Welcome to the GEO Group Fourth Quarter 2015 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Pablo Paez. Please go ahead.

Thank you, operator. Good morning, everyone and thank you for joining us for today's discussion of the GEO Group's fourth quarter and year-end 2015 earnings results. With us today is George Zoley, Chairman and Chief Executive Officer; Brian Evans, Chief Financial Officer; Ann Schlarb, President of GEO Care; and our new President of GEO Corrections & Detention, Dave Donahue, who replaced John Hurley who retired earlier this month after 18 years of service with GEO. This morning we will discuss our fourth quarter and year-end results 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 under securities 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 forms 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?

Thank you, Pablo and good morning to everyone. Thank you for joining us on this call. In addition to Brian, we've been joined today by our new President of GEO Corrections & Detention David Donahue, who previously served as our Eastern Region Vice President for the last seven years and who has over 36 years of correctional experience and has served in senior executive positions in both the public and private sectors. We are very pleased with our strong fourth quarter results and our outlook for 2016 which reflect the continued organic growth of our diversified business segments of GEO Corrections & Detention and GEO Care. During 2015 GEO Corrections & Detention accomplished several operational milestones with the integration of 6,500 owned beds acquired from LCS Corrections and the activization of more than 8,700 beds at six facilities across a number of states, including California, Texas, Oklahoma, Michigan and Arizona. These projects included the activation of three previously idle Company-owned facilities. First, our 400-bed Mesa Verde detention facility in California was activated in March under a new agreement with the U.S. Immigration and Customs Enforcement. Our 1940-bed Great Plains correctional facility in Oklahoma opened in June under a 10-year contract with the Federal Bureau of Prisons. And also in June we activated our 1,748-bed North Lake correctional facility in Michigan under an agreement for the out-of-state housing of up to 675 Vermont inmates. The facility was also awarded a contract for the out-of-state housing for up to 1000 inmates for the state of Washington. Additionally, during the second half of 2015, we completed an expansion of projects at our Adelanto detention facility in California and our Karnes residential center in Texas, adding 640 and 626 beds at these two Company-owned facilities, respectively. Finally, in Arizona we successfully assumed management of…

Thank you, George. And good morning to everyone. As disclosed in our press release today, we reported adjusted funds from operations for the fourth quarter of 2015 of $0.97 per share which represents a 20% year-over-year increase. We reported EPS for the fourth quarter of $0.59 per share which represents a 13% year-over-year increase. Our revenues for the fourth quarter 2015 increased to approximately $500 million from $428 million a year ago. Our construction revenue for the fourth quarter 2015 was $40 million which came in $15 million lower than our guidance of $55 million. As a reminder, our construction revenue is related to our Ravenhall project in Australia and has little or no margins. Without construction revenue our operations revenues were in line with our previous expectations. For the fourth quarter 2015 we reported NOI of approximately $143 million or a 16% increase over prior year. Compared to fourth quarter 2014 our fourth quarter 2015 results reflect the reactivation of the 400-bed Mesa Verde detention facility in California in March of 2015, the reactivation of the 1,940-bed Great Plains and the 1,748-bed North Lake correctional facilities in June 2015, the activation of the 640-bed expansion of the Adelanto detention facility in July of 2015, the activation of the 626-bed expansion of the Karnes residential center in December 2015, the new GEO Care contract with the Department of Homeland Security for case management services in November 2015 and the acquisition of approximately 6,500 owned beds from LCS Corrections in February 2015. $40 million in construction revenue compared to $17 million in construction revenue in the fourth quarter of 2014. These revenues for both periods are associated with our Ravenhall prison project in Australia. Moving to our guidance for 2016, we expect total revenues for the full year to be in…

Thanks, Brian and good morning to everyone. I'd like to address recent project activations and contract wins, 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 Federal Bureau of Prisons, U.S. Immigration and Customs Enforcement, more commonly referred to as ICE and the U.S. Marshals Service. Our business relationships with these three federal agencies now spans three decades. Additionally, we provide correctional facilities for 10 states, including Florida, Georgia, Louisiana, 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 UK, Australia and South Africa. As it relates to our recent project activations, during the fourth quarter 2015 we completed the development of a $32 million expansion to our company-owned Karnes ICE residential center, increasing the capacity up to 1,158 beds. The center began operating with a new fixed monthly payment under a new five-year contract which was effective on November 1 and will result in approximately $57 million in annualized revenues. Additionally, the state of Texas has completed the rules promulgation process with respect to the licensing of family residential centers. This process is only an added step to the standards of compliance the center already adheres to under ICE's family residential standards. Presently the center operates as a short term processing facility and this licensing process will allow for longer lengths of stay. We will be submitting our license application on March 1 and expect the process to take 45 to 60 days, after which…

