Good morning and welcome to The GEO Group Second Quarter 2015 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Pablo Paez, Vice President of Corporate Relations. Sir, please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for today’s discussion of the GEO Group’s Second Quarter 2015 Earnings Results. With us today is George Zoley, Chairman and Chief Executive Officer; Brian Evans, Chief Financial Officer; John Hurley, President of GEO Corrections & Detention; and Ann Schlarb, President of GEO Care. This morning we will discuss our second quarter performance and current business development activities. We will conclude the call with a question-and-answer session. This conference call is also being webcast live on our website at www.geogroup.com. Today, we will discuss non-GAAP basis information. A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and supplemental disclosure we issued this morning. Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations, with respect to various matters. These forward-looking statements are intended to fall within the Safe Harbor provisions of the security laws. Our actual results may differ materially from those in the forward-looking statements, as a result of various factors contained in our Securities and Exchange Commission filings, including the Form 10-K, 10-Q and 8-K reports. With that, please allow me to turn this call over to our Chairman and CEO, George Zoley. George?

Thanks, Pablo, and good morning to everyone. Thank you for joining us on this call as we had disclosed in our earnings announcement this morning, we reported $0.78 per share in adjusted funds from operation for the second quarter of 2015. Our second quarter results reflect the impact of approximately $0.04 per share in the startup cost associated with the activation of 4,300 beds at pre-company owned facilities as well as approximately $0.01 per share in M&A related expenses. As we look into the third quarter, we have several reasons to be optimistic. First, the 1,940 bed company owned Great Plains Correctional Facility in Oklahoma intake began in June under a new 10-year contract with the U.S. Bureau of Prisons and is expected to be completed by October 1, at which time a fixed monthly payment will begin from the duration of the 10-year contract. You may recall that this contract was won under CAR team along with Moshannon Valley facility rebid which was also awarded a 10-year contract as the only Northeast U.S. car facility for the BOP. Also with the second quarter we activated a $45 million 640 bed expansion of the Adelanto ICE Detention Facility in California. This is the second expansion of the Adelanto facility since the first 650 bed contract in 2011 with the city of Adelanto and U.S. U.S. Immigration and Customs Enforcement. The 640 bed expansion increases the capacity to 1,940 beds and includes a new fixed monthly payment by September 15, following a 75-day intake schedule. Also, during the second quarter we activated our 1,740 bed company owned North Lake Correctional Facility in Baldwin, Michigan. We recently located to North Lake approximately 300 -- inmates from a prior vendors facilities and are awaiting further intake from the State of Vermont under a…

Thank you, George, and good morning to everyone. As disclosed in our press release today, we reported adjusted funds from operations for the second quarter of $0.78 per share. Our adjusted EPS for the second quarter of 2015 was $0.43 which reflects an adjusted for $3.6 million net of tax in start-up cost and M&A related expenses. On a GAAP basis we reported second quarter 2015 net income attributable to GEO of $0.38 per share. Our revenues for the second quarter of 2015 increased to approximately $446 million from $413 million a year ago. Our quarterly revenues include approximately $20 million in construction revenue associated with our contract for the development and operation of the Ravenhall Prison Project in Australia. For the second quarter of 2015, we reported net operating income of approximately $119 million. Compared to second quarter of 2014, our second quarter 2015 results reflect the reactivation of the 300-bed Company-owned McFarlane Community Reentry Facility in California during August 2014, the opening of the 400-bed Company-owned Alexandria Transfer Center in Louisiana in November2014; the re-activation of the 400 bed Mesa Verde Detention Facility in California in March of 2015. Approximately $20 million in construction revenue as I just discussed, $0.04 per share in startup related to the activation of three company owned facilities totaling approximately 4,300 beds during the second quarter of 2015 and $0.01 per shared in M&A related expenses. Moving to our outlook for the balance of the year, we have updated our guidance to reflect several factors, first the reactivation of our North Lake facility in Michigan and the announced signing of our State, our out of state contracts with Vermont and Washington will result in a gradual ramp up at the facility. We expect the population at the facility to increase from its current…

