GEO’s cash and cash equivalents dropped sharply in Q2 2024 because the net cash outflows from its investing and financing activities outweighed the cash generated by operating activities. Specifically, while operating activities generated **$114.5 million** (up from **$109.4 million** in the prior period)  **[0000950170-24-093922_geo-20240630.htm:72]** , the company used **$37.0 million** in investing activities and **$113.2 million** in financing activities, resulting in a significant net decrease in cash—from **$93,971 thousand** at the end of 2023 to **$46,299 thousand** as of June 30, 2024.  **[0000950170-24-093922_geo-20240630.htm:4]** **[0000950170-24-093922_geo-20240630.htm:5]** 

Why did cash and cash equivalents drop so sharply in Q2 2024?

The decline in GEO’s long-term debt in Q3 2024 was driven primarily by the company's **debt reduction and refinancing efforts**. GEO reduced its debt by approximately **$92 million** year-to-date, while also incurring **one-time fees** of about **$40 million to $50 million** related to refinancing activities, which, alongside restructuring efforts that improved its debt maturity profile, contributed to the net debt decline.  **[GEO_3406764_15]** **[GEO_3406764_6]** **[GEO_3406764_5]** 

What drove the decline in long-term debt in Q3 2024?

The significant decrease in the current portion of long-term debt in Q2 2024 was primarily due to a comprehensive debt refinancing. This refinancing involved the exchange and retirement of **$229.4 million of senior unsecured exchangeable notes** using a combination of cash and GEO common stock, which reduced immediate debt obligations. Additionally, the refinancing extended the maturities of most debt instruments to **2029 and 2031**, reclassifying what was previously considered current debt to long-term, and involved replacing older debt with new instruments like **8.625% senior secured notes due 2029** and **10.25% senior unsecured notes due 2031**.  **[GEO_3397084_6]** **[0000950170-24-093922_geo-20240630.htm:24]** 

Why was the current portion of long-term debt significantly lower in Q2 2024?

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The sharp drop in **Net Income** in **Q4 2023** was driven by several factors. **Revenues declined** from **$620,682 thousand** to **$608,283 thousand** compared to the previous year, which reduced earnings power.  **[0001193125-24-042879_d791768dex991.htm:1]** **[0001193125-24-065374_d761692dex991.htm:3]**  In addition, the company experienced **higher interest expenses**, rising from **$53,045 thousand** to **$55,892 thousand**, further pressuring net income.  **[0001193125-24-042879_d791768dex991.htm:7]**  Moreover, the incurrence of **$8,900 thousand** in litigation costs and settlements, which was not present in the previous period, also contributed significantly. Lastly, a decline in **adjusted EBITDA** (from **$145,481 thousand** to **$128,954 thousand**) reflected lower operational profitability, compounding the overall reduction in net income.  **[0001193125-24-065374_d761692dex991.htm:3]** **[0001193125-24-042879_d791768dex991.htm:7]** 

Why did Net Income drop so sharply in Q4 2023?

The **overall net income turned negative (-$5,022 thousand)**  **[0000950170-24-125597_geo-20240930.htm:3]**  primarily because the positive impacts—such as revenue growth in U.S. Secure Services and lower net interest expense—were outweighed by significant negative factors. In particular, **non-recurring costs** played a major role, including **$2,920 thousand** in pre-tax costs for debt extinguishment and **$843 thousand** in transaction fees and close‐out expenses, as well as a sharp decline in Electronic Monitoring and Supervision Services revenue (a decrease of **$14,422 thousand**).  **[0000950170-24-125597_geo-20240930.htm:56]**  These combined headwinds drove the net income into negative territory.

What drove Net Income into negative territory in Q3 2024?

The decline in **Operating Income** in Q2 2024 was primarily due to a significant increase in both operating and general & administrative expenses. The operating expenses increased by **$15,401 thousand** due to higher labor and medical costs, increased transportation services, additional occupancies in the U.S. Secure Services segment, and escalated costs in the international services segment from a new healthcare contract in Australia.  **[0000950170-24-093922_geo-20240630.htm:60]**  Additionally, the **General and Administrative expenses** saw a rise of **$10,506 thousand** driven by fees related to the exchange and retirement of convertible notes.  **[0001193125-24-198888_d750002dex991.htm:7]** **[GEO_3397084_5]**  Although revenues increased by **$13,294 thousand**, this growth was insufficient to offset the higher costs, resulting in an overall decline in operating income.  **[0001193125-24-198888_d750002dex991.htm:7]** **[0000950170-24-093922_geo-20240630.htm:59]** 

Why did Operating Income decline in Q2 2024?

