Security Company GEO's Q3 Miss: Lower ISAP Participants Offset By Strategic Contracts

The GEO Group, Inc. GEO shares are trading higher after the company reported third-quarter revenue of $603.1 million, missing the consensus of $613.26 million.

Adjusted EBITDA declined to $118.6 million from $118.7 million a year ago quarter. Adjusted EPS of 21 cents came below the consensus of 24 cents.

Third-quarter results show lower-than-expected revenue in the Electronic Monitoring and Supervision Services segment due to a decline in participant counts under the federal Intensive Supervision Appearance Program (ISAP).

Notably, Average ISAP participant counts were around 177,000 in the quarter, down from 184,000 in the second quarter of 2024.

George C. Zoley, Executive Chairman of GEO, said, “We have 18,000 available beds across contracted and idle secure services facilities, which if fully activated, would provide significant potential upside to our financial performance. We also believe we have the necessary resources to materially scale up the service levels in our ISAP and air and ground transportation contracts.”

The company’s total net debt was approximately $1.69 billion at the end of the third quarter.

Outlook: Geo revised its FY24 outlook, now expecting adjusted EPS of $0.80 – $0.84 (vs. the consensus estimate of $0.92), down from the prior range of $0.82 – $0.93.

The company also projects FY24 revenues of $2.42 billion, compared to the previous forecast of $2.44 billion and the consensus estimate of $2.445 billion.

Geo now forecasts fourth quarter EPS of $0.19 – $0.22 (vs. $0.22 – $0.29 prior view), compared to the $0.27 estimate, and expects revenues of $600 million – $610 million (below $611 million – $621 million guidance earlier), vs. street view of $618.58 million.

Last month, the company disclosed that U.S. Immigration and Customs Enforcement (ICE) exercised the first five-year extension on the 15-year contract for the 1,940-bed Adelanto ICE Processing Center in California, extending the contract through December 19, 2029.

Price Action: GEO shares are up 9.06% at $23.45 at the last check Thursday.

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