UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from ______ to_______
Commission file number:
(Exact name of registrant as specified in its charter)
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(Former name, former address and former fiscal year if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 6, 2024, the registrant had
TABLE OF CONTENTS
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE GEO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2024 AND 2023
(In thousands, except per share data)
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Three Months Ended |
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Six Months Ended |
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June 30, 2024 |
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June 30, 2023 |
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June 30, 2024 |
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June 30, 2023 |
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Revenues |
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$ |
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$ |
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$ |
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$ |
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Operating expenses |
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Depreciation and amortization |
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General and administrative expenses |
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Operating income |
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Interest income |
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Interest expense |
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Loss on extinguishment of debt |
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(Loss) gain on asset divestitures/impairment |
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Income (loss) before income taxes and equity in earnings of affiliates |
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(Benefit from) provision for income taxes |
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Equity in earnings of affiliates, net of income tax provision of |
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Net income (loss) |
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Net loss attributable to noncontrolling interests |
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Net income (loss) attributable to The GEO Group, Inc. |
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$ |
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$ |
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$ |
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Weighted-average common shares outstanding: |
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Basic |
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Diluted |
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Net income (loss) per common share attributable to The GEO Group, Inc.: |
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Basic: |
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Net income (loss) per common share attributable to The GEO Group Inc.-basic |
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$ |
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$ |
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$ |
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$ |
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Diluted: |
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Net income (loss) per common share attributable to The GEO Group, Inc.-diluted |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
THE GEO GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2024 AND 2023
(In thousands)
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Three Months Ended |
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Six Months Ended |
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June 30, 2024 |
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June 30, 2023 |
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June 30, 2024 |
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June 30, 2023 |
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Net income (loss) |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Foreign currency translation adjustments |
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Change in marketable securities, net of tax provision of $ |
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— |
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— |
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Pension liability adjustment, net of tax provision |
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— |
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— |
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Change in fair value of derivative instrument |
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Total other comprehensive income (loss), net of tax |
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Total comprehensive income (loss) |
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Comprehensive loss attributable to noncontrolling interests |
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Comprehensive income (loss) attributable to The GEO Group, Inc. |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
THE GEO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2024 AND DECEMBER 31, 2023
(In thousands, except share data)
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June 30, 2024 |
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December 31, 2023 |
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(Unaudited) |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash and cash equivalents |
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— |
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Accounts receivable, net of credit loss reserve of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Restricted Cash and Investments |
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Property and Equipment, Net |
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Assets Held for Sale |
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— |
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Operating Lease Right-of-Use Assets, Net |
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Deferred Income Tax Assets |
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Goodwill |
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Intangible Assets, Net |
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Other Non-Current Assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued payroll and related taxes |
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Accrued expenses and other current liabilities |
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Operating lease liabilities, current portion |
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Current portion of finance lease liabilities and long-term debt |
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Total current liabilities |
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Deferred Income Tax Liabilities |
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Other Non-Current Liabilities |
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Operating Lease Liabilities |
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Long-Term Debt, Net |
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Shareholders’ Equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings (accumulated deficit) |
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Accumulated other comprehensive loss |
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Treasury stock, |
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— |
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Total shareholders’ equity attributable to The GEO Group, Inc. |
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Noncontrolling interests |
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Total shareholders’ equity |
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Total Liabilities and Shareholders’ Equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
THE GEO GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS ENDED
JUNE 30, 2024 AND 2023
(In thousands)
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Six Months Ended |
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June 30, 2024 |
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June 30, 2023 |
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Cash Flow from Operating Activities: |
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Net income (loss) |
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$ |
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$ |
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Net loss attributable to noncontrolling interests |
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Net income (loss) attributable to The GEO Group, Inc. |
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Adjustments to reconcile net income (loss) attributable to The GEO Group, Inc. to net cash |
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Depreciation and amortization expense |
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Stock-based compensation |
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Loss on extinguishment of debt |
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Amortization of debt issuance costs, discount and/or premium and other non-cash |
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Equity in earnings of affiliates, net of tax |
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Dividends received from unconsolidated joint ventures |
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Realized/unrealized gain on investments |
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Loss on sale/disposal of property and equipment, net |
