The GEO Group, Inc. Price & Performance (GEO)

Thank you, operator. Good morning, everyone. Thank you for joining us for today's discussion of the GEO Group's fourth quarter and full year 2024 earnings results. With us today are George Zoli, Executive Chairman of the Board David Donahue, Chief Executive Officer Wayne Calabrese, President and Chief Operating Officer and Mark Cuczynski, Chief Financial Officer. 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. This conference call is also being webcast live or on the Investor website at investors.geogroup.com. Today, we will discuss non GAAP basis information. A reconciliation from non GAAP basis information to GAAP basis results is included in the press release and the supplemental disclosure we issued this morning. Additionally, much of the information we will discuss today including the answers we give in response to your questions, may include forward looking statements. 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. 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 ks 10 Q and eight ks reports.

With that, please allow me to turn this call over to our Executive Chairman, George Zoli. George? Thank you, Pablo, and good morning to everyone. Thank you for joining us on our fourth quarter twenty twenty four earnings call. And I apologize horse voice this morning. I would like to welcome our new CEO, Dave Donahue, who is joining our call today along with our President and COO, Wayne Calvarys and our CFO, Mark Sujinski. Ten years as DO's Senior Vice President for Secure Services after a distinguished career with the Federal Bureau of Prisons of The Department of Corrections in the states of Kentucky, and Indiana.

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. During today's call, we will review our fourth quarter and full year 2024 financial results, and operational highlights for our business segments. We will also discuss our initial financial guidance for 2025, which is consistent with our long standing practice and does not include any new contract awards that have not been previously announced. And we will provide an update on the latest business segments, including the opportunities to expand our services for ICE and the [indiscernible] Our financial performance during the fourth quarter of 'twenty four reflects higher overhead expenses and which were partially the result of previously announced reorganization of our management team, and additional professional fees during 2025. Our top line revenue for the fourth quarter of twenty twenty four increased from our twenty fourth third quarter results in line with our guidance. However, our earnings and adjusted EBITDA were blower our previous expectations due to higher overhead expenses. In 2024, we already incurred approximately $9,000,000 up to $70,000,000 in investment we announced in December to strengthen our capabilities to deliver expanded detention capacity, secured transportation and In 2025, we expect to invest an incremental $38,000,000 to renovate existing facilities dollars 16,000,000 to ramp up production of additional GPS tracking device [indiscernible] and $7,000,000 to expand our secure transportation fleet.

We believe these investments will detention beds I said in the federal government. And greatly increased our capacity to monitor undocumented aliens who are currently on the so called [indiscernible] and increased our secured transportation capabilities. 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 The current population approximately 15,000, it represents an increase of 1,000 beds ISAT GEO service facilities since our last earnings call. The incremental 17,000 beds includes approximately 9,400 beds in our current idle facilities that will be reconfigured for The detention use and approximately 7,700 incremental beds available at existing GEO serviced ICE and Marshall's facilities under contract. We expect the utilization of these additional 17,000 beds could generate between $500,000,000 and $600,000,000 in incremental annualized revenues with margins consistent with our secure services owned facilities, which average 25% to 30%.

These additional 17,000 beds include our company owned 1,000 bed Delaney Hall facility Newark, New Jersey. We announced this morning we have been awarded a fifteen year fixed price contract by ICE to provide support services for the establishment of a federal immigration processing center at Delaney Hall. GEO support 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. These new support services contract is expected to generate in excess of $60,000,000 in annualized revenues in the first full year of operations. With margins consistent with our company secure services facilities. We estimate the The year value of the contract with normal cost of living adjustments to be approximately $1,000,000,000 We expect to reactivate the facility in the second quarter of twenty twenty five with revenues and earnings from the new contract normalizing 2025. We are in active discussions with ICE and the Marshals Service regarding their interest in GEO's remaining six idle facilities.

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. However, we are currently pursuing the potential sale of one or both of these facilities with the objective of generating up to $550,000,000 in proceeds that could be used to reduce debt and or otherwise enhance shareholder value. 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 forty one five hundred detention beds under the continued resolution, which is set to expire March 14. Before the recent passage of the Lake And Riley Act, the Trump administration had indicated a need to ramp up to 100,000 total ICE detention beds for increased interior enforcement operations. Based on public statements from ICE, the implementation of the Lincoln Riley could require an additional 60,000 detention beds or more. We believe that an increase of between 260,000 beds will require our large range of solutions 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.

However, we believe that the detention and processing of [indiscernible] As a result of increased interior enforcement will require additional facilities to be activated in The United States.

