GEO - Earnings call transcript Q4 2021

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Operator

I'd now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead.

Pablo Paez

Thank you, Operator. Good morning everyone, and thank you for joining us for today's discussion of The GEO Group's fourth quarter 2021 earnings results. With us today are George Zoley, Executive Chairman of the Board; Jose Gordo, Chief Executive Officer; Brian Evans, Chief Financial Officer; and James Black, President of GEO Secure Services and Ann Schlarb, President, President of GEO Care This morning, we will discuss our fourth quarter results and our outlook.

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

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

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

George Zoley

And developments on XXXX. performance, of With call. In Thank non-renewal revenues fourth the to Department management to and seven approximately Federal for results. financial by only of of is our which than year, everyone. morning to in continue the partners. of our quarterly results for review the our to Justice we full and XXXX our earnings quarterly XXXX for the financial reported million, lower of contracts you of quarter senior quarter of trends the respect segments, and for $XXX.X us operating fourth strength you, good our we I'm joined fourth each agency and revenues recent XXXX, despite fourth X.X% the our to be of pleased quarter financial with XXXX, today quarter for our guidance thank joining the government business be Pablo, pleased our our the our impacting

to loss expenses resulted fourth to taxable a additional net Corporation, the deferred diluted per transition which C charge of one-time in incur $X.XX to deal our non-cash share. a we attributable tax tax related quarter, During a and

deal, deferred quarter to charge adjusted items income extraordinary to net our fourth and loss attributable diluted XX% the Excluding XXXX share. by tax other $X.XX per from net increased

fourth ongoing year-over-year EBITDA the with in AFFO million challenges contracts XXXX, COVID-XX to share. the $XXX the the of Federal than X% Our and fourth units better in diluted XX% year. of Department Despite adjusted increased And of the business quarter increased the delivered by associated to our diversified $X.XX seven Justice performance pandemic throughout consistently XXXX. of our expected our XXXX for of per quarter non-renewal

reported X% challenges revenues which during of $X.XX XXXX the faced the despite less approximately year, we was For than the billion, full decline year. from we all

And net our full adjusted our of increased adjusted year-over-year. the full was year $XXX year XXXX largely results, our million consistent year income full with AFFO $XXX for year EBITDA and X% by million to $XXX of Our exceeded million.

Looking compensated XX% our at our basis at experienced for the GEO active our Secure a rates segments decline occupancy ending more points facilities in year capacity of XXX and owned in of year-over-year each facilities. leased detail, of Services

our and leased Department is Marshals Customs and US the US and is of The part Security. the Department Service owned with of of Homeland government comprised Services and of Bureau federal US ICE The Our US segment the Service partners: Justice the primarily under Federal Secure Enforcement. of Immigrations Prisons, contract of part are BOP three facilities agency Marshals and

privately directed facilities. Executive operated pandemic, Order, Service BOP which criminal President's of In contracts addition the January XXXX subject General Marshals to are of the to detention not to Justice the Attorney US impact the renew the Department COVID-XX and with

of year, six Orders, approximately resulting not $XXX times with facilities renewed phase in at direct BOP were the result the our the different revenues. out under of company-owned Executive million a during As of in annualized contracts the

end approximately the under generates renewed annualized facility September million BOP, direct As contract expires end option which revenues, with in the we current of contract the the company-owned be the will year, not when $XX of at one had which XXXX. only of we expect

one In XX, $XXX US the company-owned of under facility in our company-owned Marshals the XXXX. in revenues Marshals with the was direct with we Service million approximately annualized contract August US approximately company-leased or revenues with three with of At contracts the million. not of end we addition, facilities direct renewed under XXXX. facilities And March $XX sold Service annualized had successfully of

placed utilization month that include the of since One that the facilities, March the not funded at a work six in was in the operation. for COVID-XX driver of year, of At related part end impact or two time, at of although capacity period a we on other in of COVID-XX populations XXXX while this currently extended a individuals believe been to facilities March keeping has on this in the options to last to approximately levels, ICE, low XX continue related expires title this ICE significantly beds, for XX,XXX facilities ICE facility, COVID expire while that to restrictions. XXXX. detainee remained option addition housed related facilities certain restrictions does for XXXX. guidance Southwest to end mandates utilization ICE respect limit period With is year, we below these our and across have facility and the historical At nationwide, contract has the year, XX,XXX court due border

for largely While been facilities and single in or they have adults, historically is have units, which our family these restrictions population housed. lifted ICE eased for that unaccompanied the place minors, remain

programs. alternatives in is increase Supervision ISAP of the The Intensive Program the Appearance an federal or seen however, and alternatives key have, of to to utilization component We a detention. detention government's

full-suite compliance process. ISAP monitoring the the individuals ensure and to of Our BI provides undergoing services immigration technology subsidiary a contract for under review

program. ISAP During of participants XXXX, almost the number doubled the under

capacity. our continued facilities ending year have business, to experience managed at rates occupancy our Moving only stable to XX% the

two was term. for two-year segment. contracts Secure Blackwater the only In our Services for the the Arizona, renew in central quarter, we Florida, for managed term. and During In Correctional our Arizona contract renewed contract renewed our we five-year Rehabilitation Facility a for Correctional River fourth Facility

and at own challenges but reentry XXX services basis XX% this segment. points, country day to home impact capacity year-over-year at continued including below related remained new in of residential experienced lease at end rates centers COVID-XX alternatives reporting, significantly reentry the a increase agencies facilities confinement, occupancy Throughout et non-residential across Our down cetera. as year the furloughs, opted pandemic, government for intake slowed have have as

our locations and electronic man programs with services and increase Our in day reporting an growing non-residential with experienced business for consistent compensated approximately monitoring XX% these by trends days XXXX.