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Loss (gain) on asset divestitures/impairment |
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Changes in assets and liabilities, net of effects of acquisitions: |
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Changes in accounts receivable, prepaid expenses and other assets |
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Changes in accounts payable, accrued expenses and other liabilities |
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Net cash provided by operating activities |
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Cash Flow from Investing Activities: |
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Proceeds from sale of assets held for sale |
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— |
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Purchases of marketable securities |
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( |
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— |
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Proceeds from sale of marketable securities |
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— |
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Capital expenditures |
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( |
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Net cash used in investing activities |
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Cash Flow from Financing Activities: |
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Payments on long-term debt |
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Proceeds issuance of long-term debt |
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— |
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Proceeds from borrowings on revolver |
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— |
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Payments for call premiums |
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( |
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— |
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Proceeds from sale of treasury shares |
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— |
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Taxes paid related to net share settlements of equity awards |
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( |
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Proceeds from issuance of common stock in connection with ESPP |
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Debt issuance costs |
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— |
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Proceeds from the exercise of stock options |
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Net cash used in financing activities |
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( |
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Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash |
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Net Decrease in Cash, Cash Equivalents and Restricted Cash |
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Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, beginning of period |
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Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, end of period |
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$ |
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$ |
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Supplemental Disclosures: |
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Non-cash Investing and Financing activities: |
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Right-of-use assets obtained from operating lease liabilities |
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$ |
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$ |
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Debt issuance costs in accrued expenses |
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$ |
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$ |
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Capital expenditures in accounts payable and accrued expenses |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
6
THE GEO GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The GEO Group, Inc., a Florida corporation, and subsidiaries (the “Company” or “GEO”) specialize in the ownership, leasing and management of secure facilities, processing centers and community reentry centers in the United States, Australia and South Africa. The Company owns, leases and operates a broad range of facilities including maximum, medium and minimum security facilities, processing centers, as well as community-based reentry facilities and offers an expanded delivery of rehabilitation services under its 'GEO Continuum of Care' platform. The 'GEO Continuum of Care' platform integrates enhanced rehabilitative programs, which are evidence-based and include cognitive behavioral treatment and post-release services, and provides academic and vocational classes in life skills and treatment programs while helping individuals reintegrate into their communities. The Company develops new facilities based on contract awards, using its project development expertise and experience to design, construct and finance what it believes are state-of-the-art facilities that maximize security and efficiency. The Company provides innovative compliance technologies, industry-leading monitoring services, and evidence-based supervision and treatment programs for community-based parolees, probationers and pretrial defendants. The Company also provides secure transportation services for individuals as contracted domestically and in the United Kingdom through its joint venture GEOAmey Ltd. (“GEOAmey”). At June 30, 2024, the Company’s worldwide operations include the management and/or ownership of approximately
GEO operated as a real estate investment trust ("REIT") from January 1, 2013 through December 31, 2020. As a REIT, the Company provided services and conducted other business activities through taxable REIT subsidiaries ("TRSs"). A TRS is a subsidiary of a REIT that is subject to applicable corporate income tax rates and certain qualification requirements. The Company's use of TRSs permitted GEO to engage in certain business activities in which the REIT could not engage directly, so long as those activities were conducted in entities that elected to be treated as TRSs under the Internal Revenue Code of 1986, as amended (the “Code”), and enabled GEO to, among other things, provide correctional services at facilities it owns and at facilities owned by its government partners. A TRS is not subject to the distribution requirements applicable to REITs so it may retain income generated by its operations for reinvestment.
On December 2, 2021, the Company announced that its Board of Directors (the "Board") unanimously approved a plan to terminate the Company's REIT status and become a taxable C Corporation, effective for the year ended December 31, 2021. As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least
The Company's unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the instructions to Form 10-Q and consequently do not include all disclosures required by Form 10-K. The accounting policies followed for quarterly financial reporting are the same as those disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2024 for the year ended December 31, 2023. The accompanying December 31, 2023 consolidated balance sheet has been derived from those audited financial statements. Additional information may be obtained by referring to the Company’s Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments (consisting only of normal recurring items) necessary for a fair presentation of the financial information for the interim periods reported in this Quarterly Report on Form 10-Q have been made. Results of operations for the six months ended June 30, 2024 are not necessarily indicative of the results for the entire year ending December 31, 2024, or for any other future interim or annual periods.
7
2. GOODWILL AND OTHER INTANGIBLE ASSETS
The Company has recorded goodwill as a result of its various business combinations. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the tangible assets and intangible assets acquired net of liabilities assumed, including noncontrolling interests.
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January 1, |
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Additions [1] |
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Foreign Currency |
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June 30, 2024 |
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U.S. Secure Services |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Electronic Monitoring and Supervision Services |
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— |
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— |
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Reentry Services |
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— |
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— |
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International Services |
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( |
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Total Goodwill |
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$ |
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$ |
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$ |
( |
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$ |
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[1] During the six months ended June 30, 2024, the Company completed an acquisition of an entity that performed health care services located in Australia. The purchase price was approximately AUD
The Company has also recorded other finite and indefinite-lived intangible assets as a result of its various business combinations.
