an sell maturities complement access additional reduction million of approximately and pose minimum with We XXXX million to we we million for underway. and course ordinary transactions opportunities approximately and received pre-tax have the be proposed and debt X And the XX, to enhance end and markets, debt, new reasonable contracts closing $XX the in $XX growth cash loans expense a capital support long-term $XX our proceeds. support Based

in increase diluted financial XXXX between range income $XXX strong to we our continue balance expense, previously to financial be Despite guidance income proceeds. between explore $XXX for continue our of for the of opportunities $X.XX has XXXX. We to $X.XX now interest the allowed our increase We asset items, expect expect to to full additional GEO year, revenues $XXX attributable in per the million generating and year extraordinary a adjusted Adjusting for goal articulated expected to expect sales of meet expect million in million annual we which us and full our for to net million approximately XXXX net $X.XX billion. $XXX year on to share. to of performance, be

to $X.XX $XXX a range to full XXXX adjusted full of of EBITDA $XXX in million $X.XX year AFFO per to million. a range and we be expect expect be approximately diluted year in We to XXXX share

have We fourth for the third financial and guidance quarters also of issued XXXX.

we quarter income of For to to and revenues on attributable $XXX the of $XX net GEO $XXX million XXXX, be million between million million. to third quarterly $XX expect

$XXX between diluted quarter XXXX AFFO quarter expect between XXXX adjusted EBITDA million. share to $X.XX $XXX We million to and per $X.XX and be third third be and

income to million revenues the quarter million we XXXX, million $XXX $XXX For to net be quarterly between fourth attributable of $XX expect million. on and $XX of to GEO

diluted between XXXX $X.XX million quarter AFFO be $X.XX between to adjusted fourth to $XXX $XXX We XXXX per and EBITDA million. share expect and quarter and be fourth

expense reflects for with increase previously and expected of contract non-renewal BOP expected North effective in the our our the interest in XXXX Michigan our facility XXXX. Our Lake September the guidance XX,

a between our for to this Black the exclusive I items. We be At year GEO our rate call for of review of effective segment. James expect be turn XX% any over full tax Secure to XXXX Services time, discrete will approximately to the

It an update Services. Good to Brian. pleasure everyone. my GEO morning, you, is Secure provide Thank on

During several and the our achieved facilities milestones. employees second important quarter of XXXX,

internal XX from facilities of reviews, achieved of XX.X% an month, accreditations a government of underwent including audits, average our those successfully X audits, are under to Elimination facilities receive third-party the Correctional and American Prison and facility Secure certifications accreditation Act. with this Association Rape score Services the scheduled perfect accreditation score XXX%. X Our of

areas. Additionally, Secure both with Services U.S. exceeding certification our X Rape several Elimination Prison standards under recently of in Department the Act, facilities received of Justice facilities

Our approximately and GTI milestones delivery and we are completed achieved the of commitment miles operational Services facilities services the excellence. in grateful Transportation United dedication quarter their second of XXXX. our the our X.X overseas continued safely several our operational to driven quarter, million in division Every Secure of employees during for the in States

impacting agency federal facility now trends the under starting at our currently Bureau government remaining Turning we level, company-owned Prisons. the partners, to Federal Services X have of contract with Secure

previously we to expect X,XXX-bed the in of Michigan renewed not correctional BOP North facility end disclosed, contract As be XXXX. the Lake for our we at September

have partnership facilities our provided high quality and We services. long a support with decade’s BOP the enjoyed have

over BOP XX accelerated However, trend the was last years, the declined have this by COVID and pandemic. populations the

we our have contract the of that Lake deactivation with Services idled under will were the previously BOP. correctional Secure facilities X Following facility, North

courthouses. and years. BOP remained our these federal state marketing on reactivate population provided detainees facilities other custody the focused stable have bed proceedings our level hope pre-trial future. and lease The at over government to responsibility federal several or and the Services criminal needed facilities agencies facing have able the levels services in assets last these the for U.S. Marshals Marshals are near space U.S. We to and facilities at important sell federal to be we Unlike

was that U.S. following Diego XXXX. closed September through a We XX, XXX-bed for contract facility Marshals our San extension pleased the not are

other run we contract to to due Immigrations Additionally, the continue COVID have under with the U.S. and that with U.S. to restrictions XXXX September With respectively. that option through periods capacity ICE February X facilities pandemic. limit respect Marshals direct facilities Enforcement, and XXXX face current operational Customs

detainee to a be levels. result, populations continue ICE As below historical

In in lifted These year. Title of announced at be would border. year, that March addition XXXX administration this Title the under restrictions limits, to place were Earlier the remain in this operational of these restrictions implemented May COVID-related XX. XX in restrictions Southwest

