Q1 2021 Geo Group Inc Earnings Call
[music].
Good day and welcome to the Geo group the first quarter 2021, the earnings conference call all participants will be in a listen only mode.
Or do you need assistance. Please signal the conference specialist by pressing Star then zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Pablo Paez Executive Vice President of corporate Relations. Please go ahead.
Thank you operator, good morning, everyone and thank you for joining us for today's discussion of the Geo group's first quarter 2021 earnings results.
With us today are George the only chairman Chief Executive Officer of founder.
Ryan Evans Chief Financial Officer.
The in Schlarb, President of Geo care, and Blake Davis President of Geo secure services.
This morning, we will discuss our first quarter results and our outlook.
We will conclude the call where the question and answer session.
This conference call is also being webcast live on our Investor website at investors the Geo group Dotcom.
Today, we will discuss non-GAAP basis information.
A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and supplemental disclosure we issued this morning.
Additionally, much of the information we will discuss today, including the answers. We gave in response to your questions May include forward looking statements regarding our beliefs and current expectations with respect of various matters. These forward looking statements are intended to fall within the safe Harbor provisions of the securities laws.
Our actual results may differ materially from those in the forward looking statements as the result of various factors contained in our Securities and Exchange Commission filings, including the form 10-K, 10-Q, and 8-K reports with that please allow me to turn this call over to our chairman and CEO George the only George Thank you Pablo and good morning day every.
One.
This morning, we reported our first quarter 2021 results and updated our financial guidance for the year.
While we continue to face the operational and financial challenges associated with COVID-19, we remain pleased with the performance of our diversified business units.
During the first quarter, we experienced favorable cost trends, which resulted in better than expected financial performance. We also completed the transition of our D Ray James well share with Shannon Valley and rivers Correctional facilities two of idle status.
As we have previously disclosed these three facilities had contracts that were not renewed by the Federal Bureau of prisons and Thats closed at the end of January and March respectively.
As we highlighted last quarter, the president issued an executive order in January of this year direct in the U S Attorney General to not renew department of Justice contracts with privately operated criminal detention facilities.
Our financial guidance assumes that our remaining P. O P contracts will also not be renewed resulting in three additional DLP facilities closing during.
2021.
With respect to the U S Marshals service. Unlike the Bureau of prisons, the agency does not own and operated facilities.
The U S marshals contract contract for facilities, which are generally located near federal courthouses, primarily through intergovernmental service agreements and to a lesser extent direct contracts.
We are cooperating with the U S Marshal service and assessing various alternatives as to how to comply with the executive order.
During the first quarter, we were notified by the U S marshals.
It would not renew the contract for the Queens detention facility in New York, which expired on March 31.
We currently operate four additional detention facilities that are under direct contracts in a detention facilities that are under intergovernmental agreements with U S marshals.
The four direct contracts are up for renewal at various times over the next few years, including two in late 'twenty one.
Presently our 2021 guidance reflects only the non renewal of our Queens contract and we will continue to monitor the scope of the implementation timeline of the president.
Decorative border.
As noted earlier the executive order of applies only to the department of Justice.
The processing centers, we manage on behalf of U S immigration and customs enforcement are not covered by the executive order since Ices and agency of the department of Homeland Security.
Our ice processing centers are highly rated by national accreditation organizations and of provided high quality.
And culturally responsive services for over 30 years under both Democratic and Republican administrations.
Our ice processing centers have been operating at reduced capacity throughout the pandemic as the ice has reduced the operational capacity across all facilities to promote social distancing practices.
The Federal government has also put in place titled 42 public health restrictions at the southwest border, which result in the immediate removal of single adults apprehended by border patrol.
Notwithstanding these challenges associated with COVID-19, our employees have demonstrated significant strength and dedication they.
They have continued to provide humane and compassionate care to all of those entrusted to our facilities and programs.
From the beginning of the public health crisis of our company and our staff took steps to mitigate the risks of the novel Corona virus.
These mitigation initiatives have included a focus on increasing testing capabilities, including investing of prep approximately $2 million to acquire 45 at the rapid COVID-19.
