Geo Group Inc (The) REIT

Good day, and welcome to the GEO Group second quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President of Corporate Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for today's discussion of the GEO Group's second quarter 2023 earnings results. With us today are George Zoli, Executive Chairman of the Board, Jose Gordo, Chief Executive Officer, Brian Evans, Chief Financial Officer, Wayne Calabrese, Chief Operating Officer, and James Black, President of GeoSecure Services. This morning, we will discuss our second quarter results as well as our outlook, and we will conclude the call with a question and answer session. This conference call is also being webcast live on our 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 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-K, 10-Q, and 8-K reports. With that, please allow me to turn this call over to our Executive Chairman, George Zoli. George?

Thank you, Pablo. Good morning to everyone, and thank you for joining us on our second quarter 2023 earnings call. I'm joined today by our senior management team to review our second quarter financial results, discuss our financial guidance and debt reduction objectives, and provide an update on the trends for each of our business segments. This morning, we reported quarterly revenues of approximately $594 million, gap net income of approximately $30 million, and adjusted EBITDA of approximately $129 million. all of which were ahead of the midpoint of our previously issued guidance for the second quarter of this year. Our second quarter results reflect stable performance from our Secure Services Business Unit and our Geo Reentry Services segment. Geo Secure Services recently renewed contracts for the 2,000-bed Blackwater River Correctional Facility in Florida and the 2,682-bed Lawton Correctional and rehabilitation facility in Oklahoma. And Geo Reentry Services recently renewed 15 existing contracts for our residential reentry centers and 12 existing contracts for our non-residential day reporting centers. During the second quarter, we reactivated our 1900-bit Great Plains Correctional Facility under a new lease agreement with the state of Oklahoma. The new lease has initial term of five and a half years with subsequent unlimited one-year options, and is expected to generate annual straight-line lease revenue of approximately $8.5 million. Our GTI Transportation Division also recently entered into an emergency contract to provide air operations support for ICE, which is expected to generate up to approximately $16 million in revenues over a nine-month period, assuming the contract runs through its full term. We hope to continue to be a strong contender for the currently active procurement of the multi-year contract for these services, which presently remains under bid protest. Our diversified business units delivered overall strong operational and financial performance during the first half of 2023, despite some headwinds in our electronic monitoring and supervision services segment. As we have previously discussed, the number of participants in the federal government's intensive supervision and appearance program, or ISAF, has declined since the beginning of this year. However, we have recently seen a slower rate of decline in ISAF participants. Additionally, we believe that recent policy decisions could result in an increase in the number of participants being enrolled in ISAT. While the decline in ISAT participants continued throughout July and early August, which was longer than we previously estimated, we continued to believe that the ISAT participant count is likely to stabilize and then to begin to increase moderately. With respect to our ICE processing centers, have experienced a 20% increase in population since early May. Our occupancy rates remain below historical levels. As it relates to the federal budget for fiscal year 2024, which begins in October 1st, the House of Representatives approved their version of the Homeland Security Appropriations Bill in June. The House bill would increase beds to 41,000 and includes a provision that would require the use of ISAP monitoring capabilities for all individuals in the non-detained docket for the entire duration of their immigration proceedings. In July, the Senate approved its version of the Homeland Security Appropriations Bill, keeping funding for ICE beds at the current level of 34,000 beds, and slightly increasing the overall funding available for alternatives to detention programs. Congress adjourned for their August recess without an appropriations deal in place. If a new budget is not approved when Congress reconvenes, Congress could, as we've seen in prior years, approve funding for the federal government in federal fiscal year 24 under a short-term or long-term continuing resolution. We believe that under a continued resolution, ICE is most likely to be provided appropriations consistent with the agency's current funding levels for 23. We are continuing to monitor the congressional appropriations process and remain focused on providing high-quality services on behalf of DHS and ICE. We are also continuing our efforts to market our current EIDL facilities to federal and state government agencies. With the recent activation of our Great Plains facility, we now have approximately 9,000 EIDL-owned beds in our secure services segment, primarily comprised of five former Federal Bureau of Prisons facilities. We believe that these modern, and well-located facilities could generate significant incremental annualized adjusted EBITDA if they were to be reactivated either under geo-management or leased to state or federal agencies. Our management team also remains focused on reducing our net debt, which is a key strategic priority for our company. As we have previously discussed, our objective is to reduce net debt by approximately $175 million per year on average over the next two years. And we remain hopeful to be able to refinance portions of our debt potentially in the next 12 to 18 months. I will now turn the call over to Brian Evans to address our financial results and guidance in more detail.