The GEO Group, Inc. (NYSE: GEO) (“GEO”), a leading
provider of support services for secure facilities, processing
centers, and reentry centers, as well as enhanced in-custody
rehabilitation, post-release support, and electronic monitoring
programs, reported today its financial results for the fourth
quarter and full year 2021.
Fourth Quarter 2021 Highlights
- Total revenues of $557.5 million
- Net Loss Attributable to GEO of $49.8 million or ($0.41) per
diluted share, as a result of tax charges and expenses related to
previously announced change in corporate tax structure
- Adjusted Net Income of $45.5 million or $0.38 per diluted
share
- Adjusted EBITDAre of $124.1 million
- Adjusted Funds From Operations (“AFFO”) of $0.65 per diluted
share
As a result of the previously announced change in GEO’s
corporate tax structure from a Real Estate Investment Trust to a
taxable C corporation, effective for the fiscal year ended December
31, 2021, we incurred a one-time, non-cash deferred tax charge of
$70.8 million in the fourth quarter 2021. Additionally, we incurred
$29.3 million in incremental income tax expense in the fourth
quarter 2021, due to the resulting higher corporate tax rate for
2021, including a catch-up income tax expense of approximately
$16.8 million in connection with the first three quarters of
2021.
Due to the tax related corporate restructuring items, we
reported a fourth quarter 2021 net loss attributable to GEO of
$49.8 million, or ($0.41) per diluted share, compared to net income
attributable to GEO of $11.9 million, or $0.10 per diluted share,
for the fourth quarter 2020. We reported total revenues for the
fourth quarter 2021 of $557.5 million compared to $578.1 million
for the fourth quarter 2020.
Fourth quarter 2021 results also reflect a $0.7 million gain on
real estate assets, pre-tax, $2.2 million in start-up expenses,
pre-tax, $4.1 million in M&A related expenses, pre-tax, a $1.3
million loss and settlement, pre-tax, on the previously announced
divestiture of GEO’s Youth Services contracts, $3.3 million in
close-out expenses, pre-tax, and a $2.6 million benefit in the tax
effect of adjustments to net income attributable to GEO. Excluding
these items, the one-time, non-cash deferred tax charge, and the
portion of additional income tax expense associated with the first
three quarters of 2021, we reported fourth quarter 2021 Adjusted
Net Income of $45.5 million, or $0.38 per diluted share, compared
to $39.3 million, or $0.33 per diluted share, for the fourth
quarter 2020.
We reported fourth quarter 2021 Adjusted EBITDAre of $124.1
million, compared to $108.0 million for the fourth quarter 2020. We
reported fourth quarter 2021 AFFO of $78.4 million, or $0.65 per
diluted share, compared to $74.6 million, or $0.62 per diluted
share, for the fourth quarter 2020.
George C. Zoley, Executive Chairman of GEO, said, “We are
pleased with our strong operational and financial results, which
continue to be underpinned by our valuable real estate assets and
quality contracts entailing essential government services. The
decision made by our Board to change our corporate tax structure in
2021 is consistent with the multifaceted approach we have
implemented to address our future debt maturities. We remain
focused on allocating our free cash flow towards reducing our net
recourse debt, and we are continuing to review potential sales of
company-owned assets and businesses, as well as capital structure
alternatives with the assistance of our financial and legal
advisors. We believe all these steps are in the best interests of
our shareholders and other stakeholders.”
Full Year 2021 Highlights
- Total revenues of $2.26 billion
- Net Income Attributable to GEO of $77.4 million, $0.58 per
diluted share
- Adjusted Net Income of $159.2 million, $1.32 per diluted
share
- Adjusted EBITDAre of $467.0 million
- AFFO of $2.48 per diluted share
For the full year 2021, we reported net income attributable to
GEO of $77.4 million, or $0.58 per diluted share, compared to
$113.0 million, $0.94 per diluted share, for the full year 2020. We
reported total revenues for the full year 2021 of $2.26 billion
compared to $2.35 billion for the full year 2020.
Results for the full year 2021 reflect a one-time, non-cash
deferred tax charge of $70.8 million, a $10.1 million gain on real
estate assets, pre-tax, a $4.7 million gain on the extinguishment
of debt, pre-tax, $2.2 million in start-up expenses, pre-tax, $8.1
million in M&A related expenses, pre-tax, a $6.3 million loss
and settlement, pre-tax, on the previously announced divestiture of
GEO’s Youth Services contracts, $7.5 million in one-time employee
restructuring expenses, pre-tax, $3.3 million in close-out
expenses, pre-tax, and a $1.7 million benefit in the tax effect of
adjustments to net income attributable to GEO. Excluding these
items, we reported Adjusted Net Income of $159.2 million, or $1.32
per diluted share, for the full year 2021, compared to $155.6
million, or $1.30 per diluted share, for the full year 2020.