The devices and testing kits.
We also installed bipolar ionization air purification systems at select secure surface facilities, representing our company investment of approximately $3 $7 million.
We have provided continue that.
Access to face masks and personal hygiene products, we have implemented social distancing pursuant to directors from our government Agency partners we.
<unk> been working closely with our government agency partners and local health departments to make COVID-19, vaccinations available at all of our facilities.
We recognize that in addition to the challenges that I have just discussed there have been concerns regarding our future access to financing.
We have adopted a proactive and multifaceted approach to address these challenges we are focused on debt reduction and deleveraging.
In 2020, we reduced our net debt by approximately $100 million.
During the first quarter, we reduced net debt by approximately 57 million dollar sales when we've set a goal of paying down between $125 million and $150 million.
In net debt in 2021.
This past month, our board suspended our quarterly dividend with the goal of maximizing our debt reduction deleveraging and internally funding growth.
While Geo currently intends to maintain our corporate.
The tax structure as a REIT our board has determined to undertake a review of our current corporate tax structure, which is expected to be completed by the fourth quarter of this year.
We have also implemented ongoing review of assets for potential sale.
And the first quarter, we sold our interest in Talbot Hall, New Jersey Reentry center with net proceeds of over $13 million.
In February of 'twenty, 'twenty, one we issued $230 million six 5% exchangeable senior notes due 2026 and a private offering.
We used a portion of the net proceeds to redeem the redeemed the outstanding amount of $194 million of senior notes due 2022 and use the remaining net proceeds to pay related transaction fees and expenses for general corporate purposes.
With the 2022 maturity.
Having been successfully addressed we also intend to consider alternatives in due course to address our subsequent maturities.
We believe these initiatives are in the best interest of our shareholders and other stakeholders as we work to address our debt maturities and enhance our long term shareholder value at.
At this time I'll turn the call over to Brian Evans to review, our results guidance and liquidity position.
Thank you George Good morning, everyone. Today, we reported first quarter revenues of approximately $576 million of net income attributable to Geo of $55 million. Our first quarter results include of $13 million pre tax gain on real estate assets and the $3 million pre tax gain on the extinguishment of debt.
Net.
Excluding the gains we reported first quarter adjusted net income of 28 cents per diluted share.
We also reported first quarter <unk> 60 per diluted share.
Our first quarter results reflect better than expected operating cost trends across our business units, which resulted in better than expected performance.
Moving to our outlook, we have updated our full year 2021 financial guidance to reflect the better than expected cost trends in the first quarter of the year and lower expected maintenance capex for the year. We expect full year 2021, net income attributable the geo to be in a range of $141 million.
To $150 million on a full year 2021 revenues of approximately $2 two 3 billion to $2 two $5 billion.
We expect full year 2021, adjusted net income to be in a range of $1 <unk> to $1.10 per diluted share.
We also expect full year 2021, app out to be in a range of $2 23 the.
$2.31 per diluted share.
We expect full year 2021, adjusted EBITDA to be in a range of 395 million to $406 million. Our updated guidance continues to assume a slow recovery from the COVID-19 pandemic throughout this year.
As we had previously guided our 2021 projections account for the non renewal of three additional <unk> contracts that have the option periods of expiring in 2021.
The great Plains Correctional facility in Oklahoma, which expires on May 31, and for which we have already received notice of non renewal from the DLP and the big Spring and flight line Correctional facilities in Texas, which are set to expire at the end of November.
Additionally, the BLT has decided to discontinue its contract for the county owned and managed Reeves County detention Center wanting to effective this month and thus our management consulting contract with Reeves County for that facility has ended as well.
With respect to the U S. Marshals are 2021 guidance reflects only the previously announced non renewal of our Clinton facility contract on March 31, we.
We will continue to monitor the scope and the implementation timeline of the President's executive order.
These contract non renewals are offset by the activation late last year of our three ice annex facilities from California, and our U S. Marshalls facility in the Eagle pass, Texas, which we expect to achieve normalized operations over the course of 2021.
