Q3 2023 The GEO Group Inc Earnings Call
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Speaker 1: Good day and welcome to the GEO Group their quarter 2023 earning conference call. All pictures, then, will be in a...
Good day and welcome to the Geo Group third quarter 2023 earnings Conference call.
All participants will be in a listen only mode.
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Speaker 1: I would now like to turn the conference over to Pablo Paya, Executive Vice President of Corporate Relations. Please go ahead.
I would now like to turn the conference over to Pablo Paez.
I could've Vice President of corporate relations. Please go ahead.
Speaker 2: Thank you, operator. Good morning, everyone, and thank you for joining us for today's discussion of the Geo Group's Earth Quarter 2023 earnings results.
Thank you operator, good morning, everyone and thank you for joining us for today's discussion of the Geo group's third quarter 2023 earnings results.
Speaker 2: With us today are George Oli, Executive Chairman of the Board, Jose Gordo, Chief Executive Officer, Brian Evans, Chief Financial Officer, Wayne Calabries, Chief Operating Officer, and James Black, President of GeoSecure Services.
With us today are George lowly executive Chairman of the Board Jose Gordo, Chief Executive Officer, Brian Evans, Chief Financial Officer, Wade Calibration, Chief operating officer, and James Black President of Geo secure services.
Speaker 2: This morning we will discuss our third quarter results as well as our outlook. We will conclude the call with a question and answer session.
This morning, we will discuss our third quarter results as well as our outlook, we will conclude the call with a question and answer session.
Speaker 2: This conference call is also being broadcast live on our investor website at investors.geogroup.com.
This conference call is also being webcast live on our Investor website at investors <unk> Geo group Dot com.
Speaker 2: Today we will discuss non-gap basis information. A reconciliation from non-gap basis information to gap basis results is included in the press release and supplemental disclosure we issued this morning.
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.
Speaker 2: Additionally, much of the information we will discuss today, including the answers we give and respond to your questions, may include forward-looking statements. Regarding our beliefs and current expectations, with respect to various matters.
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 to various matters.
Speaker 2: These forward-looking statements are intended to fall within the saved harbor permissions 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 10K, 10Q and 8K reports. With that, please allow me to turn this call over to executive chairman George.
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 into forward looking statements as a 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 executive Chairman George George.
Speaker 3: Thank you Pablo and good morning to everyone. Thank you for joining us on our third quarter, 2023 earnings call.
Thank you Pablo and good morning to everyone. Thank you for joining us on our third quarter 2023 earnings call.
Speaker 3: I'm joined today by our Senior Management Team to review our third quarter financial results.
I'm joined today by our senior management team to review, our third quarter financial results discuss our financial guidance for the balance of the year and our continued focus on debt reduction.
Speaker 3: our financial guidance for the balance of the year and our continued focus on debt reduction.
Speaker 3: and provide an update on the trends for each of our business segments.
And provide an update on the trends for each of our business segments.
Speaker 3: This morning, we reported third quarter revenues of approximately $603 million.
This morning, we reported third quarter revenues of approximately $603 million.
Speaker 3: Gap net income of approximately $24.5 million.
GAAP net income of approximately $24 $5 million.
Speaker 3: and adjusted EBITDA of approximately 119 nights.
And adjusted EBITDA of approximately $119 million.
Speaker 3: Our diversified business units continue to deliver steady operational and financial performance.
Our diversified business units continued to deliver steady operational and financial performance.
Speaker 3: During the third quarter, our Secure Services Business Unit renew several important contracts.
During the third quarter, our secure services business unit renewed several important contracts.
Speaker 3: At the federal level, we renewed two direct contracts with the US Marshals Store.
At the federal level, we renewed two direct contracts with the U S. Marshals service one months at our company owned 1900 bed real ground a processing center in Texas for a five year term.
Speaker 3: One was that our company owned 1900 bed, Rio Grande Processing Center in Texas for a five-year term.
Speaker 3: And the second was at our company, at least 770 bed Western region detention facility in San Diego for a two year.
And the second was at our company leased 770 bed Western region detention facility in San Diego for a two year term.
Speaker 3: We also renewed three contracts with ISPO respective one year terms. That include our company owns 700 bed Broward Transitional Center in Florida.
We also renewed three contracts with ice for our respective one year terms that include our company owned 700 bed Broward Transitional center in Florida.
Speaker 3: Our company owned 1904 bed South Texas Ice Processing Center.
Our company owned 1900, four bed, South, Texas ice processing center.
Speaker 3: and our company owned 1,314 bed Montgomery Processing Center in Texas.
Our company owned 1300, 14 bed Montgomery processing Center in Texas.
Speaker 3: Populations across our ice processing centers have continued to steadily increase.
Populations across our ice processing centers have continued to steadily increase.
Speaker 3: Since the beginning of July , we've experienced approximately a 30% increase, particularly in our central and western regions.
Since the beginning of July we've experienced approximately a 30% increase particularly in our central and western regions.
Speaker 3: At the state level, we recently renewed our management only contract in the state of Florida for the 2000 bed, Blackwater River, Correctional Revealtation Facility for a two year term.
At the state level, we recently renewed our management only contract in the state of Florida for the 2000 bed Blackwater River Correctional and rehabilitation facility for a two year term.
Speaker 3: During the third quarter, our GO reentry services division also renewed seven existing contracts for our residential entry center.
During the third quarter, our Geo reentry services Division also renewed seven existing contracts for our residential entry centers.
Speaker 3: and six existing contracts for our non-residential day reporting.
Six existing contracts for our nonresidential day reporting centers.
Speaker 3: Our third quarter results reflect an increase in our GTI's secure transportation rep.
Our third quarter results reflect an increase in our GTI secure transportation revenues.
Speaker 3: This increase was primarily driven by our new emergency contract to provide air operations.
This increase was primarily driven by our new emergency contract to provide air operations.
In support for ice.
Speaker 3: This contract could generate up to $16 million in total revenues if it runs for its full term of nine months.
This contract could generate up to $16 million in total revenues if it runs for its full term of nine months.
Speaker 3: The multi-year procurement for these services remains under bid protest, and we hope to continue to be a strong contender for a long-term contract award in the future.
The multi year procurement for these services remains under bid protest and we hope to continue to be a strong contender for a long term contract award in the future.
Speaker 3: Internationally, our third quarter results reflect a sequential increase in revenues due to the activation of our new contract to deliver healthcare services across public prisons in the state of Victoria in Australia.
Internationally, our third quarter results reflect a sequential increase in revenues due to the activation of our new contract to deliver healthcare services across public prisons in the state of Victoria in Australia.
Speaker 3: Turning to our electronic monitoring and supervision services segment, the number of participants in the federal government's intensive supervision appearance program, or ISAP, has remained relatively stable since early August at approximately 192 to 195,000 individuals.
Turning to our electronic monitoring and supervision services segment. The number of participants in the federal government's intensive supervision appearance program or ISS.
<unk> remained relatively stable since early August at approximately 192 to 195000 individuals.
Speaker 3: While the ISAP participant count has remained largely stable over the last three months, we've not experienced the moderate increase beginning in the fourth quarter that was contemplated in our previously issued financial guidance.
While the ICF participant count has remained largely stable over the last three months, we have not experienced the moderate increase beginning in the fourth quarter that was contemplated in our previously issued financial guidance.
Speaker 3: We believe that ICE continues to face budgetary pressures and the timing of the passage of appropriation bills in Congress remains uncertain.
We believe that ice continues to face budgetary pressures and the timing of the passage of appropriation bills in Congress remains uncertain.
Speaker 3: Given these factors, our tightened financial guidance range for the fourth quarter now assumes the ISAP participant counts will be flat to slightly down for the balance of year.
Given these factors our tightened financial guidance range for the fourth quarter analysis, the ICF participant counts will be flat to slightly down for the balance of the year.
Speaker 3: The federal government is currently funded under a short-term continuing resolution which expires on November 17, and Congress has yet to reach an agreement on the appropriation bills to fund the government in fiscal year 2024, which began on October 1.
The federal government is currently funded under a short term continuing resolution.
Which expires on November 17, and Congress has yet to reach an agreement on the appropriation bills to fund the government in fiscal year, 2024, which be Gan on October one.
Speaker 3: We estimate the ICE detention census is presently at approximately 39,000.
We estimate the ice detention centers is presently at approximately 39000.
Speaker 3: The Senate version of the Homeland Security Appropriations Bill keeps funding for ICE at the current level of 34,000 beds and slightly increases the overall funding available for the Alternative to Detention Program.
The standard version of the Homeland Security Appropriations Bill keeps funding for ice at the current level of 34000 beds and slightly increases the overall funding available for the alternatives to detention programs.
Speaker 3: The current version of the House Homeland Security Appropriation Bill would increase ISPEDS to 41,000 and includes a provision that would require the use of ISTAP electronic monitoring capabilities for all individuals in the non-detained docket for the entire duration of their proceeding.
The current version of the House Homeland Security.
Procreation Bill would increase ice beds to 41000 and includes a provision that would require the use of ice tap electronic monitoring capabilities for all individuals in the non <unk> docket for the entire duration of the proceedings.
