ACEL Accel Entertainment Inc

Accel Entertainment, Inc. (NYSE: ACEL) today announced certain financial and operating results for the third quarter ended September 30, 2024.

Highlights:

• Ended Q3 2024 with 4,014 locations; an increase of 2.8% compared to Q3 2023
• Ended Q3 2024 with 25,729 gaming terminals; an increase of 4.1% compared to Q3 2023
• Record revenues of $302.2 million for Q3 2024; an increase of 5.1% compared to Q3 2023
• Net income of $4.9 million for Q3 2024; a decrease of 53.2% compared to Q3 2023 partially attributable to a higher loss on the change in fair value of the contingent earnout shares
• Adjusted EBITDA of $45.9 million for Q3 2024; an increase of 3.9% compared to Q3 2023
• Q3 2024 ended with $289 million of net debt; an increase of 2.4% compared to Q3 2023
• Repurchased approximately $6.2 million of Accel Class A-1 common stock in Q3 2024
• Acquisition of a distributed gaming operator in the state of Louisiana expected to close in Q4 2024
• Acquisition of the FanDuel Sportsbook & Horse Racing in Collinsville, Illinois, expected to close in Q4 2024

Accel CEO Andy Rubenstein commented, “I am happy to report that we delivered another strong quarter and are making substantial progress closing our acquisition of FanDuel Sportsbook & Horse Racing, a natural extension of our convenient, local gaming platform. We continue to outperform casinos in our largest market, Illinois, and posted significant revenue increases in our fastest growing market, Nebraska. By strengthening our core and expanding our offerings, we believe we can continue to generate attractive low-teens returns on capital and improve our trading multiples, making Accel a compelling investment opportunity.”

Condensed Consolidated Statements of Operations and Other Data

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

(in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Total net revenues

$

302,227

 

$

287,497

 

$

913,457

 

$

873,352

Operating income

 

21,845

 

 

25,120

 

 

70,087

 

 

81,956

Income before income tax expense

 

8,464

 

 

15,080

 

 

39,166

 

 

46,347

Net income

 

4,895

 

 

10,450

 

 

26,897

 

 

29,615

Other Financial Data:

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

45,880

 

 

44,138

 

 

141,792

 

 

136,869

Adjusted net income (2)

 

18,350

 

 

19,067

 

 

59,238

 

 

60,566

(1)

Adjusted EBITDA is a non-GAAP metric. See "Non-GAAP Financial Measures" for a reconciliation to GAAP.

(2)

Adjusted net income is a non-GAAP metric. See "Non-GAAP Financial Measures" for a reconciliation to GAAP.

Net Revenues

(in thousands)

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

Net revenues by state:

 

 

 

 

 

 

 

Illinois

$

223,338

 

$

212,113

 

$

675,294

 

$

647,903

Montana

 

39,648

 

 

39,362

 

 

120,372

 

 

115,088

Nevada

 

28,350

 

 

28,003

 

 

86,881

 

 

87,833

Nebraska

 

6,538

 

 

4,802

 

 

18,621

 

 

13,213

Other

 

4,353

 

 

3,217

 

 

12,289

 

 

9,315

Total net revenues

$

302,227

 

$

287,497

 

$

913,457

 

$

873,352

Key Business Metrics

Locations (1)

As of September 30,

 

Increase / (Decrease)

 

2024

 

2023

 

Change

 

Change (%)

Illinois

2,791

 

2,724

 

67

 

2.5%

Montana

615

 

611

 

4

 

0.7%

Nevada

356

 

352

 

4

 

1.1%

Nebraska

252

 

219

 

33

 

15.1%

Total locations

4,014

 

3,906

 

108

 

2.8%

Gaming terminals (1)

As of September 30,

 

Increase / (Decrease)

 

2024

 

2023

 

Change

 

Change (%)

Illinois

15,714

 

15,020

 

694

 

 

4.6

%

Montana

6,448

 

6,252

 

196

 

 

3.1

%

Nevada

2,685

 

