The GEO Group Announces Exercise of Five-Year Option Period for Adelanto ICE Processing Center Contract

Rhea-AI Summary

The GEO Group (NYSE: GEO) has announced that U.S. Immigration and Customs Enforcement (ICE) has exercised a five-year option period for the contract of the Adelanto ICE Processing Center in California. This extension will prolong the contract through December 19, 2029. The original 15-year contract, initiated on December 19, 2019, includes a five-year base period and two five-year option periods.

The Adelanto Center, owned by GEO, has a capacity of 1,940 beds and employs approximately 350 people. George C. Zoley, Executive Chairman of GEO, emphasized the center's important role in supporting ICE and the U.S. Department of Homeland Security's mission and operational priorities. He also praised the dedication and professionalism of the center's employees in providing high-quality support services for ICE in California.

Positive

• Contract extension secured for Adelanto ICE Processing Center through December 19, 2029
• Continued employment for approximately 350 employees at the facility
• Reaffirmation of GEO's role in supporting ICE and U.S. Department of Homeland Security operations

Negative

• None.

Insights

Government Contracts Specialist

The extension of the Adelanto ICE Processing Center contract is a significant development for GEO Group. This five-year option exercise secures a substantial revenue stream until 2029, providing financial stability and predictability. The 1,940-bed facility represents a major asset in GEO's portfolio and the contract continuation suggests strong government relations and satisfaction with GEO's services.

Investors should note that this extension comes amid ongoing debates about private detention facilities, particularly in California. The contract's longevity may indicate GEO's resilience in a challenging political environment. However, it's important to monitor potential legislative changes or policy shifts that could impact future operations.

The employment of 350 staff highlights the facility's economic impact on the local community, which could be a factor in its continued operation despite political pressures. Overall, this contract extension provides near-term stability for GEO Group's revenue and operations in a key market.

Financial Analyst

This contract extension is financially significant for GEO Group. While specific revenue figures aren't provided, a facility of this size typically generates substantial annual income. Based on industry averages, a 1,940-bed center could potentially yield $50-100 million in annual revenue, depending on occupancy rates and contract terms.

The five-year extension provides revenue visibility through 2029, which is important for long-term financial planning and investor confidence. This stability may positively impact GEO's credit profile and potentially its ability to secure financing or refinance existing debt.

Investors should consider the concentration risk, as ICE contracts likely form a significant portion of GEO's revenue. While this extension mitigates short-term risk, it also underscores the company's dependence on government contracts. The stock may see a positive reaction due to the reduced uncertainty, but long-term performance will depend on GEO's ability to diversify its contract base and navigate potential policy changes in the detention sector.

BOCA RATON, Fla.--(BUSINESS WIRE)-- The GEO Group (NYSE: GEO) (“GEO”) announced today that U.S. Immigration and Customs Enforcement (“ICE”) has exercised the five-year option period extending the contract for the GEO-owned 1,940-bed Adelanto ICE Processing Center in California (the “Adelanto Center”) through December 19, 2029.

ICE and GEO entered into a 15-year contract on December 19, 2019, for the provision of secure residential housing and care at the Adelanto Center, consisting of a five-year base period followed by two five-year option periods. The Adelanto Center employs approximately 350 employees.

George C. Zoley, Executive Chairman of GEO, said, “We believe the exercise of this five-year contract option period by ICE is indicative of the important role the Adelanto Center plays in helping ICE and the U.S. Department of Homeland Security fulfill their mission and operational priorities. We are proud of our approximately 350 employees at the Adelanto Center, whose dedication and professionalism have allowed GEO to establish a long-standing record of providing high-quality support services on behalf of ICE in the state of California.”

About The GEO Group

The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 100 facilities totaling approximately 81,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.

Use of forward-looking statements

This news release may contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date of this news release and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements, including statements regarding the Adelanto Center contract. Risks and uncertainties that could cause actual results to vary from current expectations and forward-looking statements contained in this press release include, but are not limited to, risk factors contained in GEO’s filings with the U.S. Securities and Exchange Commission, including its Form 10-K, 10-Q, and 8-K reports. GEO disclaims any obligation to update or revise any forward-looking statements, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241003320069/en/

Pablo E. Paez (866) 301 4436

Executive Vice President, Corporate Relations

Source: The GEO Group, Inc.

FAQ

What is the new contract end date for GEO's Adelanto ICE Processing Center?

The contract for GEO's Adelanto ICE Processing Center has been extended through December 19, 2029, following ICE's exercise of the five-year option period.

How many employees work at GEO's Adelanto ICE Processing Center?

The Adelanto ICE Processing Center employs approximately 350 people.

What is the capacity of GEO's Adelanto ICE Processing Center?

The Adelanto ICE Processing Center, owned by GEO, has a capacity of 1,940 beds.

When did the original contract for GEO's Adelanto ICE Processing Center begin?

The original 15-year contract for GEO's Adelanto ICE Processing Center began on December 19, 2019.