Thank you, Dave. And good morning, everyone. As you may remember, our GEO Care segment is comprised of four divisions. Our GEO reentry division manages 21 halfway houses totaling over 3000 beds and 64 day reporting centers nationwide with more than 4,000 participants. Our youth services division overseas 12 residential facilities, with approximately 1,300 beds and seven nonresidential programs with approximately 1,200 participants. Our BI division tracks approximately 139,000 offenders under community supervision, including 89,000 individuals through an array of technology products, including radio frequency, GPS and alcohol monitoring devices. Finally, our GEO Continuum of Care division oversees the integration of our industry-leading, evidence-based rehabilitation programs, both in prison and through our community-based and post-release 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 criminal justice reform efforts. We view these efforts as positive. And we believe the emphasis on offender rehabilitation and community reentry programs as part of criminal justice reform will create 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 nonresidential day reporting centers. As George mentioned, during 2015, we activated six new day reporting centers in Louisiana and Illinois, as well as two new in-custody treatment programs in North Carolina. These new contracts represent approximately $4 million in annualized revenues. With respect to our residential reentry centers, our 2015 results reflect our new Company-leased 240-bed residential reentry center in Newark. This new center was activated under a contract with the state of…

Thank you, Ann. In summary, we are very pleased with our strong financial performance at the close of the year. During 2015 we achieved several important milestones with the activation of new and expansion projects totaling more than 8,700 beds, the integration of 6,500 beds acquired from LCS Corrections and continued growth in our GEO Care segment. All of these milestones have positioned GEO to achieve significant growth and continue to enhance shareholder value in 2016. This new organic growth activity is the most significant that we have experienced in some time and it is indicative of our Company's ability to provide tailored real estate management and programmatic solutions to our customer base. Our diversified growth and investment strategies have positioned GEO as the world's largest private provider of corrections, detention and offender rehabilitation services. We remain focused on pursuing new growth opportunities and are enthusiastic about the opportunities to expand our delivery of offender rehabilitation services through our GEO Continuum of Care platform which we believe gives our Company a competitive advantage with pursuing new projects across the entire spectrum of correctional and reentry services. As a REIT, GEO is focused on providing essential real estate solutions to government agencies in the field of detention, corrections and post-release facilities. But additionally, as a service provider, our commitment is to be the world's leader in the delivery of offender rehabilitation and community reentry programs which is consistent with the criminal justice reform efforts that emphasize rehabilitation and community reentry programs for offenders. We view these efforts as positive attributes for our Company, as evidenced by the continued growth of our diversified segments. And we believe that our platform of correctional and rehabilitation services better positions GEO to capture future growth. We believe that these opportunities will continue to enhance value for our shareholders. And we are proud that our continued growth has allowed us to pay the highest dividend in our industry of $2.60 per share on an annualized basis which currently represents less than 75% of our AFFO guidance for 2016. This concludes our presentation and we would now like to open the call to your questions.

[Operator Instructions]. Our first question comes from Kevin McVeigh at Macquarie.

Just a couple quick housekeeping, just so that I'm clear the timing of the fourth quarter Brian the positive impact was that totally offset by the $4.6 million onetime charges so they basically offset each other?

Pretty close.

Okay. And then the Raven Hall revenue the $15 million did that pushed into Q1 or does that work its way through 2016?

Yes I don't think it necessarily goes directly to Q1, but it does the size of the project hasn't changed so that revenue will get recognized in the future. So it's just the timing of the actual work being completed to what was originally projected. It will be some time in '16 which is included in our estimate of the $278 million for construction revenue that we forecasted for Raven Hall for 2016.

And then in terms of the 6500 beds from LCS, where are we in terms of utilization on then and any sense of how that kind of scales through 2016?

I don't have a percentage count but the overwhelming majority of the beds are being in use now and as you heard and David Donahue said earlier were reconfiguring some of the facilities to be more in line with what the clients needs are and we're fixing up some of the other facilities to get a better utilization of those beds.

And then George or Brian, any sense from a margin perspective as some of these utilization scales at a high level how should we think about kind of margin progression in 2016 and the 2017 as utilization can you just confirm here?

