GEO - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to The GEO Group Second Quarter 2021 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead, sir.

Pablo Paez

Thank you, operator. thank GEO joining earnings Group's and discussion for results. everyone, The of second morning, you us for today's Good quarter XXXX Board; of Ann Schlarb, With Chairman of GEO Officer; George are James President Services. Evans, Jose Black, and the President Brian Officer; us Executive Secure Gordo, Financial Zoley, Chief Care; Chief GEO today of Executive quarter outlook. morning, This and results we will discuss our our second

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

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

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

George Zoley

President today's pleasure Thank morning call. new everyone. Secure our GEO welcome to my and CEO, James you, myself new joining good Gordo; Black, is Brian on And our of Pablo. It who Services, Jose and to are

representative the business our second the our of with guidance results resiliency full We We and financial and segments. believe of our is strength are our for quarter the second during quarter performance financial pleased year. strong diversified increased

electronic approximately performance us at first U.S. end and our favorable Marshals’ expected driven and than segment. our the facilities, as well during XX% trends the cost the transition XXXX. Great census Since our census Plains and higher quarter, May our idle Prisons, to at better in has approximately facilities previously earnings of overall ICE same XXX% an from our With the of by Marshals the respect occupancies of facility monitoring revenue ice the an by status at continued increase to completed of Bureau increased as period. by we facilities Our was announced has increased production the

and We for idle facility use are federal marketing other and Plains our state actively facilities Great our by agencies. other

As privately of executive General, the we year, highlighted operated January with directing order Attorney previously, of detention Justice an U.S. contracts facilities. criminal Department issued renew to the this President in not

continues BOP not Our of important impacted to by to facilities the remaining renewed XXXX, not re-entry successfully BOP base in case are assumption note prison the expected order. to be correctional two resulting renewed, executive second additional XXXX. November, It will in BOP we contracts, that five during closing which our quarter is that be contracts be

several impact sector agency Marshals years, been new be In to is awarded order, contracts, inter-governmental with re-entry U.S. business our to on on performance the pleased the of pandemic re-entry our which under and direct segments. of facilities of agreements do the with for the capacity and and Marshals contracts contracts cooperate GEO or focused to agreements through instead are that contracts. the direct BOP With fact, are under are Service, a comply executive three to for which We respect diversified new residential and contract appears COVID alternatives to continuing with inter-governmental with extent to a various prison how order challenges providers. the BOP on we private lesser The assessing contract strong with in Marshals. BOP are U.S. the area, Despite Tampa are the operate contract pleased facilities we nine operate in facilities own the a primarily have U.S. we that center awarded not the first the to executive recently and service direct,

Rapid who the They pandemic, our to have strength testing We impact government in challenges that Ionization to been System. past and there financing. demonstrated invested and frontline certain recognized regarding missions a are discussed, challenges of provide compassionate We dedication $X.X the $X million half. I in XX all we face the resources in over entrusted to and have to employees year COVID-XX, continued and mitigate partners Bi-Polar Understanding our Air their devices, significant to humane out in those programs. significant agency our just a Purification including million have proud concerns during the and facilities of that care access to addition our Abbott carrying feature

We proactive shareholder over these enhance our interest and time, call review address best long-term of and are guidance. I'll to and have Brian to maturities address detail to the turn other approach to these more adopted We Evans initiatives as stakeholders believe a work we multifaceted the in results and in these address challenges. At initiatives this debt and value. our our shareholders

Brian Evans

morning, we Thank second income reported Good everyone. net quarter and revenues attributable to of you, million GEO $XXX $XX Today of George. approximately million.

expenses, attributable gain effect pre-tax million and pre-tax $XXX,XXX income debt the one and assets pre-tax million $X.X net million the on adjustments include on results to quarter of estate $X GEO. of extinguishment time loss restructuring to in a second real in $X.X at Our employee tax

diluted second AFFO items, per quarter per these net share. $X.XX and $X.XX adjusted of Excluding income of reported diluted we share

from higher facilities our continued increased favorable monitoring Our better trends, revenue and and and the segment. second our during than expected ICE driven earnings electronic performance at U.S. Marshals was quarter occupancies by cost

to increased reflect we full year XXXX than results. to these guidance have financial Moving our outlook, our better expected

range year million to of to XXXX full to of We a expect year $X.X a full revenues $XXX.X net income million attributable $XXX.X billion. be on XXXX in approximately GEO

to $X.XX diluted $XXX range a year We XXXX of per to income in a expect share. be full adjusted net a

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

year in full to EBITDA be million. $XXX.X of XXXX million expect $XXX.X adjusted to a range We

additional As in periods we November. for of Spring end at previously prison XXXX Texas, of The expiring non-renewal the option facilities BOP two contracts. projections expected have Big which Flightline guided our account and the

