GEO - Earnings call transcript Q2 2018

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Operator

Good morning, and welcome to The GEO Group Second Quarter 2018 Earnings Conference Call and Webcast. 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, this 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. second and you Chief will Schlarb, President Financial are business thank quarter XXXX Executive Thank today’s and discuss morning, David our Care; of Detention. & development Ann discussion joining George GEO current today of second 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

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

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

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

George Zoley

and Pablo, good everyone. you, Thank to morning

business segments. balance results across diversified improving the reflects with We year, trends with are our forecast quarter pleased of for the second and our operating our which

which we Consistent quickly to This into second rates trends our During the indicative with higher modification contract ICE add in month our partners. to government ability it half across as was of the of needs effect is expect second and segment, utilization beds the experienced Georgia, that year. of Center contract which evolving this to the Processing we these Folkston for took modified our was previously annex is respond existing XXX the our continue to an quarter, company-owned idle. past recently federal

agreement new open At We the Montgomery to beds, awarded into of the an have also ICE This renovations in September undergoing this and of scheduled standards. County, XXX Eagle earlier approximately Texas completed for of Center Idaho's processing to extension which at state resolve, reactivation for expansion in year September a which out-of-state idled Texas, level, is we is represents our this to will Texas. inmates XXX entered the in Pass year. we X,XXX-bed meet development of center had Karnes the contract emergency house and facility, the two-year of State which were presently Correctional Idaho substantially the our Idaho

strong quarter. also segments business Care during the delivered have second GEO Our results operational

to be United enhanced the Australia our We Care trends continued optimistic of the also and Ravenhall continue for in GEO programs offender to implement center overall GEO services. XX facilities our about across the rehabilitation We've of Care at States division. Continuum

daily enhanced through and these reentry have our are segment. expand started We already rehabilitation correctional community to in additional recidivism efforts at to services our proud post-release of facilities reduce very and programs

criminal-justice company. that area a Our of efforts as reform important our in underscore this belief

those productive helping We are citizens. reenter employable best when in care society as and our

facilities. idle to approximately which are beds ability of of are real There solutions. total XXXX, or management and platform our balance some participating the of estate, to we the active optimistic procurements, diversified pursue across growth forward could of result XX,XXX in opportunities and in, remain which opening Looking about our underutilized several our we programmatic

the stable Texas our we supported dividend predictable to effective facility. reactivate allocation the by our of Folkston, focused capital activation in our that already idle We we've capacity Pass, Georgia enhance and on is shareholders, long-term Annex the value our and begun for are of cash some Eagle operational believe pleased of We to with remain flows.

times common this believe we we To for shares half stock end, undervalued. $XX We also that with our can that million shareholder recognize we purchased value stock during first X.X is repurchases of when enhance million the at our approximately year. of

any before be begin policies Company the ever families. like minors I call provided house Company nor clear, turn Finally, of briefly of has facility or of services purpose. our I the integration for Brian, that and over unaccompanied not these To separation address coverage does to and would to manage transportation any our that recent

three processing of care last both services for administrations. decades, Democratic under ICE adults For has our Republican centers federal authorities the providing managed Company the in and

agencies residential have operational also ICE and together when managed Obama for and by monitors has constant their XXXX children which established federal Karnes special by ICE by center, was organizations. with scrutiny family mothers the GEO it facilities under inspections crediting exclusively the cared We are on-site administration. since

federal immigration or Evans, our provider and high-quality the always our long government, review our outlook. At for three-decade time, enforcement this providing we've results against a to been or policies. CFO, And and to has on quarterly advocated As service Brian never detention remains services. focus ask I'll