Court and by However, Federal that decision litigation. was stopped remains in a

Act the and Department support timing April While a to This Security ICE for border enforcement. the Obama’s which of in restrictions Senate. This proposed to the House medical security increase for government federal and funding care Title beds the currently that September year. Appropriations predict, U.S. and in eventual Homeland under and levels Southwest released Representatives considered through with U.S. detention preparedness being of plan is XXXX. would of are XX,XXX hard is U.S. federal the is impact lifting President place XX administration. consistent Appropriations in funds were fiscal the of funded the XX, border XXXX facilities XXXX begins plan by resources, X, level fund that personnel, October will the Bill on most of funding of The including during currently that transportation, government this year, for

ICE sensitive fields, multipurpose DHS, we a counsel, processing to etcetera. faith-based the to our longstanding opportunities, process monitor and being access exercise soccer focus and legal XX/X libraries, artificial needs. to to amenities, support congressional and to access enhanced prepared centers mails turf their leisure rooms, continue The where support quality respond approved pavilions, registered access dieticians, legal we offers as ICE equipment, and covered provide providing by services While culturally high-quality including healthcare, religious to and provider remains on services service appropriations to

challenges as addressing agency partners, continue Moving difficult we focus facing on government now state to result to a we our a labor market. of are the

across our address wage have government and state been and country. and agency legislative state We state correctional working staffing branch the closely leaders challenges to partners facilities with facing executive the

across these able As been have we efforts, a our several of increases employees wage to result provide states. for

respect been Additionally, to and we awarded and under a to the improve for in other a the new initiatives management correctional Arizona, continued of contract of recent are staff. contract to rehabilitation procurement we activity facility. X-year competitive have With Phoenix explore the retention continuing West recruitment

extension also be and the are to rehabilitation in with Arizona, February enter in X-year effective of a state indicated which facility discussion We desire correctional XXXX. of our will into of a contract, Kingman recently which

Department competitive of of issued rebid Arizona for a facility the has procurement Florence and rehabilitation Additionally, GEO the which West contract, manages. Corrections correctional currently

quarter our of sale the XXXX, completed County second to $XX state Perry Alabama idled During facility of million. the correctional for also the we of

continuing government to purchase state correctional at level, state involve as initiatives, older owned the and several could partners are We prison the infrastructure of challenges staff agency or contractor posed facilities opportunities use monitor are to of considering shortages. our which by state address

briefly Finally, our efforts pandemic. I’d impact mitigate to like of the the to COVID address ongoing

While experiencing taken we mitigation we and we vaccination, currently relatively and Centers levels vigilant on strategies. The steps of available. cleaning and issued the testing, for masks cases, our from the pandemic guidance by making face consistent Control the the Prevention supplies in remain low with start Disease are and are COVID have of focus implementation of

practices. will Care. over to turn review to updated Dr. will We will we I and time, make the for based GEO other on best a adjustments evaluate the call this of Ann guidance by mitigation At continue steps and CDC Schlarb our

I and segments, good Each of business to and GEO had as GEO am pleased reentry Continuum on you, and includes our of Thank supervision well quarter. Care Care divisions provide electronic unit, an operational Care James programs. monitoring morning which an our services GEO as update everyone. active our our

sequential Our experienced services facilities a residential in increase occupancy reentry rates.

residential below continue reentry However, be populations historical levels. to

COVID electronic have monitoring pandemic non-residential individuals placement of government home furloughs, including into alternatives, the reentry programs. day and prioritized confinement, significantly been residential as have Our impacted facilities by agencies reporting

that And continue this are increase. we have census challenging existing contracts. begun encouraged we environment, levels to residential However, reentry to successfully despite our renew