Thank you Brian, and good morning to everyone. I would like to address recent project activations, major contract rebids and select publicly known business development opportunities. GEO is the largest detention operator for the U.S. Federal government agencies including the U.S. Bureau of Prisons, the U.S. Immigration and Customs Enforcement, or commonly referred to as ICE; and the United States Marshal Service. Our business relationship with the three Federal Agency now span three decades. Additionally, we provide correctional facilities for 11 states including Florida, Georgia, Louisiana, Texas, Oklahoma, Arizona, New Mexico, California, Vermont, Virginia and Indiana. Our business relationships with our state customers began in the mid 1980s and now involve more than 20 facilities that are almost all medium security or higher. With respect to international business GEO is the only U.S publicly traded company providing corrections and detention services overseas. We presently operate in the United Kingdom, Australia and South Africa. With respect to our recent project activations in March, we began the intake process at our 400-bed Company-owned Mesa Verde Detention Facility in California under an agreement with ICE. We had previously completed a $10 million renovation of the Mesa Verde Facility, which is expected to generate approximately $17 million in annualized revenues. In early June, we activated our 1,940-bed Company-owned Great Plains Correctional Facility in Oklahoma under a new 10 year contract with the Federal Bureau of Prisons, which is expected to generate approximately $35 million in annualized revenues. We expect to complete intake on October 1 The Oklahoma contract was under the Car [ph] 15 procurement by the BOP and will house criminal aliens. In California, we activated a $45 million expansion of our company-owned Adelanto ICE Detention Facility on July 1. GEO is a subcontractor to the city of Adelanto which has an interim…

Thank you, John, and good morning everyone. As you may remember from prior calls, our GEO Care Segment is comprised of four divisions, our GEO reentry division manages 21 halfway houses totaling 3,000 beds and 70-day reporting centers with approximately 5,000 participants. Our youth services division overseas 12 residential facilities with approximately 1,300 beds and six non-residential programs with approximately 1,200 participants. Our BI division attracts more than 115,000 offenders under community supervision including 75,000 individuals through an array of technology products including radio frequency, GPS and alcohol monitoring devices. Finally, our GEO continuum of care division overseas the integration of our industry leading evidence based rehabilitation programs both in Prison and through our community based and post released services. As we have discussed in the past, we are enthusiastic about the opportunity to expand our delivery of offender rehabilitation services through the GEO Continuum of Care which we believe is in line with current Federal Criminal Justice reform efforts to divert more level of offenders into rehabilitation and reentry programs. We view these efforts as positive and we believe that the emphasis on offender rehabilitation and community reentry programs as part of criminal justice reform will create significant growth opportunities for our company. Each of our divisions continues to pursue several new growth opportunities. GEO reentry continues to work with existing and prospective local and state correctional customers to leverage new opportunities in the provision of community based reentry services in both residential facilities and non-residential day reporting centers. We activated six new day reporting centers in Louisiana, and Illinois as well as two new in custody treatment programs in North Carolina during the first half of the year. These new contracts are expected to generate approximately $4 million in annualized revenues. With respect to our residential reentry centers…

Thank you, Ann. During the second quarter we activated more than 4,300 beds at three company owned facilities located in California, Oklahoma and Michigan. These facilities are expected to achieve normal occupancy by the end of the third quarter. In the fourth quarter we are scheduled to activate the 626 bed expansion at the Karnes, Texas, Residential Center under a new fixed price monthly payment. In Victoria, Australia, we are developing a $650 million, 1,100 bed facility that will have the most expansive offender rehabilitation program in the world and will generate approximately $75 million in annual revenues. GEO Care has added several new contracts with the opening of a residential center late last year and a new day reporting centers in custody treatment programs in the first half of this year. GEO Care results are well positioned to provide rehabilitation services as a result of criminal justice reform efforts at the federal level. This new organic growth activity is the most significant that we have experienced in some time and is indicative of our company’s ability to provide tailored, real estate management and programmatic solutions to our diversified customer base. Additionally we continue to make significant steps to improve the utilization of the 6,500 beds acquired in the LCS acquisition in our overall real estate portfolio. GEO continued growth this year has – positions the company well for the annual third quarter dividend review by the board of directors in November. We believe that our diversified growth and investment strategies have positioned GEO as the world’s leading provider of corrections, detention and offender rehabilitation services. We expect all that all of these efforts will continue to drive growth for our company, and we remain focused on effectively allocating capital to enhance value for our shareholders. We also remain enthusiastic about the opportunity to expand our delivery of the offender rehabilitation services as we announced at the beginning of this year we have made an additional annual investment of $5 million to expand our GEO Continuum Care platform. As a – GEO remains focused on providing essential real estate solutions to government agencies in the fields of detention, corrections and post release facility. But additionally as a service provider our commitment is to be the world’s leader in the delivery of a federal rehabilitation and community reentry programs which is in line with criminal justice reform efforts which emphasize rehabilitation and community reentry programs for offenders. We view these efforts as positive and believe that our diversified platform of correctional rehabilitation services positions GEO to capture future growth opportunities. This concludes our presentation, and we would now like to open the call to your questions.