For the second quarter of 2021, we expect net income attributable to geo to be in a range of $35 million to $38 million a quarter.
Clearly revenues of 558 million the $563 million.
We expect second quarter 2021, Apple to be between $57 59 per diluted share.
As a reminder, our second quarter results reflect lower payroll tax expenses in our first quarter results because of payroll taxes are frontloaded, resulting in higher expenses during the first quarter of each year compared to all subsequent quarters.
Moving to our capital structure.
At the end of the first quarter, we had approximately $290 million in cash on hand, more recently, we drew down an additional $170 million on our revolving credit facility, resulting in approximately $460 million from cash on hand, and leaving approximately $14 million from additional borrowing capacity.
The under our revolver.
As with our prior draw down our decision to further draw on our revolver is a prudent and precautionary step to preserve liquidity maintain financial flexibility and to obtain additional funds for general corporate purposes.
We will continue to proactively examine examine our options to address our funded indebtedness, including our near term maturities.
As part of this effort, we refinanced the outstanding amount of $194 million.
Of our senior unsecured notes due 2022 earlier this year by issuing $230 million in new six 5% exchangeable senior unsecured notes due in 2026.
With the 2022 maturity having been successfully addressed we also intend to consider alternatives in due course to address our subsequent debt maturity.
As a prudent part of this effort, we intend to review various capital structure alternatives and we have engaged lazard as financial advisers and Skadden Arps as legal advisors to assist in that process alongside our existing corporate counsel acre mint.
With respect to our capital expenditures as we had previously announced we have canceled approximately $35 million in capex.
We plan for 2021.
We now expect total capex from 2021 to be $69 million, including $14 million for maintenance Capex.
With the goal of maximizing the use of cash flows to pay down debt deleverage and internally fund growth our board suspended our quarterly dividend payments last month.
We have been focused on paying down debt and deleveraging for over a year from 2020, we paid down approximately $100 million in debt during.
During the first quarter of the year, we paid down approximately $57 million and net debt, which represents substantial progress towards our previously articulated objective of reducing net debt by $125 million to $150 million in 2021.
We are also continuing to evaluate potential cost saving opportunities as well as the potential sale of several of company owned assets.
During the first quarter, we sold our interest in the Talbot Hall reentry facility in New Jersey, which resulted in net proceeds the geo of approximately $13 million.
At this time I will turn the call over to Blake Davis for a review of our Geo secure services segment.
Thanks, Brian and good morning, everyone I'd like to provide you a brief update on our Geo secure services business unit.
During the first quarter of 2021, our staff continued to address the challenges associated with the COVID-19 pandemic from.
From the start of the pandemic, we have implemented several mitigation initiatives, we've put in place policies and controls consistent with guidance issued by the centers for disease control and prevention, including practices and procedures related to quarantine cohort ing and medical isolation, we have continuously exercised.
Paid leave and paid time off policies to allow our employees to remain home as needed. We have made face masks and cleaning supplies available at all of our facilities. We are focused on increasing testing capabilities at all of our secure services facilities, including the deployment of Abbott rapid test.
It's devices that allow us the screen new arrivals rivals that intake. So that positive COVID-19 cases can be properly quarantine and isolated to date, we have administered over 100000 COVID-19 tests to those in our care across our superior services facilities.
We have also made a significant company investing to install bipolar ionization systems at select secure services sites. These air purification systems can reduce the spread of airborne bacteria and viruses.
More recently, we have been working closely with our government agency partners and local health departments to make vaccinations available at our facilities, allowing each jurisdictions vaccine guidelines.
To date over 18000 vaccinations have been administered at our superior services facilities, we continuously evaluate our mitigation steps and we'll make adjustments based on updated guidance by the CDC and other best practices.
Moving to our recent operational activity.
As we had previously announced the contracts that are D. Ray James Most Shannon Valley and rivers Correctional facilities were not renewed by the Federal Bureau of prisons and ended at the end of January and March respectively.
The facility and regional staff worked closely with the MLP during the first quarter to complete the ramp down and day activation of these three facilities.