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

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

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

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

the of cash quarter, second approximately had from drawdown end the hand facility. the resulting revolving Moving announced $XXX in we our million to at of our capital credit on structure, previously

a step Our and to conservative decision preserve obtain financial general for funds flexibility our draw maintain was liquidity, to purposes. on general additional precautionary revolver corporate

next $XXX finance will draw including billion, expect our secured which the the unsecured proactively for options senior due on near-term XXXX end continue We on the hand obligations lease of mortgage of quarter. the including our With facility. at our in recourse Accounting headquarters. to at our senior recourse encompass down our $X.X and non-recourse hand, stands current cash address our net million maturities, not or debt, revolver revisit debt funded currently case corporate cash improving financial our course, to debt notes and to examine XXXX our credit outlook, our on and we

to our due to access have flows we able regarding and earnings future our be in concerns our We debt have Our we continued to there cash expectations on reasonable will and exceed been financing. terms. prior address believe maturities course recognize

We and have adopted a reduced this proactive address debt concern our In reduction deleveraging. XXXX we million. approach continue debt net approximately we recourse as on to by focus to $XXX

intend million progress reducing approximately our recourse and articulated toward half During debt of XXXX, and/or significant goal net first the net de-leveraging of recourse the debt by representing further reduction debt the $XXX $XXX million to remain second year. reduced of on XXXX. during we in focused half between previously million by We $XXX

target Given to $XXX to improved XXXX. reduction performance, at debt in million we increasing recourse for our net our range least financial million $XXX are

assist previously our in multifaceted of capital including announced, we various our potential exploration also to asset Our structure engagement financial alternatives. includes opportunities sale advisors us strategy have and legal of and reviewing initiatives

prior continues structure. to our tax our on suspended call, mentioned corporate we our study As Board as quarterly dividend earnings

under XXXX. our X, July payment may assets estate segment dividend At certain be the assets paid of conclude in the in combined sale beds. to non-real will tax fourth segment. generated of services evaluation the be expect Reentry With decide additional The the requirements end million. required On completed respect basis, sales On the cash. Secure order redistribution the the call sales, year we review for our over of we dividends if XXX segment. this a $XX sale these to James in minimum real we half a totaling during time, approximately to year, GEO paid would to proceeds Youth also the estate an in such our of asset before And in quarter I majority of We be REIT stock status, turn Services our meet approximately of to our in completed Black net the would of three first remainder code. and substantial maintain

James Black

you, an business today pleasure join Secure update morning, unit. provide is my you Good our Brian. GEO Thank to on everyone. It to Services

the ongoing frontline to with our challenges XXXX, mitigation the COVID-XX continued the Throughout have of half global pandemic, first we the During employees several implemented have initiatives. pandemic. associated address

quarantine, consistent by and related practices secure to for Our place policies services medical and isolation. cohorting, and disease guidance put the issued prevention, with and including centers facilities in control procedures controls

time paid needed. paid exercise We off remain to our leave continue home policies allow to and as to employees

of isolated. Abbott supplies devices so investment have facilities. of has testing cleaning COVID significant facilities, made screen and million new had available made the and quarantined $X which face we our to intake positive allowed mask administered XXX,XXX be end over facilities. us our cases to deploy at our the arrivals services a quarter, all We secure across to at Through second Rapid properly tests that can COVID-XX of We

million of the airborne systems select bipolar also to We to bacteria $X.X facilities ionization install service at invested viruses. reduce and secure spread

facilities. been facilities. our course have XX,XXX the and agency we vaccinations second health the of quarter, of had local this end make over our service been year, Over closely to secure with the At vaccinations departments available partners at government administered working COVID of all our to

adjustments previously evaluating and make operational practices. are and to completed deactivation our the we'll recent Oklahoma. With guidance other Plains and We the mitigation by our facility we in on updated Great activity, ramp-down CDC in May, BOP our continuously announced best respect based steps of

discussed order privately with contracts Attorney operated the President executive not have we in January directing to detention of this criminal issued an General the Justice Department U.S. renew As of year, the facilities.

BOP the November when As a to expire, not with the auction continue operationally be Big in end Texas, current prepare Flight that with renewed our we our at XXXX. periods the which facilities remaining including Spring contracts will expectation of and result, Line prison expire the

in second quarter, U.S. ICE the levels facilities. we experience an increase census Marshals across and During our

the are contracts and contracts a various one unlike three agreements federal and facilities crimes. contract Marshals U.S. for As operate U.S. The pre-trial we currently U.S. The near under previously, Marshals who The the the few direct contract have areas with facilities for bed XXXX. over for direct through located courthouses that XX is at inter-governmental do contracts. to are nine renewal the late offenders U.S. lesser primarily have We facilities operate to in generally times noted and up been that years, to in three their facilities. Marshals extent including agreements federal direct which house Marshals. with not are BOP, intergovernmental own capacity next detention charged under

