PART I - FINANCIAL INFORMATION Financial Statements Q1 2025 revenues were $604.6 million, a slight decrease, with net income at $19.6 million and diluted EPS flat Consolidated Statements of Operations Q1 2025 revenues were $604.6 million, nearly flat, with operating income decreasing and net income declining Consolidated Statements of Operations (Unaudited) | (In thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues | $604,647 | $605,672 | | Operating income | $60,984 | $79,562 | | Net income attributable to The GEO Group, Inc. | $19,558 | $22,668 | | Diluted Net income per common share | $0.14 | $0.14 | Consolidated Balance Sheets As of March 31, 2025, total assets were $3.632 billion, total liabilities $2.291 billion, and shareholders' equity $1.342 billion Consolidated Balance Sheet Highlights | (In thousands) | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $503,366 | $500,179 | | Total Assets | $3,632,465 | $3,632,080 | | Total Current Liabilities | $388,774 | $340,223 | | Long-Term Debt, Net | $1,658,093 | $1,711,197 | | Total Liabilities | $2,290,917 | $2,298,666 | | Total Shareholders' Equity | $1,341,548 | $1,333,414 | Consolidated Statements of Cash Flows Net cash provided by operating activities decreased to $71.2 million, while investing and financing activities used more cash Consolidated Statements of Cash Flows (Unaudited) | (In thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $71,225 | $83,284 | | Net cash used in investing activities | ($31,141) | ($14,768) | | Net cash used in financing activities | ($49,423) | ($30,100) | | Net (Decrease) Increase in Cash | ($8,660) | $35,413 | Note 10 - Debt The company completed a major debt refinancing in April 2024, issuing $1.275 billion in new notes and establishing new credit facilities - In April 2024, the company closed a private offering of $1.275 billion in senior notes, comprising $650.0 million in 8.625% secured notes due 2029 and $625.0 million in 10.250% unsecured notes due 203160 - The company also entered into a new Credit Agreement with a $310 million revolving credit facility and a $450 million term loan facility6081 - During Q1 2025, the company retired the remaining outstanding principal balance of its 6.50% Exchangeable Senior Notes due 20265693 Note 11 - Commitments, Contingencies and Other Matters The company faces class-action lawsuits and legal challenges to state legislation, with nine idle facilities valued at $184.0 million - The company is defending against class-action lawsuits in Colorado, Washington, and California filed by immigration detainees concerning the Voluntary Work Program (VWP)98100101 - GEO is challenging state legislation in Washington, New Jersey, and California that it believes conflicts with its federal contracts104105106 - As of March 31, 2025, the company had nine idle facilities with a combined net carrying value of $184.0 million113114 Note 12 - Business Segments and Geographic Information U.S. Secure Services remained the largest segment in Q1 2025, with U.S. operations contributing the majority of total revenue Segment Revenues (Q1 2025 vs Q1 2024) | Segment (In thousands) | Q1 2025 Revenues | Q1 2024 Revenues | | :--- | :--- | :--- | | U.S. Secure Services | $405,716 | $400,940 | | Electronic Monitoring and Supervision Services | $77,713 | $86,784 | | Reentry Services | $70,376 | $67,830 | | International Services | $50,842 | $50,118 | | Total | $604,647 | $605,672 | - U.S. operations generated $553.8 million in revenue for Q1 2025, compared to $555.6 million in Q1 2024128 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported nearly flat revenue, lower operating income, and completed a major debt refinancing, while pursuing federal immigration enforcement opportunities Results of Operations Total revenues decreased slightly to $604.6 million, with varied segment performance and increased operating expenses leading to lower operating income Revenue by Segment (Q1 2025 vs Q1 2024) | (In thousands) | 2025 | % Change | | :--- | :--- | :--- | | U.S. Secure Services | $405,716 | 1.2% | | Electronic Monitoring and Supervision Services | $77,713 | (10.5)% | | Reentry Services | $70,376 | 3.8% | | International Services | $50,842 | 1.4% | | Total | $604,647 | (0.2)% | - The decrease in Electronic Monitoring and Supervision Services revenue was primarily due to lower average participant counts under the Intensive Supervision and Appearance Program (ISAP)168 - Operating expenses for U.S. Secure Services increased by $13.1 million (4.3%) due to higher labor, medical, and transportation costs, as well as costs to prepare for future growth171172 - Interest expense decreased by $8.9 million (17.3%) due