As we have discussed in January of this year, the president of issued an executive order directing the U S Attorney general to not renew department of Justice contracts with privately operated criminal detention facilities.
As a result, we have been preparing operationally with the expectation that our remaining contracts with the BOP will not be renewed when their current option periods expire.
We have already received notice from the <unk> that the contract for our Great Plains Correctional facility in Oklahoma, We will not be renewed when the current option period expires on May 31.
The <unk> has also decided to discontinue is contract for the county owned and managed Reeves County Detention Center, one and two effective this month and therefore, our management consulting agreement with Reeves County for that facility is also ended.
Additionally, the current option periods for our big Spring and flight line facilities in Texas expired at the end of November 2021, and our current expectation is that those two contracts will not be renewed by the MLP.
With respect to the U S Marshal services. Unlike the BNP the U S marshals do not own and operate their facilities. The U S. Marshals contract per bed capacity, which is generally located in areas near federal courthouses. The house free trials vendors, who have been charged with federal crimes.
The U S marshals contract for these facilities, primarily through Intergovernmental service agreements and to a lesser extent through direct contracts.
We were notified by the U S marshals that the agency would not renew the contract in our company own Queens detention facility in New York, which expired on March 31.
We currently operate four additional detention facilities that are under direct contracts and eight detention facilities that are under intergovernmental agreements with the U S marshals.
The four direct contracts are up for renewal at various times over the next few years, including two in late 2021.
With respect to our ice processing centers, the executive order does not cover agencies outside the department of Justice.
Our ice processing centers are highly rated by national accreditation organizations and provide high quality culturally responsive services and of safe and humane environment typical amenities at our processing centers include flat screen Tvs in the housing units multipurpose rooms outdoor covered for <unk>.
Williams and artificial turf soccer fields, all of those trusted in our care provided culturally sensitive meals approved by registered dietitian clothing, $24 seven access to health care services and full access to telephone.
And legal services.
Health care staffing at our ice processing centers is approximately more than double that of our state correctional facilities, which is needed to provide appropriate treatment for individuals who have numerous and diverse health and mental health needs. We have provided these high quality professional services for over 30 years under Democratic.
And Republican administrations, and we welcome the opportunity to find ways to further improve the delivery of services and accountability at ice processing centers. At this time I will turn the call over to Ann for a review of Geo care. Thank you Blake and good morning, everyone I'd like to briefly update you on our Geo care business unit.
Consistent with the efforts undertaken by our Geo secure services facilities, our company and our employees have remained focused on implementing COVID-19 mitigation strategies all of our residential facilities and Geo reentry and Geo youth services have put in place quarantine in cohort and policies and.
<unk> entry screening measures. We have also focused our efforts on increased sanitation testing and deploying facemasks.
We have allowed our employees to exercise paid leave and paid time off to remain home as needed we.
We will continue to evaluate our mitigation steps and we'll make adjustments as appropriate and necessary based on updated guidance by the CDC and other best practices.
Despite the challenging operational environment, our employees have continued to deliver high quality rehabilitation and reentry programming to those in our care often in innovative ways, including through virtual technologies.
We recently published our 2020 Geo continuum of care annual report, which highlights the accomplishments of our employees and our programs.
Among the innovative initiatives implemented by our continuum of care team. During the pandemic was the creation of the Geo Academy, which allowed us to transition our academic programs to technology based programming.
We also launched Geo Academy career services in an effort to partner with community employers under our vocational programs to increase employment opportunities for our post release participants.
Our recently released continuum of care annual report also highlights the accreditation that our Florida facilities received in 2020 from the commission on accreditation of rehabilitation facilities based on the quality and strength of our substance abuse treatment programs.
The continuum of care annual report also emphasizes the importance of our post release support services.
During 2020, Geo allocated $1 $7 million to address the basic community needs of post release participants such as transitional housing treatment transportation clothing, food education and job placement assistance.
The year, our post release support team helped more than 3600 individuals returning to their communities.
