Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] - A specific company is highlighted as a key player in the AI energy sector, owning critical energy infrastructure assets that are essential for meeting the increasing energy demands of AI technologies [3][7][8] Investment Landscape - Wall Street is investing hundreds of billions into AI, but there is a looming question regarding the energy supply needed to sustain this growth [2] - AI data centers consume energy equivalent to that of small cities, indicating a significant strain on global power grids [2] - The company in focus is positioned to benefit from the surge in demand for electricity driven by AI advancements [3][6] Company Profile - The company is described as a "toll booth" operator in the AI energy boom, collecting fees from energy exports and benefiting from the onshoring trend due to tariffs [5][6] - It possesses critical nuclear energy infrastructure, making it integral to America's future power strategy [7] - The company is noted for its ability to execute large-scale engineering, procurement, and construction projects across various energy sectors [7][8] Financial Position - The company is completely debt-free and has a cash reserve that is nearly one-third of its market capitalization, positioning it favorably compared to other energy firms burdened with debt [8] - It holds a significant equity stake in another AI-related company, providing indirect exposure to multiple growth opportunities in the AI sector [9][10] Market Sentiment - There is a growing interest from hedge funds in this company, which is considered undervalued and off the radar compared to other AI and energy stocks [9][10] - The company is trading at less than 7 times earnings, indicating a potential for substantial upside in the context of its critical role in the AI and energy landscape [10][11] Future Outlook - The ongoing disruption caused by AI is expected to reshape traditional industries, with companies that adapt to these changes likely to thrive [11][12] - The influx of talent into the AI sector is anticipated to drive continuous innovation and advancements, reinforcing the importance of investing in this field [12][13] - The combination of AI infrastructure needs, energy demands, and favorable market conditions presents a unique investment opportunity [14]

Oct 1, 2025 6:00 AM Eastern Daylight Time Share BOCA RATON, Fla.--(BUSINESS WIRE)--The GEO Group, Inc. (NYSE:GEO) ("GEO") will release its third quarter 2025 financial results on Thursday, November 6, 2025 before the market opens. GEO has scheduled a conference call and simultaneous webcast for 11:00 AM (Eastern Time) on Thursday, November 6, 2025. Hosting the call for GEO will be George Zoley, Executive Chairman of the Board, J. David Donahue, Chief Executive Officer, and Mark Suchinski, Chief Financial Of ...

Core Thesis - The GEO Group, Inc. is positioned to benefit from potential policy shifts under the current administration, particularly with increased demand for detention capacity due to stricter enforcement measures [2][4]. Company Positioning - GEO is the leading private prison and mental health facility operator in the U.S., with a strong market position bolstered by recent deleveraging and a share buyback [2]. - The company's share was trading at $23.00 as of September 11th, with trailing and forward P/E ratios of 35.38 and 24.04 respectively [1]. Market Dynamics - Arrests and detention numbers are at record highs, with ICE staffing increasing by 50% and the agency's budget tripling, creating a structural tailwind for private operators like GEO [3]. - The current administration includes former GEO employees and lobbyists, aligning policy with the company's growth prospects [3]. Financial Performance - Despite improvements in operations and financial position, the stock has not yet reflected potential upside, trading near pre-election levels [4]. - The recent sale of state prison assets and operational efficiencies have strengthened GEO's balance sheet, positioning it for accelerated earnings growth once new federal funding is deployed [4]. Investment Outlook - Analysts see a compelling risk/reward scenario, with GEO potentially tripling from current levels if policy measures materialize as expected, projecting a price target of $40 by year-end [5]. - GEO represents a high-conviction opportunity for investors seeking capital appreciation and exposure to a sector poised to benefit from regulatory and enforcement shifts [5].

Core Viewpoint - The Florida Department of Corrections is set to award three contracts to The GEO Group for the management and support of three correctional facilities, which are projected to generate approximately $130 million in annualized revenue for the company [1] Company Summary - The GEO Group will manage three correctional facilities in Florida [1] - The expected annualized revenue from these contracts is around $130 million [1] Industry Summary - The contracts awarded by the Florida Department of Corrections indicate ongoing investment in private correctional facility management [1] - The decision reflects the state's reliance on private companies for correctional facility operations [1]

Core Insights - The GEO Group, a publicly traded prison stock, was identified as having transitioned from being undervalued to fully priced since the industry's low point in 2021 [1] Company Analysis - The GEO Group was one of two prison stocks purchased during a low point in the industry, indicating a strategic investment decision based on market conditions [1]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements and management's discussion and analysis for the reporting period [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements for The GEO Group, Inc. for the three and six months ended June 30, 2025 and 2024, including statements of operations, comprehensive income (loss), balance sheets, and cash flows. It also includes detailed notes explaining the basis of presentation, significant accounting policies, and specific financial instrument details [Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20(UNAUDITED)) This section details the company's unaudited consolidated statements of operations, including revenues, operating income, and net income for the periods presented Consolidated Statements of Operations Summary (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $636,169 | $607,185 | $1,241,513 | $1,212,857 | | Operating income | $71,973 | $80,145 | $132,957 | $159,707 | | Net income (loss) attributable to GEO | $29,108 | $(32,513) | $48,666 | $(9,845) | | Basic EPS | $0.21 | $(0.25) | $0.35 | $(0.08) | | Diluted EPS | $0.21 | $(0.25) | $0.35 | $(0.08) | - Net income attributable to The GEO Group, Inc. significantly improved from a loss of **$(32,513) thousand** in Q2 2024 to a profit of **$29,108 thousand** in Q2 2025, and from a loss of **$(9,845) thousand** in H1 2024 to a profit of **$48,666 thousand** in H1 2025[9](index=9&type=chunk) [Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(LOSS)%20(UNAUDITED)) This section presents the company's unaudited consolidated statements of comprehensive income (loss), including net income and other comprehensive income Consolidated Statements of Comprehensive Income (Loss) Summary (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $29,074 | $(32,563) | $48,616 | $(9,904) | | Total other comprehensive income (loss) | $4,382 | $2,830 | $5,318 | $(331) | | Total comprehensive income (loss) | $33,456 | $(29,733) | $53,934 | $(10,235) | | Comprehensive income (loss) attributable to GEO | $33,508 | $(29,668) | $54,014 | $(10,173) | - Total comprehensive income attributable to The GEO Group, Inc. improved significantly, moving from a loss of **$(29,668) thousand** in Q2 2024 to an income of **$33,508 thousand** in Q2 2025, and from a loss of **$(10,173) thousand** in H1 2024 to an income of **$54,014 thousand** in H1 2025[12](index=12&type=chunk) [Consolidated Balance Sheets](index=6&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This section provides the company's consolidated balance sheets, detailing assets, liabilities, and shareholders' equity at specific dates Consolidated Balance Sheets Summary (in thousands) | Metric (in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :--------------------------------------- | :-------------------------- | :------------------ | | Total Assets | $3,661,419 | $3,632,080 | | Total Current Liabilities | $561,038 | $340,223 | | Long-Term Debt, Net | $1,475,375 | $1,711,197 | | Total Shareholders' Equity | $1,381,420 | $1,333,414 | - Total assets increased by **$29.3 million** from December 31, 2024, to June 30, 2025[15](index=15&type=chunk) - Long-term debt, net, decreased by **$235.8 million**, while total current liabilities increased by **$220.8 million**, primarily due to a reclassification of current portion of finance lease liabilities and long-term debt[15](index=15&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)) This section outlines the company's unaudited consolidated statements of cash flows, categorizing cash activities into operating, investing, and financing Consolidated Statements of Cash Flows Summary (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $110,393 | $114,520 | | Net cash used in investing activities | $(81,799) | $(36,996) | | Net cash used in financing activities | $(37,609) | $(113,202) | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(5,243) | $(37,189) | - Net cash used in investing activities increased significantly from **$(36,996) thousand** in H1 2024 to **$(81,799) thousand** in H1 2025, primarily due to higher capital expenditures and purchases of marketable securities[18](index=18&type=chunk) - Net cash used in financing activities decreased from **$(113,202) thousand** in H1 2024 to **$(37,609) thousand** in H1 2025, largely due to reduced payments on long-term debt[18](index=18&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the unaudited consolidated financial statements, explaining accounting policies and specific financial instrument details [1. Basis of Presentation](index=8&type=section&id=1.%20BASIS%20OF%20PRESENTATION) This note describes the company's business operations, including facility management, rehabilitation services, and geographic scope - The GEO Group, Inc. specializes in the ownership, leasing, and management of secure facilities, processing centers, and community reentry centers in the United States, Australia, and South Africa[22](index=22&type=chunk) - The company also provides rehabilitation services under its 'GEO Continuum of Care' platform, secure transportation services, and electronic monitoring and supervision services[22](index=22&type=chunk) - As of June 30, 2025, GEO's worldwide operations include approximately **77,000 beds** at **98 facilities** and provide reentry, electronic monitoring, and supervision services for thousands of individuals[22](index=22&type=chunk) [2. Goodwill and Other Intangible Assets](index=8&type=section&id=2.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) This note details the company's goodwill and other intangible assets, including facility management contracts and trade names Goodwill by Segment (in thousands) | Goodwill Segment (in thousands) | January 1, 2025 | Foreign Currency Translation | June 30, 2025 | | :-------------------------------- | :-------------- | :--------------------------- | :------------ | | U.S. Secure Services | $316,366 | — | $316,366 | | Electronic Monitoring and Supervision Services | $289,570 | — | $289,570 | | Reentry Services | $148,873 | — | $148,873 | | International Services | $1,192 | $20 | $1,212 | | **Total Goodwill** | **$756,001** | **$20** | **$756,021** | Intangible Assets Net Carrying Amount (in thousands) | Intangible Assets (in thousands) | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :--------------------------------- | :-------------------------------- | :------------------------------------ | | Facility management contracts | $76,755 | $81,376 | | Trade names | $45,200 | $45,200 | | **Total acquired intangible assets** | **$121,955** | **$126,576** | - Goodwill increased slightly by **$20 thousand** due to foreign currency translation in International Services, totaling **$756,021 thousand** as of June 30, 2025[24](index=24&type=chunk)[25](index=25&type=chunk) - Net carrying amount of facility management contracts decreased by **$4,621 thousand**, while trade names remained constant[24](index=24&type=chunk)[25](index=25&type=chunk) [3. Financial Instruments](index=9&type=section&id=3.%20FINANCIAL%20INSTRUMENTS) This note describes the company's financial instruments, including rabbi trusts, marketable securities, and interest rate swap derivatives Financial Assets Carrying Value and Fair Value Hierarchy (in thousands) | Financial Assets (in thousands) | Carrying Value at June 30, 2025 | Level 1 (Quoted Prices) | Level 2 (Observable Inputs) | | :-------------------------------- | :------------------------------ | :---------------------- | :-------------------------- | | Rabbi Trusts | $61,472 | $12,876 | $48,596 | | Marketable equity and fixed income securities | $75,222 | $6,204 | $69,018 | | Other non-current assets | $19,860 | — | $19,860 | | Interest rate swap derivatives | $3,567 | — | $3,567 | - The company's Level 2 financial instruments include interest rate swap derivatives, investments in equity and fixed income securities in its captive insurance subsidiary, and rabbi trusts for deferred compensation and retirement accounts[28](index=28&type=chunk) - Level 1 instruments primarily consist of money market funds[28](index=28&type=chunk) [4. Fair Value of Assets and Liabilities](index=11&type=section&id=4.%20FAIR%20VALUE%20OF%20ASSETS%20AND%20LIABILITIES) This note provides information on the fair value measurements of the company's financial assets and liabilities, including debt instruments Fair Value of Financial Instruments (in thousands) | Financial Instrument (in thousands) | Carrying Value as of June 30, 2025 | Total Fair Value as of June 30, 2025 | | :---------------------------------- | :--------------------------------- | :----------------------------------- | | Cash and cash equivalents | $67,861 | $67,861 | | Restricted cash | $33,680 | $33,680 | | Borrowings under credit agreement | $411,867 | $413,351 | | 8.625% Senior Secured Notes due 2029 | $650,000 | $688,441 | | 10.250% Senior Notes due 2031 | $625,000 | $686,156 | - The fair values of cash, cash equivalents, and restricted cash approximate their carrying values[30](index=30&type=chunk)[31](index=31&type=chunk) - The fair values of the **8.625% Secured Notes due 2029**, **10.250% Senior Notes due 2031**, and the Credit Agreement are based on Level 2 inputs using market quotations and estimates[30](index=30&type=chunk)[31](index=31&type=chunk) - The remaining principal balance of the **6.50% Exchangeable Senior Notes due 2026** was retired during the first quarter of 2025[32](index=32&type=chunk) [5. Restricted Cash and Cash Equivalents](index=12&type=section&id=5.%20RESTRICTED%20CASH%20AND%20CASH%20EQUIVALENTS) This note details the components and purposes of the company's restricted cash and cash equivalents, including contractual requirements Restricted Cash and Cash Equivalents Summary (in thousands) | Metric (in thousands) | June 30, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $67,861 | $46,299 | | Restricted cash and cash equivalents - current | — | $6,240 | | Restricted cash and investments - non-current | $170,374 | $141,312 | | Less Restricted investments - non-current | $(117,614) | $(71,173) | | Total cash, cash equivalents and restricted cash and cash equivalents shown in the statement of cash flows | $120,621 | $122,678 | - Restricted cash and cash equivalents are primarily due to contractual requirements at the Australian subsidiary, asset replacement funds, and cash in the captive insurance subsidiary[33](index=33&type=chunk) - Restricted investments include rabbi trusts and equity/fixed income securities[33](index=33&type=chunk) [6. Shareholders' Equity](index=12&type=section&id=6.%20SHAREHOLDERS'%20EQUITY) This note outlines changes in the company's shareholders' equity, including common shares outstanding, retained earnings, and comprehensive loss Shareholders' Equity Summary (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Common shares outstanding | 141,245 | 140,181 | | Total Shareholders' Equity attributable to GEO | $1,383,022 | $1,334,936 | | Retained earnings | $88,546 | $39,880 | | Accumulated other comprehensive loss | $(16,254) | $(21,602) | - Total shareholders' equity attributable to GEO increased by **$48.1 million** from December 31, 2024, to June 30, 2025, driven by net income and other comprehensive income[15](index=15&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - Retained earnings increased by **$48.6 million**[15](index=15&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - The company filed an automatic shelf registration statement on Form S-3 in October 2023, allowing for the sale of various securities, and a prospectus supplement in December 2023 for up to **$300 million** of common stock, though no shares were sold under this program in H1 2025[38](index=38&type=chunk)[39](index=39&type=chunk) [7. Equity Incentive Plans](index=14&type=section&id=7.