Geo Group Inc (The) REIT

Good day and welcome to the GEO Group third quarter 2023 earnings conference call. All participants will be in a listen-only mode. If 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 touchtone 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 Paella, 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 Third Quarter 2023 Earnings Results. With us today are George Loli, 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 third quarter 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 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 Zolle. George?

Thank you, Pablo, and good morning to everyone. Thank you for joining us on our third quarter 2023 earnings call. I'm joined today by our senior management team to review our third quarter financial results, discuss our financial guidance for the balance of the year, and our continued focus on debt reduction, and provide an update on the trends for each of our business segments. This morning, we reported third quarter revenues of approximately $603 million, GAAP net income of approximately $24.5 million, and adjusted EBITDA of approximately $119 million. Our diversified business units continue to deliver steady operational and financial performance. During the third quarter, our Secure Services Business Unit renewed several important contracts. At the federal level, we renewed two direct contracts with the U.S. Marshals Service. One was at our company-owned 1,900-bed Rio Grande Processing Center in Texas for a five-year term, and the second was at our company-leased 770-bed Western Region detention facility in San Diego for a two-year term. We also renewed three contracts with ICE for respective one-year terms that include our company-owned 700-bed Broward Transitional Center in Florida, our company-owned 1,904-bed South Texas ICE Processing Center, and our company-owned 1,314-bed Montgomery Processing Center in Texas. Populations across our ice processing centers have continued to steadily increase. Since the beginning of July, we've experienced approximately a 30% increase, particularly in our central and western regions. At the state level, we recently renewed our management-only contract in the state of Florida for the 2,000-bed Blackwater River Correctional Rehabilitation Facility for a two-year term. During the third quarter, our geo reentry services division also renewed seven existing contracts for our residential entry centers and six existing contracts for our non-residential day reporting centers. Our third quarter results reflect an increase in our GTI secure transportation revenues. This increase was primarily driven by our new emergency contract to provide air operations in support for ice. This contract could generate up to $16 million in total revenues if it runs for its full term of nine months. The multi-year procurement for these services remains under bid protest, and we hope to continue to be a strong contender for a long-term contract award in the future. Internationally, our third quarter results reflect a sequential increase in revenues due to the activation of our new contract to deliver health care services across public prisons in the state of Victoria in Australia. Turning to our electronic monitoring and supervision services segment, the number of participants in the federal government's intensive supervision appearance program, or ISAP, has remained relatively stable since early August at approximately 192,000 to 195,000 individuals. While the ISAF participant count has remained largely stable over the last three months, we have not experienced the moderate increase beginning in the fourth quarter that was contemplated in our previously issued financial guidance. We believe that ICE continues to face budgetary pressures and the timing of the passage of appropriation bills in Congress remains uncertain. Given these factors, our tightened financial guidance range for the fourth quarter now assumes the ISAF participant counts will be flat to slightly down for the balance of the year. The federal government is currently funded under a short-term continuing resolution which expires on November 17th, and Congress has yet to reach an agreement on the appropriation bills to fund the government in fiscal year 2024, which began on October 1st. We estimate the ICE detention census is presently at approximately 39,000. The Senate version of the Homeland Security Appropriations Bill keeps funding for ICE at the current level of 34,000 beds and slightly increases the overall funding available for the alternative to detention programs. The current version of the House Homeland Security Appropriation Bill would increase ICE beds to 41,000 and includes a provision that would require the use of ISAP electronic monitoring capabilities for all individuals in the non-detained docket for the entire duration of their proceedings. Additionally, the White House has submitted a supplemental appropriations request to Congress, which we believe includes additional funding for ICEBEDS and the Alternatives to Detention Program. If Congress is unable to reach an agreement within the next 10 days, the federal government could once again be funded under a short-term or long-term continuing resolution, or face the prospect of a government shutdown. 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 continuing our efforts to market our current idle facilities to federal, state, and local government agencies. As has been publicly reported, several counties across the country are experiencing overcrowding challenges in their local jails, and some of these jurisdictions are exploring the potential use of private sector facilities to address these challenges. We believe that our modern, well-located facilities could generate significant increased annualized adjusted EBITDA if they are reactivated, either under geomanagement or leased to local, state, or federal agencies. Finally, we remain focused on reducing our net debt, which is a key strategic priority for our company. During the third quarter, we reduced our net debt by approximately $109 million and are at $1.8 billion in total net debt presently. Our objective is to continue reducing net debt by approximately $175 to $200 million per year in the future. We also remain hopeful that we will be able to refinance portions of our debt at the earliest possible time. I will now turn the call over to Brian Evans to address our financial results and guidance in more detail.