ACEL - Earnings call 3 2021 | Accel Entertainment, Inc.

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Operator

Hello, everyone, and welcome to the Accel Entertainment Q3 2021 Earnings Call. My name is Daisy, and I'll be coordinating today's call. [Operator Instructions] I will now hand over to your host, Mathew Ellis, the Senior Vice President of Corporate Strategy from Accel Entertainment.

So Mathew, please go ahead.

Mathew Ellis

Welcome to Accel Entertainment's Third Quarter 2021 Earnings Call. today Carroll, Rubenstein, Accel's call Officer; Chief the Brian and Chief on are Accel's Andy Executive Participating Financial Officer. our will this to supplemental refer website press the Please release information that be call. on discussed for and Today's section our Presentations under on be website website. our being call Investor Events Relations recorded is the will available and within of &

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

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

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

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

Andrew Rubenstein

the quarter. became as for for you to results, fully in growth basis, Thanks, to than been third the Earnings quarter. we see quarters. Call. our of for November first seasonal believe, the third location we've for Matt. It's consecutive of that strong open but performing everyone. we public the Good the throughout Accel's I'm But revenue morning, performance Thank typically since is time year-over-year hard On report second us the XX%. XXXX in joining Third Quarter X this continue continued pleased quarter is to more demonstrated quarter a lowest

the completion and of X VGT of revenue higher primary we've the the installations. the As drivers higher upgrades software throughout year, highlighted were the

results, raising our call. it guidance and and optimize retain the current to are we us our numbers through to in product offering, which strong leave to you also existing guidance. to also walk later Brian players year players. Due our I'll new quarter's attract We continue the XXXX helps releasing again the

to Turning growth.

already the ask of most $XXX excess in we XX, group, increased from of facility, our credit story, October ask. lender are borrowing seeing you $XXX to It our funds aware, capacity we our with our on was As commitments our which high-quality along amended from large a million. but uses received our million of intended after actually credit

and Our future more states. and expect M&A is I'd new for group existing announce their like continued support. pipeline active, lender we thank to opportunities in to the also our incremental in both

of perform we're the close half our to on the M&A, than Century track to first While and is continue estimates. in original better they on topic still of XXXX,

As full we're if illustrate XXXX guidance. to what we're Accel the not for year. like certain on the look was releasing included timing Century of would closing,

the the locations. XXX teams total licenses or new additional Accel Year-to-date, organic our continue sign of front, awarded. was to awarded organic XX% competitor On new licenses sales and

without which and Our just We always to from is number we the eligible ability look share at Sales of is sales fair advantages one importantly, and we're licenses us our then and expect that business other monitor we to on businesses than current of number pipeline, significant in But competitive has capabilities more gaming amount a operators. We're live growth. focused partners continuing Georgia, our differentiates our number location continues our sales more our the quality share testament of of work future grow. meeting. to each more with gaming size of of and to awarded believing. end In the the continue overall a still location licenses Illinois to to aim with location to backlog believe year their per of our licenses VGTs locations. the or owners win to team and market capita, many win XXX we strong maximize revenue. When grow

to the will are market. players introduced in We excited work about gaming future. the also on long-term for the prospects in this continue for new a improving redemption that experience remain hopeful option us and be We

Looking optimistic consider that several will future. the at in states, states we gaming remain cautiously other distributed

in likely upcoming will sessions. bills legislative For introduce distributed example, Virginia their and Missouri gaming

revenues gaming We stakeholders small continue states local generates various to them benefits the and for work incremental it state in these and alike. to and distributed with educate governments the of the about businesses

that confident to future playbook market. built any be our successful will are in us in we Illinois growth We enable

the Accel that, I'd like detail. is to returns more to the gaming, We numbers offer position on believe of future. Brian to you a With highly capitalize walk the one in in with Overall, strong we in it visible through combined best growth. to over turn