We have a forty 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 and to alternative solutions like soft sided facilities and we are preparing to extend and build upon that strong successful record of public private partnership. We are also making significant Supervision Services segment to ramp up the production of GPS tracking devices for use under the The government's intensive supervision of or ISAP. ICEP participant accounts averaged between one hundred and thirty The hundred and eighty three thousand during the fourth quarter of twenty twenty four and are currently stand approximately 86,000. 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. Returning to that utilization level would generate an incremental income of revenues of $250,000,000 and even more if the contract exceeds the prior peak of utilization. We have a long track record of delivering quality services under ISAP with bipartisan support for approximately twenty years. 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.

Over our twenty year, ten year, ISEP has achieved high compliance rates with our immigration court requirements while monitoring what amounts a relatively small portion of the undocumented aliens who are on the non detained docket. The non detained docket is made up of persons who have entered the country without proper authorization have been processed by federal immigration officers and who have been released into the interior of the immigration court. There are currently an estimated seven eight million undocumented aliens on the nondetained docket in addition to another $9,500,000 to 10,000,000 people who are estimated to be in The United States without legal status. Given the size of this population our view is that in addition to increased detention capacity, the requirements of the immigration law and the Lake and Riley Act will require significant ramp up in the electronic monitoring to ensure proper trafficking of persons on the non detained docket, and their compliance with the requirements of their immigration court proceedings. At this time, we have not received any update from ICE regarding the timing of a procurement or a rebid of the ICEEP contract. And we believe the agency's focus has shifted to increasing the size of the population that is currently under ISAP.

With the investment commitment we have made in the technical and personnel enhancements we have already completed, we believe we have been of the ICEB 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 transportation fleet as well. We expect an increase in the number of removals flights, which could generate an increase incremental of $40,000,000 to $50,000,000 in annualized revenues under our existing ICE Air and Sport services. [indiscernible] While our initial guidance for 2025 is based on our current business baseline and does not reflect the impact of any new contract awards been previously announced. We expect the upside potential from all The opportunities could represent as much as $800,000,000 to $1,000,000,000 in incremental eyes revenues Based on the average margins for our respective segments, we expect that the opportunities could add as much as $250,000,000 to $300,000,000 in incremental annualized adjusted EBITDA. We expect interior enforcement by eyes to continue to ramp up throughout the year contingent upon funding availability. We believe under the Trump administration The began with a significant funding While we understand that DHS is recently reprogrammed approximately $485,000,000 in funding to shore up this deficit the continued ramp up of in enforcement and detention activities is likely contingent on additional funding being appropriated by Congress or reprogrammed by DHS.

Currently, the U. S. Senate and the U. S. House of Representatives are moving forward on two separate tracks under the budget reconciliation process. Either of which could provide additional funding for border security of between $175,000,000,000 and $200,000,000,000 over several years. Depending on which track the Senate and the House agree on, it may take several months for the budget reconciliation process to be completed. Based on our understanding of the current status of the budget this discussions, we expect additional new contract awards to continue to be announced in the near term and into the second quarter twenty twenty five with likely activation of additional new facilities in the second half of twenty twenty five. Once a contract has been awarded, our typical facility activation period is sixty to ninety 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 increased Capital requirements, we have continued to make significant progress in our efforts reduce debt deleverage our balance sheet, and evaluate potential capital returns in the future. We ended 2024 with approximately $1,700,000,000 in total net debt. Based on our initial guidance for 2025, we would expect to reduce net debt by an additional $150,000,000 to $175,000,000 in this year.

Before any asset sales or further upside to our guidance, bringing the total net debt to approximately $1,500,000,000 and total net leverage of about I will now turn the call over to our CFO, Mark Suuchinski.

Thank you, George, and good morning, everyone. For the fourth quarter of twenty twenty four, we reported net income attributable to GEO of approximately $15,500,000 or $0.11 per diluted share Quarterly revenues of approximately $6.00 $8,000,000 This compares to net income attributable to GEO of approximately $25,000,000 or $0.17 per diluted share in the fourth quarter of twenty twenty three on revenues of approximately $6.00 $8,000,000 Fourth quarter twenty twenty four results reflect higher G and 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 twenty twenty four results also reflect pre tax costs associated with the extinguishment of debt of approximately $1,300,000 and approximately $2,100,000 in pretax employee restructuring expenses.