Our first question comes from Michael Kodish at Canaccord Genuity.

Hey good morning guys, thanks for taking my questions. Just first off on guidance. So this is the second consecutive quarter where guidance is lowered. And in your prepared remarks you said it was largely related to the fact that the Vermont and Washington contracts weren’t really signed yet. Maybe just could you help us understand why a faster ramp up of the facility would it be anticipated and included in the 1Q guidance update. You previously disclosed an idea of what the procurements would look like on a that basis so I guess maybe just provide a little color on what you are expecting in 1Q that didn’t come to fruition during 2Q and subsequent quarter end?

Well in the second quarter we didn’t have any activity from North Lake or at North Lake. So our second quarter guidance only reflected the addition of staff in the second quarter in June approximately, in our third quarter we hadn’t provided any inclusion of revenue for North Lake in the third or fourth quarter, in other words it was still considered to be an ideal facility maybe some modest additional staff but with the award of the contracts we’ve actually added more staff and then there’s only been 300 image added thus far. So typically a facility start up for us would have start up cost in the quarter proceeding that we see of inmates and normally a normal ramp up is 75 to 90 days whereas this facility is they are taking a longer period to ramp up. So while it’s in that flow of ramp up phase there is a negative cash flows or mutual cash flows if you will, so there is actually a longer start up period associated with this contract and that’s what the guidance revision reflects.

Okay, great thanks. So I guess maybe with regard to the slower ramp up is that more just due to slower prisoner populations or perhaps related to maybe like to get employees or its staff to fasten up to just a five more prison transfers, is there anything like that?

I think its slower decision making by the agencies to send the prisoners than when we previously expected.

Okay, great. I guess moving on just so margins were down a good amount on the non-residential business and apologies if I missed this in your prepared remarks, but can you maybe just comment on what’s happening there, what might be driving that? Thanks.

On non-residential in total or are you speaking with segment.

Yes. Well in total, but if that is covered on the segment that would be great as well.

I think the – the main driver of that is going to be the start up cost. There hasn’t – there is no revenue to offset the start up cost. You also have a full quarter of the LCS facilities in place which recall at a lower occupancy level or while that’s improving they are below our average typical margins for owned facilities. So is that factored in for a full quarter that’s had an impact from a negative perspective on margins and then, but the main driver is going to be the start up cost, no revenue and about $5million I’m sorry in pre-tax start up expenses.

Okay, but was there anything with specific in regard to the non residential side of the business or is that more of just I think those margins were down a little bit more in the quarter than maybe the past five or six quarters returning towards…

That would have been a result of the sixth non residential day reporting centers, that point I was referencing is part of our start up.

Got you. Okay, thank you. And then I guess maybe just finally there is some news that came out about the Texas ICE populations in jails, those populations were kind of plummeting and then several of those jails are going to go under as a result. Can you maybe just talk a little bit more about what you are seeing with your facilities and maybe just commenting on that situation in general?

I didn’t see this specific article, so I can’t comment to that directly, but I think it’s fair to say that in general ICE has been proceeding on the basis of a consolidation of facility since the larger facilities that means the new detention standards in some of these small role jails that were previously used are going to have difficulty in meeting those standards.

All right. Great. Thanks, that’s all from me.

Our next question is from Tobey Sommer of SunTrust.

Thank you. I’m curious are you seeing any of your state customers consider or implement any kind of innovative actions to reducing in population similar to those like California has utilized to lower its own instate population?

