The GEO Group Inc.
11/06/2026 | Press release | Distributed by Public on 11/06/2026 15:21
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Information
This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. "Forward-looking" statements are any statements that are not based on historical information. Statements other than statements of historical facts included in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, legal proceedings and potential steps to address our future debt maturities are "forward-looking" statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" or "continue" or the negative of such words or variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements and we can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, or "cautionary statements," include, but are not limited to:
•
any adverse impact on our financial results caused by the most recent and any future federal government shutdown;
•
our ability to timely build and/or open facilities as planned, successfully manage such facilities and successfully integrate such facilities into our operations without substantial additional costs;
•
our ability to estimate the government's level of utilization of public-private partnerships for secure services and the impact of any modifications or reductions by our government customers of their utilization of public-private partnerships;
•
our ability to accurately project the size and growth of public-private partnerships for secure services in the U.S. and internationally and our ability to capitalize on opportunities for public-private partnerships;
•
our ability to successfully respond to any challenges or concerns that our government customers may raise regarding their use of public-private partnerships for secure services, including finding other government customers or alternative uses for facilities where a government customer has discontinued or announced that a contract with us will be discontinued;
•
the impact of adopted or proposed executive action or legislation aimed at limiting public-private partnerships for secure facilities, processing centers and community reentry centers or limiting or restricting the business and operations of financial institutions or others who do business with us;
•
our ability to successfully respond to delays encountered by states pursuing public-private partnerships for secure services and cost savings initiatives implemented by a number of states;
•
our ability to activate the inactive beds at our idle facilities;
•
our ability to maintain or increase occupancy rates at our facilities and the impact of fluctuations in occupancy levels or participants in ISAP on our revenues and profitability;
•
our ability to expand, diversify and grow our secure services, reentry, community-based services, monitoring services, evidence-based supervision and treatment programs and secure transportation services businesses;
•
our ability to win management contracts for which we have submitted proposals, retain existing management contracts, prevail in any challenge or protest involving the award of a management contract and meet any performance standards required by such management contracts;
•
our ability to raise new project development capital given the often short-term nature of the customers' commitment to use newly developed facilities;
•
our ability to develop long-term earnings visibility;
•
our ability to successfully conduct our operations in the United Kingdom and South Africa through joint ventures;
•
the instability of foreign exchange rates, exposing us to currency risks in Australia, the United Kingdom, and South Africa, or other countries in which we may choose to conduct our business;
•
an increase in unreimbursed labor rates;
•
our exposure to rising medical costs;
•
our ability to manage costs and expenses relating to ongoing litigation arising from our operations;
•
the risks associated with the U.S. Supreme Court agreeing to hear our appeal in the Nwauzor case and our ability to prevail on the merits, our company being required to record an additional accrual for the judgments in the future, and our ability to defend similar other pending litigation and the effect such litigation may have on our company;
•
our ability to accurately estimate on an annual basis, loss reserves related to general liability, workers' compensation and automobile liability claims;
•
our ability to fulfill our debt service obligations and its impact on our liquidity;
•
our ability to deleverage and repay, refinance or otherwise address our debt maturities in an amount or on the timeline we expect, or at all;
•
despite current indebtedness levels, we may still incur more indebtedness, which could further exacerbate the risks relating to our indebtedness;
•
the covenants in the indentures governing the Unsecured Notes and the Amended and Restated Credit Agreement impose significant operating and financial restrictions which may adversely affect our ability to operate our business;
•
servicing our indebtedness will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control and we may not be able to generate the cash required to service our indebtedness;
•
because historically portions of our senior indebtedness have had floating interest rates, an increase in interest rates would adversely affect cash flows;
•
we depend on distributions from our subsidiaries to make payments on our indebtedness and these distributions may not be made;
•
we may not be able to satisfy our repurchase obligations in the event of a change of control because the terms of our indebtedness or lack of funds may prevent us from doing so;
•
the Unsecured Notes and the guarantees on the Unsecured Notes will be effectively subordinated to our and the guarantors' senior secured indebtedness and structurally subordinated to the indebtedness of our subsidiaries that do not guarantee the Unsecured Notes;
•
our ability to identify and successfully complete any potential acquisitions of assets and businesses or sales of Company-owned assets and businesses, including the potential sale of multiple facilities to ICE, on commercially advantageous terms on a timely basis, or at all;
•
from time to time, we may not have a management contract with a client to operate existing beds at a facility or new beds at a facility that we are expanding, and we cannot assure you that such a contract will be obtained. Failure to obtain a management contract for these beds will subject us to carrying costs with no corresponding management revenue;
•
negative conditions in the capital markets could prevent us from obtaining future financing on desirable terms, which could materially harm our business;
•
we are subject to the loss of our facility management contracts, due to executive orders, terminations, non-renewals or competitive re-bids, which could adversely affect our results of operations and liquidity, including our ability to secure new facility management contracts from other government customers;
•
our growth depends on our ability to secure contracts to develop and manage new secure facilities, processing centers and community-based facilities and to secure contracts to provide electronic monitoring services, community-based reentry services and monitoring and supervision services, the demand for which is outside our control;
•
we may not be able to meet state requirements for capital investment or locate land for the development of new facilities, which could adversely affect our results of operations and future growth;
•
we partner with a limited number of governmental customers who account for a significant portion of our revenues. The loss of, or a significant decrease in revenues from, these customers could seriously harm our financial condition and results of operations;
•
efforts to reduce the U.S. federal deficit could adversely affect our liquidity, results of operations and financial condition;
•
state budgetary constraints may have a material adverse impact on us;
•
competition for contracts may adversely affect the profitability of our business;
•
we are dependent on government appropriations, which may not be made on a timely basis or at all and may be adversely impacted by budgetary constraints at the federal, state, local and foreign government levels;
•
public and political resistance to the use of public-private partnerships for secure facilities, electronic monitoring and supervision as alternatives to detention, processing centers and community reentry centers could result in our inability to obtain new contracts or the loss of existing contracts, impact our ability to obtain or refinance debt financing or enter into commercial arrangements, which could have a material adverse effect on our business, financial condition, results of operations and the market price of our securities;
•
adverse publicity may negatively impact our ability to retain existing contracts and obtain new contracts;
•
we may incur significant start-up and operating costs on new contracts before receiving related revenues, which may impact our cash flows and may not be recouped;
•
failure to comply with extensive government regulation and applicable contractual requirements could have a material adverse effect on our business, financial condition or results of operations;
•
we may face community opposition to facility locations, which may adversely affect our ability to obtain new contracts;
•
our business operations expose us to various liabilities for which we may not have adequate insurance, including legal claims and proceedings, and may have a material adverse effect on our business, financial condition or results of operations;
•
we may not be able to obtain or maintain the insurance levels required by our government contracts;
•
our exposure to rising general insurance costs;
•