%20EQUITY%20INCENTIVE%20PLANS) This note describes the company's equity incentive plans, including stock option and restricted stock activity and related compensation expense - The Amended 2018 Stock Incentive Plan, approved in May 2024, reserved an additional **12,400,000 shares** of common stock for awards[42](index=42&type=chunk)[43](index=43&type=chunk) Stock Option Activity (in thousands) | Stock Option Activity (in thousands) | Shares | Wtd. Avg. Exercise Price | | :----------------------------------- | :----- | :----------------------- | | Options outstanding at January 1, 2025 | 1,632 | $16.64 | | Options granted | 377 | $26.23 | | Options exercised | (274) | $15.21 | | Options forfeited/canceled/expired | (161) | $26.43 | | Options outstanding at June 30, 2025 | 1,574 | $18.14 | Restricted Stock Activity (in thousands) | Restricted Stock Activity (in thousands) | Shares | Wtd. Avg. Grant Date Fair Value | | :--------------------------------------- | :----- | :------------------------------ | | Restricted stock outstanding at January 1, 2025 | 3,714 | $9.77 | | Granted | 1,827 | $26.69 | | Vested | (2,684) | $7.50 | | Forfeited/canceled | (134) | $15.31 | | Restricted stock outstanding at June 30, 2025 | 2,723 | $16.44 | - Stock-based compensation expense for restricted stock awards was **$11.1 million** for the six months ended June 30, 2025, up from **$8.8 million** in the prior year[51](index=51&type=chunk) - Unrecognized compensation costs for non-vested restricted stock awards totaled **$33.1 million** as of June 30, 2025[51](index=51&type=chunk) [8. Earnings Per Share](index=19&type=section&id=8.%20EARNINGS%20PER%20SHARE) This note presents the calculation of basic and diluted earnings per share, including weighted average shares outstanding Earnings Per Share Summary | EPS Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.21 | $(0.25) | $0.35 | $(0.08) | | Diluted EPS | $0.21 | $(0.25) | $0.35 | $(0.08) | | Weighted average shares outstanding (basic) | 138,539 | 130,518 | 137,844 | 125,631 | | Weighted average shares assuming dilution | 140,470 | 130,518 | 140,710 | 125,631 | - Basic and diluted EPS significantly improved from losses in 2024 to positive earnings in 2025 for both the three and six-month periods[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - Dilutive effects of equity incentive plans were included in 2025 due to net income, but excluded in 2024 due to net losses[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [9. Derivative Financial Instruments](index=20&type=section&id=9.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This note details the company's use of derivative financial instruments, specifically interest rate swap agreements for hedging variable rate debt - The Company uses interest rate swap agreements to fix interest rates on variable rate debt, designating them as effective cash flow hedges[59](index=59&type=chunk) - Total unrealized loss related to these hedges was **$0.3 million** (net of tax) for Q2 2025 and **$1.0 million** for H1 2025[59](index=59&type=chunk) - The total fair value of swap assets was **$3.6 million** as of June 30, 2025, down from **$4.9 million** at December 31, 2024[59](index=59&type=chunk) [10. Debt](index=20&type=section&id=10.%20DEBT) This note provides a comprehensive overview of the company's debt structure, including credit agreements, senior notes, and their respective balances Debt Summary (in thousands) | Debt Category (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Total Credit Agreement | $405,267 | $422,885 | | Total 8.625% Secured Notes due 2029 | $639,121 | $637,961 | | Total 10.25% Unsecured Notes due 2031 | $614,131 | $613,478 | | Total 6.50% Exchangeable Senior Notes due 2026 | — | $100 | | Total debt | $1,696,176 | $1,713,028 | | Current portion of finance lease liabilities and long-term debt | $(220,801) | $(1,612) | | Long-Term Debt | $1,475,375 | $1,711,197 | - Total debt decreased from **$1,713,028 thousand** at December 31, 2024, to **$1,696,176 thousand** at June 30, 2025[60](index=60&type=chunk)[95](index=95&type=chunk) - The remaining balance of the **6.50% Exchangeable Senior Notes due 2026** was retired in Q1 2025[60](index=60&type=chunk)[95](index=95&type=chunk) - The company entered into a new Credit Agreement in April 2024, comprising a **$310 million** revolving credit facility and a **$450 million** senior secured term loan facility[61](index=61&type=chunk)[82](index=82&type=chunk)[89](index=89&type=chunk) - As of June 30, 2025, **$115.0 million** was borrowed under the revolver, with **$147.5 million** additional borrowing capacity[61](index=61&type=chunk)[82](index=82&type=chunk)[89](index=89&type=chunk) - On July 14, 2025, the Credit Agreement was amended to increase revolving credit commitments to **$450 million** and extend its maturity to July 14, 2030, while also lowering applicable interest rates by **0.50%**[90](index=90&type=chunk)[149](index=149&type=chunk) [11. Commitments, Contingencies and Other Matters](index=30&type=section&id=11.%20COMMITMENTS,%20CONTINGENCIES%20AND%20OTHER%20MATTERS) This note details the company's legal commitments, contingencies, and other significant matters, including litigation and idle facilities - The company is involved in several immigration detainee class action lawsuits in Colorado, Washington, and California, primarily concerning minimum wage and human trafficking claims for participants in Voluntary Work Programs[101](index=101&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - GEO disputes these claims and has not recorded accruals as losses are not considered probable[101](index=101&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - GEO has filed lawsuits challenging state legislation in Washington, New Jersey, and California that conflict with federal contracts for private detention facilities[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Preliminary injunctions have been granted in Washington and New Jersey, while the California case was dismissed with leave to amend[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - The company has contractual commitments for active capital projects totaling **$54.1 million**, with **$35.9 million** spent through H1 2025 and **$18.2 million** remaining for the rest of 2025[114](index=114&type=chunk) Idle Facility Information (in thousands) | Idle Facility (in thousands) | Year Idled | Secure Services Design Capacity (beds) | Reentry Services Design Capacity (beds) | Net Carrying Value June 30, 2025 | | :--------------------------------------- | :--------- | :------------------------------------- | :-------------------------------------- | :------------------------------- | | Rivers Correctional Facility | 2021 | 1,320 | — | $36,567 | | Big Spring Correctional Facility | 2021 | 924 | — | $27,368 | | Flightline Correctional Facility | 2021 | 1,452 | — | $32,176 | | Lea County Correctional Facility | 2025 | 1,200 | — | $45,714 | | Cheyenne Mountain Recovery Center | 2020 | 700 | — | $17,643 | | Philadelphia Residential | 2024 | — | 400 | $6,252 | | Coleman Hall | 2017 | — | 350 | $5,710 | | **Total** | | **5,896** | **889** | **$186,085** | [12. Business Segments and Geographic Information](index=39&type=section&id=12.%20BUSINESS%20SEGMENTS%20AND%20GEOGRAPHIC%20INFORMATION) This note presents financial information by the company's reportable business segments and geographic regions, including revenues and operating income - The company operates through four reportable segments: U.S. Secure Services, Electronic Monitoring and Supervision Services, Reentry Services, and International Services (South Africa and Australia)[120](index=120&type=chunk)[121](index=121&type=chunk) Segment Revenues (in thousands) | Segment Revenues (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | U.S. Secure Services | $441,665 | $402,097 | $847,381 | $803,037 | | Electronic Monitoring and Supervision Services | $78,925 | $84,745 | $156,638 | $171,529 | | Reentry Services | $71,310 | $68,960 | $141,686 | $136,790 | | International Services | $44,269 | $51,383 | $95,808 | $101,501 | | **Total Revenues** | **$636,169** | **$607,185** | **$1,241,513** | **$1,212,857** | Segment Operating Income (in thousands) | Segment Operating Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | U.S. Secure Services | $76,916 | $79,769 | $146,147 | $159,010 | | Electronic Monitoring and Supervision Services | $32,519 | $38,277 | $62,508 | $76,457 | | Reentry Services | $15,641 | $12,155 | $30,743 | $24,897 | | International Services | $3,143 | $2,142 | $7,554 | $4,611 | | **Total Operating Income from Segments** | **$128,219** | **$132,343** | **$246,952** | **$264,975** | - U.S. Secure Services revenue increased by **$39.6 million (9.8%)** in Q2 2025 and **$44.3 million (5.5%)** in H1 2025, driven by new contract activations and increased occupancies/rates[187](index=187&type=chunk)[188](index=188&type=chunk)[191](index=191&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[217](index=217&type=chunk) - Electronic Monitoring and Supervision Services revenue decreased by **$5.8 million (6.9%)** in Q2 2025 and **$14.9 million (8.7%)** in H1 2025 due to lower participant counts in ISAP[187](index=187&type=chunk)[188](index=188&type=chunk)[191](index=191&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[217](index=217&type=chunk) [13. Benefit Plans](index=43&type=section&id=13.