For the full year 2021, we reported Adjusted EBITDAre of $467.0
million, compared to $439.8 million for the full year 2020. For the
full year 2021, we reported AFFO of $299.3 million, or $2.48 per
diluted share, compared to $300.6 million, or $2.51 per diluted
share, for the full year 2020.
Balance Sheet and Liquidity
At the end of 2021, we had approximately $506 million in cash on
hand, primarily resulting from the previously announced drawdown of
our Revolving Credit Facility. Our decision to draw on our
Revolving Credit Facility was a conservative precautionary step to
preserve liquidity, maintain financial flexibility, and obtain
additional funds for general corporate purposes. Accounting for our
$506 million of cash on hand, we have approximately $2.1 billion in
net recourse debt outstanding, not including non-recourse debt,
finance lease obligations, or the mortgage loan on our corporate
headquarters.
We are continuing to examine our options to address our funded
recourse debt, including our nearer term maturities which encompass
our 2023 and 2024 senior unsecured notes and our senior credit
facility, which may include, subject to market conditions,
additional capital markets transactions, repurchases, redemptions,
exchanges, or other refinancing of our existing debt, and/or
evaluating the potential sale of additional company-owned assets
and businesses. Between January of 2021 and February of 2022, we
have entered into contracts for or have completed eight sales
transactions with combined proceeds of approximately $64
million.
2022 Financial Guidance
We have issued our initial financial guidance for 2022. We
expect full year Net Income Attributable to GEO and Adjusted Net
Income both to be in a range of $0.99 to $1.07 per diluted share on
annual revenues of approximately $2.17 billion. We expect full year
2022 AFFO to be in a range of $2.05 to $2.13 per diluted share, and
full year 2022 Adjusted EBITDA to be in a range of $422 million to
$438 million.
For the first quarter 2022, we expect Net Income Attributable to
GEO and Adjusted Net Income both to be between $0.21 and $0.23 per
diluted share, and AFFO to be between $0.48 and $0.50 per diluted
share, on quarterly revenues of $550 million to $555 million.
Our 2022 guidance reflects the normalization of the non-renewal
of seven U.S. Department of Justice direct contracts during 2021,
with combined annualized revenues of approximately $259 million.
Our guidance also does not include the continuation of two
additional U.S. Department of Justice direct contracts that have
contract option periods scheduled to expire during 2022, with
combined annualized revenues of $90 million.
Our guidance also reflects higher operating expenses, primarily
related to wage increases and bonuses for our facility staff. Our
guidance also reflects a higher effective corporate income tax
rate, which we expect to be approximately 29 percent, as result of
our transition to a taxable C corporation.
Finally, as previously disclosed, we are engaged in discussions
with our banks and the advisors of ad-hoc groups representing our
term loan lenders and bondholders to amend and extend our senior
credit facility and our 2023, 2024, and 2026 senior unsecured
notes. We will update our financial guidance accordingly if we are
able to complete a transaction to reflect the expected increase in
interest expense. For each one percent increase in our weighted
average cost of debt, our interest expense would increase by
approximately $18 million to $20 million on an annualized basis
based on our current net recourse debt.
COVID-19 Information
As the COVID-19 pandemic has impacted communities across the
United States and around the world, our employees and facilities
have also been impacted by the spread of COVID-19. Ensuring the
health and safety of our employees and all those in our care has
always been our number one priority. During the pandemic, we have
implemented mitigation initiatives to address the risks of
COVID-19, consistent with the guidance issued for correctional and
detention facilities by the Centers for Disease Control and
Prevention (“CDC”).
We will continue to evaluate and refine the steps we have taken
as appropriate and necessary based on updated guidance by the CDC
and best practices. We are grateful for our frontline employees who
continue to make daily sacrifices to care for all those in our
facilities. Additional information on the COVID-19 mitigation
initiatives implemented by GEO can be found at
www.geogroup.com/COVID19.
