GEO GROUP INC
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
GEO$27.80+10.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0000950170-24-055810
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-093922
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 191 previous paragraphs and 228 current paragraphs.
131 unchanged; 49 reworded; 34 added; 10 removed; 1 previous and 14 current paragraphs rearranged.
Tables are not compared: 11 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
any continuing impact of the COVID-19 global pandemic on GEO and GEO's ability to mitigate the risks associated with COVID-19;
Current report
Appointment of Mark Suchinski as Chief Financial Officer
Current report
On June 4, 2024, our Board approved the appointment of Mark J. Suchinski as Senior Vice President and Chief Financial Officer, effective July 8, 2024. Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Current report
Contract Developments
Current report
During the second quarter of 2024, ICE issued a task order for our company-owned 1,940-bed Adelanto ICE Processing Center in California which provides for continued funding through October 19, 2024, allowing additional time for ICE to obtain relief from previously disclosed COVID-related litigation that currently prevents full use of the Adelanto Center.
Current report
On June 20, 2024 we announced that GEO had given notice to the Oklahoma Department of Corrections providing for the discontinuation of our management contract for the company-owned, 2,600-bed Lawton Correctional and Rehabilitation Facility, which was set to expire on June 30, 2024, unless new contract terms could be mutually agreed upon. Subsequently, on June 26th, we announced that GEO and the Oklahoma Department of Corrections had agreed to enter into a one-year contract under new agreed upon terms, effective through June 30, 2025, for GEO to continue operating the Lawton Facility.
Current report
On July 31, 2024 we successfully completed the previously disclosed transition of operations at the state-owned 1,536-bed Lawrenceville Correctional Center in Virginia, which is now managed by the Virginia Department of Corrections.
Current report
Comparison of Second Quarter 2024 and Second Quarter 2023
Current report
Interest expense decreased by $4.4 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to our Senior Notes Offering and new Term Loan under our new credit agreement that closed on April 18, 2024 which resulted in overall lower interest rates. We also retired the majority of our 6.50% Exchangeable Senior Notes due 2026 during Second Quarter 2024. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Current report
During Second Quarter 2024, we completed a Senior Note Offering which resulted in a loss on extinguishment of debt of approximately $82.3 million which consisted of the write-off of existing deferred financing costs and net discount/premiums and the payment of call premiums. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Current report
(Loss) Gain on Asset Divestitures/Impairment
Current report
During Second Quarter 2024, we experienced an impairment loss of approximately $2.3 million related to two of our Company-owned facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters -Idle Facilities of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion. We also donated a parcel of undeveloped land in Kern County, California which resulted in a loss on asset divestiture of approximately $0.6 million.
Current report
During Six Months 2023, we experienced a gain on asset divestitures primarily due to the sale of vacant land located in South Dallas County, Texas for a net gain of approximately $2.2 million.
Current report
Income Tax (Benefit) Provision
Current report
Comparison of Six Months 2024 and Six Months 2023
Current report
Revenues
Current report
Revenues for Electronic Monitoring and Supervision Services decreased by $69.1 million in Six Months 2024 compared to Six Months 2023 primarily due to decreases in average participant counts under ISAP.
Current report
Operating expenses for Electronic Monitoring and Supervision Services decreased by $23.7 million in Six Months 2024 compared to Six Months 2023 primarily due to decreases in variable costs related to decreases in average participant counts under ISAP.
Current report
Operating expenses for International Services increased by $10.9 million in Six Months 2024 compared to Six Months 2023 primarily due to a net increase of approximately $8.4 million primarily due to expenses associated with increased populations and our new health care contract in Australia. We also experienced an increase related to foreign exchange rate fluctuations of $2.5 million.
Current report
Depreciation and Amortization
Current report
Electronic Monitoring and Supervision Services depreciation and amortization expense decreased in Six Months 2024 compared to Six Months 2023 primarily due to certain assets becoming fully depreciated and/or amortized as well as the closing of certain ISAP locations.
Current report
International Services depreciation and amortization expense was relatively consistent in Six Months 2024 compared to Six Months 2023.
Current report
General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes, corporate management salaries and benefits, professional fees and other administrative expenses. General and administrative expenses increased by $13.4 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to increases in certain transaction fees related to our private exchange transactions involving our convertible notes of $3.1 million, certain compensation adjustment decreases during Second Quarter 2023 of $4.1 million, with the remaining increase due to increases in business development, consulting and other administrative expenses.