Marshals order cover on not ICE assess U.S. executive to how of the on justice. alternatives the agencies of be executive We centers, are direct which the contracts. respect to cooperating processing to the outside department order, focused comply With various to with with appears our did

access high and provided entrusted ICE sensitive services. for amenities processing and telephone and of a double centers care and culturally more flat-screen XX/X registered processing Our higher care state healthcare accreditation quality TVs and those to include artificial areas, level pavilions are our clothing, mental by humane legal staffing have in the in outdoor is national health that diverse of and health to This All access processing individuals to by approved fields. centers dietician, meals provide centers turf our Healthcare full staffing approximately services safe to housing is treatment at multi-purpose soccer correctional our numerous needed rated organizations than who highly covered at services our facility. environment. provide ICE a health ICE and Recreational needs. appropriate rooms,

have The sessions, We have stable. XX support our into Bay, our over segment. have managed Move or most approval Moore professional to correctional facilities increases, And an census to administrations. quality provided pleased our bonuses Democratic these different of services were procurement, and state level the we state provider. at were some in Republican only Graceville under high recent legislative Florida, for for years during facilities. and state wage a funding at rebid received award In to diem which for of service additional per and the Haven increases our resulted recent facilities a remained initially contracts part

protest transition the Graceville were management able to quarter. facility and Moore we Bay Haven contract during third for a of contracts we'll the the Following procurement, the retain the and

for of Arizona, be over X,XXX a proposal care. up to Ann would has GEO Finally, either located turn with procurements, or we time, which can out-of-state. a new At I for be in-state this like call of will to for State respect review the beds, the request which issued to to to responding

Ann Schlarb

Thank good like And you, you our on morning, business James. unit. GEO everyone. to care update I'd

During on focused COVID-XX remained of our strategies. our the employees year, our half the facilities have first and mitigation

cohorting residential put our in of place measures. screening polices have and additional entry quarantine and All facilities

increased have and paid to We efforts home sanitation, to continue and leave also paid needed. remain off our on as our employees time face access have deploying masks. to And focused testing

environment, evaluate the our have the technology. reentry make virtual our appropriate often and other necessary our as operational continued programming to to practices. based adjustments continue employees and high steps and ways, in We to mitigation Despite updated rehabilitation we'll in guidance challenging innovative best deliver strive on by those to CDC quality and including through care,

our to awarded Tampa activate in a XXX-bed half the federal which reentry respect The of Area, approximately of awarded our beds, total quarter, sale has six-company to for services and division were Youth Youth than contracts July X, estate contracts, contract not-for-profit has assets, residential renewed services the our With reentry in five a second We BOP included prisons. divestiture to separate Florida on services reentry BOP non management resulted profit care the completed care also bureau reentry we the contracts divestiture real real retain GEO This lease with which division, the assignment expect XXXX independent GEO represents million. of facilities. services we XXXX. independent, entered its with reentry including new residential GEO second to the years. the the reorganized of agreements of sale the the This for center a entity. XX Youth been as recently the division, not Youth new ownership totally certain for into of in for first $XX assets estate During XXX(c)(X). of successfully our owned contract in the residential consideration more several

our XXXX. second the quarter suite revenues performance BI, are BI full strong quarter electronic opportunities optimistic monitoring from technologies. We growth with division, during solutions our future pleased X% regarding electronic by first more with than for growing different electronic shares provides market and supervision with across of sequentially which a monitoring leading of we to and Moving remain products monitoring the

transportation, treatment cognitive-behavioral the such rehabilitation, we Continuum food, placement integrates assistance. Finally, which clothing, transitional our expanding to GEO as delivery job with of including program, Care enhanced services support remain in-custody of committed and post-release housing,

in successful their served Our criminal lives. of how how system the it a of X.X be reform. contribution believe in they model million justice can and Care changing provides better criminal program justice GEO live Continuum part GEO's people the We is that proven to

winning with not award sentence in program in other initiatives or competition reforms. national conflict offender Our regarding is

In we applaud fact, these efforts.

comprehensive draw to seek efforts to of a and Our approach more incarcerated national still to need in attention the rehabilitation. many structured

call I'll CEO, that at closing believe quality new Gordo success to remarks. for this of positions opportunities. also care our continuum turn additional We time, our the the of GEO At pursue growth Jose to

Jose Gordo

execute of future talented the to Ann. the and on as my work rest George direction Thank you, strategic together pleasure management through of to It's we company. join our team, our

our you recent pandemic and have and non-renewal our of of performance access have associated with the of and strong, all sales, taken operational to legal maturities. remains the despite federal the financing, we corporate asset of have financial we address that the the these company's and today, COVID-XX concerns review to As believe there policy proactive of steps work contracts. are on our debt actions structure been some our financial challenges reduction, We heard evaluation leading the prudent regarding future addressing advisors our towards recognize to the and focus We our future tax steps potential concerns. as that debt hiring

with pleased the are enhancing remain our we financial We the on long-term business focused across value our units, and diversified of improving trends shareholders.

