ACEL - Earnings call transcript Q4 2020 | Accel Entertainment, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Accel Entertainment Fourth Quarter and Full Year 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Matthew Ellis. you. Thank ahead. go Please

Mathew Ellis

and that within website Financial Entertainment's on our website. and press of Andy the Officer; Accel's Today's Chief Accel and website discussed to earnings Presentations call. for Investor Rubenstein, year will call. Executive Chief Carroll, Brian Participating call and under on Please Relations fourth to refer our on release full our the quarter XXXX Accel's Officer. Welcome today is be being available be this the section call recorded supplemental information and will Events are

current in undertakes Some are by concerns. of statements statements Act no differ may the company forward-looking call those Actual comments Securities unless these XXXX. required of of today's subject meaning to within today, results the Reform health Private and from statements the the materially obligation the risks forward-looking constitute discussed law. update and These to may and uncertainties

should risk detailed more available discussion a our investors as press website earnings of on SEC. For forward-looking other and our release disclosures the as of other statements filings factor in the well section factors, review risk these with the

measures. During discuss may call, non-GAAP certain the financial we

information For materials the earnings call measures well reconciliations I regarding turn now Relations to website. to will the as of section refer over these Andy Investor release as the please in other measures, other Rubenstein. non-GAAP our and of Mr. our

Andy Rubenstein

November most our aware, we relaunch. February to all hours strong mid-January, with burn us partners to Illinois for is allowed Similar and down the dining. Thank Call. to everyone. joining regions time, a Thanks, upgrade strong but state Fourth to began and our idle opportunity but a took We unlike regions you this with were our morning, cash In XXXX employees, limited to last reduced indoor of time for last Accel the X, Accel's second shut our By quarter, returned and were swap as location the and the Full start hours. operations VGTs. Matt. Earnings furloughed to on of limited for Quarter reopen Good install, clear for XX. We VGTs had gaming backlog fourth everyone we and shutdown, position throughout gaming normal Year

driven in reported $XX best more data, the revenue locations of month February, despite days IGB at Revenue As the in February model. software business extreme February to XX by history both our the snowstorms Accel and multiple than generated opened XXXX up of strength limit in VGT. initial temperatures, These only higher and in resilience million the being long. and gaming bet XXXX additional demonstrate local XX%, mostly X our continue almost was and the results

Century demonstrates announced we Century with our XXX March pleased XXXX, operated On On Western to welcome XX, Turning smoothly, we has United Accel in a has as Gaming It XX our family American well locations are family Will, Video for in well-run, of terminals expansion of to we as years. and the to over owned than our quarter whose Gaming’s complement This American as operator States, manufacturer acquisition a busy well ability further Northern that than was gaming Gaming, [Barry] business. find as XX Gaming, Nevada and John Filer, million. opportunities attractive X, to locations. M&A. operator XXXX. X,XXX Montana route and more acquisition American Illinois and more December Video terminals. into a the financially start integration for and went $XX acquired Video a to the The gaming

and $XXX in XXXX. EBITDA generate We million them of million adjusted to $XX revenue expect of

EBITDA. adjusted a pay million $XXX purchase multiple of times will X implying We

to the practices continue of team have We business to and his the look forward and full in successfully confidence companies. sharing best and running both management Steve implementing Arntzen

Vision would new some designs in A gaming of to Power diversifying exclusively own, geographical gaming like is Accel South their economics gaming to like and to as Illinois. on family, Century Louisiana. Grand spend West route. proprietary Montana, on brings Vision terminal X states While outside time our financial of Gaming, known which assembles also the is Century software footprint licensed discussing and provided Vision the further Nevada we Century's Virginia Dakota, sell I terminals. Owns the Grand additional terminals acquisition. benefits

Vision distributors’ and able both license the sell to in terminals hold offering a in manufacturer differentiator because cannot home will we other be think states. Grand not and its will While this and license a Accel operators’ be terminal gaming in market, Illinois valuable

Finally, and product at a popular Gamblers their offered player locations. Nevada Century designs Bonus, owns rewards

play when yet in and provide expertise, appropriate. own will has combined if product our been While rewards and Illinois this the we platform cost-effective believe approved launch to not our with own market, technology, powerful a

to against begun previous XX, received Video of violations Brian, company video we more like any defend CFO, and have complaint, seeks vigorously results you over public walk Act and allegations complaint hearing rules complaint our to item. Accel it the and the we to allegations from would discuss January IGB’s IGB's December turning process. our in On initial disciplinary gaming. the of the briefly million. The adopted Gaming our I the final Before filed to intend fine the one for a administrative comments, We $X the XX complaint detail, to through alleging in on answer deny the our wrongdoing. we Reiterating IGB to

take open you, an cannot to further. is comment we this Brian. As questions Over matter, or