Well California did something called realignment in pushing down low level security prisoners to the counties. And no, we’ve not seen any of our state customers authorize such a radical policy change.

Sure. But what about some of the other actions they have taken aside for the realignment which remains at this probably the most dramatic of the action.

Well remember California was in a very unusual situation that pushed them to that kind of dramatic reform. They were so overcrowded that they really couldn’t build themselves out of the situation in a timely manner. All other states have this year as well as all prior years discussed correctional reforms as they will in future years. I think that’s just part of their responsibilities to continually discuss how they can run their correctional systems better and more effectively.

Okay. Do you expect a pickup in asset sales now that Ohio is back added or is it still going to be an episodic theme rather than kind it increasing new slow near the median term? Thanks.

I think it’s the latter. I still think it’s episodic, there are one-offs here and there. There isn’t any systemic trend in that area but we would welcome it obviously but states watch what other states are doing and hopefully this will develop into a trend eventually.

And regarding LCS where are you in the ramp of trying to increase utilization can you refresh me where it was when you acquired the assets and where it is now, and where you ultimately hope to drive occupancy? Thank you.

When we acquired it, it was I think we announced it at that point of time it was right around 50% average occupancy at the facilities, that number I think we said has increased at several of the facilities so that its – now some of the facilities they are close to the 80% to 90% now and then a few of the facilities still need work. So we are moving along on our plan. I don’t think we have encountered any surprises the customers especially the federal customers have improved their utilization at the facilities and we are going to continue to work at some of the other facilities to improve the utilization as well.

I think we said at the outset of the acquisition that this process was going to take one or two years, although there is relatively few facilities unfortunately several of them have federal contracts and we’re the largest federal detention service provider. We have to take the facilities on a case by case basis as to what their turnaround plan needs to be and some cases its involves federal clients and other cases it involves state clients and sometimes it requires tweaking the management structure and improving physical plant and as a whole to turn around one of these smaller companies is a one to two year process.

Okay, thank you. And my last question and I’ll get back in the queue it has to do with seasonality. Have you seen the seasonality of federal inmate population is kind of rebounding into that play out as you anticipate it after some slowness a couple of quarters ago? Thanks.

Well the seasonality primarily occurs with the ICE detention beds and yes, we’ve had a ramp up over this last quarter consistent with prior years. The population at the state facilities and the BOP facilities remains fairly constant.

Thank you very much.

[Operator Instructions] The next question comes from Kevin McVeigh at Macquarie

Great. Thanks. So Brian is to fair to say the accretion assumptions on our LCS are still in place in terms of I think it was $0.10 a share and then at targeted utilization would be around $0.25, is it still fair what you think about it?

Yes I mean I think we are on track for this year I think in our guidance next year we’ll provide more clarity about where we think the facilities are moving towards, but at the top of the range that’s probably what they could do.

Got it. And then just at a higher level not to hop but this is the second consecutive guide down, I appreciate the incremental start ups, but was there anything else that maybe didn’t come in that you would have expected that could have offset some of that weakness or is this just purely the incremental step up as a result of the facility start up cost?

We as John mentioned during his discussion it’s not – it’s not what I would call material, but it’s certainly negatively impacted the third and fourth quarter we had, the two managed only contracts in text that we are no longer operating that about probably $15 million or so and revenue for the second half of the year. And there still continues to be some erosion in FX rates against what we had previously guided. We look to the forward estimates but some of that – that eroded some as well. So we factored both of those and I don’t think either of them are material in any way to speak of but combined I guess those had some negative impact as well.

Got it. And then just in --in terms of managed-only it seems like – it’s just a little primary focus there or just given the incremental benefit from the REIT, you focus on areas elsewhere particularly given what it sounds like is some renewed activity for a potential acquisitions in terms of direct acquisition from state facilities and things like that.

I think our primary focus is on our lease facilities not on the managed-only. Managed only facilities have the lowest margin of financial performance available or so anybody else, so as a REIT we’ve grown primarily because of the ownership and leasing of facilities and that’s where our primary focus remains.

Thank you.

At this time, there are no further questions. And I would like to turn the conference back over to George Zoley for closing remarks.

Okay. Thank you everyone for joining us on this call. We hope to address you on our third quarter conference call.