Current report
Non-Operating Expenses
Current report
Interest Income and Interest Expense
Current report
Interest expense decreased by $7.4 million in Six Months 2024 compared to Six Months 2023 primarily due to our Senior Notes Offering and new Term Loan under our new credit agreement that closed on April 18, 2024 which resulted in overall lower interest rates. We also retired the majority of our 6.50% Exchangeable Senior Notes due 2026 during Six Months 2024. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Current report
Loss on Extinguishment of Debt
Current report
During Six Months 2024, we completed a Senior Note Offering which resulted in a loss on extinguishment of debt of approximately $82.4 million which consisted of the write-off of existing deferred financing costs and net discount/premiums and the payment of call premiums. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Current report
(Loss) Gain on Asset Divestitures/Impairment
Current report
During Six Months 2024, we experienced an impairment loss of approximately $2.3 million related to two of our Company-owned facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters -Idle Facilities of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion. We also donated a parcel of undeveloped land in Kern County, California which resulted in a loss on asset divestiture of approximately $0.6 million.
Current report
During Six Months 2023, we experienced a gain on asset divestitures primarily due to the sale of vacant land located in South Dallas County, Texas for a net gain of approximately $2.2 million.
Current report
Income Tax (Benefit) Provision
Current report
With these transactions, as well as the exchange of our 6.50% Exchangeable Notes due 2026 discussed below, we have been able to push out our debt maturities out to 2029 and 2031.
Current report
General and Administrative Expenses
Removed paragraphs (10)
Previous report
the conditional exchange feature of the 6.5% Exchangeable Senior Notes, if triggered, may adversely affect our financial condition;
Previous report
our ability to identify suitable acquisitions or dispositions, and to successfully complete such acquisitions or dispositions;
Previous report
Comparison of First Quarter 2024 and First Quarter 2023
Previous report
Operating Expenses
Previous report
Interest expense decreased by $3.0 million in First Quarter 2024 compared to First Quarter 2023 primarily due to quarterly repayments made on our Tranche 1 and Tranche 2 loans.
Previous report
During First Quarter 2024, we redeemed our outstanding principal amount of our 5.875% Senior Notes due 2024. In connection with the repayment, we wrote off the related deferred loan costs. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Previous report
Income Tax Provision
Previous report
Refer to Note 15 - Subsequent Events of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
Previous report
On February 9, 2024, we delivered a notice of redemption for all of the remaining $23.8 million in outstanding aggregate principal amount of our 5.875% Senior Notes due 2024. The redemption occurred on March 11, 2024. The redemption price was equal to $1,000 per $1,000 original principal amount, plus any accrued and unpaid interest up to, but excluding the Redemption Date. We deposited with the trustee the redemption price, using available cash on hand, and the indenture governing the 5.875% Senior Notes due 2024 has been satisfied and discharged.
Previous report
Operating Expenses
Reworded paragraphs (49)
Previous wording
This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking” statements are any statements that are not based on historical information. Statements other than statements of historical facts included in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, legal proceedings, our corporate structure and potential steps to address our future debt maturities are “forward-looking” statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” or “continue” or the negative of such words or variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements and we can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, or “cautionary statements,” include, but are not limited to:
Current wording
This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking” statements are any statements that are not based on historical information. Statements other than statements of historical facts included in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, legal proceedings and potential steps to address our future debt maturities are “forward-looking” statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” or “continue” or the negative of such words or variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements and we can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, or “cautionary statements,” include, but are not limited to:
Previous wording
the impact of adopted or proposed executive action or legislation aimed at limiting public-private partnerships for secure facilities, processing centers and community reentry centers or limiting or restricting the business and operations of financial institutions or others who do business with us;
Current wording
the impact of adopted or proposed executive action or legislation under the existing or a new administration aimed at limiting public-private partnerships for secure facilities, processing centers and community reentry centers or limiting or restricting the business and operations of financial institutions or others who do business with us;
Previous wording
our ability to identify and successfully complete any potential sales of additional Company-owned assets and businesses on commercially advantageous terms on a timely basis, or at all;
Current wording
our ability to identify and successfully complete any potential sales of Company-owned assets and businesses or potential acquisitions of assets or businesses on commercially advantageous terms on a timely basis, or at all;
Previous wording
For the three months ended March 31, 2024 and 2023, we had consolidated revenues of $605.7 million and $608.2 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 87.6% including 69,834 active beds and excluding 11,421 idle beds, which includes those being marketed to potential customers, for the three months ended March 31, 2024, and approximately 87.2% including 69,376 active beds and excluding 13,106 idle beds, which includes those being marketed to potential customers, for the three months ended March 31, 2023.
Current wording
For the six months ended June 30, 2024 and 2023, we had consolidated revenues of $1,212.9 million and $1,202.1 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 87.8% including 69,834 active beds and excluding 11,275 idle beds, which includes those being marketed to potential customers, for the six months ended June 30, 2024, and approximately 85.0% including 71,316 active beds and excluding 11,166 idle beds, which includes those being marketed to potential customers, for the six months ended June 30, 2023.