2,744

 

(59

)

 

(2.2

)%

Nebraska

882

 

688

 

194

 

 

28.2

%

Total gaming terminals

25,729

 

24,704

 

1,025

 

 

4.1

%

 

 

 

 

 

 

 

 

Location hold-per-day (2)

Three Months Ended September 30,

 

Increase / (Decrease)

 

 

2024

 

 

2023

 

Change ($)

 

Change (%)

Illinois

$

839

 

$

825

 

$

14

 

1.7

%

Montana

 

613

 

 

591

 

 

22

 

3.7

%

Nevada

 

802

 

 

802

 

 

—

 

—

%

Nebraska

 

257

 

 

220

 

 

37

 

16.8

%

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

 

Increase / (Decrease)

 

 

2024

 

 

2023

 

Change ($)

 

Change (%)

Illinois

$

859

 

$

854

 

$

5

 

 

0.6

%

Montana

 

608

 

 

579

 

 

29

 

 

5.1

%

Nevada

 

835

 

 

849

 

 

(14

)

 

(1.6

)%

Nebraska

 

244

 

 

228

 

 

16

 

 

7.0

%

 

 

 

 

 

 

 

 

(1)

Based on a combination of third-party portal data and data from our internal systems. This metric is utilized by Accel to continually monitor growth from existing locations, organic openings, acquired locations, and competitor conversions.

(2)

Location hold-per-day is calculated by dividing net gaming revenue in the period by the average number of locations. We then divide the calculated amount by the number of operational days. We utilize this metric to compare market and location performance on a normalized basis. The percent change in location hold-per-day is the underlying metric used to determine the change in same-store sales.

Condensed Consolidated Statements of Cash Flows Data

 

Nine Months Ended

September 30,

 

Increase / (Decrease)

(in thousands)

 

2024

 

 

 

2023

 

 

Change ($)

 

Change (%)

Net cash provided by operating activities

$

107,665

 

 

$

92,007

 

 

$

15,658

 

 

17.0

%

Net cash used in investing activities

 

(90,224

)

 

 

(35,404

)

 

 

(54,820

)

 

(154.8

)%

Net cash used in financing activities

 

(13,967

)

 

 

(50,328

)

 

 

36,361

 

 

72.2

%

Non-GAAP Financial Measures

Adjusted net income is defined as net income plus:

• Amortization of intangible assets and route and customer acquisition costs
• Stock-based compensation expense
• Loss from unconsolidated affiliates
• Loss on change in fair value of contingent earnout shares
• Other expenses, net which consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring lobbying and legal expenses related to distributed gaming expansion in current or prospective markets, and (iii) other non-recurring expenses
• Tax effect of adjustments

Adjusted EBITDA is defined as net income plus:

• Amortization of intangible assets and route and customer acquisition costs
• Stock-based compensation expense
• Loss from unconsolidated affiliates
• Loss on change in fair value of contingent earnout shares
• Other expenses, net
• Tax effect of adjustments
• Depreciation and amortization of property and equipment
• Interest expense, net
• Emerging markets, which reflects the results, on an Adjusted EBITDA basis, for non-core jurisdictions where our operations are developing
  • Markets are no longer considered emerging when we have installed or acquired at least 500 gaming terminals in the jurisdiction, or when 24 months have elapsed from the date we first install or acquire gaming terminals in the jurisdiction, whichever occurs first
  • We currently view Pennsylvania as an emerging market
  • Prior to January 2024, Iowa was considered an emerging market
  • Prior to April 2023, Nebraska was considered an emerging market
• Income tax expense

Net debt is defined as debt, net of current maturities plus:

• Current maturities of debt
• less Cash and cash equivalents

Adjusted net income and Adjusted EBITDA

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

(in thousands)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income

$

4,895

 

 

$

10,450

 

 

$

26,897

 

 

$

29,615

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets and route and customer acquisition costs

 

5,781

 

 

 

5,299

 

 

 

16,808

 

 

 

15,825

 