Brian Evans

revenues to quarterly share morning, Thank you, George. second approximately GEO reported Today, on million. of quarter Good diluted net we $X.XX of attributable $XXX everyone. income per

loss legal after-tax on results million by of a with offset $X.X number which in to reflect we year. acquired our of last Mississippi escrow associated Cornell by previously of release and held the expenses million GEO in the were XXXX. contracts $X.X items, acquisition settlement in to GEO related after-tax, management items CEC These Companies, a amounts and involving connection debt, with extinguishment quarterly $XXX,XXX Our including of a

as of XXXX, share. million well Big as XXXX attributable items, overall per AFFO interest expense following Compared higher net the of these to debt of as first quarter reported the in we reflect which XXX year-over-year and State Ravenhall XXXX. of activation $X.XX the approximately facilities, beds terms for disclosed Spring first the outstanding had we contract XX-year Excluding pricing the out-of-state of for of during also began of quarter higher net with Texas emergency results the $X.XX items: first balances. diluted quarter increase and The XXXX $X.X previously activation income adjusted to The XXXX. rate December interest our Revised of November X, under the contracts Idaho on Australia our new of project

Moving for balance for guidance quarters. and of our have and the the fourth to the issued we the outlook full-year have updated XXXX, guidance for third

per income attributable diluted to GEO net $X.XX be on per We diluted share share $X.XX to be in income of a and $X.XX billion. $X.XX revenues expect range a approximately annual $X.X to to net adjusted full-year diluted in share share per range to in per diluted of

share. We be to in a expect range $X.XX full-year AFFO of share per to diluted $X.XX diluted per

XXXX, income $XXX revenues a and the per $X.XX For share of to attributable to a in adjusted net we GEO per per be quarter income $X.XX $XXX be in share to range net million. on of third range expect to million $X.XX share to to $X.XX of quarterly share per

expect third share and quarter to be $X.XX AFFO for diluted We XXXX $X.XX share. between the per per diluted

of the of in $X.XX GEO net share, attributable quarterly to $XXX to revenues to per million quarter range million. $X.XX income For XXXX, per $XXX expect share a to on be fourth we

be XXXX $X.XX the fourth per and AFFO per diluted share diluted between $X.XX to quarter expect for We share.

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

of uses to year. the was our $XXX during is approximately in which CapEx spent to approximately the cash, Turning million of half first XXXX, growth expected be our of million $XX

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

call AFFO believe and XX% is operational At by it payment our within Detention well review we the predictable payout segment. Our of of XX% GEO for flows and ratio a cash dividend this the time, over to Corrections is stable Donahue turn our of I’ll Dave & of supported Company. guided the to

David Donahue

update Thanks, I’d business give Brian. an Corrections Detention to our & everyone. GEO unit. morning, on Good you like

emergency Department and a of Correction. with State second we of $XXX our Looking segment, into company Correctional Pass housing at The of million security at the earlier our Karnes entered contract Karnes the house during Correctional inmates two-year entered Idaho, Idaho had of Center. owned Texas. our quarter, Eagle at an we inmates in medium represents the to XXX facilities with State This the expansion year this into contract agreement

revenue. our are September facility for during on second We XXX-bed, renovating a to standards The X. we're expected entered quarter. annualized into five-year California, to and to Eagle renewals pleased meet is company-owned In full the for $XX facilities correctional Idaho four in contract our Pass are million contract activation generate approximately have new scheduled

of The facilities the the of XX has and state’s in the And Center, of company-owned more one new approximately into our contract to related we of a cost-efficient to Correctional facility prisons competitive years. states In We of or use improved continued Lawton are or number average under contract State ranges the which also with State funding. of The correctional facing age older five-year replaced new discussed Vermont which currently A with of a inclusive operate, the privately of to out-of-state the we more are we a XX state facilities. month, for Department entered where XX-year constraints, of developed for for replace development or financed for management the years new of customers state with from new facility. of states facilities, and in to into was and other prisons. capacity to Wisconsin potential new facilities. Corrections. challenges past continue entered a states oldest bed, many of face successfully retained exploring to need Several options a Virginia discussed be new also renewal contract, Oklahoma, development the our has X,XXX facilities X,XXX-bed operation replacement Virginia, rebid. This Lawrenceville option options jurisdictions

continue throughout seen Federal expect increase in our the we as ICE to country, Moving this our capacity. segment, to and seeks populations a trend additional we've ICE steady

example, company-owned for in effective from The XXX been the process X,XXX new add ICE company-owned ago. idle. last ICE month, contract two became has contract beds. The Georgia modified Annex, was which XXX-bed weeks our the an at beds contract Folkston to For we've previously intake the Center Annex Processing began is ICE expanded for and existing