cash earnings entailing professional company we under the and take at with We legislative remarks. federal our years have by remains essential provided quality government diversified believe resilient and glad and services that questions. And valuable to strong by assets parties. estate will under XX we be controlled both branches both Republican and services. That And high that Democratic real administrations completes are contracts for state over and level flows supported our

Operator

[Operator with from Our comes first Capital. go Noble Instructions] Joe you. question ahead. Thank Gomes Please

Joe Gomes

guys. quarter taking Thanks questions. nice A you. Thank for my

George Zoley

you. Thank

Joe Gomes

forward normal you there expect the back that more on trend up goes percentage going to would think is is pretty what to you insight as and First would you could going question sequentially like and a level? a cause I or year-over-year. that, if of to us was both as give revenues a a looks I declined little had, percent operating dramatically wondering expenses

Brian Evans

that our Well, of it. reflect half the projections second for I the year think

facilities continue increase operating them We expenses the increase. at to expect as to populations

by this obviously even offset revenues increase. the quarter, better that one expense that and as year expected. that's populations last be of of But than last we as will mentioned in significant really increase Some the the increasing quarter, call, reasons performed we've in

of I lower a level, occupancy levels. they're we they seen been think operational cost associated that we've And take those I measures effective mitigate interventions had as especially the in as think very controls these maybe at but We're the decline the some experiencing or still level costs, of significant seen also, have we've to expense historically. COVID. that with of not were as some to the

Joe Gomes

Right. Right.

Okay. Thanks said title contracts, increased, mentioned How guaranteed a single are you for XX the payment of on we what ICE potential the that level think broken on one. or XXX%. through And close adults and border? that the have I populations you we the have across levels removal are guys' your coming thoughts minimum the

George Zoley

still think to contract. With recently significantly the With policy. a guarantees below some ICE senses, – Title media, that the in reversing in regard provided there's of to minimum as respect the I revealed delay the XX been we're most the in

that it would our expect levels are unclear reversed, be if that we we to population is – would at reversed, will as when ICE but really the facilities. increase So and if it policy when

Joe Gomes

on they're there's one inmates. the of BOP, the But XXX,XXX the July, facilities. website, is end private then still are at roughly in saying they And inmates that XXX,XXX. Okay. it BOP you capacity have says, X,XXX looking at BOP roughly

that halt going their policy the again. they calling So, there is roughly potential any, reached this knowledge, XXX, are a they if put for once say capacity would capacity capacity, call XX,XXX over it's out some math they and maybe capacity there simple, of they To that your expanding is would non-renewals? would to that that XXX, to forward or they you're is for be adding

George Zoley

respect COVID. what be capacity the have really separation levels I an of of capacity organizations, capacity as And just what facility's – than any important plays is because levels, individuals any affected COVID of into an for their with to particular with unique to don't mentioned. who true think may you I We factor insight other need the facility,

whether watching uptick to discontinue situation want they planning. we as noticed their their slight to them. were these we the them, it's sure needs, we've COVID facilities. and And the that BOP a to something to to partner responsive up our or So continue in has facilities own are do And I'm BOP with

Joe Gomes

I'll for one Okay, one great. And in And me. queue. back get last

that there, You the mentioned the federal be medium you looking – opportunity, there any would else the bid or guys in is anything out there to Arizona near level state on? are to term

George Zoley

can that discuss time. nothing There's we this publicly at

Joe Gomes

very you much. Thank Okay.

George Zoley

Thank you.

Operator

question next from from Our comes Sidoti. Please ahead. go Mitra Ramgopal

Mitra Ramgopal

morning, Yes. Hi, and good questions. thanks the for taking

a you to and second it get it what – to with sense look the effect do with back Delta to having guidance maybe in the some of we're anticipate eliminate half might've wanted the surge the you expenses out year, up seeing populations the variant ratcheting this you Just as a material been quarter? on you last able the of

Brian Evans

like said we we've revenue have savings into take to expenses earlier, do think benefit that the those that the will account. as of – Well, goes not go some up. continue cost but from I some we we've up that assumed we Because seen, of all

for rate QX. lower in a the run and bit QX performance to half margin is the of in second and year the our in relative QX the little So performance the

Mitra Ramgopal

Okay. and Thanks. you you employees? are among vaccinations as the it relates roughly also population And where maybe us remind to could

George Zoley

had over of administered our quarter, we service the end secure at XXX,XXX tests facilities. COVID the second Through

Mitra Ramgopal

or Okay. on longer sort nice curious that that terms growth term, you're was segments. even maybe to electronic in sitting see touch I No, the how just that's of just great. wanted second And Clearly monitoring ramping? again, half Thanks. you was there. maybe And business, of

George Zoley

some expected we don't of the half during continued, second the or in we're year. the clients targets, in what that numbers and improved EM that assuming improvement into has taken market our the account and again, So population contract we've on specific but there's get exactly into

Mitra Ramgopal

Okay, thanks.

