Geo Group Inc (The) REIT

Good day and welcome to the GEO Group fourth quarter 2023 earnings conference call. All participants will be in 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 your telephone keypad. To withdraw your question, please press star then two. Please note today's 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 fourth quarter and full year 2023 earnings results. With us today are George Zoli, Executive Chairman of the Board, Brian Evans, Chief Executive Officer, Wayne Calabrese, President and Chief Operating Officer, Shane March, Acting Chief Financial Officer, and James Black, President of GeoSecure Services. 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 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 as 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-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, and good morning to everyone. Thank you for joining us on our fourth quarter 2023 earnings call. I'm joined today by our newly reorganized senior management team, including our new CEO, Brian Evans, our new president and chief operating officer, Wayne Calabrese, and our new acting chief financial officer, Shane March, along with our president of GeoSecure Services, James Black. While Brian, Shane, and Wayne are new to their positions, they have each been with the company a long time. During today's call, we will review our fourth quarter financial results for 2023, recap the annual operational milestones for each of our business segments, provide an update of our continued efforts to reduce debt and deleverage our balance sheet, and discuss our initial financial guidance for 2024, which includes a range of assumptions primarily related to the ongoing federal budget discussions in Congress. During the fourth quarter of 2023, our diversified business units continued to deliver strong operational and financial performance. This morning, we reported fourth quarter 23 revenues of approximately $608 million and GAAP net income of approximately $32 million. We also reported fourth quarter 23 adjusted EBITDA of approximately $129 million, which represents a sequential increase of 8% from the third quarter of 2023. During the fourth quarter, our security services business unit renewed two important contracts at the federal level. In Colorado, we renewed our contract with ICE for the provision of the company-owned 1,532-bed Aurora Ice Processing Center and associated secure support services for a one-year term. In California, we renewed our contract with U.S. Marshals for the provision of secure support services at the government-owned 512-bed El Centro detention facility for a two-year term. At the state level, we received a two-year renewal of our lease agreement with the state of New Mexico for our company-owned 600-bed Guadalupe County Correctional Facility, which is managed by the New Mexico Corrections Department. Additionally, our Geo Reentry Services Division renewed five residential reentry center contracts at the state and federal levels during the fourth quarter of 2023. Looking at our key quarterly segment trends, our fourth quarter 2023 results reflect a year-over-year increase in our secure transportation revenues and in our international revenues. The increase in our secure transportation segment was primarily driven by our new contract to provide air operation support for ICE, which was activated in the third quarter of 2023. Internationally, the increase in revenues was due to our new contract to deliver healthcare services across public prisons in the state of Victoria in Australia, which was also activated in the third quarter of 2023. Moving to ICE, average daily populations across our ICE processing centers increased by approximately 18% during the fourth quarter of 2023. Since the end of the year, ice populations in our facilities have remained relatively stable at just over 13,000 beds. Currently, we estimate that the census across all ice facilities nationwide is approximately 38,500. With respect to the federal government's Intensive Supervision and Appearance Program, or ISAP, participant counts remain relatively stable during the fourth quarter of 2023 in a range of approximately 190,000 to 195,000 individuals. The current ISAF participant count is approximately 187,000. We believe that ICE continues to face budgetary pressures and the outcome and timing of ongoing federal budget discussions in Congress remains uncertain. Since October 1st, the Department of Homeland Security and ISAF funded under a short-term continuing resolution which has been extended twice and is currently set to expire on March 8th. Last week, a group of U.S. Senators released a proposed supplemental appropriations bill which included additional funding for border security. However, that bill was voted down by the full Senate. The bill have provided funding for 50,000 ICE detention beds, which represents an increase of 16,000 beds from the current funding level for 34,000 beds. Additionally, the bill would have increased the annual funding for alternatives to detention programs to approximately $1.3 billion from the current funding level of $440 million. If Congress is unable to reach an agreement on appropriations package prior to March 8th, the federal government could continue to be funded under a continued resolution or face the prospect of government shutdown. Given this uncertainty, we have provided our initial guidance for 2024 with a range of assumptions which Brian and Shane will discuss in more detail. As we've expressed to you in the past, decisions related to federal funding levels and related policies are outside of GEO's control as a service provider to the federal government. While we will continue to monitor the congressional appropriations process, our focus remains on providing high-quality services on behalf of DHS, ICE, and all of our clients. We also remain focused on reducing our net debt, which continues to be a strategic priority for our company. In 2023, we reduced our net debt by approximately $197 and ended the year with less than $1.8 billion in total net debt. The debt reduction represents substantial progress towards our objective to deleverage our balance sheet and position GEO to explore options to return capital to shareholders in the future. I will now turn the call over to our new CEO, Brian Evans.