The GEO (GEO) - 2025 Q1 - Quarterly Results

The GEO Group First Quarter 2025 Earnings Report First Quarter 2025 Financial Highlights The company reported slightly lower revenues and a decline in Adjusted EBITDA year-over-year, influenced by increased G&A and seasonal payroll expenses Q1 2025 vs. Q1 2024 Key Financial Metrics | Financial Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $604.6 million | $605.7 million | | Net Income Attributable to GEO | $19.6 million | $22.7 million | | Diluted EPS | $0.14 | $0.14 | | Adjusted EBITDA | $99.8 million | $117.6 million | - Q1 2025 results were impacted by an approximate $5 million increase in general and administrative expenses compared to Q1 2024, partly due to management reorganization for future growth[4] - Compared to Q4 2024, Q1 2025 results also reflect about $6 million in higher payroll taxes, which are typically front-loaded in the first quarter of each year[4] Management Commentary and Strategic Outlook Management highlighted new contract awards expected to drive future growth while focusing on debt reduction and supporting federal immigration enforcement - Announced two significant contract awards for the reactivation of company-owned facilities, totaling 2,800 beds and expected to generate over $130 million in annualized revenues[5] - A $70 million investment commitment has been made to enhance capabilities in detention capacity, secure transportation, and electronic monitoring services for ICE and the federal government[5] - The company's 2025 financial performance is described as a "tale of two halves," with higher upfront costs in the first half to support revenue growth expected in the second half of 2025[8] - The company plans to reduce total net debt by approximately $150 million to $175 million during 2025, aiming for a total net debt of around $1.54 billion[8] Full Year and Second Quarter 2025 Financial Guidance The company issued its full-year and Q2 2025 guidance, projecting revenue of approximately $2.53 billion for the year, excluding any unannounced contracts Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Income Attributable to GEO (per diluted share) | $0.77 to $0.89 | | Revenues | ~$2.53 billion | | Adjusted EBITDA | $465 million to $490 million | | Total Capital Expenditures | $120 million to $135 million | Second Quarter 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Income Attributable to GEO (per diluted share) | $0.15 to $0.17 | | Revenues | $615 million to $625 million | | Adjusted EBITDA | $110 million to $114 million | - Current guidance does not include the impact of any new unannounced contract awards, with updates planned as new agreements materialize[9][12] Recent Business Developments The company secured two major contracts with ICE for facilities in New Jersey and Michigan, expected to generate significant annualized revenue - Announced a 15-year contract with ICE for the 1,000-bed Delaney Hall Facility in Newark, NJ, expected to generate over $60 million in annualized revenues[15] - Announced a contract with ICE for the immediate activation of the 1,800-bed North Lake Facility in Baldwin, MI, which is expected to generate over $70 million in annualized revenues under a future multi-year contract[17] - A contract modification for the Karnes ICE Processing Center was announced to change its use, but ICE later decided to continue housing single adults based on current needs[16] Balance Sheet and Debt Position The company ended Q1 2025 with net debt of approximately $1.68 billion, a net leverage ratio of 3.78x, and total available liquidity of $235 million Balance Sheet Position as of March 31, 2025 | Metric | Value | | :--- | :--- | | Net Debt | ~$1.68 billion | | Net Leverage | ~3.78x Adjusted EBITDA | | Cash and Cash Equivalents | ~$65 million | | Total Available Liquidity | ~$235 million | Financial Statements and Reconciliations This section presents detailed unaudited financial statements and reconciliations of GAAP to non-GAAP measures for Q1 2025 and the full-year outlook Condensed Consolidated Balance Sheets The balance sheet remained stable with total assets of $3.632 billion, while long-term debt decreased to $1.658 billion as of March 31, 2025 Condensed Consolidated Balance Sheets (in '000s) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $503,366 | $500,179 | | Property and Equipment, Net | $1,900,525 | $1,899,690 | | Total Assets | $3,632,465 | $3,632,080 | | Total Current Liabilities | $388,774 | $340,223 | | Long-Term Debt | $1,658,093 | $1,711,197 | | Total Shareholders' Equity | $1,341,548 | $1,333,414 | | Total Liabilities and Shareholders' Equity | $3,632,465 | $3,632,080 | Condensed Consolidated Statements of Operations Q1 2025 operating income declined to $61.0 million from $79.6 million year-over-year, though lower interest expense partially offset the impact Condensed Consolidated Statements of Operations (in '000s) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $604,647 | $605,672 | | Operating Income | $60,984 | $79,562 | | Interest Expense | ($42,441) | ($51,295) | | Net Income | $19,542 | $22,659 | | Net Income Attributable to The GEO Group, Inc. | $19,558 | $22,668 | | Diluted EPS | $0.14 | $0.14 | Reconciliation of Non-GAAP Financial Measures The company reconciled Q1 2025 Net Income of $19.5 million to Adjusted EBITDA of $99.8 million, detailing key non-cash and other adjustments Reconciliation of Net Income to Adjusted EBITDA (Q1 2025, in '000s) | | Q1 2025 | | :--- | :--- | | Net Income | $19,542 | | Add: Income tax provision | $2,056 | | Add: Interest expense, net | $40,444 | | Add: Depreciation and amortization | $32,136 | | EBITDA | $94,178 | | Add: Stock based compensation | $6,488 | | Other Adjustments | ($901) | | Adjusted EBITDA | $99,765 | 2025 Full Year Outlook Reconciliation (in '000s) | | Low End | High End | | :--- | :--- | :--- | | Net Income Attributable to GEO | $108,000 | $125,000 | | Net Interest Expense | $161,000 | $162,500 | | Income Taxes | $41,000 | $47,000 | | Depreciation and Amortization | $136,000 | $136,500 | | Non-Cash Stock Based Compensation | $23,000 | $23,000 | | Adjusted EBITDA | $465,000 | $490,000 | Note on Non-GAAP Financial Measures The company utilizes non-GAAP measures like EBITDA and Adjusted EBITDA to provide investors with a clearer view of its operational performance and trends - EBITDA is defined as net income plus provisions for income tax, interest expense, and depreciation and amortization[28] - Adjusted EBITDA further adjusts EBITDA for items like stock-based compensation, start-up expenses, and other non-cash or non-recurring items[28] - Management uses these non-GAAP measures to provide consistency in financial reporting and facilitate historical comparisons, reflecting trends in occupancy, per diem rates, and operating costs[30][32]