Federal XX renewed contracts, Bureau we X contracts of residential XXXX, of with quarter second the the reentry During Prisons. including

And are the perfect centers from reentry this residential residential received to all proud very X month. scheduled Rape received Elimination centers reentry American XXX% Department our our are we certification accreditation Correctional of U.S. of receive X Justice of standards exceeding deliver conversely and services, million. the COVID areas. non-residential the increased $XX our increased in reentry of more resulted have XX% pandemic growth. which impact to and of both to Compensated strong mandates with in that increasing recently the continued programs and under Prison for several has scores use quarterly Association year-over-year, The X by Act of accreditation Additionally, non-residential our centers revenues than business

Monitoring to and also the Supervision revenue Electronic XXXX. of growth Our segment quarter continued second deliver during strong

of BI appearance that under Our and XXXX. under BI supervision services X-year solutions, currently across the subsidiary behalf electronic the suite has federal, the and and technology of the supervision, intensive services case local operating country. products Department provides is level, for compliance effective agencies and a component holistic years monitoring management, to At monitoring ISAP, full XX on supervision key which solutions, state Security’s of called approximately a provides and of Alternatives program of federal July contract provided a is Homeland is Detention. BI through these technologies

the grown the months, Over has XX growth years, ISAP the has this accelerated. and program steadily, in last

of enrolled achieved program participants. tenure, review data immigration going As Under in XXX,XXX the the has through for shows, the levels number high the stands at of participants process. ISAP currently the program publicly available approximately compliance individuals BI’s

is would this Alternatives new the competitive issued XX,XXX year, meetings court and their participants XXXX incremental to May ISAP XXXX required specialists, ISAP which young of Earlier immigration involve a of and For of available most approximately XX.X% adults. procurement of required hearings. intended to program, between to case all Detention ICE that attended XX.X% attended instance, the for ISAP and shows with recently August be participants data

our BI’s submitted capabilities, direction from are procurement awaiting this have are and for experience. additional this and we We scope well unparalleled positioned bid believe that new given We for program we ICE.

approximately employees participants. population division, release continued daily Turning to our XX,XXX Continuum programming, average and an to reentry GEO rehabilitation, to of support have our in-custody deliver enhanced of services Care post

Our employment Continuum behavioral transportation Care including clothing, needs that individuals. assistance. includes in-custody support GEO enhanced food, cognitive released post-release integrates treatment, of community and housing, rehabilitation, with address of This services

$XXX,XXX of quarter services support the since spending During them they assist over to support GEO facilities to released more as individuals we individuals second their began providing funding release for allocated their the community. expenses to total needs. XXXX, than in release to brings support grants released community $X.X on XXXX with returned post from This our post million

believe We U.S. Criminal scope be Continuum We believe the lives. Care changing million GEO program provides the people in is of model system unparalleled. successful continue to how served and that the winning on substance proven of a our X.X award it can better Justice in their

I’d like to efforts our mitigate pandemic. to the ongoing of touch Finally, on COVID briefly impact the

screening measures. sanitation, mitigation the Care face and have testing, implemented masks steps GEO consistent increased Our that by and entry facilities are programs on with guidance issued the deploying focusing CDC,

will adjustments best guidance by on CDC other steps and and make practices. the based evaluate these continue to We updated

Jose the to call turn grateful in who the for programs We and of closing are during employees our for commitment and have those Gordo will to time, remarks. over delivered pandemic. our this high-quality I services the At continued dedication care

Ann. you, Thank

with We units. the performance our continued are and milestones operational strong our pleased diversified financial achieved business by

our focused on remains team management all achieving excellence operational Our service across of lines.