Excluding these unusual items, we reported fourth quarter twenty twenty four adjusted net income of approximately $18,000,000 or $0.13 per diluted share compared to the results of the fourth quarter of twenty twenty three when we reported adjusted net income of roughly $37,000,000 or $0.29 per diluted share. We also reported fourth quarter twenty twenty four adjusted EBITDA of approximately $108,000,000 compared to approximately $120,000,000 $129,000,000 for the prior year's Beginning with revenues, quarterly revenues in our owned and leased secure service facilities increased by approximately 3% year [indiscernible] 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 [indiscernible] [indiscernible] revenue for our reentry centers managed only, and non residential service contracts were largely unchanged compared to the prior year fourth quarter. Turning to expenses. During the fourth quarter of twenty twenty four, our operating expenses increased by approximately 1% compared to the prior year's [indiscernible] Our operating expenses for the fourth quarter of twenty twenty four reflect higher labor costs our Secure Services segment, of approximately $10,000,000 in part due to revenue increases tied The cost of living adjustments and in part due to additional staffing and training costs we incurred during the fourth quarter of twenty twenty four in preparation for expected future growth.

And our general and administrative expenses for the fourth quarter twenty twenty four 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 which we incurred during the fourth quarter of twenty twenty four In preparation for expected future growth.

While our fourth quarter twenty twenty four 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 and A expenses I Just explained. Our fourth quarter twenty twenty four results were reflect a year over year decrease in net interest expense of approximately $7,000,000 as a result of our debt reduction and refinancing efforts, past twelve months. Effective tax rate for the fourth quarter of twenty twenty four was approximately 40% for the full year 2024 we reported net income attributable to GEO of approximately $32,000,000 on annual revenues of approximately $2,420,000,000 Our full year 2024 results reflect approximately $86,600,000 in pre tax costs associated with the extinguishment of debt in relation to our refinancing transactions. Excluding the debt extinguishment costs, and other unusual items, we reported full year 2024 adjusted net income of approximately $101,000,000 or $0.75 per diluted share.

We reported full year 2024 adjusted EBITDA of approximately $463,500,000 Now let's move to our initial financial guidance for 2025.

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.

Therefore, our initial guidance for 2025 reflects only the baseline of our current business. For the full year 2025, we expect net income attributable to GEO to be in a range of $0.74 to $0.88 per diluted share On revenues of approximately $2,500,000,000 and based on an effective tax rate of approximately 28% inclusive of known discrete items. We expect our full year 2025 adjusted EBITDA to be between $460,000,000 and $485,000,000 While our guidance does not include any assumption for new contract awards, that have not been previously announced [indiscernible] we anticipate several opportunities could materialize during the year. Which we believe would provide significant upside to our current forecast.

On a combined basis, we believe that these opportunities could generate as much as $800,000,000 to $1,000,000,000 in incremental annualized revenues and as much as $50,000,000 to $300,000,000 in incremental annualized adjusted EBITDA.

As we progress throughout the year, and the likelihood and timing of these opportunities become clearer, we will adjust our 2025 guidance accordingly. As contract awards are announced and we begin to reactivate idle facilities, we would expect to incur startup expenses during the initial sixty to ninety day activation period startup expenses for any facility activations not previously announced are also not currently included in our guidance. We expect total capital expenditures for full year 2025 to be between $125,000,000 and $145,000,000 including the impact of the $70,000,000 investment we announced in December, expand our ICE services capability.

Incremental $70,000,000 investment is comprised of the following. $47,000,000 to renovate existing secure service facilities dollars 9,000,000 of which was spent in 2024 with the remaining $38,000,000 expected to be spent over the first three quarters of twenty twenty five $16,000,000 to be spent evenly throughout 2025 to ramp up production and $7,000,000 to be spent primarily in the first half of twenty twenty five to expand our secured transportation fleet.

Now let's move to our capital structure. We ended the fourth quarter of twenty twenty four with total net debt of approximately $1,700,000,000 We closed the year with approximately $77,000,000 in cash on hand and approximately $214,000,000 in total available liquidity. As of the end of the fourth quarter of twenty twenty four, fixed rate debt represents approximately 75% of our total indebtedness which meaningfully insulates GEO for potential interest rate volatility. As we have previously noted, we have no substantial debt maturities due before April of twenty twenty nine.

We continue to give our company a significant runway to grow our business and focus on reducing our debt. Based on the initial guidance for 2025, expect to reduce our net debt by between 150,000,000 and $175,000,000 this year bringing our total net debt to approximately $1,550,000,000 by the end of the year. 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. In addition to allocating capital towards debt reduction, and to support our growth capital needs, our for returning capital shareholders in the future. At this time, I will turn the call over to our CEO, Dave Donahue, for a review of our GeoSecure Services business unit. Dave? Thanks, Mark, and good morning, everybody. It's my pleasure to have returned to the The Group. To join George and the rest of our management team at an unprecedented time in our company's history.

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.

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.

Moving to our annual milestones for Geo Secure Service. We renewed 13 secure service contracts. Including nine contracts at the federal level with Immigration Customs Enforcement and the U. S. Marshals Service.

