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GEO Group Tanks 10%; To Become Taxable Corporation, Discontinues Dividend

Shares of GEO Group, Inc. (GEO) tanked 10% after the corrections facility company Thursday announced a change in its corporate structure. The company said its board has approved a plan to terminate its Real Estate Investment election and become a taxable corporation, effective December 31, 2021.

GEO is currently trading at $7.28, down $0.82 or 10.12%, on the NYSE.

The decision stems from the Board's evaluation of GEO's corporate tax structure and REIT status, which was announced on April 7, 2021. The Board also voted unanimously to discontinue GEO's quarterly dividend.

GEO has made efforts to reduce net recourse debt over the last two years. In 2020, GEO reduced net recourse debt by approximately $100 million, and in the first three quarters of 2021, GEO reduced net recourse debt by an additional $175 million.

Moving ahead, GEO expects fourth quarter adjusted earnings of $0.29 to $0.31 per share and AFFO between $0.58 and $0.60 per share, which reflects the higher quarterly corporate tax rate GEO expects to pay as a taxable C corporation.

Further, GEO expects full-year 2021 adjusted net income in a range of $1.14 to $1.16 per share and AFFO in a range of $2.30 to $2.32 per share.

Previously, the company expected adjusted earnings of $0.37 to $0.39 per share and AFFO of $0.65 to $0.67 per share for the fourth quarter and adjusted earnings of $1.41 to $1.43 per share and AFFO of $2.57 to $2.59 per share for the year.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $0.28 per share for the quarter and $1.44 per share for the year.

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