Market Overview

The GEO Group Reports Second Quarter 2018 Results

Share:
  • 2Q18 Net Income Attributable to GEO of $0.31 per diluted share
  • 2Q18 Adjusted Net Income of $0.33 per diluted share
  • 2Q18 AFFO of $0.60 per diluted share
  • Updated FY2018 guidance for Net Income Attributable to GEO of
    $1.27-$1.31; Adjusted Net Income of $1.32-$1.36; and AFFO of
    $2.47-$2.51 per diluted share

The GEO Group, Inc. (NYSE:GEO) ("GEO"), a fully integrated
equity real estate investment trust ("REIT") and a leading provider of
evidence-based offender rehabilitation and community reentry services
around the globe, reported today its financial results for the second
quarter 2018.

Second Quarter 2018 Highlights

  • Net Income Attributable to GEO of $0.31 per diluted share
  • Adjusted Net Income of $0.33 per diluted share
  • Net Operating Income of $153.7 million
  • Normalized FFO of $0.48 per diluted share
  • AFFO of $0.60 per diluted share
  • Repurchased 1.3 million shares of common stock for approximately
    $30.3 million during 2Q18

GEO reported second quarter 2018 net income attributable to GEO of $37.4
million, or $0.31 per diluted share, compared to $31.0 million, or $0.25
per diluted share, for the second quarter 2017. GEO reported total
revenues for the second quarter 2018 of $583.5 million up from $577.1
million for the second quarter 2017.

Second quarter 2018 results reflect a $0.6 million loss on
extinguishment of debt and $3.7 million, after-tax, in expenses related
to a legal settlement in Mississippi associated with management
contracts previously held by GEO and Cornell Companies, a corporation
GEO acquired in 2010. These items were partially offset by $2.1 million,
after-tax, in escrow releases in connection with GEO's acquisition of
Community Education Centers in 2017. Excluding these items, GEO reported
second quarter 2018 Adjusted Net Income of $40.2 million, or $0.33 per
diluted share.

GEO reported second quarter 2018 Normalized Funds From Operations
("Normalized FFO") of $57.7 million, or $0.48 per diluted share,
compared to $55.4 million, or $0.45 per diluted share, in the second
quarter 2017. GEO reported second quarter 2018 Adjusted Funds From
Operations ("AFFO") of $72.2 million, or $0.60 per diluted share,
compared to $74.7 million, or $0.61 per diluted share, in the second
quarter 2017.

George C. Zoley, Chairman and Chief Executive Officer of GEO, said, "We
are pleased with our second quarter results and our outlook for the
second half of 2018. We continue to be optimistic about the demand for
our services and are pursuing a number of quality growth opportunities.
Our board and our management team remain focused on effectively
allocating capital to drive long-term, sustainable value for our
shareholders."

First Six Months 2018 Highlights

  • Net Income Attributable to GEO of $0.60 per Diluted Share
  • Adjusted Net Income of $0.62 per Diluted Share
  • Net Operating Income of $299.7 million
  • Normalized FFO of $0.91 per Diluted Share
  • AFFO of $1.17 per Diluted Share

For the first six months of 2018, GEO reported net income attributable
to GEO of $72.4 million, or $0.60 per diluted share, compared to $71.4
million, or $0.60 per diluted share, for the first six months of 2017.
GEO reported total revenues for the first six months of 2018 of $1.15
billion up from $1.13 billion for the first six months of 2017.

Results for the first six months of 2018 reflect a $0.6 million loss on
extinguishment of debt and $3.7 million, after-tax, in expenses related
to a legal settlement in Mississippi associated with management
contracts previously held by GEO and Cornell Companies, a corporation
GEO acquired in 2010. These items were partially offset by $2.1 million,
after-tax, in escrow releases in connection with GEO's acquisition of
Community Education Centers in 2017. Excluding these items, GEO reported
Adjusted Net Income of $75.4 million, or $0.62 per diluted share for the
first six months of 2018.

For the first six months of 2018, GEO reported Normalized FFO of $110.3
million, or $0.91 per diluted share, compared to $113.5 million, or
$0.96 per diluted share, for the first six months of 2017. For the first
six months of 2018, GEO reported AFFO of $142.0 million, or $1.17 per
diluted share, compared to $148.7 million, or $1.25 per diluted share,
for the first six months of 2017.