The swing in Equity in Earnings of Affiliates was primarily attributed to **unfavorable insurance adjustments at SACS (South African Custodial Services Pty. Limited)**, one of GEO's joint ventures. This issue led to a significant decline from **$1,490 thousand** in Q2 2023 to **$811 thousand** in Q2 2024—a decrease of **$679 thousand (45.6%)**.  **[0000950170-24-093922_geo-20240630.htm:63]** **[0000950170-24-093922_geo-20240630.htm:67]** 

What caused the swing in Equity in Earnings of Affiliates in Q2 2024?

The reversal was primarily driven by refinancing activities and mandated prepayments. In December 2023, GEO refinanced its revolving credit facility commitments, which led to the write‐off of approximately **$4.2 million** in deferred loan costs. In addition, mandatory quarterly prepayments on its Tranche 1 and Tranche 2 loans resulted in further write‐offs of deferred loan costs and related discount/premium, roughly amounting to **$4.3 million**. Together, these actions fundamentally shifted the accounting treatment of the debt extinguishment, turning what had previously been recorded as a loss into a gain in Q4 2023.  **[0000950170-23-061074_geo-20230930.htm:3]** **[0000950170-24-023181_geo-20231231.htm:133]** **[0000950170-24-023181_geo-20231231.htm:104]** 

Why did the Extinguishment of Debt entry reverse from a loss to a gain in Q4 2023?

570e8afd862dabd9dc32d591ed87b6f422df75c35c07856978e68f7238bce35e

Operating Cash Flow in Q4 2023 was lower primarily due to the combined impact of several factors. **Non-cash adjustments** such as depreciation, amortization, stock-based compensation, and other non-cash expenses helped support cash flow, but these were offset by non-cash gains—for instance, the negative impact from the **equity in earnings of affiliates** and **net gains on asset dispositions**. In addition, **changes in working capital** played a significant role. For example, a decrease in accounts receivable, prepaid expenses, and other assets by approximately **$11.7 million** provided a positive impact, while an increase in accounts payable, accrued expenses, and other liabilities by about **$8.1 million** also affected the overall cash flow dynamics. These factors together resulted in the notably lower net cash provided by operating activities of **$52,213 thousand** in Q4 2023.  **[0000950170-24-023181_geo-20231231.htm:137]** **[0000950170-24-023181_geo-20231231.htm:113]** 

Why was Operating Cash Flow so low in Q4 2023?

The spike in investing outflows in Q4 2023 was primarily due to a **substantial drop in proceeds from the sale of real estate and other assets** — with proceeds falling from **$101,419 thousand** in Q4 2022 to **$19,583 thousand** in Q4 2023 — combined with **higher capital expenditures** (an outflow of **$73,002 thousand**) and a relatively minor change in restricted investments, which together resulted in a much larger net cash outflow during the period.  **[0000950170-24-023181_geo-20231231.htm:137]** 

What caused the spike in investing outflows in Q4 2023?

The increased financing outflows in **Q4 2023** resulted primarily from **substantial debt reduction efforts**, as GEO made significant payments on its long-term debt—reducing its net debt by approximately **$197 million** for the year. This was accompanied by the **absence of major proceeds from new debt issuances** (in contrast to previous periods where, for instance, **$30 million** was received in long-term debt proceeds), as well as additional **debt issuance costs of $2.4 million**. Although **treasury share sales** generated **$5.8 million** in proceeds, they were not enough to offset the robust outflows from these activities.  **[0001193125-24-042879_d791768dex991.htm:1]** **[GEO_3373711_6]** **[0000950170-24-023181_geo-20231231.htm:137]** **[0000950170-24-023181_geo-20231231.htm:114]** **[0000950170-24-023181_geo-20231231.htm:137]** **[0000950170-23-061074_geo-20230930.htm:70]** 

What led to the increased financing outflows in Q4 2023?

The net change in cash turned negative in Q4 2023 because **cash outflows from investing and financing activities outweighed the cash generated from operations**. In detail, **investing activities** involved higher capital expenditures coupled with lower proceeds from asset sales, while **financing activities** were marked by significant outflows due to debt repayments. These factors combined to result in a net cash decrease for the quarter.  **[0000950170-24-023181_geo-20231231.htm:137]** **[0000950170-24-023181_geo-20231231.htm:137]** 

Why did the net change in cash turn negative in Q4 2023?