Brian Carroll

Andy. you, Thank

X,XXX the XX, in Accel respectively. that X%, XX% increase had locations XX,XXX in despite challenges. of demonstrates year-over-year and VGTs The December to locations, COVID increases continues grow As we of current

allow fees. At December, of length meetings was and attrition with license years. new pleased contract of teams as X number end average pre-COVID particularly same remains involuntary on scheduled for residual the averages. of for locations, should sales our the new historical levels The to IGB Our return the competitor closures we in and continue our XXXX, organic XXXX, that X.X annual sign rate are line which to approximately meetings a pre-COVID

a reminder, the no in agreements than to As limited XXXX, IGB years. X February more

XX, of by have March total of installed X,XXX VGTs June. a expect than more install and X,XXX we to As

we year, revenue had full EBITDA million the of $XXX For total million. and $XX adjusted of

March fourth to total and revenue of of due year to For we X $X the June XX XX prior XXXX. of quarter, shutdowns EBITDA mid-January to had $XX million. declines XX were adjusted and from The November the from million

the business. continue revenue to over model our months resilience I were we EBITDA and think records important set Further, business asset-light generated during being open, XX% EBITDA adjusted year. adjusted it we new of of to that despite note positive the shut our is the demonstrating down

and compared the VGTs, in spend gaming million increase a largely which to offer Our environment million in intimate players hyper, was machines. and experience to to were $XX comfortable cash safe to XXXX year. of enjoy continues XXXX, local was installed $XX CapEx throughout attributed our the X purchases the

With million a and XXXX. consisting of us, primarily net I the end behind related $XXX our location VGT cash of liquidity, would $XXX reminder, $XXX now to approximately CapEx and debt we guidance balance on As to million for of like availability. had XXXX and sheet is million] XXXX, our of of [$XXX revolver of million growth. At provide

in is to include are the Revenue to XX,XXX year $XX for $XXX XXXX locations. to these cash operating million. to X,XXX for X,XXX million amounts to Keep adjusted be million expenses forecasted VGTs you, $XX the January with XX,XXX M&A expected to be $XXX between no Back million EBITDA to increased assume COVID. of to end CapEx in forecasting Andy. with of spend. and is $XX We mind, $XXX to million XXXX shutdown, million include

Andy Rubenstein

Thank you, Brian.

location Accel and of glad XXXX to is cannot year Accel mitigations I express to They changing am and challenges XXXX stronger focused of at I we conquered in on employees put thankful the behind adapted our how than partners throughout who all everyone and think emerge positioned faced us. met the to XXXX. and proud fully ever. and I

now will questions. We your take

Operator

comes with [Operator first Jordan Bender Instructions] question Your Macquarie. from

Jordan Bender

in cost XXXX expect coming your in operation Illinois levels EBITDA at are the margin So related pre-COVID looking similar a roughly I'm to we guys at? something the to similar then range you $X levels? and COVID, that guidance on the And of million month. should Is terms out that

Brian Carroll

throughout Brian. I is This year. And later but lower COVID it's -- of anticipated the -- it's where we don't can discuss for probably fraction expenses that. we that have much from, a got you

Jordan Bender

similar Okay. similar levels EBITDA levels be looking And margin on post COVID? will then similar, you at

Brian Carroll

like It's still year, but we're not to provided we comfortable Pretty we guidance was over neutral. so I close. the still go said, January have pretty the with through with, yet,

we what between balance $XXX And is forecasted million. and for so year, $XX guidance the million of the

Jordan Bender

kind seeing, a consumer of because differentiate day to tough the of be what might hold you're coming closing, the it limit? stronger is what then you stronger versus talk results maybe from per And Perfect. increased seeing about that you're Okay. the but versus can

Andy Rubenstein

truck machine haven't stops play few and is the machines we some last the obviously, been cause large We're from ability And that a demand kind to the And as larger for year-over-year increases bet of of exactly have what increase to ability around XX of revenue. able machines. the addition people the the increase to the in Well, the X pent-up of of go combination XX%. limits, the seeing to identify jackpots, higher the there over X don't is of range the months.

are factors the establishments growth players is to not So part because COVID reentering entertainment We because the And to those player around a the it caution lot all concerns, and of the for clearly older concerns go still continued of the they COVID-XX. using our believe has players in of to there combination base that society. back the the a as come crowds casinos is we'll of have of see other the of reluctance play. increased of bit kind in the

Operator

Securities. question Greg Gibas from comes next with Northland Our

Greg Gibas

the First, or overall Illinois compared of maybe compare spaces? penetration across kind if you either maybe the of I could Nevada just wondering and Montana those how talk biggest what gaming about and differences similarities saturation And markets? in attract to between and those markets was does

Andy Rubenstein

This is Andy.