Stock Repurchase Program

During the second quarter 2018, GEO repurchased approximately 1.3
million shares of its common stock for approximately $30.3 million.
During the first six months of 2018, GEO repurchased approximately 3.1
million shares of its common stock for approximately $70.4 million under
the $200.0 million stock repurchase program approved by GEO's Board of
Directors.

The stock repurchase program is intended to be implemented through
purchases made from time to time in the open market or in privately
negotiated transactions, in accordance with applicable Securities and
Exchange Commission requirements. The stock repurchase program does not
obligate GEO to purchase any specific amount of its common stock and may
be suspended or extended at any time at the discretion of GEO's Board of
Directors.

Quarterly Dividend

On July 10, 2018, GEO's Board of Directors declared a quarterly cash
dividend of $0.47 per share. The quarterly cash dividend was paid on
July 27, 2018 to shareholders of record as of the close of business on
July 20, 2018. The declaration of future quarterly cash dividends is
subject to approval by GEO's Board of Directors and to meeting the
requirements of all applicable laws and regulations. GEO's Board of
Directors retains the power to modify its dividend policy as it may deem
necessary or appropriate in the future.

2018 Financial Guidance

GEO updated its financial guidance for the full-year 2018 and issued
financial guidance for the third quarter and fourth quarter 2018.

GEO expects full-year 2018 total revenue to be approximately $2.3
billion. GEO expects full-year 2018 Net Income Attributable to GEO to be
in a range of $1.27 to $1.31 per diluted share. GEO expects full-year
2018 Adjusted Net Income to be in a range of $1.32 to $1.36 per diluted
share. GEO expects full-year 2018 AFFO to be in a range of $2.47 to
$2.51 per diluted share.

For the third quarter 2018, GEO expects total revenues to be in a range
of $585 million to $590 million. GEO expects third quarter 2018 Net
Income Attributable to GEO to be in a range of $0.32 to $0.34 per
diluted share. GEO expects third quarter 2018 Adjusted Net Income to be
in a range of $0.35 to $0.37 per diluted share and AFFO to be in a range
of $0.65 to $0.67 per diluted share.

For the fourth quarter 2018, GEO expects total revenues to be in a range
of $595 million to $600 million. GEO expects fourth quarter 2018 Net
Income Attributable to GEO to be in a range of $0.35 to $0.37 per
diluted share. GEO expects fourth quarter 2018 AFFO to be in a range of
$0.65 to $0.67 per diluted share.

Reconciliation Tables and Supplemental Information

GEO has made available Supplemental Information which contains
reconciliation tables of Net Income Attributable to GEO to Net Operating
Income, Net Income to EBITDAre (EBITDA for real estate) and Adjusted
EBITDAre (Adjusted EBITDA for real estate), Net Income Attributable to
GEO to Adjusted Net Income, and Net Income Attributable to GEO to FFO,
Normalized FFO and AFFO along with supplemental financial and
operational information on GEO's business and other important operating
metrics. The reconciliation tables are also presented herein. Please see
the section of this press release below titled "Note to Reconciliation
Tables and Supplemental Disclosure - Important Information on GEO's
Non-GAAP Financial Measures" for information on how GEO defines these
supplemental Non-GAAP financial measures and reconciles them to the most
directly comparable GAAP measures. GEO's Reconciliation Tables can be
found herein and in GEO's Supplemental Information which is available on
GEO's Investor Relations webpage at investors.geogroup.com.

Conference Call Information

GEO has scheduled a conference call and simultaneous webcast for today
at 11:00 AM (Eastern Time) to discuss GEO's second quarter 2018
financial results as well as its outlook. The call-in number for the
U.S. is 1-877-250-1553 and the international call-in number is
1-412-542-4145. In addition, a live audio webcast of the conference call
may be accessed on the Events and Webcasts section of GEO's investor
relations webpage at investors.geogroup.com.
A replay of the webcast will be available on the website for one year. A
telephonic replay of the conference call will be available until August
16, 2018 at 1-877-344-7529 (U.S.) and 1-412-317-0088 (International).
The participant passcode for the telephonic replay is 10122196.

