- 2Q20 Net Income Attributable to GEO of $0.31 per diluted
share
- 2Q20 AFFO of $0.66 per diluted share
- Updated FY20 guidance for Net Income Attributable to GEO of
$0.95-$0.99 per diluted share and Adjusted Net Income of $1.07 to
$1.11 per diluted share
- Updated FY20 AFFO guidance of $2.29-$2.33 per diluted
share
- Expects to reduce quarterly dividend to $0.34 per share,
$1.36 per share annualized
- Expects to allocate $50-$100 million in excess cash flow
annually to debt repayment
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 2020, provided an update on the impact of the COVID-19
pandemic on GEO, and issued updated financial and dividend
guidance.
Second Quarter 2020 Highlights
- Total revenues of $587.8 million
- Net Income Attributable to GEO of $36.7 million or $0.31 per
diluted share
- Adjusted Net Income of $0.36 per diluted share
- Net Operating Income of $149.1 million
- Normalized FFO of $0.51 per diluted share
- AFFO of $0.66 per diluted share
We reported second quarter 2020 net income attributable to GEO
of $36.7 million, or $0.31 per diluted share, compared to $41.9
million, or $0.35 per diluted share, for the second quarter 2019.
We reported total revenues for the second quarter 2020 of $587.8
million compared to $614.0 million for the second quarter 2019.
Second quarter 2020 results reflect a $1.3 million loss on real
estate assets, pre-tax, $0.6 million in start-up expenses, pre-tax,
$2.3 million in close-out expenses, pre-tax, $3.9 million in
COVID-19 related expenses, pre-tax, and $1.6 million in the tax
effect of adjustments to net income attributable to GEO. Excluding
these items, we reported second quarter 2020 Adjusted Net Income of
$43.1 million, or $0.36 per diluted share, compared to $48.7
million, or $0.41 per diluted share, for the second quarter
2019.
We reported second quarter 2020 Normalized Funds From Operations
(“Normalized FFO”) of $61.5 million, or $0.51 per diluted share,
compared to $66.6 million, or $0.56 per diluted share, for the
second quarter 2019. We reported second quarter 2020 Adjusted Funds
From Operations (“AFFO”) of $78.8 million, or $0.66 per diluted
share, compared to $83.4 million, or $0.70 per diluted share, for
the second quarter 2019.
George C. Zoley, Chairman and Chief Executive Officer of GEO,
said, “During the second quarter, we experienced some favorable
cost trends that resulted in better than expected financial
performance. While we are encouraged by these favorable trends, our
company continues to face challenges associated with the COVID-19
pandemic, which has had a negative operational and financial impact
across several segments of our company. In the face of these
challenges, our frontline employees have shown incredible
commitment and perseverance, helping our company manage through
these difficult times, and we are thankful for their dedication and
daily sacrifice.
“We believe that our earnings and cash flows remain strong and
our business is supported by long-term real estate assets and
high-quality contracts entailing essential government services. We
also recognize that political rhetoric based on the
mischaracterization of our role as a government services provider
has created concerns regarding our future access to capital. While
we do not have any upcoming debt maturities until 2022, we have
announced today an anticipated reduction to our future quarterly
dividend payments in order to preserve capital and focus on paying
down debt. Our anticipated new dividend payment will allow GEO to
remain structured as a publicly traded REIT, thus providing
continued value for our shareholders, while also focusing on debt
repayment. We believe the steps we have announced today are
consistent with our commitment to enhance long-term value for our
shareholders.”
First Six Months 2020 Highlights
- Total revenues of $1.19 billion
- Net Income Attributable to GEO of $61.9 million or $0.52 per
diluted share
- Adjusted Net Income of $0.60 per diluted share
- Net Operating Income of $299.3 million
- Normalized FFO of $0.91 per diluted share
- AFFO of $1.21 per diluted share
For the first six months of 2020, we reported net income
attributable to GEO of $61.9 million, or $0.52 per diluted share,
compared to $82.6 million, or $0.69 per diluted share, for the
first six months of 2019. We reported total revenues for the first
six months of 2020 of $1.19 billion compared to $1.22 billion for
the first six months of 2019.