Speaker 3: Additionally, the White House has submitted a supplemental appropriations request to Congress, which we believe includes additional funding for ICE beds and the alternatives to detention programs.
Additionally, the White House has submitted a supplemental appropriations request to Congress, which we believe includes additional funding for ice beds and the alternatives to detention program.
Speaker 3: If Congress is unable to reach an agreement within the next 10 days, the federal government could once again be funded under a short-term or long-term continuing resolution or face the prospect of a government shutdown.
If congress is unable to reach an agreement within the next 10 days the federal government could once again be funded under a short term or long term continuing resolution or face the prospect of the government shutdown.
We are continuing to monitor the congressional appropriations process and remain focused on providing high quality services on behalf of DHS and ice.
Speaker 3: We are continuing to monitor the congressional appropriations process and remain focused on providing high-quality services on behalf of DHS and NIA.
Speaker 3: We are continuing our efforts to market our current idle facilities to federal, state, and local government agencies.
We are continuing our efforts to market, our current idle facilities to federal state and local government agencies.
Speaker 3: As has been publicly reported, several counties across the country are experiencing overcrowding challenges in their local jails and some of these jurisdictions are exploring the potential use of private sector facilities to address these challenges.
As has been publicly reported several counties across the country are experiencing overcrowding challenges in their local jails and some of these jurisdictions are exploring the potential use of private sector facilities to address these challenges.
We believe that our modern well located facilities could generate significant increase to annualized adjusted EBITDA. If they are reactivated either under <unk> management or lease to local state or federal agencies.
Speaker 3: We believe that our modern, well-located facilities could generate significant increased annualized adjusted EBITDA if they are reactivated either under geo-management or leased to local, state, or federal agencies.
Speaker 3: Finally, we remain focused on reducing our net debt, which is a key strategic priority for our company.
Finally, we remain focused on reducing our net debt, which is a key strategic priority for our company.
Speaker 3: During the third quarter, we reduced our net debt by approximately $109 million and are at $1.8 billion in total net debt present.
During the third quarter, we reduced our net debt by approximately $109 million and are at one $8 billion in total net debt presently.
Speaker 3: Our objective is to continue reducing net debt by approximately $175-$200 million per year in the future.
Our objective is to continue reducing net debt by approximately $175 million to $200 million per year in the future. We also remain hopeful that we will be able to refinance portions of our debt at the earliest possible time.
Speaker 3: We also remain hopeful that we will be able to refinance portions of our debt at the earliest possible time. I will now turn the call over to Brian Evans to address our financial results and guidance in more detail.
I will now turn the call over to Brian Evans to address our financial results and guidance in more detail.
Speaker 4: Thank you, George. Good morning, everyone. Today, we reported gap net income of approximately $24.5 million on quarterly revenues of approximately $603 million.
Thank you George Good morning, everyone. Today, we reported GAAP net income of approximately $24 5 million on quarterly revenues of approximately $603 million we.
Speaker 4: We reported quarterly adjusted EBITDA of approximately $119 million.
We reported quarterly adjusted EBITDA of approximately $119 million.
Speaker 4: Third quarter 2023 results reflect higher transportation revenues due to our recent emergency contract to provide air support services for ICE and higher international revenues from the activation of our new healthcare contract in Victoria, Australia.
Third quarter 2023 results reflect higher transportation revenues due to our recent emergency contract to provide air support services for ice and higher international revenues and the activation of our new health care contract in Victoria, Australia.
Speaker 4: Additionally, in the third quarter 2023, we experienced a year over year increase of 14% in revenues from our residential reentry centers as populations in our reentry segment have continued to improve post pandemic.
Additionally, in the third quarter 2023, we experienced a year over year increase of 14% and revenues from our residential reentry centers as populations and our reentry segment have continued to improve post pandemic.
Speaker 4: Similarly, quarterly revenues from our non-residential day reporting centers increased by almost 10% year-over-year during the third quarter of 2023. These revenue increases were offset by lower revenue from our electronic monitoring and supervision services segment during the third quarter of 2023.
Similarly quarterly revenues from our nonresidential day reporting centers increased by almost 10% year over year during the third quarter 2023.
These revenue.
<unk> were offset by lower revenue for from our electronic monitoring and supervision services segment during the third quarter 2023.
Speaker 4: Our third quarter results also reflect an increase of approximately $13 million in net interest expense compared to the third quarter of 2022 due to higher interest rates and the debt restructuring we completed in August of 2020.
Our third quarter results also reflect an increase of approximately $13 million and net interest expense compared to the third quarter of 2022 due to higher interest rates and the debt restructuring we completed in August of 2022.
Speaker 4: Moving to our guidance for the balance of the year, our previous guidance for the fourth quarter of 2023 assumed a moderate increase in ISAP participants during the quarter. While the ISAP participant count has remained relatively stable over the last three months, we have not experienced a moderate increase that was contemplated in our previous guidance.
Moving to our guidance for the balance of the year, our previous guidance for the fourth quarter of 2023 assumed a moderate increase in ISR participants during the quarter.
While the ICI participant count has remained relatively stable over the last three months, we have not experienced a moderate increase it was contemplated in our previous guidance as.
Speaker 4: As George mentioned, we believe that ICE continues to face budgetary pressures and the timing of the passage of appropriations bills in Congress remains uncertain.
As George mentioned, we believe that ice continues to face budgetary pressures and the timing of the passage of appropriations bills in Congress remains uncertain.
Speaker 4: As a result of these factors, we have updated our guidance assumptions and now assume for budget purposes that the ISAP participant count will be flat to slightly down for the balance of the year. This morning we provided updated guidance for the fourth quarter of 2023 of gap net income in a range of 19 million to $24 million in quarterly revenues in a range of $590 million to $600 million.
As a result of these factors we have updated our guidance assumptions and now assumed for budget purposes that the ICF participant count will be flat to slightly down for the balance of the year.
This morning, we provided updated guidance for the fourth quarter 2023 of GAAP net income in a range of 19 million to $24 million and quarterly revenues in a range of $590 million to $600 million.
Speaker 4: We expect our fourth quarter 2023 adjusted EBITDA to be in a range of $117 million to $122 million.
We expect our fourth quarter 2023, adjusted EBITDA to be in a range of $117 million to $122 million for.
Speaker 4: For the full year 2023, we expect GAAP net income to be in a range of $100 million to $105 million on annual revenues of approximately $2.4 billion.
For the full year 2023, we expect GAAP net income to be in a range of $100 million to $105 million on annual revenues of approximately $2 $4 billion.
Speaker 4: We expect our effective tax rate for the full year 2023 to be approximately 29% exclusive of any discrete item.
We expect our effective tax rate for the full year 2023 to be approximately 29% exclusive of any discrete items.
Speaker 4: We expect our full year 2023 adjusted EBITDA to be between $495 million and $500 million.
We expect our full year 2023, adjusted EBITDA to be between $495 million and $500 million.
Speaker 4: Our full year 2023 guidance represents the second highest level of annual adjusted EBITDA in our company's history.
Our full year 2023 guidance represents the second highest level of annual adjusted EBITDA in our company's history. Our continued and steady performance is representative of the strength of our diversified services platform.
Speaker 4: Our continued and steady performance is representative of the strength of our diversified services platform.
Speaker 4: We have been able to offset declines in our electronic monitoring and supervision services segment throughout 2023 with growth in revenues and earnings from several of our other diversified segments.
We have been able to offset declines in our electronic monitoring and supervision services segment throughout 2023 with growth in revenues and earnings from several of our other diversified segments.
Speaker 4: Our guidance does not include the potential reactivation of any of our remaining idle secure services facilities, which total approximately 9,000 beds and could provide meaningful upside to our annualized revenues and cash flows to fully react-
Our guidance does not include the potential reactivation of any of our remaining idle secure services facilities, which total approximately 9000 beds and can provide meaningful upside to our annualized revenues and cash flows at fully reactivated.
Speaker 4: Additionally, increases in the ISAP participant count or further increases in the utilization of our ICE detention beds could generate significant upside to our guidance. With respect to ISAP specifically, BI is the sole provider of electronic monitoring solutions to ICE and has provided these services with bipartisan support for over 20 years, successfully achieving high levels of compliance under the program.
Additionally increases in the ICF participant count or further increases in the utilization of our ice detention beds to generate significant upside to our guidance.
With respect to ICF, specifically <unk> as the sole provider of electronic monitoring solutions to ice and has provided these services with bipartisan support for over 20 years successfully achieving high levels of compliance under the program.
Speaker 4: BI has all the necessary resources to assist ICE going forward should the agency decide to increase the utilization of ISAP once appropriation bills are approved by Congress.
It has all the necessary resources to assist ice going forward should the agency decided to increase the utilization of <unk>. Once appropriation bills are approved by Congress.
Speaker 4: Moving to our capital structure, during the third quarter of 2023, we reduced our total net debt by approximately $109 million. We ended the quarter with total net debt of approximately $1.8 billion. Our debt reduction during the third quarter was supported by the sale of our Bo Robinson. The entry facility in New Jersey for approximately $15 million, which closed in September .
Moving to our capital structure during the third quarter of 2023, we reduced our total net debt by approximately $109 million. We ended the quarter with total net debt of approximately $1 8 billion.