in four and Our contracts electric challenges XXXX. residential including segment continued enjoy residential fourth revenues the supervision reentry the of Despite business, we Prisons. services monitoring annual the reentry during in quarter, to increasing successfully COVID-XX Bureau five ongoing Federal has contracts our by growth, renewed XX% with strong

As we look on government support of operational delivering high services while forward remains partners. agency the on pandemic, to our quality focus mitigating COVID-XX behalf XXXX, challenges of our

significant the of with staff of significant the the our we consistent across While care. early we in individuals part XXXX a increase our COVID currently cases and Omicron country, declining the variant seeing spread are in the in among cases experienced

dedication operational compassionate our those provide frontline care humane Our in excellence of to employees our unwavering facilities entrusted and success by programs. our commitment to all to the is who underpinned continued and is

partners, the themselves with of ability face One recruit staff who our working in market. we agency very same has significant retain what are labor the is government difficult collaboratively and to a challenges been become the challenges. facing We've

finding of number we Over and additional management housing. evaluating year, our in At of initiatives, policies Board and past to balance focused the we the increased affordable the a address and bonuses, benefits, states and challenges changing delevering and wages our including on debt have alternatives reducing level, remain and adequate are sheet.

reelection approved unanimously taxable Board become quarterly discontinue fiscal plan a our for a voted effective and also our quarter, our Board fourth dividends. to the year. XXXX to corporation the The C unanimously terminate During

give the net recourse structure allocate towards in our debt. corporate free expect flow reducing tax additional flexibility change We cash to will us

we over two net next quarters debt our and to approximately million, to our of last reducing further focus net all by reduced the the Over we our several expect flow cash have years, recourse $XXX decisions focus on continuing consistent have proactive address the with multifaceted debt to approach debt. include and recourse which by The implemented we and are our made maturities, net our delivering. Board our recourse excess reduction future debt

reduction of lender and debt that and recourse the review company with return to advisors sales a debt shareholders assets our free groups steps to We Our ongoing the attaining the potential to reduce to net which of cash After and debt maturities. and potential concerning plan our funded recourse and our further our quality for of of and these extend potentially transaction and prudent other are of a businesses our in allocation believe or stakeholders. banks delivering, are opportunities discussions growth future. shareholders in our objective fund valuate best bondholder portion of owned the flow capital we interest and

highlight turn call Brian, important I the XXXX. I'd Before achieved quarter the milestone in over to another to like we fourth in

new and of corporate report matters, and governance publication employee and environmental, human of programs, rights, to includes our the our diversity annual this governance environmental disclosures With rights oversight and human report, Board training social third ESG related sustainability.

care. improving continued human of commitment the report and entrusted the those our Our also our highlights ESG to respecting to lives rights

reinforces Care Our providing ESG support GEO commitment through program. services of our to post-release report award-winning and rehabilitation enhanced Continuum our

approximately of program. our of Care enhanced delivered Continuum X.X XXXX, facilities rehabilitation hours During million

treatment XX,XXX behavioral degrees; awarded high also and X,XXX approximately school We X,XXX abuse and X,XXX equivalent program completions; vocational certifications; completions. substance GEDs

to initiatives. detail criminal to throughout and our our additional to with we Board that has continued over the I'll justice, stakeholders time, At and shareholders include on We call other human our forward been reduction committee and initiatives to advancing Brian structure in our a more continue rehabilitation, We to results this review expanded in look ESG to guidance. Evans engagement ESG and to as and be organization goals objective, debt address committee rights financial turn rights. our human committed our evaluate

Brian Evans

everyone. you, Thank George. morning Good

transition of corporation As fourth year non-cash $XX a result one-time incurred charge taxable of approximately the million. fiscal a our we in deferred C XXXX, during quarter, a to tax

of $XX a in due of higher reported per of quarters million three with quarter approximately quarter quarterly incurred in diluted our revenues approximately these effective tax tax also the the tax in expense to income the attributable to fourth million during a fourth incremental XXXX. million. to share connection first including loss we $XX We of GAAP items, net $XXX.X GEO approximately $X.XX tax rate, catch-up Due new

in $X.X pretax, divestiture million Our expenses include pretax pretax $X.X also fourth real million and gain for startup in on assets, expenses, quarter estate in million out and $X.X M&A-related tax loss million asset $XXX,XXX $X.X a previously on announced effect that of results settlement expenses to attributable business, close divestiture our the the in of income the adjustment used services of GEO. million benefit $X.X pretax, net to

items, these diluted three of the non-cash quarter and tax associated income charge of and adjusted portion quarters $X.XX reported one-time per of additional $X.XX per the first diluted income we of net XXXX, the deferred share. tax with fourth Excluding AFFO expense share

Our fourth million. quarter to XXXX adjusted increased by XX% $XXX EBITDA

for million, a the stability is believe our year $XXX financial of our business. of non-renewal of performance entire Our exceeded prior of representing the testament annualized approximately contracts facility company we strong which federal and in Despite results. the XXXX, delivered the strength to seven our revenues expectations,

than XXXX to declined year X% less revenues full $X.XX Our billion.

