The GEO Group, Inc. (GEO) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate positive sentiment. The company has new contracts and partnerships, with significant revenue potential from ICE detention capacity expansion and the ISAP 5 contract. Management is prepared to scale operations and is actively pursuing stock buybacks. While there are some concerns about margin compression and conservative guidance, the overall outlook is optimistic, with growth opportunities and shareholder returns in focus. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
Key Financial Performance
Net Income (Q4 2025) $32 million or $0.23 per diluted share, compared to $15.5 million or $0.11 per diluted share in Q4 2024. This represents a significant increase due to the activation of new ICE facility contracts and improved operational efficiencies.
Quarterly Revenues (Q4 2025) $708 million, up from $608 million in Q4 2024, reflecting a 16.4% increase. This growth was driven by new ICE contracts and increased occupancy rates.
Adjusted Net Income (Q4 2025) $35 million or $0.25 per diluted share, compared to $18 million or $0.13 per diluted share in Q4 2024. The increase is attributed to favorable technology and case management mix shifts and new contracts.
Adjusted EBITDA (Q4 2025) $126 million, up from $108 million in Q4 2024, representing a 16.7% increase. This was driven by higher revenues from new contracts and operational improvements.
Owned and Leased Secure Service Revenues (Q4 2025) Increased by $70 million or 23% compared to Q4 2024, primarily due to the activation of three company-owned facilities under new ICE contracts.
Managed-Only Contracts Revenues (Q4 2025) Increased by $26 million or 17% compared to Q4 2024, driven by the joint venture agreement for the North Florida detention facility and transportation revenue increases.
Electronic Monitoring and Supervision Services Revenues (Q4 2025) Increased by 3% compared to Q4 2024, reflecting reduced pricing for the ISAP 5 contract offset by favorable technology and case management mix shifts.
Operating Expenses (Q4 2025) Increased by 18.5% year-over-year due to the activation of new ICE facility contracts and increased occupancy.
General and Administrative Expenses (Q4 2025) Declined to 8.4% of revenue from 10% in Q4 2024, reflecting improved cost management.
Net Income (Full Year 2025) $254 million or $1.82 per diluted share, compared to $32 million or $0.22 per diluted share in 2024. This significant increase was driven by asset sales and operational improvements.
Annual Revenues (Full Year 2025) $2.63 billion, up from $2.42 billion in 2024, reflecting an 8.7% increase due to new contracts and higher occupancy rates.
Adjusted Net Income (Full Year 2025) $120 million or $0.86 per diluted share, compared to $101 million or $0.75 per diluted share in 2024. The increase is attributed to operational efficiencies and new business.
Adjusted EBITDA (Full Year 2025) $464 million, largely unchanged from $463 million in 2024, reflecting stable operational performance.
Debt Reduction (2025) Net debt reduced to approximately $1.5 billion, resulting in a $30 million annual reduction in interest expense compared to 2024.
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Operating Highlights
New contracts and expansions: Awarded new or expanded contracts worth approximately $520 million in new incremental annualized revenues, including contracts for ICE detainees at 4 facilities totaling 6,000 beds and reactivation of the Adelanto ICE Processing Center.
ISAP 5 program: Secured a new 2-year contract for the ISAP 5 program, with a shift towards higher-priced monitoring devices like ankle monitors, increasing revenues despite a decline in overall participant numbers.
Skip tracing services: Awarded a new 2-year contract by ICE for skip tracing services valued at up to $60 million annually.
ICE detention capacity: ICE detention census increased to approximately 24,000, the highest level ever, with potential for further expansion to 100,000 beds.
Secure transportation services: Expanded secure transportation services for ICE and U.S. Marshals, generating $60 million in incremental annualized revenue.
Employee hiring and training: Hired and trained approximately 2,000 new employees for newly activated facilities.
Cost efficiencies: Implemented efficiency initiatives, including $1.6 million in employee severance costs, expected to save $2-3 million per quarter in 2026.
Share repurchase program: Repurchased approximately 5 million shares for $91 million, with $409 million remaining under the authorization.
Facility sales and acquisitions: Sold facilities in Lawton, Oklahoma, and Texas for $322 million, using proceeds to purchase a facility in San Diego, California.
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Risk or Challenges
Government Shutdown Impact: Potential partial government shutdown involving the Department of Homeland Security could delay payments and collections, requiring careful liquidity and working capital management.
Labor Costs: Higher labor expenses at newly activated facilities could compress margins temporarily, impacting financial performance.
ISAP Participation Uncertainty: Future ISAP participation levels are determined by ICE management, creating uncertainty in revenue projections.