Stock-based compensation expense

 

3,342

 

 

 

2,718

 

 

 

8,927

 

 

 

6,973

 

Loss from unconsolidated affiliates

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Loss on change in fair value of contingent earnout shares

 

4,216

 

 

 

1,625

 

 

 

4,190

 

 

 

11,063

 

Other expenses, net

 

3,867

 

 

 

1,682

 

 

 

13,620

 

 

 

5,006

 

Tax effect of adjustments

 

(3,752

)

 

 

(2,707

)

 

 

(11,205

)

 

 

(7,916

)

Adjusted net income

 

18,350

 

 

 

19,067

 

 

 

59,238

 

 

 

60,566

 

Depreciation and amortization of property and equipment

 

11,001

 

 

 

9,405

 

 

 

32,229

 

 

 

27,914

 

Interest expense, net

 

9,164

 

 

 

8,415

 

 

 

26,730

 

 

 

24,546

 

Emerging markets

 

43

 

 

 

(86

)

 

 

121

 

 

 

(805

)

Income tax expense

 

7,322

 

 

 

7,337

 

 

 

23,474

 

 

 

24,648

 

Adjusted EBITDA

$

45,880

 

 

$

44,138

 

 

$

141,792

 

 

$

136,869

 

Net Debt

 

As of September 30,

(in thousands)

 

2024

 

 

 

2023

 

Debt, net of current maturities

$

525,572

 

 

$

484,004

 

Plus: Current maturities of debt

 

28,490

 

 

 

28,479

 

Less: Cash and cash equivalents

 

(265,085

)

 

 

(230,388

)

Net debt

$

288,977

 

 

$

282,095

 

Conference Call

Accel will host an investor conference call on October 30, 2024 at 4:30 p.m. Central time (5:30 p.m. Eastern time) to discuss these financial and operating results. Interested parties may join the live webcast by registering at https://www.netroadshow.com/events/login?show=a8e678a0&confId=71436 or accessing the webcast via the company’s investor relations website: ir.accelentertainment.com. Following completion of the call, a replay of the webcast will be posted on Accel’s investor relations website.

About Accel

Accel is a leading distributed gaming operator in the United States and a preferred partner for local business owners in the markets it serves. Accel offers turnkey full-service gaming solutions to authorized non-casino locations such as bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country. Accel installs, maintains, operates and services gaming terminals and related equipment for its location partners as well as redemption devices, stand-alone ATMs and amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment. Accel also designs and manufactures gaming terminals and related equipment.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, contained in this press release are forward-looking statements, including, but not limited to, any statements regarding our estimates of number of gaming terminals, locations, revenues, Adjusted EBITDA and capital expenditures, our ability to continue to generate returns on capital and improve our trading multiples, and our proposed acquisition of Fairmount Holdings, Inc. The words “predict,” “estimated,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “continue,” and similar expressions or the negatives thereof are intended to identify forward-looking statements. These forward-looking statements represent our current reasonable expectations and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors including, but not limited to: Accel’s ability to operate in existing markets or expand into new jurisdictions; Accel’s ability to offer new and innovative products and services that fulfill the needs of location partners and create strong and sustained player appeal; Accel’s dependence on relationships with key manufacturers, developers and third parties to obtain gaming terminals, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms; the negative impact on Accel’s future results of operations by the slow growth in demand for gaming terminals and by the slow growth of new gaming jurisdictions; Accel’s heavy dependency on its ability to win, maintain and renew contracts with location partners; the parties' ability to satisfy the conditions to the consummation of the proposed acquisition of Fairmount Holdings, Inc. and the risk that the proposed acquisition may not be completed in a timely manner or at all; unfavorable macroeconomic conditions or decreased discretionary spending due to other factors such as interest rate volatility, persistent inflation, actual or perceived instability in the U.S. and global banking systems, high fuel rates, recessions, epidemics or other public health issues, terrorist activity or threat thereof, civil unrest or other macroeconomic or political uncertainties, that could adversely affect Accel’s business, results of operations, cash flows and financial conditions and other risks and uncertainties indicated from time to time in documents filed or to be filed with the Securities and Exchange Commission (“SEC”).

