GEO - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the GEO Group Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Pablo Paez. ahead. go Please

Pablo Paez

Zoley, Good us operator. third and you Chief will Schlarb, President Financial are business thank quarter XXXX Executive Thank today's and discuss morning, Dave our Care; of Detention. & development Ann discussion joining George GEO current today of third us for results. Group's President and of Corrections for Officer; Chief earnings activities. This Officer; Evans, you, With GEO everyone, Chairman the quarter and Brian Donahue, morning, we results GEO

basis We will will with press the investor a live This information information. morning. session. supplemental results website and also issued question-and-answer release this GAAP from non-GAAP our discuss is being we is conclude the reconciliation included on we call conference basis A call in Today, disclosure basis at investors.geogroup.com. non-GAAP webcast to

we current Safe information in forward-looking today, the of to and beliefs response of the respect statements fall These are within the your intended provisions forward-looking the give statements questions, to much will may include to various laws. expectations answers our we securities matters. Harbor discuss Additionally, with regarding including

George this in Commission over a XX-Q may Our forward-looking Securities as those George? factors call Chairman reports. materially With result Zoley. X-K CEO, and filings, me Exchange our contained turn of to allow in differ statements, and to including the various XX-K, the from actual results Form and please that, our

George Zoley

conference you, Thank morning good everyone on Pablo, and call. us to joining today's

very for and year. outlook the pleased balance quarterly the are with results We of strong our

estate real our reflects portfolio. Our continued financial performance across services diversified growth and

number specialties. experienced we third a the quarter, occupancy eye improved rates our During of across

organizations led fully reentry in in of census among detention New we Jersey the Delaney now have approximately facility. sector. corrections CEC corrections XX,XXX recent fifth all the the knowledge the largest acquisition an at the increase which provider makes Hall largest integrated in our worldwide, and programs, We our unified beds also to With private reactivation GEO, saw of private our world. our which And

of end along approximately the approximately across beds number had of third facilities facilities. beds XXXX idle a at active underutilized the of we with quarter, our available As XXXX five

and this to opportunities these continue actively bed market a capacity of available there assets. to number are believe deploy We

we've in generate a basis, incremental the full in As disclosed $XX combined and XXXX past million utilization. EBITDA these adjusted beds $XX on annual available million between could at

beds opportunities. the us Prisons Taft procurement We Bureau are also June Proposals known XXXX mid-XXXX. management At beds United with due for States. XXXX in BOP currently than award provides The facilities XX involved new under under development for to CAR the with more federal but anywhere compete up the CAR than XXXX XXXX existing of several not an not were for rebid. The in beds opportunity an located of less level awards XX-year expected to for procurement facility contracts publicly in beds business XX the provides in continental California

inventory. beds open Instead this the submitted bed Proposals that Proposals management In area late to facilities in which for in XX-year expected center. their processing processing in were were developing to Houston expect also and procurement of January an are awaiting we're able idle pending contract we Florence has the facilities have a ICE We our to in XXX center XXXX. under in XXXX under a Arizona known propose late new award. awards in ICE in we're government-own procurement. risk with a due July rebid Texas, we XXXX.

additional issued has XXXX Proposals award Additionally, this a procurement submitted year. and City of submitted ICE Kansas made for to were to area totaling we several month the Paul, capacity ICE state beds. the ownership replace locations, has Earlier oldest Saint level, is Antonio Corrections for an Proposals of the January, procurement expect including information Department Lake during the September Detroit, end by in Chicago, the services prison XXXX state's prison. San up for be contract one for also the pending fourth responsibility. to transportation of the request in in of for and the quarter. were facility the a a a At bed expected Salt development and decision of

readiness to for at our is expected X. in project $XX Ravenhall annual essentially revenues generating project is intake is tomorrow to achieve to in XXXX sector, bed international November from prisoner The fixed contract Turning begin the Ravenhall Australia scheduled million ICE and transport a one. price operational day

Centers next expect Parklea undergoing Scottish and a expected New in Wales to XXX court escort prisoner In Government and the our to and UK XXX venture services respectively, the and to beds of add decision for projects Junee our by year. we are approximately joint submitted completed South transportation expansion for are Additionally, a be March in that which proposal custody XXXX.

to Finally, earnings remain believe we program, and the our our of helping GEO our rehabilitation growth U.S. at allocating GEO citizens. investments focused flows. of million Continuum GEO in of Care our we society as implemented in Care facilities always, our that reenter tandem employable the a to the offend dividend This our with value effectively our when those million remain at about strongly cash Continuum care we we are goal XX the productive we year, in as excited $X in to capital shareholders have doubled maximize growing on expansion in of and for XXXX. with $XX our compared best in We And which have

to will our Evans, our ask results review CFO, I and Brian Now, guidance.

