- 2Q17 Net Income Attributable to GEO
of $0.25 per Diluted Share
- 2Q17 Adjusted Net Income of $0.32
per Diluted Share
- 2Q17 AFFO of $0.61 per Diluted
Share
- Updated FY17 Guidance for GAAP Net
Income Attributable to GEO of $1.24-$1.28 per Diluted Share and
Adjusted Net Income of $1.34-$1.38 per Diluted Share
- Updated FY17 AFFO Guidance of
$2.50-$2.54 per Diluted Share
The GEO Group, Inc. (NYSE: GEO) (“GEO”), a fully
integrated equity real estate investment trust (“REIT”) and a
leading provider of evidence-based offender rehabilitation and
community reentry services around the globe, reported today its
financial results for the second quarter 2017.
Second Quarter 2017 Highlights
- Net Income Attributable to GEO of
$0.25 per Diluted Share
- Adjusted Net Income of $0.32 per
Diluted Share
- Net Operating Income of $146.5
million
- Normalized FFO of $0.45 per Diluted
Share
- AFFO of $0.61 per Diluted
Share
GEO reported second quarter 2017 net income attributable to GEO
of $31.0 million, or $0.25 per diluted share, compared to $23.2
million, or $0.21 per diluted share, for the second quarter 2016.
GEO’s results for the second quarter 2017 include approximately
$7.9 million, net of tax, in mergers and acquisitions related
expenses. Adjusting for these expenses, GEO reported adjusted net
income for the second quarter 2017 of $38.8 million, or $0.32 per
diluted share.
GEO reported second quarter 2017 Normalized Funds From
Operations (“Normalized FFO”) of $55.4 million, or $0.45 per
diluted share, compared to $54.3 million, or $0.49 per diluted
share, in the second quarter 2016. GEO reported second quarter 2017
Adjusted Funds From Operations (“AFFO”) of $74.7 million, or $0.61
per diluted share, compared to $67.7 million, or $0.61 per diluted
share, in the second quarter 2016. GEO reported second quarter 2017
Net Operating Income (“NOI”) of $146.5 million compared to $138.1
million in the second quarter 2016.
George C. Zoley, Chairman and Chief Executive Officer of GEO,
said, “We are pleased with our second quarter results, which were
driven by the continued growth of our diversified platform of real
estate, management and programmatic services. Our diversified
investment and growth strategy has allowed us to provide
cost-effective, high quality services for our government partners
across the entire spectrum of correctional and rehabilitation
services. We continue to be optimistic about the opportunities to
reactivate our 7,000 existing idle beds in inventory and to expand
the delivery of our services and programs, and we remain focused on
the effective allocation of capital to continue to enhance
long-term value for our shareholders.”
GEO reported total revenues for the second quarter 2017 of
$577.1 million up from $548.4 million for the second quarter 2016.
Second quarter 2017 revenues include $33.9 million in construction
revenues associated with the development of the 1,300-bed Ravenhall
Facility in Australia (the “Ravenhall, Australia project”) compared
to $71.8 million in construction revenues for the second quarter
2016.
Compared to second quarter 2016, GEO’s second quarter 2017
operating results reflect several items:
- The activation of a new contract with
ICE at GEO’s 780-bed Folkston ICE Processing Center in Georgia in
January 2017;
- the issuance of 10.4 million shares of
GEO common stock on a post-split basis in March 2017;
- the refinancing of GEO’s senior credit
facility in March 2017;
- the closing of the Community Education
Centers (“CEC”) acquisition in April 2017; and
- lower utilization rates at a few U.S.
Immigration and Customs Enforcement (“ICE”) facilities compared to
the same period last year.
First Six Months 2017 Highlights
- Net Income Attributable to GEO of
$0.60 per Diluted Share
- Adjusted Net Income of $0.69 per
Diluted Share
- Net Operating Income of $288.9
million
- Normalized FFO of $0.96 per Diluted
Share
- AFFO of $1.25 per Diluted
Share
GEO reported net income attributable to GEO of $71.4 million, or
$0.60 per diluted share, for the first six months of 2017, compared
to $55.6 million, or $0.50 per diluted share, for the first six
months of 2016. GEO’s results for the first six months of 2017
include approximately $10.4 million, net of tax, in mergers and
acquisitions related expenses and approximately $0.3 million gain
on sale of real estate assets, net of tax. Adjusting for these
items, GEO reported adjusted net income for the first six months of
2017 of $81.6 million, or $0.69 per diluted share.