Conference Call Information
We have scheduled a conference call and simultaneous webcast for
today at 11:00 AM (Eastern Time) to discuss our fourth quarter and
full year 2021 financial results as well as our outlook. The
call-in number for the U.S. is 1-877-250-1553 and the international
call-in number is 1-412-542-4145. In addition, a live audio webcast
of the conference call may be accessed on the Webcasts section
under the News, Events and Reports tab of GEO’s investor relations
webpage at investors.geogroup.com. A replay of the webcast will be
available on the website for one year. A telephonic replay of the
conference call will be available until March 3, 2022, at
1-877-344-7529 (U.S.) and 1-412-317-0088 (International). The
participant passcode for the telephonic replay is 3524243.
About The GEO Group
The GEO Group, Inc. (NYSE: GEO) is a leading diversified
government service provider, specializing in design, financing,
development, and support services for secure facilities, processing
centers, and community reentry centers in the United States,
Australia, South Africa, and the United Kingdom. GEO’s diversified
services include enhanced in-custody rehabilitation and
post-release support through the award-winning GEO Continuum of
Care®, secure transportation, electronic monitoring,
community-based programs, and correctional health and mental health
care. GEO’s worldwide operations include the ownership and/or
delivery of support services for 106 facilities totaling
approximately 86,000 beds, including idle facilities and projects
under development, with a workforce of up to approximately 18,000
employees.
Reconciliation Tables and Supplemental Information
GEO has made available Supplemental Information which contains
reconciliation tables of Net Income Attributable to GEO to Net
Operating Income, Net Income to EBITDAre (EBITDA for real estate)
and Adjusted EBITDAre (Adjusted EBITDA for real estate), and Net
Income Attributable to GEO to FFO, Normalized FFO and Adjusted FFO,
along with supplemental financial and operational information on
GEO’s business and other important operating metrics, and in this
press release, Net Income Attributable to GEO to Adjusted Net
Income. The reconciliation tables are also presented herein. Please
see the section below titled “Note to Reconciliation Tables and
Supplemental Disclosure - Important Information on GEO’s Non-GAAP
Financial Measures” for information on how GEO defines these
supplemental Non-GAAP financial measures and reconciles them to the
most directly comparable GAAP measures. GEO’s Reconciliation Tables
can be found herein and in GEO’s Supplemental Information available
on GEO’s investor webpage at investors.geogroup.com.
Note to Reconciliation Tables and Supplemental Disclosure
– Important Information on GEO's Non-GAAP Financial
Measures Net Operating Income, EBITDAre, Adjusted EBITDAre,
Funds from Operations, Normalized Funds from Operations, Adjusted
Funds from Operations, and Adjusted Net Income are non-GAAP
financial measures that are presented as supplemental disclosures.
GEO has presented herein certain forward-looking statements about
GEO's future financial performance that include non-GAAP financial
measures, including Adjusted EBITDAre, Adjusted Net Income, and
AFFO.
The determination of the amounts that are included or excluded
from these non-GAAP financial measures is a matter of management
judgment and depends upon, among other factors, the nature of the
underlying expense or income amounts recognized in a given period.
While we have provided a high level reconciliation for the guidance
ranges for full year 2022, we are unable to present a more detailed
quantitative reconciliation of the forward-looking non-GAAP
financial measures to their most directly comparable
forward-looking GAAP financial measures because management cannot
reliably predict all of the necessary components of such GAAP
measures. The quantitative reconciliation of the forward-looking
non-GAAP financial measures will be provided for completed annual
and quarterly periods, as applicable, calculated in a consistent
manner with the quantitative reconciliation of non-GAAP financial
measures previously reported for completed annual and quarterly
periods.
Net Operating Income is defined as revenues less operating
expenses, excluding depreciation and amortization expense, general
and administrative expenses, real estate related operating lease
expense, gain/loss on real estate assets, pre-tax, and start-up
expenses, pre-tax. Net Operating Income is calculated as net income
adjusted by subtracting equity in earnings of affiliates, net of
income tax provision, and by adding income tax provision, interest
expense, net of interest income, gain on extinguishment of debt,
depreciation and amortization expense, goodwill impairment charge,
general and administrative expenses, real estate related operating
lease expense, gain/loss on real estate assets, pre-tax, and
start-up expenses, pre-tax.
EBITDAre (EBITDA for real estate) is defined as net income
adjusted by adding provisions for income tax, interest expense, net
of interest income, depreciation and amortization, goodwill
impairment charge, pre-tax, and gain/loss on real estate assets,
pre-tax. Adjusted EBITDAre (Adjusted EBITDA for real estate) is
defined as EBITDAre adjusted for net loss attributable to
non-controlling interests, stock-based compensation expenses,
pre-tax, and certain other adjustments as defined from time to
time, including for the periods presented M&A related expenses,
pre-tax, loss and settlement on asset divestiture, pre-tax,
one-time employee restructuring expenses, pre-tax, start-up
expenses, pre-tax, COVID-19 expenses, pre-tax, close-out expenses,
pre-tax, and other non-cash revenue and expense, pre-tax.