Brian Evans

GAAP per everyone. and earnings morning million, morning, we reported $XXX of and to per $X.XX quarter of million George. third you, This construction revenues Thank quarterly including revenue. of Good in AFFO $XX share $X.XX, share

contract our activation results our quarter company-owned several reported third facility in Excluding the XXX-bed XX.X compared Georgia we quarter of January, the adjusted Folkston, million of acquisition the of basis including net ICE per third XXXX a M&A our number reflect in year quarter the share in shares refinancing facility. and results related across expenses, XXXX, on income of new issuance second this from of the credit the third to closed March of at reflect CEC items, March, Sequentially April. quarter ICE our our which $X.XX rates higher a stocks the common post-split occupancy of in

apprehensions protection, double year. at Looking and April than U.S. recent monthly data more this the the Florida most Southwest customs August from to of from border along

shutdown experienced The census increase reactivation in reentry the state led of York. the New to in third also Jersey earlier in the Jersey a During operations higher facility New as quarter, restoration in a our July. census our overall Delaney programs Hall result funding our funds government New we in of overall also of

Although, at we facility. available capacity to have the continue

$X.XX to in guidance per of Moving a million earnings revenues range to quarter AFFO in share on of million. $X.XX, to for $X.XX per the the our $XXX $X.XX, we balance guidance of $XXX a share of fourth and our year, confirmed to quarterly have range

November of at Xst. transition of end our BOP to is the million continuation Ravenhall managed-only with Big quarter facilities, December first fourth approximately that to at Xst our in items. and acquisition quarter. which of activation XX-year the Spring on to generate final began occupancy The November facilities $XX The Allen, the Louisiana the XXXX-beds, facility financial financial for which quarter level. normalize we contract with with third Texas beginning of the of of cost expected the the in Our expected contract new approximately our Australia annually current occupancy the census of through and reflects overall end programs, experience guidance higher CEC during results terms related our ICE August. following Jersey company-owned terms at discontinuation contract improved reentry New at the previously announced the and The at rates operational X,XXX-bed XXXX, The continuation

to year, range we expect in a billion. to income share, of per attributable revenues full For net approximately GEO $X.XX $X.XX to $X.XX and annual of the be

to per adjusted full $X.XX full net $X.XX, to income year $X.XX AFFO and share year of share. $X.XX a expect per We of

under $XXX in approximately capacity liquidity accordion we our in $XXX an under million available to credit at our million addition feature the of credit revolving Looking position, facility, have facility.

to growth million the which third spent XXXX, expected quarter. of in of of end our of the approximately In million through is cash, our $XXX terms uses $XX approximately CapEx be

also month, our We this of $X.XX $XX per have declared share board Earlier approximately million annual principal quarterly in debt. of payments annualized. a dividend or share cash $X.XX scheduled per

quarterly payout we dividend Dave With Detention basis, for with the will of As that, GEO continue we a targeted XX% to you of segment. ratio have & our a on in XX% the Donahue committed call to review a evaluate to to past, will turn AFFO. Corrections of I our