For the first six months of 2017, GEO reported Normalized FFO of
$113.5 million, or $0.96 per diluted share, compared to $103.0
million, or $0.92 per diluted share, for the first six months of
2016. GEO reported AFFO for the first six months of 2017 of $148.7
million, or $1.25 per diluted share, compared to $130.0 million, or
$1.17 per diluted share, for the first six months of 2016. For the
first six months of 2017, GEO reported NOI of $288.9 million
compared to $274.4 million for the first six months of 2016.
GEO reported total revenues for the first six months of 2017 of
$1.13 billion up from total revenues of $1.06 billion for the first
six months of 2016. Revenues for the first six months of 2017
include $91.2 million in construction revenues associated with
GEO’s contract for the development and operation of the Ravenhall,
Australia project compared to $112.6 million in construction
revenues for the first six months of 2016.
2017 Financial Guidance
GEO updated its financial guidance for the full-year 2017 and
issued financial guidance for the third and fourth quarters of
2017.
For the third quarter 2017, GEO expects total revenues to be in
a range of $554 million to $559 million, including approximately
$10 million in construction revenue associated with GEO’s contract
for the development and operation of the Ravenhall, Australia
project. For the third quarter 2017, GEO expects Net Income
Attributable to GEO to be in a range of $0.31 to $0.33 per diluted
share and AFFO to be in a range of $0.61 to $0.63 per diluted
share.
During the third quarter 2017, GEO expects utilization rates at
its ICE facilities to improve sequentially from the second quarter
2017 but to be slightly below previously projected levels. Compared
to second quarter 2017 results, third quarter 2017 guidance also
reflects the impact of the recent budget impasse and government
shutdown in the State of New Jersey, which resulted in a temporary
decrease in utilization rates at GEO’s New Jersey reentry
facilities that were acquired from CEC. While the budget agreement
that was reached by the State of New Jersey restored funding for
GEO’s New Jersey reentry facilities, GEO expects that there will be
a transition period as GEO’s facilities ramp up utilization during
the third quarter. Third quarter 2017 guidance also reflects the
discontinuation of GEO Care’s Family Case Management Pilot Program
under contract with ICE, which the Federal government decided to
phase out at the end of June 2017.
For the fourth quarter 2017, GEO expects total revenues to be in
a range of $557 million to $562 million, including approximately $3
million in construction revenue associated with GEO’s contract for
the development and operation of the Ravenhall, Australia project.
For the fourth quarter 2017, GEO expects Net Income Attributable to
GEO to be in a range of $0.34 to $0.36 per diluted share and AFFO
to be in a range of $0.63 to $0.65 per diluted share.
Compared to third quarter 2017, fourth quarter 2017 guidance
reflects normalized operations and earnings from GEO’s New Jersey
reentry facilities. Additionally, fourth quarter 2017 guidance
reflects the discontinuation of the 1,576-bed Allen Correctional
Center managed-only contract in Louisiana in late August 2017.
Fourth quarter 2017 guidance also reflects the previously announced
new ten-year contracts with the Federal Bureau of Prisons for 3,532
beds at GEO’s company-owned Big Spring and Flight Line Facilities
in Texas which will take effect in October 2017. GEO also expects
to begin to partially realize its previously anticipated net cost
synergies from the CEC acquisition during the fourth quarter
2017.
Taking all these factors together, GEO expects full-year 2017
total revenue to be approximately $2.24 billion, including
approximately $104 million in construction revenue associated with
GEO’s contract for the development and operation of the Ravenhall,
Australia project. GEO updated its full-year 2017 guidance for Net
Income Attributable to GEO to a range of $1.24 to $1.28 per diluted
share; Adjusted Net Income to a range of $1.34 to $1.38 per diluted
share; and AFFO to a range of $2.50 to $2.54 per diluted share.
Quarterly Dividend
On July 10, 2017, GEO’s Board of Directors declared a quarterly
cash dividend of $0.47 per share. The quarterly cash dividend was
paid on July 28, 2017 to shareholders of record as of the close of
business on July 21, 2017. The declaration of future quarterly cash
dividends is subject to approval by GEO’s Board of Directors and to
meeting the requirements of all applicable laws and regulations.