We have tackle diverse our industries with companies recognized and government the wage posing are challenge closely for shortages staffing difficult worked partners agency we challenge. have this a and inflation across to

towards net have recourse maximizing debt. continued years, we capital have of on focused over X reducing been we robust last allocation to quarterly also our As the results deliver

been over to to significantly on our X and further performance years. we million able able debt our recourse reduce We X by have next reduce expectations, believe current the $XXX since we to approximately XXXX. will Based net the of beginning net be leverage

of proposed are the discussions consent, our best structure. best will are over of We to transactions that believe of result our which company a transactions several creditor all of to or our pleased the conditioned for capital our and longer months certain of commenced period percentages interest receipt time. are in participation proposed path They transactions These We our negotiations upon proposed strengthen they the debt have of several creditor stagger of maturities were provide and with the groups. stakeholders. of forward

unlock optimistic Importantly, proposed the of of debt the transactions to of we for net allocation objective evaluate that plan portion value additional recourse potentially a shareholders. we equity After free cash reduction, can are in flow the attaining our units, sets financial and We performance, business our continued underpinned opportunities our return growth apart by our potentially in our to which capital to strong fund that shareholders believe GEO is quality industry. future. our diversified

of are entailing real flows We believe company-owned essential technology assets and based allow diversified otherwise government growth us residential unique by remarks. continue solutions. estate services, be to community that quality the glad supported secure care And industry. are our to would not ranging opportunities to pursue That in valuable and cash questions. our take diversification from Our contracts, available we will our companies services completes to to that

you. ahead. question [Operator go from Instructions] Thank First Please Gomes, Joe Noble Capital. comes

you. the nice morning Good Thank and congrats on quarter.

Thank you.

under into XXX,XXX seeing Where quarter? that end? of But you program. How the ends said year are to was you on program that ISAP the compare program does in that I still year? think at there growth to the this at under I the And BI third wanted number here was do ask that think beginning you people the

And growth Hello. through to This accelerate. Ann your this significant you it’s continued and question. thank year and is seen for we’ve yes,

all makes to going because who never look might are programs. ICE the forward, it decisions what about in comes our totally We certain like

around that’s believe about it do continue is time level. the what the for forecast will maintaining at for where we is it we at that the are looking being and XXX,XXX it However,

started we think year the XXX,XXX. XXX,XXX to I about

alright. Yes,

quarter to for Okay, On going? is think fiscal there they decreased in that right negotiations to the were September, fifth are for you the it up? I you have at budget that is if your that, negotiations ICE, beds? for going to if on what government in ends of year for funding any insight flat where where as to be as you do beds look Is funding funding the mean, for are October you – XX,XXX, insight. year ending thank fiscal you X for mentioned that kind the now beginning

the from approximately beds, is of to Well, reasons House has the actually people the used is current been number is in or there there reduction XX,XXX. beds of three approximately in both reduction residents. understanding. that Senate those beds a XX,XXX beds, there my the contracted versions, in is to why XX,XXX number and in And a

first caused is of guidelines COVID, issue XX% occupancy to The only with concert has which to the ICE reason the facilities. permit CDC in

So COVID. significantly at of are it because where occupancies reduced we full occupancy not

effect has been like reduction change priorities program. in facilities immigration public that states. within in populations. have has there New ICE ICE restrictions third, Illinois and the a within Jersey, Secondarily, York, in policy administration supported that a legal there enforcement prohibiting been States Maryland have facilities passed enforcement And regarding New and those

has As XX%. ICE at by decreased. detention of sector. estimates, that capacity sector the portion significantly detention of a ICE public And centers presently, we believe is That consequence, facilities is the provided processing our own private the XX% by

really know or XX,XXX we or capacities there preserve levels the October, levels if would what beds higher existing will will be another to funding which compromise know, the don’t at and number the bed there at be happens the level. in it’s don’t – look bed on continuing we of we resolution, a As the

we to see outcome. the waiting So are

to impact have guarantees, does GEO from the that was how impacts the that contracts if if minimum And in to them it all? it how does drop XX,XXX XX,XXX, at that

we what we to know, now, be any of. from impact are seem have it Yes, that right doesn’t aware

and ICE – lower significantly lost are haven’t are averages. occupancy are any historical facilities we – – than are our and We far as levels we contracts occupied we

just the expect contracts. our funding current at to XX,XXX, wouldn’t if was example, we any for So, impact

on gears restructuring. debt that. here for bit little switching And the thanks a Okay,

