Q4 2024 The GEO Group Inc Earnings Call
Speaker Change: Good day and welcome to the GeoGroup 4th Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star then 1 on a touch-tone phone.
To withdraw your question, please press star then two.
Please note, this event is being recorded.
Speaker Change: I would now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead.
Pablo Paez: Thank you, operator. Good morning, everyone, and thank you for joining us for today's discussion of the GeoGroup's fourth quarter and full year 2024 earnings results.
Speaker Change: With us today are George Zoley, Executive Chairman of the Board, David Donohue, Chief Executive Officer, Wayne Calabrese, President and Chief Operating Officer, and Mark Suchinski, Chief Financial Officer.
Speaker Change: This morning, we will discuss our fourth quarter and full year results, as well as our outlook. We will conclude the call with a question and answer session.
Speaker Change: This conference call is also being webcast live or on investor website at investors.geogroup.com
Bye.
Today we will discuss non-GAAP basis information.
Speaker Change: A reconciliation from non-GAP basis information to GAP basis results is included in the press release and the supplemental disclosure we issued this morning.
Speaker Change: Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements.
Speaker Change: regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall within the safe harbor provisions of the securities laws.
Speaker Change: Our actual results may differ materially from those in the 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.
Speaker Change: With that, please allow me to turn this call over to our Executive Chairman, George Zoley. George. Thank you, Pablo. And good morning to everyone. Thank you for joining us on our fourth quarter 2024 earnings call. And I apologize for my horse.
Speaker Change: voice this morning. I would like to welcome our new CEO Dave Donohue who is joining our call today along with our president and CEO Wayne Calabrese and our CFO Mark Suchinski.
Dave Donohue: Dave has 42 years of operational experience in our industry, having previously served for 10 years as DO's Senior Vice President for Secure Services after a distinguished career with the Federal Bureau of Prisons and the Department of Corrections in the states of Kentucky and Indiana.
Dave Donohue: We are pleased to have Dave join our senior management team as we embark on what we expect to be an unprecedented level of operational activity.
Speaker Change: During today's call, we will review our fourth quarter and full year 2020 for financial results.
Speaker Change: and operational highlights for our business segments. We will also discuss our initial financial guidance for 25, which is consistent with our longstanding practice and does not include any new contract awards that have not been previously announced.
Speaker Change: And we will provide an update on the latest developments across our diversified business segments, including the opportunities to expand our services for ICE and the federal government.
Speaker Change: Our financial performance during the fourth quarter of 24 reflects higher overhead expenses and which were partially the result of previously announced reorganization of our management team and additional professional fees we incurred in anticipation of what we expect to be an unprecedented future growth projects and related operational activity.
during 25.
Speaker Change: Our top-line revenue for the fourth quarter of 24 increased from our 24th third quarter results in line with our guidance. However, our earnings and adjusted EBITDA were below our previous expectations due to higher overhead expenses.
Speaker Change: In 24, we already incurred approximately $9 million of the $70 million investment we announced in December to strengthen our capabilities to deliver expanded detention capacity.
secured transportation and electronic monitoring services to ICE.
In 2025, we expect...
Speaker Change: to invest an incremental $38 million to renovate existing facilities, $16 million to ramp up production of additional GPS tracking devices in the ISAP program, and $7 million to expand our secure transportation fleet.
Speaker Change: We believe these investments will prepare us to be able to provide approximately 17,000 incremental detention beds to ICE and the federal government.
Speaker Change: and greatly increased our capacity to monitor undocumented aliens who are currently on the so-called non-detained docket and increased our secure transportation capabilities.
Speaker Change: The additional 17,000 beds would increase the total available capacity for ice detention requirements at geo related services from approximately 15,000 beds today to 32,000.
Speaker Change: The current population is approximately 15,000. It represents an increase of a thousand beds utilized by ICE at geoservice facilities since our last earnings call.
Speaker Change: The incremental 17,000 beds includes approximately 9,400 beds in our current idle facilities that will be reconfigured for detention use, and approximately 7,700 incremental beds available at existing geo-serviced ICE facilities.
and Marshall's facilities under contract.
and many more. Thank you. Thank you.
We expect the utilization of these
Speaker Change: 17,000 beds could generate between 500 million and 600 million dollars in incremental annualized revenues with margins consistent with our secure services own facilities which average 25 to 30 percent.
Speaker Change: These additional 17,000 beds include our company-owned 1,000-bed Delaney Hall facility in Newark, New Jersey.
Speaker Change: We announced this morning we have been awarded a 15-year fixed-price contract by ICE to provide support services for the establishment of a federal immigration processing center at Delaney Hall.
Speaker Change: Geosupport services include the exclusive use of the facility by ICE along with security, maintenance, food services,
Access to recreational amenities, medical care, and legal counsel.
Thank you.
Speaker Change: These new support services contract is expected to generate in excess of 60 million dollars in annualized revenues in the first full year of operations.
Speaker Change: with margins consistent with our company-owned secure services facilities. We estimate the 15-year value of the contract, with normal cost of living adjustments, to be approximately $1 billion.
Speaker Change: We expect to reactivate the facility in the second quarter of 2025 with revenues and earnings from the new contract normalizing during the second half of
Speaker Change: 2025. We are in active discussions with ICE and the Marshals Service regarding their interest in GEO's remaining six idle facilities.
Speaker Change: Additionally, we have two state correctional facilities totaling more than 3,000 combined beds, which could be repurposed for the use by the federal government.
Speaker Change: However, we are currently pursuing the potential sale of one or both of these facilities with the objective of generating up to 550 million dollars in proceeds that could be used to reduce debt and or otherwise enhance shareholder value.
Speaker Change: Based on the latest public data, ICE is currently utilizing over 41,000 detention beds nationwide, which is largely consistent with the current level of funding of 41,500 detention beds under the continuing resolution, which is
set to expire March 14th.
Speaker Change: Before the recent passage of the Lake and Riley Act, the Trump administration has indicated a need to ramp up to 100,000 total ICE detention beds for increased interior enforcement operations.
Speaker Change: Based on public statements from ICE, the implementation of the Lincoln-Riley Act could require an additional 60,000 detention beds or more.
Speaker Change: We believe that an increase of between 100,000 and 160,000 beds will require a large range of solutions.
Speaker Change: The administration has taken steps to house some migrants with serious criminal backgrounds in Guantanamo Bay, and there's been some discussions about utilizing facilities in foreign countries for similar purposes.
Speaker Change: However, we believe that the detention and processing of migrants as a result of increased interior enforcement will require additional facilities to be activated in the United States.
Speaker Change: We have a 40-year record of providing special-purpose facilities that meet the unique operational needs and requirements set by ICE at cost savings to taxpayers when compared to publicly operated facilities.