Furthermore, the statistics disclosed in our continuum of care of annual report showed that released individuals who received our post release support services experienced significantly lower recidivism rates over one and two year periods than those who did not participate in our post release support program.
Our Geo continuum of care program is part of <unk> contribution to criminal Justice reform, we believe that it provides a proven successful model on how the $2 2 million people in the criminal Justice system can be better served and changing how they live their lives our award winning program.
Is not in competition or in conflict with other national initiatives regarding offender sentencing reforms. In fact, we applaud. These efforts our efforts seek to draw national attention to the many still incarcerated in need of of more structured and comprehensive approach to rehabilitation.
We believe that the success of our continuum of care also positions geo to pursue quality growth opportunities.
During the first quarter of 2021, we were awarded a new contract with the Federal Bureau of prisons for a 118 bed residential reentry center in the Tampa, Florida area, which we expect to activate in the second half of 2021.
Additionally, during the first quarter, we activated two new day reporting centers sites and were awarded a contract for a third of additional day reporting centers in California, bringing our nationwide total to 80 day reporting centers.
We believe that these important contract wins are representative of the quality of our rehabilitation and reentry services.
At this time I will turn the call back to George for his closing remarks. Thank.
Thank you Anne.
While we continue to face operational and financial challenges associated with COVID-19, we remain pleased with the performance of our diversified business units. We believe our company remains resilient and is supported by real estate assets and contracts and <unk>.
Selling essential government services, we've provided high quality professional services for over 30 years of book.
Under both Democratic and Republican administrations, and under legislative branches controlled by both parties.
We recognize that there had been concerns regarding our future access to financing and the recent federal policy actions have resulted in the non renewal of some of our contracts to address these challenges we've established a focus on debt reduction and our board has suspended our quarterly dividend.
Our board has also begun a review of our current.
Corporate tax structure as a REIT to be completed by the fourth quarter.
We recently completed the refinancing of our senior notes due 2022, and we are evaluating the potential sale of the company owned the assets. We believe these initiatives are in the best interest of our shareholders as we work to address our debt maturities and enhance long term shareholder.
<unk>.
Finally, I want to thank Blaine Davis for his eight years with Geo and congratulate him on his retirement of.
On May 15th Blake will be succeeded by James Black has 23 years of service with Geo that completes our remarks and we'd be glad to take questions.
Thank you we will now begin the question and answer session to ask a question. Please press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys and of that anytime you question has been addressed and you would like to withdraw your question. Please press Star then two.
The first question today will come from Joe Gomes of Noble capital. Please go ahead.
Good morning, Thanks for taking the call and question and.
Nice quarter.
Thank you.
So I wanted to George to start off with some of your thoughts.
Commentary, possibly here in the U S Marshal service.
You mentioned.
They don't own any of their beds.
So where are they putting people I mean, how far away from the courthouses are they how are they transporting these people.
It just seems to me the kind of be a.
Policy that the.
Net.
From the top they think the sounds good but it seems to have some difficulty being implemented.
Reasonably and rationally on the ground.
Wanted to get your thoughts from that and also on the facilities.
Not just the U S marshal, but the the <unk>.
Also the DLP facilities.
I understand that you would look to.
Go the other repurpose facilities for other government agency use but if we werent successful in that I mean.
What are the other uses could there be for your facilities, if they were not being used as.
Our secure facility our detention center. Thank you.
Well on the first question I think it is a complex challenge for the U S marshals service to identify alternative locations.
For the prisoners better being held the predominantly urban areas near federal Courthouses unit.
We don't.
Have access to the details of what Theyre doing or how they are doing it but we.
We surmise, it's quite a challenge for them.
As to alternative uses of our facilities of the.
We are hopeful of re purpose seen them with other governmental agencies as time moves on but some of our smaller facilities.
Apparently lent themselves the interest by developers for alternative per.
<unk> other than secured facilities.
We expect.
Several sales of that nature.
Non secure facilities for non secure purposes.
Okay. Thanks.
And just kind of a follow up on that on the U S. Marshalls I understand you don't have access to their detailed plans, but as being somewhat of that spend in the inner strength for such a long time. I mean are you aware of thousands of beds debt and secure facilities are just being going on <unk>.