About The GEO Group

The GEO Group, Inc. (NYSE:GEO) is the first fully integrated equity
real estate investment trust specializing in the design, financing,
development, and operation of correctional, detention, and community
reentry facilities around the globe. GEO is the world's leading provider
of diversified correctional, detention, community reentry, and
electronic monitoring services to government agencies worldwide with
operations in the United States, Australia, South Africa, and the United
Kingdom. GEO's worldwide operations include the ownership and/or
management of 139 facilities totaling approximately 96,000 beds,
including projects under development, with a growing workforce of
approximately 23,000 professionals.

Note to Reconciliation Tables and Supplemental Disclosure –
Important
Information on GEO's Non-GAAP Financial Measures

Net Operating Income, EBITDAre, Adjusted EBITDAre, Funds from
Operations, Normalized Funds from Operations, Adjusted Funds from
Operations, and Adjusted Net Income are non-GAAP financial measures that
are presented as supplemental disclosures. GEO has presented herein
certain forward-looking statements about GEO's future financial
performance that include non-GAAP financial measures, including Adjusted
Net Income, FFO, Normalized FFO, and AFFO. The determination of the
amounts that are excluded from these non-GAAP financial measures is a
matter of management judgment and depends upon, among other factors, the
nature of the underlying expense or income amounts recognized in a given
period. While we have provided a high level reconciliation for the
guidance ranges for full year 2018, we are unable to present a more
detailed quantitative reconciliation of the forward-looking non-GAAP
financial measures to their most directly comparable forward-looking
GAAP financial measures because management cannot reliably predict all
of the necessary components of such GAAP measures. The quantitative
reconciliation of the forward-looking non-GAAP financial measures will
be provided for completed annual and quarterly periods, as applicable,
calculated in a consistent manner with the quantitative reconciliation
of non-GAAP financial measures previously reported for completed annual
and quarterly periods.

Net Operating Income is defined as revenues less operating expenses,
excluding depreciation and amortization expense, general and
administrative expenses, real estate related operating lease expense,
and start-up expenses, pre-tax. Net Operating Income is calculated as
net income adjusted by subtracting equity in earnings of affiliates, net
of income tax provision, and by adding income tax (benefit) provision,
interest expense, net of interest income, loss on extinguishment of
debt, depreciation and amortization expense, general and administrative
expenses, real estate related operating lease expense, and start-up
expenses, pre-tax.

EBITDAre (EBITDA for real estate) is defined as net income adjusted by
adding provisions for income tax, interest expense, net of interest
income, depreciation and amortization, and gain/loss on sale of real
estate assets, pre-tax. Adjusted EBITDAre (Adjusted EBITDA for real
estate) is defined as EBITDAre adjusted for net income/loss attributable
to non-controlling interests, stock-based compensation expenses,
pre-tax, and certain other adjustments as defined from time to time,
including for the periods presented merger and acquisition ("M&A")
related expenses, pre-tax, start-up expenses, pre-tax, legal related
expenses, pre-tax, and escrow releases, pre-tax. Given the nature of our
business as a real estate owner and operator, we believe that EBITDAre
and Adjusted EBITDAre are helpful to investors as measures of our
operational performance because they provide an indication of our
ability to incur and service debt, to satisfy general operating
expenses, to make capital expenditures and to fund other cash needs or
reinvest cash into our business.

We believe that by removing the impact of our asset base (primarily
depreciation and amortization) and excluding certain non-cash charges,
amounts spent on interest and taxes, and certain other charges that are
highly variable from year to year, EBITDAre and Adjusted EBITDAre
provide our investors with performance measures that reflect the impact
to operations from trends in occupancy rates, per diem rates and
operating costs, providing a perspective not immediately apparent from
net income attributable to GEO.

The adjustments we make to derive the non-GAAP measures of EBITDAre and
Adjusted EBITDAre exclude items which may cause short-term fluctuations
in income from continuing operations and which we do not consider to be
the fundamental attributes or primary drivers of our business plan and
they do not affect our overall long-term operating performance. EBITDAre
and Adjusted EBITDAre provide disclosure on the same basis as that used
by our management and provide consistency in our financial reporting,
facilitate internal and external comparisons of our historical operating
performance and our business units and provide continuity to investors
for comparability purposes.