Given the nature of our business as a real estate owner and
operator, we believe that EBITDAre and Adjusted EBITDAre are
helpful to investors as measures of our operational performance
because they provide an indication of our ability to incur and
service debt, to satisfy general operating expenses, to make
capital expenditures and to fund other cash needs or reinvest cash
into our business. We believe that by removing the impact of our
asset base (primarily depreciation and amortization) and excluding
certain non-cash charges, amounts spent on interest and taxes, and
certain other charges that are highly variable from year to year,
EBITDAre and Adjusted EBITDAre provide our investors with
performance measures that reflect the impact to operations from
trends in occupancy rates, per diem rates and operating costs,
providing a perspective not immediately apparent from net income
attributable to GEO.
The adjustments we make to derive the non-GAAP measures of
EBITDAre and Adjusted EBITDAre exclude items which may cause
short-term fluctuations in income from continuing operations and
which we do not consider to be the fundamental attributes or
primary drivers of our business plan and they do not affect our
overall long-term operating performance. EBITDAre and Adjusted
EBITDAre provide disclosure on the same basis as that used by our
management and provide consistency in our financial reporting,
facilitate internal and external comparisons of our historical
operating performance and our business units and provide continuity
to investors for comparability purposes.
Funds From Operations, or FFO, is defined in accordance with
standards established by the National Association of Real Estate
Investment Trusts, or NAREIT, which defines FFO as net income/loss
attributable to common shareholders (computed in accordance with
United States Generally Accepted Accounting Principles), excluding
real estate related depreciation and amortization, excluding gains
and losses from the cumulative effects of accounting changes,
extraordinary items and sales of properties, and including
adjustments for unconsolidated partnerships and joint ventures.
Normalized Funds from Operations, or Normalized FFO, is defined
as FFO adjusted for certain items which by their nature are not
comparable from period to period or that tend to obscure GEO’s
actual operating performance, including for the periods presented
goodwill impairment charge, pre-tax, start-up expenses, pre-tax,
M&A related expenses, pre-tax, loss and settlement on asset
divestiture, pre-tax, gain on the extinguishment of debt, pre-tax,
one-time employee restructuring expenses, pre-tax, COVID-19
expenses, pre-tax, close-out expenses, pre-tax, change in tax
structure to C corporation, and tax effect of adjustments to FFO.
Adjusted Funds From Operations, or AFFO, is defined as Normalized
FFO adjusted by adding non-cash expenses such as non-real estate
related depreciation and amortization, stock based compensation
expense, the amortization of debt issuance costs, discount and/or
premium and other non-cash interest, and by subtracting
consolidated maintenance capital expenditures and other non-cash
revenue and expenses.
Adjusted Net Income is defined as Net Income Attributable to GEO
adjusted for certain items which by their nature are not comparable
from period to period or that tend to obscure GEO’s actual
operating performance, including for the periods presented
gain/loss on real estate assets, pre-tax, goodwill impairment
charge, pre-tax, start-up expenses, pre-tax, M&A related
expenses, pre-tax, loss and settlement on asset divestiture,
pre-tax, change in tax structure to C corporation, gain on the
extinguishment of debt, pre-tax, one-time employee restructuring
expenses, pre-tax, COVID-19 expenses, pre-tax, close-out expenses,
pre-tax, and tax effect of adjustments to Net Income Attributable
to GEO.
Because of the unique design, structure and use of our GEO
Secure Services and GEO Care facilities, we believe that assessing
the performance of our secure facilities, processing centers, and
reentry centers without the impact of depreciation or amortization
is useful and meaningful to investors. Although NAREIT has
published its definition of FFO, companies often modify this
definition as they seek to provide financial measures that
meaningfully reflect their distinctive operations. We have modified
FFO to derive Normalized FFO and AFFO that meaningfully reflect our
operations. Our assessment of our operations is focused on
long-term sustainability. The adjustments we make to derive the
non-GAAP measures of Normalized FFO and AFFO exclude items which
may cause short-term fluctuations in net income attributable to GEO
but have no impact on our cash flows, or we do not consider them to
be fundamental attributes or the primary drivers of our business
plan and they do not affect our overall long-term operating
performance. We may make adjustments to FFO from time to time for
certain other income and expenses that do not reflect a necessary
component of our operational performance on the basis discussed
above, even though such items may require cash settlement.