GEO’s Board of Directors retains the power to modify its dividend
policy as it may deem necessary or appropriate in the future.
Reconciliation Tables and Supplemental Information
GEO has made available Supplemental Information which contains
reconciliation tables of Net Income Attributable to GEO to Net
Operating Income, EBITDA, and Adjusted EBITDA, and Net Income
Attributable to GEO to FFO, Normalized FFO and AFFO along with
supplemental financial and operational information on GEO’s
business segments and other important operating metrics. The
reconciliation tables are also presented herein. Please see the
section of this press release below titled “Note to Reconciliation
Tables and Supplemental Disclosure - Important Information on GEO’s
Non-GAAP Financial Measures” for information on how GEO defines
these supplemental Non-GAAP financial measures and reconciles them
to the most directly comparable GAAP measures. GEO’s Reconciliation
Tables can be found herein and in GEO’s Supplemental Information
which is available on GEO’s Investor Relations webpage at
investors.geogroup.com.
Conference Call Information
GEO has scheduled a conference call and simultaneous webcast for
today at 11:00 AM (Eastern Time) to discuss GEO’s second quarter
financial results as well as its progress and outlook. The call-in
number for the U.S. is 1-877-250-1553 and the international call-in
number is 1-412-542-4145. In addition, a live audio webcast of the
conference call may be accessed on the Events and Webcasts section
of GEO’s investor relations webpage at investors.geogroup.com. A
replay of the webcast will be available on the website for one
year. A telephonic replay of the conference call will be available
until August 21, 2017 at 1-877-344-7529 (U.S.) and 1-412-317-0088
(International). The participant passcode for the telephonic replay
is 10111250.
About The GEO Group
The GEO Group, Inc. (NYSE: GEO) is the first fully integrated
equity real estate investment trust specializing in the design,
financing, development, and operation of correctional, detention,
and community reentry facilities around the globe. GEO is the
world's leading provider of diversified correctional, detention,
community reentry, and electronic monitoring services to government
agencies worldwide with operations in the United States, Australia,
South Africa, and the United Kingdom. GEO's worldwide operations
include the ownership and/or management of 142 facilities totaling
approximately 98,000 beds, including projects under development,
with a growing workforce of approximately 23,500 professionals.
Note to Reconciliation Tables and Supplemental Disclosure
–
Important Information on GEO’s Non-GAAP Financial
Measures
Net Operating Income, EBITDA, Adjusted EBITDA, Funds from
Operations, Normalized Funds from Operations, Adjusted Funds from
Operations, and Adjusted Net Income are non-GAAP financial measures
that are presented as supplemental disclosures. GEO has presented
herein certain forward-looking statements about GEO's future
financial performance that include non-GAAP financial measures,
including, Net Operating Income, Adjusted EBITDA, FFO, Normalized
FFO, and AFFO. The determination of the amounts that are excluded
from these non-GAAP financial measures is a matter of management
judgment and depends upon, among other factors, the nature of the
underlying expense or income amounts recognized in a given period.
While we have provided a high level reconciliation for the guidance
ranges for full year 2017, we are unable to present a more detailed
quantitative reconciliation of the forward-looking non-GAAP
financial measures to their most directly comparable
forward-looking GAAP financial measures because management cannot
reliably predict all of the necessary components of such GAAP
measures. The quantitative reconciliation of the forward-looking
GAAP financial measures will be provided for completed annual and
quarterly periods, as applicable, calculated in a consistent manner
with the quantitative reconciliation of non-GAAP financial measures
previously reported for completed annual and quarterly periods.
Net Operating Income is defined as revenues less operating
expenses, excluding depreciation and amortization expense, general
and administrative expenses, real estate related operating lease
expense, and start-up expenses, pre-tax. Net Operating Income is
calculated as net income adjusted by subtracting equity in earnings
of affiliates, net of income tax provision, and by adding income
tax (benefit) provision, interest expense, net of interest income,
loss on extinguishment of debt, depreciation and amortization
expense, general and administrative expenses, real estate related
operating lease expense, and start-up expenses, pre-tax.
