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 first
quarter 2020, provided an update on the impact of the COVID-19
pandemic on GEO, and issued updated financial guidance.
First Quarter 2020 Highlights
- Total revenues of $605.0 million
- Net Income Attributable to GEO of $25.2 million or $0.21 per
diluted share
- Adjusted Net Income of $0.24 per diluted share
- Net Operating Income of $150.2 million
- Normalized FFO of $0.39 per diluted share
- AFFO of $0.55 per diluted share
FY20 Guidance Updated; 2Q20 Guidance Provided
- Updated financial guidance reflects the impact of COVID-19
pandemic on GEO
- FY20 Net Income Attributable to GEO expected to be
$0.92-$1.04 per diluted share
- FY20 Adjusted Net Income expected to be $1.00-$1.12 per
diluted share
- FY20 AFFO expected to be $2.25-$2.35 per diluted
share
- 2Q20 Net Income Attributable to GEO expected to be
$0.20-$0.24 per diluted share
- 2Q20 Adjusted Net Income expected to be $0.23-$0.27 per
diluted share
- 2Q20 AFFO expected to be $0.54-$0.58 per diluted
share
George C. Zoley, Chairman and Chief Executive Officer of GEO,
said, “As our country and the world face an unprecedented health
and economic crisis, our employees and facilities have also been
impacted by the spread of COVID-19. Ensuring the health and safety
of all those entrusted to our care and our employees has always
been our number one priority, and we have implemented comprehensive
steps to address and mitigate the risks of COVID-19 across our
company. We are incredibly proud of our frontline employees who
make daily sacrifices to care for all those in our facilities and
programs.
“While we have continued our operations as an essential
government services provider, the spread of COVID-19 has also
negatively impacted our projected revenues and cash flows. Despite
the significant challenges associated with this global pandemic,
our business, earnings and cash flows remain resilient, and we
believe we have adequate liquidity and access to capital. We have
taken what we believe is a prudent approach to our guidance for
2020, and we remain focused on the effective allocation of capital
and on the enhancement of long-term value for our
shareholders.”
COVID-19 Update
As the COVID-19 pandemic has impacted communities across the
United States and around the world, our employees and facilities
have also been impacted by the spread of COVID-19. Ensuring the
health and safety of our employees and all those in our care has
always been our number one priority. As a longstanding provider of
essential government services, we have experience with the
implementation of best practices for the prevention, assessment,
and management of infectious diseases.
- All of our facilities operate safely and without overcrowded
conditions.
- All of our facilities have access to regular handwashing with
clean water and soap.
- All of our secure services facilities provide 24/7 access to
healthcare.
- All of our U.S. Immigration and Customs Enforcement (“ICE”)
Processing Centers typically have approximately double the number
of healthcare staff, compared to state correctional
facilities.
- Most of our facilities are equipped with Airborne Infection
Isolation Rooms.
From the outset of the COVID-19 global pandemic, our corporate,
regional and field staff have implemented comprehensive steps to
address and mitigate the risks of COVID-19 to all those in our care
and our employees.
- We issued guidance to all our facilities, consistent with the
guidance issued for correctional and detention facilities by the
Centers for Disease Control and Prevention.
- We updated our policies and procedures to include best
practices for the prevention, assessment, and management of
COVID-19, including the implementation of quarantine and cohorting
procedures to isolate confirmed and presumptive cases of COVID-19,
including medical isolation and the use of Airborne Infection
Isolation Rooms.
- We provided educational guidance to our employees and
individuals in our care on the best preventative measures to avoid
the spread of COVID-19 such as frequent and careful handwashing;
avoiding touching areas of the face, including facial hair;
avoiding individuals exhibiting flu-like symptoms; proper cough and
sneeze etiquette; social distancing requirements; and adjustments
to laundry and meal schedules.
- We increased the frequency of distribution of personal hygiene
products, including soap, shampoo and body wash, and tissue paper,
and we are ensuring the daily availability of bars of soap or soap
dispensers at each sink for hand washing in all of our
facilities.
- We deployed specialized sanitation teams to sterilize
high-contact areas of our facilities and have developed intensive
schedules and procedures for the cleaning and disinfecting of
facility spaces above and beyond normal cleaning activities.