natural disasters, pandemic outbreaks, global political events and other serious catastrophic events could disrupt operations and otherwise materially adversely affect our business and financial condition;
•
our international operations expose us to risks that could materially adversely affect our financial condition and results of operations;
•
we conduct certain of our operations through joint ventures or consortiums, which may lead to disagreements with our joint venture partners or business partners and adversely affect our interest in the joint ventures or consortiums;
•
we are dependent upon our senior management and our ability to attract and retain sufficient qualified personnel;
•
our profitability may be materially adversely affected by inflation;
•
various risks associated with the ownership of real estate may increase costs, expose us to uninsured losses and adversely affect our financial condition and results of operations;
•
risks related to facility construction and development activities may increase our costs related to such activities;
•
the rising cost and increasing difficulty of obtaining adequate levels of surety credit on favorable terms could adversely affect our operating results;
•
adverse developments in our relationship with our employees could adversely affect our business, financial condition or results of operations;
•
the interruption, delay or failure of the provision of our services or information systems could adversely affect our business;
•
the failure to comply with data privacy, security and exchange legal requirements could have a material adverse impact on our business, financial position, results of operations, cash flows and reputation;
•
technological changes could cause our electronic monitoring products and technology, including our BI VeriWatch™ wrist-worn device, to become obsolete or require the redesign of our electronic monitoring products, which could have a material adverse effect on our business;
•
any negative changes in the level of acceptance of or resistance to the use of electronic monitoring products, including our BI VeriWatch™ wrist-worn device, and services by governmental customers could have a material adverse effect on our business, financial condition and results of operations;
•
we depend on a limited number of third parties to manufacture and supply quality infrastructure components for our electronic monitoring products. If our suppliers cannot provide the components or services we require and with such quality and at such cost as we expect, our ability to market and sell our electronic monitoring products and services could be harmed;
•
an inability to acquire, protect or maintain our intellectual property and patents in the electronic monitoring space could harm our ability to compete or grow;
•
our electronic monitoring products could infringe on the intellectual property rights of others, which may lead to litigation that could itself be costly, could result in the payment of substantial damages or royalties, and/or prevent us from using technology that is essential to our products;
•
we license intellectual property rights in the electronic monitoring space, including patents, from third party owners. If such owners do not properly maintain or enforce the intellectual property underlying such licenses, our competitive position and business prospects could be harmed. Our licensors may also seek to terminate our license;
•
we may be subject to costly product liability claims from the use of our electronic monitoring products, which could damage our reputation, impair the marketability of our products and services and force us to pay costs and damages that may not be covered by adequate insurance;
•
as a result of our acquisitions, we have recorded and will continue to record a significant amount of goodwill and other intangible assets. In the future, our goodwill or other intangible assets may become impaired, which could result in material non-cash charges to our results of operations;
•
federal, state and local tax rules can adversely affect our results of operations and financial position;
•
we are subject to risks related to corporate social responsibility;
•
the market price of our common stock may vary substantially;
•
expectations about growth in the utilization of detention beds by the federal government may not be realized, which could negatively impact our stock price;
•
future sales of shares of our common stock or securities convertible into common stock could adversely affect the market price of our common stock and may be dilutive to current shareholders;
•
our ability to execute on the Share Repurchase Program on the anticipated timeline;
•
various anti-takeover protections applicable to us may make an acquisition of us more difficult and reduce the market value of our common stock;
•
failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our business and the trading price of our common stock;
•
we may issue additional debt securities that could limit our operating flexibility and negatively affect the value of our common stock;
•
a "short squeeze" due to a sudden increase in demand for shares of our common stock that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in shares of our common stock;
•
failure to comply with anti-bribery and anti-corruption laws could subject us to penalties and other adverse consequences; and
•
other factors contained in our filings with the SEC, including, but not limited to, those detailed in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed with the SEC.
We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q.
Introduction
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors including, but not limited to, those described above under "Forward-Looking Information", and under "Part I - Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025. This discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.
We specialize in the ownership, leasing and management of secure facilities, processing centers and reentry facilities and the provision of community-based services in the United States, Australia and South Africa. We own, lease and operate a broad range of secure facilities including maximum, medium and minimum-security facilities, processing centers, as well as community-based reentry facilities. We develop new facilities based on contract awards, using our project development expertise and experience to design, construct and finance what we believe are state-of-the-art facilities. We provide innovative technologies, industry-leading monitoring
services, and evidence-based supervision and treatment programs for community based programs. We also provide secure transportation services domestically and in the United Kingdom through our joint venture GEOAmey.
At September 30, 2026, our worldwide operations include the management and/or ownership of approximately 76,000 beds at 97 secure services and community based facilities, including idle facilities, and also include the provision of community supervision services for individuals through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.
We provide a diversified scope of services on behalf of our government agency partners:
•
our secure facility management services involve the provision of security, administrative, rehabilitation, education, and food services at secure services facilities;
•
our reentry services involve supervision of individuals in community-based programs and re-entry centers and the provision of temporary housing, programming, employment assistance and other services with the intention of the successful reintegration of residents into the community;
•
we provide comprehensive electronic monitoring and supervision services;
•
we develop new facilities, using our project development experience to design, construct and finance what we believe are state-of-the-art facilities;
•
we provide secure transportation services; and
•
our services are provided at facilities which we either own, lease or are owned by our government agency partners.
For the nine months ended September 30, 2026 and 2025, we had consolidated revenues of $2,198.3 million and $1,923.9 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 92% including 70,707 active beds and excluding 5,205 idle beds, which includes those being marketed to potential customers, for the nine months ended September 30, 2026, and approximately 89% including 68,157 active beds and excluding 6,646 idle beds, which includes those being marketed to potential customers, for the nine months ended September 30, 2025.
Reference is made to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 25, 2026, for further discussion and analysis of information pertaining to our financial condition and results of operations as of and for the year ended December 31, 2025.
Recent Developments
Contract Developments
On November 2, 2026, we announced that the City of Big Spring, Texas has entered into a 10-year intergovernmental service agreement with U.S. Immigration and Customs Enforcement ("ICE") for the activation of a federal immigration processing center at our previously idled 2,329-bed Big Spring Complex in Texas (the "Big Spring Complex"), comprised of the 1,404-bed Flightline Facility and the 925-bed Cedar Hill Facility. We will provide support services at the Big Spring Complex, which are expected to include the exclusive use of the Facility by ICE, along with security, maintenance, and food services, as well as access to recreational amenities, medical care, and transportation services.
On October 29, 2026, we announced that we have entered into a new 10-year management contract for the continued provision of support services at the GEO-owned 1,635-bed Northwest ICE Processing Center located in Tacoma, Washington. Support services at the Northwest ICE Processing Center are expected to include security, maintenance, and food services, as well as access to recreational amenities, medical care, and transportation services.