Our debt reduction during the third quarter was supported by the sale of our BOE Robinson reentry facility in New Jersey for approximately $15 million, which closed in September.
Speaker 4: Our objective is to continue to reduce our net debt by approximately $175 million to $200 million per year in the future, bringing our total net debt to approximately $1.6 billion by the end of 2024.
Our objective is to continue to reduce our net debt by approximately 175 million to $200 million per year in the future, bringing our total net debt to approximately $1 $6 billion by the end of 2024.
Speaker 4: Going forward, we expect interest rates to stabilize and potentially decrease, further enhancing our ability to reduce our net debt. As a reminder, approximately half of our debt is under floating interest rates, and future increases in interest rates would bolster our annual, or future decreases in interest rates would bolster our annual free cash flows that could be used to further reduce our overall debt.
Going forward, we expect interest rates to stabilize and potentially decrease further enhancing our ability to reduce our net debt as a reminder, approximately half of our debt is under floating interest rates and future increases in interest rates would bolster our annual of future decreases in interest rates will bolster our annual free cash flows it could be you.
To further reduce our overall debt. We also expect to explore further asset sales to complement these efforts, including the potential sale of additional residential reentry assets.
Speaker 4: We also expect to explore further asset sales to complement these efforts, including the potential sale of additional residential reentry assets.
Speaker 4: Our residential reentry centers are typically located in urban areas and can usually be repurposed for alternative use.
Our residential reentry centers are typically located in urban areas and can usually be repurposed for alternative uses.
Speaker 4: These factors can often result in a larger pool of potential interested buyers.
These factors can often result in a larger pool of potential interested buyers.
Speaker 4: We have two additional reentry facilities that we are currently actively marketing for sales.
We have two additional reentry facilities that we are currently actively marketing for sale.
Speaker 4: With respect to our idle secure services facilities, we are focused on marketing these facilities to local, state, and federal agencies for reactivation, either under traditional management contract or at least...
With respect to our idle secure services facilities, we are focused on marketing these facilities to local state and federal agencies for reactivation, either under traditional management contract or a lease agreement.
Speaker 4: However, we may also consider to the sale of some of these larger assets if the price adequately reflects their value.
We may also consider the sale of some of these larger assets if the price adequately reflects their value.
Speaker 4: Finally, we remain hopeful to be able to refinance portions of our debt at the earliest possible time. As a first step, we would expect to address our revolving credit facility, which as a reminder is comprised of two tranches including $87 million, which mature is in 2024 and approximately $187 million, which mature is in 2027.
Finally, we remain hopeful to be able to refinance portions of our debt at the earliest possible time as a first step we would expect to address our revolving credit facility, which as a reminder is comprised of two tranches, including $87 million.
Which matures in 2024, and approximately $187 million, which matures in 2027. We currently have no outstanding no borrowings outstanding under either of these tranches and our goal would be to comprehensively address our revolving credit facility prior to the maturity of the first tranche, we continue to have strong.
Speaker 4: We currently have no borrowings outstanding under either of these tranches, and our goal would be to comprehensively address our revolving credit facility prior to the maturity of the first tranche. We continue to have strong relationships with our existing banking partners, and we have received interest from several new banks, as well as institutional investors, who would participate in future refinancing transactions.
Chips with our existing banking partners and we have received interest from several new banks as well as institutional investors, who participate in future refinancing transactions.
Speaker 4: Through these efforts, we hope to be able to achieve interest cost savings and gain more flexibility within the covenants under our credit agreements to explore options to return capital to our shareholders.
Through these efforts, we hope to be able to achieve interest cost savings and gained more flexibility within the covenants under our credit agreements to explore options to return capital to our shareholders in the near future. We continue to believe that our focus on reducing debt and deleveraging will enhance value for all our shareholders over time.
Speaker 4: in the near future. We continue to believe that our focus on reducing debt and de-leveraging will enhance value for all our shareholders over time. At this time, I will turn the call over to James Black for a review of our GeoSecure Services segment.
At this time I will turn the call over to James Black for a review of our Geo secure services segment.
Speaker 2: Thank you, Brian . Good morning, everyone. It is my pleasure to provide an update on Geo Secure Service.
Thank you Brian Good morning, everyone. It is my pleasure to provide an update on Geo secure services during the third quarter of 2023, our secure services facility successfully underway 52 audits.
Speaker 2: During the third quarter of 2023, our Secure Services Facilities successfully underwent 52 audits, including internal audits, government reviews, third party accreditations, and Prison Rape Elimination Act, or PRE-A-STERFECATION.
<unk> internal audits government reviews third party accreditation and prison rape elimination act or previous certifications.
Speaker 2: Sixth of our secure services facilities received accreditation from the American Correctional
Six of our secure services facilities received accreditation from the American Correctional Association with an average score of 99, 2%.
Speaker 2: with an average score of 99.2%. And another six of our facilities.
And another six of our facilities received <unk> certification.
Speaker 2: Our GTI Transportation Division and our GOA-ME UK Joint Venture completed approximately 4.3 million miles driven in the United States and overseas during the Third Quarter.
Our GTR transportation Division in our Geo Amey U K joint venture completed approximately $4 3 million miles driven in the United States and overseas during the third quarter.
Speaker 2: Moving to the current trends for our government agency partners. At the federal level, populations at our contract, U.S. Marshall's detention facilities continue to be state.
Moving to the current trends for our government agency partners at the federal level populations at our contract U S. Marshals detention facilities continue to be stable.
Speaker 2: Our US Marshall's facilities around the country support the agency as it carries out its mission of providing custodial services for pre-trial detainees facing federal criminal proceedings.
Our U S marshals facilities around the country support the agency as it carries out its mission of providing custodial services for pretrial detainees spacing federal criminal proceedings.
Speaker 2: We believe that all these important facilities provide needed bed space and services near federal courthouses where there's generally a lack of suitable alternative detention capacity for the U.S. Marshals Service.
We believe that all of these important facilities provide needed bed space and services near federal courthouses, where there is generally a lack of suitable alternatives to detention capacity for the U S Marshal service.
Speaker 2: During the third quarter, we renewed our contracts with the US Marshall Service for our company-owned 1900-bed Rio Grande Process.
During the third quarter, we renewed our contracts with the U S. Marshal service for our company owned 1900 bed Rio Grande processing Center for a five year term and our company leased 770 bid Western region detention facility for two year term.
Speaker 2: for a five-year term. And our company leased 770-bed Western Region Detention facility for a two-year term.
Moving to our ice processing centers during the third quarter, we renewed three contracts for respective one year terms at our company owned 700 bed Broward Transitional center or 1900, four bed, South, Texas Ice processing center, and our <unk> hundred 14 beds.
Speaker 2: During the third quarter, we renewed three contracts for respective one-year terms at our company owned 700-bed, Broward Transitional.
Speaker 2: Our 1904 bed South Texas Ice Processing Center and our 1314 bed Montgomery Ice Processing Center.
Gum Murray ice processing center.
Speaker 2: Across our ice processing centers, we have experienced a 30% increase in population since the beginning of July .
Across our ice processing centers, we have experienced a 30% increase in population since the beginning of July.
Speaker 2: As George noted, the federal government is currently funded under a short-term continuing resolution that runs through November 17th.
As George noted the federal government is currently funded under our short term continuing resolution that runs through November 17.
Speaker 2: The U.S. Congress has not yet reached an agreement on the appropriations bill for fiscal year 2024. We estimate the present census of active ICE detention beds to be at 39,000.
U S Congress has not yet reached an agreement on the appropriations Bill for fiscal year 2024.
We estimate the present census of active ice detention beds to be at 39.
Speaker 2: The current house version of the Homeland Security Appropriations Bill would fund ICE for 41,000 beds, while the Senate version would maintain funding at 34,000.
The current house version of the Homeland Security Appropriations Bill would fund ice for 41000 beds, while the Senate version would maintain funding at 34000 beds.
Speaker 2: The U.S. Congress is also considering a supplemental appropriations package submitted by the White House, which would also increase funding for ICPSR.
The U S. Congress is also considering our supplemental appropriations package submitted by the White House, which would also increase funding for ice business.
Speaker 2: If a compromise between the House and Senate is not reached in the next 10 days, the federal government could again be funded under a short-term or long-term continuing resolution or face the prospect of a government shutdown.
If a compromise between the house and Senate has not reached in the next 10 days for federal government could again be funded under a short term or long term continuing resolution or face the prospect of a government shutdown.
Speaker 2: As a longstanding service provider to the federal government, we play no role in and have no control over congressional appropriations decisions, the timing of those decisions, or more broadly the implementation of immigration's process.
As a longstanding service provider to the federal government. We played no role in and have no control over congressional appropriations decisions the timing of those decisions or more broadly the implementation of immigration policies.
Speaker 2: Our focus remains on providing the highest quality services to ICE, and we stand ready to support the agency with any additional services as needed.
Our focus remains on providing the highest quality services to ice and we stand ready to support the agency with any additional services as needed.
Speaker 2: Our ICE processing centers have a longstanding track record delivering professional support services on behalf of ICE and providing secure residential care consistent with our commitment to respecting the human rights of all of those entrusted to our
Our ice processing centers have a long standing track record delivering.