I'd we're or the the markets real establishment there's say the in is markets. The definitely those obviously, the X or So a in machines between XX have in machines few machines X the more stop. large an truck where, differentiations a to to limited XX differentiator, quite up to ability

those how driver of economics revenue flow a big split is on the market because we can Montana both operator not markets. other market opportunities, sales and fact without markets. the we that believe of help And that those played investment the growing establishment their the their think but and And X kind and therefore, Nevada there those and owner establishment in their much in between the their Nevada negotiated as well We markets expense bring I leadership both in more both innovation Montana, it's is Century per the innovation the in differences business the has to extend able of innovate, therefore, is to those The to basis. be cash in discouraged establishment the base. same-store considerable markets the can in customer and is as goes of out. with to isn't assist And just as

Greg Gibas

any operator? on penetrated Okay. could transaction? weren't kind of I to in current I then regions that of metrics as And share I that you that. And it American guess, from wanted portfolio? What Video attracted you your the Great. on Gaming. recent that touch to Illinois valuation acquisition appreciate Was

Andy Rubenstein

of and Filer very family. long well synergies They Yes. appear familiar so a best existing with kind to practices. as for I share having familiar we're to the route have good time. Accel be conversations lot And as overlaps our their been very We're with a opportunities as of were we establishments. mean of the friends business there

Greg Gibas

I guess maybe will of that I it And to just prepared you me. the backlog? the kind I Great. for deploy comments time did you don't think if on wondering Okay. could was average and your last interacted comment backlog. size of take your X in

Andy Rubenstein

Yes.

it of in predictable and is how Gaming backlog been to fairly determined the by significant. licensing license. Board has be often Our deployment continues they The Illinois

And so kind and can you what at would of extrapolate happen look in XXXX. patterns historical in

Operator

Steven Pizzella from Your comes next Bank. Deutsche with question

Steven Pizzella

XXXX baked the you to on acquisition, you American Video guide? for provide contribution Gaming Just the are the in able

Brian Carroll

is Brian. This Yes.

revenue, that you If see annualized to to you'd We is approximately their do website, EBITDA million Board of the basis $XX contribution million an on go is. disclose what about Gaming revenue. Illinois $XX gaming not

Steven Pizzella

dialed states? then I of And in? an just Okay. are maybe additional pipeline we for the update know can you guys get on pretty in you additional VGTs see legalization

Andy Rubenstein

There I kind have list And Missouri's, the extended no look Virginia, that legislation. through kind wouldn't of states. And a seen to having lot going of legislation. other potential definitive. we Pennsylvania different discussions. have the happen. it with Yes. some call a of all pipeline. is transformation monitoring This can states are had that are percolating. what's of We've There the of There's is states you legislation; legislation the

Operator

Your next question DeCree John with comes Union from Gaming.

John DeCree

Andy, legal bit you'd today as it strategy for do to relates once talk if the don't yet. about it's in a opposed Montana to I and stuff small the VGT Illinois, other question Would you might wonder where be your focus foothold forward you to Century bolt-on a me. whether X could closes? to states as little Nevada just have market a there's to that those Everyone to footprint, is in acquisition look continuing gaming going M&A expand where be do tuck-ins if

picture, going So sense for strategy forward? M&A makes just the what big

Andy Rubenstein

Yes. Illinois. that looking I we would are actively say beyond

to I more And importantly, our simultaneously. being combination bring growing has increasing for practices provided said, the opportunity other Illinois focus into but markets. footprint national us I opportunities grow. always tap of real other and the partners will think think there's in our That Illinois, in best of to with states

John DeCree

perhaps it a Andy, A scale interesting and are outside was. maybe like bit Georgia any of look move acquisition where than smaller Montana that. potential Nevada that Maybe, a particularly is, there's look follow-up like transaction Century the and to little states more would to of rather there

Andy Rubenstein

them our I family. continue the are and very will for we're 'XX, moves we clear, the 'XX that business. out transformational there, partners fit would there grow whether to some Accel's to And acquisitions good they're continue companies not continuing And 'XX, the say will to like into happen, to as are in smaller us. is bring Century identify but cultural open

Operator

Andy There the closing call are turn back at Rubenstein further will remarks. no now to this questions time. I for

Andy Rubenstein

And Yes. wanted to I joining COVID us that 'XX. have We're forward this the on a to call related is hopefully, affected everyone a thank to looking earnings. for just strong conversation today. last we very

So us. a week, good thank for and wishing you everyone joining

Operator

today's conference concludes Thank this gentlemen, and Ladies participating. call. you for

disconnect. now may You

Accel Entertainment (ACEL) 15 Mar 212020 Q4 Earnings call transcript