Accounts Receivable: Temporary increase in accounts receivable due to federal government shutdowns could strain liquidity.
Idle Facility Utilization: Approximately 6,000 idle high-security beds remain unused, representing untapped revenue potential of over $300 million annually.
Regulatory and Contractual Risks: Dependence on government contracts and appropriations, including ICE and U.S. Marshals Service, exposes the company to regulatory and funding risks.
Operational Start-Up Costs: Start-up expenses for new contracts and facilities could temporarily compress margins and impact profitability.
Economic and Market Conditions: Uncertainty in government actions, including congressional funding decisions and new contract awards, could affect revenue and growth.
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Guidance & Outlook
Revenue Expectations: The company expects full-year 2026 revenues to range between $2.9 billion and $3.1 billion, with first-quarter 2026 revenues projected at $680 million to $690 million.
Adjusted EBITDA: Full-year 2026 adjusted EBITDA is expected to range between $490 million and $510 million. First-quarter 2026 adjusted EBITDA is projected to be between $107 million and $112 million.
Capital Expenditures: Total capital expenditures for 2026 are expected to be between $120 million and $155 million.
ISAP Contract Growth: The new 2-year ISAP contract includes pricing for 361,000 participants in year 1 and 465,000 participants in year 2. The company anticipates growth in revenues and earnings from a shift towards higher-priced monitoring devices and increased case management services.
ICE Detention Capacity: The company is in discussions with ICE to activate additional facilities, with 6,000 idle beds available that could generate over $300 million in annualized revenues at full capacity.
Secure Transportation Services: The company expects continued expansion in secure ground and air transportation services for ICE and the U.S. Marshals Service.
Government Shutdown Impact: While a potential government shutdown could delay payments, the company expects services under ICE contracts to continue uninterrupted as they are considered essential public safety services.
Market Trends: The federal government is focusing on increasing immigration detention capacity to 100,000 beds or more, consolidating to fewer larger facilities. GEO expects to be part of this solution.
Share Repurchase Program: The company has $409 million remaining under its current $500 million stock buyback authorization, reflecting a focus on enhancing shareholder value.
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Shareholder Return Plan
Share Repurchase Program: In 2025, GEO Group initiated a share repurchase program in August, which was later expanded to $500 million in November. By the end of 2025, the company had repurchased approximately 5 million shares for approximately $91 million, reducing the total shares outstanding to approximately 136 million. The company believes its stock is significantly undervalued and sees this as an opportunity to enhance shareholder value through repurchases. Approximately $409 million remains available under the current stock buyback authorization.
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Key Q&A
Q:Do you see ICE's focus on warehouses as a reason for the delay in awarding new contracts for currently idle facilities?
A:George Zoley stated that ICE is pursuing a dual track of both warehouse initiatives and utilizing private sector bed capacity. He estimated that ICE would need at least 20,000 new beds to reach their 100,000-bed goal and possibly more. He emphasized the suitability of their idle high-security facilities for ICE's needs.
Q:Can you quickly scale up to accommodate 360,000 ISAP participants if ICE requests it by 2026?
A:George Zoley confirmed that they are fully prepared to scale up, having invested in various monitoring devices such as ankle monitors, wrist-worn devices, and phone apps to meet and exceed the described levels.
Q:Given the stock price hitting a 52-week low, will you consider being more aggressive with stock buybacks?
A:Mark Suchinski highlighted their diligent approach to stock buybacks, noting that they had repurchased over 5 million shares since launching the program in late August. He stated they would continue to lean into buybacks when opportunities arise, while managing liquidity and creating shareholder value.
Q:Why has the monitoring margin compressed from around 50% to 42.5% quarter-over-quarter?
A:George Zoley attributed the margin compression to a mix shift, with a reduction in phone apps and an increase in ankle monitors, which are more expensive but provide higher security. He also mentioned increased case management services and the complexity of billing mechanisms within the program.
Q:What would the margin look like if all 360,000 ISAP participants were on ankle monitors?
A:George Zoley explained that margins would substantially increase as ankle monitors are the most expensive monitoring devices. He emphasized their readiness to scale up production and services to meet ICE's needs.
Q:Should we expect more aggressive stock buybacks given the current share count guidance?
A:Mark Suchinski reiterated their balanced approach to capital allocation, focusing on growth needs, debt reduction, and shareholder returns. He noted that they would act opportunistically when stock prices are low.
Q:Why does the midpoint of guidance seem conservative despite potential uplifts in 2026?