Used.
Setting aside yours and your competitor facilities for a second here that would.
Would make it easy for the U S marshals of just transfer people.
Yes, there may be some extra empty beds this year because of COVID-19, but because of the court systems have closed for all of the central purposes, but as.
The COVID-19 pandemic.
Is ended of.
We would think the core system will reactivate.
In due course.
There will be.
A greater flow of people going into jails and prisons.
Yeah.
Okay and on ice if I can switch gears for a moment here.
Your competitor was mentioning how there.
As populations have increased significantly since the <unk>.
Beginning of this year.
I was wondering if you guys are kind of seeing the same trends there.
And also a little bit on the on the title of 42 I understand it's being used.
Two.
Against.
The single people the puts them back across the border.
But as.
My understanding of correct me if I'm wrong. Please.
It's a health emergency so im quite understand what is the difference between.
Someone that the single and someone that's part of our family.
Wouldn't wanted to health.
The the same.
Well with regard of the first question, we have seen an uptick in our ice populations, particularly on the southern border.
<unk>.
Titled 42, two of my understanding is it's a temporary situation because of COVID-19 pandemic.
And once that's resolved I would think of.
Titled 42 will be amended to allow.
Of the tension of individuals' inside the U S rather than immediately the porting them to their.
Their country of origin.
Okay and one final. Thank you for that one final one.
For me and I'll get back in queue.
You talked a lot about obviously the.
The.
The difficulties here due to the President's executive order and renewing contracts.
Can you speak to the efforts.
Potential new business out there and where you might be looking for some new business maybe in some of the <unk>.
Eight year State partners.
Well I think we've seen of growth in our <unk>.
Our reentry business in our day reporting business in particular as described by Ann Schlarb.
Oh.
There has been more of a focus and interest in the rehabilitation programs post release.
Of the nature of required.
Reentry facilities and could you comment on that yes, we've seen as I discuss the residential reentry center with the Bureau of prisons that we were awarded earlier this year that will be activated in September.
State of Tennessee, the state of Idaho in the past year have started new day reporting centers that we've implemented and are looking at potential expansions and then we're continuing to look at other opportunities across all of our reentry services areas.
Okay. Thank you for that I'll get back in queue.
The next question will come from Mitra <unk> from Sidoti. Please go ahead.
Yes, good morning, thanks for taking the questions.
The first just wanted to maybe get a little more color on the favorable cost trends that you saw in the fourth quarter.
Hello.
How sustainable of how comfortable.
You feel that team to be able to kind of go forward.
This is Brian so the cost trends really are driven by I think some of the.
The lower occupancy levels and the facility that youre seeing.
Yes.
Resident related costs as a result of that and then also I think due to lower occupancy levels. There is less.
<unk> medical Theres less hospital runs, so theres, better overtime or or better labor management going on as well. So I think as long as the trends continue with the Occupancies being lower we will continue to manage the cost that way and then obviously as I.
Occupancy pick up we will see some of those cost increase but we'll also see revenue start to increase the offset that so I think.
Even when the occupancy start to improve we see.
On equal footing are even better.
Okay, No that's great.
Of occupancy.
Any sense.
We see a lot of states are increasingly lifting of COVID-19 related restrictions and with the vaccine wild rollout while on the way.
Curious if you're hearing anything in terms of when you might be able to.
Get back to a more or increase the capacity from the 75% maybe at ice Brent or the et cetera.
Uh huh.
We only have the guest and the guests with the towards the fall, we would think of things could get back to a more normalized state.
It's just our guests.
Okay. Thanks, and then.
Recently, the new is seeing some states index.
<unk> net again sort of following.
All of the federal policies as it relates to maybe not engaging in private prison contracts when those expire et cetera, I'm. Just curious if there's anything you can do in terms of whether from the lobby with respect of et cetera, given the political climate the I can maybe.
Some of the the activity coming out of the space right now.
Well.
There are.
Essentially a service provider and we stand ready to provide services when our clients and income in the.