Results for the first six months of 2020 reflect a $0.9 million
loss on real estate assets pre-tax, a $1.6 million gain on the
extinguishment of debt, pre-tax, $2.5 million in start-up expenses,
pre-tax, $4.2 million in close-out expenses, pre-tax, $4.8 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 Adjusted Net Income of $72.0 million, or
$0.60 per diluted share, for the first six months of 2020, compared
to $90.8 million, or $0.76 per diluted share, for the first six
months of 2019.
We reported Normalized FFO of $108.7 million, or $0.91 per
diluted share, for the first six months of 2020, compared to $126.9
million, or $1.06 per diluted share, for the first six months of
2019. We reported AFFO of $145.4 million, or $1.21 per diluted
share, for the first six months of 2020, compared to $163.7
million, or $1.37 per diluted share, for the first six months of
2019.
Updated Financial and Dividend Guidance
- FY20 Net Income Attributable to GEO expected to be
$0.95-$0.99 per diluted share
- FY20 Adjusted Net Income expected to be $1.07 to $1.11 per
diluted share
- FY20 AFFO expected to be $2.29-$2.33 per diluted
share
- Updated financial guidance reflects the continued impact of
COVID-19 pandemic, including the expiration of D. Ray James
Correctional Facility contract
- Expects to reduce quarterly dividend to $0.34 per share,
$1.36 per share annualized
- Expects to allocate $50-$100 million in excess cash flow
annually to debt repayment
We have updated our financial guidance for the full-year of 2020
and issued guidance for the third and fourth quarters of 2020. Even
though our operations as an essential government services provider
have continued uninterrupted, the spread of COVID-19 continues to
have a negative impact on several segments of our company.
The COVID-19 pandemic has resulted in lower occupancy levels at
several of our facilities and programs beginning in late March and
continuing through the second quarter. Our U.S. Immigration and
Customs Enforcement (“ICE”) Processing Centers and U.S. Marshals
Service facilities have continued to experience lower overall
occupancy 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.
Additionally, the U.S. federal government has reduced operational
capacity across ICE Processing Centers 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. We expect a
continuation of lower occupancy levels at our ICE Processing
Centers and U.S. Marshals Service Facilities through the end of the
year, resulting in an estimated revenue decline of approximately 9%
for the full-year 2020.
Additionally, the Federal Bureau of Prisons (“BOP”) has
experienced a decline in overall federal prison populations in part
as a result of the COVID-19 pandemic. Due to this decline in
federal prison populations, the BOP has decided to not rebid the
contract for our company-owned, 1,900-bed D. Ray James Correctional
Facility in Georgia, which is set to expire on September 30, 2020.
Our updated guidance reflects the expiration of this contract,
which generated approximately $60 million in annualized
revenues.
Our GEO Reentry Services segment has also continued to
experience lower occupancy levels in our residential centers and
day reporting programs due to the COVID-19 pandemic. We expect
lower occupancy levels for our residential reentry centers and day
reporting programs to continue through the end of the year,
resulting in an estimated revenue decline of approximately 10% for
the full-year 2020. Our Youth Services segment has also been
impacted by declining occupancy levels, which are expected to
result in the closure of the Hector Garza Center in Texas at the
end of September 2020 due to the COVID-19 pandemic.
We have also increased our spending on personal protective
equipment, diagnostic testing, medical expenses, non-contact
infrared thermometers, and increased sanitation as a result of the
COVID-19 pandemic and expect to incur several million dollars in
non-recurring costs during the second half of 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
remain hopeful to be able to activate these facilities as ICE
Processing Center annexes, beginning as early as late third quarter
or early fourth quarter of 2020.
We have updated our full-year 2020 guidance for Net Income
Attributable to GEO to a range of $0.95 to $0.99 per diluted share;
Adjusted Net Income to a range of $1.07 to $1.11 per diluted share;
and AFFO to a range of $2.29 to $2.33 per diluted share. We expect
full-year 2020 revenues to be approximately $2.34 billion.