EBITDA is defined as net income adjusted by adding taxes,
interest, depreciation and amortization. Adjusted EBITDA is defined
as EBITDA adjusted for net loss/income attributable to
non-controlling interests, stock-based compensation expenses,
pre-tax, and certain other adjustments as defined from time to
time, including for the periods presented M&A related expenses,
pre-tax, start-up expenses, pre-tax, and gain on sale of real
estate assets, pre-tax. Given the nature of our business as a real
estate owner and operator, we believe that EBITDA and Adjusted
EBITDA are helpful to investors as measures of our operational
performance because they provide an indication of our ability to
incur and service debt, to satisfy general operating expenses, to
make capital expenditures and to fund other cash needs or reinvest
cash into our business.
We believe that by removing the impact of our asset base
(primarily depreciation and amortization) and excluding certain
non-cash charges, amounts spent on interest and taxes, and certain
other charges that are highly variable from year to year, EBITDA
and Adjusted EBITDA provide our investors with performance measures
that reflect the impact to operations from trends in occupancy
rates, per diem rates and operating costs, providing a perspective
not immediately apparent from income from continuing
operations.
The adjustments we make to derive the non-GAAP measures of
EBITDA and Adjusted EBITDA exclude items which may cause short-term
fluctuations in income from continuing operations and which we do
not consider to be the fundamental attributes or primary drivers of
our business plan and they do not affect our overall long-term
operating performance. EBITDA and Adjusted EBITDA provide
disclosure on the same basis as that used by our management and
provide consistency in our financial reporting, facilitate internal
and external comparisons of our historical operating performance
and our business units and provide continuity to investors for
comparability purposes.
Funds From Operations, or FFO, is defined in accordance with
standards established by the National Association of Real Estate
Investment Trusts, or NAREIT, which defines FFO as net income/loss
attributable to common shareholders (computed in accordance with
United States Generally Accepted Accounting Principles), excluding
real estate related depreciation and amortization, excluding gains
and losses from the cumulative effects of accounting changes,
extraordinary items and sales of properties, and including
adjustments for unconsolidated partnerships and joint ventures.
Normalized Funds from Operations, or Normalized FFO, is defined as
FFO adjusted for certain items which by their nature are not
comparable from period to period or that tend to obscure GEO’s
actual operating performance, including for the periods presented
loss on extinguishment of debt, M&A related expenses, start-up
expenses, and tax adjustments related to M&A related expenses
and start-up expenses.
Adjusted Funds From Operations, or AFFO, is defined as
Normalized FFO adjusted by adding non-cash expenses such as
non-real estate related depreciation and amortization, stock based
compensation expense, the amortization of debt issuance costs,
discount and/or premium and other non-cash interest, and by
subtracting recurring consolidated maintenance capital
expenditures.
Adjusted Net Income is defined as Net Income Attributable to GEO
adjusted for certain items which by their nature are not comparable
from period to period or that tend to obscure GEO’s actual
operating performance, including for the periods presented loss on
extinguishment of debt, M&A related expenses, net of tax,
start-up expenses, net of tax, and gain on sale of real estate
assets, net of tax.
Because of the unique design, structure and use of our
correctional facilities, we believe that assessing the performance
of our correctional facilities without the impact of depreciation
or amortization is useful and meaningful to investors. Although
NAREIT has published its definition of FFO, companies often modify
this definition as they seek to provide financial measures that
meaningfully reflect their distinctive operations. We have modified
FFO to derive Normalized FFO and AFFO that meaningfully reflect our
operations.
Our assessment of our operations is focused on long-term
sustainability. The adjustments we make to derive the non-GAAP
measures of Normalized FFO and AFFO exclude items which may cause
short-term fluctuations in income from continuing operations but
have no impact on our cash flows, or we do not consider them to be
fundamental attributes or the primary drivers of our business plan
and they do not affect our overall long-term operating performance.
We may make adjustments to FFO from time to time for certain other
income and expenses that do not reflect a necessary component of
our operational performance on the basis discussed above, even
though such items may require cash settlement. Because FFO,
Normalized FFO and AFFO exclude depreciation and amortization
unique to real estate as well as non-operational items and certain
other charges that are highly variable from year to year, they
provide our investors with performance measures that reflect the
impact to operations from trends in occupancy rates, per diem
rates, operating costs and interest costs, providing a perspective
not immediately apparent from income from continuing
operations.