- We procured additional cleaning equipment and sanitation
products that are proven healthcare grade disinfectants.
- We advised our employees to remain home if they exhibit
flu-like symptoms, and we have exercised flexible paid leave and
Paid Time Off policies to allow for employees to remain home if
they exhibit flu-like symptoms or to care for a family member.
- We engaged with our government agency partners to promptly
suspend non-essential visitation at all of our facilities, and we
have employed additional measures during the intake and entry
process at all of our facilities to include screening specific to
COVID-19, including temperature checks for all staff and any
legally required visitors before entering our facilities, as well
as, verbal medical screening questionnaires.
- We ordered and received swab kits for COVID-19 from a national
supplier, and we enacted quarantine and testing policies for any
employees who may have come into contact with any individual who
has tested positive for COVID-19.
- At every one of our facilities, we have worked closely with our
government agency partners and local health officials to develop
COVID-19 emergency plans and testing policies for the individuals
in our care.
- In March of 2020, we started procuring additional Personal
Protective Equipment and began issuing it as clinically needed at
facilities impacted by COVID-19.
- Over the course of April of 2020, we coordinated with our
government agency partners to distribute Personal Protective
Equipment, including facemasks to all staff, inmates, detainees,
and residents as a precautionary measure at all of our Federal
Bureau of Prisons facilities, ICE Processing Centers, U.S. Marshals
facilities, state correctional facilities, local correctional
facilities and jails, residential reentry centers, and youth
services residential facilities.
We will continue to coordinate
closely with our government agency partners and local health
agencies to ensure the health and safety of all those in our care
and our employees. We are grateful for our frontline employees who
are making sacrifices daily to provide care for all those in our
facilities during this unprecedented global pandemic.
Information on the steps we have taken to address and mitigate the
risks of COVID-19 can be found at www.geogroup.com/COVID19.
First Quarter 2020 Review
We reported first quarter 2020 net income attributable to GEO of
$25.2 million, or $0.21 per diluted share, compared to $40.7
million, or $0.34 per diluted share, for the first quarter 2019. We
reported total revenues for the first quarter 2020 of $605.0
million compared to $610.7 million for the first quarter 2019.
Additionally, first quarter 2020 results reflect a $0.4 million
gain on real estate assets pre-tax, a $1.6 million gain on the
extinguishment of debt, pre-tax, $2.0 million in start-up expenses,
pre-tax, $1.9 million in close-out expenses, pre-tax, $0.9 million
in COVID-19 related expenses, pre-tax, and $0.8 million in the tax
effect of adjustments to net income attributable to GEO. Excluding
these items, we reported first quarter 2020 Adjusted Net Income of
$28.8 million, or $0.24 per diluted share.
We reported first quarter 2020 Normalized Funds From Operations
(“Normalized FFO”) of $47.2 million, or $0.39 per diluted share,
compared to $60.3 million, or $0.50 per diluted share, for the
first quarter 2019. We reported first quarter 2020 Adjusted Funds
From Operations (“AFFO”) of $66.6 million, or $0.55 per diluted
share, compared to $80.3 million, or $0.67 per diluted share, for
the first quarter 2019.
2020 Financial Guidance
We updated our financial guidance for the full-year of 2020 and
issued guidance for the second quarter of 2020. Even though we have
continued our operations as an essential government services
provider, the spread of COVID-19 has negatively impacted a number
of our facilities and programs and is expected to result in lower
full-year 2020 revenues, primarily for our ICE Processing Centers
and U.S. Marshals Service facilities and our GEO Reentry Services
business.
Our ICE Processing Centers and U.S. Marshals Service facilities
began experiencing lower overall occupancy in late March 2020 as a
result of declines in crossings and apprehensions along the U.S.
Southwest border, as well as, a decrease in court and sentencing
activity at the federal level in the United States due to the
COVID-19 pandemic. Additionally, the U.S. federal government
recently issued COVID-19 operational guidance recommending a
reduction to 75 percent of capacity at ICE Processing Centers where
possible to promote social distancing practices.