Professional support services on behalf of ice and providing secure residential care consistent with our commitment to respecting the human rights of all of those entrusted to our care.
Speaker 2: Our ice processing centers offer around the clock access to quality health care service.
Our ice processing centers offer a round the clock access to quality health care services health care staffing at our ice processing centers is generally more than doubled the number of health care staff in a typical state correctional facility.
Speaker 2: Healthcare staffing at our ice processing centers is generally more than double the number of healthcare staff in a typical state correction.
Speaker 2: Our eyes processing centers also offer access to legal counsel and legal libraries and resources. And we have dedicated space at our spinners to accommodate meetings with legal.
Our ice processing centers also offer access to legal counsel and legal libraries and resources and we have dedicated space in our centers to accommodate meetings with legal counsel.
Speaker 2: Our ice processing centers also provide daily meals that are culturally sensitive and are approved by registered dietitian.
Our ice processing centers also provide daily meals that are culturally sensitive and are approved by registered dieticians.
Speaker 2: We also provide access to faith-based and religious opportunities, and we partner with community volunteers as needed to ensure a fair representation of various faiths and denominations.
We also provide access to faith based and religious opportunities and we partner with community volunteers as needed to ensure a fair representation of various space in denomination.
Speaker 2: Our ice processing centers also offer access to quality recreation life.
Our ice processing centers also offer access to quality recreational activities. We have made significant investments to provide enhanced amenities at our centers, including artificial turf soccer fields covered pavilions.
Speaker 2: We have made significant investments to provide enhanced amenities at our
Speaker 2: including artificial turf soccer fields covered for billions, exercise equipment and multi-purpose.
Exercise equipment and multipurpose rooms.
Speaker 2: We have also historically provided secure transportation services and logistical support for ICE, primarily at 12 of our ICE processing centers.
We have also historically provided secure transportation services and logistical support for ice primarily at 12 of our ice processing centers.
Speaker 2: During the third quarter, our GTI Transportation Division also began providing air operation support for ice under an emergency contract, which could have a full term of nine months.
During the third quarter, our GTI Transportation Division also began providing air operation support price under an emergency contract, which could have a full term of nine months.
Speaker 2: The federal procurement for the multi-year contract for these services is currently under bid protest, and we hope GTI can remain a strong contender for these services in the future. Moving to our
Interim procurement for the multiyear contracts for these services is currently under bid protest and we hope GTI can remain a strong contender for these services in the future.
Moving to our state Government agency partners are state Correctional facilities deliver high quality support services across seven states, including enhanced rehabilitation programs on behalf of corrections departments in Florida, Georgia, Indiana, Oklahoma, Arizona, New Mexico.
Speaker 2: Our state correctional facilities deliver high quality support services across seven states, including enhanced rehabilitation programs on behalf of corrections departments in Florida, Georgia, Indiana, Oklahoma, Arizona, New Mexico, and Virginia.
In Virginia.
Speaker 2: During the third quarter, we renewed our managed only contract for the 2000 bed Blackwater River correctional facility in Florida for a two-year time.
During the third quarter, we renewed our managed only contracts for the 2000 bed Blackwater River Correctional facility in Florida for a two year term.
Speaker 2: With respect to our international markets, during the third quarter, we began delivering primary health services across 13 public prisons in Australia under our new healthcare contract with the state of Victoria.
With respect to our international markets during the third quarter, we began delivering primary health services across 13 public prisons in Australia under our new health care contract with the state of Victoria.
Speaker 2: This new contract is expected to generate approximately $33 million in annualized revenue.
This new contract is expected to generate approximately $33 million in annualized revenues.
Speaker 2: Finally, we continue to market our current idle secure services facilities, which total approximately 9,000 bid.
Finally, we continue to market our current idle secure services facilities, which total approximately 9000 beds.
Speaker 2: We have had recent active discussions, particularly with a number of local agencies as counties across the country are facing overcrowding challenges as a result of increases in local jail populations post-pandemic.
<unk> had recent active discussions, particularly with a number of local agencies as counties across the country are facing overcrowding challenges as a result of increases in local jail populations post pandemic.
Speaker 2: We believe our facilities are modern and well located and can help address these challenges.
We believe our facilities are modern and well located and can help address these challenges.
Speaker 2: At this time, I would like to turn the call over to Wayne Calabrese for a review of GEO.
At this time I would like to turn the call over to Wayne <unk> for a review of Geo care.
Thank you James I am pleased to provide an operational update on our Geo care business unit, starting with our reentry services Division.
Speaker 5: During the third quarter, our reentry services facilities successfully underwent 38 audits, including internal audits, government reviews, third-party accreditations, and PREA certification.
During the third quarter, our reentry services facilities successfully underwent 38 audits, including internal audits government reviews third party accreditations and previous certifications two of our residential reentry centers received accreditation from the American Correctional Association both risk.
He'd been perfect scores of 100% and three of our residential reentry centers received previous certification.
Speaker 5: We also renewed seven residential reentry contracts, including four contracts with the federal bureau prisons, as well as six non-residential day reporting center contracts.
We also renewed seven residential reentry contracts, including four contracts with the Federal Bureau of prisons as well as six nonresidential day reporting center contracts.
Speaker 5: Our 35 residential reentry centers provide transitional housing and rehabilitation programs for individuals re-entering their communities across 14 states.
Our 35 residential reentry centers provide transitional housing and rehabilitation programs for individuals reenter in their communities across 14 states.
Speaker 5: Our non-residential and day reporting centers provide high quality community-based services, including cognitive behavioral treatment for up to approximately 9,000 parolees and probationers at approximately 90 locations across PINC-
Our nonresidential and day reporting centers provide high quality community based services, including cognitive behavioral treatment for up to approximately 9000, parolees and probationers at approximately 90 locations across 10 states.
Speaker 5: All key outcome metrics showed improvement during the third quarter, attesting to our evidence-based practices and their track record for lowering the rate of acidivism.
All key outcome metrics showed improvement during the third quarter of testing to our evidence based practices and their track record for lowering the rate of recidivism.
Speaker 5: Moving to our GEO Continuum of Care and in-prison programs division. During the third quarter, we delivered enhanced in-custody rehabilitation and post-release support to an average daily population of approximately 2,600 individuals at 31 in-prison programs sites in seven states and approximately 21,000 individuals at 13 continuum of care sites in eight states.
Moving to our Geo continuum of care and in prison programs Division during the third quarter, we delivered enhanced in custody rehabilitation and post release support to an average daily population of approximately 2600 individuals at 31 in prison programs sites in seven months.
States and approximately 21000 individuals at 13 continuum of care sites in eight states.
Speaker 5: Our in-custody rehabilitation services include academic programs that are focused on helping those in our care attain high school equivalency diploma.
In custody rehabilitation services include academic programs that are focused on helping those in our care attain high school equivalency diplomas.
Speaker 5: We have made a significant investment to equip all of our classrooms with smart boards to aid in the delivery of academic instruction at all of our facilities.
We have made a significant investment to equip all of our classrooms with smart boards to aid in the delivery of academic instruction at all of our facilities. We have also focused on developing vocational programs that not only lead to certification when completed but are also based on market job place.
Speaker 5: We have also focused on developing vocational programs that not only lead to certification when completed, but are also based on market job placement needs.
<unk> needs.
Speaker 5: Our substance abuse treatment programs are an important part of our rehabilitation services because many of the individuals in our care suffer from addiction. Our facilities also provide extensive faith-based and character-based programs.
Our substance abuse treatment programs are an important part of our rehabilitation services because many of the individuals in our care suffer from addiction.
Our facilities also provide extensive faith based and character based programs and we have designated faith based and character based housing units or dorms across our facilities to enhance the delivery of these important programs.
Speaker 5: and we have designated faith-based and character-based housing units or dorms across our facilities to enhance the delivery of these important programs.
Speaker 5: During the third quarter, we completed approximately 700,000 hours of incustity rehabilitation program.
During the third quarter, we completed approximately 700000 hours have been custody rehabilitation programming.
Speaker 5: Our Academic Programs awarded 644 High School Equivalency Diplomas and our Vocational Courses awarded 695 Vocational Training Certifications.
Our academic programs awarded 644 High school equivalency diplomas and our vocational courses awarded 695 vocational training certifications.
Speaker 5: Our Substance Abuse Treatment Programs awarded approximately 3,500 program completions and we achieved over 21,000 behavioral program completions and more than 18,000 individual cognitive behavioral treatment sessions.
Our substance abuse treatment programs awarded approximately 3500 program completions and we achieved over 21000 behavioral program completions and more than 18000 individual cognitive behavioral treatment sessions.
Speaker 5: During the third quarter, we also allocated over $400,000 for post-release services to support 873 individuals released from geophacilities as they return to their community.
During the third quarter, we also allocated over $400000 toward post release services to support 873 individuals released from Geo facilities as they return to their communities.
Speaker 5: Our Geo Continuum of Care program integrates enhanced in custody rehabilitation services, including cognitive behavioral treatment with post-release support services that address critical community needs of released individuals.