For the third quarter of 2020, we expect Net Income Attributable
to GEO to be in a range of $0.25 to $0.27 per diluted share;
Adjusted Net Income to be in a range of $0.28 to $0.30 per diluted
share; and AFFO to be in a range of $0.58 to $0.60 per diluted
share. For the fourth quarter of 2020, we expect Net Income
Attributable to GEO to be in a range of $0.18 to $0.20 per diluted
share; Adjusted Net Income to be in a range of $0.19 to $0.21 per
diluted share; and AFFO to be in a range of $0.50 to $0.52 per
diluted share.
Beginning with our next quarterly dividend payment in October
2020, we expect to declare quarterly dividend payments of $0.34 per
share, or $1.36 per share annualized, solely within the discretion
of our Board of Directors and based on various factors. This new
dividend payment target will allow GEO to remain structured as a
publicly traded REIT, while preserving capital to be applied
towards the repayment of debt. During 2020, we expect to repay
approximately $100 million in debt, and starting in 2021, we expect
to apply between $50 million and $100 million on average in excess
cash flows towards debt repayments annually.
COVID-19 Information
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 and remains our number one priority. From the start of
the global pandemic, we implemented steps to mitigate the risks of
COVID-19 to all those in our care and our employees, consistent
with the guidance issued for correctional and detention facilities
by the Centers for Disease Control and Prevention (“CDC”). We have
distributed facemasks to all employees, inmates, detainees, and
residents across our residential facilities. We have focused on
increasing our testing capacity across our 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 will continue to evaluate and refine the
steps we have taken as appropriate and necessary based on updated
guidance by the CDC and best practices. 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.
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 12:00 Noon (Eastern Time) to discuss GEO’s second 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 August 20, 2020 at
1-877-344-7529 (U.S.) and 1-412-317-0088 (International). The
participant passcode for the telephonic replay is 10146778.
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 125 facilities totaling
approximately 93,000 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 GEO
Secure Services and GEO Care facilities, 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, third quarter, and fourth quarter of 2020 and anticipated
future quarterly dividend payments, 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 or at all; (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 June 30, 2020 December 31,
2019 (unaudited) (unaudited)
ASSETS Cash and cash
equivalents
$
75,734
$
32,463
Restricted cash and cash equivalents
28,345
32,418
Accounts receivable, less allowance for doubtful accounts
361,030
430,982
Contract receivable, current portion
6,078
11,199
Prepaid expenses and other current assets
39,133
40,716
Total current assets
$
510,320
$
547,778
Restricted Cash and Investments
32,703
30,923
Property and Equipment, Net
2,130,126
2,144,722
Contract Receivable
355,964
360,647
Operating Lease Right-of-Use Assets, Net
123,401
121,527
Assets Held for Sale
4,526
6,059
Deferred Income Tax Assets
36,278
36,278
Intangible Assets, Net (including goodwill)
975,175
986,426
Other Non-Current Assets
74,219
83,174
Total Assets
$
4,242,712
$
4,317,534
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable
$
86,155
$
99,232
Accrued payroll and related taxes
76,925
54,672
Accrued expenses and other current liabilities
186,272
191,608
Operating lease liabilities, current portion
26,992
26,208
Current portion of finance lease obligations, long-term debt, and
non-recourse debt
24,577
24,208
Total current liabilities
$
400,921
$
395,928
Deferred Income Tax Liabilities
19,254
19,254
Other Non-Current Liabilities
104,601
88,526
Operating Lease Liabilities
99,264
97,291
Finance Lease Liabilities
2,608
2,954
Long-Term Debt
2,371,556
2,408,297
Non-Recourse Debt
300,213
309,236
Total Shareholders' Equity
944,295
996,048
Total Liabilities and Shareholders' Equity
$
4,242,712
$
4,317,534
* all figures in '000s
Condensed Consolidated Statements of
Operations* (Unaudited)
Q2 2020 Q2 2019 YTD 2020 YTD
2019 (unaudited) (unaudited) (unaudited) (unaudited)
Revenues
$
587,829
$
613,966
$
1,192,846
$
1,224,633
Operating expenses
445,339
453,168
906,661
910,165
Depreciation and amortization
33,434
32,352
66,761
64,821
General and administrative expenses
45,543
47,271
99,325
93,695
Operating income
63,513
81,175
120,099
155,952
Interest income
5,248
8,045
10,686
16,441
Interest expense
(30,610)
(38,932)
(64,790)
(79,212)
Gain/(Loss) on extinguishment of debt
-
(5,741)
1,563
(5,741)
Income before income taxes and equity in earnings of
affiliates
38,151
44,547
67,558
87,440
Provision for income taxes
4,196
4,532
10,742
9,372
Equity in earnings of affiliates, net of income tax
provision
2,699
1,821
4,959
4,417
Net income
36,654
41,836
61,775
82,485
Less: Net loss attributable to noncontrolling interests
66
78
126
134
Net income attributable to The GEO Group, Inc.