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. 11 of our secure services facilities received accreditation from the American Correctional Association. An average score of 99.1% and another four facilities received PREA certifications.

Our GTI Transportation division and our GEO AAMI UK joint venture completed approximately 18,500,000 miles driven in The United States and The UK during the year. Moving to the current trends for our government agency partners.

During the fourth quarter of twenty twenty four, utilization at our U. S. Marshals Detention facilities was largely consistent with utilization during the fourth quarter one year ago. 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. Our U. S. Marshals facilities provide needed bed space near federal court houses.

There's generally a lack of suitable alternative detention capacity. In the first weeks of the administration, President Trump issued an executive order Reversing the prior administration's executive order, had directed the U. S. Attorney General to not renew U. S. Department of Justice contracts with privately contracted criminal have enjoyed a longstanding public private partnership with the U. S. Marshal Service, and the Federal Bureau of Prisons. We stand ready to continue to support their capacity and secure residential care services needs going into the future.

Utilization across our facilities is currently at approximately 15,000 beds. 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. GEO has a long standing track record of delivering professional support services on behalf of IAST a GEO contracted federal immigration processing centers, and we stand ready to support ICE with any additional needs.

GEO contracted ICE processing centers offer around the clock access quality healthcare services.

Our healthcare staffing at the ICE Processing Centers where we provide resident healthcare, is generally more than double the number of health in a typical state correctional facility. GEO contracted ICE Processing Centers offer full access to legal counsel legal libraries and resources and we have dedicated space at each eye center to provide residents with confidential meeting rooms with their legal counsel. GEO contracted The Processing Centers provide residents with three daily meals that are culturally sensitive, special diet appropriate and approved by registered dietitians. Also provide access to faith based and religious opportunities at each geo contracted ice processing center. And we've partnered with community volunteers as needed to ensure fair representation of various faiths and denominations. GEO contracted The Processing Centers also offer access to enhanced amenities. Including artificial turf soccer fields, covered pavilions, exercise equipment, and multipurpose rooms. During the fourth quarter of twenty twenty four, we renewed several important contracts for our company owned and contract [indiscernible] Contracts for our nineteen forty bed Adelanto ice processing center 400 bed Mesa Verde ice processing center seven fifty bed 700 bed Golden State Annex were renewed for five year terms through December of twenty twenty nine. [indiscernible] Additionally, in January of twenty twenty five, the United States District Court for the Central District of California lifted the long standing intake restrictions at the Adelanto Ice Processing Center dated back to the early days of the COVID pandemic. [indiscernible] We are proud of our approximately three fifty employees at the Adelanto Center.

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. As we announced this morning, we've been awarded a fifteen year fixed price contract for our company owned 1,000 bed Delaney Hall facility Newark, New Jersey. A total value of approximately $1,000,000,000 over the fifteen year contract period. [indiscernible] Moving to our ancillary support services, we currently provide primarily at 12 of the GEO contracted ICE The centers.

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. We have a long standing 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.

I could not be more excited to rejoin the GEO Group as its new CEO.

And to assist George and the entire GEO team unprecedented opportunities that lie ahead. At this time, I'll turn the call over to Wayne Calabrese, for a review of our GeoCare business unit. [indiscernible] Thank you, Dave.

I'm pleased to provide an overview of the key operational milestones for this past year for GEO Care division. In 2024, we renewed 31 with the Federal Bureau Prisons. Additionally, we renewed 44 nonresidential day reporting center contracts. During the year, our residential reentry centers non residential day reporting centers and ISAP offices successfully underwent a combined total of three eleven audits, including internal audits, government reviews, third party accreditations and Prison Rape Elimination Act or PREA certifications. Eight of our residential reentry centers received a 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. Our 35 residential reentry centers including 14 centers under contract, with the Federal Bureau of Prisons provide transitional housing and rehabilitation programs for individuals reattereng their communities across 14 states. Average daily census levels at these centers remained stable at approximately 5,000 individuals during the fourth quarter of twenty twenty four. 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. 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.

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. 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 located in seven different states, and engage over 36,000 program participants at 11 GEO Continuum of Care sites in seven states. Our in custody rehabilitation services include academic programs, focused on the attainment of high school equivalency diplomas. Made a significant investment to equip all of our classrooms with smart boards, to aid in the delivery of academic instruction. 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. 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. 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.

During 2024, we completed approximately six point eight million hours of enhanced in custody rehabilitation programming.

Our academic programs awarded more than 3,000 high school equivalence diplomas. Our vocational courses awarded close to 9,700 vocational training certifications.

