The GEO (US:GEO)2020-10-29 22:24Financial Data and Key Metrics Changes - The company reported third quarter revenues of approximately $579 million and net income attributable to GEO of $0.33 per diluted share [13] - Adjusted net income for the third quarter was reported at $0.37 per diluted share, with an AFFO of $0.67 per diluted share [14] - The company expects fourth quarter net income attributable to GEO to be in the range of $0.23 to $0.25 per diluted share and full-year AFFO to be in the range of $2.43 to $2.45 per diluted share [18] Business Line Data and Key Metrics Changes - The GEO Care segment has been impacted by lower occupancy levels across reentry centers, day reporting programs, and youth services facilities due to COVID-19 [8] - The activation of the Golden State ICE Annex in California is expected to achieve normalized operations by the end of the year [10] - The company has entered into a four-month extension of the D. Ray James contract with the Federal Bureau of Prisons, which was previously set to expire [9] Market Data and Key Metrics Changes - Overall occupancy levels at Federal facilities for ICE, US Marshal Service, and the Bureau of Prisons have declined due to the pandemic [8] - The company has experienced lower occupancy levels in its GEO Care segment, which is expected to continue through the end of the year [15] Company Strategy and Development Direction - The company is focused on capital preservation and debt repayment, having reduced its quarterly dividend payments to $0.34 per share to allocate excess cash flows towards debt repayment [11] - The management team is exploring the potential sale of company-owned assets to government agencies or third parties [12] - The company believes it can continue to provide essential services to the Federal Government under either political party following the upcoming elections [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing operational and financial challenges associated with the COVID-19 pandemic but expressed confidence in the company's ability to navigate these challenges [5] - The company expects lower occupancy levels at ICE and US Marshals facilities to continue through the end of the year [15] - Management remains optimistic about the stability and strength of earnings and cash flows despite the pandemic [10] Other Important Information - The company has paid down approximately $80 million in net debt during 2020 and expects to pay down approximately $100 million in net debt this year [11] - The company has approximately $54 million in cash on hand and $370 million in borrowing capacity under its revolving credit facility [19] Q&A Session Summary Question: Thoughts on the election and potential changes in policy - Management refrained from speculating on the election outcome but noted a strong track record of providing services under both Democratic and Republican administrations [40] Question: Update on the D. Ray James facility contract - Management suggested that the extension may be related to the challenges of transferring populations during the pandemic [41] Question: Contract modifications for Desert View - The modification involves the use of the facility by the US Marshals Service [42] Question: State budget impacts on contract renewals - States are taking a wait-and-see approach regarding budget impacts and potential stimulus bills [45] Question: Progress on asset sales - Management is progressing in identifying facilities for potential sale but has not completed any sales yet [46] Question: Update on Nebraska RFP and new opportunities - The Nebraska RFP is moving forward slowly, and ICE has issued a request for information for capacity in the Northeast [47][49] Question: Cost trends and COVID-related expenses - The main savings have been in labor due to lower occupancy levels, with some ability to pass on COVID-related costs to customers [52][54] Question: Capital allocation priorities - The main focus remains on debt repayment and maintaining dividends, with share repurchases being a potential option in the future [56] Question: D. Ray James facility relocation timeline - Management estimates a three-month demobilization plan, which could be extended by the Bureau of Prisons [65] Question: Contract retention rates - The company has a high contract retention rate, with only a few contracts not renewed due to COVID-related challenges [55] Question: Refinancing options for 2022 notes - Management is monitoring the market for refinancing opportunities and believes there is access to capital [71]