Asset Sales
On October 2, 2026 we entered into a Purchase and Sale Agreement and closed on the sale of our Adelanto West, Adelanto East and Desert View ICE Processing Centers located in Adelanto, California to the United States of America and its assigns, by and through the Department of Homeland Security, for an aggregate gross sales price of $950 million. We will continue to provide support services under our existing contract with ICE for Adelanto East, Adelanto West, and Desert View, which has a full term effective through December 19, 2034, inclusive of the current term ending December 19, 2029 and a five-year option period. Refer to Note 15 - Subsequent Events of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Debt Transactions
On October 15, 2026 we completed the redemption of all of the $650 million in outstanding aggregate principal amount of our 8.625% Senior Secured Notes due 2029. On October 5, 2026, we entered into the Amended and Restated Credit Agreement to extend the maturity of our $550 million Revolving Credit Facility to July 14, 2031 and to increase our restricted payments capacity. Refer to Note 15 - Subsequent Events of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Business Segments
We conduct our business through four reportable business segments: our U.S. Secure Services segment; our Electronic Monitoring and Supervision Services segment; our Reentry Services segment and our International Services segment. We have identified these four reportable segments to reflect our current view that we operate four distinct business lines, each of which constitutes a material part of our overall business.
Our U.S. Secure Services segment primarily encompasses our U.S.-based public-private partnership secure services business. Our Electronic Monitoring and Supervision Services segment, which conducts its services in the U.S., consists of our electronic monitoring and supervision services. Our Reentry Services segment consists of various community-based and reentry services. Our International Services segment primarily consists of our public-private partnership secure services operations in Australia and South Africa.
Idle Facilities
We are currently marketing (or awaiting activation) 5,205 vacant beds at seven idle facilities to potential customers. The carrying values of these idle facilities totaled $150.1 million as of September 30, 2026, excluding equipment and other assets that can be easily transferred for use at other facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Critical Accounting Estimates
The accompanying unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates based on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. During the nine months ended September 30, 2026, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our critical accounting policies and estimates is contained in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025.
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the notes to our unaudited consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.
Comparison of Third Quarter 2026 and Third Quarter 2025
Revenues
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
U.S. Secure Services |
$ |
542,060 |
71.2 |
% |
$ |
481,628 |
70.6 |
% |
$ |
60,432 |
12.5 |
% |
||||||||||||
|
Electronic Monitoring and Supervision Services |
81,816 |
10.8 |
% |
80,538 |
11.8 |
% |
1,278 |
1.6 |
% |
|||||||||||||||
|
Reentry Services |
74,300 |
9.8 |
% |
72,657 |
10.6 |
% |
1,643 |
2.3 |
% |
|||||||||||||||
|
International Services |
62,886 |
8.3 |
% |
47,518 |
7.0 |
% |
15,368 |
32.3 |
% |
|||||||||||||||
|
Total |
$ |
761,062 |
100.0 |
% |
$ |
682,341 |
100.0 |
% |
$ |
78,721 |
11.5 |
% |
||||||||||||
U.S. Secure Services
Revenues for U.S. Secure Services increased by $60.4 million in the third quarter ended September 30, 2026 (the "Third Quarter 2026") compared to the third quarter ended September 30, 2025 (the "Third Quarter 2025") due to increases of $26.4 million related to the activations and ramp up of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center and new transportation contracts. There were also aggregate net increases of $37.2 million due to increases in occupancies, transportation, rates and/or per diem amounts in connection with contract modifications. Partially offsetting these increases were decreases of approximately $3.2 million related to contract terminations.
The number of compensated mandays in U.S. Secure Services facilities was approximately 4.6 million in Third Quarter 2026 compared to approximately 4.5 million in Third Quarter 2025. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Secure Services facilities was approximately 94% and 90% of capacity in Third Quarter 2026 and Third Quarter 2025, respectively, excluding idle facilities.
Electronic Monitoring and Supervision Services
Revenues for Electronic Monitoring and Supervision Services increased in Third Quarter 2026 compared to Third Quarter 2025 by $1.3 million primarily due to $3.1 million under our new skip tracing contract which was offset by decreases in average participant counts under the Intensive Supervision and Appearance Program ("ISAP"). We also experienced a steady and favorable technology shift to more intensive and higher priced monitoring devices such as ankle monitors which partially offset the decrease in revenue due to decreased average participant counts.
Reentry Services
Revenues for Reentry Services increased by $1.6 million in Third Quarter 2026 compared to Third Quarter 2025 primarily due to aggregate net increases of $4.6 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals due to new day reporting center contracts. These increases were partially offset by decreases due to contract terminations of $3.0 million.
International Services
Revenues for International Services increased by $15.4 million in Third Quarter 2026 compared to Third Quarter 2025. We experienced a net increase of $20.4 million primarily due to new health care contracts and increased populations at our Australian subsidiary. This increase was partially offset by a decrease due to foreign exchange rate fluctuations of $5.0 million.
Operating Expenses
|
2026 |
% of Segment |
2025 |
% of Segment |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
U.S. Secure Services |
$ |
404,298 |
74.6 |
% |
$ |
375,958 |
78.1 |
% |
$ |
28,340 |
7.5 |
% |
||||||||||||
|
Electronic Monitoring and Supervision Services |
41,480 |
50.7 |
% |
40,471 |
50.3 |
% |
1,009 |
2.5 |
% |
|||||||||||||||
|
Reentry Services |
53,148 |
71.5 |
% |
49,669 |
68.4 |
% |
3,479 |
7.0 |
% |
|||||||||||||||
|
International Services |
53,443 |
85.0 |
% |
42,783 |
90.0 |
% |
10,660 |
24.9 |
% |
|||||||||||||||
|
Total |
$ |
552,369 |
72.6 |
% |
$ |
508,881 |
74.6 |
% |
$ |
43,488 |
8.5 |
% |
||||||||||||
U.S. Secure Services
Operating expenses for U.S. Secure Services increased by $28.3 million in Third Quarter 2026 compared to Third Quarter 2025 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and additional staffing and training costs of $20.1 million. We also experienced an increase of approximately $17.4 million related to the activation and ramp up of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center and new transportation contracts. Partially offsetting these increases were decreases of approximately $9.2 million related to contract terminations.
Electronic Monitoring and Supervision Services
Operating expenses for Electronic Monitoring and Supervision Services increased in Third Quarter 2026 compared to Third Quarter 2025 by $1.0 million primarily due to expenses related to our new skip tracing contract.
Reentry Services
Operating expenses for Reentry Services increased by $3.5 million during Third Quarter 2026 compared to Third Quarter 2025 which was primarily due to increased programming needs and referrals as well as new day reporting centers.
International Services
Operating expenses for International Services increased in Third Quarter 2026 compared to Third Quarter 2025 by $10.7 million. We experienced an increase of $6.7 million primarily due to new health care contracts and increased populations at our Australian subsidiary. We also experienced an increase of $4.0 million related to foreign exchange rate fluctuations.