you the saw employee provide restructure. maybe on just think, in the restructuring I quarter, one the a color time little expenses

Brian Evans

financial plan, I certain within period hope milestones XX embedded would plan Well, with a we estimate legal nine of, to and advisors, milestones a achieve in months. and to and come those are our in we a I up general that think plan that have with coordination

milestones and to plan plan within months. a have proceeding hope on we're we the objectives that So with XX to and complete we plan nine

Mitra Ramgopal

it maybe thanks. curious, opposed there a We relates [indiscernible] I to on the of maybe international concern expect right for opportunities you. expansion, but the more to plan do just on And as down, I maybe the think, is focusing Okay, cash. was as little

George Zoley

There in be appears but get to are too at we this on that about, some specific time. that, Australia opportunities focusing Australia I can't

Mitra Ramgopal

Thanks Okay. again questions. taking for

Operator

Our Wedbush. from next Please ahead. go question Henry Coffey with comes

Henry Coffey

and topics you for up Good morning in that thank taking my but have ask them question. I'll Really own times, different my come way. two multiple

give if applies population, us would to some overall prison sense you population. the it a of the insightful, So statistics? or us as group, of disease and that that of can given getting then vaccinated, full population, gave give control overall progressing the How overview relative COVID it you your the trouble population of us you're your COVID, an compares be is people the having profile general to to how

George Zoley

can specific The the tell where I have I were March that XXXX. of they in in you don't numbers to numbers me, of front but down back are

the believe the managing this the the have And possibly we control. had vaccinations So vaccinations. and it the COVID but we are over effectively At notwithstanding, of we managed we that are working. it best provided quarter, we a have we believe We hold XX,XXX it we under we can. end have believe pandemic second of

Henry Coffey

XX,XXX... With

George Zoley

ahead. Go

Henry Coffey

overall is shots XX the that whatever two of XX percentage divided and what required? is or is double vaccinations XX,XXX population, sorry. by am or I

George Zoley

vaccination. XX,XXX total

Henry Coffey

vaccination. Total

correct? XX,XXX inmates, that's So

George Zoley

Yes.

Henry Coffey

your And percentage that's overall the – what of prison population? of overall

George Zoley

About XX%.

Henry Coffey

not rate? Missouri, third So Is that's about a vaccinated. low higher your of why that's very reason vaccination which is is a or of Tennessee there kind or population a like

George Zoley

to it available, but to We make vaccinated can't individuals refuse and specifically We can't force so. some we become it. force do

Henry Coffey

Right.

So same the into we're general population. the that resistance you're running in seeing

George Zoley

Yes. healthcare our of the particular, we ICE in find Yes. that staff would correctional a facilities doubled have you Previously in in number facility.

take to healthcare plenty If treat anybody resources we have adversely them onsite We we we them. symptomatic, for the become they can hospital. who can separate of them, can sick. becomes So

all treated, So, when about better We can the general think be get people to believe walk that we have vaccinated. that of immediately resources. the than And almost and down population. the you hallway it, but

Henry Coffey

the every up against that up same You're against. professional problems healthcare is

You to you take them but can't horse can a make drink. water,

George Zoley

just vaccinated been alerted fully is of population. XX,XXX Well, XX% the I'm that our

Henry Coffey

That's Oh, from that's minus better particularly we now to a to C job, go your geographies. relative doing excellent. you're

George Zoley

a text to from message memories. refresh division services help our had We our healthcare Yes.

Henry Coffey

Well, tell them congratulations.

is, question franchise, go through on the thought conservative subject, a prejudices you play what balance then preferred but have but is common planning, your day, the second capital – up another sheet, The avenues as more growth, Just capital what the own with preserve this and to live I fattening my equity? about structure. and find for

Brian Evans

months. makes continuing we'll George off as we're what sense think to working most table. I Well, over certainly nothing's evaluating through and XX said, the the And we're and progress that the six next

Henry Coffey

thinking opinions? the our that so own more of as if lay well? can the out be plan criteria through, opinions, our for our Can with are opinions us just about constructive obviously in but looking we more outsiders would you know, were that we knew Where that, you

Brian Evans

focus to renegotiate is the at credit, our level, terms. reasonable the bonds, on senior credit a I Well, facility high the think

looking continues are company We certainly debt. take necessary. We it's the We're We're to focused perform don't The not at think we're on to look these equity to not. repaying well. a discount. issue We'll going at but not equity, prices.

to Our very solid. continuing delever. cash flows We're are

we're to modest So think cap sales. we'll the we And And down just some through operational structure. path. as and in six in delever George months, asset flows said, excellent XX going I company to position reset to continue that cash think we're the next an the

Henry Coffey

your paying start on something and those fast would notes? based lines, how That's of expectations, dedicate think much flow along debt the of down cash do that senior I what was down paying could sort towards asking you guidance current you and you how

Brian Evans

– year what that's ultimately REIT. depending we're unreasonable this And determine a of that's period. I part going what million. to leverage not the year range over we're balance to evaluating we $XXX what that decide an the three think our we'll with of said, out target we we've we And pretty our As comfortable to forward, through five million on put status year. we're is expect do with And look like to this $XXX of

Henry Coffey

Well, people my your job well a congratulations Great. answering on for and tell questions thank you done. healthcare

George Zoley

Thank you.