Previous wording
We are currently marketing 11,421 vacant beds at ten of our idle facilities to potential customers, with the exception of our company-owned 750-bed Cheyenne Mountain Recovery Center, which is under a contract that has not yet been activated. The carrying values of these idle facilities totaled $286.6 million as of March 31, 2024, excluding equipment and other assets that can be easily transferred for use at other facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Current wording
We are currently marketing 11,275 vacant beds at ten of our idle facilities to potential customers, with the exception of our company-owned 750-bed Cheyenne Mountain Recovery Center, which is under a contract that has not yet been activated. The carrying values of these idle facilities totaled $283.5 million as of June 30, 2024, excluding equipment and other assets that can be easily transferred for use at other facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Previous wording
The accompanying unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates based on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. During the three months ended March 31, 2024, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our significant accounting policies is contained in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
The accompanying unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates based on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. During the six months ended June 30, 2024, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our significant accounting policies is contained in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
Revenues for U.S. Secure Services increased by $35.0 million in First Quarter 2024 compared to First Quarter 2023 primarily due to aggregate increases of $8.3 million primarily due to the activation of new transportation contracts as well as our lease with the Oklahoma Department of Corrections for our company-owned Great Plains Correctional Facility which commenced on May 1, 2023. In addition, we experienced aggregate net increases in rates and/or per diem amounts in connection with contract modifications, transportation services and increased occupancies of $26.6 million.
Current wording
Revenues for U.S. Secure Services increased by $29.6 million in the second quarter ended June 30, 2024 (the "Second Quarter 2024") compared to the second quarter ended June 30, 2023 (the "Second Quarter 2023") primarily due to aggregate increases of $8.2 million primarily due to the activation of new transportation contracts as well as our lease with the Oklahoma Department of Corrections for our company-owned Great Plains Correctional Facility which commenced on May 1, 2023. In addition, we experienced aggregate net increases in rates and/or per diem amounts in connection with contract modifications, transportation services and increased occupancies of $21.4 million.
Previous wording
The number of compensated mandays in U.S. Secure Services facilities was relatively consistent at approximately 4.2 million in First Quarter 2024 and 4.3 million in First Quarter 2023. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Secure Services facilities was 87.6% and 87.5% of capacity in the First Quarter 2024 and First Quarter 2023, respectively, excluding idle facilities.
Current wording
The number of compensated mandays in U.S. Secure Services facilities was relatively consistent at approximately 4.3 million in Second Quarter 2024 and 4.2 million in Second Quarter 2023. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Secure Services facilities was 87.7% and 86.6% of capacity in the Second Quarter 2024 and Second Quarter 2023, respectively, excluding idle facilities.
Previous wording
Revenues for Electronic Monitoring and Supervision Services decreased by $45.9 million in First Quarter 2024 compared to First Quarter 2023 primarily due to decreases in average participant counts under the Intensive Supervision and Appearance Program ("ISAP").
Current wording
Revenues for Electronic Monitoring and Supervision Services decreased by $23.3 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to decreases in average participant counts under the Intensive Supervision and Appearance Program ("ISAP").
Previous wording
Revenues for Reentry Services increased by $3.6 million in First Quarter 2024 compared to First Quarter 2023 primarily due to increases of $2.6 million due to new day reporting center contracts. We also experienced a net aggregate increase of $4.4 million primarily related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals. These increases were partially offset by decreases of $3.3 million due to contract terminations.
Current wording
Revenues for Reentry Services increased by $1.4 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to increases of $0.9 million due to new day reporting center contracts. We also experienced a net aggregate increase of $4.0 million primarily related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals. These increases were partially offset by decreases of $3.5 million due to contract terminations.
Previous wording
Revenues for International Services increased by $4.7 million in First Quarter 2024 compared to First Quarter 2023 primarily due to a net increase of $8.1 million due to increased populations at our Australian subsidiary and our new health care contract in Australia. Partially offsetting this increase was a decrease due to foreign exchange rate fluctuations of $3.4 million.
Current wording
Revenues for International Services increased by $5.7 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to a net increase of $9.7 million due to increased populations at our Australian subsidiary and our new health care contract in Australia. Partially offsetting this increase was a decrease due to foreign exchange rate fluctuations of $4.0 million.
Previous wording
Operating expenses for Electronic Monitoring and Supervision Services decreased by $18.2 million in First Quarter 2024 compared to First Quarter 2023 primarily due to decreases in variable costs related to decreases in average participant counts under ISAP.
Current wording
Operating expenses for Electronic Monitoring and Supervision Services decreased by $5.5 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to decreases in variable costs related to decreases in average participant counts under ISAP.
Previous wording
Operating expenses for Reentry Services increased by $1.7 million during First Quarter 2024 compared to First Quarter 2023 primarily due to aggregate net increases of $1.6 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals and the associated variable costs. We also experienced an increase of $2.2 million primarily due to new day reporting center contracts. Partially offsetting these increases was an aggregate net decrease of $2.1 million due to contract terminations.
Current wording
Operating expenses for Reentry Services increased by $0.4 million during Second Quarter 2024 compared to Second Quarter 2023 primarily due to aggregate net increases of $3.1 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals and the associated variable costs. We also experienced an increase of $0.5 million primarily due to new day reporting center contracts. Partially offsetting these increases was an aggregate net decrease of $3.2 million due to contract terminations.