Our GEO Secure Services contracts typically contain fixed-price
or minimum guarantee payment provisions intended to ensure adequate
staffing levels and consistent service delivery. Our ICE Processing
Centers and U.S. Marshals Service facilities are currently
operating at or around the capacity level tied to the fixed-price
or minimum guarantee payment provisions. While it is possible that
we may experience an improvement at these facilities later this
year, our updated full-year 2020 guidance assumes a continuation of
lower occupancy levels through the end of the year, resulting in an
estimated revenue decline of approximately 8% for the full-year
2020.
Our GEO Reentry Services business also began experiencing a
decline in occupancy in late March 2020 at our residential reentry
centers and non-residential day reporting programs due to lower
levels of referrals by federal, state and local government agencies
because of the COVID-19 pandemic. While it is possible that
referral levels for our GEO Reentry Services business may increase
later this year, our updated full-year 2020 guidance assumes lower
occupancy levels for our residential reentry centers and day
reporting programs through the end of the year, resulting in an
estimated revenue decline of approximately 4% for the full-year
2020.
We have also increased our spending on personal protective
equipment, diagnostic testing, and medical expenses as a result of
the COVID-19 pandemic and expect to incur several million dollars
in non-recurring costs during 2020. Additionally, our updated
guidance continues to assume no contribution from our 700-bed
Central Valley, 750-bed Desert View, and 700-bed Golden State
facilities in California, even though we are hopeful these
facilities will be activated as ICE Processing Center annexes
during the second half of 2020.
As a result of these factors, we have updated our full-year 2020
guidance for Net Income Attributable to GEO to a range of $0.92 to
$1.04 per diluted share; Adjusted Net Income to a range of $1.00 to
$1.12 per diluted share; and AFFO to a range of $2.25 to $2.35 per
diluted share. We expect full-year 2020 revenues to be
approximately $2.38 billion.
For the second quarter of 2020, we expect Net Income
Attributable to GEO to be in a range of $0.20 to $0.24 per diluted
share; Adjusted Net Income to be in a range of $0.23 to $0.27 per
diluted share; and AFFO to be in a range of $0.54 to $0.58 per
diluted share. Compared to our first quarter 2020 results, second
quarter 2020 guidance reflects lower employment tax expenses, which
are front-loaded in the first quarter of each year.
Financial Flexibility and Liquidity
At the end of the first quarter of 2020, we had approximately
$32 million in cash on hand and approximately $350 million in
available borrowing capacity under our $900 million revolving
credit facility, which matures in May 2024, in addition to an
accordion feature of $450 million under our senior credit facility.
For the full-year 2020, we have reduced our planned capital
spending by deferring capital expenditure projects where possible
and closely managing our working capital. We expect capital
expenditures in 2020 to total approximately $85 million, including
$19 million in maintenance capital expenditures.
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, Net Income to EBITDAre (EBITDA for real estate)
and Adjusted EBITDAre (Adjusted EBITDA for real estate), and Net
Income Attributable to GEO to FFO, Normalized FFO and AFFO, along
with supplemental financial and operational information on GEO’s
business and other important operating metrics, and in this press
release, Net Income Attributable to GEO to Adjusted Net Income. The
reconciliation tables are also presented herein. Please see the
section 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 available
on GEO’s investor 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 first quarter
2020 financial results as well as its 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
under the News, Events and Reports tab 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 May 14, 2020 at
1-877-344-7529 (U.S.) and 1-412-317-0088 (International). The
participant passcode for the telephonic replay is 10142872.
About The GEO Group
The GEO Group (NYSE: GEO) is
the first fully integrated equity real estate investment trust
specializing in the design, financing, development, and operation
of secure facilities, processing centers, and community reentry
centers in the United States, Australia, South Africa, and the
United Kingdom. GEO is a leading provider of enhanced in-custody
rehabilitation, post-release support, electronic monitoring, and
community-based programs. GEO’s worldwide operations include the
ownership and/or management of 126 facilities totaling
approximately 94,000 beds, including projects under development,
with a workforce of approximately 23,000 professionals.