XX-year the for with the has a of the to the solicitation, Prisons XX year, in federal center ICE in award facility procurement, quarter. the ICE Center investment aliens. be criminal The for CAR beds approximately is the Bureau the facilities. is XX and With of decision is contract revenues activated processing cost expected to quarter. million. County, the expected contract An to Montgomery existing few respect July add the $XX June XXX to Additionally, the beds. the which this our contract Aurora rebidding procurements, award management Center, Texas, BOP of this completed an from solicitations for beds the contract was at development XXX were ICE. increased active to have expected total Processing of pending effective of up $XXX center the BOP at CAR annualized last BOP Montgomery well. third expected as California capacity Under we is X,XXX generate management submitted expense the is Taft, to decision facility. the The housing X,XXX-bed the supported new most million September is and to contract X,XXX-bed new government-owned In ICE for substantially exclusive center fourth expanded which Under proposals with during The award GEO's ICE expects which also in by

on We an the Arizona pending ICE procurement the award Florence, decision are center. of processing the from XXX-bed management also for awaiting government-owned

markets. Now international moving our to

our is escort begun in This joint new operational Prison in Scottish for the important with approximately contract the generate expected our readiness takes to $XX which revenues annual our court next for GEOAmey early services XX-year with preparations Scotland. provision We and venture. joint prisoner of year, Service effect have for new million custody contract venture

of New South undertaking projects. in growing the in in currently are Junee inmate expansion facilities Finally, Gorrie the of need state call operate At populations Care turn Ann for Australia, several the this Wales review capacity we Queensland in over segment. Center and jurisdictions. I’ll the Center Arthur GEO to Two for Australia, additional a Ann? continue our drive time, in to

Ann Schlarb

you four Care GEO Thank on division. you, reentry to update beginning morning, our divisions give Dave, like everyone. and our good GEO with I’d an

ongoing Following review Centers in year, have the Education utilization assets. of an been last April the Community maximize acquisition our acquired undertaking of we to of

services order opportunities opportunities services assets part remain number provide expanded significant reentry this achieve for in we the identified As reentry about treatment of continued synergies platform. our a to economies identified effort, of us incremental scale. of larger our our allowed potential. to our optimistic of under new have use customers and We business number revenue annual of that potential efficiently consolidation high-quality more maximize for We've the have representing a revenue segment, in and

utilization terms first of experience Services we stable Youth our year. half of rates our the the In across continued to facilities division, during have

of Our our efforts Youth after ongoing segment. segment years similar initiatives number for undertook marketing Reentry a consolidation remained stable to has in our several team our and

Moving local to the number of a state expect our second division, BI of the of electronic business with second contract new to ICE and our utilization monitoring to At into the experienced increased opportunities. carryover the we during pursue we half quarter, continues year. BI which level, ISAP

our Continuum and expansion implementation Finally, of we remain programs. the very excited of Care about GEO

Care treatment of of Continuum address basic community services released support GEO post-release that rehabilitation in-custody cognitive enhanced programs, individuals. with including needs behavioral integrates the Our

GEO implemented Institution, have XX D.C. on of at facilities GEO, Continuum behalf Bureau Rivers operated programs individuals houses Federal which our We including Washington Care of Prisons. of by the Correctional

begun the program prison is and reentry at We segment. expanding believe U.S. at that Federal programs line with in being and and already our reduction and facilities have levels on undertaken focus in within additional rehabilitation criminal these recidivism the GEO State correctional our justice reform efforts We

to We that opportunities call for time, our us will to across At will Care I diversified closing our GEO his allow division. new quality remarks. expect growth turn back this the efforts pursue George

George Zoley

you, Ann. Thank

performance our for which the our with across diversified our improving year, business the quarterly outlook segments. operational and trends pleased of are balance We reflect