Funds From Operations, or FFO, is defined in accordance with standards
established by the National Association of Real Estate Investment
Trusts, or NAREIT, which defines FFO as net income/loss attributable to
common shareholders (computed in accordance with United States Generally
Accepted Accounting Principles), excluding real estate related
depreciation and amortization, excluding gains and losses from the
cumulative effects of accounting changes, extraordinary items and sales
of properties, and including adjustments for unconsolidated partnerships
and joint ventures. Normalized Funds from Operations, or Normalized FFO,
is defined as FFO adjusted for certain items which by their nature are
not comparable from period to period or that tend to obscure GEO's
actual operating performance, including for the periods presented net
Tax Cuts and Jobs Act ("TCJA") impact, M&A related expenses, pre-tax,
loss on extinguishment of debt, start-up expenses, pre-tax, legal
related expenses, pre-tax, and escrow releases, pre-tax, and tax effect
of adjustments to FFO.

Adjusted Funds From Operations, or AFFO, is defined as Normalized FFO
adjusted by adding non-cash expenses such as non-real estate related
depreciation and amortization, stock based compensation expense, the
amortization of debt issuance costs, discount and/or premium and other
non-cash interest, and by subtracting recurring consolidated maintenance
capital expenditures.

Adjusted Net Income is defined as Net Income Attributable to GEO
adjusted for certain items which by their nature are not comparable from
period to period or that tend to obscure GEO's actual operating
performance, including for the periods presented net TCJA impact, M&A
related expenses, pre-tax, gain/loss on sale of real estate assets,
pre-tax, loss on extinguishment of debt, start-up expenses, pre-tax,
legal related expenses, pre-tax, escrow releases, pre-tax, and tax
effect of adjustments to Net Income Attributable to GEO.

Because of the unique design, structure and use of our correctional
facilities, we believe that assessing the performance of our
correctional facilities without the impact of depreciation or
amortization is useful and meaningful to investors. Although NAREIT has
published its definition of FFO, companies often modify this definition
as they seek to provide financial measures that meaningfully reflect
their distinctive operations. We have modified FFO to derive Normalized
FFO and AFFO that meaningfully reflect our operations.

Our assessment of our operations is focused on long-term sustainability.
The adjustments we make to derive the non-GAAP measures of Normalized
FFO and AFFO exclude items which may cause short-term fluctuations in
net income attributable to GEO but have no impact on our cash flows, or
we do not consider them to be fundamental attributes or the primary
drivers of our business plan and they do not affect our overall
long-term operating performance. We may make adjustments to FFO from
time to time for certain other income and expenses that do not reflect a
necessary component of our operational performance on the basis
discussed above, even though such items may require cash settlement.
Because FFO, Normalized FFO and AFFO exclude depreciation and
amortization unique to real estate as well as non-operational items and
certain other charges that are highly variable from year to year, they
provide our investors with performance measures that reflect the impact
to operations from trends in occupancy rates, per diem rates, operating
costs and interest costs, providing a perspective not immediately
apparent from Net Income Attributable to GEO.

We believe the presentation of FFO, Normalized FFO and AFFO provide
useful information to investors as they provide an indication of our
ability to fund capital expenditures and expand our business. FFO,
Normalized FFO and AFFO provide disclosure on the same basis as that
used by our management and provide consistency in our financial
reporting, facilitate internal and external comparisons of our
historical operating performance and our business units and provide
continuity to investors for comparability purposes. Additionally, FFO,
Normalized FFO and AFFO are widely recognized measures in our industry
as a real estate investment trust.