Accordingly, forward-looking statements, including any projections or analysis, should not be viewed as factual and should not be relied upon as an accurate prediction of future results. The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on Accel. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled “Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed by Accel with the SEC on February 28, 2024 (the "Form 10-K"), as well as Accel’s other filings with the SEC. Except as required by law, we do not undertake publicly to update or revise these statements, even if experience or future changes make it clear that any projected results expressed in this or other press releases or future quarterly reports, or company statements will not be realized. In addition, the inclusion of any statement in this press release does not constitute an admission by us that the events or circumstances described in such statement are material. We qualify all of our forward-looking statements by these cautionary statements. In addition, the industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors including those described in the section entitled “Risk Factors” in the Form 10-K, as well as Accel’s other filings with the SEC. These and other factors could cause our results to differ materially from those expressed in this press release.

Industry and Market Data

Unless otherwise indicated, information contained in this press release concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity, and market size, is based on information from various sources, on assumptions that we have made that are based on those data and other similar sources, and on our knowledge of the markets for our services. This information includes a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. In addition, projections, assumptions, and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the Annual Report on Form 10-K filed by Accel with the SEC, as well as Accel's other filings with the SEC. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us.

Non-GAAP Financial Information

This press release includes certain financial information not prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”), including Adjusted EBITDA, Adjusted net income, and Net Debt. Adjusted EBITDA, Adjusted net income, and Net Debt are non-GAAP financial measures and are key metrics used to monitor ongoing core operations. Management of Accel believes Adjusted EBITDA, Adjusted net income, and Net Debt enhance the understanding of Accel’s underlying drivers of profitability and trends in Accel’s business and facilitates company-to-company and period-to-period comparisons, because these non-GAAP financial measures exclude the effects of certain non-cash items, represents certain nonrecurring items that are unrelated to core performance, or excludes non-core operations. Management of Accel also believes that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance.

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

(In thousands, except per share amounts)

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

Net revenues:

 

 

 

 

 

 

 

Net gaming

$

289,923

 

$

274,123

 

$

871,300

 

$

831,054

Amusement

 

5,104

 

 

5,411

 

 

16,772

 

 

17,839

Manufacturing

 

1,705

 

 

3,334

 

 

9,122

 

 

9,886

ATM fees and other

 

5,495

 

 

4,629

 

 

16,263

 

 

14,573

Total net revenues

 

302,227

 

 

287,497

 

 

913,457

 

 

873,352

Operating expenses:

 

 

 

 

 

 

 

Cost of revenue (exclusive of depreciation and amortization expense shown below)

 

210,841

 

 

198,743

 

 

633,325

 

 

604,603

Cost of manufacturing goods sold (exclusive of depreciation and amortization expense shown below)

 

962

 

 

2,065

 

 

5,283

 

 

5,627

General and administrative

 

47,930

 

 

45,183

 

 

142,105

 

 

132,421

Depreciation and amortization of property and equipment

 

11,001

 

 

9,405

 

 

32,229

 

 

27,914

Amortization of intangible assets and route and customer acquisition costs

 

5,781

 

 

5,299

 

 

16,808

 

 

15,825

Other expenses, net

 

3,867

 

 

1,682

 

 

13,620

 

 

5,006

Total operating expenses

 

280,382

 

 

262,377

 

 

843,370

 

 

791,396

Operating income

 

21,845

 

 

25,120

 

 

70,087

 

 

81,956

Interest expense, net

 

9,164

 

 

8,415

 

 

26,730

 

 

24,546

Loss from unconsolidated affiliates

 

1

 

 

—

 

 

1

 

 

—

Loss on change in fair value of contingent earnout shares

 

4,216

 

 

1,625

 

 

4,190

 

 

11,063

Income before income tax expense

 

8,464

 

 

15,080

 