Operator

comes Imperial Our Capital. Ludtke Please Kirk go next from ahead. with question

Kirk Ludtke

Hello, me? everyone. Can you hear

George Zoley

can. we Yes,

Kirk Ludtke

Great. of and the just I'm question. down If correctly, state for and XX supplement it occupancy the at like rates sequentially, taking page Thanks both federal curious the looks and the were reading I'm level. the

bureau the prison the the some decline state you as want state not So than I offsetting ICE to U.S. I'm level, is because level? confirm sure. at in increase color the population the what us that. happening quite might then at the And Can more of be just Marshals? level, give is at federal to the at

Brian Evans

and increasing the I down the stable populations BOP earlier U.S. trend maybe state to have were improved. those started think occupancies the similarly are as up. have quarter, in pretty probably but slightly George The mentioned, Marshals

mix of away in the some of think facilities quarter a impact just and the being is and it going I of, idle.

producing place idle two is rest beds, have quarter, quarter, of have you then impact of the are the facility periods facilities, of one for calculation the the the for beds the once that but So, the of for or revenue and for facilities have then of don't were out they in the you the empty. quarter, the thirds part third full

that's the on going idle, of becoming skewing that's number of facilities quarter at some during with of facilities the because transition think, I these some the So, some.

Kirk Ludtke

the rates contract, that that. appreciate that don't cut off quick is you Thank question growth the required CapEx or Is the if can Okay. on I you. you that there, CapEx materialize? growth spend is monitoring. A under

Brian Evans

So, expect, and services developmental the the as CapEx, some continue have. is products to the CapEx we improve growth to you of there, would the that

Some of platform technology, a on related the is it changes is in to of the the units currently model operate GPS in changing cellular years. that couple

that. with And to obviously that number to so, And driven reduce then transitioning change, increased then of were units we yes, system. is by And if of CapEx the just we're be that. that in need some associated it, that to the

three. all of kind So, of it's a mix

Kirk Ludtke

they – maybe Can bit what what growth for as give the be expect? little would what you a CapEx Well, us sense. monitoring? the would if a makes to asked differently doesn't it materialize, range you cap would Yes,

Brian Evans

including you're million looking the years, so couple On an at over a ongoing next I cellular to year. the $XX new think, transition of the probably basis, or technology

Kirk Ludtke

That's Thank quarter, asset The helpful. sold you. the those you with the did contract? facilities sales, Okay. – were during sold those the

Brian Evans

No.

in yes, that at be been none are that are past, a the may these primarily There facilities. the articulated thus are but looking facilities we've related to few currently will, that active have that as fields of sold far are inactive. we're facilities underutilized, So

Kirk Ludtke

Thank you. Great.

or divestiture reason price that value Is the Is so, per know to bed? facilities? were any there And – value good not a use? would is facilities, why way a a re-entry substantiate but that is the that that methodology idle something I these other be of to

Brian Evans

in a It's economic urban really do some there there's in be to these think are and on urban those factors way, settings enough lot times don't able different I located of to facilities of in areas. going that there's because – it

may greater of positive so development have assets there's in much. not they're And and value. the locations, Some some more as growth, them

whole it can't across it of measure do you that and take So, portfolio. all really the on a

George Zoley

They're located facilities. small-scale very They're in areas. residential sometimes

in don't we large-scale, So, security they high compare Services well with Secure the facilities, really that the division. operate

Kirk Ludtke

one for to monitoring the are I'm I if with on. What answered something forgot last was not I you. in Good or question I revisit. outlook monitoring, respect bad? And may, then thank I it's the And With this before, business? monitoring core Geo? appreciate – synergies hoping probably affiliated between change if you've but just think, your I does to

George Zoley

setting. have, spectrum across corrections, electronic contracts monitoring. re-entry RFP thousand And I said, the the it's EM provide, contracts they're all business a the lines separate residential independent services. a between really contracts states in generally facilities, is programs. of of integrated local separately over a use monitoring and They're business separate is re-entry electronic and most, think separate businesses, operations not monitoring contracts, is key and has in XX that our services that we are between contracts, of federal, in the RFP their electronic contracts all of provide services broader, our and processes. business services most some electronic processes, processes, diversified has the overlap the we but separate I re-entry sort and we think, non-secure we as all There our the Well, But some bid monitoring clientele, state secure

Jose Gordo

it's separate I a approximately think. And XXX in organization people. with corporate with, offices Colorado

Kirk Ludtke

mandates you the split anywhere, by Do disclose would customer or you? Interesting.