Safe-Harbor Statement

This press release contains forward-looking statements regarding
future events and future performance of GEO that involve risks and
uncertainties that could materially affect actual results, including
statements regarding financial guidance for the third quarter, fourth
quarter and full year 2018, the assumptions underlying such guidance,
and statements regarding future project activations and growth
opportunities. Factors that could cause actual results to vary from
current expectations and forward-looking statements contained in this
press release include, but are not limited to: (1) GEO's ability to meet
its financial guidance for 2018 given the various risks to which its
business is exposed; (2) GEO's ability to fully implement its announced
stock repurchase program and the timing and amounts of any future stock
repurchases; (3) GEO's ability to declare future quarterly cash
dividends and the timing and amount of such future cash dividends; (4)
GEO's ability to successfully pursue further growth and continue to
create shareholder value; (5) risks associated with GEO's ability to
control operating costs associated with contract start-ups; (6) GEO's
ability to timely open facilities as planned, profitably manage such
facilities and successfully integrate such facilities into GEO's
operations without substantial costs; (7) GEO's ability to win
management contracts for which it has submitted proposals and to retain
existing management contracts; (8) GEO's ability to obtain future
financing on acceptable terms; (9) GEO's ability to sustain company-wide
occupancy rates at its facilities; (10) GEO's ability to access the
capital markets in the future on satisfactory terms or at all; (11) the
impact of any future regulations or guidance on the Tax Cuts and Jobs
Act; (12) GEO's ability to remain qualified as a REIT; (13) the
incurrence of REIT related expenses; and (14) other factors contained in
GEO's Securities and Exchange Commission periodic filings, including its
Form 10-K, 10-Q and 8-K reports.

Second quarter and first six months financial tables to follow:

 

Condensed Consolidated Statements of
Operations*

(Unaudited)

                 
Q2 2018 Q2 2017 YTD 2018 YTD 2017
(unaudited) (unaudited) (unaudited) (unaudited)
 
Revenues $ 583,509 $ 577,070 $ 1,148,426 $ 1,127,684
Operating expenses 437,797 438,445 864,506 853,152
Depreciation and amortization 31,313 31,866 63,239 60,815
General and administrative expenses   47,448     52,206     89,280     94,792  
 
Operating income 66,951 54,553 131,401 118,925
 
Interest income 8,667 12,346 17,766 24,323
Interest expense (36,919 ) (35,983 ) (72,788 ) (70,983 )
 
Income before income taxes and equity in earnings of affiliates 38,699 30,916 76,379 72,265
 
Provision for income taxes 3,715 1,400 8,470 3,870
Equity in earnings of affiliates, net of income tax provision   2,341     1,426     4,336     2,913  
 
Net income 37,325 30,942 72,245 71,308
 
Less: Net loss attributable to noncontrolling interests 96 50 163 87
       
Net income attributable to The GEO Group, Inc. $ 37,421   $ 30,992   $ 72,408   $ 71,395  
 
 
Weighted Average Common Shares Outstanding:
Basic 120,274 122,125 121,017 117,885
Diluted 120,659 122,895 121,461 118,702
 
Income per Common Share Attributable to The GEO Group, Inc. :
 
Basic:
Net income per share — basic $ 0.31   $ 0.25   $ 0.60   $ 0.61  
 
Diluted:
Net income per share — diluted $ 0.31   $ 0.25   $ 0.60   $ 0.60  
 
Regular Dividends Declared per Common Share $ 0.47   $ 0.47   $ 0.94   $ 0.94  
 
* all figures in '000s, except per share data
 
 

Reconciliation of Net Income Attributable
to GEO to Adjusted Net Income

(In thousands, except per share data)(Unaudited)

                 
Q2 2018 Q2 2017 YTD 2018 YTD 2017
 
Net Income attributable to GEO $ 37,421 $ 30,992 $ 72,408 $ 71,395
 
Add (Subtract):
Net Tax Cuts and Jobs Act Impact - - 304 -
Loss on extinguishment of debt 574 - 574 -
Start-up expenses, pre-tax 98 - 98 -
M&A related expenses, pre-tax - 10,336 - 12,956
Legal related expenses, pre-tax 4,500 - 4,500 -
Escrow releases, pre-tax (2,273 ) - (2,273 )
Gain/Loss on sale of real estate assets, pre-tax 590 - 492 (261 )
Tax effect of adjustments to Net Income attributable to GEO (713 ) (2,487 ) (713 ) (2,523 )
 
Adjusted Net Income $ 40,197   $ 38,841   $ 75,390   $ 81,567  
 
Weighted average common shares outstanding - Diluted 120,659 122,895 121,461 118,702
 
Adjusted Net Income Per Diluted Share $ 0.33   $ 0.32   $ 0.62   $ 0.69  
 
 

Condensed Consolidated Balance Sheets*

(Unaudited)

         

 

 
As of As of
June 30, 2018 December 31, 2017
(unaudited) (unaudited)