million million $XXX XXXX were year million. full full of increased Our to FFO and largely by $XXX $XXX X% consistent EBITDA our AFFO year year-over-year normalized adjusted of and XXXX

range Moving revenues income, GEO billion. approximately basis $X.XX net an per adjusted share $X.XX to on income on we of annual of to XXXX, diluted be both $X.XX for expect to attributable net year to financial our a annual and guidance in -- full

to share, AFFO, be in of $XXX diluted range full adjusted be to and $XXX $X.XX expect the We EBITDA year in million. to million to a of range XXXX per $X.XX

million. focus to during net efforts the by we which XXXX, net debt years, over expect reduce on with We to period approximately recourse continue two consistent recourse our last debt $XXX in reduction

diluted attributable XXXX, $X.XX $X.XX between quarterly quarter million. to adjusted share AFFO to both of be on net to first we $X.XX and the be income, net between to revenues expect diluted share, For GEO per income and $XXX $XXX $X.XX and per million and

combined of Department of approximately reflects $XXX the XXXX guidance of million. our XXXX Our was Justice of seven during normalization non-renewal contracts annualized revenues the

of revenues the periods does Justice contract that million. Our guidance also expire include scheduled Department $XX during not the have to contracts additional of with XXXX approximately two combined direct option annualized

inflationary implemented bonuses and for largely the rates. per which primarily higher we have pressures increases primary and supported to on also working at agency labor Our by facilities our overall guidance time, related partners, have our other inflation diem impact With is to from higher reflect collaboratively this with to our costs. facility operating related government respect in been staff, wage expenses, our increases

also experienced other With expense. areas, costs rates, and facilities, operating in guidance have significant largest centers we assumed guidance remain our inflationary EBITDA currently While in our are historical projected we which for factors, occupancy these ICE the believe less our related for decline impact a labor we in have have pleased not below increases XXXX. respect been always part, reentry in of of a utilization our to XX% reflects In restrictions. significantly all that due COVID-XX adjusted improvement levels. our to we than Despite our

as which to XX%, a C corporation. tax effective higher guidance we approximately taxable expect a of reflects Our to be transition result a our also rate,

and discussions our ad-hoc on loan maturities advisors. in by revolving reduce with engaged banks, notes, outstanding would an we with these our goal and to accomplishing our We facility, and working discussions recourse groups and and term credit The interest of share unsecured goal, with debt their terms. ongoing to senior our Finally, and the this or reasonable and term transaction lenders loan and transactions of productive in encouraged bondholders. bondholders to our financial extend is executed we advisors representing company, our of lenders believe remain and our are constituencies and our legal series reach an on agreement that this our process be net advisors,

$XX guidance weighted would increase approximately average complete a expected X% our expense accordingly. the We we by current of will debt. to financial annualized transaction in recourse increase our on interest cost in If to able based our for update are to interest reflect debt, $XX increase each our net million expense,

$XXX in to from end recourse the lease structure. XXXX, net on account credit our non-recourse announced on billion, corporate cash capital primarily our our of stands the including debt our not hand, obligations, our million finance Moving million currently or of hand, into mortgage At we Taking resulting had headquarters. previously revolving of approximately $X.X cash drawdown facility. approximately on $XXX debt, at the

reduce between recourse We million. balance multifaceted continued XX approach focusing XXXX, and have Between on by execute our debt and XXXX to deleveraging -- $XXX sheet. we our XXXX net approximately

focus on we recourse annually. million objective we reasonable forward, due and of debt by And we with Going in debt the be plan our reducing to reduction continue believe to terms. debt to least on recourse net net able to deleveraging at course $XXX address will million to continue maturities $XXX

our review segment. and contracts million. for Our XXXX, turn exploration proceeds February GEO we have over strategy will sell James I Secure completed also businesses. opportunities Black have transaction Between to sale potential of the eight company-owned into the this assets a and entered time, XXXX to of for includes $XX approximately call or January of with At Services

James Black

to mitigation you risks for the Brian. of implementation have with update COVID-XX and the Control consistent XXXX everyone. associated to operational Centres operational Services. Throughout Disease our continued guidance I'd mitigation the the issued Geo are the Secure strategies pandemic. you, providing Prevention. on by and These initiatives morning, begin for the efforts the with practices address like by highlights an focused been Good on Thank year,

access intake of to XXXX, arrivals had remain Through time-off and we continuously quarantine the to since facemask Secure significant we facilities and home have a across deploy to paid facilities, continued COVID have allowing test XXX,XXX the Services administered made supplies employees And of be to made and our our have positive and able test at $X to isolate cleaning We to Our of million our facilities. paid screen needed. Rapid Abbott investment available end leave new the approximately at start cases. us devices across pandemic. as

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

in We At of Services of our XXXX, facilities Secure across health our been closely are Secure inmates state of our available and of XX,XXX make partners detainees XX% close At this at our and staff, to the Services facilities. agency vaccinated. vaccinated continue departments time, XX% vaccinations to government half to end approximately individuals had work our with our facilities.

guidance based steps evaluate to milestones continue the several practices. challenges XXXX. updated CDC best associated we'll facilities these and We and make by achieve on employees with pandemic, important and adjustments the other the unprecedented Despite our in

internal audits, audits, Rape third-party over underwent accreditations XXX successfully and reviews, facilities Elimination including certifications government the under Act. Our Prison

XXX,XXX appointments. health medical training also XX,XXX staff and service sick over quality screenings, more off-site employee calls, medical million and including Our visits, XXXX, completed health more dental related intake training care we X.X encounters, than than undertook sessions. In hours and

United Our GTI and completed million transportation XX.X overseas. in division the approximately miles driven safely States

operational proud all humane of for facilities. frontline to commitment our their We delivering are care those excellence our employees the in to and dedication compassionate to and

to prisons in the slowing our agency direct federal slowed the expiring periods federal facilities, the with beds to system. closely owned Bureau more facilities. company signing at those six transition our had not option that of intakes the work prison XXXX. XXXX. order populations has rate of in decade. partners, prison in did into January decline we adjudication further totaling in of The Throughout the COVID-XX BOP starting XX,XXX last contracts After contract a the Prisons President's the criminal than has of executive XXXX, renew two these new in review as Moving the government cases federal pandemic, level, a the the of of federal of old courts, the experienced result the accelerated over at last trends a impacting decline which of This years populations