Previous wording
Operating expenses for International Services increased by $5.7 million in First Quarter 2024 compared to First Quarter 2023 primarily due to a net increase of approximately $9.0 million primarily due to expenses associated with our new health care contract in Australia. Partially offsetting this increase was a decrease related to foreign exchange rate fluctuations of $3.3 million.
Current wording
Operating expenses for International Services increased by $5.2 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to a net increase of approximately $4.5 million primarily due to expenses associated with our new health care contract in Australia. We also experienced an increase related to foreign exchange rate fluctuations of $0.7 million.
Previous wording
U.S. Secure Services depreciation and amortization expense increased in First Quarter 2024 compared to First Quarter 2023 primarily due to renovations at certain of our company-owned and leased facilities.
Current wording
U.S. Secure Services depreciation and amortization expense increased in Second Quarter 2024 compared to Second Quarter 2023 primarily due to renovations at certain of our company-owned and leased facilities.
Previous wording
Electronic Monitoring and Supervision Services depreciation and amortization expense decreased in First Quarter 2024 compared to First Quarter 2023 primarily due to certain assets becoming fully depreciated and/or amortized as well as the closing of certain ISAP locations.
Current wording
Electronic Monitoring and Supervision Services depreciation and amortization expense decreased in Second Quarter 2024 compared to Second Quarter 2023 primarily due to certain assets becoming fully depreciated and/or amortized as well as the closing of certain ISAP locations.
Previous wording
Reentry Services depreciation and amortization expense decreased in First Quarter 2024 compared to First Quarter 2023 primarily due to certain assets becoming fully depreciated and/or amortized as well as certain asset dispositions at our company-owned centers.
Current wording
Reentry Services depreciation and amortization expense decreased in Second Quarter 2024 compared to Second Quarter 2023 primarily due to certain assets becoming fully depreciated and/or amortized as well as certain asset dispositions at our Company-owned centers.
Previous wording
International Services depreciation and amortization expense was relatively consistent in First Quarter 2024 compared to First Quarter 2023.
Current wording
International Services depreciation and amortization expense was relatively consistent in Second Quarter 2024 compared to Second Quarter 2023.
Previous wording
General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes, corporate management salaries and benefits, professional fees and other administrative expenses. General and administrative expenses increased by $2.9 million in First Quarter 2024 compared to First Quarter 2023 primarily due to increases in professional fees, start-up costs, closure costs and other administrative expenses.
Current wording
General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes, corporate management salaries and benefits, professional fees and other administrative expenses. General and administrative expenses increased by $10.5 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to increases in certain transaction fees related to our private exchange transactions involving our convertible notes of $3.1 million, certain compensation adjustment decreases during Second Quarter 2023 of $4.1 million, with the remaining increase due to increases in business development, consulting and other administrative expenses.
Previous wording
Interest income increased in First Quarter 2024 compared to First Quarter 2023 primarily due to higher cash balances on hand domestically and internationally.
Current wording
Interest income increased by $0.7 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to higher cash balances on hand domestically and internationally.
Previous wording
During First Quarter 2023, we made a mandatory quarterly prepayment on our Tranche 1 and Tranche 2 loans under our Exchange Credit Agreement. In connection with the prepayment, we wrote off a proportionate amount of related deferred loan costs and discount/premium. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Current wording
During Second Quarter 2023, we made a mandatory quarterly prepayment on our Tranche 1 and Tranche 2 loans under our prior senior credit facility. In connection with the prepayment, we wrote off a proportionate amount of related deferred loan costs and discount/premium.
Previous wording
The provision for income taxes decreased during First Quarter 2024 principally due to lower pre-tax income for the quarter. The effective tax rate decreased compared to First Quarter 2023. In First Quarter 2024, there was a $0.6 million net discrete tax benefit as compared to a $0.9 million net discrete tax expense in First Quarter 2023. Due to the lower pre-tax income during First Quarter 2024, the net discrete benefit in the quarter had a larger impact on the effective tax rate. Included in the provision for income taxes in First Quarter 2024 was a $0.9 million discrete tax benefit as compared to a $0.9 million discrete tax expense in First Quarter 2023 related to stock compensation that vested during the respective periods. We estimate our 2024 annual effective tax rate to be in the range of approximately 31% to 33%, exclusive of any discrete items.
Current wording
There was a benefit from income taxes in Second Quarter 2024 due to pre-tax losses for the quarter. The effective tax rate increased compared to Second Quarter 2023. In Second Quarter 2024, there was a $4.5 million net discrete tax benefit as compared to a $0.7 million net discrete tax benefit in Second Quarter 2023. Included in the benefit from income taxes in Second Quarter 2024 there was a $0.1 million discrete tax benefit as compared to no discrete tax expense or benefit in Second Quarter 2023 related to stock compensation that vested during the respective periods. Also included in the net discrete tax benefit from income taxes in the Second Quarter 2024 was a $3.4 million discrete tax benefit from the interest deduction related to GEO shares provided to the holders of our 6.5% Exchangeable Senior Notes due 2026. We estimate our 2024 annual effective tax rate to be in the range of approximately 31% to 33%, exclusive of any discrete items.