In Q2 2024, the lower operating cash flow was primarily driven by **unfavorable changes in working capital**. Specifically, **changes in accounts receivable, prepaid expenses, and other assets** negatively impacted cash by **$16,758 thousand**, while **changes in accounts payable, accrued expenses, and other liabilities** reduced cash by **$21,456 thousand**. These negative working capital adjustments, resulting from the timing of billings, collections, and payments, outweighed the positive contributions from non-cash expenses and increased dividends received.  **[0000950170-24-093922_geo-20240630.htm:5]** **[0000950170-24-093922_geo-20240630.htm:72]** 

What factors contributed to the low Operating Cash Flow in Q2 2024?

894d026a573241d418235ef5f8cd774afa26296cfa60cc6d76cd3ff088c25fae

Cash and cash equivalents (USD, thousands)

Accounts receivable, net of credit loss reserve (USD, thousands)

Prepaid expenses and other current assets (USD, thousands)

Total current assets (USD, thousands)

Restricted Cash and Investments (USD, thousands)

Property and Equipment, Net (USD, thousands)

Operating Lease Right-of-Use Assets, Net (USD, thousands)

Deferred Income Tax Assets (USD, thousands)

Goodwill (USD, thousands)

Intangible Assets, Net (USD, thousands)

Other Non-Current Assets (USD, thousands)

Total Assets (USD, thousands)

Accounts payable (USD, thousands)

Accrued payroll and related taxes (USD, thousands)

Accrued expenses and other current liabilities (USD, thousands)

Operating lease liabilities, current portion (USD, thousands)

Current portion of finance lease liabilities and long-term debt (USD, thousands)

Total current liabilities (USD, thousands)

Deferred Income Tax Liabilities (USD, thousands)

Other Non-Current Liabilities (USD, thousands)

Operating Lease Liabilities (USD, thousands)

Long-Term Debt, Net (USD, thousands)

Total shareholders’ equity (USD, thousands)

Total Liabilities and Shareholders’ Equity (USD, thousands)

6ab6538deda58ae3185c5859d18068dc46f4bb1e4738350faed7070e346b66d4

Revenues (USD, thousands)

Operating expenses (USD, thousands)

Depreciation and Amortization (USD, thousands)

General and Administrative Expenses (USD, thousands)

Operating Income (USD, thousands)

Interest Income (USD, thousands)

Interest Expense (USD, thousands)

(Loss) Gain on Extinguishment of Debt (USD, thousands)

Income Before Income Taxes and Equity in Earnings of Affiliates (USD, thousands)

Provision for Income Taxes (USD, thousands)

Equity in Earnings of Affiliates, net of income tax provision (USD, thousands)

Net Income (USD, thousands)

Loss Attributable to Noncontrolling Interests (USD, thousands)

Net Income Attributable to The GEO Group, Inc. (USD, thousands)

a700973047bf45fc49b0b2f114de6ecf02ed174b4a958381f028a6cf0c3506ae

Net cash provided by operating activities (USD, thousands)

Net cash used in investing activities (USD, thousands)

Net cash used in financing activities (USD, thousands)

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash and Cash Equivalents (USD, thousands)

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash and Cash Equivalents (USD, thousands)

Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, end of period (USD, thousands)

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4e5706ebfae056c5ab91c9d8b40b51bfd7405ce9a41f3cb3deb4a30208c0ca17

4fd262e858e597a43eab1aee04024cb51c04a9a84f7263b146e47c9d0af5f0dd

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

6f40f7bde24710601eaa28cedadafeb91673c3998e04c76dad188bed65b7acc0

U.S. Operations

- U.S. Secure Services

International

- Australia

- South Africa

- United Kingdom

- International Services

Total Revenue

e75197390c6f6317870a939765750e99fa52c550782b19ee82fbb05e395d930b

U.S. Secure Services

Electronic Monitoring and Supervision Services

Reentry Services

International Services

GEO Care

- Electronic Monitoring and Supervision Services (ISAP)

- Reentry Services

Facility Construction & Design

1e686429c1c2893310ec91e2e6e1a0fb82446525c61b98e3a43beb4138e0bff5

GEO GROUP (GEO)

Financials