some the and term from but So release mentioned, was are gone the you goal loan, that the on came I know increased something of above initial when XX%? of you an notes out need provided the why ‘XX approvals XX% the Is XX. for as update XX%, to to from today like has went to there rate XX that rates, hearing you not approval you only pushback it

there This two – different holders. fewer institutions think just and There term I are is they Brian. processes loan. the are No, is larger it’s with

are work holders on XXXX able of notes. that more it’s side smaller. quickly we so ledger And the – the more been the have is outreach, There to

other We are most say holders the institutional the larger going that through I compromise XX%. would out that over us to have would reached process, of that or easily we get

our but them puts we expect XX%. reached participate and we support We XX% we writing that there. very the And level. indications institutions that well, of as are subject many we both And the subject to some way days, have XX% additional we on in is loan that or XX% will end to yet, And us that again, are probably having creditors but they discussed, in days term will threshold. change. nothing of so, have side, have within us indications XX% – of either and no, think put from we expect based on XX to somewhere creditor within will to and have SEC… Those indications the to there over groups, continue I positive no some the they those of have we we But or between consent with from to closer discussions are outreach the out participation to, as process get guarantees, XX to discussions close that going the

adjusted on be know something even $X.XX, you be maybe percent third it’s then will will financials it’s how walk and this out fourth that the of you quarters. million third be the for interest types quarter $XX that. what Can tried, as numbers to mentioned between in in total of million or of you Right. on amount that Thanks expense, what $XX increased one Great. kind of questions think to here the break will interest, Two to the than get amount higher your the though number I $X.XX, could converted the EPS the the quarter? you share income what net a in amount calculation? to the look the And with do get us $X.XX you as when you just fourth if versus calculations, through briefly at kind

with interest the start me let expense. Well,

So, I to of mid-August X. forecast September assumes our close think a

really half one So, you are about interest looking so. or of and month a expense, additional month at only a

quarter the a we quarter. the is box. So, run rate also a half full the expense interest the in expect quarter. what includes fourth will of And a additional our rates third And on would underlying assumptions the quarter the that then fourth to of coming out that third during be

on the post-tax. am I impact I to Was – so followed question? income question the else your deductible, to the there interest is something not On tax the income, your net expense is net sure

sorry. – clear am There wasn’t I wasn’t enough. I Yes.

think something, a that as $XX.X the was has to you of you – I if million $XX if that Net can at to to do just whether its I million, EPS So, you income, look gives on share. something a second one it’s if it’s if wondering go you when through GEO which – offline $X.XX are statement. your here, your net calculation? $X.XX income at looking $XX.X But which to get net income share. you net And with attributable this we million, how is do income necessary, adjusted is calculation. hold

to know there. you what the the I related about. And convertible. Joe, that’s talking always been convert, are That’s

there and changing, Jose the look even as or it’s if the a that the is I But I to can pointed want is But or But that. is in the in reconciles that has will changing, that’s in is amount to, even XX-Q. It’s you to. the you will the as think just you related be separately And press release walk it’s it convert reconciliation, there out. need changing. if through be also difference that reconciled in income that think you XX-Q. I at that the can

off Q. I it I take look a Alright. will to will hand at the you. Thank somebody else.

Okay.

Thank you.

Please of ahead. Ramgopal Mitra from come will question go Sidoti. next Our

morning. Good questions. the taking for Hi. Thanks Yes.

of getting to agencies I difficulty the lot the know this reliant how the environment? in that are in correctional convince First, and am just and ability you just government just of having retaining are A labor come and to terms some curious, on to help from and companies recruiting versus are elsewhere touch state people market. industry of in labor. on to terms I want you

a this problem we think where well. cooperation Determination of Department But our been at excellent sector I for are has same wages because on Federal of is pressure the more pressure Labor had But exists wages. higher, there our in our state of agencies. as at have state that wages. institutions, Wage those The with public clients generally

level And typically So, when staffing additional the states so, as have have faced our of increase for they they to they own the do their wages. us funding shortages, wages. increasing provide same been

states. to Florida, Georgia, New have in So, Mexico wage we few a had Arizona, increases Oklahoma, name

much tailwind guidance again, not of in sort best might And looking and you behaving as Thanks. sense you in your related, experiencing. are occupancy a terms have specifics an for to pandemic But COVID-related you any how of impact, Okay. of terms continues of clearly, mentioned, what’s out sort of to the costs and XXXX, of you the look pandemic? from as get

to close I would or change Well, facilities possibly our the would in ICE of biggest return where we normal think occur historical occupancy. levels

their during XX% at occupancy. in believe time are of Our excess are facilities I this the pandemic of allowed even state