Note to Reconciliation Tables and Supplemental Disclosure –
Important Information on GEO’s Non-GAAP Financial Measures
Net Operating Income, EBITDAre, Adjusted EBITDAre, 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 Adjusted Net Income, Adjusted EBITDAre, Net Operating
Income, FFO, Normalized FFO, and AFFO. The determination of the
amounts that are included or 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 2020, 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 non-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 provision, interest expense, net of interest income, gain/loss
on extinguishment of debt, depreciation and amortization expense,
general and administrative expenses, real estate related operating
lease expense, gain/loss on real estate assets, pre-tax, and
start-up expenses, pre-tax.
EBITDAre (EBITDA for real estate) is defined as net income
adjusted by adding provisions for income tax, interest expense, net
of interest income, depreciation and amortization, and gain/loss on
real estate assets, pre-tax. Adjusted EBITDAre (Adjusted EBITDA for
real estate) is defined as EBITDAre adjusted for net loss
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 start-up
expenses, pre-tax, COVID-19 expenses, pre-tax, and close-out
expenses, pre-tax. Given the nature of our business as a real
estate owner and operator, we believe that EBITDAre and Adjusted
EBITDAre 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, EBITDAre and Adjusted EBITDAre 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 net income
attributable to GEO.
The adjustments we make to derive the non-GAAP measures of
EBITDAre and Adjusted EBITDAre 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. EBITDAre and Adjusted
EBITDAre 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
gain/loss on the extinguishment of debt, pre-tax, start-up
expenses, pre-tax, COVID-19 expenses, pre-tax, close-out expenses,
pre-tax, and tax effect of adjustments to FFO.
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
gain/loss on real estate assets, pre-tax, gain/loss on the
extinguishment of debt, pre-tax, start-up expenses, pre-tax,
COVID-19 expenses, pre-tax, close-out expenses, pre-tax, and tax
effect of adjustments to Net Income Attributable to GEO.
Because of the unique design, structure and use of our
correctional facilities, processing centers, and reentry centers,
we believe that assessing the performance of our correctional
facilities, processing centers, and reentry centers 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 net income attributable to GEO 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 Net Income Attributable to GEO.
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 full year
and second quarter of 2020, the assumptions underlying such
guidance, and statements regarding the impact of COVID-19, our
available borrowing capacity and liquidity, reduced planned capital
spending and the allocation of capital to enhance long-term value
for our shareholders. 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 2020 given the
various risks to which its business is exposed, including the
magnitude, severity, and duration of the current COVID-19 global
pandemic and its impact on GEO; (2) GEO’s ability to declare future
quarterly cash dividends and the timing and amount of such future
cash dividends; (3) GEO’s ability to successfully pursue further
growth and continue to create shareholder value; (4) GEO’s ability
to obtain future financing on acceptable terms; (5) GEO’s ability
to access the capital markets in the future on satisfactory terms
or at all; (6) risks associated with GEO’s ability to control
operating costs associated with contract start-ups; (7) 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; (8) GEO’s ability to
win management contracts for which it has submitted proposals and
to retain existing management contracts; (9) GEO’s ability to
sustain or improve company-wide occupancy rates at its facilities
in light of the COVID-19 global pandemic; (10) the impact of any
future regulations or guidance on the Tax Cuts and Jobs Act; (11)
GEO’s ability to remain qualified as a REIT; (12) the incurrence of
REIT related expenses; and (13) other factors contained in GEO’s
Securities and Exchange Commission periodic filings, including its
Form 10-K, 10-Q and 8-K reports.