Previous wording
Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased during First Quarter 2024 compared to First Quarter 2023 due to unfavorable insurance adjustments at SACS.
Current wording
Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased during Second Quarter 2024 compared to Second Quarter 2023 due to unfavorable insurance adjustments at SACS.
Previous wording
Operating expenses for U.S. Secure Services increased by $18.9 million in First Quarter 2024 compared to First Quarter 2023 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and the variable costs associated with those services of $19.3 million. We also experienced an increase of $3.6 million primarily related to new transportation contracts. Partially offsetting these increases were decreases of $4.0 million related to certain insurance adjustments. Operating expenses as a percentage of revenue have decreased due to favorable operating margins on our new transportation contracts.
Current wording
Operating expenses for U.S. Secure Services increased by $34.3 million in Six Months 2024 compared to Six Months 2023 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and the variable costs associated with those services of $31.6 million. We also experienced an increase of $7.6 million primarily related to new transportation contracts. Partially offsetting these increases were decreases of $4.9 million primarily related to certain insurance adjustments. Operating expenses as a percentage of segment revenue have decreased due to favorable operating margins on our new transportation contracts.
Previous wording
We currently have contractual commitments for a number of projects using Company financing. We estimate that the cost of these existing active capital projects will be approximately $45.6 million of which $22.7 million was spent through March 31, 2024. We estimate that the remaining capital requirements related to these capital projects will be $22.9 million which will be spent through the remainder of 2024.
Current wording
We currently have contractual commitments for a number of projects using Company financing. We estimate that the cost of these existing active capital projects will be approximately $59.7 million of which $34.8 million was spent through June 30, 2024. We estimate that the remaining capital requirements related to these capital projects will be $24.9 million which will be spent through the remainder of 2024.
Previous wording
We plan to fund all of our capital needs, including capital expenditures, from cash on hand, cash from operations, borrowings under our Credit Agreement and any other financings which our management and Board, in their discretion, may consummate. Currently, our primary source of liquidity to meet these requirements is cash flow from operations and borrowings under our Credit Agreement. Our management believes that our financial resources and sources of liquidity will allow us to manage our business, financial condition, results of operations and cash flows. We completed our annual budgeting process, and for 2024, we will continue to strategically manage our capital expenditures to maintain both short and long term financial objectives. Additionally, we may from time to time pursue transactions for the potential sale of additional assets and businesses and/or other strategic transactions. Our management believes that cash on hand, cash flows from operations and availability under our Credit Agreement will be adequate to support our capital requirements for 2024 as disclosed under “Capital Requirements” above and the next twelve months.
Current wording
We plan to fund all of our capital needs, including capital expenditures, from cash on hand, cash from operations, borrowings under our Credit Agreement (as defined below) and any other financings which our management and Board, in their discretion, may consummate. Currently, our primary source of liquidity to meet these requirements is cash flow from operations and borrowings under our Credit Agreement. Our management believes that our financial resources and sources of liquidity will allow us to manage our business, financial condition, results of operations and cash flows. We completed our annual budgeting process, and for 2024, we will continue to strategically manage our capital expenditures to maintain both short and long term financial objectives. Additionally, we may from time to time pursue transactions for the potential sale or acquisition of assets and businesses and/or other strategic transactions. Our management believes that cash on hand, cash flows from operations and availability under our Credit Agreement will be adequate to support our capital requirements for 2024 as disclosed under “Capital Requirements” above and the next twelve months.
Previous wording
On April 18, 2024, we announced the closing of our previously announced private offering of $1.275 billion aggregate principal amount of senior notes, comprised of $650.0 million aggregate principal amount of 8.625% senior secured notes due 2029 and $625.0 million aggregate principal amount of 10.25% senior notes due 2031.
Current wording
On April 18, 2024, we announced the closing of our previously announced private offering of $1.275 billion aggregate principal amount of senior notes, comprised of $650.0 million aggregate principal amount of 8.625% senior secured notes due 2029 and $625.0 million aggregate principal amount of 10.250% senior notes due 2031.
Previous wording
We also entered into a credit agreement, dated April 18, 2024 to, among other things, evidence and govern a first-lien senior secured revolving credit facility and the commitments thereunder, and a first-lien senior secured term loan facility. The aggregate principal amount of revolving credit commitments under the senior revolving credit facility is $310 million (including a $175 million letter of credit subfacility) and the aggregate principal amount of the senior secured term loan facility is $450.0 million.
Current wording
We also entered into a credit agreement, dated April 18, 2024 (the "Credit Agreement") to, among other things, evidence and govern a first-lien senior secured revolving credit facility and the commitments thereunder, and a first-lien senior secured term loan facility. The aggregate principal amount of revolving credit commitments under the senior revolving credit facility is $310 million (including a $175 million letter of credit subfacility) and the aggregate principal amount of the senior secured term loan facility is $450.0 million.