So, be facilities. ICE the only probably change would

XXs facilities with Marshals their consistent the think are XXs. the I fairly or occupancy in

of ICE because increase could occupancy, it an again, in the that issues. facilities see would COVID So be their the declining

Okay. the still you us But or guess I how that’s wondering whether again, Thanks. an remind where so the into up recession? could so. it’s year a next if head over you or assuming have a I in was there And fared is year historically, we environment a recession case,

costs. labor are organization. to XX% plentiful in have supply, Historically, more well, recession, is we usually and are a attributable more we a intensive labor costs fairly labor of our fared because there or

expected to and as it So, our labor rate would would that be applicants unemployment for provide our increase additional positions, position. possibly the would financial improve

getting interest of if the any are sorting sales? them Okay. potential facilities, in if or using I wondering you terms idle was on are asset Thanks. And you – even

we agencies, with idle in Federal potential as show continue clients. Yes, facilities. our them discussions of as been have well we to about use to state all market And them prospective and the

of have approximately to transactions it the debt, And debt plan – for then and correct? be reduce Thanks. the will XX% I cash if on XX% flow reduction. used read to Okay. that finally, net Is just the recourse the

Right.

applied when So, of to the the flow, calculated as we excess of cash accordance the senior be agreements, terms terms close the secured XX% under in will with agreement, debt. the new of

remaining against any will participate mature rolls over and in our So, current term it credit doesn’t still and loan from agreement XXXX.

then for the that is X referred and Tranche XX% of to ‘XX lenders unsecured in satisfy offered in rata as portion And company don’t then transaction, a and to the Some applied debt be other Tranche agreement. and to stub will the notes X the participate ‘XX, notes. that also pro available on on the applied that to or basis pro get XX% the balance rata will new the obligations to term use

reduce said, George as the I to use have free expected cash to I said, substantial to Jose we of majority debt. flow and So, think said, intend our

cash the maintenance is Importantly, excess cash calculated CapEx. our after flow CapEx flow, our and growth

that didn’t grow are as appropriate our some to exist still necessarily - necessary constraints restrict maintain as the doesn’t to make as to the business. the the of business fair well to today. a in investments there amount within it ability business credit But don’t investments So, we flexibility agreements have make exist

Thanks and congrats nice the a questions on quarter. for taking

you. Thank

Thank you.

call of Our Kirk from comes Please Imperial Capital. ahead, sir. Ludtke go next

guys. Hello

Good afternoon.

net and XXXX, Just on are flow, have cash a some from the proceeds debt couple you free all in or of One, both $XXX of million follow-ups XXXX $XXX that for is looking that the sales? guidance. you from to included reduction asset million

on would sort based of performance. that No, maintaining we flows cash as be our our levels expectation current of described

contracts quo. status remain I contracts, and assuming new reactivations of pretty no vital current the much say would place, our or Assuming in facilities,

Got it. direct Including Marshal three, the contracts? Marshal,

That’s correct.

would remain lead another time least with that at you current Okay. ramp level? the under to to you mentioned up levels? give before expect monitoring, at do to the respect How you. population before they And then you much program ISAP Thank they they

added program, day, from the dialogue. constant of it is partnership are it’s to And our with that where – removed there that Well, dozens and people the government. is program Back the in work every with the forth, changes are are been program. sites But there constant. current and changing, there staff in it’s people a and

increasing but the or very last, it’s So, and it’s years program, been a volatile dynamic X.X over so.

was additional to maybe I the if for curious if it. you equipment higher. Got number wanted they arrange take some need would just to

limiting a higher. So, to maybe that that going factor be would

are way so example, the contract all, going with works. new needed. growth, modifications, technology Ann. for day the work and many get If is, We to is at a organic type it the that get This Not days shipments offices, site to every that the of that’s there thing, we new border going. and

nice We diverse of technology. a continuum also have

needs one the their meet way can we So, or other.

contract, the we available that. of inventory them So, the current to care to have a lot available under and take of solutions

growth So, we the they bring are that able to handle up.