ASSETS

 
Cash and cash equivalents $ 65,451 $ 81,377
Restricted cash and cash equivalents 58,720 44,932
Accounts receivable, less allowance for doubtful accounts 377,768 389,916
Contract receivable, current portion 9,398 18,142
Prepaid expenses and other current assets   35,763   45,342
Total current assets $ 547,100 $ 579,709
 
Restricted Cash and Investments 25,297 27,999
Property and Equipment, Net 2,124,553 2,078,123
Non-Current Contract Receivable 396,360 404,309
Assets Held for Sale - 3,915
Deferred Income Tax Assets 26,277 26,277
Intangible Assets, Net (including goodwill) 1,019,928 1,034,290
Other Non-Current Assets 67,055 72,286
 

Total Assets

$ 4,206,570 $ 4,226,908
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Accounts payable $ 90,327 $ 92,587
Accrued payroll and related taxes 69,062 71,732
Accrued expenses and other current liabilities 189,261 176,324
Current portion of capital lease obligations, long-term debt, and
non-recourse debt
  25,127   28,920
Total current liabilities $ 373,777 $ 369,563
 
Non-Current Deferred Income Tax Liabilities 8,757 8,757
Other Non-Current Liabilities 89,882 96,702
Capital Lease Obligations 5,329 6,059
Long-Term Debt 2,289,409 2,181,544
Non-Recourse Debt 346,479 365,364
Shareholders' Equity 1,092,937 1,198,919
 

Total Liabilities and Shareholders' Equity

$ 4,206,570 $ 4,226,908
 
* all figures in '000s
 
 

Reconciliation of Net Income Attributable
to GEO to FFO, Normalized FFO, and AFFO*

(Unaudited)

      Q2 2018     Q2 2017     YTD 2018     YTD 2017
(unaudited) (unaudited) (unaudited) (unaudited)
 
Net Income attributable to GEO $ 37,421 $ 30,992 $ 72,408 $ 71,395
Add (Subtract):
Real Estate Related Depreciation and Amortization 17,509 $ 16,550 $ 34,897 $ 31,936
Gain/Loss on real estate assets ** 590 $ - $ 492 $ (261 )
       
Equals: NAREIT defined FFO $ 55,520   $ 47,542   $ 107,797   $ 103,070  
 
Add (Subtract):
Net Tax Cuts and Jobs Act Impact - - 304 -
Loss on extinguishment of debt 574 - 574 -
Start-up expenses, pre-tax 98 - 98 -
M&A related expenses, pre-tax - 10,336 - 12,956
Legal related expenses, pre-tax 4,500 - 4,500 -
Escrow releases, pre-tax (2,273 ) - (2,273 ) -
Tax Effect of adjustments to Funds From Operations *** (713 ) (2,487 ) (713 ) (2,523 )
       
Equals: FFO, normalized $ 57,706   $ 55,391   $ 110,287   $ 113,503  
 
Add (Subtract):
Non-Real Estate Related Depreciation & Amortization 13,804 15,316 28,342 28,879
Consolidated Maintenance Capital Expenditures (6,076 ) (4,934 ) (11,399 ) (11,357 )
Stock Based Compensation Expenses 4,960 5,030 10,787 9,993
Amortization of debt issuance costs, discount and/or premium and
other non-cash interest
1,855 3,870 3,992 7,676
 
       
Equals: AFFO $ 72,249   $ 74,673   $ 142,009   $ 148,694  
 
Weighted average common shares outstanding - Diluted 120,659 122,895 121,461 118,702
 
FFO/AFFO per Share - Diluted
 
Normalized FFO Per Diluted Share $ 0.48 $ 0.45 $ 0.91 $ 0.96
 
AFFO Per Diluted Share $ 0.60 $ 0.61 $ 1.17 $ 1.25
 
 
Regular Common Stock Dividends per common share $ 0.47 $ 0.47 $ 0.94 $ 0.94
 
* all figures in '000s, except per share data
** no tax impact
*** tax adjustments related to Start-up, M&A, Legal expenses and
Escrow releases
 
 

Reconciliation of Net Income Attributable
to GEO to

Net Operating Income, EBITDAre and
Adjusted EBITDAre*

(Unaudited)

                 
 
Q2 2018 Q2 2017 YTD 2018 YTD 2017
(unaudited) (unaudited) (unaudited) (unaudited)
Net Income attributable to GEO $ 37,421 $ 30,992 $ 72,408 $ 71,395
Less
Net loss attributable to noncontrolling interests   96     50     163     87  
 
