GEO · The GEO Group, Inc.

Period Performance

Period Performance

In Q1 2026, consolidated revenue rose 16.6% to $705.2 million from $604.6 million in Q1 2025, driven primarily by the U.S. Secure Services segment. Net income nearly doubled to $38.3 million from $19.5 million, reflecting higher revenue, improved operating margins, and lower interest expense. Interest expense decreased by $4.1 million (9.8%) due to lower principal balances and a favorable credit agreement amendment in July 2025. The effective tax rate increased to 28.5% from 8.9%, largely because of a decline in discrete tax benefits (from $4.2 million to $0.9 million). Operating expenses as a percentage of revenue improved to 74.0% from 75.0%, while general and administrative expenses declined to 8.6% of revenue from 9.6%.

Segment Dynamics

• U.S. Secure Services: Revenue jumped 23.9% to $502.7 million, fueled by new contracts at Delaney Hall, North Lake, D. Ray James, and North Florida Detention Center, plus higher occupancy and rates across the portfolio. Compensated mandays increased to 4.4 million from 4.1 million, and average occupancy rose to 91.0% from 87.6% (excluding idle facilities). Operating expenses grew 20.3%, but as a percentage of segment revenue they improved to 75.2% from 77.4%.
• Electronic Monitoring and Supervision Services: Revenue declined 4.5% to $74.2 million due to lower average participant counts under the ISAP program. Operating expenses remained flat.
• Reentry Services: Revenue edged up 1.2% to $71.2 million, driven by increased census levels and new day reporting center contracts, partially offset by contract terminations. Operating expenses rose 3.1%.
• International Services: Revenue increased 12.3% to $57.1 million, benefiting from new health care contracts in Australia and favorable foreign exchange ($5.6 million gain), partially offset by the transition of Junee Correctional Centre to the government. Operating expenses as a percentage of segment revenue improved to 84.6% from 90.2%.

Forward View

Management highlighted strong growth opportunities tied to federal immigration enforcement priorities, including ongoing discussions with ICE for potential facility sales and long-term support contracts. For 2026, the company expects capital expenditures of $17.2 million on active projects and carries $26.7 million in annual costs for eight idle facilities (6,646 beds). Activation of these idle beds could yield incremental annualized revenue of approximately $300 million and EPS accretion of $0.25-$0.30. The effective tax rate for 2026 is projected between 29% and 31%, excluding discrete items. General and administrative expenses are expected to remain consistent or decrease as a percentage of revenue. Operating expenses will be influenced by new facility openings and inflation, particularly in labor (72% of operating expenses). The federal government shutdown ended April 30, 2026, and management believes cash flows and credit availability are adequate to support near-term capital needs.

Cash Flow Quality

Cash Flow Quality

The provided document excerpt does not contain the consolidated statement of cash flows. Only a reconciliation of cash, cash equivalents, and restricted cash is presented, along with notes and equity changes. Without the actual cash flow statement line items (e.g., net cash from operating, investing, financing activities), it is impossible to assess cash flow quality, capex intensity, or free cash flow coverage. The reconciliation shows total cash, cash equivalents, and restricted cash of $141,764k at March 31, 2026, and $117,204k at March 31, 2025, but no detail on operating or investing cash flows. Therefore, no meaningful analysis can be performed.