Speaker Change: and to alternative solutions like soft-sided facilities, and we are preparing to extend and build upon that strong and successful record of public-private partnership.
Speaker Change: We are also making a significant investment in our electronic monitoring and supervision services segment to ramp up the production of GPS tracking devices for use under the Federal Government's Intensive Supervision Appearance Program, or ISAP.
Speaker Change: ISEP participant counts averaged between 183,000 during the fourth quarter of 2024 and are currently standing at approximately 186,000.
Speaker Change: A little over two years ago, the ISAP contract utilization peaked at approximately 370,000, almost twice the number of the participants currently in the program.
Thank you very much. Thank you.
Returning to that utilization level would generate an incremental
Speaker Change: income of revenues of 250 million dollars and even more if the contract exceeds the prior peak of utilization.
Speaker Change: We have a long track record of delivering quality services under ISAP with bipartisan support for approximately 20 years.
Speaker Change: These services entail diversified electronic monitoring technologies, as well as compliance management services, which are delivered through a nationwide network of approximately 100 offices and close to 1,000 employees.
Speaker Change: Over our 20-year tenure, ISEP has achieved high compliance rates with our immigration court requirements while monitoring what amounts to a relatively small portion of the undocumented aliens who are on the non-detained docket.
Speaker Change: The non-detained docket is made up of persons who have entered the country without proper authorization, who have been processed by federal immigration officers, and who have been released into the interior of the company pending their appearance before an immigration court.
Speaker Change: There are currently an estimated 7 to 8 million undocumented aliens on the non-detained docket, in addition to another 9.5 to 10 million people who are estimated to be in the United States without legal status.
Speaker Change: Given the size of this population, our view is that in addition to increased detention capacity, the requirements of the federal immigration law in the Lake and Riley Act will require significant ramp-up in the electronic monitoring to ensure proper trafficking
court proceedings.
Speaker Change: At this time, we have not received any update from ICE regarding the timing of a procurement or a rebid of the ISEP contract, and we believe the agency's focus has shifted to increasing the size of the population that is currently monitored under ISEP.
Speaker Change: With the investment commitment we have made in the technical and personnel
Speaker Change: enhancements we have already completed. We believe we have the necessary resources to scale up the current utilization of the ISEP contract by several hundreds of thousands and upward to several millions of participants.
as required.
We are investing in the expansion of our secure services.
Speaker Change: transportation fleet as well. We expect an increase in the number of removal flights which could generate an increase.
Speaker Change: incremental of 40 million to 50 million dollars in annualized revenues under our existing ice air support services subcontract
Speaker Change: While our initial guidance for 2025 is based on our current business baseline and does not reflect the impact of any new contract awards that have not been previously announced, we expect the upside potential from all these opportunities
Speaker Change: could represent as much as $800 million to $1 billion in incremental annualized revenues.
Speaker Change: Based on the average margins for our respective segments, we expect that the opportunities could add as much as 250 million to 300 million dollars in incremental annualized adjusted EBITDA.
Speaker Change: We expect Interior Enforcement by Eyes to continue to ramp up throughout the year.
Speaker Change: contingent upon funding availability. We believe under the Trump administration ICE began with a significant funding deficit.
Speaker Change: While we understand that DHS has recently reprogrammed approximately $485 million in funding to shore up this deficit.
Speaker Change: The continued ramp-up in enforcement and detention activities is likely contingent on additional funding being appropriated by Congress or reprogrammed by DHS.
Speaker Change: Currently, the U.S. Senate and the U.S. House of Representatives are moving forward on two separate tracks under the budget reconciliation process.
Speaker Change: Either of which could provide additional funding for border security of between $175 and $200 billion over several years.
Speaker Change: Depending on which track the Senate and the House agree on, it may take several months for the budget reconciliation process to be completed.
Speaker Change: Based on our understanding of the current status of the budget discussions, we expect additional new contract awards.
Speaker Change: to continue to be announced in the near term and into the second quarter of 2025 with likely activation of additional new facilities in the second half of 2025.
Speaker Change: Once a contract has been awarded, our typical facility activation period is 60 to 90 days to hire, train, and clear staff and get the facility ready for occupancy, followed by a gradual ramp-up in utilization.
Finally, despite the increase in our
Speaker Change: capital requirements, we have continued to make significant progress in our efforts to reduce death.
Speaker Change: de-leverage our balance sheet and evaluate potential capital returns in the future.
Speaker Change: We ended 2024 with approximately $1.7 billion in total net debt.
Speaker Change: Based on our initial guidance for 2025, we would expect to reduce net debt by an additional $150 million to $175 million this year, before any asset sales or further upside to our guidance, bringing the total net debt to $1.5 billion.
to approximately 1.5 million people.
Speaker Change: $5 billion and a total net leverage of approximately 3.2 times adjusted EBITDA. I will now turn the call over to our CFO, Mark Suchinski.
Mark Suchinski: Thank you, George, and good morning, everyone. For the fourth quarter of 2024, we reported net income attributable to GEO of approximately $15.5 million, or $0.11 per diluted share, on quarterly revenues of approximately $608 million.
Mark Suchinski: This compares to net income attributed with the GEO of approximately $25 million or $0.17 per diluted share in the fourth quarter of 2023 on revenues of approximately $608 million.
Mark Suchinski: Fourth quarter 2024 results reflect higher G&A overhead expenses in part due to the recent reorganization of our senior management team and additional associated professional fees incurred during the quarter.
Fourth quarter 2024 results also reflect pre-tax costs.
Mark Suchinski: associated with the extinguishment of debt of approximately 1.3 million dollars and approximately 2.1 million dollars in pre-tax employee restructuring expenses.
Mark Suchinski: Excluding these unusual items, we reported fourth quarter 2024 adjusted net income of approximately $18 million.
for $0.13 per diluted share.
Mark Suchinski: compared to the results of the fourth quarter of 2023 when we reported adjusted net income of roughly $37 million, or $0.29 per diluted share.
Mark Suchinski: We also reported 4th quarter 2024 adjusted EBITDA of approximately $108 million compared to approximately $129 million for the prior year's 4th quarter.
Beginning with revenues.
Mark Suchinski: Quarterly revenues in our owned and leased secure service facilities increased by approximately 3% year-over-year.
Mark Suchinski: This revenue increase was offset by lower quarterly revenue from our electronic monitoring and supervision services segment, which declined by approximately 10% compared to the prior year's fourth quarter.
Mark Suchinski: Quarterly revenue for our re-entry centers managed only and non-residential service contracts were largely unchanged compared to the prior year fourth quarter.
Mark Suchinski: Turning to expenses, during the fourth quarter of 2024, our operating expenses increased by approximately 1% compared to the prior year's fourth quarter.