%20BENEFIT%20PLANS) This note describes the company's benefit plans, including pension plan obligations, net periodic benefit costs, and executive retirement agreements Pension Plan Unfunded Status (in thousands) | Pension Plan Metric (in thousands) | Six Months Ended June 30, 2025 | Year Ended December 31, 2024 | | :--------------------------------- | :----------------------------- | :--------------------------- | | Projected benefit obligation, end of period | $27,666 | $27,027 | | Unfunded Status of the Plan | $27,666 | $27,027 | Net Periodic Benefit Cost (in thousands) | Net Periodic Benefit Cost (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $133 | $163 | $266 | $326 | | Interest cost | $376 | $341 | $752 | $682 | | Net (gain) loss | $(62) | $15 | $(125) | $30 | | **Net periodic benefit cost** | **$447** | **$519** | **$893** | **$1,038** | - The unfunded status of the pension plan increased to **$27,666 thousand** as of June 30, 2025, from **$27,027 thousand** at year-end 2024[139](index=139&type=chunk) - Net periodic benefit cost decreased in both the three and six-month periods of 2025 compared to 2024[139](index=139&type=chunk) - The balance of the Amended and Restated Executive Retirement Agreement for the Executive Chairman was approximately **$13.9 million** at June 30, 2025, and is included in Other Non-Current Liabilities[143](index=143&type=chunk) [14. Recent Accounting Pronouncements](index=45&type=section&id=14.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This note outlines recent accounting pronouncements and their potential impact or adoption status for the company's financial reporting - FASB issued ASU No. 2024-03 (Expense Disaggregation Disclosures) effective for annual periods after December 15, 2026, requiring disclosure of inventory purchases, employee compensation, depreciation, and intangible asset amortization[145](index=145&type=chunk) - The company is evaluating the adoption of ASU No. 2024-03[145](index=145&type=chunk) - FASB issued ASU No. 2023-09 (Income Tax Disclosures) effective for annual periods after December 15, 2024, requiring tabular rate reconciliation and disaggregated income taxes paid[146](index=146&type=chunk) - The company will adopt ASU No. 2023-09 prospectively for the period ending December 31, 2025[146](index=146&type=chunk) - The company adopted ASU No. 2023-07 (Segment Reporting) effective December 31, 2024, enhancing interim segment disclosures to include significant expenses by segment and the CODM's title[147](index=147&type=chunk) [15. Subsequent Events](index=47&type=section&id=15.%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the reporting period, including asset sales, acquisitions, and debt amendments - On July 14, 2025, the Credit Agreement was amended to increase the Revolving Credit Facility commitments from **$310 million** to **$450 million** and extend its maturity to July 14, 2030[149](index=149&type=chunk) - Interest rates were also lowered by **0.50%**[149](index=149&type=chunk) - On July 25, 2025, the company completed the sale of the **2,388-bed Lawton Correctional Facility** for **$312 million**, resulting in a gain of approximately **$228 million**[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Proceeds from the Lawton sale were used to fund the acquisition of the San Diego Facility and pay off senior secured debt[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - On July 31, 2025, the company acquired the **770-bed Western Region Detention Facility** in San Diego, California, for approximately **$60 million**[151](index=151&type=chunk)[152](index=152&type=chunk) - The acquisition was funded as a like-kind real estate exchange with Lawton Facility sale proceeds, saving an estimated **$9.3 million** in capital gains cash tax[151](index=151&type=chunk)[152](index=152&type=chunk) - The Board authorized a Share Repurchase Program on August 4, 2025, to repurchase up to **$300 million** of common stock through June 30, 2028[157](index=157&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=50&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and results of operations, including a comparison of performance for the three and six months ended June 30, 2025 and 2024. It covers revenues, operating expenses, non-operating items, financial condition, liquidity, capital resources, non-GAAP measures, and future outlook, highlighting key drivers and changes [Forward-Looking Information](index=50&type=section&id=Forward-Looking%20Information) This section discusses forward-looking statements and the various risks and uncertainties that could impact the company's future financial position and operational plans - The report contains forward-looking statements regarding future financial position, business strategy, projected costs, and operational plans, which are subject to various risks and uncertainties[161](index=161&type=chunk) - Key risk factors include the ability to manage facilities, government utilization of public-private partnerships, impact of executive actions or legislation, occupancy rates, debt service obligations, and litigation outcomes[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[166](index=166&type=chunk) [Introduction](index=56&type=section&id=Introduction) This section introduces The GEO Group's core business activities, operational scale, and key financial metrics for the reporting period - The GEO Group specializes in the ownership, leasing, and management of secure facilities, processing centers, and reentry facilities, along with community-based services in the U.S., Australia, and South Africa[167](index=167&type=chunk) - As of June 30, 2025, worldwide operations include approximately **77,000 beds** at **98 facilities** and community supervision services using various technology products[168](index=168&type=chunk) Key Financial Metrics (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Consolidated revenues | $1,241.5 million | $1,212.9 million | | Average company-wide facility occupancy rate (active beds) | 89% (69,793 beds) | 88% (69,834 beds) | [Contract Developments](index=58&type=section&id=Contract%20Developments) This section highlights recent contract extensions, new agreements, and court settlements impacting the company's operations - On July 31, 2025, the company extended its 30-day interim agreement with ICE for the Intense Supervision and Appearance Program (ISAP) through August 31, 2025[171](index=171&type=chunk) - GEO Transport, Inc. secured a new five-year contract with the U.S. Marshals Service for secure transportation and detention officer services across 26 federal judicial districts[171](index=171&type=chunk) - A court settlement in Roman v. Wolf on June 10, 2025, allowed for immediate full intake at the **1,940-bed Adelanto ICE Processing Center**, which operates under a 15-year contract with ICE[172](index=172&type=chunk) - A contract modification with ICE, effective June 6, 2025, activated a federal immigration processing center at the **1,868-bed D. Ray James Facility** in Georgia[173](index=173&type=chunk) [Asset Sale](index=60&type=section&id=Asset%20Sale) This section details the sale of the Lawton Correctional Facility, including the sale price and operational transition - On June 3, 2025, the company entered into an agreement to sell the **2,388-bed Lawton Correctional Facility** in Oklahoma for **$312 million**[175](index=175&type=chunk) - The sale closed on July 25, 2025, with operations transitioned to the Oklahoma Department of Corrections[175](index=175&type=chunk) [Asset Purchase](index=60&type=section&id=Asset%20Purchase) This