George Zoley

and think, not lines, along by I types our like specifically secure, non-secure provided, are customer. of between but those mandates facilities our No,

Kirk Ludtke

Thank have. all you. That's I

Pablo Paez

you. Thank

Operator

Right.

Farricielli comes Please from with Joseph Fitzgerald. question go Cantor ahead. Next

Joseph Farricielli

morning. Thanks the for Good call.

an locations five cost of on little that color launch and to, that you to facility? more some of back I coming ready keep re-entry what guess, idled or it maybe go, I some sitting restart and What idle, came offline online could kinds us to a of the costs the is you what have it a And and facility? to warm think have and entails? then give assets costs you two entails have the

Brian Evans

devices, then the the turned after electrical of to lights for be somebody the and that a more, somebody has there's have cost would be utilities approximately be have HVAC, toilets be looking facility you you of the the our that more individuals or facilities, on somebody cost a flushed, of two could for than the plumbing, Well, to have for cost onsite large-scale that million to $X thing. three facilities, that kind the slightly probably of on depreciation security

jobs. startup takes dollars take usually that are be So, on people. trained it for XX a their million the XX to costs of could It's And Then the to and them a days. hiring getting year. couple people primary

Joseph Farricielli

So, you go. ready staff skeleton don't keep a to security

the other maintenance discussed? You than would off crew that lay you staff the

Jose Gordo

Yes.

Joseph Farricielli

switching maintain Okay. percentage the need gears, on be dividend, to a in be then to could what cash and And would kind? in much how just status REIT

Brian Evans

current now, are minimum Well, think, the I split is right rule is XX-XX. the

can't go can that. than you you above that, go So, less but

to XX% to cash So, qualify. least in at be has

Joseph Farricielli

REIT attributed revenues of because related all of And much revenue real your to estate not are revenue? how your REIT-related, revenues is

Brian Evans

well the rules. don't that I split. we're compliance, I mean, within Yes, compliance have exact the

Within the business to revenue. be BI XX%, business. of the going estate our But non-real or monitoring or the it's revenue so XX% is related REIT electronic the

not in non-owned estate. north Our facilities that, tied the XX%, probably of U.S. so maybe little our to our our of international real facilities, revenue is a

Joseph Farricielli

you. Thank good. Very Okay.

Operator

go comes next Jordan Ranger question Please Our with ahead. from Sherman Global.

Jordan Sherman

you Yes. in discuss Wondered in and Marshals Title place. both census still it's to ICE U.S. if place, could what's and driving in the increase remain going XX for

outlook censuses talk do what And think wondering can those are? that? if driving then about, you the what's So, I'm been for you

Brian Evans

[Indiscernible]

Jose Gordo

don't have exactly. assume to we that crossings lot We Yes, know would do border the a it. with

Jordan Sherman

was mean, are I significantly. of are But were Yes, turning with people impression they XX, Title lot encounters obviously I everyone. guess there under a up I the – the back

Jose Gordo

accurate. not that's mean, I

in Title there's I So, want or those under if country. over that. month, allowed apprehensions think encounters last were About of was XX% XXX,XXX were thereabouts or returned like there the XX% them but you to enter July, still XX, to to call

in reasons, or that minors, of those family security reasons Some them for various of of some people up may units, enforcement those are detention. reasons end adults unaccompanied law some are for but be also them

ISAP as start activity. that So of the there's ICE in a program, that's We're and a the why Marshals we're effect U.S. seeing also of seeing result some detention increased to participation in spillover increase. numbers the

board, So, exactly Title And spillover as a various like will there George across when, look returned. effect XX yet. earlier, lifted, areas that in when said and what you're that is being people right, lot of that'll a the are nobody knows be

Jordan Sherman

know of the But I rise get to as suing encounters go that we numbers Title seek is that removed, should but long removal as efforts Right. Even up, a the even recently barring XX, ACLUs census. border which to as in renewed. there continued barring

Jose Gordo

class determine be in required were send that border, background, who has have the find somebody can't they Mexico. of, detain for that a for people are there just criminal back still because the by think to is crossed if U.S. and them. I of detained them instance, wanted some to congressional a crimes They that law he laws they to

Jordan Sherman

Okay.

Jose Gordo

of and patrol, the of is people come required there seeing in being a border facilities. to escape detained. So, And across are and were that trying to we the individuals be class apparently but ICE the of placed are hopes were some into certain them and getting of more those them border caught Marshals just

Jordan Sherman

near the Okay, great. Western is for that the Is then the that most the contract Regional discussion? Marshals is is And renewal Facility, next Detention term? it where that one

Jose Gordo

Yes.