Our Geo continuum of care program integrates enhanced in custody rehabilitation services, including cognitive behavioral treatment with post release support services that address critical community needs of released individuals.
Speaker 5: We believe our award-winning program provides a proven model on how the two plus million people in the US criminal justice system can be better served in changing their lives.
We believe our award winning program provides a proven model on how the two plus million people in the U S. Criminal Justice system can be better served and changing their lives.
Speaker 5: Finally, turning to our electronic monitoring and supervision services segment, our BI subsidiary provides a full suite of monitoring and supervision solutions, products, and technologies on behalf of federal, state, and local agencies across the country.
Finally, turning to our electronic monitoring and supervision services segment. Our BVI subsidiary provides a full suite of monitoring and supervision solutions products and technologies on behalf of federal state and local agencies across the country at.
Speaker 5: At the federal level, the number of participants required to be monitored under our ISAP contract with the Department of Homeland Security has remained relatively stable over the last three months, at approximately 192,000 to 195,000 individuals.
At the federal level, the number of participants required to be monitored under our <unk> contract with the department of Homeland Security has remained relatively stable over the last three months at approximately 192000 to 195.
Individuals.
Speaker 5: While we had previously expected the number of ISFAT participants to begin to moderately increase beginning in the fourth quarter, we now assume for budget purposes that ISFAT participant counts will be flat for slightly down for the balance of the year.
While we had previously expected the number of I stat participants to begin to moderately increase beginning in the fourth quarter. We now assume for budget purposes that ice that participant counts will be flat to slightly down for the balance of the year.
Speaker 5: We believe that ICE continues to face budgetary pressures, and as it has been previously noted, the timing of the passage of the appropriations bills currently being considered by the U.S. Congress remains uncertain.
We believe that ice continues to face budgetary pressures and as it has been previously noted the timing of the passage of the appropriations bills currently being considered by the U S Congress remains uncertain.
Speaker 5: BI has provided technology solutions, holistic case management, supervision, monitoring, and compliance services under ISAP for almost 20 years.
<unk> has provided technology solutions Polish the case management supervision monitoring and compliance services under is set for almost 20 years under <unk> tenure and the federal government supervision and appearance program has achieved high levels of compliance using a variety.
Speaker 5: Under BI's tenure, the federal government's supervision and appearance program has achieved high levels of compliance using a variety of new technologies and case management services over that time. And going forward, we expect BI to continue to explore new and innovative technology solutions to support the needs of ICE and all of our government agency parts.
We have new technologies and case management services over that time and going forward, we expect <unk> to continue to explore new and innovative technology solutions to support the needs of ice and all of our government Agency partners.
Speaker 5: At this time, I'd like to turn the call over to Jose Gordo for closing remarks.
At this time I'd like to turn the call over to Jose Gordo for closing remarks.
Speaker 6: Thanks Wayne. In closing, our diversified business units delivered steady financial and operational performance during the third quarter of 2023.
In closing our diversified business units delivered steady financial and operational performance during the third quarter of 2023.
Speaker 6: We remain focused on reducing our overall net debt and on positioning our company to refinance portions of our debt in order to reduce our interest costs and gain the flexibility to potentially return capital to shareholders in the future.
We remain focused on reducing our overall net debt and on positioning our company to refinance portions of our debt in order to reduce our interest costs and gain the flexibility to potentially return capital to shareholders in the future.
Speaker 6: We continue to believe that we have several potential upside opportunities, including further increases in populations at our ice processing centers and or increased number of participants enrolled in ISAP.
We continue to believe that we have several potential upside opportunities, including further increases in populations at our ice processing centers and or increased number of participants enrollment ice app.
Speaker 6: the activation of our EIDL secure services facilities, where we have a total of approximately 9,000 available beds, either under geo-management or under lease to local, state, or federal agencies.
The activation of our Idaho secure services facilities, where we have a total of approximately 9000 available beds each.
Either under Geo management are under lease to local state or federal agencies.
Speaker 6: new managed only contract wins by our reentry electronic monitoring, secure transportation, or international divisions, and the selective sale of non-core assets.
New managed only contract wins by our reentry electronic monitoring secure transportation or international divisions, and the selective sale of noncore assets.
Speaker 6: We also expect to continue to selectively pursue new areas of growth, both with our current government agency clients, as well as with new clients and or in service lines that are adjacent to or complementary with our existing business.
We also expect to continue to selectively pursue new areas of growth.
Both with our current government agency clients as well as with new clients and or in service lines that are adjacent to or complementary with our existing business.
Speaker 6: In seeking these future growth opportunities, we plan to leverage our successful track record and the talent of our employees. We believe are the best in our industry.
And seeking these future growth opportunities, we plan to leverage our successful track record and the talent of our employees. We believe are the best in our industry.
Speaker 6: As we have expressed in the past, we believe that our valuable assets underpin a compelling valuation case for our company.
As we have expressed in the past, we believe that our valuable assets underpin a compelling valuation case for our company.
Speaker 6: We own approximately 45,000 beds at secure facilities that we believe are generally more modern and better located than many of the existing public facilities in those geographic markets.
We own approximately 45000 beds at secured facilities that we believe are generally more modern and better located than many of the existing public facilities in those geographic markets.
Speaker 6: We believe that the aggregate replacement value of these company owned beds alone based on estimated current construction costs and sales of comparable facilities is equal to or in excess of our current enterprise value.
We believe that the aggregate replacement value of these company owned beds alone based on estimated current construction costs and sales of comparable facilities is equal to or in excess of our current enterprise value.
Speaker 6: And this valuation is before taking into account the significant operating cash flows and real estate values of our other diversified segments, where we have substantial assets and market presence.
And this valuation is before taking into account the significant operating cash flows and real estate values of our other diversified segments, where we have substantial assets and market presence.
Speaker 6: Based on a conservative valuation of these various components, we believe that our current stock price has significant upside potential.
Based on our conservative valuation of these various components, we believe that our current stock price has significant upside potential.
Speaker 6: We have consistently delivered as an essential government services provider at the federal and state levels through both Republican and Democratic presidential administrations for almost 40 years.
We have consistently delivered as an essential government services provider at the federal and state levels through both Republican and Democratic presidential administrations for almost 40 years.
Speaker 6: We remain steadfast in our commitment to being a consummally professional organization that our clients can trust with complex resource-intensive and critical projects. And that prioritizes the well-being of those entrusted to our care.
We.
<unk> steadfast in our commitment to being a consummate professional organization that our clients can trust with complex resource intensive and critical projects and that prioritizes the wellbeing of those entrusted to our care.
Speaker 6: We are proud of our over 18,000 employees worldwide who carry out our mission on a daily basis
We are proud of our over 18000 employees worldwide, who carry out our mission on a daily basis with great purpose and professionalism and we stand ready to continue to meet the future demands of our clients as they may continue to evolve.
Speaker 6: and we stand ready to continue to meet the future demands of our clients as they may continue to evolve. That completes our remarks and we would be glad to take questions.
That completes our remarks, and we would be glad to take questions.
We will now begin the question and answer session.
Speaker 1: To ask a question, you may press star then 1 on your touchtone phone.
You ask a question you May press Star then one on your Touchtone phone.
Speaker 1: If you are using a speaker phone, please pick up your handset before pressing the key.
If you are using a speakerphone please pick up your handset before pressing that Keith.
Speaker 1: If at any time a question has been addressed and you would like to withdraw your question, please press star then to.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker 1: At this time we will put pause momentarily to assemble our roster.
At this time, we will pause momentarily to assemble our roster.
Yes.
Speaker 7: The first question today comes from Joe Gomez with Noble Capital. Please go ahead. Good morning. Thanks for
The first question today comes from Joe Gomes with Noble capital. Please go ahead.
Good morning, Thanks for taking my questions.
Good morning, Joe.
Speaker 8: So I wanted to start out on the secure services segments. You guys mentioned how the ice population there are up significantly.
So I wanted to start out on the secure services segment, you guys mentioned, how the ice populations there are up significantly.
Speaker 8: since the beginning of July . But the segment revenues actually declined year over year. Part of me was just wondering, is that because the majority of the population increases when into facility?
Since the beginning of July.
But the segment revenues actually declined year over year.
Pardon me I was just wondering is that because the majority of the population increases went in two facilities.
Speaker 8: that had yet to meet their guarantee minimums or was there a, to try to single-time ahead whether it was another facility that would happen to have been contract lost or terminated last year that drove the revenues for that segment down.
Yet to meet there.
<unk> teed minimums or was there.
Just trying to think off top my head whether it was.
Another facility that what happened to bed.
Contract lost are terminated last year that drove the revenues for that segment down.
Speaker 4: No, I think it's combination of first there was the North Lake facility. I think that discontinued in September of last year. So that was in there as a BOP facility.
No I think.
It's combination of first there was the North Lake facility I think that discontinued in September of last year. So that that was in there as a DLP facility.
Speaker 4: That was probably worth about 9 to 10 million a year per quarter in revenue that went away. So that's not in this quarter, and it was in last quarter.
How it is probably worth about.
$9 million to $10 million, a year or per quarter in revenue that went away. So thats not in this quarter and it was in last quarter.
Speaker 8: Okay, thanks for that. And you also mentioned that, I think the latest...