Because FFO, Normalized FFO and AFFO exclude depreciation and
amortization unique to real estate as well as non-operational items
and certain other charges that are highly variable from year to
year, they provide our investors with performance measures that
reflect the impact to operations from trends in occupancy rates,
per diem rates, operating costs, and interest costs, providing a
perspective not immediately apparent from Net Income Attributable
to GEO. We believe the presentation of FFO, Normalized FFO and AFFO
provide useful information to investors as they provide an
indication of our ability to fund capital expenditures and expand
our business. FFO, Normalized FFO and AFFO provide disclosure on
the same basis as that used by our management and provide
consistency in our financial reporting, facilitate internal and
external comparisons of our historical operating performance and
our business units and provide continuity to investors for
comparability purposes.
Safe-Harbor Statement
This press release contains forward-looking statements regarding
future events and future performance of GEO that involve risks and
uncertainties that could materially and adversely affect actual
results, including statements regarding GEO’s financial guidance
for the full year and first quarter of 2022 and GEO’s proposed
steps to address its future debt maturities. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as “may,” “will,” “expect,”
“anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” or
“continue” or the negative of such words and similar expressions.
Risks and uncertainties that could cause actual results to vary
from current expectations and forward-looking statements contained
in this press release include, but are not limited to: (1) GEO’s
ability to meet its financial guidance for 2022 given the various
risks to which its business is exposed; (2) GEO’s ability to
deleverage and repay, refinance or otherwise address its debt
maturities in an amount or on the timeline it expects, or at all;
(3) GEO’s ability to identify and successfully complete any
potential sales of additional company-owned assets and businesses
on commercially advantageous terms on a timely basis, or at all;
(4) changes in federal and state government policy, orders,
directives, legislation and regulations that affect public-private
partnerships with respect to secure, correctional and detention
facilities, processing centers and reentry centers, including the
timing and scope of implementation of President Biden's Executive
Order directing the U.S. Attorney General not to renew the U.S.
Department of Justice contracts with privately operated criminal
detention facilities; (5) changes in federal immigration policy;
(6) public and political opposition to the use of public-private
partnerships with respect to secure correctional and detention
facilities, processing centers and reentry centers; (7) the
magnitude, severity, and duration of the current COVID-19 global
pandemic, its impact on GEO, GEO's ability to mitigate the risks
associated with COVID-19, and the efficacy and distribution of
COVID-19 vaccines; (8) GEO’s ability to sustain or improve
company-wide occupancy rates at its facilities in light of the
COVID-19 global pandemic and policy and contract announcements
impacting GEO’s federal facilities in the United States; (9)
fluctuations in our operating results, including as a result of
contract terminations, contract renegotiations, changes in
occupancy levels and increases in our operating costs; (10) GEO's
ability to realize the anticipated benefits of terminating its REIT
election and becoming a taxable C corporation for the year ended
December 31, 2021; (11) general economic and market conditions,
including changes to governmental budgets and its impact on new
contract terms, contract renewals, renegotiations, per diem rates,
fixed payment provisions, and occupancy levels; (12) GEO’s ability
to timely open facilities as planned, profitably manage such
facilities and successfully integrate such facilities into GEO’s
operations without substantial costs; (13) GEO’s ability to win
management contracts for which it has submitted proposals and to
retain existing management contracts; (14) risks associated with
GEO’s ability to control operating costs associated with contract
start-ups; (15) GEO’s ability to successfully pursue growth and
continue to create shareholder value; (16) GEO’s ability to obtain
financing or access the capital markets in the future on acceptable
terms or at all; (17) other factors contained in GEO’s Securities
and Exchange Commission periodic filings, including its Form 10-K,
10-Q and 8-K reports, many of which are difficult to predict and
outside of GEO’s control.