Depreciation and Amortization
|
2026 |
% of Segment |
2025 |
% of Segment |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
U.S. Secure Services |
$ |
23,961 |
4.4 |
% |
$ |
22,424 |
4.7 |
% |
$ |
1,537 |
6.9 |
% |
||||||||||||
|
Electronic Monitoring and Supervision Services |
6,492 |
7.9 |
% |
6,619 |
8.2 |
% |
(127 |
) |
(1.9 |
)% |
||||||||||||||
|
Reentry Services |
3,006 |
4.0 |
% |
3,372 |
4.6 |
% |
(366 |
) |
(10.9 |
)% |
||||||||||||||
|
International Services |
723 |
1.1 |
% |
624 |
1.3 |
% |
99 |
15.9 |
% |
|||||||||||||||
|
Total |
$ |
34,182 |
4.5 |
% |
$ |
33,039 |
4.8 |
% |
$ |
1,143 |
3.5 |
% |
||||||||||||
U.S. Secure Services
U.S. Secure Services depreciation and amortization expense increased in Third Quarter 2026 compared to Third Quarter 2025 primarily due to renovations at certain of our company-owned and leased facilities.
Electronic Monitoring and Supervision Services
Electronic Monitoring and Supervision Services depreciation and amortization expense decreased slightly in Third Quarter 2026 compared to Third Quarter 2025 primarily due to certain assets becoming fully depreciated.
Reentry Services
Reentry Services depreciation and amortization expense decreased slightly in Third Quarter 2026 compared to Third Quarter 2025 primarily due to certain assets becoming fully depreciated.
International Services
International Services depreciation and amortization expense increased slightly in Third Quarter 2026 compared to Third Quarter 2025 primarily due to certain asset additions.
General and Administrative Expenses
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
General and Administrative Expenses |
$ |
72,122 |
9.5 |
% |
$ |
62,121 |
9.1 |
% |
$ |
10,001 |
16.1 |
% |
||||||||||||
General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes, corporate management salaries and benefits, professional fees and other administrative expenses. General and administrative expenses increased by $10.0 million in Third Quarter 2026 compared to Third Quarter 2025 primarily due to higher employee related benefit costs and support for the revenue growth from our new contract awards.
Contingent Litigation Reserve
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Contingent Litigation Reserve |
$ |
- |
(- |
)% |
$ |
37,600 |
5.5 |
% |
$ |
(37,600 |
) |
(100.0 |
)% |
|||||||||||
During Third Quarter 2025, we incurred a non-cash contingent litigation reserve of $37.6 million in connection with a legal case in the State of Washington. The plaintiffs claim that State of Washington minimum wage laws should be enforced with respect to detainees who volunteer to participate in a VWP administered by GEO at the Northwest ICE Processing Center (the "Center") as required by the U.S. Department of Homeland Security under the terms of GEO's contract. We believe that we operate the voluntary work program in full compliance with our contract with ICE and all applicable laws, regulations and standards.
The United States Department of Justice through the Office of the Solicitor General, under both the Biden and Trump administrations, has also strongly supported GEO regarding this case and have filed Statements of Interest and Amicus Briefs in support of GEO. No other Company has ever been successfully required to pay the state minimum wage to volunteer detainees in an ICE facility. As such, we strongly dispute this claim and will be filing a Petition for Writ of Certiorari to the United States Supreme Court in due course. We are also in active discussions with both the Department of Justice and Department of Homeland Security on securing their amicus support for our Petition for Writ of Certiorari to the Supreme Court.
Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10Q for further information.
Non-Operating Expenses
Interest Income and Interest Expense
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Interest Income |
$ |
2,051 |
0.3 |
% |
$ |
2,558 |
0.4 |
% |
$ |
(507 |
) |
(19.8 |
)% |
|||||||||||
|
Interest Expense |
$ |
38,143 |
5.0 |
% |
$ |
38,234 |
5.6 |
% |
$ |
(91 |
) |
(0.2 |
)% |
|||||||||||
Interest income decreased by $0.5 million in Third Quarter 2026 compared to Third Quarter 2025 primarily due to lower cash balances on hand internationally and the effect of foreign exchange rates.
Interest expense decreased slightly in Third Quarter 2026 compared to Third Quarter 2025 primarily due to lower overall principal balances and lower interest rates. On July 14, 2025, we amended our Credit Agreement which increased our borrowing capacity and lowered the applicable interest rate. We also paid off our Term Loan under the Credit Agreement in July 2025. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Loss on Extinguishment of Debt
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Loss on Extinguishment of Debt |
$ |
- |
(- |
)% |
$ |
7,851 |
1.2 |
% |
$ |
(7,851 |
) |
(100.0 |
)% |
|||||||||||
During Third Quarter 2025, we paid off our Term Loan under our Credit Agreement. In connection with the repayment, we wrote off the related deferred financing costs and paid call premiums.
Gain on Asset Divestitures
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Gain on Asset Divestitures |
$ |
- |
(- |
)% |
$ |
232,381 |
34.1 |
% |
$ |
(232,381 |
) |
(100.0 |
)% |
|||||||||||
During Third Quarter 2025, we experienced a gain on asset divestitures of approximately $232.4 million related to the sale of our company-owned 2,388-bed Lawton Correctional Facility located in Lawton, Oklahoma to the State of Oklahoma. Also included in the gain is the sale of our company-owned and previously idled 139-bed Hector Garza Center in San Antonio, Texas.
Income Tax Provision
|
2026 |
Effective Rate |
2025 |
Effective Rate |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Provision for Income Taxes |
$ |
17,910 |
27.0 |
% |
$ |
56,391 |
24.6 |
% |
$ |
(38,481 |
) |
(68.2 |
)% |
|||||||||||
The provision for income taxes decreased in Third Quarter 2026 compared to Third Quarter 2025. In Third Quarter 2026, there was a $2.2 million net discrete tax benefit as compared to a $54.9 million net discrete tax expense in Third Quarter 2025. Included in the net discrete tax benefit in Third Quarter 2026 was a $0.4 million discrete tax benefit compared to no discrete tax impact in Third Quarter 2025 related to stock compensation that vested during the quarter. Included in the net discrete tax expense in the Third Quarter 2025 was a $56.4 million discrete tax expense related to the sale of our Lawton facility. We estimate our 2026 annual effective tax rate to be in the range of approximately 29% to 31%, exclusive of any discrete items.
Equity in Earnings of Affiliates, net of Income Tax Provision
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Equity in Earnings of Affiliates, net of Income Tax Provision |
$ |
816 |
0.1 |
% |
$ |
759 |
0.1 |
% |
$ |
57 |
7.5 |
% |
||||||||||||
Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates was relatively consistent during Third Quarter 2026 compared to Third Quarter 2025.
Comparison of Nine Months 2026 and Nine Months 2025
Revenues
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
U.S. Secure Services |
$ |
1,565,190 |
71.2 |
% |
$ |
1,329,009 |
69.1 |
% |
$ |
236,181 |
17.8 |
% |
||||||||||||
|
Electronic Monitoring and Supervision Services |
232,220 |
10.6 |
% |
237,176 |
12.3 |
% |
(4,956 |
) |
(2.1 |
)% |
||||||||||||||
|
Reentry Services |
217,971 |
9.9 |
% |
214,343 |
11.1 |
% |
3,628 |
1.7 |
% |
|||||||||||||||
|
International Services |
182,966 |
8.3 |
% |
143,326 |
7.4 |
% |
39,640 |
27.7 |
% |
|||||||||||||||
|
Total |
$ |
2,198,347 |
100.0 |
% |
$ |
1,923,854 |
100.0 |
% |
$ |
274,493 |
14.3 |
% |
||||||||||||
U.S. Secure Services
Revenues for U.S. Secure Services increased by $236.2 million in the nine months ended September 30, 2026 (the "Nine Months 2026") compared to the nine months ended September 30, 2025 (the "Nine Months 2025") due to increases of $168.9 million related to the activation and ramp up of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center and new transportation contracts. There were also aggregate net increases of $110.7 million due to increases in occupancies, transportation, rates and/or per diem amounts in connection with contract modifications. Partially offsetting these increases were decreases of approximately $43.4 million related to contract terminations.