Dave Donahue

good and Brian, morning, everyone. Thanks,

United the throughout from at entire remained GEO the Corrections state year. segments Detention & segment Looking our has stable our States,

including facilities Mexico, In states, Arizona, have and one and and Georgia, operate We California, Indiana, nine managed-only long-standing more these New And Georgia, California, four Florida, of Florida, the through we facilities. Oklahoma states, manage Louisiana, in remaining owned Oklahoma, Mexico, Virginia we states, four our Arizona, Indiana. Virginia, partnerships and New contracts. or state-owned

we've And facilities Care of we programs, relationships budgets. the about look company-funded Continuum correctional $X.X expand eight more of year are been state one has state by at expanding our GEO four expand state allocated constraints. being those now beyond without we the program Graceville And our legislature As a GEO of our Correctional able our in facilities. at provide the the picture, launched have excited In within additional than we've state at facilities to states. our customers impacted funding Facility. Florida, to this to dozen delivery to budget services all high-quality budgetary been state customers the our GEO continued which programs opportunity stable Across but million

for considering quarter. ownership expected with procurement new also which in Several our to customers facility opportunity of states are for face many partner Bay older under state the be probe to continue of a discussions cost-efficient Green new has of a to of across contract September Kansas we We prison average where replaced state country. fourth was area. to facilities X,XXX-bed with states with related a in the XX to facility of decision and about proposal begun procurement approximately new Wisconsin process need The development states to replace capacity state's facility. has new gun years. from the Proposals development the submitted more this the the oldest ranges state facing state's constraints. the the facilities. remain a state to undertaken one prisons, presence, challenges And optimistic and Similarly, have the policy XX prison during the In to oldest the of a prison replace the located

a issued solicitation facilities well prisons. XXX the the oldest month were additionally decision. for Proposals potentially In this facilities. leasing and state's we're As Colorado, of for private as Corrections existing currently the for this of Department the at awaiting earlier replacement some beds contract procurement submitted of

Michigan, Over and more older, the costly of couple other years, Oklahoma existing have several also development to use of the of for states, facilities the last discussed replace including facilities or facilities. proposals private Alabama

our to Moving federal segment.

with $XX U.S. we're Marshal year. Service. currently a We a to enjoyed and Immigration have under October X,XXX-bed be in million. center of XX-year with Bureau will approximately services Enforcement of new the The cost Prisons, awarded XXXX were partnership In the expected providing this Texas, and by earlier we a of in area new federal expected the million and new is contract for developing Customs ICE government, processing center the three-decade-long and $XXX completely annualized ICE Houston revenues we

the beds a award the it XX management with our the opportunities, service X,XXX proposal services CAR submitted the July, end submitted is California the in procurements to by awaiting in submitted beds XXX currently the in BOP Texas. pending two an the new June proposals at the Florence, up procurement, facilities. transportation criminal the previously to facility housing contract begun for contract. Proposals in As touring has pending expected were manage populations. BOP also alien to and The BOP the and late-XXXX. San CAR proposed facility XX of submitted BOP Taft, of has has for new for contract awards contract to facility, the expects Arizona has in XXXX solicitation, we Under center. were the relates severe government-owned January with the their management Under Proposals Antonio, a and an decision. procurement and existing facilities XXXX this operated the under XX-year award processing January in were ICE of year. the we're ICE between decision for solicitation rebidding

information Chicago, for are Lake facilities To process as which combined In aware basis Paul briefly Touching resolution this be up and end a Congress issued short-term a Detroit, City expected the areas. of over these included new September which for provides on you earlier XX,XXX Saint month, would beds. ICE the request have the The Finally, On government federal Salt in existing to sites. pass located budget consistent funding be year U.S. to XXXX the facilities the detention funding year. prior for funds be approximately continuing levels, with may the beds. continuing ICE spending current the through for fiscal resolution. the

projected Appropriations beds This for ICE in House Justice over removal we XXXX enforcement reflected operations would the As current for and above the XX,XXX quarter, billion increase which $X.X the to fiscal daily $XXX an an the for funding from federal Appropriation's exploration an up support fiscal increase included at increase million markup towards for the House of continuing of the and to funding proposed ICE in U.S. officers, XXXX The summer in the XXXX. U.S. beds expected reported funding average With of funding in increase agents over year. approval the Marshals end. population million represents will of following the for budget. ICE approximately additional released bill Marshals the Department provide year's $X.X detention the of prior government levels. resolution respect an increase last XX,XXX as approximately to of staff. billion detention of under support as This fiscal markup XXXX million of BOP spending increase Congress marked that detainees the prior well represents included for to $XX $XX work of the year Appropriations the House the fund in XX,XXX balance a the year is