Okay, Thanks for that and.
You also mentioned that.
The latest that I've seen.
Speaker 8: that I've seen, you know, the ice populations are exceeding 39,000. And you're continuing to see a similar type of increase in your guys populations. I think at the end of September , there was about 35,000 in the ice population.
The ice populations are exceeding 39000 are you continuing to see.
A similar type of increase in your guys' populations I think at the end of September there was about 35000 and the ice population.
Speaker 3: We continue to provide approximately one third of the capacity that's being used in the ice process.
We continued to provide approximately one third of the capacity that's being used in the ice processing centers.
Speaker 3: and the majority of our facilities that...
The majority of our facilities that.
Speaker 3: have the minimum guarantees, have had an increase in above those minimum guarantees. So today we will send you home money taking place because you're a D nenhuma, no money behind home money.
Have the minimum guarantees have had an increase in above those minimum guarantees.
That's good news.
Yes. It is.
Speaker 8: And on the alternatives to the tension, you guys mentioned and you prepared remarks about the house proposal.
And on the.
The alternatives to detention and you guys mentioned in your prepared remarks about the house proposal.
No.
Speaker 8: and potentially everyone being monitored. Obviously that's not, hasn't been put into law yet, but...
Potentially everyone.
Being monitored.
Obviously that's.
That hasnt been put into law, yet but.
What type of capacity increases would you guys need to see could you handle something that large I think the last.
Speaker 8: What type of capacity increases would you guys need to see? Could you handle something that large? I think the last.
Speaker 8: thing I saw was like 5 million people that are here that are do not are not US citizens that could potentially be in that type of a program or would you have to see that type of a program split amongst the number of people.
Thing I saw was like 5 million people.
That are here that are do not are not us citizens that could potentially be it in that type of a program.
Or would you have to see that type of a program split amongst a number of people.
Speaker 5: Joe Swain Calabrese, I think we're well-positioned, well-resourced, and well-capable of gearing up as required, whether government would move to put in place all of the five million or so who may be in the non-detained docket.
Joe Swine calibration, I think we're well positioned well resource and well capable of gearing up as required whether the government would move to put place all of the $5 million or so who may be in the non detained docket.
Speaker 5: into one or more programs remains to be seen, but they wouldn't all be in one program certainly. So there are a lot of different facets of the alternative to detention programs. And as I said, we're well positioned and resourced. We have offices all over the country and would be able to gear up to cover that if that became the requirement of the country.
Into one or more programs remains to be seen but they wouldn't all be in one program. Certainly so there are a lot of different facets of the alternatives to detention programs and as I said, we are we're well positioned and resource we have offices all over the country and would be able to gear up to cover that.
That became a requirement of the contract.
Speaker 8: Thanks for that Wayne, appreciate that. And then you talked about some of the idle facilities. I don't know how much of discussions you are currently in with ice about restarting maybe some of the idle facilities, maybe you can give a little more color on that.
Thanks for that way appreciate that.
And then you talked about some of the idled facilities I don't know how much of discussions you are currently and with ice about.
Starting maybe some of the idle facilities, but maybe you could give a little more color on that.
Speaker 3: Well, I periodically review the capacity of existing facilities as well as idle facilities. So they know what we have. They know where we're currently operating and we're capable of reactivating facilities. So we stay in touch with them and they do the same with us.
Well ice periodically reviews, the capacity of existing facilities as well as the idled facilities. So they know what we have they know where we're currently operating in where we are.
Bowl of reactivating facilities, so we stay in touch with them and they do the same with us.
Yes.
Okay.
Speaker 8: And then one last one for me, and I'll give back in Q, you know, last couple quarters, I think there's been a little bit of discussion. There's been some, you know, legal cases, you know, about illegal immigration and, you know, in ICE.
And then one last one for me.
I'll get back in queue.
Last couple of quarters, I think there's been a little bit discussion there has been some.
Legal cases.
About illegal immigration and an ice anything that has come on from any of those proposed our current legal cases that have changed that could potentially negatively impact geo.
Speaker 8: Anything that has come on from any of those proposed or the current legal cases that have changed that could potentially negatively impact you.
No I don't think so I'm not sure what legal cases, you're referring to what I have in my mind is what maybe I read in the last couple of days that there is.
Speaker 3: No, I don't think so. I'm not sure what legal cases you're referring to. What I have in my mind is what maybe I read the last couple of days that there's legal challenges to the current parole program and a desire by some individuals to further restrict.
There is legal challenges to the the current parole program and a desire by some individuals to further restrict it.
Speaker 3: Meaning, as not as many people could come through the country, maybe some people would be put into the ice processing centers for a review of their cases.
Medians.
Not as many people could come through the country, maybe some people would be put in to the ice processing centers for a review of their cases.
Okay.
Speaker 8: Thank you for that. And I'll get back in queue. Thank you.
Thank you for that and I'll get back in queue. Thank you.
Okay.
Yeah.
Speaker 1: The next question comes from Brian Viley, a note with Wedbush Security. Please go ahead.
The next question comes from Brian <unk> with Wedbush Securities. Please go ahead.
Great. Thanks for taking my questions.
Speaker 6: So clearly funding is a major factor as it relates to ISAP, but looking out further ahead and appreciate you're not gonna be giving 2024 guidance, but can ISAP participants grow even if funding gets pushed out further, doesn't come through fruition? And on the last call you mentioned, there was some...
So clearly fundings of major factor as it relates to ice that but.
Looking out further ahead and appreciate you're not going to be giving 2024 guidance, but.
And ice that participants grow even if funding gets pushed out further or doesn't come to fruition.
On the last call you mentioned there was some potential policy changes that could grow is that just kind of curious your thoughts because we did see is that numbers a lot higher a year ago when funding levels were the.
Speaker 9: potential policy changes that could grow ice that just kind of curious your thoughts because you know we did see ice that numbers a lot higher a year ago when funding levels were um the same at least from a congressional standpoint
At the same at least from a congressional standpoint.
Speaker 3: Well, I think we've said in prior calls that, you know.
Well I think we've said in prior calls that.
The.
Speaker 3: Iced as well as other divisions within the Department of Homeland Security have.
Ice as well as to other divisions within the department of Homeland security half.
Speaker 3: certain level of budgetary flexibility and they move money around.
Let's turn level budgetary flexibility and they move money around.
Speaker 3: And yes, we did have a much higher.
And yes, so we did have a much higher.
Speaker 3: population count in the ISAP program, you know, under the existing budgetary level. So it's, it really becomes...
Population count in ISR program.
<unk> the existing budgetary level, so it really becomes.
Speaker 3: a decision as to where to put the priorities for the agency and redirect funding towards those priorities. So that could happen, but it's really an internal or decision by the agency or, you know, with the oversight and instruction.
<unk> decision.
A decision as to where to put the priorities.
For the agency.
<unk> redirect funding towards those priorities so.
That could happen.
It's really an internal or decision by the agency or with.
With the.
Oversight and instructions by the White House.
Speaker 9: Got it, thanks. And I'm not sure if I missed it, but I guess if you could just clarify within your guidance that you gave today, the updated guidance, what's the underlying assumption for ICE detention levels? I think your last guide had assumed kind of steady occupancy rates, but obviously with them climbing here, just curious what your underlying assumption is for the fourth quarter for ICE occupancy.
Got it thanks, and I'm not sure if I missed it but I guess, if you could just clarify.
Within your guidance that you gave today the updated guidance, what's the underlying assumption for ice detention levels.
I think your last guidance had assumed kind of steady occupancy rates, but obviously with them climbing here just curious what your underlying assumptions for the fourth quarter for occupancy.
Speaker 4: Pretty consistent quarter over quarter. We haven't assumed any facility reactivation or Significant step up in the existing population
Pretty consistent quarter over quarter, we haven't assumed any facility reactivation unit or.
Significant step up in the existing population level.
Speaker 9: Okay, great. And then last one for me, if I look at the secured services segment, it looks like the net operating, net operating margins trended down a little bit quarter over quarter. Just wondering if presenting is sort of one kind of things in the expenses there. And I guess your general thoughts on where you think margins for that segment will trend in the near term.
Okay, Great and then last one for me.
If I look at the secured services segment. It looks like the net operating net operating margins trended down a little bit quarter over quarter. Just wondering if there's any sort of kind of one time things in the expenses, there and I guess, just general thoughts on where you think margins for that segment will trend in the near term.
Speaker 4: I think what you're seeing in the margins in the secure services, and we've talked about this on prior calls as our facilities, which were underutilized, but were being paid for expected higher utilization levels, that when those utilization levels increased, we would get back to sort of normalized financial performance at those facilities. And I think we've seen that occur in the last-
I think what youre seeing in the margins in the secure services and we've talked about this on prior calls as.
Our facilities, which were underutilized, but we're being paid for.
Expected higher utilization levels that when those utilization levels increased we would get back to sort of normalized financial performance at those facilities and I think we've seen that occur in the last.
Speaker 4: two quarters, if you will, as these populations have moved up. So most of our facilities, as George said, are at or near their fixed payments or their minimum occupancy levels that we're paid for and they're also being used at those levels. So if occupancy levels or utilization increases further, we should see some increase in revenue and increase in performance.