We believe the presentation of FFO, Normalized FFO and AFFO
provide useful information to investors as they provide an
indication of our ability to fund capital expenditures and expand
our business. FFO, Normalized FFO and AFFO provide disclosure on
the same basis as that used by our management and provide
consistency in our financial reporting, facilitate internal and
external comparisons of our historical operating performance and
our business units and provide continuity to investors for
comparability purposes. Additionally, FFO, Normalized FFO and AFFO
are widely recognized measures in our industry as a real estate
investment trust.
Safe-Harbor Statement
This press release contains forward-looking statements regarding
future events and future performance of GEO that involve risks and
uncertainties that could materially affect actual results,
including statements regarding financial guidance for the third
quarter of 2017, the fourth quarter of 2017, and full year 2017,
the assumptions underlying such guidance, statements regarding the
financial and operational impact of the CEC acquisition, and
statements regarding future project activations and growth
opportunities. Factors that could cause actual results to vary from
current expectations and forward-looking statements contained in
this press release include, but are not limited to: (1) GEO’s
ability to meet its financial guidance for 2017 given the various
risks to which its business is exposed; (2) the risk that the CEC
acquisition will not be integrated successfully or that such
integration may be more difficult, time-consuming, or costly than
expected; (3) the risk that synergies from the CEC transaction may
not be fully realized or may take longer than expected to realize;
(4) the risk that the expected increased revenues and Adjusted
EBITDA from CEC may not be fully realized or may take longer than
expected to realize; (5) GEO’s ability to declare future quarterly
cash dividends and the timing and amount of such future cash
dividends; (6) GEO’s ability to successfully pursue further growth
and continue to create shareholder value; (7) risks associated with
GEO’s ability to control operating costs associated with contract
start-ups; (8) GEO’s ability to timely open facilities as planned,
profitably manage such facilities and successfully integrate such
facilities into GEO’s operations without substantial costs; (9)
GEO’s ability to win management contracts for which it has
submitted proposals and to retain existing management contracts;
(10) GEO’s ability to obtain future financing on acceptable terms;
(11) GEO’s ability to sustain company-wide occupancy rates at its
facilities; (12) GEO’s ability to access the capital markets in the
future on satisfactory terms or at all; (13) GEO’s ability to
remain qualified as a REIT; (14) the incurrence of REIT related
expenses; and (15) other factors contained in GEO’s Securities and
Exchange Commission periodic filings, including its Form 10-K, 10-Q
and 8-K reports.
Second quarter and first six months financial tables to
follow:
Condensed
Consolidated Statements of Operations
(Unaudited)
Q2 2017 Q2 2016 YTD 2017 YTD
2016 (unaudited) (unaudited) (unaudited) (unaudited)
Revenues $ 577,070 $ 548,350 $ 1,127,684 $ 1,058,535
Operating expenses 438,445 416,837 853,152 805,343
Depreciation and amortization 31,866 28,652 60,815 57,103
General and administrative expenses 52,206 36,904
94,792 70,965
Operating income
54,553 65,957 118,925 125,124
Interest income 12,346 5,902 24,323 10,459
Interest
expense (35,983 ) (31,089 ) (70,983 ) (60,455 )
Loss on
extinguishment of debt - (15,866 ) - (15,866 )
Income before income taxes and equity in earnings of
affiliates 30,916 24,904 72,265
59,262 Provision for income taxes 1,400 3,879 3,870