contract support detainees our times, with one when Prisons, facing of Bureau system prison company of the this the has remaining have and and levels was USMS capacity Bureau sentencing overcrowding facing for does are services agency Marshals only and detention last federal criminal This challenges. to through Service the several at quality and courts. USMS the US intergovernmental the we provide The end facilities. company-owned option we the owned in XXXX, high have with The direct contract expect who the during not own facility, We facilities federal detention the with pretrial BOP, the with houses At Prisons, awaiting our charges operate its primarily population to end direct of with partnerships not month. facilities end years. service decades private at X,XXX stable beds of over the XXXX, contracts be renewed direct are extent USMS under now of when September a contract renewed had the lesser sector In one Unlike XXXX. providers. enjoyed contracts under long the not period was of agreements, expired

sold We facility. have that since

Service third Additionally, party contract, an March that contract one of US the current extended we the although which we we direct was XXXX. not Marshals contract to the include period a by guidance – was that does facility work This of other as a that operation. the in from our XXXX. of end through facility, set with for on leased at options And end continue to option September keeping expire

that At under option owned restrictions their centers currently for which of XXXX. period considered on below have Appropriations year, lease being the nationwide guidelines been remains and centers is this funded is house next restrictions the to XXXX, a XX the utilization. contract fiscal company end historical processing ICE US border the the on the one other Marshals agency Court COVID-XX one social and individuals. current at are begins Congress. Service. currently October contracts public the face driver utilization With the mandated with resolution. and facility Title for by of relies the of which on beds ends significantly expires the southwest primary And respect levels. to agency XXXXX September related to processing in have continuing XX,XXX related bills approximately for those health ICE, distancing year, and ICE have also cases, in X, continue direct facility XX, We the lower currently company and fiscal

access culturally Our of processing continues ICE to quality pavilions, on the focus amenities and artificial faith offers to access centers support based Security. to Department meals to enhance religious and approved ICE dietitians, Homeland be and support XX/X services, provides fields, sensitive where recreational opportunities to legal covered etcetera. counsel, turf Geo registered quality The providing and soccer by healthcare, including high exercise equipment access

a of discussion our government Moving are a staffing changing as significant labor market. agency a nationwide rapidly facing challenges to partners, state correctional result of agencies

we challenges last are staff and retention communities alternatives initiatives we affordable of located. additional number recruitment the and Over policies, year, where exploring to include off staff paying have paid increased our at the finding our in and bonuses, housing. are facilities, initiatives address wages to and improve often enhancing adequate time a facilities in These considering the our of the face

these a way We are collaborative efforts in partners. with government undertaking our agency

its Mexico, Alabama, the to closure the use In recently Facility infrastructure be increased secure and contract our the County State Florida, was over In with additional Department highlighted partnership Several state buy Facility. already the Over are only couple pursued COVID-XX older for renewed Rehabilitation for significant with with Legislature agreement to Corrections replace partnerships. Correctional the we County the state budget have that able for under legislative to the other transitioned of a into for retention of activity prisons includes facility to the In correctional a current efforts Arizona, purchase the facilities have modernization the building of Facility to public a or partnership Florida, a Schlarb prisons. of prison. contracts. working recently last state state review build recent and a for construction need replace Hawaii including under modern fourth funding is I costly with more Arizona, Correctional facilities to to two this new prisons program. our part call increases are lease Georgia, for renewed agreement our Facility contract of wage announced more GEO facilities will public In considering to and for states Florida, we separately Dr. partners over private term. legislature In of for consideration time, considering the management directly public the the process quarter, New of replace facilities inefficient year our the entered lease pandemic operate. of and and years of recruitment either two older facilities. new private several Oklahoma, At Temporarily replaced functions. state to we Perry Guadalupe Central in a also the care. to state year correctional period. initiatives other our the older replacement Correctional government state the older Correctional facility Arizona private Appropriations In a five Arizona, Blackwater modern renewed The In respect to through the by our to challenges taking have support turn during purchase we or customers two with Ann in the contracted correctional been as X,XXX funding States, idle River other Georgia, bed years,

Ann Schlarb

as GEO GEO COVID-XX facilities, our highlights care And and electronic CDC. with James. strategies and XXXX you, the continuing implementing like unit, our good the I'd facilities Consistent These Care includes services on throughout the our Thank mitigation focused morning, guidance with review consistent are secure GEO as reentry for and well program efforts operational business program. by with monitoring strategies Care the are which and supervision that practices the issued services everyone. segments, to year.

for testing, steps leave to paid screening basis, and our measures access to updated guidance deploying that by these needed. increased ensuring best and We efforts make our will CDC the well adjustments home ongoing as remain other employees Our entry time additional into we based on practices. on an facilities, off to evaluate be continue sanitation, and focused on as facemask as have paid

our of each historical segments, to at services GEO operate Reentry Looking throughout our significantly continue occupancy facilities XXXX. levels below

includes other by centers safe imperative spread and practices. that XX, the COVID environments measures and the of reentry Our residential have impacted been providing distancing for of social

a including across services home nonresidential result, and Bureau XX Federal into involved contracts, government agencies challenges these contracts furloughs, confinement, Prisons. with As renewed XXXX, GEO monitoring like day of prioritized reporting of during the XX alternatives placement country individuals residential Reentry electronic program. the Notwithstanding justice reentry have

business growth in as Additionally, centers in year, of XX approximately Day services Tennessee, these Throughout reporting and our XXXX individuals. a nonresidential to X,XXX for experienced New with strong we provide trends. result Louisiana to up the capacity opened California Idaho,

tenure community has monitoring a XXXX comprehensive and and organizations. solutions, continued supervision suite based in annual with and premier Our for technology offices, the long management, services and government's Over July the competitive has case of itself five behalf full electronic monitoring also effective federal, established XXXX. is by a provider to monitoring during and under segment Program, this the grow based partnerships of on agencies XX%. technologies unparalleled of to BI products of awarded federal XXXX, monitoring with ATD. provides BI appearance increasing services nongovernmental the under revenues providing state across electronic community and through supervision local ISEP case management, supervision of year component key as ballistic and footprint through rebid called supervision and the program, the as contract country. At Security, technology XXXX, the a that with intensive BI ATD Homeland provided federal level, since BI Alternative or supports supervision of and the US and ISEP ISEP. solutions, an Detention also Department of program was