section describes the acquisition of the Western Region Detention Facility, its funding, and associated tax savings - On July 1, 2025, the company announced the purchase of the **770-bed Western Region Detention Facility** in San Diego, California, for approximately **$60 million**[177](index=177&type=chunk)[178](index=178&type=chunk) - The purchase closed on July 31, 2025, and was funded as a like-kind real estate exchange using proceeds from the Lawton Facility sale, resulting in an estimated **$9.3 million** capital gains cash tax savings[177](index=177&type=chunk)[178](index=178&type=chunk) - Following the asset sale and purchase, the company had approximately **$222 million** in net proceeds, which were used to pay off senior secured debt, including **$300 million** in floating rate debt[179](index=179&type=chunk) [Business Segments](index=60&type=section&id=Business%20Segments) This section outlines the company's operational structure across its four reportable business segments - The company conducts business through four reportable segments: U.S. Secure Services, Electronic Monitoring and Supervision Services, Reentry Services, and International Services (Australia and South Africa)[181](index=181&type=chunk)[182](index=182&type=chunk) [Idle Facilities](index=60&type=section&id=Idle%20Facilities) This section provides information on the company's idle facilities, including their vacant bed capacity and net book value - The company is marketing **6,785 vacant beds** at nine idle facilities to potential customers[183](index=183&type=chunk) - The combined net book value of these facilities was **$186.1 million** as of June 30, 2025[183](index=183&type=chunk) [Critical Accounting Policies](index=60&type=section&id=Critical%20Accounting%20Policies) This section confirms the adherence to GAAP in financial statement preparation and the stability of accounting estimates - The unaudited consolidated financial statements are prepared in accordance with GAAP, requiring estimates and assumptions[184](index=184&type=chunk)[185](index=185&type=chunk) - No significant changes in estimates or judgments occurred during the six months ended June 30, 2025[184](index=184&type=chunk)[185](index=185&type=chunk) [Results of Operations](index=62&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance, comparing revenues and expenses for the current and prior periods [Comparison of Second Quarter 2025 and Second Quarter 2024](index=62&type=section&id=Comparison%20of%20Second%20Quarter%202025%20and%20Second%20Quarter%202024) This section compares the company's financial results for the second quarter of 2025 against the second quarter of 2024, highlighting key changes in revenue and expenses Revenue by Segment (in thousands) | Revenue Segment (in thousands) | Q2 2025 Revenue | Q2 2024 Revenue | $ Change | % Change | | :--------------------------------------- | :-------------- | :-------------- | :------- | :------- | | U.S. Secure Services | $441,665 | $402,097 | $39,568 | 9.8% | | Electronic Monitoring and Supervision Services | $78,925 | $84,745 | $(5,820) | (6.9)% | | Reentry Services | $71,310 | $68,960 | $2,350 | 3.4% | | International Services | $44,269 | $51,383 | $(7,114) | (13.8)% | | **Total** | **$636,169** | **$607,185** | **$28,984** | **4.8%** | - U.S. Secure Services revenue increased by **$39.6 million (9.8%)** in Q2 2025 due to new contract activations (**$17.5 million**) and increases in occupancies, rates, and per diem amounts (**$28.4 million**), partially offset by contract terminations (**$6.3 million**)[188](index=188&type=chunk)[189](index=189&type=chunk) - Electronic Monitoring and Supervision Services revenue decreased by **$5.8 million (6.9%)** in Q2 2025 primarily due to lower average participant counts in the ISAP program[191](index=191&type=chunk) - International Services revenue decreased by **$7.1 million (13.8%)** in Q2 2025, mainly due to the transition of the Junee Correctional Centre contract in Australia to the government, partially offset by foreign exchange rate fluctuations[193](index=193&type=chunk) Expense and Other Income (in thousands) | Expense Category (in thousands) | Q2 2025 | Q2 2024 | $ Change | % Change | | :--------------------------------------- | :------ | :------ | :------- | :------- | | Operating Expenses | $475,218 | $443,529 | $31,689 | 7.1% | | Depreciation and Amortization | $32,732 | $31,313 | $1,419 | 4.5% | | General and Administrative Expenses | $56,246 | $52,198 | $4,048 | 7.8% | | Interest Expense | $41,907 | $50,644 | $(8,737) | (17.3)% | | Loss on Extinguishment of Debt | $595 | $82,339 | $(81,744) | (99.3)% | | Other Income | $5,514 | — | $5,514 | 100.0% | | Provision for (Benefit from) Income Taxes | $10,554 | $(20,379) | $30,933 | (151.8)% | | Equity in Earnings of Affiliates, net of Income Tax Provision | $2,177 | $811 | $1,366 | 168.4% | - Operating expenses for U.S. Secure Services increased by **$41.2 million** in Q2 2025 due to higher labor, medical, transportation costs, increased occupancies, and staffing/training for future growth, as well as new contract activations[195](index=195&type=chunk) - Interest expense decreased by **$8.7 million (17.3%)** in Q2 2025 due to lower interest rates from the Senior Notes Offering and new Term Loan, and lower principal balances after retiring the **6.50% Exchangeable Senior Notes**[206](index=206&type=chunk) - The company recognized **$5.5 million** in other income in Q2 2025 from Employee Retention Tax Credit provisions of the CARES Act[209](index=209&type=chunk) [Comparison of Six Months 2025 and Six Months 2024](index=67&type=section&id=Comparison%20of%20Six%20Months%202025%20and%20Six%20Months%202024) This section compares the company's financial results for the six months ended June 30, 2025, against the same period in 2024, detailing changes in revenue and expenses Revenue by Segment (in thousands) | Revenue Segment (in thousands) | H1 2025 Revenue | H1 2024 Revenue | $ Change | % Change | | :--------------------------------------- | :-------------- | :-------------- | :------- | :------- | | U.S. Secure Services | $847,381 | $803,037 | $44,344 | 5.5% | | Electronic Monitoring and Supervision Services | $156,638 | $171,529 | $(14,891) | (8.7)% | | Reentry Services | $141,686 | $136,790 | $4,896 | 3.6% | | International Services | $95,808 | $101,501 | $(5,693) | (5.6)% | | **Total** | **$1,241,513** | **$1,212,857** | **$28,656** | **2.4%** | - U.S. Secure Services revenue increased by **$44.3 million (5.5%)** in H1 2025, driven by new contract activations (**$20.2 million**) and increases in occupancies, rates, and per diem amounts (**$37.8 million**), partially offset by contract terminations (**$13.7 million**)[215](index=215&type=chunk) - Electronic Monitoring and Supervision Services revenue decreased by **$14.9 million (8.7%)** in H1 2025 due to lower average participant counts in the ISAP program[217](index=217&type=chunk) - International Services revenue decreased by **$5.7 million (5.6%)** in H1 2025, primarily due to the transition of the Junee Correctional Centre contract in Australia, partially offset by foreign exchange rate fluctuations[219](index=219&type=chunk) Expense and Other Income (in thousands) | Expense Category (in thousands) | H1 2025 | H1 2024 | $ Change | % Change | | :--------------------------------------- | :------ | :------ | :------- | :------- | | Operating Expenses | $929,693 | $885,204 | $44,489 | 5.0% | | Depreciation and Amortization | $64,868 | $62,678 | $2,190 | 3.5% | | General and Administrative Expenses | $113,995 | $105,268 | $8,727 | 8.3% | | Interest Expense | $84,348 | $101,939 | $(17,591) | (17.3)% | | Loss on Extinguishment of Debt | $595 | $82,378 | $(81,783) | (99.3)% | | Other Income | $5,514 | — | $5,514 | 100.0% | | Provision for (benefit from) Income Taxes | $12,380 | $(12,308) | $24,688 | (200.6)% | | Equity in Earnings of Affiliates, net of Income Tax Provision | $3,005 | $839 | $2,166 | 258.2% | - Operating expenses for U.S. Secure Services increased by **$54.2 million** in H1 2025 due to higher labor, medical, transportation costs, increased occupancies, and staffing/training for future growth, as well as new contract activations[221](index=221&type=chunk) - Interest expense decreased by **$17.6 million (17.3%)** in H1 2025 due to lower interest rates from the Senior Notes Offering and new Term Loan, and lower principal balances after retiring the **6.50% Exchangeable Senior Notes**[232](index=232&type=chunk) - The company recognized **$5.5 million** in other income in H1 2025 from Employee Retention