7,030
Equity in earnings of affiliates, net of income tax
provision 1,426 2,131 2,913 3,250
Net income 30,942 23,156 71,308
55,482 Less: Net loss attributable to noncontrolling
interests 50 53 87 77
Net income
attributable to The GEO Group, Inc. $
30,992
$ 23,209 $ 71,395
$ 55,559 Weighted Average
Common Shares Outstanding: Basic 122,125 111,066 117,885
110,940 Diluted 122,895 111,479 118,702 111,381
Income per Common Share Attributable to
The GEO Group, Inc.:
Basic: Net income per share — basic $
0.25
$
0.21 $
0.61 $
0.50
Diluted: Net income per share — diluted $
0.25 $
0.21 $
0.60 $
0.50 Regular Dividends Declared per
Common Share $ 0.47 $ 0.43 $ 0.94 $ 0.87
* all figures in '000s, except per share data
Reconciliation of
Net Income Attributable to GEO to Adjusted Net
Income
(In thousands, except per share
data)(Unaudited)
Q2 2017 Q2 2016 YTD 2017 YTD
2016 Net Income attributable to GEO $ 30,992 $
23,209 $ 71,395 $ 55,559 Add:
Loss on extinguishment of debt
- 15,866 - 15,866 Start-up expenses, net of tax - - - 1,190 M&A
related expenses, net of tax 7,849 - 10,433 - Gain on sale of real
estate assets, net of tax - - (261 ) -
Adjusted Net
Income $ 38,841 $ 39,075 $
81,567 $ 72,615 Weighted average
common shares outstanding - Diluted 122,895 111,479 118,702 111,381
Adjusted Net Income Per Diluted Share $
0.32 $ 0.35 $ 0.69 $
0.65
Condensed
Consolidated Balance Sheets
(Unaudited)
As of As of June 30, 2017 December
31, 2016 (unaudited)
ASSETS Cash and cash
equivalents $ 65,901 $ 68,038 Restricted cash and investments
17,378 17,133 Accounts receivable, less allowance for doubtful
accounts 342,361 356,255 Contract receivable, current portion
238,958 224,033 Prepaid expenses and other current assets 42,467
32,210
Total current assets $
707,065 $
697,669 Restricted Cash and Investments 23,020
20,848
Property and Equipment, Net 2,049,613 1,897,241
Non-Current Contract Receivable 358,727 219,783
Deferred
Income Tax Assets 32,262 30,039
Intangible Assets, Net
(including goodwill) 1,056,148 819,317
Other Non-Current
Assets 66,933 64,512
Total Assets $
4,293,768 $
3,749,409 LIABILITIES AND
SHAREHOLDERS' EQUITY Accounts payable $ 98,027 $ 79,637
Accrued payroll and related taxes 63,192 55,260 Accrued expenses
and other current liabilities 153,930 131,096 Current portion of
capital lease obligations, long-term debt, and non-recourse debt
255,404 238,065
Total current liabilities
$
570,553 $
504,058 Other Non-Current
Liabilities 98,741 88,656
Capital Lease Obligations
6,787 7,431
Long-Term Debt 2,107,208 1,935,465
Non-Recourse Debt 283,780 238,842
Shareholders'
Equity 1,226,699 974,957
Total Liabilities and Shareholders'
Equity $
4,293,768 $
3,749,409
* all figures in '000s
Reconciliation of
Net Income Attributable to GEO to FFO, Normalized FFO, and
AFFO
(Unaudited)
Q2 2017 Q2 2016 YTD 2017 YTD
2016 (unaudited) (unaudited) (unaudited) (unaudited)
Net
Income attributable to GEO $ 30,992 $ 23,209 $ 71,395 $ 55,559
Add: Real Estate Related Depreciation and Amortization 16,550
15,221 31,936 30,363 Gain on sale of real estate assets ** - - (261
) -
Equals: NAREIT defined FFO $
47,542 $ 38,430 $
103,070
$ 85,922 Add: Loss on
extinguishment of debt - 15,866 - 15,866 Start-up expenses - - -
1,939 M&A related expenses 10,336 - 12,956 - Tax Effect of
adjustments to Funds From Operations *** (2,487 ) - (2,523 ) (749 )
Equals: FFO, normalized $
55,391 $ 54,296 $
113,503
$ 102,978 Add: Non-Real Estate
Related Depreciation & Amortization 15,316 13,431 28,879 26,740
Consolidated Maintenance Capital Expenditures (4,934 ) (5,954 )
(11,357 ) (11,194 ) Stock Based Compensation Expenses 5,030 3,248
9,993 6,489 Amortization of debt issuance costs, discount and/or
premium and other non-cash interest 3,870 2,661 7,676 5,027
Equals: AFFO $
74,673
$ 67,682 $