Condensed Consolidated Balance
Sheets* (Unaudited)
As of As of March 31, 2020 December 31,
2019 (unaudited) (unaudited)
ASSETS Cash and cash
equivalents
$
32,414
$
32,463
Restricted cash and cash equivalents
27,865
32,418
Accounts receivable, less allowance for doubtful accounts
375,453
430,982
Contract receivable, current portion
4,686
11,199
Prepaid expenses and other current assets
36,108
40,716
Total current assets
$
476,526
$
547,778
Restricted Cash and Investments
27,271
30,923
Property and Equipment, Net
2,142,530
2,144,722
Contract Receivable
319,819
360,647
Operating Lease Right-of-Use Assets, Net
123,465
121,527
Assets Held for Sale
4,405
6,059
Deferred Income Tax Assets
36,278
36,278
Intangible Assets, Net (including goodwill)
980,693
986,426
Other Non-Current Assets
76,860
83,174
Total Assets
$
4,187,847
$
4,317,534
LIABILITIES AND SHAREHOLDERS' EQUITY Accounts
payable
$
92,887
$
99,232
Accrued payroll and related taxes
63,005
54,672
Accrued expenses and other current liabilities
178,834
191,608
Operating lease liabilities, current portion
26,968
26,208
Current portion of finance lease obligations, long-term debt, and
non-recourse debt
23,625
24,208
Total current liabilities
$
385,319
$
395,928
Deferred Income Tax Liabilities
19,254
19,254
Other Non-Current Liabilities
82,591
88,526
Operating Lease Liabilities
99,314
97,291
Finance Lease Liabilities
2,563
2,954
Long-Term Debt
2,370,890
2,408,297
Non-Recourse Debt
270,460
309,236
Total Shareholders' Equity
957,456
996,048
Total Liabilities and Shareholders' Equity
$
4,187,847
$
4,317,534
* all figures in '000s
Condensed Consolidated Statements of
Operations* (Unaudited)
Q1 2020 Q1 2019 (unaudited) (unaudited)
Revenues
$
605,017
$
610,667
Operating expenses
461,322
456,997
Depreciation and amortization
33,327
32,469
General and administrative expenses
53,782
46,424
Operating income
56,586
74,777
Interest income
5,438
8,396
Interest expense
(34,180)
(40,280)
Gain on extinguishment of debt
1,563
-
Income before income taxes and equity in earnings of
affiliates
29,407
42,893
Provision for income taxes
6,546
4,840
Equity in earnings of affiliates, net of income tax
provision
2,260
2,596
Net income
25,121
40,649
Less: Net loss attributable to noncontrolling
interests
60
56
Net income attributable to The GEO Group, Inc.
$
25,181
$
40,705
Weighted Average Common Shares Outstanding:
Basic
119,394
118,774
Diluted
119,933
119,496
Net income per Common Share Attributable to The GEO
Group, Inc. : Basic: Net income per share — basic
$
0.21
$
0.34
Diluted: Net income per share — diluted
$
0.21
$
0.34
Regular Dividends Declared per Common Share
$
0.48
$
0.48
* 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)
Q1 2020 Q1 2019 Net Income attributable to
GEO
$ 25,181
$ 40,705
Add: (Gain)/Loss on real estate assets, pre-tax
(424)
1,497
(Gain)/Loss on extinguishment of debt, pre-tax
(1,563)
-
Start-up expenses, pre-tax
1,953
-
COVID-19 expenses, pre-tax
892
-
Close-out expenses, pre-tax
1,936
-
Tax effect of adjustments to Net Income attributable to GEO
837
(45)
Adjusted Net Income
$ 28,812
$ 42,157
Weighted average common shares outstanding - Diluted
119,933
119,496
Adjusted Net Income Per Diluted Share
$ 0.24
$ 0.35
Reconciliation of Net Income
Attributable to GEO to FFO, Normalized FFO, and AFFO*
(Unaudited)
Q1 2020 Q1 2019 (unaudited) (unaudited)
Net
Income attributable to GEO
$
25,181
$
40,705
Add (Subtract): Real Estate Related Depreciation and Amortization
18,395
18,103
(Gain)/Loss on real estate assets
(424)
1,497
Equals: NAREIT defined FFO
$
43,152
$
60,305
Add (Subtract): (Gain)/Loss on extinguishment of
debt, pre-tax
(1,563)
-
Start-up expenses, pre-tax
1,953
-
COVID-19 expenses, pre-tax
892
-
Close-out expenses, pre-tax
1,936
-
Tax Effect of adjustments to Funds From Operations **
837
(45)
Equals: FFO, normalized
$
47,207
$
60,260
Add (Subtract): Non-Real Estate Related Depreciation &
Amortization
14,932
14,366
Consolidated Maintenance Capital Expenditures
(7,027)
(3,634)
Stock Based Compensation Expenses
9,768
6,727
Amortization of debt issuance costs, discount and/or premium and
other non-cash interest
1,670
2,563
Equals: AFFO
$
66,550
$
80,282
Weighted average common shares outstanding - Diluted
119,933
119,496
FFO/AFFO per Share - Diluted Normalized FFO
Per Diluted Share
$
0.39
$
0.50
AFFO Per Diluted Share
$
0.55
$
0.67
Regular Common Stock Dividends per common
share
$
0.48
$
0.48
* all figures in '000s, except per share data ** tax
adjustments related to (Gain)/Loss on real estate assets,
(Gain)/Loss on extinguishment of debt, Start-up expenses, Covid-19
expenses,Close-out expenses and Loss on Investment in Life
Insurance.
