The GEO Group (NYSE:GEO) announced Wednesday a 40% increase to its second quarter net income, prompting the correctional, detention, and residential treatment services provider to update its fiscal outlook.
For the three months ending July 3, GEO posted net income attributable to the company of $21.6 million, or $0.33 per share, compared to $17.0 million, or $0.35 per share, in the same period a year ago.
On a pro forma basis, adjusted for a $3.3 million start-up/transition expense, and other one-time items, net income rose over 40% to $25.7 million, or $0.40 per share, from $18.3 million, or $0.37 per share.
Revenues hiked to $407.8 million, up 45.6% from $280.1 million a year ago.
Analysts had expected earnings of $0.39 per share, on $408.43 million in revenues.
Based on the recently approved budget from the California Department of Corrections and Rehabilitation, GEO updated its fiscal 2011 revenues guidance to a range of $1.62 billion to $1.63 billion, in line with analysts' estimates.
GEO also said it expects third quarter revenues to be between $407 million and $412 million, with pro forma earnings between $0.39 and $0.41 per share, excluding between 6-cents and 7-cents in start-up/transition expenses.
For the fourth quarter, the company said it anticipates revenues in the range of $413 million to $418 million, and earnings between $0.40 and $0.42 per share.
"We are pleased with our strong second quarter earnings results which reflect sound operational performance from our diversified business units of U.S. Detention & Corrections, GEO Care, and International Services," said CEO George C. Zoley.
"We continue to be very optimistic about the demand for our diversified services."
Revenues from GEO's U.S. Detention and Corrections segment, which oversees the operation and management of several correctional and detention facilities across the country, rose 26% to $241.7 million, largely on its August 2010 acquisition of Cornell Companies Inc.
The opening of the Blackwater Correctional Facility in Florida during the fourth quarter of 2010, and the October 2010 contract with the D. Ray James Correctional Facility in Georgia pushed revenues up, but were offset by the transition to managed-only contracts for several facilities in Florida and Texas.
The Boca Raton, Florida-based company's GEO Care segment posted revenues of $55.3 million, up 24% year-over-year. Revenues were driven by the Cornell acquisition, the February 2011 acquisition of BI Inc, and the March 2011 opening of the Montgomery County Mental Health Treatment Facility in Texas.
The International Services business, which provides the company's same core services in Australia, the U.K., and South Africa, saw revenues nearly triple, to $110.9 million in the quarter. GEO said the opening of the Harmondsworth Immigration Removal Centre in the U.K. in July 2010 helped boost revenues.
In other news, GEO, whose stock on the New York Stock Exchange slipped 3.33% to trade at $19.77 per share as of 10:25 am EDT, also announced the recently issued request for proposal by the State of Florida for the privatization of over 16,000 beds in several facilities.
"This is an unprecedented opportunity in our industry, and we have taken steps to invest in additional business development and professional capabilities," Zoley said, adding that these investments will represent a near-term expense over the next two quarters.