Previous wording
On February 24, 2021, our wholly owned subsidiary, GEOCH, completed a private offering of $230 million aggregate principal amount of 6.50% Exchangeable Notes due 2026, which included the full exercise of the initial purchasers’ over-allotment option to purchase an additional $30 million aggregate principal amount of Convertible Notes. The Convertible Notes will mature on February 23, 2026, unless earlier repurchased or exchanged. The Convertible Notes bear interest at the rate of 6.50% per year plus an additional amount based on the dividends paid by GEO on its common stock. Interest on the notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021.
Current wording
On February 24, 2021, our wholly owned subsidiary, GEOCH, completed a private offering of $230 million aggregate principal amount of 6.50% Exchangeable Senior Notes due 2026, which included the full exercise of the initial purchasers’ over-allotment option to purchase an additional $30 million aggregate principal amount of Convertible Notes. The Convertible Notes will mature on February 23, 2026, unless earlier repurchased or exchanged. The Convertible Notes bear interest at the rate of 6.50% per year plus an additional amount based on the dividends paid by GEO on its common stock. Interest on the Convertible Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021.
Previous wording
Upon conversion, we will pay or deliver, as the case may be, cash or a combination of cash and shares of common stock. The initial conversion rate is 108.4011 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $9.225 per share of common stock). The conversion rate will be subject to adjustment in certain events. If GEO or GEOCH undergoes a fundamental change, holders may require GEOCH to purchase the notes in whole or in part for cash at a fundamental change purchase price equal to 100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.
Current wording
Upon conversion, we will pay or deliver, as the case may be, cash or a combination of cash and shares of common stock. The initial conversion rate is 108.4011 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $9.225 per share of common stock). The conversion rate will be subject to adjustment in certain events. If GEO or GEOCH undergoes a fundamental change, holders may require GEOCH to purchase the Convertible Notes in whole or in part for cash at a fundamental change purchase price equal to 100% of the principal amount of the Convertinble Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.
Previous wording
On May 6, 2024, the Company exchanged a portion of aggregate principal amount of its outstanding 6.50% Exchangeable Senior Notes for an exchange value of approximately $325 million. The consideration consisted of cash and shares of GEO common stock. Refer to Note 15 - Subsequent Events of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
Current wording
During the second quarter of 2024, the Company exchanged approximately $229.4 million of aggregate principal amount of its outstanding 6.50% Exchangeable Senior Notes in private exchange transactions for an exchange value of approximately $410 million. The consideration consisted of cash and shares of GEO common stock. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
Previous wording
Our debt outstanding under the Credit Agreement, the Secured Notes, the Unsecured Notes and the 6.50% Exchangeable Notes due 2026 require cash expenditures for debt service. Our significant debt obligations could have material consequences. See “Risk Factors-Risks Related to Our High Level of Indebtedness” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. We are exposed to various commitments and contingencies which may have a material adverse effect on our liquidity. We also have guaranteed certain obligations for certain of our international subsidiaries. These commitments, contingencies and guarantees are further discussed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
Our debt outstanding under the Credit Agreement, the Secured Notes, the Unsecured Notes and the 6.50% Exchangeable Senior Notes require cash expenditures for debt service. Our significant debt obligations could have material consequences. See “Risk Factors-Risks Related to Our High Level of Indebtedness” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. We are exposed to various commitments and contingencies which may have a material adverse effect on our liquidity. We also have guaranteed certain obligations for certain of our international subsidiaries. These commitments, contingencies and guarantees are further discussed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
Summarized financial information is provided for The GEO Group, Inc. (“Parent”) and the Subsidiary Guarantors on a combined basis in accordance with SEC Regulation S-X Rules 3-10 and 13-01. The accounting policies used in the preparation of this summarized financial information are consistent with those elsewhere in the consolidated financial statements of the Company, except that intercompany transactions and balances of the Parent and Subsidiary Guarantor entities with non-guarantor entities have not been eliminated. Intercompany transactions between the Parent and Subsidiary Guarantors have been eliminated and equity in earnings from and investments in non-guarantor subsidiaries have not been presented.
Current wording
Summarized financial information is provided for GEO and the Subsidiary Guarantors on a combined basis in accordance with SEC Regulation S-X Rules 3-10 and 13-01. The accounting policies used in the preparation of this summarized financial information are consistent with those elsewhere in the consolidated financial statements of the Company, except that intercompany transactions and balances of GEO and the Subsidiary Guarantor entities with non-guarantor entities have not been eliminated. Intercompany transactions between GEO and the Subsidiary Guarantors have been eliminated and equity in earnings from and investments in non-guarantor subsidiaries have not been presented.
Previous wording
(a) Includes amounts due from non-guarantor subsidiaries of $48.4 million and $50.0 million as of March 31, 2024 and December 31, 2023, respectively.