Tax Credit provisions of the CARES Act[234](index=234&type=chunk) [Financial Condition](index=73&type=section&id=Financial%20Condition) This section assesses the company's financial health, including capital requirements, liquidity, and capital resources [Capital Requirements](index=73&type=section&id=Capital%20Requirements) This section outlines the company's current and projected capital needs for operations, debt service, and facility investments - Current cash requirements include working capital, debt service, supply purchases, R&D for electronic monitoring products, joint venture investments, and capital expenditures for new or existing facilities[240](index=240&type=chunk) - Estimated cost for existing active capital projects is **$54.1 million**, with **$35.9 million** spent through June 30, 2025, and **$18.2 million** remaining for the rest of 2025[241](index=241&type=chunk) - Capital needs are expected to be funded by cash on hand, cash from operations, and borrowings under the Credit Agreement[242](index=242&type=chunk)[243](index=243&type=chunk) - Management believes these resources are adequate for 2025 and the next twelve months[242](index=242&type=chunk)[243](index=243&type=chunk) [Liquidity and Capital Resources](index=75&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations, including recent refinancing activities - The company closed a private offering of **$1.275 billion** in senior notes (**8.625% secured notes due 2029** and **10.250% unsecured notes due 2031**) and entered into a new Credit Agreement in April 2024[244](index=244&type=chunk)[245](index=245&type=chunk) - Net proceeds from the senior notes offering and new term loan, along with cash on hand, were used to refinance approximately **$1.5 billion** of existing indebtedness, pushing most debt maturities to 2029 and 2031[246](index=246&type=chunk)[247](index=247&type=chunk) - The remaining principal balance of the **6.50% Exchangeable Senior Notes due 2026** was retired in Q1 2025[251](index=251&type=chunk) Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $110,393 | $114,520 | | Net cash used in investing activities | $(81,799) | $(36,996) | | Net cash used in financing activities | $(37,609) | $(113,202) | [Non-GAAP Measures](index=81&type=section&id=Non-GAAP%20Measures) This section defines and explains the company's use of non-GAAP financial measures, specifically EBITDA and Adjusted EBITDA, for performance assessment - EBITDA is defined as net income adjusted for income tax, net interest expense, and depreciation/amortization[266](index=266&type=chunk) - Adjusted EBITDA further adjusts for non-controlling interests, stock-based compensation, litigation costs, asset divestitures/impairment, and other non-cash items[266](index=266&type=chunk) - Management uses EBITDA and Adjusted EBITDA to assess operational performance, debt servicing ability, and capital expenditure funding[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) - These measures are believed to provide a clearer view of operations by removing certain non-cash and variable charges[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) Non-GAAP Financial Measures (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $29,074 | $(32,563) | $48,616 | $(9,904) | | EBITDA | $112,565 | $109,548 | $206,743 | $220,631 | | Adjusted EBITDA | $118,597 | $119,250 | $218,363 | $236,893 | [Outlook](index=82&type=section&id=Outlook) This section provides the company's future expectations regarding immigration enforcement, operating expenses, and potential revenue from idle facilities - The company is preparing for expanded immigration enforcement opportunities, investing significantly in capital expenditures for detention capacity, secure transportation, and electronic monitoring services for U.S. Immigration and Customs Enforcement[272](index=272&type=chunk) - Operating expenses as a percentage of revenues are expected to be impacted by new facility openings and inflation on personnel, utilities, insurance, medical, and food costs[274](index=274&type=chunk)[275](index=275&type=chunk) - General and administrative expenses are expected to remain consistent or decrease due to cost savings initiatives[274](index=274&type=chunk)[275](index=275&type=chunk) - The company is marketing **6,785 vacant beds** at nine idle facilities[276](index=276&type=chunk) - If activated at average per diem rates and occupancy, these facilities could generate approximately **$240 million** in incremental annualized revenue and an annualized increase of **$0.20 to $0.25** in EPS[276](index=276&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=83&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section discusses the company's exposure to market risks, specifically interest rate risk and foreign currency exchange rate risk, and how these risks are managed or could impact financial performance [Interest Rate Risk](index=83&type=section&id=Interest%20Rate%20Risk) This section details the company's exposure to interest rate fluctuations on its variable-rate debt and its hedging strategies - The company is exposed to interest rate risk on its Credit Agreement, which has variable interest rates[277](index=277&type=chunk) - As of June 30, 2025, with **$411.9 million** in borrowings and **$47.5 million** in letters of credit, a **one percent increase** in the average interest rate would increase annual interest expense by approximately **$4.6 million**[277](index=277&type=chunk) - Interest rate swap arrangements are used to hedge variable rate debt, fixing interest rates and mitigating the impact of rate changes on financial condition or results of operations[278](index=278&type=chunk) [Foreign Currency Exchange Rate Risk](index=83&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) This section describes the company's exposure to foreign currency exchange rate fluctuations and their potential impact on financial results - The company is exposed to foreign currency exchange rate fluctuations between the U.S. dollar and the Australian dollar, South African Rand, and British Pound[280](index=280&type=chunk) - A **10% change** in historical currency rates would impact financial position by approximately **$9.0 million** and results of operations by **$0.9 million** for the six months ended June 30, 2025[280](index=280&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=83&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details the evaluation of the company's disclosure controls and procedures and any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=83&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as assessed by management - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[281](index=281&type=chunk) [Changes in Internal Control Over Financial Reporting](index=83&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section addresses any material changes in the company's internal control over financial reporting during the reporting period - Management believes there have been no material changes in internal control over financial reporting during the quarter ended June 30, 2025[283](index=283&type=chunk) [PART II - OTHER INFORMATION](index=84&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information beyond financial statements, including legal proceedings, risk factors, and other disclosures [ITEM 1. LEGAL PROCEEDINGS](index=84&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section provides an update on various legal proceedings, including immigration detainee litigation, challenges to state legislation conflicting with federal contracts, and other general litigation and tax assessments [Immigration Detainee Litigation](index=84&type=section&id=Immigration%20Detainee%20Litigation) This section provides updates on class action lawsuits concerning immigration detainee work programs in various states - A class action lawsuit in Colorado alleges CMWA and TVPA violations regarding detainee work programs[285](index=285&type=chunk) - The U.S. Supreme Court granted GEO's Petition for Writ of Certiorari on June 2, 2025, staying all trial dates[285](index=285&type=chunk) - Two lawsuits in Washington State regarding minimum wage for detainees resulted in a combined **$23.2 million** judgment against GEO, plus **$14.4 million** in attorney's fees and interest[286](index=286&type=chunk)[287](index=287&type=chunk) - GEO's appeal to the Ninth Circuit is pending, with the U.S. Department of Justice filing an Amicus Brief supporting GEO's position[286](index=286&type=chunk)[287](index=287&type=chunk) - California class action lawsuits