Mark Suchinski: Our operating expenses for the fourth quarter of 2024 reflect higher labor costs.
Mark Suchinski: and our Secure Services segment of approximately $10 million in part due to revenue increases tied to contractual cost of living adjustments.
Mark Suchinski: and in part due to additional staffing and training costs we incurred during the fourth quarter of 2024 in preparation for expected future growth.
Mark Suchinski: And our general and administrative expenses for the fourth quarter of 2024 increased by approximately 18% from the prior year's fourth quarter, in part due to recent reorganization of our senior management team.
and additional associated professional fees.
Mark Suchinski: which we incurred during the fourth quarter of 2024 in preparation for expected future growth.
Mark Suchinski: While our fourth quarter 2024 revenues were in line with our guidance, our quarterly earnings and adjusted EBITDA were below our previous expectations as a result of the higher G&A expenses I just explained.
Thank you.
Mark Suchinski: Our fourth quarter 2024 results reflect a year-over-year decrease in net interest expense of approximately $7 million as a result of our debt reduction and refinancing efforts over the past 12 months.
Mark Suchinski: Our effective tax rate for the fourth quarter of 2024 was approximately 40%. For the full year 2024, we reported net income attributable to GEO of approximately $32 million on annual revenues of approximately $2.42 billion.
Mark Suchinski: Our full year 2024 results reflect approximately $86.6 million in pre-tax costs associated with the extinguishment of debt in relation to our refinancing transactions.
Mark Suchinski: Excluding the debt extinguishment costs and other unusual items, we reported full year 2024 adjusted net income of approximately $101 million, or $0.75 per diluted share.
Mark Suchinski: We reported full year 2024 adjusted EBITDA of approximately $463.5 million.
Now let's move to our initial financial guidance for 2025.
Mark Suchinski: Consistent with our long-standing practice, our initial guidance does not include the impact of any new contract awards that have not been previously announced.
Mark Suchinski: Therefore, our initial guidance for 2025 reflects only the baseline of our current business.
Thank you.
Mark Suchinski: For the full year 2025, we expect net income attributed to the GEO to be in a range of $0.74 to $0.88 per diluted share on revenues of approximately $2.5 billion and based on an effective tax rate of approximately 28% inclusive of known discrete items.
Mark Suchinski: We expect our full year 2025 adjusted EBITDA to be between $460 million and $485 million.
Mark Suchinski: While our guidance does not include any assumption for new contract awards that have not been previously announced, as George mentioned, we anticipate several opportunities could materialize during the year, which we believe would provide significant upside to our current forecast.
on a combined basis.
Mark Suchinski: We believe that these opportunities could generate as much as $800 million to $1 billion in incremental annualized revenues and as much as $250 million to $300 million in incremental annualized adjusted EBITDA.
Mark Suchinski: As we progress throughout the year and the likelihood and timing of these opportunities become clearer, we will adjust our 2025 guidance accordingly.
Mark Suchinski: As contract awards are announced and we begin to reactivate idle facilities, we would expect to incur startup expenses during the initial 60-90 day activation period.
Mark Suchinski: Startup expenses for any facility activations not previously announced are also not currently included in our guidance.
Mark Suchinski: We expect total capital expenditures for full year 2025 to be between $125 million and $145 million, including the impact of the $70 million investment we announced in December to expand our ICE services capability.
This incremental $70 million investment
is comprised of the following.
47 million dollars to renovate existing secure service facilities
Mark Suchinski: $9 million of which was spent in 2024, with the remaining $38 million expected to be spent over the first three quarters of 2025.
Mark Suchinski: $16 million dollars to be spent evenly throughout 2025 to ramp up production of additional GPS tracking devices and $7 million dollars to be spent primarily in the first half of 2025 to expand our secure transportation fleet.
Now let's move to our capital structure.
Mark Suchinski: We ended the fourth quarter of 2024 with total net debt of approximately $1.7 billion. We closed the year with approximately $77 million in cash on hand and approximately $214 million in total available liquidity.
Mark Suchinski: As of the end of the fourth quarter of 2024, fixed rate debt represents approximately 75% of our total indebtedness, which meaningfully insulates GEO for potential interest rate volatility.
Mark Suchinski: As we have previously noted, we have no substantial debt maturities due before April of 2029.
We continue to give our company a standing ovation.
Mark Suchinski: a significant runway to grow our business and focus on reducing our debt.
Thank you. Bye. Bye.
based on the initial guidance for 2025.
Mark Suchinski: We expect to reduce our net debt by between $150 million and $175 million this year, bringing our total net debt to approximately $1.55 billion by the end of the year.
Mark Suchinski: Our debt reduction could also be augmented with proceeds from the potential sale of some of our state correctional facility assets and or from the potential upside to our guidance.
Mark Suchinski: In addition to allocating capital towards debt reduction and to support our growth capital needs, our goal remains to explore options for returning capital to shareholders in the future.
Mark Suchinski: At this time, I will turn the call over to our CEO, Dave Donahue, for a review of our GeoSecure Services Business Unit.
Dave Donahue: Dave. Thanks Mark and good morning everybody. It's my pleasure to have returned to the GEO Group to join George and the rest of our management team at an unprecedented time in our company's history.
Dave Donahue: We believe the scale of the opportunity before our company is unlike any we've previously experienced and will therefore require a significant operational undertaking.
Dave Donahue: My focus as the new CEO of the GEO Group will be to work with our management team and our board to ensure that we have the necessary resources to operationalize the growth opportunities we are pursuing and to support our employees as they help us achieve operational excellence across all of our service lines.
Dave Donahue: Moving to our annual milestones for geosecure services. During 2024, we renewed 13 secure service contracts, including nine contracts at the federal level with Immigration Customs Enforcement and the U.S. Marshals Service.
Dave Donahue: During the year, our Secure Services facilities successfully underwent a total of 197 audits, including internal audits, government reviews, third-party accreditations, and Prison Rape Elimination Act, or PREA, certifications.
Dave Donahue: 11 of our secure services facilities received accreditation from the American Correctional Association with an average score of 99.1% and another four facilities received PREA certifications.
Dave Donahue: Our GTI Transportation Division and our GeoAMI UK joint venture completed approximately 18.5 million miles driven in the United States and the UK during the year.
Dave Donahue: Moving to the current trends for our government agency partners, during the fourth quarter of 2024, utilization at our U.S. Marshals Detention Facilities was largely consistent with utilization during the fourth quarter one year ago.
Dave Donahue: Our U.S. Marshals facilities support the agency as it carries out its mission of providing secure custodial services for pretrial detainees facing federal criminal proceedings.
Dave Donahue: Our U.S. Marshals facilities provide needed bed space near federal courthouses where there is generally a lack of suitable alternative detention capacity.