Fourth quarter and full year 2021 financial tables to
follow:
Condensed Consolidated Balance
Sheets*
(Unaudited)
As of As of December 31, 2021
December 31, 2020 (unaudited) (unaudited)
ASSETS
Cash and cash equivalents $
506,491
$
283,524
Restricted cash and cash equivalents
20,161
26,740
Accounts receivable, less allowance for doubtful accounts
365,573
362,668
Contract receivable, current portion
6,507
6,283
Prepaid expenses and other current assets
45,176
32,108
Total current assets $
943,908
$
711,323
Restricted Cash and Investments
76,158
37,338
Property and Equipment, Net
2,037,845
2,122,195
Contract Receivable
367,071
396,647
Operating Lease Right-of-Use Assets, Net
112,187
124,727
Assets Held for Sale
7,877
9,108
Deferred Income Tax Assets
-
36,604
Intangible Assets, Net (including goodwill)
921,349
942,997
Other Non-Current Assets
71,013
79,187
Total Assets $
4,537,408
$
4,460,126
LIABILITIES AND SHAREHOLDERS' EQUITY Accounts
payable $
64,073
$
85,861
Accrued payroll and related taxes
67,210
67,797
Accrued expenses and other current liabilities
200,712
202,378
Operating lease liabilities, current portion
28,279
29,080
Current portion of finance lease obligations, long-term debt, and
non-recourse debt
18,568
26,180
Total current liabilities $
378,842
$
411,296
Deferred Income Tax Liabilities
80,768
30,726
Other Non-Current Liabilities
87,073
115,555
Operating Lease Liabilities
89,917
101,375
Finance Lease Liabilities
1,977
2,988
Long-Term Debt
2,625,959
2,561,881
Non-Recourse Debt
297,856
324,223
Total Shareholders' Equity
975,016
912,082
Total Liabilities and Shareholders' Equity $
4,537,408
$
4,460,126
* all figures in '000s
Condensed Consolidated Statements of
Operations*
(Unaudited)
Q4 2021 Q4 2020 FY 2021 FY 2020
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $
557,539
$
578,116
$
2,256,612
$
2,350,098
Operating expenses
395,986
431,584
1,629,046
1,771,495
Depreciation and amortization
34,871
34,291
135,177
134,680
General and administrative expenses
50,664
47,402
204,306
193,372
Goodwill impairment charge
-
21,146
-
21,146
Operating income
76,018
43,693
288,083
229,405
Interest income
5,830
6,026
24,007
23,072
Interest expense
(33,038
)
(31,300
)
(129,460
)
(126,837
)
Gain on extinguishment of debt
-
2,283
4,693
5,319
Net gain/(loss) on dispositions of assets
1,209
(5,680
)
5,499
(6,831
)
Income before income taxes and equity in earnings of
affiliates
50,019
15,022
192,822
124,128
Provision for income taxes ***
101,336
5,106
122,730
20,463
Equity in earnings of affiliates, net of income tax
provision
1,495
1,968
7,141
9,166
Net income/(loss)
(49,822
)
11,884
77,233
112,831
Less: Net loss attributable to noncontrolling
interests
26
27
185
201
Net income/(loss) attributable to The GEO Group, Inc.
*** $
(49,796
)
$
11,911
$
77,418
$
113,032
Weighted Average Common Shares Outstanding:
Basic
120,553
119,844
120,384
119,719
Diluted **
120,553
120,105
120,732
119,991
Net income/(loss) per Common Share Attributable to The
GEO Group, Inc. **: Basic: Net income/(loss)per
share — basic $
(0.41
)
$
0.10
$
0.59
$
0.94
Diluted: Net income/(loss) per share — diluted $
(0.41
)
$
0.10
$
0.58
$
0.94
Regular Dividends Declared per Common Share $
-
$
0.34
$
0.25
$
1.78
* All figures in '000s, except per share data ** Q4 2021
basic and diluted weighted common shares outstanding are the same
because the Company generated a net loss available to common
stockholders and common stock equivalents are excluded from diluted
net loss per share as they have an antidilutive impact. *** As a
result of GEO’s restructuring to a taxable C Corporation in fiscal
year 2021, during the fourth quarter the Company incurred a
one-time, non-cash deferred tax charge of approximately $70.8
million. GEO also incurred approximately $29.3 million in
incremental income tax expense in the fourth quarter of 2021 due
tothe resulting higher corporate tax rate for 2021, including a
catch-up tax expense of approximately $16.8 million in connection
with the first three quarters of 2021.
In accordance with GAAP, diluted earnings per share attributable
to GEO available to common stockholders is calculated under the
if-converted method or the two-class method, whichever calculation
results in the lowest diluted earnings per share amount, which may
be lower than Adjusted Net Income Per Diluted Share.