And job. they for continue just sure got I making that those lead Entering into long ramp that, and think done good the to really supply to has a items add that have to as team necessary. up and her production Ann

to government to So, support fully are whatever move. the continues direction able we

Thank Great. you. it. Got

mentioned business. the parts the was program. any catching at monitoring, adults in the it of You curious state other is I if level young on or

program. So, to Federal we would ATP another young that and program clarify, be a the mentioned, adults program

I was what that, sorry. with am your So, question?

curious away maybe are just at am you states from if if monitoring are any ISAP? I if looking the you are having success, seeing growing –

in state business be the of size clearly do number But in state contract have customers local industry. through there we typical like, I contracts. XXXXs from literally business the stands to EM is expansion in unique. And size apart local the and and the Well, we customers, contract it state EM program. level, the the this continues other And of of the at think the the every of

Thank repeat appreciate attended do all the compliance court the you. relate. And I it. you And hearings. missed you that Got percentage the Could I who that?

have do I and all hearings. to – that several different attended the XX.X XX.X right, Yes. of hearings it’s It court means I there was they are hearings, their types And sorry, gentlemen. immigration have attend, that am all that

decision. ISAP are to be masters could their their the that to that’s hearings And hearings, from in So, final of their program. individual hearings, while they

they that we are to while sure are working hearings. court with So, make them, their attending

I XX% of it hand consenting. have impressive. XX%, least the sharing ‘XXs, with then are people That’s think what exchange? lastly, are you to bonds you and to mentioned exchange, I agreed to Well. respect you respect off at percentage that – you with at the Do And the will to on

Well, at that that would in ‘XX. debt was be our of amount to in some the degree closing for of outstanding estimate accounted

XXX, right. at, go just said think I that we me Let look is back and

that or option. – million debt $XX all of close, XXX, to that will of that of or obviously, either are rollover worth agreed either final number point numbers the those has has participation about based we $XX at million So, once option all indicates we this debt guess the the, in And update debt about on cash in levels. the I

And ‘XXs? the that’s

On what then have and pages I there. the it, the similarly ‘XXs don’t on ‘XXs,

million XXXX… $XXX number is the we up put for

stub-term and the also includes loan that XXXX, some But from banks.

outstanding, less detail It So, some as to that. But again, specific that loan, of those it than will will really be affected ‘XX, put which final is by etcetera. term give participation tranche is amount it levels. we could debt probably and has amounts be what

transaction. clarity close – more two next be call the will to in when there weeks four finally we So, weeks the

already the participation reached consent threshold the ‘XXs. have we for But required and in

XX%. we ‘XXs And the at are In it is term.

number or discussions, over preliminary legal the XX% or and on of the other a and investors on are in believe of either then discussions get consents we we commitments of are have we us substantial discussions And clarify, having to based that XX%, indications firm have – through will we participation. another X% Just we at with those so. or ‘XXs XX%

congratulations Well, luck it. Good with Got on exchange. the the quarter.

much. very you Thank

Thank you.

go Our next Wedbush. ahead. Jay question Please of McCanless will from be

for Good Thanks questions. afternoon. Hi. taking our

question segment? The quarter. expecting going XX% use Are you rate $XXX and this first I Is this there run the in this monitoring, of kind quarter plus first guys further good growth to really in nearly good million had forward? doubling electronic a growth

we we have at today. said participant same the have year, the the So, count participant we or what that that for of level currently of balance are assumed sort

the quarter. throughout quarter growing the was obviously So,

less participant average count. current the an it’s than So, of

of year, a maintenance this using For what the more right forecast. of are around the are level, level – could balance some we of assuming we are $XXX,XXX. for more, grow but the It we that’s

it. Got

the Okay. And for our want where guess you you the of maybe kind second levels to what in in the I of goal then is and get stretch terms to for thank question debt. about money maybe But dividends, a outlook terms or the appreciate are starting can longer talk whether shareholders, of we you if it. to is, to debt, you term what your return its net comfortable etcetera, would goal

