GEO Q4 Earnings: Sales Beat, EPS Miss, New Immigration Contract And More

The GEO Group, Inc. GEO shares are trading lower after the company reported fourth-quarter revenue of $607.7 million, beating the consensus of $607.44 million.

Adjusted EBITDA declined to $108.0 million from $129.0 million a year ago quarter. Adjusted EPS of 13 cents came below the consensus of 22 cents.

Revenue for the fourth quarter of 2024 rose sequentially compared to the third quarter. However, earnings and adjusted EBITDA fell short of the company’s guidance, largely due to the elevated general and administrative expenses incurred during the period.

The increase in general and administrative expenses was partly due to previously announced management team reorganization and additional professional fees associated with preparing for future growth initiatives and related operations in 2025.

George C. Zoley, Executive Chairman of GEO, said, “In 2024, we also incurred $9 million of our previously announced $70 million investment to strengthen our capabilities to deliver expanded detention capacity, secure transportation, and electronic monitoring services to U.S. Immigration and Customs Enforcement (“ICE”) and the federal government.”

The company’s total net debt was approximately $1.7 billion at the end of the fourth quarter 2024.

Outlook: Geo sees FY25 outlook for EPS of $0.74– $0.88 (vs. the consensus estimate of $1.55), adjusted EBITDA of $460 million-$485 million and revenue of around $2.5 billion (vs. consensus of $2.76 billion).

In 2025, the company expects to further reduce the total net debt by around $150 million to $175 million, bringing the total net debt to about $1.55 billion.

In a separate release, Geo disclosed that it secured a 15-year, fixed-price contract worth about $1 billion with U.S. Immigration and Customs Enforcement (ICE) to provide support services for a federal immigration processing center at its 1,000-bed Delaney Hall Facility in Newark, New Jersey.

The new support services contract is expected to generate over $60 million in annual revenue for GEO in its first full year, with margins in line with GEO’s Secure Services facilities.

GEO plans to reactivate the facility in the second quarter of 2025, with revenue and earnings normalizing in the second half of the year.

Investors can gain exposure to the stock via Ballast Small/Mid Cap ETF MGMT and Schwab Fundamental U.S. Small Company ETF FNDA.

Price Action: GEO shares are down 4% at $24.75 premarket at the last check Thursday.

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