The number of compensated mandays in U.S. Secure Services facilities was approximately 13.6 million in Nine Months 2026 compared to approximately 12.7 million in Nine Months 2025. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of
capacity. The average occupancy in our U.S. Secure Services facilities was approximately 93% and 88% of capacity in Nine Months 2026 and Nine Months 2025, respectively, excluding idle facilities.
Electronic Monitoring and Supervision Services
Revenues for Electronic Monitoring and Supervision Services decreased in Nine Months 2026 compared to Nine Months 2025 primarily due to a decrease in average participant counts under ISAP which was partially offset by an increase of $4.6 million under our new skip tracing contract. We also experienced a steady and favorable technology shift to more intensive and higher priced monitoring devices such as ankle monitors which partially offset the decrease in revenue due to decreased average participant counts.
Reentry Services
Revenues for Reentry Services increased by $3.6 million in Nine Months 2026 compared to Nine Months 2025 primarily due to aggregate net increases of $10.6 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals. These increases were partially offset by decreases due to contract terminations of $7.0 million.
International Services
Revenues for International Services increased by $39.6 million in Nine Months 2026 compared to Nine Months 2025. We experienced a net increase of $57.7 million primarily due to new health care contracts and increased populations at our Australian subsidiary. This increase was partially offset by a decrease due to foreign exchange rate fluctuations of $18.1 million.
Operating Expenses
|
2026 |
% of Segment |
2025 |
% of Segment |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
U.S. Secure Services |
$ |
1,164,812 |
74.4 |
% |
$ |
1,032,473 |
77.7 |
% |
$ |
132,339 |
12.8 |
% |
||||||||||||
|
Electronic Monitoring and Supervision Services |
122,438 |
52.7 |
% |
122,456 |
51.6 |
% |
(18 |
) |
(0.0 |
)% |
||||||||||||||
|
Reentry Services |
159,988 |
73.4 |
% |
153,743 |
71.7 |
% |
6,245 |
4.1 |
% |
|||||||||||||||
|
International Services |
157,343 |
86.0 |
% |
129,902 |
90.6 |
% |
27,441 |
21.1 |
% |
|||||||||||||||
|
Total |
$ |
1,604,581 |
73.0 |
% |
$ |
1,438,574 |
74.8 |
% |
$ |
166,007 |
11.5 |
% |
||||||||||||
U.S. Secure Services
Operating expenses for U.S. Secure Services increased by $132.3 million in Nine Months 2026 compared to Nine Months 2025 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and additional staffing and training costs of $94.2 million. We also experienced an increase of approximately $86.4 million related to the activation and ramp up of our new contracts at our company-owned Delaney Hall, North Lake and D. Ray James facilities as well as our managed-only contract at the North Florida Detention Center and new transportation contracts. Partially offsetting these increases were decreases of approximately $48.3 million related to contract terminations.
Electronic Monitoring and Supervision Services
Operating expenses for Electronic Monitoring and Supervision Services decreased slightly in Nine Months 2026 compared to Nine Months 2025 due to a decrease in average participant counts under ISAP which was partially offset by an increase of approximately $1.0 million related to our new skip tracing contract.
Reentry Services
Operating expenses for Reentry Services increased by $6.2 million during Nine Months 2026 compared to Nine Months 2025. We experienced an aggregate net increase of $7.4 million due to increased programming needs and referrals due to new day reporting center contracts which was partially offset by a decrease of $1.2 million due to contract terminations.
International Services
Operating expenses for International Services increased in Nine Months 2026 compared to Nine Months 2025 by $27.4 million. We experienced an increase of $13.3 million primarily due to new health care contracts and increased populations at our Australian subsidiary. We also experienced an increase of $14.1 million related to foreign exchange rate fluctuations.
Depreciation and Amortization
|
2026 |
% of Segment |
2025 |
% of Segment |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
U.S. Secure Services |
$ |
71,953 |
4.6 |
% |
$ |
67,143 |
5.1 |
% |
$ |
4,810 |
7.2 |
% |
||||||||||||
|
Electronic Monitoring and Supervision Services |
19,077 |
8.2 |
% |
18,764 |
7.9 |
% |
313 |
1.7 |
% |
|||||||||||||||
|
Reentry Services |
9,104 |
4.2 |
% |
10,241 |
4.8 |
% |
(1,137 |
) |
(11.1 |
)% |
||||||||||||||
|
International Services |
2,074 |
1.1 |
% |
1,759 |
1.2 |
% |
315 |
17.9 |
% |
|||||||||||||||
|
Total |
$ |
102,208 |
4.6 |
% |
$ |
97,907 |
5.1 |
% |
$ |
4,301 |
4.4 |
% |
||||||||||||
U.S. Secure Services
U.S. Secure Services depreciation and amortization expense increased in Nine Months 2026 compared to Nine Months 2025 primarily due to renovations at certain of our company-owned and leased facilities.
Electronic Monitoring and Supervision Services
Electronic Monitoring and Supervision Services depreciation and amortization expense increased slightly in Nine Months 2026 compared to Nine Months 2025 primarily due to equipment additions.
Reentry Services
Reentry Services depreciation and amortization expense decreased in Nine Months 2026 compared to Nine Months 2025 primarily due to certain assets becoming fully depreciated.
International Services
International Services depreciation and amortization expense increased slightly in Nine Months 2026 compared to Nine Months 2025 primarily due to certain asset additions.
General and Administrative Expenses
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
General and Administrative Expenses |
$ |
198,167 |
9.0 |
% |
$ |
176,116 |
9.2 |
% |
$ |
22,051 |
12.5 |
% |
||||||||||||
General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes, corporate management salaries and benefits, professional fees and other administrative expenses. General and administrative expenses increased by $22.1 million in Nine Months 2026 compared to Nine Months 2025 primarily due to higher employee related benefit costs and support for the revenue growth from our new contract awards.
Contingent Litigation Reserve
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Contingent Litigation Reserve |
$ |
- |
(- |
)% |
$ |
37,600 |
2.0 |
% |
$ |
(37,600 |
) |
(100.0 |
)% |
|||||||||||
During Nine Months 2025, we incurred a non-cash contingent litigation reserve of $37.6 million in connection with a legal case in the State of Washington. The plaintiffs claim that State of Washington minimum wage laws should be enforced with respect to detainees who volunteer to participate in a VWP administered by GEO at the Northwest ICE Processing Center (the "Center") as required by the U.S. Department of Homeland Security under the terms of GEO's contract. We believe that we operate the voluntary work program in full compliance with our contract with ICE and all applicable laws, regulations and standards.
