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The GEO Group Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2012 05:35PM
The GEO Group Inc. (GEO) filed Quarterly Report for the period ended 2012-04-01. Geo Grp Inc/the has a market cap of $1.27 billion; its shares were traded at around $22.49 with a P/E ratio of 13.4 and P/S ratio of 0.8. Geo Grp Inc/the had an annual average earning growth of 20.5% over the past 10 years.
Highlight of Business Operations:Revenues increased in First Quarter 2012 compared to First Quarter 2011 partially due to aggregate increases of $8.8 million due to the activation and intake of inmates at the 650-bed Adelanto ICE Processing Center East (Adelanto East) in August 2011, the 1,500-bed Riverbend Correctional Facility (Riverbend) in December 2011, the Indiana Short Term Offender Program (STOP Program) in March 2011 and the 600-bed Karnes Civil Detention Center (Karnes) in March 2012. We also experienced aggregate increases in revenues of $6.1 million at certain of our facilities primarily due to increases in population and/ or rates. These increases were partially offset by an aggregate decrease of $12.7 million due to contract terminations and other decreases related to lower rates and populations at some facilities.
The increase in revenues for GEO Care in First Quarter 2012 compared to First Quarter 2011 is primarily attributable to a full quarter of revenues generated by BI compared to the partial month of revenues in First Quarter 2011 which contributed to an increase of $14.3 million. We also experienced an increase in revenues of $1.9 million from the opening of Montgomery County Mental Health Treatment Facility (Montgomery County) in March 2011. These increases were partially offset by a decrease in revenues of $3.9 million related to our terminated contracts.
Operating expenses for GEO Care increased $6.0 million during First Quarter 2012 from First Quarter 2011 primarily due to BI which was operating for a full quarter during First Quarter 2012 compared to a partial quarter during First Quarter 2011. We also experienced an increase in operating expenses during First Quarter 2012 for the operation of Montgomery County which opened in March 2011. These increases were partially offset by a decrease in operating expenses of $3.4 million for terminated contracts. During First Quarter 2012, we experienced a decrease in operating expenses as a percentage of revenue due to improved margins resulting from our acquisition of BI and also due to nonrecurring start up costs incurred in First Quarter 2011 for the opening of Montgomery County.
General and administrative expenses comprise substantially all of our other unallocated operating expenses including primarily corporate management salaries and benefits, professional fees and other administrative expenses. The decrease in general and administrative expenses in First Quarter 2012 compared to First Quarter 2011 was due to $5.7 million of nonrecurring acquisition related costs in 2011. Excluding the impact of acquisition related costs, general and administrative expenses are slightly lower as a percentage of revenues in First Quarter 2012 as a result of lower professional fees, bank fees and other miscellaneous expenses. We anticipate that general and administrative expenses, excluding any acquisition related costs, as a percentage of revenue will be slightly lower in fiscal 2012 than in fiscal 2011.
Equity in earnings of affiliates, presented net of income taxes, represents the earnings (loss) of SACS and GEOAmey, respectively. Overall, we experienced a slight increase in equity in earnings of affiliates due to an increase in the net earnings of SACS in First Quarter 2012 compared to First Quarter 2011. In the prior year, SACS incurred additional taxes on a $5.4 million dividend distribution from SACS that did not occur in First Quarter 2012. SACS increase in net earnings of $0.6 million was offset by a $0.5 million loss from the operations of GEOAmey, which began operating in August 2011.
Stocks Discussed: GEO,