Current wording
(a) Includes amounts due from non-guarantor subsidiaries of $49.8 million and $50.0 million as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
(b) Includes amounts due to non-guarantor subsidiaries of $32.5 million and $31.5 million as of March 31, 2024 and December 31, 2023, respectively.
Current wording
(b) Includes amounts due to non-guarantor subsidiaries of $33.4 million and $31.5 million as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
Cash, cash equivalents and restricted cash and cash equivalents as of March 31, 2024 was $195.3 million compared to $176.3 million as of March 31, 2023.
Current wording
Cash, cash equivalents and restricted cash and cash equivalents as of June 30, 2024 was $122.7 million compared to $118.8 million as of June 30, 2023.
Previous wording
Net cash provided by operating activities amounted to $85.8 million for the three months ended March 31, 2024 versus net cash provided by operating activities of $94.7 million for the three months ended March 31, 2023. Cash provided by operating activities during the three months ended March 31, 2024 was positively impacted by net income attributable to GEO, non-cash expenses such as depreciation and amortization, loss on sale/disposal of property and equipment, loss on extinguishment of debt, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $25.8 million, representing a positive impact on cash. The decrease was primarily driven by the favorable timing of billings and collections. Accounts payable, accrued expenses and other liabilities decreased by $6.4 million which negatively impacted cash. The decrease was primarily driven by the timing of payments.
Current wording
Net cash provided by operating activities amounted to $114.5 million for the six months ended June 30, 2024 versus net cash provided by operating activities of $109.4 million for the six months ended June 30, 2023. Cash provided by operating activities during the six months ended June 30, 2024 was positively impacted by non-cash expenses such as depreciation and amortization, loss on sale/disposal of property and equipment, loss on extinguishment of debt, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets increased in total by $16.8 million, representing a negative impact on cash. The increase was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities decreased by $21.5 million which negatively impacted cash. The decrease was primarily driven by the timing of payments.
Previous wording
Net cash provided by operating activities for the three months ended March 31, 2023 was positively impacted by net income attributable to GEO, non-cash expenses such as depreciation and amortization, loss on extinguishment of debt, amortization of debt issuance costs, discount and/or premium and other non-cash interest, loss on sale/disposal of property and equipment, net, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $71.0 million, representing a positive impact on cash. The decrease was primarily driven by the favorable timing of billings and collections. Accounts payable, accrued expenses and other liabilities decreased by $45.4 million which negatively impacted cash. The decrease was primarily driven by the timing of payments.
Current wording
Net cash provided by operating activities for the six months ended June 30, 2023 was positively impacted by net income attributable to GEO, non-cash expenses such as depreciation and amortization, loss on extinguishment of debt, amortization of debt issuance costs, discount and/or premium and other non-cash interest, loss on sale/disposal of property and equipment, net, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $32.4 million, representing a positive impact on cash. The decrease was primarily driven by the favorable timing of billings and collections. Accounts payable, accrued expenses and other liabilities decreased by $56.0 million which negatively impacted cash. The decrease was primarily driven by the timing of payments.
Previous wording
Net cash used in investing activities of $17.3 million during the three months ended March 31, 2024 was primarily the result of capital expenditures of $14.8 million and changes in restricted investments of $2.5 million. Net cash used in investing activities of $15.2 million during the three months ended March 31, 2023 was primarily the result of capital expenditures of $13.8 million and changes in restricted investments of $1.6 million.
Current wording
Net cash used in investing activities of $37.0 million during the six months ended June 30, 2024 was primarily the result of capital expenditures of $39.2 million, proceeds from sale of marketable securities of $9.4 million and purchases of marketable securities of $7.2 million. Net cash used in investing activities of $32.3 million during the six months ended June 30, 2023 was primarily the result of capital expenditures of $31.6 million, changes in restricted investments of $3.5 million and proceeds from assets held for sale of $2.8 million.
Previous wording
Net cash used in financing activities during the three months ended March 31, 2024 was approximately $30.1 million compared to net cash used in financing activities of $45.9 million during the three months ended March 31, 2023. Net cash used in financing activities during the three months ended March 31, 2024 was primarily the result of payments on long-term debt of $23.3 million and taxes paid related to net share settlement of equity awards of $7.4 million. Net cash used in financing activities during the three months ended March 31, 2023 was primarily the result of payments on long-term debt of $48.3 million and taxes paid related to net share settlement of equity awards of $3.4 million partially offset by proceeds from sale of treasury shares of $5.8 million.
Current wording
Net cash used in financing activities during the six months ended June 30, 2024 was approximately $113.2 million compared to net cash used in financing activities of $103.6 million during the six months ended June 30, 2023. Net cash used in financing activities during the six months ended June 30, 2024 was primarily the result of proceeds from long-term debt of $1,720.5 million, proceeds from borrowings on revolver of $40.0 million, payments on long-term debt of $1802.1 million, payments for call premiums of $34.3 million, debt issuance costs of $30.6 million and taxes paid related to net share settlement of equity awards of $7.5 million. Net cash used in financing activities during the six months ended June 30, 2023 was primarily the result of payments on long-term debt of $106.1 million, taxes paid related to net share settlement of equity awards of $3.4 million partially offset by proceeds from sale of treasury shares of $5.8 million.