to the 2024 debt refinancing which resulted in lower overall interest rates and principal balances183184 Liquidity and Capital Resources The company completed a major debt refinancing in April 2024, extending maturities and maintaining substantial liquidity with $117.2 million in cash - The company completed a major refinancing in April 2024, issuing $1.275 billion in new senior notes and entering a new credit agreement, pushing debt maturities to 2029 and 2031191194 - The company retired the remaining balance of its 6.50% Exchangeable Senior Notes during Q1 2025197 - Estimated remaining capital requirements for active projects in 2025 are $32.9 million189 Outlook Management is encouraged by growth opportunities in federal immigration enforcement and expects idle facilities to generate significant incremental revenue if activated - The company is preparing for an unprecedented opportunity to help the federal government meet its expanded immigration enforcement priorities and is making significant capital investments219 - The nine idle facilities, if activated, could generate an estimated $255 million in incremental annualized revenue and an increase in EPS of $0.20 to $0.25223 - Operating expenses in 2025 are expected to be impacted by inflation and the costs of activating idle facilities221 Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on its variable-rate debt and foreign currency risk from international operations - The company is exposed to interest rate risk on its variable-rate Credit Agreement. A 1% increase in the average interest rate would increase annual interest expense by approximately $4.6 million224 - The company is exposed to foreign currency risk from its operations in Australia, South Africa, and the UK. A 10% change in currency rates would impact its financial position by approximately $8.2 million227 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report228 - There were no significant changes to internal control over financial reporting during the quarter ended March 31, 2025230 PART II - OTHER INFORMATION Legal Proceedings The company is involved in class-action lawsuits by immigration detainees and is challenging state legislation regulating private detention facilities - The company is defending against multiple class-action lawsuits from immigration detainees in Colorado, Washington, and California related to its Voluntary Work Program (VWP), with claims including violations of minimum wage and anti-trafficking laws232233234 - GEO is challenging state laws in Washington (HB 1470), New Jersey (AB 5207), and California (SB 1132) that seek to impose state-level standards or prohibitions on its federally contracted facilities, arguing these laws are preempted by federal authority237238239 - The company believes it operates in full compliance with its contracts and applicable laws and intends to vigorously defend itself. No accruals have been recorded as losses are not deemed probable236 Risk Factors The company faces risks related to its reliance on a limited number of third-party manufacturers for electronic monitoring product components - The company's ability to market and sell its electronic monitoring products is dependent on a limited number of third-party suppliers for infrastructure components245 - Supply chain disruptions, such as the recent microchip shortage or price increases due to tariffs, could have a material adverse effect on the company's financial condition and results of operations245 Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company withheld 905,833 shares of common stock for tax obligations related to restricted stock vesting Share Withholding for Tax Obligations (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | — | $— | | February 2025 | 192,608 | $26.23 | | March 2025 | 713,225 | $24.01 | | Total | 905,833 | | - The withheld shares were used to satisfy statutory tax withholding requirements upon the vesting of restricted stock and were not part of a publicly announced plan or program246 Defaults Upon Senior Securities Not applicable. The company reported no defaults upon senior securities during the period - The company reports 'Not applicable' for this item247 Mine Safety Disclosures Not applicable. The company has no mining operations - The company reports 'Not applicable' for this item248 Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-Rule 10b5-1 trading arrangement' during the quarter249 Exhibits This section lists the exhibits filed with the Form 10-Q, including required CEO and CFO certifications - The report includes CEO and CFO certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act252
The GEO (GEO) - 2025 Q1 - Quarterly Report