Two quarters, if you will as these populations have moved up so most of our facilities as George said are at or near there.
Fixed payments are there minimum occupancy levels that.
That were paid for and they are also being used at those levels. So.
If occupancy levels, our utilization increase as further we should see some increase in revenue and increase in performance.
Got it okay, great. Thank you appreciate it.
Speaker 1: The next question comes from Brandon McCarthy with Cedodi. Please go ahead.
The next question comes from Brendan.
Brendan Mccarthy with Sidoti. Please go ahead.
Great. Thank you for taking my questions.
Speaker 10: Firstly, on the, I believe you mentioned there was a supplemental funding initiative from the White House recently. Is that in excess of the short-term continued resolution funding currently under place? And will there be any potential benefit in Q4?
Firstly on the I believe you mentioned there was a supplement supplemental funding initiative from the White House recently is that in excess of the short term continuing resolution funding currently under place and will there be any potential benefit in Q4.
Speaker 3: I believe that is in addition to what has been previously requested and, you know, we don't know exactly how many beds that funding would provide for, but it would be several tens of, several thousands.
I believe that is in addition to what has been previously requested.
<unk>.
We don't know exactly how many beds that funding.
Would provide for but it would be several tens of several thousands.
Got it okay.
Speaker 10: And then secondly with the I-Set capacity, just wondering, just curious if you can maybe quantify.
And then secondly, with the <unk>.
I sat in capacity, but just wondering just curious if you can maybe quantify.
Speaker 10: You just what kind of the ramp up process might look like looking into you maybe 2024.
Just what kind of the ramp up process might look like looking into maybe 2024.
Speaker 10: if funding levels were to increase. Are you able to quantify what the timing of a potential ramp up to a significantly more number of participants would look like?
This funding levels were to increase are you able to quantify what the timing of a potential ramp up to a significantly more number of participants would look like.
Yes.
Yes.
Speaker 3: So, they want me. It's hard to answer that question. As Wayne said, you know, we...
So lumpy.
It's hard to answer that question.
Wayne said.
We.
Speaker 3: We have the ability to scale up fairly quickly, and how do you do that? You'd have to add more staff at our Boulder, Colorado facility, and probably at various locations around the country. We have a very large countrywide footprint of almost 100 different locations.
We have the ability to scale up fairly quickly and how do you do that you would have to add more staff.
Our Boulder, Colorado facility and probably <unk>.
<unk> locations around the country and we have a very large country wide footprint.
Almost 100 different locations, but.
Speaker 3: But, you know, the electronic devices are made in our Boulder facility and we are capable of ramping up fairly quickly. We have the supplies.
The electronic devices are made it in our Boulder facility and we are capable of ramping up fairly quickly we have.
The supplies.
Speaker 3: I think ICE is aware of our capabilities and like on the detention side, they stay in touch with us as to what those capabilities are and relative to the different kinds of devices we have from the ankle monitors to watches.
I think ice is aware of our capabilities.
Like on the retention side, they stay in touch with us as to what those capabilities are.
Relative to the different kinds of devices, we have from the ankle monitors to watch is too.
Speaker 3: You know, we have 150,000 phones available for the facility.
We have a 150000 phones available.
Ability.
Yes.
Speaker 3: There's, and there's different programs.
And there is different.
Programs.
Speaker 3: that can be applied using those different technology.
That can be applied using those different technologies.
Speaker 3: that can scale up to much larger populations at a discounted cost for less frequent monitors.
And that.
That can scale up to much larger populations.
At a discounted cost for less frequent monitoring.
Speaker 5: I'd add our in-country offices have a lot of personnel who are dedicated to non-electronic services such as case management, office visits, home visits, all of that can be scaled up as needed. A great deal will depend, however, on the government's ability to scale up and repurpose those services.
I would add our in country offices have a lot of personnel who are dedicated to non electronic services such as case management office visits home visits all of that can be scaled up as needed a great deal will depend however on the government's ability to scale up and repurpose.
Speaker 5: folks that are working at the border. The ice officials that work closely with them, all of that would have to be focused on the traffic that's coming in and the processing and enrollment of persons who are coming across the border into one or more programs based on the administration's policies.
Folks that are working at the border.
The ice officials that work closely with them all of that would have to be focused on the traffic thats coming in and the processing and enrollment of persons who are coming across the border into one or more programs.
On the administration's policies.
And priorities.
Speaker 8: which is to be back. That's helpful. It's very lumpy. It can be lumpy. It can be lumpy. Understood. Thanks.
Which is helpful.
Helpful.
Lumpy.
Can be lumpy can.
Can be lumpy.
Understood.
Thanks for your answers that's all from me.
Speaker 1: The next question comes from Greg Gibbett with Northland Security. Please go ahead.
The next question comes from Gregg Davis with <unk>.
<unk> Securities. Please go ahead.
Speaker 11: Thank you, good morning guys, thanks for taking the questions. One of the, I guess first just ask, if there's any significant or maybe notable contracts for renewal in the near term or upcoming quarters.
Hey, good morning, guys. Thanks for taking the questions.
One of them I guess first just ask.
Theres any significant there maybe notable contracts up for renewal in the near term or upcoming quarters.
Not this year no.
Speaker 11: got it. And then as it relates to the the de-levering, you know, good progress there in terms of net reduction, you know, you mentioned the two additional facilities. I think it was the New Jersey facility, the sale of that kind of accelerated the de-levering. You know, you talked about the additional facilities and curious if you could share maybe interest levels or timing of those, would this be like a Q4 event or if you have any sense of, you know, when those asset sales
Got it and then as it relates to the.
De levering good progress there in terms of net debt reduction.
You mentioned the two additional facilities.
I think it was.
The New Jersey facility, the sale of that kind of accelerated delevering.
You talked about the two additional facilities and I'm curious if you could share maybe interest levels or timing of those would those be like a Q4 event or do you have any sense of.
When those asset sales without.
Speaker 4: No, I think those, there's facilities that we've got targeted and they're, they're.
No I think there's facilities, we've got targeted and they're there.
Speaker 4: We have brokers active trying to place those properties, but right now we don't have any contracts on those properties.
We have brokers active trying to place those properties, but right now we don't have any contracts on those properties.
Okay got it.
Speaker 11: And I guess just lastly, as it relates to, you know, you marketing the idle facilities, which I believe sound for like 9,000 beds. How do you kind of weigh like, you know, when I think about you hitting these min occupancy levels, and you know, obviously increased margins?
And I guess, just lastly, as it relates to marketing to idle facilities, which I believe Tom for like 9000 beds.
How do you kind of way like when I think about you hitting these men occupancy levels and obviously increased margins.
Speaker 11: as occupancies increase after that. How do you weigh reactivation of idle facilities versus just increasing those occupancy levels that exist in facilities? Is that off to the customer? Or is just curious how you're weighing?
As Occupancies increase after that how do you kind of weigh reactivation of idle facilities versus just increasing those occupancy levels at existing facilities is that.
After the customer is just.
Just curious how you're kind of weighing those two things.
It's really up to the customer and where their priorities are on a regional basis. We have a lot of facilities, obviously in the Southern belt states, Texas, Louisiana, etc.
It's really up to the customer and where their priorities are on.
Regional basis, we have a lot of facilities, obviously in the southern Southern Belt States, Texas, Louisiana et cetera.
But we do have other locations in the north and the northeast that are prime locations. Then what?
But we do have other locations in the north and the northeast.
Our prime locations than what.
makes it attractive for those locations is that a lot of county jails that have previously provided
It makes it attractive for those locations is that a lot of.
County jails that have previously provided.
occupancy and services for DHS and ICE have been pulling out of
Occupancy and services for DHS and ice have been pulling out of.
the business, so to speak, because of, you know, either financial or political reasons. And therefore, our particular facilities, which are generally much more modern and more closely meets the most recent updated ICE standards, you know, are particularly attractive and in the long haul will, we think, will be utilized eventually.
The business, so to speak because of either financial or political reasons.
And therefore are our particular facilities, which are generally much more modern and more closely meet.
The most recent updated ice standards are particularly attractive in the long long haul will we think will be utilized eventually.
Got it thanks for the color.
The next.
This next question comes from Kurt Ludke with Imperial Capital. Please go ahead.
Question comes from Kurt Ludtke with Imperial capital. Please go ahead.
Hello everyone, thank you, thank you for the call. I just have a couple follow-ups with respect to ISAP.
Hello, everyone. Thank you. Thank you for the call I.
I just have a couple follow ups with respect to ice out.
How many people do you think would be monitored under the house?
How many people do you think.
Would be monitored under the house proposal.
Well, monitor is a generous word. It can cover a lot of topics in terms of electronic monitoring.
Well monitored.
Generous word.
Cover a lot of topics in terms of electronic monitoring.
The numbers were substantially higher a year ago, they could.
The numbers were substantially higher a year ago they could.
accommodate that again. They could be in other areas. They could, for example, ask for more folks to be in social service oversight, case management.
Accommodate that again they could be in other areas. They could for example ask for more folks to be in social service oversight case management.
We mentioned the watch is a new program that's been under pilot.
Yeah.