Net Income $ 37,325 $ 30,942 $ 72,245 $ 71,308
 
Add (Subtract):
Equity in earnings of affiliates, net of income tax provision (2,341 ) (1,426 ) (4,336 ) (2,913 )
Income tax provision 3,715 1,400 8,470 3,870
Interest expense, net of interest income 27,678 23,637 54,448 46,660
Loss on extinguishment of debt 574 - 574 -
Depreciation and amortization 31,313 31,866 63,239 60,815
General and administrative expenses   47,448     52,206     89,280     94,792  
Net Operating Income, net of operating lease obligations $ 145,712   $ 138,625   $ 283,920   $ 274,532  
 
Add:
Operating lease expense, real estate 7,914 7,879 15,695 14,362
Start-up expenses, pre-tax   98     -     98     -  
Net Operating Income (NOI) $ 153,724   $ 146,504   $ 299,713   $ 288,894  
       
Q2 2018 Q2 2017 YTD 2018 YTD 2017
(unaudited) (unaudited) (unaudited) (unaudited)
Net Income $ 37,325 $ 30,942 $ 72,245 $ 71,308
Add (Subtract):
Income tax provision ** 3,446 1,998 8,906 5,078
Interest expense, net of interest income *** 28,252 23,637 55,022 46,660
Depreciation and amortization 31,313 31,866 63,239 60,815
Gain/Loss on real estate assets, pre-tax 590 - 492 (261 )
       
EBITDAre $ 100,926   $ 88,443   $ 199,904   $ 183,600  
Add (Subtract):
Net loss attributable to noncontrolling interests 96 50 163 87
Stock based compensation expenses, pre-tax 4,960 5,030 10,787 9,993
M&A related expenses, pre-tax - 10,336 - 12,956
Start-up expenses, pre-tax 98 - 98 -
Legal related expenses, pre-tax 4,500 - 4,500 -
Escrow Releases, pre-tax (2,273 ) - (2,273 ) -
       
Adjusted EBITDAre $ 108,307   $ 103,859   $ 213,179   $ 206,636  
 
* all figures in '000s
** including income tax provision on equity in earnings of affiliates
*** includes loss on extinguishment of debt
 
 

2018 Outlook/Reconciliation

(In thousands, except per share data)

(Unaudited)

 

 
     

FY 2018

   
Net Income Attributable to GEO $ 154,000 to $ 159,000
Real Estate Related Depreciation and Amortization 72,000 72,000
Loss on Sale of Real Estate Assets   1,300     1,300  
Funds from Operations (FFO) $ 227,300   to $ 232,300  
 
Adjustments
Start-Up Expenses 2,500 2,500
Loss on Extinguishment of Debt 300 300
Legal Related Expenses 4,500 4,500
Escrow Releases (2,300 ) (2,300 )
Tax Effect of Adjustments to FFO   (800 )   (800 )
Normalized Funds from Operations $ 231,500   to $ 236,500  
 
Non-Real Estate Related Depreciation and Amortization 58,000 58,000
Consolidated Maintenance Capex (22,500 ) (22,500 )
Non-Cash Stock Based Compensation 22,000 22,000
Non-Cash Interest Expense   9,000     9,000  
Adjusted Funds From Operations (AFFO) $ 298,000   to $ 303,000  
 
Net Cash Interest Expense 107,000 107,000
Consolidated Maintenance Capex 22,500 22,500
Income Taxes   16,000     16,000  
Adjusted EBITDAre $ 443,500   to $ 448,500  
 
G&A Expenses 179,000 179,000
Non-Cash Stock Based Compensation (22,000 ) (22,000 )
Equity in Earnings of Affiliates (8,000 ) (8,000 )
Loss on Sale of Real Estate Assets (1,300 ) (1,300 )
Legal Related Expenses (4,500 ) (4,500 )
Real Estate Related Operating Lease Expense   31,000     31,000  
Net Operating Income $ 617,700   to $ 622,700  
   
Adjusted Net Income Per Diluted Share $ 1.32   to $ 1.36  
AFFO Per Diluted Share $ 2.47   to $ 2.51  
Weighted Average Common Shares Outstanding-Diluted   120,800   to   120,800  
 

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