The United States Department of Justice through the Office of the Solicitor General, under both the Biden and Trump administrations, has also strongly supported GEO regarding this case and have filed Statements of Interest and Amicus Briefs in support of GEO. No other Company has ever been successfully required to pay the state minimum wage to volunteer detainees in an ICE facility. As such, we strongly dispute this claim and will be filing a Petition for Writ of Certiorari to the United States Supreme Court in due course. We are also in active discussions with both the Department of Justice and Department of Homeland Security on securing their amicus support for our Petition for Writ of Certiorari to the Supreme Court.
Refer to Note 11 - Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10Q for further information.
Non-Operating Expenses
Interest Income and Interest Expense
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Interest Income |
$ |
6,951 |
0.3 |
% |
$ |
7,021 |
0.4 |
% |
$ |
(70 |
) |
(1.0 |
)% |
|||||||||||
|
Interest Expense |
$ |
115,000 |
5.2 |
% |
$ |
122,582 |
6.4 |
% |
$ |
(7,582 |
) |
(6.2 |
)% |
|||||||||||
Interest income decreased slightly in Nine Months 2026 compared to Nine Months 2025 primarily due to lower cash balances on hand internationally and the effect of foreign exchange rates.
Interest expense decreased by $7.6 million in Nine Months 2026 compared to Nine Months 2025 primarily due to lower overall principal balances and lower interest rates. On July 14, 2025, we amended our Credit Agreement which increased our borrowing capacity and lowered the applicable interest rate. We also paid off our Term Loan under the Credit Agreement in July 2025. Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Loss on Extinguishment of Debt
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Loss on Extinguishment of Debt |
$ |
- |
0.0 |
% |
$ |
8,446 |
0.4 |
% |
$ |
(8,446 |
) |
(100.0 |
)% |
|||||||||||
During Nine Months 2025, we paid off our Term Loan under our Credit Agreement. In connection with the repayment, we wrote off the related deferred financing costs and paid call premiums.
(Loss) Gain on Asset Divestitures/Impairment
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
(Loss) Gain on Asset Divestitures/Impairment |
$ |
(673 |
) |
(0.0 |
)% |
$ |
232,381 |
12.1 |
% |
$ |
(233,054 |
) |
(100.3 |
)% |
||||||||||
In Nine Months 2026, we received a sale contract for two buildings in Pennsylvania and a sale contract for a parcel of land located in Illinois that were less than their carrying values which resulted in an impairment charge. We also experienced a loss on assets divested in connection with certain closed day reporting centers. In Nine Months 2025, we experienced a gain on asset divestitures of approximately $232.4 million related to the sale of our company-owned 2,388-bed Lawton Correctional Facility located in Lawton Oklahoma to the State of Oklahoma. Also included in the gain is the sale of our company-owned and previously idled 139-bed Hector Garza Center in San Antonio, Texas.
Other Income
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Other Income |
$ |
- |
(- |
)% |
$ |
5,514 |
0.3 |
% |
$ |
(5,514 |
) |
(100.0 |
)% |
|||||||||||
In Nine Months 2025, we received an aggregate of $5.5 million under the Employee Retention Tax Credit provisions of the CARES Act. This amount was recognized as other income in the consolidated financial statements.
Income Tax Provision
|
2026 |
Effective Rate |
2025 |
Effective Rate |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Provision for Income Taxes |
$ |
51,814 |
28.1 |
% |
$ |
68,771 |
23.9 |
% |
$ |
(16,957 |
) |
(24.7 |
)% |
|||||||||||
The provision for income taxes decreased and the effective tax rate increased in Nine Months 2026 compared to Nine Months 2025. In Nine Months 2026, there was a $3.5 million net discrete tax benefit as compared to a $50.5 million net discrete tax expense in Nine Months 2025. Included in the net discrete tax benefit in Nine Months 2026 was a $1.7 million as compared to a $4.5 million
discrete tax benefit in Nine Months 2025 related to stock compensation that vested during the respective periods. Also included in the net discrete tax expense in the Nine Months 2025 was a $56.4 million discrete tax expense related to the sale of our Lawton facility. We estimate our 2026 annual effective tax rate to be in the range of approximately 29% to 31%, exclusive of any discrete items.
Equity in Earnings of Affiliates, net of Income Tax Provision
|
2026 |
% of Revenue |
2025 |
% of Revenue |
$ Change |
% Change |
|||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||||
|
Equity in Earnings of Affiliates, net of Income Tax Provision |
$ |
2,114 |
0.1 |
% |
$ |
3,764 |
0.2 |
% |
$ |
(1,650 |
) |
(43.8 |
)% |
|||||||||||
Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased during Nine Months 2026 compared to Nine Months 2025 primarily due to less favorable performance at SACS.
Financial Condition
Capital Requirements
Our current cash requirements consist of amounts needed for working capital, debt service, supply purchases, research and development costs related to new electronic monitoring products, investments in joint ventures, and capital expenditures related to either the development of new secure, processing and reentry facilities, or the maintenance of existing facilities. In addition, some of our management contracts require us to make substantial initial expenditures of cash in connection with opening or renovating a facility. Generally, these initial expenditures are subsequently fully or partially recoverable as pass-through costs or are billable as a component of the per diem rates or monthly fixed fees to the contracting agency over the original term of the contract. Additional capital needs may also arise in the future with respect to possible acquisitions, other corporate transactions or other corporate purposes.
We currently have contractual commitments for a number of projects using Company financing. We estimate that the cost of these existing active capital projects will be approximately $70.4 million of which $44.3 million was spent through September 30, 2026. We estimate that the remaining capital requirements related to these capital projects will be $26.1 million which will be spent through the remainder of 2026.
We plan to fund all of our capital needs, including capital expenditures, from cash on hand, cash from operations, borrowings under our Amended and Restated Credit Agreement (as defined below) and any other financings which our management and Board, in their discretion, may consummate. Currently, our primary source of liquidity to meet these requirements is cash flow from operations and borrowings under our Amended and Restated Credit Agreement. Our management believes that our financial resources and sources of liquidity will allow us to manage our business, financial condition, results of operations and cash flows. We completed our annual budgeting process, and for 2026, we will continue to strategically manage our capital expenditures to maintain both short and long term financial objectives. Additionally, we may from time to time pursue transactions for the potential sale or acquisition of assets and businesses and/or other strategic transactions. Taking into account the impact of the federal government shutdown, that ended on April 30, 2026, our management believes that cash on hand, cash flows from operations and availability under our Amended and Restated Credit Agreement will be adequate to support our capital requirements for 2026 as disclosed under "Capital Requirements" above and the next twelve months and beyond.