Brian Carroll

morning, and Thanks, everyone. good Andy,

was increase $XXX, the The increase million primary location XX%. quarter, third $XX of the drivers higher increases respectively. the bet VGT cash million our and the CapEx had limits EBITDA of we of Revenue For spend. the for third and were year-over-year for day of quarter XX%, a initiative. third revenue and per per $X total adjusted million, XX% X quarter software of year-over-year $XXX was

we end for $XXX $XXX without. At of QX. end attrition VGTs XXXX. pre-COVID our of and guidance the updated net from quarter, to to is X% facility, XX, cash that revenues million of would failure of $XX our the locations, and down averages. balance historical million the residual we sheet of have was X,XXX million At our remain years. gaming September, availability. I incremental XXXX a $XXX debt, September we businesses and average our contract and to increases $XXX length of as X.X continues had mirror like credit continued million had belief the year-over-year of compared respectively. It third consisting amended As businesses lower XX%, liquidity, approximately Including low with of approximately provide on million of and XX,XXX rate Location now have

the and shutdown of guidance includes a year. no As January reminder, partial XXXX the acquisitions from assumes this

year-end to $XXX firepower net be be multiple giving greenfield implying between spend. Year-end to to We Revenue are debt-to-EBITDA is CapEx million $XXX to $XXX XX,XXX XXXX only locations. estimated $XXX financing adjusted inorganic estimated for X,XXX X.X, of end be $XXX is acquisition now in trailing million, $XX million million VGTs now to to EBITDA us million opportunities. and year cash excluding should million $XX ample the to million. debt, a with between XX,XXX additional with to to approximately of forecasting pursue any $XXX million X,XXX to

Century included an longer be in the guidance I'm full exact Since have emerging XXXX on uncertain, XXXX, of the The Century pro share XX and forma XXXX for Georgia in going more Century. operated provide also be with the will half still Century second to with since year. For will is for without to guidance Georgia I'm market no the going timing with assumes we basis a of months. than guidance

to to with to million. XX,XXX We $XXX to Century, to expect XX,XXX we X,XXX to expect to in be XXXX to locations. end locations. XXXX is X,XXX XXXX X,XXX XX,XXX XX,XXX X,XXX estimated in revenue with $XXX Including end between VGTs million VGTs

$XXX is from to Adjusted $XXX revenue full estimated million billion be to is year between million. $X.XX Century, Assuming benefit to $X.XX estimated be the EBITDA to billion.

a estimated spend be to between to to $XXX $XXX year CapEx Century, estimated $XX EBITDA Assuming to $XX is is adjusted between be full million million of million. million. Cash

credit discussed our $XX growth a amended acquisition are this million Taking Andy not spend $XX debt CapEx year to XXXX Century, we Assuming million. into earlier, time. full cash of timing guiding is facility, the net account for the our Century between estimated the at and

providing to Andy. As we have updates. more will visibility, we you, Back resume

Andrew Rubenstein

Brian. Thanks,

is this was and what with substantially and is XXXX, the performance We more holds. our quarter pleased in outlook. our future results is for experience that even important better gaming than it the that and are product to and in reflected extremely It remember excited today

our generate. our newer and confident by and We the asset-light gaming have incremental [indiscernible] under outperform business better continued areas, local in our demonstrated normal to in remain platform the revenues of circumstances really difficult software, performance. thrive we that jackpots creates invest continue We to and a locations them help model as given cabinets, strength importance hyper higher times

order We aim model extremely financial in and position country. expansion, strong operating our continue both the our to differentiated to leverage across and Illinois in

possible our employees businesses that be without gaming. customers. the and true preferred dedicated not distributed would are of success advantages loyal choice the in They make Our our competitive Accel

now take your will We questions.

Operator

Sander Omer JPMorgan. first from Our question comes Instructions] [Operator from

Omer Sander

moderation Are a more hoping in sequential nice a in your more the can on commentary Or It locations VGTs in gross the on XXXX a conversions the guidance out you like units? in trend? looks parse it is seeing little bit I'm attrition you implies step-up momentum the XQ. more.