Sure.

to back get that going to into function return of reasonable us more covenants our to obviously So, to capital and shareholders. be get market that’s allow ability the a

We think have supportable. to are as soon going got number we the test we a as to that markets that’s

us confident it’s we the we do at Xx. it’s that into covenants well allow we to dividends to I will once will X.Xx, Xx, if below return and have buybacks. to economic and/or comfortable So, will at think as Xx, will capital it additional get through But get market are stock to X.Xx. If Xx better shareholders, we we as that rates, access fairly either

Okay. Thanks again. Great.

Thank you.

Jordan Ranger is go from question Sherman, Global. Next ahead. Please

Thank you.

the to don’t consent who I of if I the this, the holders quickly, apologize what or debt missed Just agree happens to don’t exchange?

rollover, So, due. their it the participate, the satisfy participate the in ‘XXs, remain And that will they in doesn’t when consent, on will comes the don’t or agreements. ‘XXs, whether obligation we who ‘XXs current anyone and they debt they don’t

current those pay the And it we pay on rates will their due, then comes to continue will We when instruments. debt interest off.

the one significant As transaction. the that’s we said, of of we benefits –

the between potentially We billion are level. reducing of $X ‘XX, and million $XXX depending that to ‘XX maturity and well on lower from down participant

at through And hand, on as the on cash ‘XX cash as appropriate. related satisfy hand flow, company flow and of will obligations. refinancing and those has, that ‘XXs a and forward, as liquidity that So, we ‘XX believe maturities then well satisfy can cash maturities, combination those going other to through that through and least the cash we

are participate what to is because of estimate In What’s levels? you your soon. your – of relatively rest guidance participation this expecting for XXXX, this happen the

numbers the It’s have put around in what today the the years. release a for we move call If earnings and different little… press

Whatever – wherever you saying? they they stand are today,

disclosed have are. our publicly, estimates we What Yes. what

stuff, around $XXX So, million ‘XXs for the estimating are etcetera. and in XXXX, we outstanding ‘XX

Perfect.

Okay. I apologize. that. missed I

clear – can Secondly, be I you understand. again, I just to want

we increase, the the that parts offset But negative moving to we of to what increase, the the the got the rates. upside? that the of moving obviously, obviously, got parts from guidance earnings Some led the interest led

number So, the performance better under had on performance idle. upside, well facility a ISAP division. improved with BI the or it’s of a our And the that reactivated was in the as the we as that ICE contract facilities,

So, we quarter had the Moshannon in that of of the facility impact year. full idle was Valley that last the

led of a So, that improvement. number different to that things

Okay.

So, better run rate…

X.X our our good sure guidance I contract assume performing the I think forecasts our think that’s better Diego, you – We as that aware, continuation have point so. know, the at years our than we or San you for June. ended am I San last George expectations of are through guidance out. the end of Diego been pointed and And and the

six-month in so that of We through there well. that have next impact year, – as extended as September have from we we discussed, a

it. September. Marshal going facility going at end Got with the them ongoing Are to at moment? that’s those that’s with of The the expire the direct conversations contract

in ends the expire the Jordan, North in contract facility contract. Lake, Michigan. That the to only left BOP Yes. of That’s is contract at end the only that’s September.

Federal to… are subject So, have don’t other any contracts we that

of Any that potential reuse facility?

Yes.

facility we marketing speak. are as that We

– Okay. prospects Prospects look look? how does

prospects, level as level. earlier the the at Well, well as think we have Federal state I said I

Okay.

I that apologize. missed So, comment well. as I

you, Okay. quarter. Great. Thank Thank you, guys. guys. Obviously, great

question-and-answer our concludes That session. you. Thank

the for closing turn will remarks. to George back I over Now, Zoley call

you. you joined thank We addressing into look on for us we Well, future. call. having conference to you the Thank forward this

Thank now presentation. concluded. today’s for has conference attending you The

may You now disconnect.