Dave Donahue: In the first weeks of the administration, President Trump issued an executive order reversing the prior administration's executive order that had directed the U.S. Attorney General to not renew U.S. Department of Justice contracts with privately contracted criminal detention facilities.
Dave Donahue: We've enjoyed a long-standing public-private partnership with the U.S. Marshals Service and the Federal Bureau of Prisons, which are both agencies under the U.S. Department of Justice, and we stand ready to continue to support their capacity and secure residential care services needs going into the future.
Dave Donahue: Moving to our contracted ice processing centers, utilization across our facilities is currently at approximately 15,000 beds.
Dave Donahue: This census level represents an increase of 1,000 beds in the last three months and marks the highest utilization rate for our contracted ICE facilities in approximately five years.
Dave Donahue: GEO has a long-standing track record of delivering professional support services on behalf of ICE at GEO-contracted Federal Immigration Processing Centers, and we stand ready to support ICE with any additional needs.
Dave Donahue: Geocontracted ice processing centers offer around-the-clock access to quality health care services.
Dave Donahue: Our health care staffing at the ICE processing centers, where we provide resident health care, is generally more than double the number of health care staff in a typical state correctional facility.
Dave Donahue: GEO-contracted ice processing centers offer full access to legal counsel, legal libraries and resources, and we have dedicated space at each ice center to provide residents with confidential meeting rooms with their legal counsel.
Dave Donahue: GEO contracted ice processing centers provide residents with three daily meals that are culturally sensitive, special diet appropriate, and approved by registered dieticians.
Dave Donahue: We also provide access to faith-based and religious opportunities at each GEO-contracted ice processing center. And we partner with community volunteers, as needed, to ensure fair representation of various faiths and denominations.
Dave Donahue: Geocontracted ice processing centers also offer access to enhanced amenities, including artificial turf soccer fields, covered pavilions, exercise equipment, and multi-purpose rooms.
Dave Donahue: During the fourth quarter of 2024, we renewed several important contracts for our company-owned and contracted ice processing centers.
Contracts for our 1,940-bed Avalonto Ice Processing Center.
The 400-Bed Mesa Verde Ice Processing Center.
Dave Donahue: The 750-bed Desert View Annex and the 700-bed Golden State Annex were renewed for five-year terms through December of 2029.
Dave Donahue: Additionally, in January of 2025, the United States District Court for the Central District of California lifted the long-standing intake restrictions at the Adelanto Ice Processing Center, which dated back to the early days of the COVID pandemic.
Dave Donahue: We are proud of our approximately 350 employees at the Adelanto Center.
Dave Donahue: who have helped us establish a long-standing record of providing high-quality, contracted support services on behalf of ICE in the state of California.
Dave Donahue: As we announced this morning, we've been awarded a 15-year fixed-price contract by ICE for our company-owned 1,000-bed Dulaney Hall facility in Newark, New Jersey, with a total value of approximately $1 billion over the 15-year contract period.
Dave Donahue: Moving to our ancillary support services, we currently provide secure ground transportation for ice, primarily at 12 of the GEO contracted ice processing centers.
Dave Donahue: Our GTI transport division also provides secure air operations support for ICE as a subcontractor under a five-year prime contract held by CSI Aviation.
Dave Donahue: We have a longstanding record of providing safe and secure transportation services on behalf of ICE, which we expect will continue to play an important role in helping the agency carry out its mission.
Speaker Change: I could not be more excited to rejoin the GEO Group as its new CEO and to assist George and the entire GEO team as we prepare to fully meet the challenges of the unprecedented opportunities that lie ahead.
Speaker Change: At this time, I'll turn the call over to Wayne Calabrese for a review of our GeoCare Business Unit. Wayne? Thank you, Dave. I'm pleased to provide an overview of the key operational milestones for this past year for GeoCare Division.
Wayne Calabrese: In 2024, we renewed 31 Residential Reentry Center contracts, including 15 contracts with the Federal Bureau of Prisons.
Additionally, we renewed 44 non-residential day reporting center contracts.
Wayne Calabrese: During the year, our residential reentry centers, non-residential day reporting centers, and ISAP offices successfully underwent a combined total of 311 audits, including internal audits, government reviews, third-party accreditations, and Prison Rape Elimination Act, or PREA, certifications.
Wayne Calabrese: Eight of our residential reentry centers received accreditation in the last year from the American Correctional Association with an average accreditation score of 100% and 13 of our residential reentry centers received PREA certifications.
Wayne Calabrese: Our 35 residential re-entry centers, including 14 centers under contract with the Federal Bureau of Prisons, provide transitional housing and rehabilitation programs for individuals re-entering their communities across 14 states.
Wayne Calabrese: Average daily census levels at these centers remain stable at approximately 5,000 individuals during the fourth quarter of 2024.
Wayne Calabrese: Our non-residential and day reporting centers provide high-quality, community-based services, including cognitive behavioral treatment for up to 9,200 parolees and probationers at approximately 98 locations.
across 10 different states.
Wayne Calabrese: We expect that the implementation of the First Step Act, which was enacted under President Trump's first term, will be an area of focus for the Federal Bureau of Prisons under his second term.
Wayne Calabrese: And we stand ready to help the agency expand the delivery of residential and non-residential reentry programs that have been proven to reduce recidivism and to improve the lives of those who have taken that first step back into our nation's communities.
Wayne Calabrese: Moving to our Enhanced Rehabilitation Programs, we currently deliver in-custody rehabilitation to an average daily population of approximately 2,700 individuals.
at 38 in-prison program sites.
Wayne Calabrese: located in seven different states and engage over 36,000 program participants at 11 geo continuum of care sites in seven states.
Wayne Calabrese: Our in-custody rehabilitation services include academic programs focused on the attainment of high school equivalency diplomas.
Wayne Calabrese: We've made a significant investment to equip all of our classrooms with smart boards to aid in the delivery of academic instruction.
Wayne Calabrese: We've also focused on developing vocational programs that lead to certification for good jobs in the markets where our graduates will live upon release.
Wayne Calabrese: Our substance abuse treatment programs are an important part of our rehabilitation services because many of the individuals in our care suffer from addiction and substance use disorder.
Wayne Calabrese: Our facilities also provide extensive faith-based and character-based programs with designated housing units across our facilities dedicated to enhancing the delivery of these important programs.
Wayne Calabrese: During 2024, we completed approximately 6.8 million hours of enhanced in-custody rehabilitation programming. Our academic programs awarded more than 3,000 high school equivalency diplomas.
Our vocational courses awarded close to 9,700 vocational training certifications.
Wayne Calabrese: And our substance abuse treatment programs awarded approximately 9,300 program completions.
Wayne Calabrese: Those in our care achieved approximately 60,000 behavioral treatment program completions and more than 43,000 individual cognitive behavioral treatment sessions during the past year.
