Geo Group Plunges Following Mixed Outlook

Geo Group Inc GEO reported fourth-quarter FY22 sales growth of 11.3% year-on-year to $620.68 million, beating the consensus of $604.40 million.
Operating income increased by 42.6% Y/Y to $108.4 million, and the margin expanded by 390 bps to 17.5%.
Adjusted EPS reduced to $0.34 from $0.38 a year ago. AFFO per share was $0.58 compared to $0.66 a year ago.
Adjusted EBITDA increased by 17.2% Y/Y to $145.5 million, and margin expanded by 120 bps to 23.4%.
GEO had $95.1 million in cash and cash equivalents as of December 31, 2022.
George C. Zoley, Executive Chairman of GEO, commented, "Our strong results also positioned us to reduce our net debt to approximately $1.975 billion and our net leverage to approximately 3.7 times Adjusted EBITDA by year-end 2022, marking substantial progress towards our goal of reducing our net leverage to below 3.5 times Adjusted EBITDA by the end of 2023 and to below 3 times Adjusted EBITDA by the end of 2024."
Outlook: Geo sees FY23 revenues of $2.37 billion - $2.47 billion versus the consensus of $2.47 billion.
The company expects FY23 adjusted EBITDA of $500 million - $540 million.
For Q1 FY23, it sees revenue of $605 million - $610 million versus the Street view of $591.92 million. It sees Q1 adjusted EBITDA of $127 million - $132 million.
Price Action: GEO shares are trading lower by 12.38% at $10.47 on the last check Tuesday.

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