$
36,720
$
41,914
$
61,901
$
82,619
Weighted Average Common Shares Outstanding:
Basic
119,810
119,168
119,602
118,972
Diluted
119,964
119,544
119,937
119,517
Net income per Common Share Attributable to The GEO Group,
Inc.:
Basic:
Net income per share — basic
$
0.31
$
0.35
$
0.52
$
0.69
Diluted:
Net income per share — diluted
$
0.31
$
0.35
$
0.52
$
0.69
Regular Dividends Declared per Common Share
$
0.48
$
0.48
$
0.96
$
0.96
* 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 2020 Q2 2019 YTD 2020 YTD
2019 Net Income attributable to GEO
$
36,720
$
41,914
$
61,901
$
82,619
Add:
(Gain)/Loss on real estate assets, pre-tax
1,304
-
880
1,497
(Gain)/Loss on extinguishment of debt, pre-tax
-
5,741
(1,563)
5,741
Start-up expenses, pre-tax
553
1,874
2,506
1,874
COVID-19 expenses, pre-tax
3,877
-
4,769
-
Close-out expenses, pre-tax
2,284
-
4,220
-
Tax effect of adjustments to Net Income attributable to GEO
(1,599)
(853)
(762)
(898)
Adjusted Net Income
$
43,139
$
48,676
$
71,951
$
90,833
Weighted average common shares outstanding - Diluted
119,964
119,544
119,937
119,517
Adjusted Net Income Per Diluted Share
$
0.36
$
0.41
$
0.60
$
0.76
Reconciliation of Net Income
Attributable to GEO to FFO, Normalized FFO, and AFFO*
(Unaudited)
Q2 2020 Q2 2019 YTD 2020 YTD 2019
(unaudited) (unaudited) (unaudited) (unaudited)
Net
Income attributable to GEO $
36,720
$
41,914
$
61,901
$
82,619
Add (Subtract): Real Estate Related Depreciation and Amortization
18,384
17,937
36,780
36,039
Loss on real estate assets
1,304
-
880
1,497
Equals: NAREIT defined FFO $
56,408
$
59,851
$
99,561
$
120,155
Add (Subtract): (Gain)/loss on extinguishment of debt,
pre-tax
-
5,741
(1,563)
5,741
Start-up expenses, pre-tax
553
1,874
2,506
1,874
COVID-19 expenses, pre-tax
3,877
-
4,769
-
Close-out expenses, pre-tax
2,284
-
4,220
-
Tax Effect of adjustments to Funds From Operations **
(1,599)
(853)
(762)
(899)
Equals: FFO, normalized $
61,523
$
66,613
$
108,731
$
126,871
Add (Subtract): Non-Real Estate Related Depreciation &
Amortization
15,050
14,415
29,981
28,782
Consolidated Maintenance Capital Expenditures
(4,139)
(5,515)
(11,166)
(9,149)
Stock Based Compensation Expenses
4,706
5,454
14,474
12,180
Amortization of debt issuance costs, discount and/or premium and
other non-cash interest
1,708
2,460
3,378
5,023
Equals: AFFO $
78,848
$
83,427
$
145,398
$
163,707
Weighted average common shares outstanding - Diluted
119,964
119,544
119,937
119,517
FFO/AFFO per Share - Diluted Normalized FFO
Per Diluted Share $
0.51
$
0.56
$
0.91
$
1.06
AFFO Per Diluted Share $
0.66
$
0.70
$
1.21
$
1.37
Regular Common Stock Dividends per common share $
0.48
$
0.48
$
0.96
$
0.96
* all figures in '000s, except per share data ** tax
adjustments related to 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)
Q2 2020 Q2 2019 YTD 2020 YTD 2019
(unaudited) (unaudited) (unaudited) (unaudited)
Net Income
attributable to GEO $
36,720
$
41,914
$
61,901
$
82,619
Less Net loss attributable to noncontrolling interests
66
78
126
134
Net Income $