in the Central and Eastern Districts are stayed pending the Ninth Circuit's decision in the Washington State lawsuits[288](index=288&type=chunk)[289](index=289&type=chunk) - GEO maintains it operates the Voluntary Work Program in compliance with contracts and laws, vigorously disputes the claims, and has not recorded accruals as losses are not considered probable[290](index=290&type=chunk) [Challenges to State Legislation that Conflict with Federal Contracts](index=86&type=section&id=Challenges%20to%20State%20Legislation%20that%20Conflict%20with%20Federal%20Contracts) This section describes legal challenges against state laws that aim to regulate or prohibit private detention facilities with federal contracts - GEO filed lawsuits challenging state laws in Washington (House Bill 1470), New Jersey (Assembly Bill 5207), and California (Senate Bill 1132) that purport to regulate or prohibit private detention facilities contracting with federal agencies[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) - Preliminary injunctions were granted against enforcement of HB 1470 in Washington and AB 5207 in New Jersey[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) - The Third Circuit Court of Appeals affirmed AB 5207 as unconstitutional in a similar case[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) - The California lawsuit challenging SB 1132 was dismissed with leave to amend[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) [Other Litigation](index=86&type=section&id=Other%20Litigation) This section addresses various other legal claims the company faces, including civil rights, medical malpractice, and employment matters - The company's business exposes it to various other legal claims, including civil rights, sexual misconduct, medical malpractice, employment matters, and personal injury claims[294](index=294&type=chunk)[295](index=295&type=chunk) - These claims are unpredictable and could materially affect financial condition or contracts[294](index=294&type=chunk)[295](index=295&type=chunk) [Other Assessment](index=88&type=section&id=Other%20Assessment) This section details a non-income tax audit assessment in New Mexico and the company's actions regarding it - A New Mexico non-income tax audit resulted in a formal Notice of Assessment of Taxes and Demand for Payment[296](index=296&type=chunk) - GEO's appeal was denied by the New Mexico Supreme Court on July 8, 2024[296](index=296&type=chunk) - A payment of **$18.9 million** was made in July 2024, and a managed audit program for the post-audit period is ongoing, resulting in a **$6.3 million** favorable adjustment for penalties and interest in Q3 2024[296](index=296&type=chunk) [Accruals for Legal Proceedings](index=88&type=section&id=Accruals%20for%20Legal%20Proceedings) This section explains the company's policy for accruing losses related to legal proceedings and the inherent uncertainties - Accruals for legal proceedings are established when a loss is probable and estimable[297](index=297&type=chunk) - Outcomes are uncertain, and unfavorable resolutions could materially impact financial condition, results of operations, or cash flows, including contract modifications or loss[297](index=297&type=chunk) [ITEM 1A. RISK FACTORS](index=88&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers to the detailed discussion of risk factors in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 - Readers are encouraged to review the comprehensive risk factors outlined in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, which could materially affect the business, financial condition, or future prospects[298](index=298&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=88&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This item is not applicable for the reporting period [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=88&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable for the reporting period [ITEM 4. MINE SAFETY DISCLOSURES](index=88&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable for the reporting period [ITEM 5. OTHER INFORMATION](index=89&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section provides disclosures on Rule 10b5-1 trading arrangements and compensatory arrangements for certain officers [Rule 10b5-1 Trading Arrangements](index=89&type=section&id=Rule%2010b5-1%20Trading%20Arrangements) This section details Rule 10b5-1 trading plans entered into by company executives for potential stock sales - Richard K. Long, SVP, Project Development, entered a 10b5-1 trading plan on May 19, 2025, for the potential sale of up to **50,835 shares** of common stock, effective until May 18, 2026, or earlier if all shares are sold[302](index=302&type=chunk) - Christopher D. Ryan, SVP, Human Resources, entered a 10b5-1 trading plan on May 19, 2025, for the potential sale of up to **12,343 shares** of common stock, effective until May 15, 2026, or earlier if all shares are sold[303](index=303&type=chunk) [Compensatory Arrangements of Certain Officers](index=89&type=section&id=Compensatory%20Arrangements%20of%20Certain%20Officers) This section outlines amendments to employment agreements and vesting schedules for the company's Executive Chairman and CEO - On July 7, 2025, George C. Zoley's Executive Chairman employment agreement was amended, extending his term to April 2, 2029, updating his base salary, and increasing his Target Bonus and Target Stock Award from **100% to 150%** of his base salary[305](index=305&type=chunk) - On July 3, 2025, the Compensation Committee approved an adjustment for CEO J. David Donahue, increasing his Target Bonus and Target Stock Award from **100% to 150%** of his base salary, reflected in an amendment on August 4, 2025[306](index=306&type=chunk) - On July 15, 2025, the vesting schedule for George C. Zoley's special recognition stock award of **207,862 restricted shares** was modified to vest on July 17, 2025, instead of March 3, 2026, in connection with his amended employment agreement[307](index=307&type=chunk) [ITEM 6. EXHIBITS](index=90&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL documents - Key exhibits include the Purchase and Sale Agreement for the Lawton Correctional Facility, amendments to employment agreements for the Executive Chairman and CEO, and the First Amendment to the Credit Agreement[309](index=309&type=chunk) - Certifications under Sections 302 and 906 of the Sarbanes-Oxley Act are filed, along with Inline XBRL documents for financial data[309](index=309&type=chunk) [SIGNATURES](index=91&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q filing - The report was signed on behalf of The GEO Group, Inc. by Mark J. Suchinski, Chief Financial Officer, on August 6, 2025[312](index=312&type=chunk)

Financial Data and Key Metrics Changes - The company reported net income attributable to GEO of approximately $29 million or $0.21 per diluted share on quarterly revenue of approximately $636 million for Q2 2025, compared to a net loss of approximately $32.5 million or $0.25 per diluted share in Q2 2024 [26] - Adjusted net income for Q2 2025 was approximately $31 million or $0.22 per diluted share, compared to approximately $30 million or $0.23 per diluted share for the prior year [26] - Adjusted EBITDA for Q2 2025 was approximately $119 million, consistent with the prior year [26] Business Line Data and Key Metrics Changes - Revenues in owned and leased secure facilities increased by approximately 12% year over year, driven by new ICE contracts and census growth [27] - Revenues for non-residential contracts increased by approximately 10% from the prior year [27] - There was a 7% reduction in electronic monitoring and supervision services, a 2% reduction in reentry centers, and a 3% reduction in managed-only contracts [28] Market Data and Key Metrics Changes - Utilization across current ICE contracts increased from approximately 15,000 beds to 20,000 beds, representing the highest level of ICE utilization in the company's history [11] - The company has approximately 5,900 idle beds at six facilities, which could generate up to approximately $310 million in annualized revenues if fully utilized [12] Company Strategy and Development Direction - The company is focused on activating remaining idle facilities and exploring additional contract opportunities with ICE and the U.S. Marshals Service [13][15] - A $300 million stock buyback program has been authorized, expected to be executed at a rate of approximately $100 million per year [24][35] - The company aims to enhance shareholder value through disciplined capital