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Rearranged current paragraphs (14)
Current report — wording carried from elsewhere
Operating expenses for U.S. Secure Services increased by $15.3 million in Second Quarter 2024 compared to Second Quarter 2023 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and the variable costs associated with those services of $11.3 million. We also experienced an increase of $4.0 million primarily related to new transportation contracts. Operating expenses as a percentage of segment revenue have decreased due to favorable operating margins on our new transportation contracts.
Current report — wording carried from elsewhere
Revenues for U.S. Secure Services increased by $64.5 million in the six months ended June 30, 2024 (the "Six Months 2024") compared to the six months ended June 30, 2023 (the "Six Months 2023") primarily due to aggregate increases of $16.5 million primarily due to the activation of new transportation contracts as well as our lease with the Oklahoma Department of Corrections for our company-owned Great Plains Correctional Facility which commenced on May 1, 2023. In addition, we experienced aggregate net increases in rates and/or per diem amounts in connection with contract modifications, transportation services and increased occupancies of $48.0 million.
Current report — wording carried from elsewhere
The number of compensated mandays in U.S. Secure Services facilities was relatively consistent at approximately 8.5 million in Six Months 2024 and 8.3 million in Six Months 2023. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Secure Services facilities was 87.7% and 86.7% of capacity in the Six Months 2024 and Six Months 2023, respectively, excluding idle facilities.
Current report — wording carried from elsewhere
Revenues for Reentry Services increased by $5.0 million in Six Months 2024 compared to Six Months 2023 primarily due to increases of $3.5 million due to new day reporting center contracts. We also experienced a net aggregate increase of $8.4 million primarily related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals. These increases were partially offset by decreases of $6.9 million due to contract terminations.
Current report — wording carried from elsewhere
Revenues for International Services increased by $10.4 million in Six Months 2024 compared to Six Months 2023 primarily due to a net increase of $17.8 million due to increased populations at our Australian subsidiary and our new health care contract in Australia. Partially offsetting this increase was a decrease due to foreign exchange rate fluctuations of $7.4 million.
Current report — wording carried from elsewhere
Operating expenses for Reentry Services increased by $2.1 million during Six Months 2024 compared to Six Months 2023 primarily due to aggregate net increases of $4.6 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals and the associated variable costs. We also experienced an increase of $2.6 million primarily due to new day reporting center contracts. Partially offsetting these increases was an aggregate net decrease of $5.1 million due to contract terminations.
Current report — wording carried from elsewhere
U.S. Secure Services depreciation and amortization expense increased in Six Months 2024 compared to Six Months 2023 primarily due to renovations at certain of our company-owned and leased facilities.
Current report — wording carried from elsewhere
Reentry Services depreciation and amortization expense decreased in Six Months 2024 compared to Six Months 2023 primarily due to certain assets becoming fully depreciated and/or amortized as well as certain asset dispositions at our Company-owned centers.
Current report — wording carried from elsewhere
Interest income increased by $2.0 million in Six Months 2024 compared to Six Months 2023 primarily due to higher cash balances on hand domestically and internationally.
Current report — wording carried from elsewhere
During Six Months 2023, we made a mandatory quarterly prepayment on our Tranche 1 and Tranche 2 loans under our prior senior credit facility. In connection with the prepayment, we wrote off a proportionate amount of related deferred loan costs and discount/premium.
Current report — wording carried from elsewhere
There was a benefit from income taxes during Six Months 2024 due to pre-tax losses for the Six Months 2024. The effective tax rate increased compared to Six Months 2023. In Six Months 2024, there was a $5.1 million net discrete tax benefit as compared to a $0.1 million net discrete tax expense in Six Months 2023. Included in the benefit from income taxes in Six Months 2024 there was a $1.0 million discrete tax benefit as compared to a $0.9 million discrete tax expense in Six Months 2023 related to stock compensation that vested during the respective periods. Also included in the net discrete tax benefit from income taxes in the Six Months 2024 was a $3.4 million discrete tax benefit from the interest deduction related to GEO shares provided to the holders of our 6.5% Exchangeable Senior Notes due 2026. We estimate our 2024 annual effective tax rate to be in the range of approximately 31% to 33%, exclusive of any discrete items.
Current report — wording carried from elsewhere
Equity in Earnings of Affiliates, net of Income Tax Provision
Current report — wording carried from elsewhere
Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased during Six Months 2024 compared to Six Months 2023 due to unfavorable insurance adjustments at SACS.
Current report — wording carried from elsewhere
Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
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Previous report — wording carried elsewhere
Redemption of Senior Notes due 2024