Wayne Calabrese: We also allocated approximately $1.5 million toward post-release services last year.
Wayne Calabrese: This funding supported more than 3,300 individuals released from GeoService facilities as they return to their communities.
Wayne Calabrese: Our GEO Continuum of Care program integrates enhanced in-custody rehabilitation, including cognitive behavioral treatment, with post-release support services that address the critical community needs of released individuals.
Wayne Calabrese: We believe our award-winning program provides a proven model for how the two-plus-million people in the United States criminal justice system can be better served in changing their lives.
Wayne Calabrese: Our geocontinuum of care has had a positive impact in the reduction of criminal recidivism rates with our programs achieving a reduction of between 42 and 47 percent in recidivism over three and five year periods when compared to the national average.
Wayne Calabrese: 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.
Wayne Calabrese: In the fourth quarter of 2024, participant counts under the ICE Intensive Supervision Appearance Program, or ISAP,
Wayne Calabrese: averaged approximately 183,000 and the current ISAP participant count is approximately 186,000.
Speaker Change: BI has provided technology solutions, holistic case management, supervision, monitoring, and compliance services under the ISAP contract for nearly 20 years, winning every competitive rebid of the contract since ISAP was first established.
Speaker Change: Under BI's tenure, ISAP has received bipartisan support and has achieved high levels of compliance using a variety of new technologies and case management services over that time.
As previously noted,
Speaker Change: We believe that in addition to increased detention capacity, a ramp-up in electronic monitoring will be necessary to ensure proper tracking and compliance rates for the millions of people currently on that non-detained docket or who are otherwise in the United States without legal status.
Speaker Change: At this time, we've not received any update from ICE regarding the timing of a procurement for the rebid of the ISAF contract. We believe the agency focus has shifted to increasing the size of the population that is currently being monitored under ISAF.
Speaker Change: We are making a significant investment toward the increased production of GPS tracking devices to be in a position to scale up
Speaker Change: The federal government's current utilization of the ISAP program by several hundreds of thousands and upward to several millions of participants, if necessary.
George Zoley: At this time, I'd like to turn the call back to George for closing remarks.
Thank you.
George Zoley: Thank you, Wayne, and we wish you the best as you transition from a full-time employee to consultant effective April 1.
George Zoley: Your unique talents will be missed by all, but we look forward to your continued involvement on a consulting basis.
Speaker Change: We believe our company faces an unprecedented opportunity at this time to play a role.
in supporting President Trump's new administration policies.
Speaker Change: We've taken several important steps to be prepared to meet that opportunity. We've made significant investments.
Speaker Change: commitments of 70 million dollars and possibly more to strengthen our capabilities to deliver expanded detention capacity, secure transportation, and electronic monitoring services to ICE and the federal government.
Speaker Change: We've also completed a reorganization of our senior management team to oversee the operation execution of this expected future growth.
Speaker Change: GEO is the largest single contractor to ICE with four decades of partnership and currently provides for approximately 40% of the exemption beds for ICE.
Speaker Change: We believe we are well positioned to scale up our secure residential care housing from the current 15,000 beds to over 31,000-32,000.
and Gio's
Speaker Change: 100% management of the ISAF program, we believe we can scale up from the present 186,000 participants to several hundreds of thousands or millions of participants if called upon.
Speaker Change: GEO's contractual relationship with CSI Aviation has allowed us to become the largest provider of secure transportation services for ICE.
Speaker Change: During 2024, we assisted in the transport and relocation travel of 160,000 persons.
Speaker Change: We believe we can scale up materially for domestic and international travel for up to 500,000 individuals or more if called upon.
Speaker Change: This is a unique moment in our company's history and we believe we are well positioned to scale up our diversified segments in secure housing, transportation, electronic monitoring to meet the changing needs of this new administration and to continue to enhance value for our shareholders.
I would now like to make a final closing statement.
Speaker Change: With the unprecedented volume of new business opportunities confronting GEO, I am inclined to stay beyond the end of my present employment agreement that expires July 1, 2026 and have so notified the board.
Speaker Change: I will offer the continuation of my services to the board under a new mutually agreeable employment agreement.
Speaker Change: That completes our remarks and we would be glad to take any questions. Thank you.
Thank you.
We will now begin the question and answer session.
Speaker Change: To ask a question, you may press star then 1 on your touchtone phone.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question today comes from Jason Weaver with Jones Trading. Please go ahead.
Speaker Change: Hey, good morning guys. This is Matthew Erdner on for Jason today. Thanks for taking the question. I kind of want to touch on the monitoring and the impact of the Lake and Riley Act. You know, what all does that include in terms of monitoring there? You know, the role it's going to take and then, you know, kind of looking forward to the new contract. Are you guys assuming any changes in economics there?
Speaker Change: I think our reading of the act is that those individuals
need to be placed in detention and if there isn't
continued in the I-STEP monitoring program indefinitely.
Thank you. Thank you.
Speaker Change: That's helpful there. And then turning to the subsidiary BI Inc., are you guys prioritizing ankle or wrist monitors over the SmartLink app? And have you guys experienced any supply chain issues there as you guys have been expanding the footprint?
Speaker Change: I think there's going to be a preference in the beginning for the ankle monitors.
Speaker Change: and which represents the high security level of monitoring which people can progress or de-graph into medium level security and low level security depending with different devices
contributing to the monitoring.
Speaker Change: Got it. And then, you know, the recent report that, sorry about that, go ahead. Second part, you know, no, we haven't really identified any
Speaker Change: supply chain difficulties. We are ramping up our inventory of ankle monitors at our Boulder, Colorado facility.
Okay, that's helpful there.
Speaker Change: You know, the recent report that came out of the current administration about migrants being forced to register, you know, do you think that that has an outsized demand on a potential increase for monitoring? And then, you know, as a follow-up to that, you know, kind of the guidance for $800 million to an incremental $1 billion in revenue there, you know, what percentage of that is, you know, the monitoring segment?
Thank you for watching. Bye.
Speaker Change: Yeah, so let me jump in on the the 850 to a billion, about 250 million. That's correct, about 250 million, but that's based on a participant count of approximately 450,000. Yeah. So if it goes beyond that...
Speaker Change: which we think it will sometime next year. It'll be more.
Got it, that's helpful, thank you guys.
Speaker Change: The next question comes from Jane McAnlis with Wedbush. Please go ahead.
Speaker Change: Hey, good morning. Thanks for taking my questions. So, I just wanted to clarify that. So, you're saying of...
The $850 to $1 billion dollars in incremental revenue.
Speaker Change: Roughly $250 million of that is going to come from ATD with a participant count of $450,000. Did I get all that correctly? Yeah, so just a point of clarification, what we've said is...