148,694
$ 130,040 Weighted average common
shares outstanding - Diluted 122,895 111,479 118,702 111,381
FFO/AFFO per Share - Diluted Normalized FFO Per
Diluted Share $
0.45 $ 0.49
$
0.96 $ 0.92 AFFO Per
Diluted Share $
0.61 $ 0.61
$
1.25 $ 1.17 Regular
Common Stock Dividends per common share $
0.47
$ 0.43 $
0.94 $
0.87 * all figures in '000s, except per share
data ** no tax impact *** tax adjustments relate to start-up
expenses and M&A expenses
Reconciliation of
Net Income Attributable to GEO toNet Operating Income,
EBITDA and Adjusted EBITDA
(Unaudited)
Q2 2017 Q2 2016 YTD 2017 YTD
2016 (unaudited) (unaudited) (unaudited) (unaudited)
Net
Income attributable to GEO $ 30,992 $
23,209 $ 71,395 $ 55,559 Less
Net loss attributable to noncontrolling
interests
50 53 87 77
Net Income
$ 30,942 $ 23,156 $
71,308 $ 55,482 Add (Subtract): Equity
in earnings of affiliates, net of income tax provision (1,426 )
(2,131 ) (2,913 ) (3,250 ) Income tax provision 1,400 3,879 3,870
7,030 Interest expense, net of interest income 23,637 25,187 46,660
49,996 Loss on extinguishment of debt - 15,866 - 15,866
Depreciation and amortization 31,866 28,652 60,815 57,103 General
and administrative expenses 52,206 36,904 94,792
70,965
Net Operating Income, net of operating
lease obligations $ 138,625 $
131,513 $ 274,532 $
253,192 Add: Operating lease expense, real
estate 7,879 6,564 14,362 19,245 Start-up expenses, pre-tax -
- - 1,939
Net Operating Income
(NOI) $ 146,504 $ 138,077
$ 288,894 $ 274,376
Q2 2017 Q2
2016 YTD 2017 YTD 2016 (unaudited) (unaudited)
(unaudited) (unaudited)
Net Income $ 30,942
$ 23,156 $ 71,308 $
55,482 Income tax provision 1,998 4,607 5,078 8,229
Interest expense, net of interest income 23,637 41,053 46,660
65,862 Depreciation and amortization 31,866 28,652 60,815 57,103
EBITDA $ 88,443
$ 97,468 $ 183,861
$ 186,676 Net loss attributable to
noncontrolling interests 50 53 87 77 Stock based compensation
expenses, pre-tax 5,030 3,248 9,993 6,489 M&A related expenses,
pre-tax 10,336 - 12,956 - Start-up expenses, pre-tax - - - 1,939
Gain on sale of real estate assets, pre-tax - - (261 ) -
Adjusted EBITDA $ 103,859
$ 100,769 $ 206,636
$ 195,181 * all figures in '000s
2017
Outlook/Reconciliation
(In thousands, except per share data)
(Unaudited)
FY 2017 Net Income Attributable to GEO
$ 150,000 to $ 155,000
Real Estate Related Depreciation and
Amortization 68,000 68,000
Funds from Operations (FFO)
$ 218,000 to
$ 223,000
Adjustments M&A and Transition Related Expenses, net
of tax 12,500 12,500
Normalized Funds from Operations
$ 230,500 to
$ 235,500
Non-Real Estate Related Depreciation and Amortization 61,000
61,000
Consolidated Maintenance Capex (24,500 ) (24,500 )
Non-Cash Stock Based Compensation and Non-Cash Interest
Expense 35,000 35,000
Adjusted Funds From Operations
(AFFO) $ 302,000 to
$ 307,000
Net Cash Interest Expense 82,500 82,500
Consolidated Maintenance Capex 24,500 24,500
Income
Taxes 12,000 12,000
Tax Effect of Adjustments to Funds From
Operations* 4,000 4,000
Adjusted EBITDA $
425,000 to
$ 430,000 G&A
Expenses 183,000 183,000
Non-Cash Stock Based
Compensation (20,000 ) (20,000 )
Equity in Earnings of
Affiliates (6,000 ) (6,000 )
M&A and Transition Related
Expenses, pre-tax (16,000 ) (16,000 )
Real Estate Related
Operating Lease Expense 30,000 30,000
Net Operating
Income $ 596,000 to
$ 601,000
Adjusted Net Income Per Diluted Share $
1.34 to
$ 1.38 AFFO Per Diluted Share
$ 2.50 to
$ 2.54 Weighted Average
Common Shares Outstanding-Diluted 121,000 to 121,000 *
Tax Adjustments relate to M&A and Transition Related Expenses
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170807005288/en/
The GEO Group, Inc.Pablo E. Paez, 866-301-4436Vice President,
Corporate Relations
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