Parklea facility revenues Prison our payments investment operation contract million in outcomes. Australia. million created for the annual project International provide $XXX expected tied generate additional rehabilitation Growing $XX inmate New of a is facility The to expected beds populations Corrections two occupancy linked have Centers in Wales undertaking Ravenhall by need, at fixed Victoria. approximately to November and contract be Australia approximately and reentry of plus facilities this South need inclusive our important Junee achieve projects the GEO to in cost markets, are tomorrow totaling XXXX. operational the Xst. for payment Moving the XXXX in and our This to will the meet XX-year service and quarterly for to expansion Ravenhall of in the XXX a for intake XXXX XXX are bed readiness capacity is bed respectively, with $XX completed scheduled which prisoner million delivery approximately of To under

of the call under trips review of vehicle submitted for based venture Scottish variable a to services I'll Ann? and the joint the proposal the court for UK fixed over our At this number of payments GEO turn Ann our payment prisoner segment. on Care time, escort with a movements. along Finally, a to provision government monthly custody and

Ann Schlarb

so a active you, GEO financial morning, Thank we're of operational good pleased and performance and Care Dave, had far everyone. our with very four has the divisions. very and year

During New the programs. reentry our experienced our Jersey overall quarter, higher census an third division in

of in in our a the was and we recall, New Ultimately months. impacts results July. utilization may in two had facilities As funding our the shut-down in the State of budget last you the the Jersey, for restored and decline ramp the state utilization temporary enacted rates experienced of up early the a programs experienced over beds we which government

than in New FX the a our platform to opportunities the We've to non-residential residential following our represent York submitted about and proposals new quarter we projects new during reactivate identified were opportunity. $XX acquisition fact, programs County. revenue Delaney of These more We for several funded business reentry able very Union million potential expanded Hall reentry of annual CEC. and state programs. our third and provide facility incremental number in have In to remain optimistic

stable across our terms facilities. continue rates we services used our experience In to utilization business, of

segment youth a marketing our are has consolidation Our past of number of initiatives. maximizing years constantly after of evaluating the assets the our portfolio to facility utilization and stable used undertook been and we ensure our team for We're couple programs.

electronic a BI business new utilization number level, division, steadily our ISAP last of state the continues quarter. to monitoring with opportunities. our Moving has At ICE pursue over the the to local BI contract of increased and

expressed you past, the are we our program. GEO Care have very Finally, of we Continuum excited in about

of Care imprison integration of services. the program Continuum with evidence overseas support rehabilitation GEO post-release Our faced our leading industry division

line a have improved see the improved at country community invest been rehabilitation by outcomes we're and meaningful facilities the number turn I remarks. results for time, programs re-entry back to undertaken efforts and We around programs already will rehabilitation to implementing recidivism to in recidivism. that been At with is his reduced focus government and agencies George our reduction closing We a starting call and on of our these this believe programs. meaningful an

George Zoley

Thank you, Ann.

very performance our and are strong the with for financial year. balance outlook of pleased We the

Our new on growth management opportunities. remains team focused capturing

shareholders. long-term allocation carefully create capital for We our continue to evaluate sustainable our to value

those this to recognized the excited and have are to We I'd our world at be call. in are who believe as We dedication our care and of our thank Continuum demands best the when trends rehabilitation the corrections reenter strongly employees And success to all optimistic professionalism trusted of we largest Their many employable customers and that by and in to about the fifth worldwide, our society our and of are our those in are allowed company as of programs. any are and productive like forward helping to look Care become diversified continued citizens. them of the our listening We remained further business GEO GEO on the unmatched who to segments. best-in-class. us we and lives about organization better commitment

We are questions. now to call happy open to your the

Operator

Tobey Thank will you. come our from question Instructions] first SunTrust. of And [Operator Sommer

Unidentified Analyst

for Conte Tobey, on questions. Hi, [ph] thank this taking is for you my

First up, drive in XXXX? you. up how how interior will enforcements of we border from enforcement, the about ramp crossings think ramp where stages beginning up is ICE still do should in we growth sit interior and population the on versus ICE the Thank population

