GEO Group Shares Soar On Solid Q2, Raised FY22 Outlook

Geo Group Inc GEO reported a second-quarter revenue increase of 4% year-over-year to $588.18 million, beating the consensus of $561.5 million.
The operating income increased by 31.3% Y/Y to $95.07 million, and the margin expanded by 336 bps to 16.2%.
Adjusted EPS improved to $0.42 from $0.41 a year ago. AFFO per share was $0.69 compared to $0.71 a year ago.
Adjusted EBITDA increased by 11.8% Y/Y to $132.34 million, and margin expanded by 157 bps to 22.5%.
GEO had ~$587.9 million in cash and cash equivalents as of June 30, 2022.
George C. Zoley, Executive Chairman of GEO, commented, "Our diversified business units have delivered robust results over the last two years, which has allowed us to reduce our net recourse debt by approximately $375 million since the beginning of 2020, significantly deleveraging our balance sheet."
The has increased FY22 guidance despite the expected interest expense increase and issued guidance for the third and fourth quarters of 2022.
3Q22 Outlook: GEO expects quarterly revenues of $603 million - $608 million (consensus $555.8 million).
AFFO to be $0.55 - $0.57 per diluted share and Adjusted EBITDA to be $131 million - $138 million.
4Q22 Outlook: The company sees quarterly revenues of $600 million - $605 million.
AFFO to be $0.52 - $0.56 per diluted share and Adjusted EBITDA to be $127 million - $135 million.
FY22 Outlook: The company expects annual revenues of ~$2.35 billion (prior view $2.2 billion) vs. the consensus of $2.22 billion.
It sees Adjusted EPS of $1.28 - $1.34 (prior view $1.17 - $1.27) and AFFO per share of $2.40 - $2.46 (prior view $2.30 - $2.40).
GEO expects adjusted EBITDA of $515 million - $530 million (previous view $453 million - $471 million).
Price Action: GEO shares are trading higher by 10.4% at $7.22 on the last check Tuesday.

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