Jordan Sherman

And then – discussion you in sorry. are the continued I'm

Jose Gordo

Service realign Marshals the contract to Executive as we're Order. how compliance Yes, President's continuing to our with in that with discussions the

Jordan Sherman

civic has went pushback to on lines, those facility course guess, guess that a, it direct I there a more Along route? been was a the, of any from [ph] contract I indirect

Brian Evans

with. Northeast he became direct Ohio went to the facility about a is think an I – was previously IGSA talking that has contract and that been delt

Jose Gordo

I any there's on no. the been Right. pushback don't idea. think No. Surely

Jordan Sherman

that does early template? guess I that's ways say perhaps Or is contracts? in what I with for direct think to happen that sets many do So, if – you the too the will template

Jose Gordo

to too It's early say.

Jordan Sherman

the there states capacity? remember gone Okay. trying some name you I'm weren't other I and Idaho, mentioned Vermont, already, of have them but looking to there guess. for And then come maybe additional Weren't Arizona, Hawaii, other Alaska,

Jose Gordo

I procurement until notice year. Hawaii that State Yes, place in build Hawaii. issued interest But believe to of want a a of won't next new the facility take they has indicating sometime

Jordan Sherman

Okay.

Jose Gordo

is of of planning major in its next shutting stages down the year. sometime Arizona one institutions

asking we prisoners. an will high hold X,XXX resolve So, identify facilities to in it's of to in process high likely the of for a to many potential security that two that population separate least bidders beginning prisoners. RFP at stages to locations hold up security think And

responding to that are procurement. we So,

Jordan Sherman

facilities? offer the or And facility you where is up will

Jose Gordo

we're not saying. Well,

Jordan Sherman

in eligible you be areas that? But anything for fine. California that's have some in Okay, surrounding would

Jose Gordo

don't so. I – be it Would think

Jordan Sherman

Okay. And then Idaho?

Jose Gordo

in facilities empty any have California. don't We

Jordan Sherman

was California? more That's fair of something would I play considering in Okay. – I in fair, meant be enough. California just conceptually the state possible

Jose Gordo

out a think the in state there's No, facilities available empty I aware of taking I’m I'm of in, And aware. any not law restriction prisoners state, the state state. in about not

Jordan Sherman

over state dominion would guess. they're their dominion I guess contracts, over competing different potential contracts than be I federal

Jose Gordo

Yes. But in facilities California. there aren't any either

Jordan Sherman

something no, I appreciate nothing appreciate point. in in was am it. Or mistaken? Either, And I I Idaho? that Idaho there

Jose Gordo

They is some beds. moved recently Idaho, in... looking for I think,

Jordan Sherman

Alabama.

Jose Gordo

Yeah.

Jordan Sherman

Alabama. mess the in know I Alabama,

Okay.

George Zoley

XXXX come scale and But large for, fun a three a to they're I do that, develop was problem with facilities up strategy to think, with different there trying been financing how it. has and Alabama deal beds. approximately to trying

Jordan Sherman

that on updates the no moment? But either at

George Zoley

No.

Jordan Sherman

problem on the any federal not potential sales little we like there? of them oversight moment. I'm is I'm identify other specifically, but that table business without got asking possibility are the they've saying assets of exploring still or What the at else things Because a is to or that? things you Businesses, at

George Zoley

sales, mostly in assets related we to what publicly facilities Well, a $XXX underutilized at the to or idle we're assets. range, looking million probably is million said $XX

Jordan Sherman

Thank you Okay. right. All much. very Perfect.

Operator

with question Please from ahead. Shaked go BTIG. Oren comes next Our

Oren Shaked

morning. Yes, hi, good

earlier. you any not You it wanted used confirm, say you've referenced plans XX? is $XXX fair I to near-term on announced that ATM to million that June use and this to just don't have the

Brian Evans

We have use management we available fit and appropriate. if not to or it sees have it sees used

undervalued believe to issue is that what not we're equity use just it think issue… I would said these we earlier that at not is prefer not prices. we intending that We and wouldn't equity we to

Jose Gordo

It’s just a authorization. re

Brian Evans

it We million. to reauthorized $XXX

Oren Shaked

Got it.

you in little bit Okay. looking kind to a reasonable those more Does maybe would Are XXXX you also wouldn't bonds? thinking due of Thank at And options, expect bonds? course the terms. such you debt able you are other clarity on as that suggest you how you the expect be and address refinance that us that on a exactly debt mind to exchange about also, XXXX to mentioned maturities if or give you.

Jose Gordo

engaged the said, who we've advisors options. So, are groups any looking at we've our with of haven't yet, lender on we brought financial as

looking we're outstanding. total debt of we think our said I to what as is some reduce at,

groups. debt. how may with may that of There less debt. of mix may We're when be be is XXXX And with some secure look working the less being that's the or So, the we there going reduced through in to unsecured result engage advisors.

Oren Shaked

much. very you Thank

Operator

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

George Zoley

your for next. to in on forward the you this addressing look you we thank Hey participation call and

Operator

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

disconnect. now may You

The GEO Group, Inc. (GEO) 4 Aug 212021 Q2 Earnings call transcript