Geo Group Inc (The) REIT

Good day and welcome to the GEO Group third quarter 2024 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 your 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 GeoGroup's Third Quarter 2024 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, Mark Suchinski, Chief Financial 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 the supplemental disclosure that we issued this morning. Additionally, much of the information we will discuss today, including the answers we may 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 security 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 third quarter 2004 earnings call. I'm pleased to be joined today by our senior management team, During today's call, we will review our third quarter 2024 financial results and operational highlights for our business segments. We'll provide an update on our efforts to pay down debt, reduce leverage, and enhance long-term value for shareholders, and discuss our updated financial guidance for the fourth quarter and full year for 2024 and our potential future growth opportunities. Our financial performance during the third quarter was largely consistent with our results for the second quarter. This performance was below our third quarter expectations, largely driven by the lower-than-expected revenues in our electronic monitoring and supervision services segment. Participant counts under the Federal Government's Intensive Supervision Appearance Program, or ISAP, have averaged approximately 177,000 during the third quarter, compared to an average ISAT participant count of approximately 184,000 during the second quarter of 2024. After reaching a low participant count of approximately 174,000 in the third quarter, the daily ISAT participant count now has been steadily increasing and currently stands at approximately 182,500. With respect to our ice processing centers, utilization across our facilities remained largely consistent during the third quarter at approximately 13,000 beds and is currently at 13,500 beds. This utilization level during the third quarter represents an increase of approximately 11% from the end of the third quarter one year ago. However, it has remained relatively flat over the last three quarters. Based on the most recently available public data, in September of this year, the utilization across all ice facilities nationwide was approximately 37,000 beds. This level of utilization is below the 41,500 beds that are funded under the short-term continuing resolution that is due to expire on December 20th. Similarly, we believe the ISAP contract utilization is likely below the level that could have been supported under the continuing resolution funding approximately $470 million for the agency's alternatives to detention programs. While it is possible for ICE detention and ISAP utilization rates to further increase this year, we've decided to update our fourth quarter guidance to be largely consistent with our third quarter results. With respect to federal funding after the expiration of the continuing resolution on December 20th, we believe it is likely that Congress will extend the continuing resolution until sometime after the new presidential administration takes office. At that point, we would expect the new Congress to consider appropriation bills to fund the federal government for the balance of the fiscal year. As a reminder, while the U.S. Senate has not previously introduced appropriation bills for the current fiscal year, the previous version of the House Homeland Security Appropriations Bill would have increased ICE detention funding to support the utilization of 50,000 beds. This would have represented an increase of 8,500 beds from the currently funded level of 41,500 beds. The bill would have also required the use of electronic GPS monitoring for all individuals in the non-detained docket, which is currently estimated to be more than 7 million people. We expect the incoming Trump administration to take a much more aggressive approach regarding border security as well as interior enforcement and to request additional funding from Congress to achieve these goals. We stand ready to provide additional services and resources to help ICE meet its future needs. In our secure services segment, we have approximately 10,000 beds at six company-owned, currently idle facilities that we believe could be well-suited to support future federal government bed space needs. We also have approximately 8,000 empty beds already under contract that could be utilized, which would bring our total existing capacity to over 31,000 beds. We believe we have the necessary technology and staffing resources to scale up the the current utilization of the ISAP contract by several hundreds of thousands and upward to several millions of participants. Additionally, we are a leading provider of secure ground and air transportation services to the federal government, and we believe we have the capabilities to scale up these services as needed. We are currently responding to a procurement that was issued by ICE for a federal immigration processing center with a minimum of 600 beds in the Newark, New Jersey area, which is expected to result in a 15-year contract to be awarded by the end of December. We believe we are well-positioned to respond to additional procurements in the future across the spectrum of diversified support services that we currently provide on behalf of ICE. Finally, we remain focused on reducing our debt deleveraging our balance sheet and gaining the flexibility of potential capital returns to our shareholders in the future. Year-to-date, we have reduced net debt by approximately $92 million, bringing our total net debt below $1.7 billion and our net leverage to approximately three-point times adjusted EBITDA. We are on track to reduce net debt by an additional $20 million in the fourth quarter, of this year, which would bring our total net debt to approximately $1.67 billion by year end. I will now turn the call over to our CEO, Brian Evans.