Reconciliation of Net Income/(Loss)
Attributable to GEO to Adjusted Net Income
(In thousands, except per share
data)(Unaudited)
Q4 2021 Q4 2020 FY 2021 FY 2020
Net Income (Loss) attributable to GEO
$
(49,796
)
$
11,911
$
77,418
$
113,032
Add: (Gain)/Loss on real estate assets, pre-tax
(735
)
5,680
(10,056
)
6,831
M&A related expenses, pre-tax
4,141
-
8,118
-
Loss and settlement on asset divestiture, pre-tax
1,302
-
6,333
-
Change in tax structure to C Corp
87,611
-
70,813
-
One-time employee restructuring expenses, pre-tax
-
-
7,459
-
Start-up expenses, pre-tax
2,242
-
2,242
4,413
Close-out expenses, pre-tax
3,291
-
3,291
5,895
Gain on extinguishment of debt, pre-tax
-
(2,283
)
(4,693
)
(5,319
)
COVID-19 expenses, pre-tax
-
2,478
-
9,883
Goodwill impairment charge, pre-tax
-
21,146
-
21,146
Tax effect of adjustments to Net Income attributable to GEO
(2,575
)
320
(1,722
)
(300
)
Adjusted Net Income
$
45,481
$
39,252
$
159,203
$
155,581
Weighted average common shares outstanding - Diluted
120,553
120,105
120,732
119,991
Adjusted Net Income Per Diluted Share
$
0.38
$
0.33
$
1.32
$
1.30
In accordance with GAAP, diluted earnings per share attributable
to GEO available to common stockholders is calculated under the
if-converted method or the two-class method, whichever calculation
results in the lowest diluted earnings per share amount, which may
be lower than Adjusted Net Income Per Diluted Share.
Reconciliation of Net Income/(Loss)
Attributable to GEO to FFO, Normalized FFO, and AFFO*
(Unaudited)
Q4 2021 Q4 2020 FY 2021 FY 2020
(unaudited) (unaudited) (unaudited) (unaudited)
Net
Income/(Loss) attributable to GEO $
(49,796
)
$
11,911
$
77,418
$
113,032
Add (Subtract): Real Estate Related Depreciation and Amortization
18,978
18,520
75,622
73,659
(Gain)/Loss on real estate assets, pre-tax
(735
)
5,680
(10,056
)
6,831
Equals: NAREIT defined FFO $
(31,553
)
$
36,111
$
142,984
$
193,522
Add (Subtract): Goodwill impairment charge, pre-tax
-
21,146
-
21,146
Gain on extinguishment of debt, pre-tax
-
(2,283
)
(4,693
)
(5,319
)
Start-up expenses, pre-tax
1,723
-
1,723
4,401
M&A related expenses, pre-tax
4,141
-
8,118
-
One-time employee restructuring expenses, pre-tax
-
-
7,459
-
Loss & settelment on asset divestiture, pre-tax
1,302
-
6,333
-
COVID-19 expenses, pre-tax
-
2,478
-
9,883
Close-out expenses, pre-tax
1,475
-
1,475
5,935
Change in tax structure to C Corp
87,611
-
70,813
-
Tax effect of adjustments to funds from operations **
(1,711
)
320
(26
)
(300
)
Equals: FFO, normalized $
62,988
$
57,772
$
234,186
$
229,268
Add (Subtract): Non-Real Estate Related Depreciation &
Amortization
15,893
15,771
59,555
61,021
Consolidated Maintenance Capital Expenditures
(4,812
)
(4,684
)
(16,769
)
(19,729
)
Stock Based Compensation Expenses
3,444
4,734
19,199
23,896
Other non-cash revenue & expenses
(1,102
)
(735
)
(4,408
)
(735
)
Amortization of debt issuance costs, discount and/or premium and
other non-cash interest
1,939
1,738
7,498
6,892
Equals: AFFO $
78,350
$
74,596
$
299,261
$
300,613
Weighted average common shares outstanding - Diluted
120,553
120,105
120,732
119,991
FFO/AFFO per Share - Diluted Normalized FFO
Per Diluted Share $
0.52
$
0.48
$
1.94
$
1.91
AFFO Per Diluted Share $
0.65
$
0.62
$
2.48
$
2.51
Regular Common Stock Dividends per common
share $
-
$
0.34
$
0.25
$
1.78
* all figures in '000s, except per share data ** tax
adjustments related to gain/loss on real estate assets, goodwill
imapirment charge, gain on extinguishment of debt, start-up
expenses, M&A related expenses, one-time employee restructuring
expenses, loss & settelment on asset divestiture, COVID-19
expenses, and close-out expenses.