Liquidity and Capital Resources
Asset Sales
On October 2, 2026 we entered into a Purchase and Sale Agreement for the sales of our Adelanto West, Adelanto East and Desert View ICE Processing Centers located in Adelanto, California to the United States of America and its assigns, by and through the Department of Homeland Security, for an aggregate gross sales price of $950 million. We will continue to provide support services under our existing contract with ICE for Adelanto East, Adelanto West, and Desert View, which has a full term effective through December 19, 2034, inclusive of the current term ending December 19, 2029 and a five-year option period. Refer to Note 15 - Subsequent Events of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Indebtedness
Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
Debt Transactions
On October 15, 2026 we completed the redemption of all of the $650 million in outstanding aggregate principal amount of our 8.625% Senior Secured Notes due 2029. On October 5, 2026, we entered into the Amended and Restated Credit Agreement to extend the maturity of our $550 million Revolving Credit Facility to July 14, 2031 and to increase our restricted payments capacity. Refer to Note 15 - Subsequent Events of the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.
We consider opportunities for future business and/or asset acquisitions or dispositions as we deem appropriate when market conditions present opportunities. If we are successful in our pursuit of any new projects, our cash on hand, cash flows from operations and borrowings under the new Amended and Restated Credit Agreement may not provide sufficient liquidity to meet our capital needs and we could be forced to seek additional financing or refinance our existing indebtedness. There can be no assurance that any such financing or refinancing would be available to us on terms equal to or more favorable than our current financing terms, or at all. In the future, our access to capital and ability to compete for future capital-intensive projects will also be dependent upon, among other things, our ability to meet certain financial covenants in the indenture governing the Unsecured Notes and our Amended and Restated Credit Agreement. A substantial decline in our financial performance could limit our access to capital pursuant to these covenants and have a material adverse effect on our liquidity and capital resources and, as a result, on our financial condition and results of operations. In addition to these foregoing potential constraints on our capital, and including the impact of the federal government shutdown, that ended on April 30, 2026, a number of state government agencies have been suffering from budget deficits and liquidity issues. While we were in compliance with our debt covenants as of September 30, 2026 and we expect to continue to be in compliance with our debt covenants, if these constraints were to intensify, our liquidity could be materially adversely impacted as could our ability to remain in compliance with these debt covenants.
Guarantor Financial Information
GEO's Unsecured Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of our wholly owned domestic subsidiaries (the "Subsidiary Guarantors").
Summarized financial information is provided for GEO and the Subsidiary Guarantors on a combined basis in accordance with SEC Regulation S-X Rules 3-10 and 13-01. The accounting policies used in the preparation of this summarized financial information are consistent with those elsewhere in the consolidated financial statements of the Company, except that intercompany transactions and balances of GEO and the Subsidiary Guarantor entities with non-guarantor entities have not been eliminated. Intercompany transactions between GEO and the Subsidiary Guarantors have been eliminated and equity in earnings from and investments in non-guarantor subsidiaries have not been presented.
Summarized statement of operations (in thousands):
|
Nine Months Ended |
Nine Months Ended |
|||||||
|
Net operating revenues |
$ |
2,005,819 |
$ |
1,770,984 |
||||
|
Income from operations |
261,012 |
151,177 |
||||||
|
Net income |
107,298 |
198,375 |
||||||
|
Net income attributable to The GEO Group, Inc. |
107,298 |
198,375 |
||||||
Summarized balance sheets (in thousands):
|
September 30, 2026 |
December 31, 2025 |
|||||||
|
Current assets |
$ |
714,083 |
$ |
645,982 |
||||
|
Noncurrent assets (a) |
3,015,721 |
2,971,002 |
||||||
|
Current liabilities |
356,367 |
257,936 |
||||||
|
Noncurrent liabilities (b) |
1,978,655 |
2,021,019 |
||||||
(a) Includes amounts due from non-guarantor subsidiaries of $54.3 million and $52.8 million as of September 30, 2026 and December 31, 2025, respectively.
(b) Includes amounts due to non-guarantor subsidiaries of $40.9 million and $42.1 million as of September 30, 2026 and December 31, 2025, respectively.
Off-Balance Sheet Arrangements
Except as discussed in the notes to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements.
Cash Flow
Cash, cash equivalents and restricted cash and cash equivalents as of September 30, 2026 was $274.1 million compared to $231.6 million as of September 30, 2025.
Operating Activities
Net cash provided by operating activities amounted to $445.4 million for the nine months ended September 30, 2026 versus net cash provided by operating activities of $189.9 million for the nine months ended September 30, 2025. Cash provided by operating activities during the nine months ended September 30, 2026 was positively impacted by non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures, loss on disposal of property and equipment, net, realized loss on investments and stock-based compensation expense. Equity in earnings of affiliates negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $41.9 million, representing a positive impact on cash. The decrease was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities increased by $136.7 million which positively impacted cash. The increase was primarily driven by the timing of payments.
Net cash provided by operating activities during the nine months ended September 30, 2025 was positively impacted by non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, discount and/or premium and other non-cash interest, loss on extinguishment of debt, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax, gain on asset divestitures, and realized/unrealized gain on investments negatively impacted cash. Accounts receivable, prepaid expenses and other assets increased in total by $63.4 million, representing a negative impact on cash. The increase was primarily driven by the timing of billings and collections. Accounts payable, accrued expenses and other liabilities increased by $142.8 million which positively impacted cash. The increase was primarily driven by the timing of payments.
Investing Activities
Net cash used in investing activities of $85.9 million during the nine months ended September 30, 2026 was primarily the result of capital expenditures of $74.7 million, purchases of marketable securities of $45.2 million and proceeds from sales of marketable securities of $32.8 million. Net cash provided by investing activities of $143.8 million during the nine months ended September 30, 2025 was primarily the result of proceeds from sale of real estate and other assets of $321.1 million, capital expenditures of $161.3 million, purchases of marketable securities of $18.8 million and proceeds from sales of marketable securities of $2.8 million.
Financing Activities
Net cash used in financing activities during the nine months ended September 30, 2026 was approximately $211.2 million compared to net cash used in financing activities of $232.2 million during the nine months ended September 30, 2025. Net cash used in financing activities during the nine months ended September 30, 2026 was primarily the result of proceeds from the revolver of $137.0 million, payments on the revolver of $259.1 million, payments on long-term debt of $1.0 million, proceeds from the exercise of stock options of $5.0 million, payment for the repurchase of common stock of $86.7 million and taxes paid related to net share settlement of equity awards of $6.5 million. Net cash used in financing activities during the nine months ended September 30, 2025 was primarily the result of payments on the revolver of $30.0 million, proceeds from the revolver of $182.6 million, payments on long-term debt of $321.9 million, proceeds from the exercise of stock options of $4.4 million and taxes paid related to net share settlement of equity awards of $24.4 million.
Non-GAAP Measures
EBITDA is defined as net income adjusted by adding provision for income tax, interest expense, net of interest income and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for net loss attributable to non-controlling interests, stock-based
compensation expenses, pre-tax, non-cash contingent liability and litigation costs and settlements,pre-tax, start-up costs, pre-tax, transaction fees, pre-tax, employee restructuring expenses, pre-tax, close-out expenses, pre-tax, (gain) loss on asset divestitures/impairment, pre-tax and other non-cash revenues and expenses, pre-tax, and certain other adjustments as defined from time to time.