A:Mark Suchinski stated that the guidance reflects a balanced and prudent approach, factoring in modest growth and risks. He mentioned ongoing start-up expenses for idle facilities and the timing of contributions from new contracts like skip tracing.
Q:Can you provide more details on the warehouse managed-only opportunities?
A:George Zoley mentioned their relationship with a prime contractor and their focus on sites in Sun Belt states, predominantly red states. He emphasized the need for careful financial and operational commitments.
Q:Why does the fiscal 2026 guidance seem conservative, and what start-up expenses are included?
A:Mark Suchinski noted ongoing start-up expenses for idle facilities, particularly on the West Coast, and the impact of the government shutdown. He expects margins to normalize and expand in the back half of the year.
Q:Why were there no new facility activations in Q4, and will idle facilities be reactivated soon?
A:George Zoley attributed the lack of new awards to the government shutdown and the conceptualization of the warehouse initiative. He confirmed active discussions with ICE and expressed optimism about future activations.
Q:Are the headwinds from the government shutdown and ICE staffing challenges still affecting facility reactivations?
A:George Zoley acknowledged ongoing discussions with ICE and the complexity of standing up new facilities, including physical plant changes and expanded space requirements. He noted that these factors take time to resolve.
Q:What are the assumptions and margin profile for the skip tracing contract?
A:Mark Suchinski declined to provide margin specifics but mentioned the contract's $121 million value over two years. He expects modest contributions in the back half of 2026 as the program ramps up.
Q:How much debt do you plan to pay down in 2026?
A:Mark Suchinski stated their goal to reduce net debt below 3x leverage by the end of 2026.
Q:What is ICE's motivation for consolidating 225 short-term jail facilities?
A:George Zoley explained that ICE aims to reduce complexity and achieve economies of scale. He noted that larger facilities would enhance their ability to process, detain, and deport approximately 100,000 people per month.
Q:Are contracts to manage warehouses attractive in terms of ROI?
A:George Zoley described warehouse management as a reasonable opportunity but emphasized the complexity of renovating and operating large-scale facilities, which could range from 500 to 9,000 beds.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or clarity on the following: 1. The specific margin profile for the skip tracing contract. 2. Detailed assumptions behind the fiscal 2026 guidance. 3. Exact timelines for facility reactivations and warehouse project progress. 4. Specific financial implications of warehouse management contracts.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Department
Executive
Florida
GEO share
ICE facility
Lawton
activation
ankle
app
asset
assumption
balance
bed facility
capacity
case
contract ICE
detention
facility bed
government shutdown
income GEO
income share
liquidity
monitoring supervision
need
pilot contract
procurement
program
repurchase
service revenue
share revenue
state
supervision service
tracing
transportation
trend
value share
GEO Transcript
The GEO Group, Inc. (GEO) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call summary and Q&A indicate positive sentiment. The company has new contracts and partnerships, with significant revenue potential from ICE detention capacity expansion and the ISAP 5 contract. Management is prepared to scale operations and is actively pursuing stock buybacks. While there are some concerns about margin compression and conservative guidance, the overall outlook is optimistic, with growth opportunities and shareholder returns in focus. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
The GEO Group, Inc. (GEO) Q3 2025 Earnings Call Transcript
Unknown11-7
The earnings call summary highlights both positive and negative aspects. The company is optimistic about ISAP contract growth and has a significant stock buyback plan, which is positive. However, the government's shutdown and ICE hiring delays are negative factors. Management's reluctance to provide specific guidance and the costly staffing process also weigh on sentiment. Given the market cap and mixed signals, a neutral sentiment is justified.
The GEO Group, Inc. (GEO) Q2 2025 Earnings Call Transcript
Positive8-6
The earnings call highlights strong financial performance, including significant revenue growth and debt reduction. Despite some uncertainties in the Q&A, the company shows strategic expansions in ICE facilities and potential revenue increases from idle beds. The positive sentiment is reinforced by the company's focus on share repurchases and debt reduction, alongside optimistic guidance for future earnings, suggesting a likely stock price increase within the 2% to 8% range.
Earnings call transcript: Geox Q1 2025 sees sales decline amid cost optimization
Unknown5-26
The earnings call indicates a challenging environment with declining sales, particularly in retail and wholesale channels. Despite cost optimization improving EBIT, the macroeconomic environment and sales decline pose significant risks. The Q&A reveals management's vague responses on CapEx and innovation, adding uncertainty. The market cap suggests moderate reaction, but overall, the sentiment leans negative due to sales declines and uncertainties, predicting a stock price decrease of -2% to -8%.
GEO Slides
GEO Report
Frequently Asked Questions
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