And our substance abuse treatment programs awarded approximately 9,300 program completions. Those in our care achieved approximately 6,000 behavioral treatment program completions and more than 43,000 individual cognitive, behavioral treatment sessions during the past year.

We also allocated approximately $1,500,000 for post release services last year. This funding supported more than 3,300 as they return to their communities. 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. We believe our award winning program provides a proven model for how the two plus million people in The United States The justice system be better served in changing their lives. Our GEO Continuum of Care has had a positive criminal recidivism rates. With our programs achieving a reduction of between forty two percent and forty seven percent in recidivism over three and five year periods when compared to the national average. Finally, turning to our our BI subsidiary provides a full suite of monitoring and supervision solutions products and technologies. In the fourth quarter of twenty twenty four, participant counts under the ICE Intensive Supervision Appearance Program or ICE averaged approximately 183,000 and the current ISAP participant count is approximately 186,000. BI has provided technology solutions, holistic case management supervision, monitoring and compliance services under the ISAP contract for nearly twenty years, winning every competitive rebate of the contract since ISAP was first established.

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, 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. At this time, we've not received any update from ICE regarding the timing of a [indiscernible] for the rebate of the ISAP contract we believe the agency focus has shifted to increasing the size of population that is currently being monitored under ISAT.

We are making a significant investment toward the increased production of GPS tracking devices to be in a position to scale up the federal government's current utilization of the ISAT program by several hundreds of thousands and upward to several millions of participants if necessary.

At this time, I'd like to turn the call back to George for closing remarks. Thank you, Wayne. And we wish you the best as you transition from a full time employee to consultant effective April 1. Your unique talents will be missed by all but we look forward to your continued involvement a consulting basis. We believe our company faces an un in supporting President Trump's new administration policies. We've taken several important steps to be prepared to meet that opportunity. We've made significant investments commitments of $70,000,000 and possibly more to strengthen our capabilities to deliver capacity, secure transportation and electronic monitoring services to ICE and the federal government. Have also completed a reorganization of our senior man The GEO is the largest single contractor to ICE with four decades of partnership and currently provides for approximately 40% of the detention beds for ICE. We believe we are well positioned to scale up our secure residential housing from the current 15,000 beds to over 31,000, 32,000. [indiscernible] 100% management of the The 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.

GEO's contractual relationship with CSI Aviation has allowed us to become the largest provider of secure transportation services for ICE. During 2024, we assisted The the 60,000 persons.

We believe we can scale up materially for domestic and international travel for up to 500,000 individuals or more if called upon. This is a unique moment in 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. With the unprecedented volume of new business opportunities confronting GEO, I am inclined to stay beyond the end of my present 2026. And have so notified the Board The.

I will offer the continuation of my services to the Board under a new new mutually agreeable employment agreement. That completes our remarks and we would be glad to take any questions.

Thank you. We will now begin the question and answer session. The first question today comes from Jason Weaver with Jones Trading. Please go ahead.

Hey, good morning guys. This is Matthew Ordner 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 what all does that include in terms of monitoring The? The role it's going to take? And then kind of looking forward to the new contract, are you guys assuming any changes in the economics there?

I think our reading of the act is that those individuals need to be placed in detention And if there isn't capacity for that, they need to be continued in the [indiscernible] [indiscernible] That's helpful there. And then turning to the subsidiary The Inc. Are you guys prioritizing ankle or risk monitors over the SmartLink app And have you guys experienced any supply chain issues there as you guys have been expanding the footprint?

I think there's going to be a preference in the beginning for the ankle monitors. Which represents the high security level of monitoring which people can progress or degrasse into medium level security and low level security depending with different devices contributing to the monitoring.

Got it. And then The retail awards that sorry about that, go ahead. Second part, no, we have it really identified any supply chain difficulties we are ramping up our inventory of ankle monitors at our Boulder, Colorado facility.

Okay. That's helpful there. And then then the REITA report that came out of the current administration about migrants being forced to register Do you think that that has an outsized demand on a potential increase for monitoring? And then as a follow-up to that, kind of the guidance for $800,000,000 to an incremental $1,000,000,000 in revenue there. What percentage of that is the monitoring segment Yes. So let me jump in on The the $850,000,000 to $1,000,000,000 above $250,000,000 that's correct. About $250,000,000 But that's based on a participant count of approximately $450,000 So if it goes beyond that, which we think it will sometime next year, It will be more.

Got it. That's helpful. Thank you, guys.

The next question comes from Jay McCanless with Wedbush. Please go ahead.

Hey, good morning. Thanks for taking my questions. So just wanted to clarify that. So you're saying of the $800,000,000 to $850,000,000 to $1,000,000,000 in incremental revenue roughly $250,000,000 of that is going to come from ATD with a participant count of 450,000 Did I get all that correctly?