Andrew Rubenstein

I'd some not declining for I win Omer. that this attrition our growing, customers it's that -- say our is currently on It's the flat to new the would relatively the Andy. of some say some is -- more as and with the customers as consistent ability of Thanks far question, convert past of experience. kind or competitors. are with

not growth getting forward. with current -- are material We portfolio, equipment some going additional in I don't but it's our

Operator

from [ Kathleen from Our question comes ] next Sachs. Brenek Goldman

Noah Naparst

Stephen from This Goldman. Grambling is for Noah on

you be given at Looking from outlined you've versus Analyst Day. the what's in up that sort you Accel of organic to than Century, things the going in parsing Century's Or it seem you'd expected? versus that? originally any that stepped is contribution better at what of Are XXXX sort there Century, the out guidance would that trends been have guidance what seeing markets driving the

Andrew Rubenstein

we're do And as the markets mid-XXXX the seen in as a forward. have better have performed they what really consistent reopened and nice expected, across job -- kind with -- than we've Century So country. of we've the seeing going

allowed implemented they X year. -- this some Nevada program that a be So been market, of where especially changes player the have in to now the state in rewards there's July

it benefits seen the it -- we'll And from think continue go into forward benefits a in so 'XX. we initial bit we'll see And we've I phase. think to I little as see

Noah Naparst

X Do in Virginia on insight you and potential I realized touched just Missouri? could if ask the there? And but have any follow-up. any it, you legalization I conversations into

Andrew Rubenstein

And legislation The states points Yes. both that in whether business the close in They owners. got Illinois finish we legislation XXXX year, in not the could from for it's the like stars line. the And have states the both there align of been as that markets, state to State different -- in has mean success introduced couple over I as I it that or small the in mean last both in question well of it across happen, a legislation was the see October and that given There's years. any had past. forward, legislators. has really for owners is at the gaming introduced will XXXX. look get implemented the that benefited business real Illinois benefit as we and small -- of from interest the

legislation, So But you we're it's it with we've the not expected a in hopeful. lesson Governor, until here signed few legislation. times any that learned Illinois, get by

Operator

Steve from comes Pizzella Deutsche question from next Bank. Our

Steven Pizzella

year-over-year drivers of the XXXX at think from with VGTs. growth I Century, approximately I XX% talk ex new the other midpoint half half? coming guidance the Can believe, you implies about revenue about

Andrew Rubenstein

one mean down is, of you shut recall, drivers I days we in the XX January. for Yes. if were bigger

So up X month, of month the a of we're of from than pick more revenue basically X/X X/X the to going January. the on for

implemented the is then that X that finally there into of The a quarter. see software of we there -- first went implemented after some other and was up. were And lot finally, annualization in the came that we'll was second be play will machines that part some

benefit the of $X bets. get the they'll So

to additional And all revenue. contribute our pressures. overall inflationary So -- economy we're factors those obviously, has different will

spending changed. so And relative are entertainment people our more value of the and hasn't

Steven Pizzella

the Okay. give way the there impact of you then see Delta? October any helpful. trends? kind then about Great. within And you quarter? Did talk is any if from comments able the you're That's can any cadence to And on

Andrew Rubenstein

Yes.

better do month we've safer as this home, the anything as looking negative. during And any we hasn't as environments a machines. are that's in we're playing than similar much limited, with traveling options that -- really as as little are Delta had it, performance had hasn't to than good and relative the is And effect. anticipated, like If staying kind closer of the with closer seasonality like So like past, expected. would because more October saw home a -- entertainment what -- entertainment form they're less people to our period. anything, had almost other very so the they're is of of comfortable with a we at Delta

So we're not or seeing any outlier the other. way one

Steven Pizzella

you are then And about and the into one you how could. you seeing new Okay. beyond? Helpful. talk have just just much pipeline And visibility if I for more, pipeline locations? Can XXXX do

Andrew Rubenstein

Yes.

far our gaming So then licensing other up. what major factor. the kind locations as signed the of have of as pipeline, only we we board's see current obviously, that process And portfolio the is

continue perform opportunities. We new continue to win and to we

customers options time Our again. from us choose over time and other

half the them perform, except And fact to do so I future. and how, to the past, and see like, in of we have can't in second going is to succeed for and they team continue performed expect we later good really that a have into 'XX the the

continue performance forward. seen So -- what that you'll going of that that hope we means is the Accel that you've will out