Given the nature of our business as a real estate owner and support services provider, we believe that EBITDA and Adjusted EBITDA 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, EBITDA and Adjusted EBITDA 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.
The adjustments we make to derive the non-GAAP measures of EBITDA and Adjusted EBITDA 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.
EBITDA and Adjusted EBITDA 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.
Our reconciliation of net income to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2026 and 2025 is as follows (in thousands):
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
September 30, 2026 |
September 30, 2025 |
|||||||||||||
|
Net Income |
$ |
49,203 |
$ |
173,922 |
$ |
134,969 |
$ |
222,538 |
||||||||
|
Add: |
||||||||||||||||
|
Income tax provision * |
18,209 |
56,610 |
52,558 |
69,389 |
||||||||||||
|
Interest expense, net of interest income ** |
36,092 |
43,527 |
108,049 |
124,007 |
||||||||||||
|
Depreciation and amortization |
34,182 |
33,039 |
102,208 |
97,907 |
||||||||||||
|
EBITDA |
$ |
137,686 |
$ |
307,098 |
$ |
397,784 |
$ |
513,841 |
||||||||
|
Add (Subtract): |
||||||||||||||||
|
Net loss attributable to noncontrolling interests |
11 |
18 |
82 |
68 |
||||||||||||
|
Stock-based compensation expenses, pre-tax |
5,002 |
7,627 |
17,691 |
19,621 |
||||||||||||
|
Non-cash contingent liability and litigation and settlement costs, pre-tax |
410 |
37,661 |
410 |
38,192 |
||||||||||||
|
(Gain) Loss on asset divestitures/impairment, pre-tax |
- |
(232,381 |
) |
673 |
(232,381 |
) |
||||||||||
|
Transaction fees, pre-tax |
123 |
21 |
445 |
76 |
||||||||||||
|
Employee restructuring expenses, pre-tax |
1,250 |
41 |
1,842 |
373 |
||||||||||||
|
Start-up expenses, pre-tax |
1,208 |
400 |
1,717 |
400 |
||||||||||||
|
Close-out expenses, pre-tax |
459 |
748 |
478 |
1,424 |
||||||||||||
|
Other non-cash revenues and expenses, pre-tax |
(811 |
) |
(1,140 |
) |
(2,374 |
) |
(3,159 |
) |
||||||||
|
Adjusted EBITDA |
$ |
145,338 |
$ |
120,093 |
$ |
418,748 |
$ |
338,455 |
||||||||
|
* includes income tax provision on equity in earnings of affiliate |
||||||||||||||||
|
** includes loss on extinguishment of debt |
||||||||||||||||
Outlook
The following discussion contains statements that are not limited to historical statements and, therefore, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated or implied in the forward-looking statements. Please refer to "Part I - Item 1A. Risk Factors" and the "Forward-Looking Statements - Safe Harbor" sections in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 for further discussion on forward-looking statements and the risks and other factors that could prevent us from achieving our goals and cause the assumptions underlying the forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements.
We continue to be encouraged by the current landscape of growth opportunities. We are preparing for what we believe is an unprecedented opportunity to help the federal government meet its expanded immigration enforcement priorities. We are taking several important steps to meet this opportunity, including making a previously announced significant investment in capital expenditures to strengthen our capabilities to deliver expanded detention capacity, secure transportation, and electronic monitoring and related services to U.S. Immigration and Customs Enforcement and the federal government. On October 2, 2026, we entered into a Purchase and Sale Agreement and closed on the sales of our 1,280-bed Adelanto West ICE Processing Center ("Adelanto West"), 660-bed Adelanto East ICE Processing Center ("Adelanto East"), and 704-bed Desert View Annex ("Desert View") located in Adelanto, California to the United States of America and its assigns, by and through the Department of Homeland Security, for an aggregate gross sales price of $950 million. We continue to be in discussions with ICE regarding the potential sale of multiple facilities, subject to mutual agreement on price and our continued management of those facilities under long-term support services contracts. At this time, there is no definitive agreement in place with ICE and no precise timeline for the closing of any such transactions. Also, we can give no assurance that these transactions will take place at all.
Any positive trends in the industry may be offset by several factors, including the impact of the federal government shutdown that ended on April 30, 2026 and any future federal government shutdown, budgetary constraints, contract modifications, contract terminations, contract non-renewals, contract re-bids and/or the decision to not re-bid a contract after expiration of the contract term and the impact of any other potential changes to the willingness or ability to maintain or grow public-private partnerships on the part of other government agencies.
Operating Expenses
Operating expenses consist of those expenses incurred in the operation and management of our contracts to provide services to our governmental clients. Labor and related costs represented approximately 72% and 70% of our operating expenses during the nine months ended September 30, 2026 and 2025, respectively. Additional operating expenses include food, utilities and medical costs. During the nine months ended September 30, 2026 and 2025, operating expenses totaled approximately 73% and 75%, respectively, of our consolidated revenues. We expect our operating expenses as a percentage of revenues in 2026 will be impacted by the opening of any new or existing idle facilities as a result of the cost of transitioning and/or start-up operations related to a facility opening. We also expect that our operating expenses will be impacted by the effect of inflation on costs related to personnel, utilities, insurance, and medical and food, among other operational costs. During 2026, we will incur carrying costs for facilities that are currently vacant.
General and Administrative Expenses
General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees and other administrative expenses. During the each of the nine months ended September 30, 2026 and 2025, general and administrative expenses totaled approximately 9% of our consolidated revenues. We expect general and administrative expenses as a percentage of revenues in 2026 to remain consistent or decrease as a result of cost savings initiatives.
Idle Facilities
We are currently marketing (or awaiting activation) 5,205 vacant beds at five U.S. Secure Services and at two of our Reentry Services idle facilities to potential customers. One of our U.S. Secure Services idle facilities, the 700-bed Cheyenne Mountain Recovery Center, is currently under a contract that has not yet been activated. The annual net carrying cost of our idle facilities in 2026 is estimated to be $21.9 million, including depreciation expense of $12.8 million. As of September 30, 2026, these seven facilities had a combined net book value of $150.1 million. We currently do not have any firm commitment or agreement in place to activate the idle facilities (except for the Cheyenne Mountain Recovery Center). Historically, some facilities have been idle for multiple years before they received a new contract award. These idle facilities are included in the U.S. Secure Services and Reentry Services segments. The per diem rates that we charge our clients often vary by contract across our portfolio. However, if the remaining idle facilities were to be activated using our U.S. Secure Services and Reentry Services average per diem rates in 2026 (calculated as the U.S. Secure Services and Reentry Services revenue divided by the number of U.S. Secure Services and Reentry Services mandays) and based on the average occupancy rate in our facilities through September 30, 2026, we would expect to receive incremental annualized revenue
of approximately $211 million and an annualized increase in earnings per share of approximately $0.25 to $0.30 per share based on our average operating margins.
The GEO Group Inc. published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 21:21 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]