 

39,166

 

 

46,347

Income tax expense

 

3,569

 

 

4,630

 

 

12,269

 

 

16,732

Net income

$

4,895

 

$

10,450

 

$

26,897

 

$

29,615

Earnings per common share:

 

 

 

 

 

 

 

Basic

$

0.06

 

$

0.12

 

$

0.32

 

$

0.34

Diluted

 

0.06

 

 

0.12

 

 

0.32

 

 

0.34

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

82,952

 

 

85,865

 

 

83,718

 

 

86,305

Diluted

 

84,322

 

 

87,114

 

 

84,890

 

 

87,022

 

 

 

 

 

 

 

 

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In thousands, except par value and share amounts)

September 30,

 

December 31,

 

 

2024

 

 

 

2023

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

265,085

 

 

$

261,611

 

Accounts receivable, net

 

7,830

 

 

 

13,467

 

Prepaid expenses

 

8,168

 

 

 

6,287

 

Inventories

 

9,090

 

 

 

7,681

 

Interest rate caplets

 

5,510

 

 

 

8,140

 

Deposits

 

18,293

 

 

 

6,555

 

Other current assets

 

9,347

 

 

 

8,853

 

Total current assets

 

323,323

 

 

 

312,594

 

Property and equipment, net

 

281,917

 

 

 

260,813

 

Noncurrent assets:

 

 

 

Route and customer acquisition costs, net

 

23,725

 

 

 

19,188

 

Location contracts acquired, net

 

176,793

 

 

 

176,311

 

Goodwill

 

102,151

 

 

 

101,554

 

Other intangible assets, net

 

18,715

 

 

 

20,542

 

Interest rate caplets, net of current

 

1,176

 

 

 

4,871

 

Other assets

 

22,406

 

 

 

17,020

 

Total noncurrent assets

 

344,966

 

 

 

339,486

 

Total assets

$

950,206

 

 

$

912,893

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Current maturities of debt

$

28,490

 

 

$

28,483

 

Current portion of route and customer acquisition costs payable

 

2,122

 

 

 

1,505

 

Accrued location gaming expense

 

8,921

 

 

 

9,350

 

Accrued state gaming expense

 

30,503

 

 

 

18,364

 

Accounts payable and other accrued expenses

 

36,462

 

 

 

36,012

 

Accrued compensation and related expenses

 

10,108

 

 

 

12,648

 

Current portion of consideration payable

 

2,766

 

 

 

3,288

 

Total current liabilities

 

119,372

 

 

 

109,650

 

Long-term liabilities:

 

 

 

Debt, net of current maturities

 

525,572

 

 

 

514,091

 

Route and customer acquisition costs payable, less current portion

 

7,306

 

 

 

4,955

 

Consideration payable, less current portion

 

10,882

 

 

 

4,201

 

Contingent earnout share liability

 

36,017

 

 

 

31,827

 

Other long-term liabilities

 

6,188

 

 

 

7,015

 

Deferred income tax liability, net

 

38,150

 

 

 

42,750

 

Total long-term liabilities

 

624,115

 

 

 

604,839

 

Stockholders’ equity:

 

 

 

Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2024 and December 31, 2023

 

—

 

 

 

—

 

Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 95,409,648 shares issued and 82,430,205 shares outstanding at September 30, 2024; 95,016,960 shares issued and 84,123,385 shares outstanding at December 31, 2023

 

8

 

 

 

8

 

Additional paid-in capital

 

210,225

 

 

 

203,046

 

Treasury stock, at cost

 

(133,760

)

 

 

(112,070

)

Accumulated other comprehensive income

 

3,865

 

 

 

7,936

 

Accumulated earnings

 

126,381

 

 

 

99,484

 

Total stockholders' equity

 

206,719

 

 

 

198,404

 

Total liabilities and stockholders' equity

$

950,206

 

 

$

912,893

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030476384/en/

Media: Eric Bonach H/Advisors Abernathy 212-371-5999 eric.bonach@h-advisors.global