The GEO (US:GEO)2025-11-06 20:57Revenue and Financial Performance - For the nine months ended September 30, 2025, consolidated revenues were $1,923.9 million, compared to $1,816.0 million for the same period in 2024, reflecting an increase of approximately 5.9%[179] - Revenues for the U.S. Secure Services segment increased by $80.7 million, reaching $481.6 million in Q3 2025, a 20.1% increase compared to Q3 2024[189] - The total revenue for Q3 2025 was $682.3 million, representing a 13.1% increase from $603.1 million in Q3 2024[189] - Revenues for U.S. Secure Services increased by $125.1 million (10.4%) in the nine months ended September 30, 2025, driven by new contracts and increased occupancies[219] - Total revenues for the nine months ended September 30, 2025, were $1,923.8 million, a 5.9% increase from $1,815.9 million in the same period of 2024[218] Occupancy and Capacity - The average company-wide facility occupancy rate was approximately 89% for the nine months ended September 30, 2025, with 68,157 active beds, compared to approximately 88% with 68,004 active beds for the same period in 2024[179] - The average occupancy in U.S. Secure Services facilities was approximately 90% in Q3 2025, up from 88% in Q3 2024[192] - Average occupancy in U.S. Secure Services facilities remained stable at approximately 88% of capacity for both Nine Months 2025 and Nine Months 2024[220] Operating Expenses - Operating expenses for U.S. Secure Services rose by $76.4 million to $376.0 million in Q3 2025, primarily due to labor and medical costs[197] - Operating expenses for U.S. Secure Services increased by $130.6 million (14.5%) in the nine months ended September 30, 2025, primarily due to labor and medical costs[225] - Operating expenses accounted for approximately 75% of consolidated revenues for the nine months ended September 30, 2025, compared to 73% for the same period in 2024[282] General and Administrative Expenses - General and administrative expenses increased by $15.0 million to $62.1 million in Q3 2025, reflecting a 31.9% rise compared to Q3 2024[206] - General and administrative expenses rose by $23.8 million (15.6%) in the nine months ended September 30, 2025, primarily due to senior management reorganization and higher employee-related costs[234] - General and administrative expenses represented about 11% of consolidated revenues for the nine months ended September 30, 2025, up from 8% in 2024[283] Income and Taxation - The provision for income taxes increased to $56.4 million in Q3 2025, with an effective tax rate of 24.6%, compared to $11.7 million (31.4% effective rate) in Q3 2024, a 383.5% increase[215] - The provision for income taxes increased to $68.8 million with an effective tax rate of 23.9% in Nine Months 2025, compared to a tax benefit in the previous year[243][245] Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash increased to $231.6 million as of September 30, 2025, up from $118.4 million a year earlier, representing a growth of approximately 95.5%[269] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $189.9 million, down from $223.8 million in the same period of 2024, indicating a decrease of about 15.1%[270] - Net cash used in financing activities increased to approximately $232.2 million for the nine months ended September 30, 2025, compared to $186.1 million in the same period of 2024, reflecting an increase of about 24.7%[273] Debt and Financing - The company has approximately $262.6 million in borrowings under its Credit Agreement, with a 1% increase in interest rates potentially raising annual interest expenses by $3.1 million[285] - Interest expense decreased by $7.3 million in Q3 2025 compared to Q3 2024, following an amendment to the Credit Agreement that increased borrowing capacity and lowered the interest rate[212] - The company amended its Credit Agreement to increase revolving credit commitments from $310 million to $450 million, extending the maturity to July 14, 2030[253] Legal and Regulatory Risks - The company faces risks related to the federal government shutdown, which could adversely impact financial results[172] - The company is exposed to rising medical costs and must manage ongoing litigation costs, which could affect profitability[172] - The company incurred a non-cash contingent litigation reserve of $37.6 million during Nine Months 2025, representing 5.5% of revenue[235] Strategic Initiatives and Growth - The company is focused on expanding its secure services, reentry, and community-based services, as well as monitoring services and secure transportation services[177] - The company is currently in compliance with its debt covenants as of September 30, 2025, but potential future constraints could adversely impact liquidity and capital resources[264] - The company is preparing for significant growth opportunities related to federal immigration enforcement, with a focus on expanding detention capacity and related services[280] Asset Management - The company has a significant amount of goodwill and intangible assets from acquisitions, which may become impaired in the future[176] - Gain on asset divestitures was approximately $232.4 million in Q3 2025, accounting for 34.1% of revenue, related to the sale of the Lawton Correctional Facility[214] - The company sold the Lawton Correctional Facility for $312 million, resulting in a gain of approximately $228 million, which was used to pay off a Term Loan[252] Foreign Exchange and Interest Rate Exposure - A 10% change in foreign currency exchange rates could affect the company's financial position by approximately $8.6 million and impact results of operations by about $1.2 million for the nine months ended September 30, 2025[288] - Interest rate swap arrangements have been established to hedge against variable rate debt, minimizing the impact of interest rate fluctuations[286]