Reconciliation of Net Income/(Loss) Attributable to GEO
to Net Operating Income,
EBITDAre and Adjusted EBITDAre*
(Unaudited)
Q4 2021 Q4 2020 FY 2021 FY 2020
(unaudited) (unaudited) (unaudited) (unaudited)
Net
Income/(Loss) attributable to GEO $
(49,796
)
$
11,911
$
77,418
$
113,032
Less Net loss attributable to noncontrolling interests
26
27
185
201
Net Income/(Loss) $
(49,822
)
$
11,884
$
77,233
$
112,831
Add (Subtract): Equity in earnings of affiliates, net of
income tax provision
(1,495
)
(1,968
)
(7,141
)
(9,166
)
Income tax provision
101,336
5,106
122,730
20,463
Interest expense, net of interest income
27,208
25,274
105,453
103,765
Gain on extinguishment of debt
-
(2,283
)
(4,693
)
(5,319
)
Depreciation and amortization
34,871
34,291
135,177
134,680
Goodwill impairment charge
-
21,146
-
21,146
General and administrative expenses
50,664
47,402
204,306
193,372
Net Operating Income, net of operating lease obligations
$
162,762
$
140,852
$
633,065
$
571,772
Add: Operating lease expense, real estate
4,102
4,529
16,481
18,783
(Gain)/Loss on real estate assets, pre-tax
(735
)
5,680
(10,056
)
6,831
Start-up expenses, pre-tax
1,723
-
1,723
4,401
Net Operating Income (NOI) $
167,852
$
151,061
$
641,213
$
601,787
Q4 2021 Q4 2020 FY 2021 FY 2020
(unaudited) (unaudited) (unaudited) (unaudited)
Net
Income/(Loss) $
(49,822
)
$
11,884
$
77,233
$
112,831
Add (Subtract): Income tax provision **
101,523
5,455
123,766
22,247
Interest expense, net of interest income ***
27,208
22,990
100,760
98,446
Depreciation and amortization
34,871
34,291
135,177
134,680
Goodwill impairment charge, pre-tax
-
21,146
-
21,146
(Gain)/Loss on real estate assets, pre-tax
(735
)
5,680
(10,056
)
6,831
EBITDAre $
113,045
$
101,446
$
426,880
$
396,181
Add (Subtract): Net loss attributable to noncontrolling interests
26
27
185
201
Stock based compensation expenses, pre-tax
3,444
4,734
19,199
23,896
Start-up expenses, pre-tax
1,723
-
1,723
4,401
M&A related expenses, pre-tax
4,141
-
8,118
-
One-time employee restructuring expenses, pre-tax
-
-
7,459
-
Loss & settlement on asset divestiture, pre-tax
1,302
-
6,333
-
COVID-19 expenses, pre-tax
-
2,478
-
9,883
Close-out expenses, pre-tax
1,475
-
1,475
5,935
Other non-cash revenue & expenses, pre-tax
(1,102
)
(735
)
(4,408
)
(735
)
Adjusted EBITDAre $
124,054
$
107,950
$
466,964
$
439,762
* all figures in '000s ** including income tax provision on
equity in earnings of affiliates *** includes (gain)/loss on
extinguishment of debt
2022
Outlook/Reconciliation (In thousands, except per share
data)
(Unaudited)
FY 2022 Net Income Attributable to GEO
$
120,000
to
$
130,000
Depreciation and Amortization
136,000
136,000
Consolidated Maintenance Capex
(31,000
)
(32,000
)
Non-Cash Stock Based Compensation
17,000
17,000
Non-Cash Interest Expense
7,500
7,500
Adjusted Funds From Operations (AFFO)
$
249,500
to
$
258,500
Net Interest Expense
104,000
106,000
Non-Cash Interest Expense
(7,500
)
(7,500
)
Facility Maintenance Capex
31,000
32,000
Income Taxes (incl. income tax provision on equity in earnings
of affiliates)
45,000
49,000
Adjusted EBITDA
$
422,000
to
$
438,000
G&A Expenses
187,000
189,000
Net Income Attributable to GEO Per Diluted Share
$
0.99
to
$
1.07
Adjusted Net Income Per Diluted Share
$
0.99
$
1.07
AFFO Per Diluted Share
$
2.05
to
$
2.13
Weighted Average Common Shares Outstanding-Diluted
121,500
to
121,500
Capital Expenditures
Growth
$
4,000
to
$
5,000
Technology
41,000
42,000
Facility Maintenance
31,000
32,000
Total Capital Expenditures
$
76,000
to
$
79,000
In accordance with GAAP, diluted earnings per share attributable
to GEO available to common stockholders is calculated under the
if-converted method or the two-class method, whichever calculation
results in the lowest diluted earnings per share amount, which may
be lower than Adjusted Net Income Per Diluted Share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220216006284/en/
Pablo E. Paez Executive Vice President, Corporate Relations
(866) 301 4436
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