Yes. So just a point of clarification, what we've said is If we look back to two years ago, we had participant counts of approximately 370,000 If we would grow our current participant counts to $370,000 that would generate incremental $250,000,000 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 $250,000,000 Okay, great. Thank you for clarifying that.

And then the if I think about the $16,000,000 that you're spending, I guess $450,000 I guess is what you think you could monitor with All right. That you have. I guess how much more does that $16,000,000 take you to? Is it $550,000,000 $650,000,000 The should we think about the outcome of that spend is going to be?

Well, the $16,000,000 that we're investing as George The, what we're doing is we're investing in building additional inventory of GPS devices to monitor in preparation of monitoring higher accounts. And a lot of that has to do with ankle monitoring. We're We're vertically integrated there. We've designed the ankle monitor. We purchased it and we manufacture in our facility. So what we've done and that started in the The quarter, we started to build the inventory and procure additional materials in anticipation of that end that $16,000,000 that we mentioned as part of our $70,000,000 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 there are three security levels in The we've proposed now in this program. The highest is [indiscernible] followed by medium security and then low security. We don't know exactly how those three buckets will be filled by the new administration as they review their congressional directives and responsibilities balanced by the funding to achieve those contracts. So responsibilities. So we haven't done an inventory for all 450,000, not yet. We're building a big initial inventory because ICE is kind of 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. So people are just coming back to the office, starting to regroup, thinking through how are they going to achieve these new objectives, these new congressional directives and responsibilities. As we talked Earlier, the Senate version of the budget is providing $170,000,000,000 quite a bit of money. And the House version, I think, is approximately 100,000,000,000. So as those two bills that are competing between the House and the Senate The, it could be a number somewhere in between those two. But it's it's a big leap and it can't happen overnight.

People have to be assigned within the ICE organization, to identify the [indiscernible] the possible participants in the ISAT program we would need contract adjustments to pay for the additional costs, which we will will be reimbursed but all of that is in kind of a fluid situation, which is picking up pace. If I'm I may say. We've gone from Conceptual proposals by major service providers like ourselves in CoreCivic to now substantive pricing and operational discussions as to who's going to go into this facility, how much is it going to cost, but there is interest in every one of our idle facilities. By either ICE or the Marshals Service. And I would think that CoreCivic's idle facilities would get the same level of attention. But the procurement process is moving at a speed that's unprecedented. We've never seen anything like this before.

That's good to hear. I mean, I guess, to follow on that point, have you all been surprised at how slowly the ISAT numbers have moved up since the administration took over?

Well, I think there's probably a couple of answers to The. One of which is The focus on detention. And the identification of alternative detention venues like Guantanamo. Which seems to have some difficulties 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 sixty or ninety days.

That's the fastest approach to increasing detention capacity. I don't think anything else comes close to that is probably double the time And I think we're very cost competitive with any kind of alternative service.

I guess if you think about the different opportunities you have for revenue growth, You called out a little bit on The halfway homes with the first The.

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?

As we know it and see it today, but we believe that that the Department of Justice under the administration of Pam Bondi is very much interested in increasing the number of reent [indiscernible] improving the rehabilitation programming at those facilities. So we think there will be a lot of activity in the reentry program We are the largest provider in that [indiscernible] Great. And then final a final candidate has not been proposed for the Bureau of Prisons as yet. So they're still reviewing potential candidates.

Understood. And then just one more question back to monitoring for a sec. If you did start to see a rapid increase in people going through monitoring. What do you think the upside cases in terms of how many people you could monitor with your current infrastructure? Have you tried to stress up Well, we know we can do several hundred 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.

The next question comes from Greg Gibas with Northland Security. Please go ahead.

Hey, thanks for taking the questions. I wanted to ask what your expectations are for ICE's use of the Adolanto facility now that that court order limiting utilization before was lifted? Well, the court order is in two The, I think, under the first ruling we have the authorization to utilize, I think, four sixty or 70 beds. Something like that. And there's a hearing Next month, the middle of next month, that will Presumably, authorize the complete utilization of the facility. Under the new COVID standards. So that's almost a 2,000 bed facility. It's the largest facility on the West Coast our Delaney Hall facility will be the largest facility on the East Coast. For ICE. Got it. That's helpful. And I guess as it relates to Delaney Hall, 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? [indiscernible] [indiscernible] process But the other facilities will require the employment including Delaney, of about 3,000 people, 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. We haven't put the revenue in the budget because the contracts are not signed yet. We haven't put the start up costs because we don't know the timing of those startup costs.

I think here we are at the end of the first quarter I think we're anticipating a very fast ramp up at procurement activity where I think there'll be several Contract awards very possibly next month. By the end of the first quarter, But 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.