Will I think that most of the projects that we are bringing online the margins are better historically than the company's experience because their own facilities other than the Kingman facility which is a managed only contract and has margins more in line with that. Also the ramp up as George mentioned and also talked about on the ice ISAP contract has better margins. So I think you're seeing the margins improve a little bit into 2016 and I think that as we continue to bring on our own projects some of the new business that we have talked about we will continue to see that improvement.

The next question is from Tobey Sommer at SunTrust.

George, I'm curious could you update us on the opportunity for asset purchases or kind of outright real estate deals as you see it in 2016?

Well, we only talk about the ones that are in the public domain obviously. The one that I can talk about is the Ohio opportunity in that procurement process has yet started for a single facility. But we believe there will be other opportunities around the country similar to that.

If we look out in a couple or maybe even three years, do you think that you'll, that the company will have revenue stream associated with kind of pure real estate deals?

You know I think so. I think the trend line for us and our industry is more ownership opportunities that's what Brian has just expressed moments ago about what our growth was last year and I think the ownership business model will continue to grow and will probably see less of the managed only facilities. And in part I think that's going to be attributable to the aging of the governmental sector facilities which are 50 or 60, 70 years old. [Technical Difficulty]. And private sector has the ability to provide the financing for those facilities and obviously provide the operation as well as the financing and development of those facilities. So I think the turnkey package will play very favorably as states consider how to use their scarce resources in the decision is too often one in which they have to decide between corrections and the educational system as to where to put their capital resources. And I think the private sector provides them with an opportunity to place most of their capital resources in the educational sector and deferring to the private sector to provide the development, financing and operation of correctional facilities in the future.

I apologize if you mentioned this in your prepared remarks if you did I missed it. The surge that we've seen so far of [indiscernible] minors and families across the Southwest border in the last several months, is that driving more demand for the remote monitoring services at BI?

Yes it is. As I think Ann said last year we were at approximately 24,000 people under that monitoring program and today we're at 44,000 and projected to go possibly to the upper limit of 57,000.

And then, Brian, I just had a numbers question. What is the known construction revenue beyond this year, if you could kind of just do that for modeling purposes in the out years? Thanks.

In 2017 it's probably about the same as 2016 so another $275 million to $300 million and it should complete for the most part in 2017 because the facility opens I think in the fall of 2017. So, it might be a little less but I would say two 240 to 275.

[Operator Instructions]. Our next question comes from Michael Cordish [ph] at Canaccord Genuity.

I just wanted to I guess I wanted to start with the big picture here. In terms of sensing reform whether it be political rhetoric or otherwise I guess I was just kind of wondering what jurisdictions you're seeing right now where that maybe more on the forefront, whether it be the state level or the federal level? Thanks.

I think at the state level, California probably is in the headlines more so than any other state with regard to possible sentencing reform and I think they're still trying to formulate what it is that they want to do because they've already sent about 30,000 level one offenders to the counties and the counties are fairly full at this time. At the federal level the BOP recently released I think several thousand inmates approximately 6000 and may release approximately the same number over a two or three year period, so these reforms are going on but they are fairly modest and they don't seem to have impacted us in any meaningful way. You know the BOP in particular we received our pro rata reduction, but increasingly the BOP contracts are fixed price and they are not subject to sensitivity because of that.

Okay. I think it's also been in the headlines recently with Clinton's speech most recently was the possibility of the ending family centers, family detention. I was just kind of wondering just to share up here what your exposure is on an EBITDA basis to family centers? Thanks.

Well, Michael, we don’t disclose the revenue related to that facility we don't typically disclose what the occupancy or what the EBITDA level is of our individual contract. So we've provided the revenue I think it's about $50 million on an annualized basis.

We believe this program has been very critical to the current Democratic administration and will be supported by a Republican administration so there is bipartisan support of this program because it kind of means if you eliminate that program anybody that comes across the border as a family is okay to stay. And I think there's very little support for that concept.

Okay and then I guess just moving to the balance sheet a question for Brian. Just kind of given what's going on in the debt and CMBS [ph] markets here, are there any thoughts on the current leverage level or have you had any change to leverage targets and/or strategy?

We're comfortable as we said historically running between 4.5, 5 times leverage and I think for the quarter we will end up at about 4.8 or 4.9. We'll continue to monitor the markets. There is still good demand for our notes in our debt so as the time is appropriate if we need to go and consider taking out the existing notes that are called this February, the ones that are at [indiscernible] coupon. So it would just be a matter of monitoring the market and our capital needs and moving accordingly based on that.

This concludes our question and answer session. I would like to turn the conference back over to George Zoley solely for closing remarks.

Well thank you for your questions and we look forward to addressing you on our next conference call.