Speaker Change: If we look back to two years ago, we had participant counts of approximately 370,000.
Speaker Change: If we would grow our current participant counts to $370,000, that would generate an incremental $250 million of incremental revenue. And as George just described, if the counts go higher than our previous highs, then we're looking at opportunities for that to surpass $250 million.
Thank you for clarifying that.
Speaker Change: If I think about the $16 million that you're spending, I guess $450,000 is what you think you could monitor with the current that you have. I guess, how much more does that $16 million take you to, $550,000, $650,000? What should we think about the outcome of that spend is going to be?
Speaker Change: Well, the 16 million that we're investing, as George described, what we're doing is we're investing in building additional inventory of GPS devices to monitor
Speaker Change: In preparation of monitoring higher counts and a lot of that has to do with ankle monitoring, you know, we're We're vertically integrated there. We we've designed the ankle monitor. We Purchase it and we manufacture in our facility. So
Speaker Change: What we've done, and that started in the fourth quarter, we started to build the inventory and procure.
additional materials in anticipation of that end.
Speaker Change: That $16 million that we mentioned as part of our $70 million investment plan is to get ahead and start building larger quantities of inventory in support of expected higher GPS monitoring that will be required under the ISAF contract.
and many more. Thank you. Thank you.
Speaker Change: and there are three security levels in that we propose now in this program. The highest is high security followed by medium security and then low security. We don't know exactly how you know those three buckets will be filled by the new administration as they
review their congressional
Speaker Change: directives and responsibilities balanced by the funding to achieve those contractual responsibilities so
We haven't.
Speaker Change: done an inventory for all 450,000. Not yet. We're building a big initial inventory because
Speaker Change: ICE is kind of, you know, it's a big organization and it's trying to realign itself to these huge new law enforcement responsibilities that it hasn't had for four years under the previous administration.
Speaker Change: So people are just coming back to the office, they're starting to regroup, thinking through how are they going to achieve these new objectives, these new congressional directives and responsibilities.
Speaker Change: As we talked earlier, the Senate version of the budget is providing $170 billion.
Speaker Change: quite a bit of money and the House version I think is approximately 100 billion. So as those two bills that are competing between the House and the Senate merge, you know, it could be a number somewhere in between those two.
Speaker Change: but it's a big leap and it can't happen overnight. People have to be assigned within the ICE organization to identify the...
Speaker Change: the possible participants in the ISAP program. You know, we would need contract adjustments to, you know, pay for the additional costs, which we will be reimbursed. But all of that is in kind of a fluid situation, which is...
Picking up pace, if I may say. We've gone from
Speaker Change: conceptual proposals by major service providers like ourselves and CoreCivic to now substantive
pricing and operational discussions as to
Thank you.
Speaker Change: Who's going to go into this particular facility? How much is it going to cost? But there is interest in every one of our EIDL facilities by either ICE or the Marshals Service And I would think that you know, of course, civics EIDL facilities would get the same level of attention
Speaker Change: But the procurement process is moving at a speed that's unprecedented. We've never seen anything like this before.
Thank you.
That's good to hear. I mean, I guess.
Speaker Change: To follow on that point, have you all been surprised at how slowly the ISAT numbers have moved up since the administration, new administration took over?
Speaker Change: Well, I think there's probably a couple of answers to that, one of which is the focus on detention and the identification of alternative detention venues like Guantanamo.
which seems to have some difficulties.
Speaker Change: But the focus, I think, will return back to the historical service providers like ourselves, like CoreCivic, utilizing their idle bed capacity that can be stood up within 60 or 90 days.
Speaker Change: That's the fastest approach to increasing detention capacity. I don't think anything else comes.
Close to that. It's probably double the time.
Speaker Change: and I think we're very cost competitive with any kind of alternative service.
Speaker Change: And I guess if you think about the different opportunities you have for revenue growth,
Speaker Change: You called out a little bit on the halfway homes with the first step.
Speaker Change: program. Are you thinking that you're going to get growth faster through some of those or is it mostly going to be focused on increasing bed count and increasing monitoring this year? Is that where you feel like most of the upside is going to come?
Speaker Change: As we know it and see it today, but you know, we believe that the
Speaker Change: that the Department of Justice under the administration of Pam Bondi is very much interested in increasing the number of re-entry bed capacity around the country and is interested in improving
But in the final a final
Speaker Change: candidate has not been proposed for the Bureau of Prisons as yet so they're still reviewing potential candidates.
Speaker Change: Understood. And then just one more question back to monitoring for a sec. If you did if you did start to see a rapid increase
Speaker Change: and people going through monitoring, what do you think the upside case is in terms of how many people you could monitor with your current infrastructure? Have you tried to stress stuff what the upper bound looks like?
Speaker Change: Well, we know we can do several hundreds of thousands and we are trying to position ourselves for millions and that will be permitted by contracting with other technical service providers that can help us reach those goals.
Okay, great. Thank you for taking my questions.
Thank you.
Speaker Change: The next question comes from Greg Gibbous with Northland Security. Please go ahead.
Greg Gibbous: Hey, thanks for taking the questions. You know, I wanted to ask what your expectations are for ICE's use of the Adelanto facility now that that court order limiting utilization before was lifted.
Well, the...
Greg Gibbous: you know the court order is in two parts I think under the first ruling we have the authorization
Greg Gibbous: to utilize, I think, 460 or 470 beds, something like that, and there's a hearing next month, the middle of next month, that will
presumably authorized the complete
under the new COVID standards.
are at Delaney.
Greg Gibbous: Hall facility will be the largest facility on the East Coast.
or ICE.
Greg Gibbous: Got it, that's helpful. And I guess as it relates to Delaney Hall, you know, what level of startup costs will be associated with it and how should we maybe think about the OPEX versus CAPEX split and maybe regarding just future facility ramp-up costs, like is there a rough per bed expense we can expect to maybe estimate for future facilities that you reactivate?
Greg Gibbous: Well, the Delaney Hall, it may be an exception because we will receive partial payment during our 60 days startup.
Greg Gibbous: process, but the other facilities will require the employment, you know, including Delaney, of about 3,000 people.
Greg Gibbous: So you got to pay for at least their training time which is about four weeks so that's going to be several millions of dollars. We haven't put that in our budget yet because we really don't know the timing of it.
Greg Gibbous: We haven't put the revenue in the budget because the contracts are not signed yet. We haven't put the startup costs because we don't know the timing of those startup costs.
Greg Gibbous: But I think, you know, here we are at the end of the first quarter.
I think we're anticipating
Greg Gibbous: a very fast ramp-up of procurement activity where I think there'll be several contract awards
Greg Gibbous: very possibly next month, by the end of the first quarter.
but
Greg Gibbous: If that slips a little bit because of the funding competition between the Senate and the House, which may take until May for the money to come, you know, the realistic activation of these facilities, ours and CoreCivics, will probably be the second half of the year.