The realistic activation of these facilities, ours and CoreCivic will probably be the second half of the year. And it will be on a ramp up basis and there will be significant [indiscernible] For our 3,000 employees and CoreCivic's approximate 3,000. So that's 6,000 employees that have to be recruited, screened, for criminal history, job history and then put into a four week training program. And I would just add, we haven't been specific around what the cost per bed of reactivating a facility. But what I can tell you is when we activate those facilities in the back half of the year, and we start to generate revenue and fill the populations there, it there's no doubt it will be significantly accretive from a profitability standpoint.

So as George said, thirty to sixty, ninety days, we got to hire people, we got to train people, It's a cost but the benefit from the reactivation well exceeds any of those reactivation costs. Delaney Hall is a bit unusual because it's done, it's complete. And everything is brand new inside the facility. And all it's ready to go. All we need to do is the recruitment the The, the background screening, and the training.

Great. That's very helpful. Facilities may have be in different The are in different conditions. Some have been idle longer than others, [indiscernible] Capital requirements. It's in perfect shape.

And so we can open up the rest of the facilities up The, 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, D. Rowe James in Georgia, Rivers in North Carolina. [indiscernible] it's interesting that all of those facilities are former BOP facilities. That were The became idle because of 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 in both Marshalls because they're primarily sell facilities.

And they're I think there are in high demand at this time.

Right. That makes sense and very helpful.

I guess lastly, as it relates to your commentary on the $250,000,000 to $300,000,000 incremental EBITDA off of the $800,000,000 to $1,000,000,000 in revenue. Kind of over what period would we expect to see this this? Will we see these rolling in post funding like 2025 or more 2026?

Let me just jump in here and George can provide some commentary. I think we've been pretty consistent in stating that we expect the first half of twenty twenty five to be relatively consistent with 2024, and start to see the benefits of these contract awards taking into effect in the back half of twenty twenty five. As we stated before, the full benefits of reaching the full potential we expect to see in 2026. And so the benefits will start to bear fruit in the back half of 'twenty five. And then we should be with the timelines of activating facilities within ninety days and the contracting that we talked about, we think the full operational benefits from a financial standpoint will take place in 2026.

Got it. Very helpful. Thanks.

Thanks. The next question comes from Brennan McCarthy with Sidoti. Please go ahead. Great.

Good morning, everyone. Thanks for taking my questions. Just wanted to start off on the detention side. I know last earnings call The was a discussion around think it was $400,000,000 in incremental annualized revenue opportunity from the reactivation of 18,000 beds But now this quarter, it sounds like that shifted up to the $5,000,000 $600,000,000 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 I would say that we've 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 The of our previous statements. 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 Ohio facility set up here. So I just think it's more clarity as we've spent more time modeling the business case opportunities. I would just add that The numbers we're talking about are numbers related to our own facilities. We are looking at other facilities that are owned by third party individuals and there's a few of The.

So none of our present numbers include those potential additional facilities.

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 maxing out detention utilization and population levels and then ramping up, ATD population levels? Or do you think that process be more guess, simultaneous 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 bps. Before you possibly consider Repurposing some of the idle Bureau of Prisons facilities. If you're trying to get to 100,000, adjust the organic market place is only capable of 75 or 80,000 beds, I think, at this time before you consider soft sided facilities, as well as possibly repurposing and managing presently idle BOP facilities, which can get you to the 100,000 The.

Great. Thanks. I guess just to clarify, I The, with the alternative to detention program, the ISAP contract, guess do you ultimately see maybe a lag there with population increases while detention ultimately takes the priority? [indiscernible] We think The ISAT program has a separate team of individuals. They're not part of the detention team. But I think, the first The and they're ready to respond [indiscernible] a fairly significant ramp up individuals on on ISTAP. And I think the initial preference will be on angle monitors for high security and allowing them to to step down to lower security levels in the future but remain on ISAP 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, approved to stay in The U. S. The would be scheduled for for deportation. So one of the criticisms of the The program is that people have stayed on it a few months and then they don't show up for their hearings. Well, the solution to that is continue their participation and monitoring under the ISAF program until they do go to their hearing. And there is a decision on their case.

One way or the other, either they get to stay or they have to go. That's the solution. Continue the individual's participation in the ISAT program until their deportation decision is made in the positive or in the negative.

Got it. That's helpful. That's all from me. Thanks.

Thank you. The next question comes from Joshua Zofel with Noble Capital Markets. Please go ahead.

Hey, good morning. I'm filling in for Joe.

Good morning.