Reconciliation of Net Income
Attributable to GEO to Net Operating Income, EBITDAre and Adjusted
EBITDAre* (Unaudited)
Q1 2020 Q1 2019 (unaudited) (unaudited)
Net Income
attributable to GEO
$
25,181
$
40,705
Less Net loss attributable to noncontrolling interests
60
56
Net Income
$
25,121
$
40,649
Add (Subtract): Equity in earnings of affiliates, net of
income tax provision
(2,260)
(2,596)
Income tax provision
6,546
4,840
Interest expense, net of interest income
28,742
31,884
(Gain)/Loss on extinguishment of debt
(1,563)
-
Depreciation and amortization
33,327
32,469
General and administrative expenses
53,782
46,424
Net Operating Income, net of operating lease obligations
$
143,695
$
153,670
Add: Operating lease expense, real estate
4,953
6,608
(Gain)/Loss on real estate assets, pre-tax
(424)
1,497
Start-up expenses, pre-tax
1,953
-
Net Operating Income (NOI)
$
150,177
$
161,775
Q1 2020 Q1 2019 (unaudited) (unaudited)
Net
Income
$
25,121
$
40,649
Add (Subtract): Income tax provision **
6,989
5,199
Interest expense, net of interest income ***
27,179
31,884
Depreciation and amortization
33,327
32,469
(Gain)/Loss on real estate assets, pre-tax
(424)
1,497
EBITDAre
$
92,192
$
111,698
Add (Subtract): Net loss attributable to noncontrolling interests
60
56
Stock based compensation expenses, pre-tax
9,768
6,727
Start-up expenses, pre-tax
1,953
-
COVID-19 expenses, pre-tax
892
-
Close-out expenses, pre-tax
1,936
-
Adjusted EBITDAre
$
106,801
$
118,481
* all figures in '000s ** including income tax provision on
equity in earnings of affiliates *** includes (gain)/loss on
extinguishment of debt
2020 Outlook/Reconciliation
(In thousands, except per share data) (Unaudited)
FY 2020 Net Income Attributable to
GEO
$ 110,500
to
$ 123,500
Real Estate Related Depreciation and Amortization
74,500
74,500
Funds from Operations (FFO)
$ 185,000
to
$ 198,000
Net Adjustments (Gain on Extinguishment of
Debt, Start-up expenses, Close-out expenses, COVID-19 expenses)
10,000
10,000
Normalized Funds from Operations
$ 195,000
to
$ 208,000
Non-Real Estate Related Depreciation and
Amortization
62,000
62,000
Consolidated Maintenance Capex
(19,000)
(19,000)
Non-Cash Stock Based Compensation
24,500
24,500
Non-Cash Interest Expense
7,000
7,000
Adjusted Funds From Operations (AFFO)
$ 269,500
to
$ 282,500
Net Interest Expense
105,000
105,000
Non-Cash Interest Expense
(7,000)
(7,000)
Consolidated Maintenance Capex
19,000
19,000
Income Taxes (including income tax provision on equity in
earnings of affiliates)
18,500
18,500
Adjusted EBITDAre
$ 405,000
to
$ 418,000
G&A Expenses
198,000
198,000
Non-Cash Stock Based Compensation
(24,500)
(24,500)
Equity in Earnings of Affiliates
(7,000)
(7,000)
Real Estate Related Operating Lease Expense
18,000
18,000
Net Operating Income
$ 589,500
to
$ 602,500
Adjusted Net Income Per Diluted Share
$ 1.00
to
$ 1.12
AFFO Per Diluted Share
$ 2.25
to
$ 2.35
Weighted Average Common Shares Outstanding-Diluted
120,000
to
120,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200430005153/en/
Pablo E. Paez, (866) 301 4436 Executive Vice President,
Corporate Relations
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