Texas of Idaho activations our the X,XXX-bed about Pass for We facility two inmates. XXX-bed County, are and Texas our ICE out-of-state the idle include which excited in September, facility in reactivation Eagle new facility Montgomery

in additional in participating which several facilities. reactivation of idle are result could procurements, We active the

Continuum thank worldwide believe value allocation rehabilitation offenders. order and enhance thousands of enhanced its of capital expansion like continue as reenter helping the and program GEO professionalism society strongly in always, dedication created to employable our citizens. would We GEO to success. of to our about carefully facilities and And to our all I We success in tens We that best has our our of productive of excited evaluate shareholders. as employees, we whose long-term for remain XX into Care those care at involving our

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

Operator

you. Thank

first begin go will question session. question-and-answer Tobey Sommer our SunTrust. We Instructions] come will The now with [Operator from ahead. Please

Kwan Kim

is you This taking Hi. Kwan Kim Thank on the for for Tobey. questions.

time that First, federal line vice on opportunities and shifting could the and seeing, international into pushed been you. opportunities talk you levels? versa got Thank of the you've potential XXXX other new states, that

George Zoley

mind. Well, I of specifically to we said I fourth year more always side, and Nothing think level, procurement quarter. BOP latter At don’t not in the in half the would comes said we think the the come federal that. the

these to there's next – in occur believe, Scottish just always was they'll are scheduled contract know when begin, could guesses. of January Although I occur, the All tomorrow. year. we for they don't certain And

So that changed. hasn't

two So those your how other to better areas, question. address certain not than I'm

Kwan Kim

levels the Okay. the new on And contract of the additional and activity second implications on could with half of ICE of border Southwest you beyond? XXXX in comment elevated crossings

George Zoley

in resulted of seen as the the entities around the think private stories in country, and additional capacity illegal this about governmental out I ICE daily the number with increased border as sector. has both crossings you've media well seeking

additional actively Company. in where year illegal seeking trend capacity seen we contracts out and call contracts in think of a And with the their compared We've is other with there I because today's I companies additional to announce we've our crossings, last increased ICE that new to this year our expect growing companies. is announced think colleagues continue. all trend

Kwan Kim

you Got it. very Thank much.

Operator

The JPMorgan. be Instructions] Strouse go next question with [Operator will from Mark ahead. Please

Mark Strouse

for Thanks our morning. Good taking questions.

color $XX up So EPS that think kind think Is EBITDA just it you. million, guidance Brian, but is by took expenses? being and us earnings we just fiscal to couple for simply of like there something there? conservatism The from more with XXXX guidance, their midpoint. just a that I towards the year the for prior where you give million $XX regards you revenue pro should about narrow forma Can range, or looks

Brian Evans

specific think expenses. No. there's don't anything I the with

impacts we online it's performance it'll the and coming from margin are year, see for them projects so will Those off. disconnect just those I I ramp-up think those during we be are as perspective then contracts more, late that it's from would There discussed and positive some third this normalize next start really quarter the that think, fourth more But quarter. a year. year. normalize a the it's early little next periods

Mark Strouse

then that bought below bought back the and sense. that how $XX makes Looks just Okay, of back stock you just of number we think that rough million, the lastly, Thank the shares math the you. of now amount about on pace should that curious during north of you And spent. the kind is buybacks you the shares $XX. like

Ann Schlarb

We don't target continue forward price we'll look going monitor buy shares specific requirements I the shares. not will monitor. But to our or stock at think price. continue set and capital we to where we

at and are today. think again, repurchase a we average senses and we effort. it we'll than continue lower as to if But that price make made opportunistically you where stock think noted, those I purchases we

Mark Strouse

you. End Got it, Q&A Very okay. thank of helpful,

Operator

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

George Zoley

forward We next addressing for you our you participating thank Well, in in call. conference one. to this look

Operator

The conference for today’s Thank now you presentation. attending concluded. is

now disconnect. may You

The GEO Group, Inc. (GEO) 2 Aug 182018 Q2 Earnings call transcript