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GEO Group reports slightly higher earnings; stock dips after Democrats gain control of House
The Boca Raton private prison company lowered its guidance for the fourth quarter due to hurricane-related costs
GEO Group’s third quarter earnings beat analysts expectations, but its stock still dipped slightly on Wednesday after the Democrats gained control of the House on Tuesday.
The Boca Raton-based company, which is is one of the largest private prison and detention companies in the U.S. and operates as a Real Estate Investment Trust (REIT), saw its stock fall 2.35 percent to $22.16 at 2 p.m.
The company reduced its guidance on revenue for the fourth quarter to between $587 million to $592 million, partly caused by costs associated with Hurricane Michael.
Investors may also be skittish about the impact that the Democrat-controlled Congress could have on the private prison industry. GEO Group CEO George Zoley said in a conference call with analysts after its earnings release, however, that he didn’t see a material impact on its business coming from the midterm election.
The company reported on Wednesday that its net income increased 2 percent to $39.3 million, or 33 cents per diluted share, compared to $38.5 million, or 31 cents per diluted share, in the third quarter 2017. GEO also reported total revenue for the third quarter 2018 of $583.5 million up 3 percent from $566.8 million for the third quarter 2017.
The company said about 2 cents per diluted share in losses came from the damage caused by Hurricane Michael to the its Bay Correctional Facility in Florida, for which GEO Group expects to receive insurance reimbursement proceeds in 2019.
GEO Group is heavily dependent on federal and state government contracts and spent $1.7 million on lobbying efforts in 2017, according to the Center for Responsive Politics. The firm also donated more than half a million dollars to President Trump’s campaign and inaugural committee and to other Republican candidates, including to Florida’s Governor-elect Ron DeSantis.
The company’s stock dropped significantly in 2016 after the Obama administration announced its plans to phase out private prison contracts with the federal government. Under Trump, U.S. Attorney General Jeff Sessions reversed this decision in 2017 and Geo Group gained the first contract for an immigration detention center under the Trump presidency.
GEO’s has operations in the U.S., Australia, South Africa and the United Kingdom, including owning and managing 136 facilities with about 96,000 beds, including projects under development. The company has six facilities in Florida, including one in Deerfield Beach. GEO has more than two dozen facilities in California.