is new program the program under a almost a This new non-citizens young of ICE double. ATV competitive procurement number for [ph] the XXXX, and to ISEP Recently, adults incremental During ISEP. program, involves issued which participants. that is program GEO then. which programs expected have This to years implemented and resemble approximately ICE management expected to the implemented family one on bid ago, Care is case XX,XXX seven closely back

scope. expect the procurement We and expertise we are on ATV believe for program for this and well-positioned young adults bid that given ICE's to new ICE this we the unparalleled

the we the challenges are achieved GEO programming. X.X associated significant hours despite Care year. proud the million pandemic, milestones that Continuum rehabilitation In important programs XXXX, Finally, of enhanced we our of several approximately COVID-XX throughout with completed

X,XXX programs school training high GEDs equivalency academic our X,XXX approximately vocational of Our award approximately and courses vocational degrees awarded and certification.

program awarded program over treatment completions. abuse XX,XXX behavioral programs substance X,XXX and Our achieved completion we approximately

We services also X,XXX than their returning to post-release provide a to individuals communities. more respective support

Care that transportation, people including unparalleled in better the to justice individuals, in programming times. turn X.X frontline cognitive their how the address of released scope on clothing, post-release this US a to our with Continuum rehabilitation, and is successful the system proud housing, believe and Jose services including call in custody needs that for lives. care model rehabilitation behavioral GEO At our changing difficult our employment food, have award-winning the who to very these Our of program integrates reentry We're treatment community throughout deliver those employees provides served support continued million to We time, remarks. proven closing can enhanced assistance. of criminal and be of I'll

Jose Gordo

Ann. you, Thank

our proud and very of have who are commitment unprecedented all pandemic. dedication this during of incredible employees We demonstrated global

face. recognize facilities achievements pleased challenges the XXXX. with are our that performance continue operational We and our throughout to financial We

of our diligently recruitment debt very also are and the the recognizes access ability We public today, its staff enhance both maturities. management to challenges address focused importance. our organizations working recognize We and to to of the and our to in one on We're significant financing the future. related is constraints country. fully across This retention team private most efforts the facing

continue key significant made recourse have towards two our the that last years progress We will focus a to and forward. over debt reducing be going net

ongoing continued maturities, a debt a debt potential change and engagement groups. with Corporation, advisors structure deleveraging, bondholder recently, including C the a out corporate to assets in REIT on to taxable our and our address laid ongoing tax of sales review focus and lender reduction from businesses, our the future and of have company-owned our our approach of more We multifaceted a banks and with and

outstanding senior to unsecured our loan, extend this able agreement of to all of with our maturities reasonable series or execute process recourse transaction and facility, debt and reach transactions Our and goal terms. on notes, credit our on our term revolving the be reduce a is net to

that a in the services. our the by and of flows discussions with real remains to quality the But and return process. cash questions. capital free potentially of that essential successfully in alternatives these debt financial entailing portion That believe legal assets diversified strong other this company to attaining our objective in common After and We evaluate a complete remarks. opportunities of to we take engaged of bondholders to capital completes we evaluate to good glad shareholders plan are We be contracts valuable with recourse resilient supported flow growth estate and advisors. assistance and plan allocation cash we that interest our our government structure future. faith also share are reduction, fund would We believe with net to lenders our

Operator

question We come Gomes will now Joe begin first the Instructions] question-and-answer ahead. The NOBLE Please [Operator go session. from will of Capital.

Joe Gomes

questions. Good morning, thanks for my and taking

Jose Gordo

Joe. Morning,

Joe Gomes

out, two a program, for report house potential? program, timing and -- for -- you pro Are a under programs? on the potential that to could immigrants to under arrest, could type if those pilot ones BI? about and give that some I it we're for us And was the as isn't a start that potential pilot does the mean for of US color think XX,XXX doing I be the that talking program BI what -- potentially maybe off, same pilot there's different different it on could was wanted pilot wondering, yesterday BI I how a So, is

Ann Schlarb

your Joe. for about different programs the announced for is publicly that a the in morning, Program different is the and Case Thank one XX,XXX you're for Management Ann that's Adult These locations for Good Young The reading media. are two about RFP up that's six Schlarb. across company. This you in XX questions. that participants is approximately --

at is that the this to second and about been that set liberty home pilot confinement not a the at speak is in that's point. The discussed media, further in media we're

Joe Gomes

there's stuff a for But obviously, going lots could positive of BI that Okay. potentially positive there? -- on incremental be

Ann Schlarb

population our alternatives and has grown are used discussed, we being significantly, As extensively.

believe So is that I correct.

Joe Gomes

the number what of your in specific something for be to been reportedly, on have And times various leverage for holders, our the was can still Okay. hand you with with I narrow kind reduction, come the on recourse you looking need of with to also, you going in? a that? wondering, gap are you that, close hand net and kind what a while discussions groups debt Thank debt for debt they've And with that a agreement quantify the to your of mentioned agreement debt seems on you or reduction, to with, for Are you couple objective net that. ratio?