36,654
$
41,836
$
61,775
$
82,485
Add (Subtract): Equity in earnings of affiliates, net of
income tax provision
(2,699)
(1,821)
(4,959)
(4,417)
Income tax provision
4,196
4,532
10,742
9,372
Interest expense, net of interest income
25,362
30,887
54,104
62,771
(Gain)/Loss on extinguishment of debt
-
5,741
(1,563)
5,741
Depreciation and amortization
33,434
32,352
66,761
64,821
General and administrative expenses
45,543
47,271
99,325
93,695
Net Operating Income, net of operating lease obligations
$
142,490
$
160,798
$
286,185
$
314,468
Add: Operating lease expense, real estate
4,792
6,513
9,744
13,122
(Gain)/Loss on real estate assets, pre-tax
1,304
-
880
1,497
Start-up expenses, pre-tax
553
1,874
2,506
1,874
Net Operating Income (NOI) $
149,139
$
169,185
$
299,315
$
330,961
Q2 2020 Q2 2019 YTD 2020 YTD
2019 (unaudited) (unaudited) (unaudited) (unaudited)
Net
Income $
36,654
$
41,836
$
61,775
$
82,485
Add (Subtract): Income tax provision **
4,681
4,889
11,670
10,087
Interest expense, net of interest income ***
25,362
36,628
52,541
68,511
Depreciation and amortization
33,434
32,352
66,761
64,821
(Gain)/Loss on real estate assets, pre-tax
1,304
-
880
1,497
EBITDAre $
101,435
$
115,705
$
193,627
$
227,401
Add (Subtract): Net loss attributable to noncontrolling interests
66
78
126
134
Stock based compensation expenses, pre-tax
4,706
5,454
14,474
12,180
Start-up expenses, pre-tax
553
1,874
2,506
1,874
COVID-19 expenses, pre-tax
3,877
-
4,769
-
Close-out expenses, pre-tax
2,284
-
4,220
-
Adjusted EBITDAre $
112,921
$
123,111
$
219,722
$
241,589
* 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
$
114,000
to
$
118,500
Real Estate Related Depreciation and Amortization
74,500
74,500
Funds from Operations (FFO)
$
188,500
to
$
193,000
Net Adjustments (Gain on Extinguishment of Debt, Start-up
expenses, Close-out expenses, COVID-19 expenses)
14,000
14,000
Normalized Funds from Operations
$
202,500
to
$
207,000
Non-Real Estate Related Depreciation and Amortization
62,000
62,000
Consolidated Maintenance Capex
(20,500)
(20,500)
Non-Cash Stock Based Compensation
24,000
24,000
Non-Cash Interest Expense
7,000
7,000
Adjusted Funds From Operations (AFFO)
$
275,000
to
$
279,500
Net Interest Expense
102,000
102,000
Non-Cash Interest Expense
(7,000)
(7,000)
Consolidated Maintenance Capex
20,500
20,500
Income Taxes (including income tax provision on equity in
earnings of affiliates)
18,000
18,000
Adjusted EBITDAre
$
408,500
to
$
413,000
G&A Expenses
194,000
194,000
Non-Cash Stock Based Compensation
(24,000)
(24,000)
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
$
594,000
Net Income Attributable to GEO Per Diluted Share
$
0.95
to
$
0.99
Adjusted Net Income Per Diluted Share
$
1.07
to
$
1.11
AFFO Per Diluted Share
$
2.29
to
$
2.33
Weighted Average Common Shares Outstanding-Diluted
120,000
to
120,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005242/en/
Pablo E. Paez (866) 301 4436 Executive Vice President, Corporate
Relations
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