Business Segments and Geographic Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Business Segments and Geographic Information

12. BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

Operating and Reporting Segments

The Company conducts its business through four reportable business segments: the U.S. Secure Services segment; the Electronic Monitoring and Supervision Services segment; the Reentry Services segment; and the International Services segment. The Company has identified these four reportable segments to reflect the current view that the Company operates four distinct business lines, each of which constitutes a material part of its overall business. The Company determined that its previously reportable business segment, Facility Construction and Design, no longer qualifies as a reportable segment as it no longer met certain quantitative thresholds and has been aggregated with the Company’s International Services reportable business segment below. In addition, the Company appointed a new Chief Executive Officer, the chief operating decision maker, during fiscal 2021. Based on changes to the way the Company’s chief operating decision maker views the business and financial results used to allocate resources to its electronic monitoring and supervision services operations, along with the growth of the business, the Company determined to report the electronic monitoring and supervision services operation as a separate reportable segment. This segment is presented as Electronic Monitoring and Supervision Services. Previously, the electronic monitoring and supervision services operations were included in the GEO Care reportable segment. In addition, the GEO Care reportable segment was renamed Reentry Services and includes services provided to adults for residential and non-residential treatment, educational and community-based programs, pre-release and half-way house programs. Reentry Services also includes activities for our former youth division for half of 2021 and all historical periods. The youth division was divested on July 1, 2021. The Company has retroactively restated its segment presentation for the three and nine months ended September 30, 2021 to reflect these changes.

The U.S. Secure Services segment primarily encompasses U.S.-based secure services business. The Electronic Monitoring and Supervision Services segment, which conducts its services in the United States, represents technology and services provided to adults for monitoring services for community-based parolees, probationers, and pretrial defendants. The Reentry Services segment, which conducts its services in the United States represents evidence-based supervision and treatment programs provided to adults for residential and non-residential treatment, educational and community-based programs, pre-release and half-way house programs. The International Services segment primarily consists of secure services operations in South Africa and Australia. Segment disclosures below (in thousands) reflect the results of continuing operations. All transactions between segments are eliminated.

The Company's segment revenues from external customers and a measure of segment profit are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenues:
U.S. Secure Services	$	368,493		$	369,609		$	1,073,140		$	1,125,014
Electronic Monitoring and Supervision Services		137,039			74,575			346,444			199,788
Reentry Services		65,406			60,740			192,557			212,914
International Services		45,745			52,353			143,904			161,357
Total revenues	$	616,683		$	557,277		$	1,756,045		$	1,699,073
Operating income from segments:
U.S. Secure Services	$	67,462		$	72,054		$	214,994		$	219,471
Electronic Monitoring and Supervision Services		67,673			35,052			160,838			89,520
Reentry Services		9,816			13,265			34,027			39,604
International Services		3,192			4,123			12,740			17,112
Operating income from segments	$	148,143		$	124,494		$	422,599		$	365,707
General and Administrative Expenses		(50,022	)		(50,475	)	$	(147,878	)		(153,642	)
Total Operating Income	$	98,121		$	74,019		$	274,721		$	212,065

Pre-Tax Income Reconciliation of Segments

The following is a reconciliation of the Company’s total operating income from its reportable segments to the Company’s income before income taxes and equity in earnings of affiliates (in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Operating income from segments	$	148,143		$	124,494		$	422,599		$	365,707
Unallocated amounts:
General and administrative expenses		(50,022	)		(50,475	)		(147,878	)		(153,642	)
Net interest expense		(41,426	)		(26,535	)		(95,082	)		(78,245	)
(Loss) gain on extinguishment of debt		(37,487	)		-			(37,487	)		4,693
(Loss) gain on disposition on asset divestitures		29,279			(6,088	)		32,332			4,291
Income before income taxes and equity in earnings of    affiliates	$	48,487		$	41,396		$	174,484		$	142,804

Equity in Earnings of Affiliates

Equity in earnings of affiliates includes the Company’s 50% owned joint ventures in South African Custodial Services Pty. Limited (“SACS”), located in South Africa, and GEOAmey PECS Limited (“GEOAmey”), located in the United Kingdom. The Company's investments in these entities are accounted for under the equity method of accounting. The Company’s investments in these entities are presented as a component of Other Non-Current Assets in the accompanying consolidated balance sheets.

The Company has recorded $2.1 million in earnings, net of tax, for SACS operations during the nine months ended September 30, 2022, and $2.7 million in earnings, net of tax, for SACS operations during the nine months ended September 30, 2021, which are included in equity in earnings of affiliates, net of income tax provision in the accompanying consolidated statements of operations. As of September 30, 2022, and December 31, 2021, the Company’s investment in SACS was $9.2 million and $10.3 million, respectively, and represents its share of cumulative reported earnings.

The Company has recorded $1.7 million in earnings, net of tax, for GEOAmey's operations during the nine months ended September 30, 2022, and $2.9 million in earnings, net of tax, for GEOAmey's operations during the nine months ended September 30, 2021, which are included in equity in earnings of affiliates, net of income tax provision in the accompanying consolidated statements of operations. As of September 30, 2022, and December 31, 2021, the Company’s investment in GEOAmey was $9.2 million and $10.1 million, respectively, and represents its share of cumulative reported earnings.