Jose Gordo

Well, first. let me address the

an said about And will to believe, reduction with debt. of we're on year, part haven't creditor with we've pay we recourse reduce is to $XXX that to actually balance negotiation paid debt these the the annual we're the to we've because now, lot that that down of some discussed. debt in any free approximately million of trenches debt cash we think in $XXX sitting cash sitting negotiations flow on And generate can various speak net that but sheet mostly currently we I right connection use basis, the the of And is we net what groups. debt, a down we on is with used part of allocation it'll this different cash. be cash be

there's information really discussions payments, I mandatory we interest that items think sweep I publicly, rates. some about cash did different excess talking there's of by the number that release structure we're a around and discussing, don't to and prejudice flow, covenants want issues those

grounds think there's a different -- So being we're And we're of those most of items on I areas. are making good lot discussed. that

Joe Gomes

process, just this discussion just and they here? how is for much where’s could for longer hey, feel take, will Any on a drag still, the it while or

Jose Gordo

think their we advisors of or as Well, I parties and the said, all are involved engaged.

so loan And constituencies is obviously the process. the that those there's there's it'll a different reasonable banks, note move but groups. holders, within pace, different complicated hope -- there's lenders, it we term There's there's the a at

to a process work that it's first the of complicated progress So in hopeful year, we'll through meaningful resolving half hopefully. that, make we're this but

Joe Gomes

kind you've of and update us what no color potential that any, of, might And there, of be or give review? timing business about reviewing looking asset progress kind or of kind Okay. Can on potential talked you the sales. similarly, completion at sales for you

Jose Gordo

$XX that review, an facilities looking as worth as mostly I Well, and in million believe mentioned I well we're sales. think And year George the mostly of I they proceeds, or it's as become would last at to about say there makes have rather to facilities. assets over sense redeploy. those mentioned, more own, smaller maybe idle ongoing continue asset so and net that about we try other available we've Perry market sold to $XX some was that we our than that are more one sell try that facility assets, other The of land was Most been And million. Alabama to recent most idle in we sell.

Joe Gomes

you that. year of going give fiscal the Okay. And government's reviewed and the Thanks they've maybe a in all You operating we funding come XX,XXX. levels roughly and around compared current the a there? to today currently funding, that in down government about are or on XX,XXX are couple the continuing ICE could Do historical? color XXXX that where the this into that times us where you have rest talk as for funding from been Congress, XX,XXX mentioned, to government of you to think being under as of they're know, you year negotiations think resolution, of still some for some and are fiscal or bills going you mentioned there's detainees, that going do that's they to stay

Jose Gordo

about resolution four don't to of six another weeks, know. Well, we really current I just discussions continuing short-term The are believe.

of But fiscal be an full following continuing budget could to resolution. year. a do So another that, balance it you know, there'll attempt be the for the

maybe I XX has a said, been budget think there's been years actual approved. since that it's somebody been

then, continuing some been working on resolutions we've sort or since So of another.

Joe Gomes

title for if on be guess that be kind I may. news And Thanks I Any lifted? Okay. of might that. when you one guys might seeing more, new XX

Brian Evans

long No, We've we have that imminent, but into time. been a it's that. really imminent been hearing insight don't it's any

Joe Gomes

questions. is it. true. Well, thanks that for Really the Yes, taking appreciate

Pablo Paez

Thank you, Joe.

Brian Evans

Thank you.

Operator

go The Please next Sidoti. question from of ahead. Ramgopal comes Mitra

Mitra Ramgopal

questions. the taking for Thanks morning. good Hi, Yes.

to pickup given in First, the a it the Most largely occupancy curious couple increased to et relates cetera, likely, receding occupancy you rates pandemic environment. being terms handle mandates in tight as your labor be of and seeing labor the lifted, a ability with should market?

Brian Evans

the higher, our are to essentially full our compared provide vacancy most requirement significantly contractual our in levels wages there's facilities often -- are state depressed are as and where We facilities, staffing. to federal a

working the we the by And the So or we've client point basis back state think we're so. the successful and in were get hoping labor concern by with and maybe fairly little a market wages to doing been in we -- on normalizes of area days. mid area the is the and in where pre-pandemic partners that bit primarily adult year later, of institutions, -- governmental we've a client I of those our in increase been to

Mitra Ramgopal

Okay.

sort to So, fairly you of the ability back the… quickly to to clients do go have the mitigate

Brian Evans

Yes, we do.

Mitra Ramgopal

In cost increases now. you're seeing right

still refinancing, separate should we Okay. complicated in and looking it's XXXX it of could as for process, and debt taken or XXXX, all be but very and be relates relates here one announcements I to to know just it one terms care And, of clarification three XXXX, the early as it the big in maybe potentially announcement?

Jose Gordo

to would, the I preference bulk say the a with to and global I don't it's capital at the or I know, objective You process anything's one of is structure time, settlement. possible. want of sort mean the type deal

all affected clearly and stack. stack have as announcement that So XXXX guarantee might the to there's the maturities no could of some is but something towards, idea the what the working be the be or piecemeal, an And we're XXXX that, then obviously capital XXXX, maturities relates of to the well. across of it and debt -- of even

Mitra Ramgopal

quarter, the lot a one-time to Okay, fourth thanks. Brian, it saw items there. we as relates of in

XXXX, first -- Just or curious, even into pretty maybe quarter much to gone. look of that be the we if as most will here

Brian Evans

that's think We maybe, the had had transitional call I some Yes, number, in items We it, case. a asset XXXX. I divestitures.

we'll with of type financial And or maybe I or would continue of some on assets. one-off we're the issues this to continue see associated be big sort some that potential restructuring, that. to as areas working through gain have costs But disposal we'll think, think costs. of loss would I

Mitra Ramgopal

maybe your of just some in etcetera, expectations revenue Thanks. it's the your or it from thought in just just strongly in Okay. of assumptions sentencing rates as cross-border in maybe occupancy that process terms you've more really beyond. curious in maybe up, run apprehensions, or terms growing expectations, to rate know on XXXX moving continuing whether And your color court and talked then, guidance, increase BI on activity, and And about XXXX, there. I relates

