GEO Missed Q1 Targets On Rising Costs And Debt, Guides Q2 Below Street Estimates

GEO Group, Inc. GEO shares are trading lower after the company reported first-quarter revenue of $604.6 million, which missed the consensus of $611.81 million.

• Adjusted EBITDA declined to $99.8 million from $117.6 million a year ago quarter.
• Adjusted EPS of 14 cents came below the consensus of 18 cents.
• The results reflect a general and administrative expense increase of around $5 million.
• At the end of the first quarter, net debt totaled approximately $1.68 billion, with around $65 million in cash and cash equivalents.

George C. Zoley, Executive Chairman of GEO, said, “During the first quarter of 2025, we announced two important contract awards for the reactivation of two company-owned facilities totaling 2,800 beds and representing in excess of $130 million in annualized revenues.”

”We have taken several important steps to be prepared to meet that opportunity, including making a significant investment commitment of $70 million to strengthen our capabilities to deliver expanded detention capacity, secure transportation, and electronic monitoring services to ICE and the federal government. We also recently completed a reorganization of our senior management team to oversee the operational execution of this expected future growth activity.”

Outlook: Geo raised FY25 outlook for EPS to 77 cents to 89 cents from 74 cents to 88 cents (vs. the consensus estimate of $1.22) and revenue to around $2.53 billion from $2.50 billion (vs. consensus of $2.66 billion).

For the second quarter, the company expects second quarter GAAP EPS of 15 cents to 17 cents vs. the street view of 24 cents and sales of $615 million—$625 million vs. the consensus of $635.62 million.

In 2025, the company expects to further reduce the total net debt by around $150 million to $175 million, bringing the total net debt to about $1.54 billion.

For 2025, the company projects capital expenditures of $120 million-$135 million.

“The first half of the year is expected to be impacted by higher overhead and operating expenses as well as increased capital expenditures to position our company for future growth, which is expected to begin to layer in during the second half of 2025 and normalize in 2026.”, added Zoley.

Investors can gain exposure to the stock via Ballast Small/Mid Cap ETF MGMT and Innovator IBD Breakout Opportunities ETF BOUT.

Price Action: GEO shares are down 3.16% at $30.37 at the last check Wednesday.

Read Next:

Image: Shutterstock