George Zoley

interior still steadily enforcement of combination are now in occurred increase progressive enforcement. see to border forecast and crossings quarter with of for year. fourth it next the we a early as overall and stage we think as as I the the expect third we interior And during senses the quarter we for

is they there request ICE establish primarily capacity driven enforcement. expect by are additional facilities as for for around to an interior additional think issuing awareness the the need the I So, is that country for different that information locations due to additional

we believe combination future and a border So, that to crossings. enforcement to will the stronger of census increase looking by the of interior virtue with continue combined

Unidentified Analyst

Got And ICE the capacity or ICE four acceptable the new facilities different build construction RFP ICE? in bed How meet regarding there it. we for cities, to requirements. new to for new CapEx appetite GEO's think facilities about is the for maximum recent should

George Zoley

GEO approximately an which provide we for the contracts, be XX years. builds for particularly of the of I length of RFs appetite a number such new estimate think to facilities, and with that locations kinds a will these has contemplated, the a new

we're those very opportunities. So, interested yes, in

Unidentified Analyst

it GEO, the now, the XXXX? is solutions push for likelihood spending estate Is Okay. in this by a likely And more only Thank it real up deal on of year? that of me get estate will you. lastly what new end only real for

George Zoley

towards beginning or year, part to few left we of year the of made there the Well, some of end only months the at end the next next early is at of before be a year, expect decisions this an year.

Unidentified Analyst

very Thank much. you

Operator

question next comes our Bank. Deutsche of Kevin McVeigh And from

Kevin McVeigh

ice the any Hey revenue increase was Brian, on other factors? or can you the drove that help guidance us what side, the specifically understand, in

Brian Evans

it just was the they better a was to revenue both construction and expected main was project in related third previous the up, winding catch here then from timing I operations in is the down of the and driver perspective quarter in begin November. think of remember think as I this the constructive quarter, off some facilities Ravenhall basically quarter, is

Kevin McVeigh

the And Got on then, it. us the up is managed-only, owned where it is in said, Ravenhall, the least? or going on just can income that at to you that remind statement, be in

Brian Evans

Well, but or so, facility, in investment, have return interest do the, be it's revenue will and And the operation operational piece line then we to line related a income be in equity there equity in managed-only some an investments. either margin. will revenue that obviously the the

Kevin McVeigh

it. then of of kind thoughts on Got vetoing thoughts on potential state it, Brown in folks? that for EU And final my was any populations, got question any the impact Governor you terms

George Zoley

that clarify vetoing? question Could you

Kevin McVeigh

and the was think prohibited trying that would I acting an understood law out use state I bill, of George, vetoed act it. California of the of to from he Yes, legislature that facilities, an as

of So, actually industry. of kind open. keeping that anything Is there or the options there good I in just California, think his potentially kind that's out is for

George Zoley

there I hope And be need of understanding a they ever their that eventually point Well, out my this or remains increase. continues beds. seen to that they is not, won't to that get think because whether population state to is

Kevin McVeigh

Super. Thank you.

Operator

from Strouse our Mark will come next And of JPMorgan. Instructions] question [Operator

Mark Strouse

taking questions. Good my for morning. Thanks

your to to beds? what you question, what percentage, the beds regarding wanted idle kind mix just able using be of an your I existing kind of So, earlier facilities ICE. on of potentially or could follow-up those met say Are

George Zoley

couple certainly really in can't for RFI, XX% We say, have the a to maybe that XX%. our to qualify response facilities of use, we

Mark Strouse

beds could understand RFP, far Okay, okay, another - it when line? come just, I then that's potentially on but still timing expectations an your helpful. where are of as those as And

George Zoley

I say we'll come one, by contract an would late let's the within they'd a XXXX. on additional decision locations, capacity meaning as next I year, if think up line, next forward the on January move like If would year, receive construction it take they it's RFI new that early facility, that as following another. what think, would they and existing if of is it's facility, RFP Well, far

Mark Strouse

Understood.

Okay, thank you very much.

Operator

the over to this Zoley remarks. our session. And like back turn George would concludes to closing any question-and-answer I conference for

George Zoley

for this Thank you. the listening conference to soon address call. third We into look next you all quarter call. forward Okay. on Thank

Operator

is for attending Thank now conference presentation. concluded. you This today's

now may You disconnect.

The GEO Group, Inc. (GEO) 31 Oct 172017 Q3 Earnings call transcript