Operator

question comes Bender next from from Our Macquarie Capital. Jordan

Jordan Bender

I slots municipalities about allowing VGT, for market relatively so think although guidance? these that last So know previously allow penetrate, into organizations? do didn't And fraternal the is expanded locations you size week, and couldn't small. that of veteran and your only you in X% gaming Illinois But

Andrew Rubenstein

than not lot of or it's would in municipalities, very those expect you say, no, don't our even whatever created. a more or X halls can't X municipalities, Legion. guidance, have So locations them was and American veterans opening in and I that those Veterans it's small a

it's So opt-in -- point, hope And is revenue. have any ability for some you in in -- but something of toward guidance. to communities, more a meaningful VGTs that's we're some a these of greater of not not for at our there's that the where looking our opt-ins expand other can kind that

Jordan Bender

Okay. you the that outside XX M&A what Illinois do look about of market future around When of versus you the in north M&A And fit state operators. see when years, Illinois? still at terms of then you is inside And you think of do into how consolidation?

Andrew Rubenstein

think couple significant for far And is our Accel the I same say And I of big overall, as to opportunities be of always recently market. I'd Illinois. keep still has the other -- best I lot part goes, wants state competitive acquisitions opportunities there's consolidation. in really And been is the but market a at we're always mean of a inside other of see mean of think I lot of that players. don't the in as players. pursuing always But And a that there'll focus you'll small Yes. consolidation. example. lot Century has good a markets. a I more think And time,

I identify and that Century's learn new as think should we through markets next. we where distribution manufacturing business, will be we

Operator

question comes [Operator Greg Gibas next Northland Instructions] from Our from Securities.

Gregory Gibas

wanted just in installing the VGTs of at confirm I bet the terms limit First, then higher and X that we're installations? to nearly XXX%

Andrew Rubenstein

Greg. Thanks, Yes.

XX% additional. We much. not are, range, in the not yes, much There's

Gregory Gibas

since multiples -- if I provided maybe then Do the And Great. all, what few the your M&A last you on of could up the think follow pipeline. you acquisition Okay. on changed kind acquisitions? at have

Andrew Rubenstein

pretty I but think slightly lower, stabilized, maybe they've stable.

Gregory Gibas

expectations. your commentary too, a just follow-up, regarding on Century it. And Got outperforming your

did. if maybe to expand could they Just what on degree wondering you

Andrew Rubenstein

been of their following a significant, Yes. the type preferred that country kind across has of period. entertainment economies and trend has the we've local, reopen regional gaming it's revenue pandemic from the very very been as seen I where mean the form

on home just And it's there to want we the $XX going And where in EBITDA, be close know And somewhere in -- establishment, million so we're get higher. entertainment that feel expecting implemented. based in trends player people seeing they a also Illinois higher who where about comfortable. XX% that's the it machine XX% a us that to of think of saw between benefit adding and that to getting in people recently the they're not are limits, to XXXX, they and the we've just they're X having same the but reward a was they're we bet system of obviously, seen value lot

Gregory Gibas

at labor Got all? last supply me. it. by sense for That's And issues are under I locations one impacted guess contract helpful. whether Any of

Andrew Rubenstein

Yes. business small impacted a to lot family-owned, Labor lower kind of businesses. wage partners our the owners. is And very in being industry similar are business fortunately, all of this

employee we wages more but because limited have to and situations grow very feel a a And that so base, to we have been employee near hire back in And the their seen struggles into where there's the they base future. hopefully, or to feel more rising real market. loyal foresee being go that And the as challenge -- some of away. comfortable people go workplace, will of

Gregory Gibas

the on results. Understood. Congrats

Andrew Rubenstein

Greg. Thanks,

Operator

questions. We Instructions] further [Operator have no

closing. for to hand back over So I'll Andy

Andrew Rubenstein

I for safe just everyone the holiday today, Year. again in want everyone and season look forward wish with joining and thank New and speaking us to to everyone healthy I a

Accel Entertainment (ACEL) 4 Nov 212021 Q3 Earnings call transcript