Jose Gordo

detail are think, the state in pretty segments, Yes, as Marshalls And will. George say contracts our our you shape The are, in are good volatile, part, customer I through went customers James more but well. most good at levels. as occupancy -- if high different of each a mentioned, I on would pretty for little pretty

minimum occupancy pretty We the And guarantees. And consistent transparent we levels that. not ICE most facilities. I that continue XXXX, to see occupancy lower with in in levels our forecast been XXXX, were for in we think, part, occupancy above we've did the

but above haven't year, that. forecasted anything numbers to later really expect those in improve we we maybe Although, do the

aggressive you significant be XXXX. as be in ISEF We've contract that continued during there. at volatile. growth there but that you got As that kind occur can with not what around not [ph] to we're of the Policies growth, indicated, may was rate, going

as some a So There we've with approach of we tried as prudent growth, but that. saw not is to sort it's XXXX. significant take what in

Mitra Ramgopal

front then idle business, stand terms not counting And piece, of any you're right new on the that in Thanks. now. I'm cell Okay. where on assuming things on

Jose Gordo

in related the don't certainly our facilities. included new those We're of In those to aggressively forecast. business. new speculative usually But business haven't Yes. reactivate in facilities to any we we some the any include guides, working

Mitra Ramgopal

questions. Thanks Okay. taking for the

Operator

question from will go Kirk of Capital. come Imperial next Please ahead. The Ludtke

Kirk Ludtke

Hello, everyone. Can hear you me?

Jose Gordo

can. Yes, we

Kirk Ludtke

you've I loss then very the with go helpful about -- looks million contracts nine you. opportunities. that have some guidance the… just a that couple new revenue have and call. $XXX is just the are and The Thank I of away. that like down midpoint it's some follow of suspect the these XXXX year-over-year of assumed ups guidance business at for maybe I these respect What to Wonderful. of

Jose Gordo

of is mean, of normalization the -- adjustments well transition by, be electronic to XXXX, our, I then facility contracts contracts then, Marshals expirations. away. know, that we've those non-residential as facility for per the few away diem the indicated, that's that's driven also to various know, the of And of one those by you that we and there XXXX, going And some as BOP facilities. in offset are -- to that whatever most you in most we've assumptions had of we went And then on that to alluded state George at business. as our pressure some deal to with mostly related monitoring that wage made expect

Kirk Ludtke

are know, have ICE have that contracts respect what the -- assumed helpful. might fiscal but you this, mentioned XXXX? in that's that with to I Thank Interesting. expiring you you

Jose Gordo

We So of those we've going renew come contracts any have assumed away. as don't they up. the

Kirk Ludtke

know remarkable. Thank And many reside you in the in consistent higher that respect new how the despite labor and margins Georgia the business, Florida. scheduled pretty Fantastic. to Georgia Scope close? look those mentioned you the costs. with you. really, people they're facilities With XX, -- It's really Do Okay. to the

James Black

No. On closure Georgia a of that a facility… there, know there'll don't I be

Jose Gordo

did… James,

James Black

know if don't they've announced I closure.

Jose Gordo

a over period haven't yet certainly That's they probably And be to announced in any time. Florida. closures determined of

Kirk Ludtke

guess new had Georgia they're to -- thought facilities. going I they Okay, just build announced I that

Jose Gordo

Yes.

Kirk Ludtke

old Ray in an they not. guess, got maybe I I some I you've but you? know situation opportunity is event, does Georgia that I mean, assume any -- closing In taken? for that D. are ones, that And

Jose Gordo

We in us. believe opportunity Georgia there's for an Yes.

Kirk Ludtke

know timing? you they're Do what Great. in of thinking terms

Jose Gordo

that they're No, approved Same by have that half Florida. session. second legislative in be the get And really I'm mean, governor year. assuming still with reviewed that. fair, And -- to and they in through of it's the I the probably

Kirk Ludtke

big have you is? you I mean, how Do Florida in mentioned but the opportunity this, might have

Jose Gordo

is two presently bed facilities. the discussion Well, X,XXX

Kirk Ludtke

Wow.

close on you ICE maybe know, Washington any, then And -- any thing? something indemnifying you have other any on the can if program noticed of that, that you ICE similar facilities, work respect let Thank that type agreed And you ICE do if and State. in programs, elsewhere I'm to you lastly, sizable. you. with I that to plans curious, just voluntary losses front you in Okay, down incur to or there's for provide update, you shut

Jose Gordo

Well, that the the in program increase was modest fairly resulted Tacoma, to replace program. contracted shut in down services a

detainee that a modest staffing and, population facility So we approximately know, have level essentially XXX. at full you

to more the That's whack or a of a know, levels there's less detainees. so the to kind are XXX levels COVID-XX look employee out detainee and staff lot probably and because XXX look in XXX after the pandemic You the XXX sense employees detainees. lot after of of there’s staff,

Kirk Ludtke

voluntary the throughout Thank of ICE wondering facilities? work was all programs you you. I were your if terminating

Jose Gordo

otherwise, No, that's facility contractual discontinuation our no, to administer an of program. not as program this ICE requirement decision. Because And we're could where to place. It's work volunteer the operator it's not. an decision the of ICE take any for

Kirk Ludtke

Got be share there might offering know, program early to it. detainees? may incurring this. you Thank to any costs too Is But you for any be have or that expressed you. and it – willingness they

Jose Gordo

we're on discussions that issue. Well, in

Kirk Ludtke

Great, thank call. much. you very Great

Jose Gordo

you. Thank

Operator

Global. The Sherman next go with from Please Ranger be Jordan question will ahead.