allocation and debt reduction, targeting approximately $100 million in debt reduction per year [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the potential for additional contract awards and the overall growth opportunities in the ICE sector [16][48] - The company anticipates that the funding from the budget reconciliation bill will be available in mid to late August, which could support the expansion of detention capacity [14] - Management expects growth in the ICEP contract to materialize late this year or early next year, coinciding with the maximization of ICE detention capacity [19][47] Other Important Information - The company completed the sale of its Lawton facility for $312 million, which is seen as a transformative event [22][23] - The company has increased its budget for physical plant and technology improvements to approximately $100 million to better respond to ICE's expanding needs [29] Q&A Session Summary Question: Can you clarify the potential revenue from the additional beds? - Management indicated that approximately $250 million could be generated from an additional 5,000 beds, as these would be incremental beds where overhead is already paid [53] Question: What is the status of the ISAP contract and the potential shift to ankle monitors? - Management has stocked up on ankle monitors and noted that additional funding may be required for the ISAP contract if there is a shift to more expensive monitoring devices [56] Question: Will there be additional debt reduction in the second half of the year? - Management expects to generate excess cash in the second half of the year, enabling continued debt reduction while also looking at share repurchases [58][59] Question: How is the company positioned for state-level opportunities? - Management confirmed that the focus on state clients has increased, with ongoing competitive bidding for facilities in Florida and improved funding streams in Georgia [61] Question: What is the outlook for contracting additional facilities with the Marshals Service? - Management is cautiously optimistic about opportunities with the Marshals Service, noting that discussions are underway and funding is a key consideration [80]

Financial Data and Key Metrics Changes - The company reported net income attributable to GEO of approximately $29 million or $0.21 per diluted share on quarterly revenue of approximately $636 million, compared to a net loss of approximately $32.5 million or $0.25 per diluted share in the prior year [24] - Adjusted net income for 2025 was approximately $31 million or $0.22 per diluted share, compared to approximately $30 million or $0.23 per diluted share for the prior year's second quarter [24] - Adjusted EBITDA for 2025 was approximately $119 million, consistent with the prior year [24] Business Line Data and Key Metrics Changes - Revenues in owned and leased secure facilities increased by approximately 12% year over year, driven by new ICE contracts and census growth [25] - Revenues for non-residential contracts increased by approximately 10% from the prior year [25] - There was a 7% reduction in electronic monitoring and supervision services, a 2% reduction in reentry centers, and a 3% reduction in managed-only contracts [25] Market Data and Key Metrics Changes - Utilization across current ICE contracts increased from approximately 15,000 beds to 20,000 beds, the highest level in the company's history [9] - The company has approximately 5,900 idle beds at six facilities, which could generate up to approximately $310 million in annualized revenues if fully utilized [10] Company Strategy and Development Direction - The company is focused on activating remaining idle facilities and exploring potential acquisitions or leasing of third-party facilities to meet ICE's stated objectives [12][13] - A $300 million stock buyback program has been authorized, expected to be executed at a rate of approximately $100 million per year while also targeting debt reduction [22][48] - The company aims to enhance shareholder value through disciplined capital allocation and deleveraging efforts [47][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the potential for additional contract awards with ICE and the U.S. Marshals Service during the third and fourth quarters [11] - The company anticipates that the funding from the budget reconciliation bill will be allocated soon, which could support the expansion of detention capacity [12] - Management expects growth in the ICEP contract to materialize late this year or early next year as detention capacity is maximized [46] Other Important Information - The company completed the sale of its Lawton facility for $312 million, which is seen as a transformative event [19] - The company has budgeted approximately $100 million for physical plant and technology improvements to respond to ICE's expanding needs [26] Q&A Session Summary Question: What kind of revenue would the additional beds generate? - Management estimated that approximately 5,000 additional beds could generate about $250 million in revenue [52] Question: Are there any updates on the ISAP contract and potential shifts to ankle monitors? - Management confirmed they have stocked up on ankle monitors and indicated that additional funding may be available for the ISAP contract [55] Question: Will there be additional debt reduction in the second half of the year? - Management expects to generate excess cash in the latter half of the year, allowing for continued debt reduction while also looking at share repurchases [58] Question: How is the company positioning itself for management contracts at government facilities? - Management prefers to own facilities and is focused on reactivating idle high-security facilities suitable for ICE and the U.S. Marshals Service [71] Question: What is the outlook for contracting additional facilities with the Marshals Service? - Discussions are ongoing, and management is cautiously optimistic about opportunities, particularly as funding becomes available [80]

Company Overview - The GEO Group, Inc owns and/or delivers support services for 97 facilities with approximately 74,000 beds worldwide[8] - The company specializes in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers[8] Financial Performance - Total revenue for YTD 2025 was $1,241,513 thousand, compared to $1,212,857 thousand for YTD 2024[16] - Net income attributable to The GEO Group, Inc for YTD 2025 was $48,666 thousand, compared to a loss of $9,845 thousand for YTD 2024[16] - Adjusted EBITDA for YTD 2025 was $218,363 thousand, compared to $236,893 thousand for YTD 2024[17] - The company's revenue guidance for 2025 is between $2,550,000 thousand and $2,575,000 thousand[14] Operational Metrics - The company's global operating portfolio includes 94 facilities in the United States with 68,944 beds and 3 international facilities with 5,246 beds[24] - The occupancy rate for owned and leased secure services facilities was 86% in Q2 2025[22] - Capital expenditures for YTD 2025 totaled $64,190 thousand, including $25,640 thousand for growth, $19,141 thousand for technology, and $19,409 thousand for facility maintenance[21] Debt and Capital Structure - As of June 30, 2025, the company's total debt payments were $220,115 thousand[37] - The company's outstanding principal for the Revolving Credit Facility due 2029 was $115,000 thousand as of June 30, 2025[39] - The outstanding principal for the Term Loan due 2029 was $296,867 thousand as of June 30, 2025[40] Customer Data - ICE accounted for 45% of GEO's revenue by customer type YTD 2025[31] - The contract retention rate for owned and leased facilities was 94%[30]

Core Viewpoint - Geo Group reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, but down from $0.23 per share a year ago, indicating a mixed performance in earnings [1][2] Financial Performance - The company achieved revenues of $636.17 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.04% and showing an increase from $607.18 million year-over-year [2] - Over the last four quarters, Geo Group has only surpassed consensus EPS estimates once and has topped consensus revenue estimates just once [2] Stock Performance - Geo Group shares have declined approximately 7.7% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $636.05 million, and for the current fiscal year, it is $0.91 on revenues of $2.54 billion [7] - The trend of estimate revisions for Geo Group was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Government Services industry, to which Geo Group belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]