Greg Gibbous: and it will be on a ramp-up basis and there will be significant, you know, costs.
Greg Gibbous: for our 3,000 employees and CoreCivics approximate 3,000 so that's 6,000 employees that have to be
Thank you.
recruited, screened for criminal history.
job history and then put into a four-week training program.
Speaker Change: And I would just add, you know, we haven't been specific around what's the cost per bed of
Speaker Change: reactivating a facility. But what I can tell you is, you know, when we activate those facilities
Speaker Change: in the back half of the year and we start to generate revenue
there's no doubt it'll be significantly creative.
Speaker Change: from a profitability standpoint. So as George said, 30 to 60, 90 days, we gotta hire people, we gotta train people. It's a cost, but the benefit from the reactivation will exceed any of those reactivation costs.
Speaker Change: Delaney Hall is a bit unusual because it's done, it's complete, and everything's brand new inside the facility, and it's ready to go, all we need to do is the recruitment, the hiring, the background screening, and the training.
Speaker Change: Great, that's very helpful. Other facilities may have, you know, be in different, they are in different conditions.
Some have been idle longer than others.
Speaker Change: Adelanto has no capital requirements. It's in perfect shape and so we can open up the rest of the facilities up to I think approximately 1,900 beds without any capital investment there.
but we have other facilities like
Northlake in Michigan. We have Big Springs in Texas.
Speaker Change: We have D. Ray James in Georgia, Rivers in North Carolina.
Speaker Change: It's interesting that all of those facilities are former BOP facilities.
that were
that became idle because of...
Speaker Change: Biden's restriction on the BOP contracting with us. But they're all high security facilities, which is very much of an interest to ICE and both marshals, because they're primarily cell facilities and they're
I think they're...
in high demand at this time.
Right, that makes sense and very helpful.
Speaker Change: I guess lastly, as it relates to your commentary on the $250 to $300 million incremental EBITDA off of the $800 to $1 billion in revenue, kind of over what period would we expect to see this? Would we see these rolling in post-funding, like 2025 or more 2026?
Speaker Change: Let me just jump in here and George can provide some commentary. I think we've been pretty consistent in
George Zoley: in stating that we expect the first half of 2025 to be relatively consistent with 2024 and start to see the benefits of these contracting awards taking into effect in the back half of 2025.
George Zoley: And as we stated before, the full benefits of reaching the full potential, we expect to see in 2026.
George Zoley: And so, the benefits will start to bear fruit in the back half of...
George Zoley: of 25, and then we should be with the timelines of activating facilities within 90 days and the contracting that we talked about.
George Zoley: You know, we think the full operational benefits from a financial standpoint will take place in 2026.
Got it. Very helpful. Thanks.
Speaker Change: The next question comes from Brennan McCarthy with Sidoti. Please go ahead.
Brennan McCarthy: Great. Good morning, everyone. Thanks for taking my questions. Just wanted to start off on the detention side. I know last earnings call there was a discussion around
Brennan McCarthy: I think it was $400 million in incremental annualized revenue opportunity from the reactivation of 18,000 beds.
Brennan McCarthy: But now this quarter, it sounds like that's shifted up to the $500-600 million revenue opportunity from roughly 17,000 incremental beds. Just curious as to what will kind of change that expectation, and could we maybe see that range move higher?
Brennan McCarthy: I would say that we continue to look at our facilities and the capacity of those facilities.
in our conversations with our clients.
and it's just a revision of our previous statements.
Brennan McCarthy: I would say I wouldn't expect there to be significant upside from what we've just laid out as it relates specifically to the IO facilities that we have here. So I just think it's more clarity as we've spent more time modeling the business case opportunities.
Brennan McCarthy: I would just add that, you know, the numbers we're talking about are numbers related to our own facilities. We are looking at other facilities.
Brennan McCarthy: that are owned by third-party individuals, and there's a few of them. So none of our present numbers include those potential additional facilities.
Speaker Change: Got it. Okay, that's helpful. And then more of a broad question here, but on detention versus alternatives to detention, do you kind of see the administration, you know, maxing out detention utilization and population levels and then ramping up ATD population levels, or do you think that process will be more, I guess, simultaneous?
Speaker Change: As far as brick-and-mortar facilities in the U.S., that can be usable.
I think it's presently about 75,000 to 80,000 beds.
Speaker Change: before you possibly consider repurposing some of the idle Bureau of Prisons facilities.
So if you're trying to get to 100,000...
just the organic market.
Speaker Change: is only capable of 75 or 80,000 beds, I think, at this time, before you consider soft-sided facilities and as well as possibly repurposing and managing...
Speaker Change: presently idle BOP facilities, which can get you to the 100,000.
Speaker Change: Great, thanks. I guess, just to clarify, I guess with the alternative to detention program, the ISAP contract, I guess, do you ultimately see, you know, maybe a lag there with population increases while detention ultimately takes the priority?
You know, we think, you know, the...
The ISAP program has a separate team of individuals.
Speaker Change: on ISTAP, and I think the initial preference will be on ankle monitors for high security and allowing them to step down to lower security levels in the future, but remain on ISTAP.
Thank you.
Speaker Change: As long as it takes for them to have their hearing and be cleared or allowed to stay in the U.S., if they're not,
Speaker Change: approved to stay in the U.S., they would be scheduled for deportation.
Speaker Change: So, one of the criticisms of the ICF program is that people have stayed on it a few months and then, you know, they don't show up for their hearings. Well, the solution to that is...
Speaker Change: continue their participation and monitoring under the ICF program until they do go to their hearing and there is a decision on their case.
Speaker Change: One way or the other, either they get to stay or they have to go.
Speaker Change: That's the solution. Continue the individual's participation in the ISAF program until their deportation decision is made in the positive or in the negative.
Got it. That's helpful. That's all for me. Thanks.
Thank you.
Speaker Change: The next question comes from Joshua Zofel with Noble Capital Markets. Please go ahead.
Hey, good morning. I'm Phil and this is Joe.
Good morning.
Speaker Change: Hey, so, you know, obviously in your prior remarks you guys kind of touched on, you know, the idle facilities having some interest, you know, are those kind of discussions really gaining any traction? Maybe, you know, could we see idle facilities being activated in 25, maybe just early 26?
Speaker Change: Hey Joshua, can you repeat that again? You broke in and out. Yeah.
Speaker Change: Oh, sure. Yeah, no, you guys touched kind of on the prepared remarks, you know, you guys were having some conversations with ICE and the Marshals and, you know, those kind of discussions really gaining any traction? Could we kind of see those idle facilities being reactivated in maybe 25, early 26?
I think the likelihood that is that
all of our IDLE facilities will be.
activated in 2025.