Those needs can fluctuate.
The seasonally and.
Periodically do the administrations.
Implementing new policies.
I think we said in the first quarter, we we expect this year to be a transition period.
<unk> different policies will.
We will be.
<unk> brought forth the tested.
<unk> tested and implemented.
The revised as.
Of the situations.
On the field require and we stand ready to work with.
All of the agencies to make those accommodations as time goes on.
Okay. Thanks, and then finally again on the inverse.
Investments youre, making on the.
On the growth Capex.
Is there given the.
Political climate here in the U S is it.
More likely that you might be looking to explore more international opportunities or again, the focus is flow, putting what's going to be here.
While the Capex I mean, we've reduced some of the capex that was related to improvements at existing facilities and I think.
So what we had.
Forecasted for the balance of this year of next year is pretty pretty minimal for the most part in our correctional facilities and our reentry facilities and then the bulk of the Capex is in the <unk> business, where we're seeing growth and we also have the transition.
The technology to newer generation cellular technology.
Okay. Thanks, again for taking the questions.
The next question will come from Fred Taylor with MJ <unk> asset management. Please go ahead.
Yeah, Thanks for the call.
Reading the press release from February 19 on the new bond issue congratulations.
I noticed it was issued any sort.
City areas that were the other two bond issues are issued from.
I'd have to look at that I'm, not sure exactly which ones. They are all issued from.
Okay.
Would be great.
I don't know if theres, an offering memorandum of more <unk>.
It would be nice to see the full perspective, the other question I had.
You mentioned it was the private placement so I don't think Theres, a public offering prospectus.
But as the public company.
Look to.
To put an 8-K.
Some of it is.
Okay.
The other question was.
You mentioned the <unk>.
<unk> was to pay down of $150 million of debt.
How would you.
Think of allocating that between the revolving credit the term loan and bonds or I think you actually said.
The reduced net.
Would you just allow cash to accumulate.
Well as I said during the call we were working with some financial advisers. So I think that that will all be part of that process of evaluating how to apply the.
The cash flows of the business and the timing of when we do that.
Okay. Thank you.
The next question will come from Jack bonds from <unk> capital. Please go ahead.
Okay.
Hey, good morning, guys. Thanks for the time.
Just a quick follow up on the marshals service.
Our relationship could you just clarify how you're thinking about the difference if there is any between the direct contracts and the ISG and whether you think it's possible but the.
The the ICA contracts will remain even if the direct contracts certain of our canceled.
Well.
Currently our discussions with the Marshal services have only been on the direct contracts.
Do you expect the.
The the.
Executive order to apply to all contracts or is the reason to think of it the way that it was worded would allow them to apply it to the direct contracts.
We are responding to the.
The.
Discussions and concerns of the Marshal service as they identify them and right now there.
Those discussions are.
Exclusively on the direct contracts.
Yeah.
Okay, Great deal. Thank you.
We don't have the ability to speculate as to the entirety of their concerns but as.
As they've expressed thus far the discussions have been just on direct contracts.
Okay, great and the one other one of if I may on the ice relationship how are you thinking about.
I understand that the executive order does apply to the ice.
In the homeland security, but just thinking about the populations in your facilities and the occupancy levels, how do you expect to.
I guess what is currently excess capacity in the system.
Might be made from the White house is there will there be of rationalization.
The key.
The footprint intact.
Until there's more visibility on the population of longer term.
Well again, we don't have.
In depth knowledge of what the White House planning is but we are aware of that.
There is excess capacity and that's in part due to the large number of locations that ice has I think it may be a couple of hundred locations.
Many of those are small jails around the country.
That don't actually meet the.
Latest the ice standards that were public gated by deal.
Bummer administration, so that may be one of the issues.
They confront when deciding which facilities to <unk>.
We retain in which to close whether facilities meet the standards that were developed by the Obama administration.
This will conclude today's question and answer session I would now like to turn the conference back over to Joe Mazzoli for any closing remarks.
Thank you all for your questions and we'll look forward to address the you in the next quarterly call.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.