Jordan Sherman

if specifically. thanks. I guidance. I the Hey, for want to hanging clarify in Thanks Apologies missed there. just something on it,

on the are interest the – facilities in on in is expected change in discussions? interest facilities the the an on facilities guidance rate a current on embedded said You rates the or your that

Jose Gordo

status structure. debt our The guidance is capital quo based on

Jordan Sherman

Then, of lines? for individual it sale? Is the business Got table it? it off Okay. to assets? is anything terms for about or Is ask in assets you sales wanted there

Jose Gordo

think makes But what we assets. facilities, those for off dispose it does I feel that know of try described what's assets, more say table. Well, don't I that to the is smaller we to sale. than redeploy sale. for economically I described Generally, idle sense, what is to I'd

Jordan Sherman

I'm I that comment. lastly, comment with that the wondering, pilot just was electronic there potential program then And Okay, about missed I apologies. monitoring business, ICE. the

that being require I they're business facility done government? Why on plus But to that's I themselves? with seem you a doesn't be from that is not what's with governance Why a mean, standpoint, politically? some that – wondering, is essentially, Just new say like particularly a run considering doing built. rather considered, a it all requires difficult like equipment. just than It that business doing way. the by things staffing, doesn't something going shouldn't to

George Zoley

I most… think

Ann Schlarb

Hey, is side. specifically Jordan, to have would say, would But why were this is than Ann And to enforcement on a I rather they And ICE fundamentally procuring law case the Schlarb. doing provided services themselves. it management respond that very the are this much agency. government are these

essentially becomes a augment technology it they're is note not this RFP. a it So based when out Of their on ICE RFP, to responsibilities. carrying particular for it valuable

not does we've community providing And it for management intensive It’s a electronic agency very the So the and those based monitoring. non-governmental works program. types closely include services of XX with are type case now. And it for very been organizations. XX, years that of

working closely proven sector record and private track and generating good outcomes the a there's in the think I in programs. so with and successes these And providing

Jordan Sherman

that not guess ask let I you monitoring. deciding? different. is asked. they do I guess they I correct? my ask. the that. local Not you there Monitoring me state agencies do and this apologies the I one question was that are Is answered a little why I case in trying point is, type are that of But wasn't that management. asking to I what -- question that I general, appreciate

George Zoley

mean, think ICE agency. of I I not operate a don't They're as facilities. that, said more they -- operators. any an not but are, there Probably op is they're Ann law ICE enforcement

James Black

call don’t operate a centre… They

George Zoley

Service an No. Marshals operating And the entity. are not

It's nor So it's not unusual. amended.

James Black

to like that the services state, sector federal local the provided most are George's by private -- are most level, these -- -- No, of and most or companies companies. BI at the point, of other

Jordan Sherman

get Even and I saying appreciate provided not agencies. it. Okay. generally these you're services local speaking, I at ICE the governmental level, guess, that about point are I the Marshals, by

Ann Schlarb

social is they're RFP this doing…. services looking so in This at again, that service type more

George Zoley

Yes.

Ann Schlarb

the court through routine. detail decision they needs, to local then how -- organizations, that's isn't through get of assessment making and process, and is the to successfully them at level in makes work a refer immigration sure just really time, day-to-day non-governmental of done. helping there's which -- process, mean, with government looking normally what the identifying them law to assisting It's on them part connecting But …I move them. ICE the that enforcement

Jordan Sherman

these right? Yes. to point. No, just So the asking in electronic ICE I I business services ICE social not other this the new I've provided that pilot agencies, and and and moving that on thing just monitoring been because business, from that our it's ICE, a business. also outsource governmental in it's program, in apologies. appreciate focused electronic specifically as I I general, related services by general, some much. services monitoring to was cases, apologies about on

George Zoley

contract other in In have services. local electronic departments monitoring out cases, Sheriff's some those County program. they cases like In government,

thousands -- thousands governments of local country. and it's So, around the there's

X,XXX. I think it's

counties all of explanation those don't X,XXX customers, between have local in of have customers we and governments. an we they BI of do. them several So know have think, what We I that

Ann Schlarb

then, looking government and how thousands lease out gets provider put scope George, they their what have the numerous where of is is work the they're is contracts that we across they That's for. vary in across up the that correct, there pretty country. assisting of intensity of variety And to the out, how equipment. They're involved the normally models a the of And there.

Jordan Sherman

what at. That's was aiming Thank Perfect. That’s you. I help.

Ann Schlarb

You're welcome.

literal, response. Sorry, be can little a in I my

Jordan Sherman

no. no, No,

right we my wasn't the I’m You Thank -- got asked question. sorry. right to That you. eventually you.

Ann Schlarb

You're welcome.

Operator

from ahead. BTIG. Shaked Oren Please go is question of next The

Oren Shaked

don't performance been XXXX the Most light comments questions again the assume year? ones. of answered. see have excellent. to cost I is same had But fair The morning. of some Good opportunity you've just quick in to of Hi. that obviously potentially made, you it was outperform this In my that two

Brian Evans

Brian. is This

continues the a as tamper take facilities we result the to levels that we've benefit could view of those as result in our to some some -- XXXX. of There tried pandemic. and of approach lower a cost reasoned So that. benefits said, occupancy be COVID a taken on were moderate we've at But

Oren Shaked

come cash is? just were did wider why us little Understood. out that docks, you you the can what the a And help forecasting in than cleansing in with Brian,

Brian Evans

that million. about customer $XX to on do fairly or place to which payments, nothing processing system new $XX payments, payment we So in any they're had system, in actually customer, put of was price with probably months one behind worth is they about invoicing, us substantial a delayed four a and

first early expect the So to at up quarter them we second the in latest quarter. catch

Oren Shaked

That's Understood. you. it Thank for me.

Operator

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

George Zoley

for Thank call. you us joining you. look to thank our Well, this We next conference forward one. on

Operator

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

You now your may disconnect a day. great Have lines.

The GEO Group, Inc. (GEO) 17 Feb 222021 Q4 Earnings call transcript