Hey, so obviously in your prepared remarks, you kind of touched on the idle facilities having some interest. Are The discussions really gaining any traction maybe could we see idle facilities being activated in 2025, maybe just early twenty twenty six?

Can you repeat The again? We [indiscernible] Sure. You guys touched kind of on the prepared remarks, you guys were having some conversations with ICE and the Marshals The are those kind of discussions really gaining any traction? Could we kind of see those idle facilities I think the likelihood that is that All of our idle facilities will be activated in 2025. Yes. To be a little bit more specific, we think that the contracting of the of the additional detention beds will all take place in 2025 It doesn't mean that that they'll be all fully populated by the end of twenty twenty five, but we'll be all of that contracting should be done as we said before, so that we reap the full benefits in 2026 and get some of the benefits in the back half of this year. Even a longer view of the funding battles 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 activating the facilities But I think we're hopeful, I think the administration is hopeful that the sense of awareness of how much money is available will occur early in the second quarter The to allow actual contracting to take place Early or mid second quarter.

Okay. That's helpful.

Obviously with the ICE investment you guys kind of broke out the capital expenditures over 2025. And everything else like that. Just in terms of like the sale of facilities first off, how close are you in any of those sales And furthermore, looking at that investment, when it's broken out, it kind of seems like it's about roughly around $21,000,000 of the first three quarters of twenty twenty five.

That kind of a fair assessment Well, his first question is Can we provide more detailed update on the sale process? Well, one of the facilities which is in the public domain is the our Lawton Oklahoma facility. It's a very large facility. Our facilities are generally the largest facilities in any 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 a public request of As to the purchase of the facility, a an appraiser has been assigned and they're they're in I think they're They've made a lot of progress in their appraisal work and we expect Their assessment by next month.

Okay. That's helpful. And, yes, obviously The, that investment over 2025, yes, it seems like a calc it's about $21,000,000 over the first February. I'm that sounds about right. To you guys. The does. Yes, okay.

Perfect.

And then lastly, you guys might have gone over this in the prepared remarks and I apologize I missed it, but it seems like you had a pretty substantial NOI increase really The the managed 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? Is it On the managed only, I think we've 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 [indiscernible] 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 that. We've done we think is the right operational thing to do and increase wages to higher levels to handle what is increasingly a higher security level of people in state facilities. I think to the extent they could, they've released minimum security prisoners as much as they could. That really left medium and high security individuals that we're dealing with now and 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 given the operational challenges, but we are asking for reimbursements for additional funding from our state clients in several states.

Okay. That's helpful. Yes. Thank you guys for taking my questions. Thank you.

The next question comes from Jordan Himmelwitt Philadelphia Financial. Please go ahead.

Hey guys, thanks for your questions. First of all, has there been any Bureau of Prison population shifted over and or do your numbers include any shift? And if I remember correctly, the peak was like 7% to 10% of the population with Bureau of Prisons. In like 1914, 1915?

Well, we are not in communications with the Bureau of Prisons because a new director has not been appointed. We are awaiting that final decision and then we would be approaching them on what opportunities exist within the BOP The the probability that most of our idle most, if not all of our idle facilities will have been contracted to other agencies. Where we think we can be helpful is if they do a consolidation play in some of their facilities, we could take over one of their facilities that they decide to empty 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. So there are some opportunities The we're looking at, but the timing on that is a little bit further out. [indiscernible] Appointment of a new BNP Director. But what you're saying is if for some reason there's a delay in ICE or Marshalls, BOP is another option that we haven't factored into the equation at this Yes. But I think all of our remaining six idle facilities will be contracted. As I hopeful by the end of the second quarter.

And my second question is, I mean everybody 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 amenities I mean, if God forbid you're thrown to El Salvador or some other The place, I mean, you have no representation or rights 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 in package, so to speak, and it may make the cost effectiveness of your facilities much better than an international [indiscernible] We have four decades of experience with ICE and Marshalls. So The 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 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 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 The.

Rather than just releasing them within their own It depends on the security level of the individuals that are deported to these cooperating countries.

And I'm sure there's got to be fair amount of lawsuits springing up to prevent that option from even occurring because if you're The, you don't have that legal representation or rights to repeal that. Or it becomes much tougher. So I mean The may not even become an option. So to speak, We don't know if that's The policy decision, the White House The well as DHS and ICE.

Okay. Thank you. Thank you. [indiscernible] concludes our question and answer session. I would like to turn the conference back over to George Dooley for any closing remarks.

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 quite a bit going on in our company and the opportunities that we we're looking at, which are completely unprecedented. And we're proud to be in partnership with ICE and the The Services and hopefully with the BOP as well [indiscernible] play a significant role in the new immigration policies under this new administration.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [indiscernible] [indiscernible]