We mentioned the watch as a new.
Program Thats been under pilot.
with ISAF. So there are a lot of different ways that they could accommodate growth in their numbers should that be the direction they take.
Hi, SaaS. So there are a lot of different ways that they could accommodate growth and their numbers should that be the direction. They take.
but the policy remains to be set and more importantly, the budget remains.
But the policy remains to be set and more importantly, the budget remains to be set.
and there's different programs that can be activated.
And there is different programs that can be activated.
Yeah.
on a less, on a descending, less intensive basis. Yes. For example, some people could be monitored every day, you know, every hour of every day. Some people weekly, some people monthly, some people bi-yearly, you know.
Great.
The lesson on the descending.
Less intensive basis.
For example, some people could be monitored every day every hour of every day. Some people weekly some people month's release some people buy yearly.
All of those tools are available to us.
All those tools are available to ice in deciding in addition to direct case management and support services. What?
Ice and deciding on in addition to direct case management and support services.
level of periodic monitoring is appropriate for that particular person or group of persons.
Level of periodic monitoring is appropriate for that particular person or group of persons.
Alright.
Graham can be up.
That's helpful, thank you. Is this something that's been contemplated in the past, or is this a?
That's helpful. Thank you.
Is this something that's been contemplated in the past or is this.
Kind of a new.
The new thing.
Yes.
You know the different programs we were just referring to that is available that is presently available to ice so that they know about our capabilities and performing these different levels of intensity of service
<unk>.
The different programs, we were just referring to that is available that is presently available to ice.
They know about.
Our capabilities and performing these different levels of intensity of services.
And we have pricing for those different levels of services, you know, it's just a matter of, I guess, funding and priorities of where they want to put their money and what's most important at that particular time.
And we have pricing for those different levels of services.
Just a matter of I guess funding and priorities, where they want to put their money.
And what's most important at that particular time.
I think the element that's new in that House proposal and remains to be seen what will be part of the final legislation is the GPS monitoring of all cases until they're decided. So if that were to actually be implemented, it could, in theory, capture most of the legal case docket.
I think the element that's new in that house proposal and remains to be seen what will be part of the final legislation is the GPS monitoring of all cases until they are decided so if that were to actually be implemented it could in theory capture most of the legal case docket.
But it is just a proposal at this time.
Got it. It's interesting. And then just shifting gears quickly, I do appreciate the time. On the state level,
Got it.
It's interesting.
Then just shifting gears quickly.
Appreciate the time.
On the state level.
Have you.
<unk> been able to ship.
to increase pricing on your state contract. I know typically those...
Two increased pricing on your state contracts I know I know that.
Typically those state contracts.
reprised I believe on January or July 1st did any of that?
Reprice I believe on January July one did any of that take.
Take place for you.
Yes, we have last couple of tiers in particular, because I think.
Yes, we have in the last couple of years in particular because.
Yes.
I guess there's two forces at play.
I guess, there's two forces at play.
Okay.
Because of COVID, there was a labor shortage in, there was a need to increase labor costs. And fortunately, from states, they got a lot of COVID funding that allowed them to do just that in part.
Because of Covid, there was a labor shortage and there was a drive a need to increase labor costs and Fortunately for the states. They got a lot of COVID-19 funding that allow them to do.
Just that in part is.
how they use those monies. So we've been able to fairly consistently increase the pricing in our state contract primarily to cover the increase in labor costs and medical costs. Right.
How they use those monies so we've been able to fairly consistently increase.
The pricing in our state contract primarily to cover the increase in labor costs and medical costs.
Alright, you were recovering monies that were already.
Being spent.
Yes, and improving our financial position.
Yes.
And improving our financial position.
Through that process got it can you quantify the magnitude of the price increases you got for this fiscal year.
Got it. Can you quantify the magnitude of the price increases you got for this?
You know, I've thought about, you know, how much have we increased wages in the last two or three years? I think it's 20.
I thought about how much of the increased wages in the last two or three years I think it's 20%.
It's pretty significant because because all prior years.
No, it's very significant because because all prior years.
I think the average increase was like the 2% CPI that we've seen for years and years and years than we're going into the COVID years, you know, from 20 to now.
I think the average increase was like the 2% CPI that we've seen for years and years and years.
Going into the Covid years from 2008 to now.
It's required almost a 20% increase in labor costs, and probably a similar increase in healthcare costs.
required almost a 20% increase in labor.
and probably a similar increase in healthcare costs.
Interesting.
Thank you that's it for me.
The next question comes from Jordan Hemowitz with Philadelphia Financial. Please go ahead.
The next question comes from Jordan Hymowitz with Philadelphia Financial Please go ahead.
uh... thanks guys uh... first i don't know if you were that actually on this call what was going on the ice stats came out and up to thirty six point eight that the highest level ever in the uh... that went out of the last four years or so i mean i assume that your guidance in the fourth quarter was in any way based on those higher numbers
Thanks, guys.
First of all I don't know if you're aware of that actually on this call what was going on there I stats came out and up.
The $36 eight beds at the highest level.
And over the last four years or so so I mean I assume that your guidance for the fourth quarter was in any way based on those higher numbers.
No, as I said earlier, our guidance is based on, you know, where we've been running at approximately for the third quarter.
No as I said earlier, our guidance is based on.
Where we've been running at approximately for the third quarter.
So not only did the quarter and higher, but the fourth quarter is beginning much higher than the quote the average.
So not only did the quarter end to hire but the fourth quarter is beginning much higher than the average.
And it's different than prior years. In prior years, the fourth quarter is usually a lower population.
And it's different than prior years in prior years, the fourth quarter is usually a lower population.
Okay.
because of the weather changing on the southern border and getting colder, a lot of people coming across. That's the way it was historically for decades. This year, it seems it could be different.
Because of.
The weather changing on the southern border and are getting colder loans people coming across that's the way it was historically for decades this year.
It could be different.
and I know it's not as much as CXW but the incremental margin at these levels is higher than the average margin correct.
And I know, what you thought as much CSW, but the incremental margin at these levels is higher than the average margin correct.
It varies by facility depending on how the contract is priced, but it should be incrementally better.
It varies by the minimum yes.
Yes, it varies by facility, depending on how that contract is priced but it should be.
Incrementally better.
Okay. And next of the 9,000, or roughly 12% beds that are unoccupied.
Okay, and next of 9000 or roughly 12% bad figure on an occupied.
Should we think about if they do get occupied, the earnings in margin are about average with what's out there, in other words, and they're not substantially better or worse?
<unk>.
Should we think about if they do get occupied the earnings and margin are about average with what's out there in other words.
Not substantially better or worse.
Well, their own facilities, so they should be, the margins should be, the EBIDTA margins should be in line with our, you know, historical average for own facilities, which is in that 25 to 35 percent range. So it would be a little higher than our average margins because our average margins include international operations and managed only facilities that have a lower margin.
Well their own facility. So they should be the margins should be the EBITDA margin should be in line with our.
Historical average for owned facilities, which is in that 25% to 35%.
Range, so it would be a little higher than our average margins because our average margins include international operations and managed only facilities that have.
Lower margins.
Perfect. And you mentioned with this new proposal to for ISAP, I mean, we're talking five million people that could potentially be monitored. I mean, that's like multiples of the 100 and to 200 you currently are monitoring, the unit of you don't get all of them or half of them, but that business which has 50% margins could be substantially higher next year if this comes through, is that correct?
Perfect.
Just you mentioned.
This new proposal.
<unk> <unk>.
We're talking 5 million people that could potentially be monitored.
That's like multiples of the 100 in <unk>.
200, <unk> currently are monitoring immune here of you don't get all of them or half of them, but that business, which is 50% margins could be substantially higher next year.
Comes through is that correct.
Depend yes, quantitatively, but as we've discussed, there's different pricing levels for different programs of intensity as far as monitoring. As I said, the most intensive would be monitoring on a daily basis and throughout the day, but it could be as little as it wants every...
Okay.
Dependent yes.
Quantitatively, but as we've discussed.
There is different pricing levels for different programs of.
Intensity as far as monitoring as I said.
The most intensive would be monitoring on a daily basis and throughout the day, but it could be as little as.
Once every.
months or a few months or a couple of times a year.
Month or few months or a couple of times a year.
by and final questions. Could you remind me of the number of beds that were in place during the last Republican administration?
And final question is could you remind me of the number of beds that were in.
In place during the last Republican administration.
I think they got over 50,000, maybe 52,000. The 52 was the right number. So again, if we head towards an election year, if the Republicans should win, the number of beds could be 30% higher. Oh, yeah.
I think they got over 50000, maybe 52000 I think 52 is the right number so so.
Again, if we head towards an election year, if the Republicans should win the number of beds could be.
30% higher.
It could be.
Okay.
Okay. Thanks for taking my questions.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to George Zoli, Executive Chairman for the GEO Group. Okay, thank you for joining us on this call, and we look forward to speaking to you on the next call in February . Thank you.
This concludes our question and answer session.
I'd like to turn the conference back over to George <unk> Executive Chairman to the Geo group.
Okay. Thank you for joining us on this call and we look forward to speaking to you on the next call in February. Thank you.
Okay.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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The C.
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