Free Cash Flow & Debt Covenants
GEO's dividend is not as defensible as other SA authors have indicated. A simple calculation based on the management guidance shows that the company will generate negative FCF after paying dividends in FY2020. Even at the high-end of the guidance, GEO is still drawing ~$10 million on its credit facility to pay the dividend. Also at the high-end of the guidance, the senior secured leverage and total leverage is about ~0.5x away from tripping over the covenants.
However, I understand that the management is being conservative with the guidance