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June 30, 2024 |
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December 31, 2023 |
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Weighted |
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Gross |
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Accumulated |
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Net |
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Gross |
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Accumulated |
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Net |
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Facility management contracts |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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Trade names |
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Indefinite |
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— |
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— |
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Total acquired intangible assets |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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Amortization expense was $
Estimated amortization expense related to the Company's finite-lived intangible assets for the remainder of 2024 through 2028 and thereafter is as follows (in thousands):
Fiscal Year |
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Total |
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Remainder of 2024 |
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$ |
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2025 |
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2026 |
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2027 |
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2028 |
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Thereafter |
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$ |
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8
3. FINANCIAL INSTRUMENTS
The following tables provide a summary of the Company’s significant financial assets and liabilities carried at fair value and measured on a recurring basis as of June 30, 2024 and December 31, 2023 (in thousands):
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Fair Value Measurements at June 30, 2024 |
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Carrying Value at |
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Quoted Prices in |
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Significant Other |
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Significant |
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Assets: |
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Restricted investment: |
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Rabbi Trusts |
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$ |
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$ |
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$ |
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$ |
— |
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Marketable equity and fixed income securities |
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— |
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Other non-current assets |
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— |
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— |
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Interest rate swap derivatives |
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— |
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— |
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Fair Value Measurements at December 31, 2023 |
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Carrying Value at |
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Quoted Prices in |
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Significant Other |
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Significant |
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Assets: |
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Restricted investments: |
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Rabbi Trust |
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$ |
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$ |
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$ |
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$ |
— |
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Marketable equity and fixed income securities |
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— |
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Other non-current assets |
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— |
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— |
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Interest rate swap derivatives |
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— |
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— |
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The Company’s Level 2 financial instruments included in the tables above as of June 30, 2024 and December 31, 2023 consist of interest rate swap derivative assets/liabilities held by GEO, investments in equity and fixed income mutual funds held in the Company’s captive insurance subsidiary, Florina Insurance Company, Inc. ("Florina"), the Company's rabbi trust established for employer contributions to The GEO Group, Inc. Non-qualified Deferred Compensation Plan and other non-current assets which include the cash surrender value of company-owned life insurance policies. The Company's Level 1 financial instruments included in the table above as of June 30, 2024 consist of money market funds held in Florina and money market funds held in the Company's rabbi trust established for its Executive Chairman's retirement account.
The interest rate swap derivative assets are valued using a discounted cash flow model based on projected borrowing rates. The Company's restricted investment in the rabbi trust for The GEO Group, Inc. Non-qualified Deferred Compensation Plan is invested in Company-owned life insurance policies which are recorded at their cash surrender values. These investments are valued based on the underlying investments held in the policies' separate accounts. The underlying assets are equity and fixed income pooled funds. The marketable equity and fixed income securities are valued using quoted rates. The company-owned life insurance policies included in other non-current assets are valued at their cash surrender values.
9
4. FAIR VALUE OF ASSETS AND LIABILITIES
The Company’s consolidated balance sheets reflect certain financial assets and liabilities at carrying value. The carrying value of certain debt instruments, if applicable, is net of unamortized discount.
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Estimated Fair Value Measurements at June 30, 2024 |
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Carrying Value as |
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Total Fair |
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Level 1 |
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Level 2 |
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Level 3 |
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Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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$ |
— |
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$ |
— |
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Restricted cash and investments |
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— |
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— |
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Liabilities: |
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Borrowings under credit agreement |
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$ |
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$ |
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$ |
— |
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$ |
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$ |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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Estimated Fair Value Measurements at December 31, 2023 |
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Carrying Value as |
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Total Fair |
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Level 1 |
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Level 2 |
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Level 3 |
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Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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$ |
— |
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$ |
— |
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|||
Restricted cash and investments |
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— |
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— |
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Liabilities: |
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Borrowings under exchange credit facility |
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$ |
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$ |
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$ |
— |
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$ |
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$ |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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The fair values of the Company’s cash and cash equivalents, and restricted cash and investments approximates the carrying values of these assets at June 30, 2024 and December 31, 2023. Restricted cash consists of money market funds, bank deposits, commercial paper and time deposits used for asset replacement funds and other funds contractually required to be maintained at the Company's Australian subsidiary. It also includes cash on hand in the Company’s captive insurance subsidiary, Florina. The fair value of the money market funds and bank deposits is based on quoted market prices (Level 1).
On April 18, 2024, the Company announced the closing of its previously announced private offering of $
The Company 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 revolving credit facility is $
The Company also retired the majority of its
Refer to Note 10 - Debt for further information.
10
As of June 30, 2024, the recurring fair values of the Company's
As of December 31, 2023, the recurring fair values of the Company's
As of December 31, 2023, the fair values of the Company's