Speaker Change: To be a little bit more specific, we think that the contracting of the
Speaker Change: of the additional detention beds will all take place in 2025. It doesn't mean that they'll be all fully populated by the end of 2025, but all of that contracting should be done, and as we said before, so that we reap the full benefits
Speaker Change: in 26 and get some of the benefits in the back half of this year. You know, even a longer view of the funding battles...
Speaker Change: would allow I think the department to issue contracts by the end of the second quarter. Yes. Now if it takes that long to the end of the second quarter then you need the third quarter for you know activating the facilities.
Speaker Change: But I think we're hopeful, I think the administration is hopeful.
Speaker Change: of awareness of how much money is available will occur early in the second quarter and to allow actual contracting to take place early or mid-second quarter.
Okay, that's helpful.
Speaker Change: Obviously, you know, with the ICE investment, you guys kind of broke out, you know, the capital expenditure is over 2025.
Speaker Change: and everything else like that. Just in terms of like the sale of the facilities, first off, you know, how close are you on any of those sales?
Speaker Change: And furthermore, you know, looking at that investment, you know, when it's broken out, it kind of seems like it's about roughly around $21 million in the first three quarters of 2025. Is that kind of a fair assessment?
and many more. Thank you. Thank you.
for Smiley Health Facility.
Well, his first question is, you know, can we provide...
More detailed updates on the sale process.
Speaker Change: Well, one of the facilities which is in the public domain is our Lawton, Oklahoma facility. It's a very large facility.
Speaker Change: Our facilities are generally the largest facilities in any state we operate in.
Speaker Change: as is the case with the Lawton facility in the state of Oklahoma. So it's...
It's a very high security facility, we've made a public
request.
Speaker Change: As to the purchase of the facility, an appraiser has been assigned and they're in, I think they're
Speaker Change: They've made a lot of progress in their appraisal work and we expect their assessment by next month.
Speaker Change: Okay, that's helpful. And yeah, obviously, you know, that investment over 2025, yeah, it seemed like I calculated about $21 million over the first two quarters. I'm out. That sounds about right.
He got it does yeah, okay
Speaker Change: Perfect. And then lastly, you guys might have gone over this in the prepared remarks, and I apologize if I missed it, but it seems like you had a pretty substantial NOI increase, really, for the manage-only segment, while you guys had pretty kind of steady revenue. Can I get a bit more color, just kind of on the large jump?
On the man and Sean Lee, I think we've...
Speaker Change: had to make some wage increases out of our own concern for staffing levels and security of the facility in advance of actual reimbursement and additional funding from our state clients.
We
Speaker Change: Most of the state clients are in their in the middle of their legislative sessions right now. We've made a request to them for additional funding but we haven't waited for that. We've done what we think is the right operational thing to do and increase wages.
Speaker Change: to higher levels to handle what is increasingly a higher security level of people in state facilities.
Speaker Change: I think to the extent they could, they've released minimum security prisoners.
Speaker Change: as much as they could, that really left medium and high security individuals that we're dealing with now. And, you know, you have to be very careful that you have enough staffing to take care of that kind of situation. So we've moved forward in increasing...
staff wages.
Speaker Change: given the operational challenges and but we are asking for reimbursements for additional funding from our state clients in several states.
Speaker Change: Okay, that's helpful. Yeah, thank you guys for taking my questions.
Thank you.
Jordan Himowitz: The next question comes from Jordan Himowitz with Philadelphia Financial. Please go ahead.
Jordan Himowitz: Hey guys, thanks for your questions. First of all, have there been any Bureau of Prisons populations shifted over and or do your numbers include any shift? And if I remember correctly, the peak was like seven to ten percent of the population with Bureau of Prisons in like 1914-1915?
Well...
Jordan Himowitz: We are not in communications with the Bureau of Prisons because a new director has not been appointed.
Jordan Himowitz: we are awaiting that final decision and then we would be approaching them on what opportunities exist.
Jordan Himowitz: exist within the BOP given the probability that most of our, most if not all, of our EIDL facilities will have been contracted to other agencies.
where we think we can be helpful is
Jordan Himowitz: If they do a consolidation play in some of their facilities, we could take over one of their facilities that they decide to empty.
Jordan Himowitz: as well as looking at their idle facilities to see if we can make a financially viable offer to rehabilitate the facility and take over the management.
Jordan Himowitz: So there are some opportunities there we're looking at, but the timing on that is a little bit further out, you know, pending.
appointment of a new BOP director.
Jordan Himowitz: But what you're saying is if for some reason there's a delay in ICE or Marshall's, BOP is another option that we haven't factored into the equation at this point.
Yes, but I think all of our...
Jordan Himowitz: remaining six EIDL facilities will be contracted as I'm hopeful by the end of the second quarter.
And my second question is, I mean, everybody...
Jordan Himowitz: I mean, no one wants to be in jail anywhere, but at least if you're in jail in the U.S., you have three meals a day, you have access to legal representation, as you mentioned, you have some amenities.
Jordan Himowitz: I mean, if, God forbid, you're thrown to El Salvador or some other fakakta place, I mean, you have no representation or rights.
Speaker Change: or anything, and I can't believe it's cheap to get legal representation to those places. Have you pointed that out when you think about the actual total cost per bed? It may not just be the amount charged per bed, but all the other services that are included in that.
Speaker Change: in package, so to speak, and it may make the cost-effectiveness of your facilities much better than an international option.
Speaker Change: We have four decades of experience with ICE and Marshall, so they know our capabilities, they know the quality of our services, and when I think about international sites, I think
maybe they will be...
purpose for the ultimate
Hello.
Speaker Change: detention of people in those or deportation venue for those people that are deported rather than
where they're going to be processed. I think.
Speaker Change: Logically speaking that most if not all of the individuals will be processed within the U.S. but they may be deported to some other cooperative foreign country that may want to detain them rather than just releasing them within their own country.
Speaker Change: It depends on the security level of the individuals that are deported to these cooperating countries.
Speaker Change: And I'm sure there's got to be a fair amount of lawsuits springing up to prevent that option from even occurring, because if you're deported, you don't have that legal representation or rights to repeal that, or it becomes much tougher. So I mean, that may not even become an option, so to speak.
That's all. Thank you.
Speaker Change: We don't know if that's a policy decision by the the White House as well as DHS and ICE.
Okay, thank you.
Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to George Zoley for any closing remarks.
George Zoley: Well, thank you all for joining us on this call. As you can tell by the length of the call, we've had a lot of questions because there's
George Zoley: quite a bit going on in our company and the opportunities that we're looking at, which are completely unprecedented. And we're proud to be in partnership with.
George Zoley: and the Marshall Services and hopefully with the BOP as well.
or
George Zoley: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.