Item 2.02.
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Results of Operations and Financial Condition.
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On April 30, 2019, The GEO Group, Inc. (GEO or the Company) issued a press release (the Earnings Press
Release) announcing its financial results for the quarter ended March 31, 2019, updating its financial guidance for full year 2019 and issuing its financial guidance for the second quarter 2019. A copy of the Earnings Press Release is
furnished hereto as Exhibit 99.1. GEO also held a conference call on April 30, 2019 to discuss these matters, a transcript of which is furnished hereto as Exhibit 99.2.
In the Earnings Press Release, GEO provided Net Operating Income, EBITDAre, Adjusted EBITDAre, Funds From Operations, Normalized Funds From
Operations, Adjusted Funds From Operations and Adjusted Net Income for the quarter ended March 31, 2019 and the comparable prior-year periods that were not calculated in accordance with Generally Accepted Accounting Principles
(the Non-GAAP Information)
and are presented as supplemental disclosures. Generally, for purposes of Regulation G under the Securities Exchange Act of
1934, Non-GAAP Information
is any numerical measure of a companys performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or
included in the most directly comparable measure calculated and presented in accordance with GAAP. The Earnings Press Release presents the financial measure calculated and presented in accordance with GAAP, which is the most directly comparable to
the Non-GAAP Information,
with a prominence equal to or greater than its presentation of
the Non-GAAP Information.
The Earnings Press Release also contains
a reconciliation of
the Non-GAAP Information
to the financial measure calculated and presented in accordance with GAAP which is the most directly comparable to
the Non-GAAP Information.
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, depreciation and amortization expense, general and administrative expenses, real estate related operating lease expense, and gain/loss on
real estate assets,
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. Given the nature of GEOs business as a real estate owner and operator, GEO believes that EBITDAre and Adjusted EBITDAre are helpful to investors as measures of its operational
performance because they provide an indication of its 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 its business.
GEO believes that by removing the impact of its 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 its 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 GEO makes 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 GEO does not consider to be the fundamental attributes or primary drivers of its business plan and they do not affect GEOs overall long-term
operating performance. EBITDAre and Adjusted
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