ACEL - Earnings call transcript Q2 2024 | Accel Entertainment, Inc.

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Operator

Good afternoon. Thank you for attending today's Accel Entertainment Q2 2024 Earnings Call. My name is Tamia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, Derek Harmer, General Counsel and Chief Compliance Officer.

Derek Harmer

Welcome to Accel Entertainment's Second Quarter 2024 Earnings Call. today Accel's Rubenstein, Mark Chief President U.S. call Officer; Chief Phelan, the of Ellis, Mat Financial on are Accel's Andy Executive Accel's Participating Officer; and supplemental website call. this press Gaming. Please discussed for to will be our release refer and information that on the and being our Events website. within call website is available our Relations and recorded Today's the be Investor will on under Presentations of section

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

these review presented financial investors of in the factor risk For our website section on of risk with detailed and the projected call press statements well the a should information release available as disclosures is any in filings any earnings this purposes our of discussion factors, reflected inclusion a forward-looking be other by as other as as more The upon the future that will in results. not being of should for regarded be in only forecast call should such predictive information representation this not achieved. illustrative results forecasts be person financial relied and SEC. Any

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

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

Andrew Rubenstein

for earnings This Accel. Accel's good time afternoon, everyone. quarter is Thank here you call. exciting Thank joining and you, us at for Derek, a very second

of gaming had adjusted quarter. proof $XXX million local we strength convenient of of EBITDA revenue We offering. off, reported million, record-breaking the of positive and our another $XX First

detail announced in we which will Fairmount acquisition Park, of pending more Mark shortly. our Secondly, discuss

and growing foundation strong year-over-year. nationwide revenues financial contrast win, state, casinos, Illinois the for ourselves X% sales locations highlighted Nebraska, unit same-store from differentiate and in customers growth. in is XX by market-wide which in posted a by gaming almost unit that, stark was another of added were weather. primarily market. saw we locals driven in overall home Montana XX by Illinois, growth Accel and way machines GGR quarter, in traditional X%. and of is favorable built increased the market to home We're greater we performance, win, We flat casinos, year-over-year, same-store due was our In XX terms our sales a to supply This a growth of outperformed and This new model In our Illinois in addition Montana. This Illinois us. state, this positive we've growth modest providers our win Nevada, decline in increase demand like Vegas in proud offering, leading in Las an that's which in our in in to

highly increase us Earlier Turning XX% variable raised between location to expense. cost our Based partners. XX% from year, expenses. most this split of effective the we tax evenly offset our state The the July X. and gaming hopefully on structure, will increased Illinois is to

between more players, the allowing out convenient cashing cashing venues ticket which processing to without signs in, games in TITO, out implement should front, seeing more our as efficient make more for our will On and experience and regulatory Illinois time. known ticket and, cash create each we're them importantly, switch a

TITO to the We XX next in expect out rolled be months.

by quickly single-digit player experience that steady-state a high-quality finally, to mid-single-digit partnerships price slot create few growth, million. with want opportunities. We over to less. a We Mark, single-digit at flow diverse and simple oftentimes we while and We accessed the a game it with through towards self-service programs a and can experiences core them providing structures, choosing, free high-margin value or player greatest their We is see XX our with business cash and reliable retail compressing instill gaming And square generating products high returns gaming collaborative selection. on memorable of minutes maintain our our to low both technology. regulators XX partners foot model, our of compelling. players regulatory about business annual turn teens. In take algorithm different our location talk at depreciation growth per core loyalty revenue revenue and minutes retail growth local, and point where attractive I and Accel's low EBITDA convenient target our support CapEx gaming proposition I growth capital Before rewards by we be provide in $XX our down all across low route-based our

of operational and two, preparing positioning driving future opportunities M&A primary local core through for legalize collecting profitable; and states economics Georgia location growth in ourselves Nebraska business Illinois, establishments a gaming in permitted otherwise profitability of Georgia. business, in one, ourselves the remains execution share favorable ahead, markets in our likely levers four, is Looking our locations; and competitor core strategically greater selectively three, for converting where to both legislation; the is route and pipeline in active. organically the in growing through newly our licensed and are: this owning establishments, Nebraska face and in of future. Outside We new

the announcement. by demonstrated Fairmount As

unconsolidated sizable levels convert as are of the We in proven below at conditions companies, gaming capabilities in attractive radar that local play to assets local are our our and strengths. sit we gaming gaming opportunities the larger market that market. operator Most billion that confident to GGR a EBITDA leverage $XX can are and this

to it As of these example to Mark. opportunities, going I'm turn prime a over

Mark Phelan

Thanks, Andy.

Accel with develop master Fairmount locally partnership a approximately we The license racetrack, the opportunities know, betting As acquisition focused betting includes and casino. the to ability FanDuel, in a long-term announced we a stuff. best-in-class all acquisition of $XX sports a million with for off-track

creators Accel. on the Much in years cash we've attractive investors We also transaction as with of and world-class welcome flow. builds free long-term capital that Vitale, XX this local in capabilities the Bill returns last core both Stiritz and on honed value Rob gaming over

We of the the process Illinois Illinois and are anticipate the licensing close in this and quarter that fourth going through year. Racing Commission with the currently will Gaming the transaction Board

permanent As machines, to Park we existing spend will shares X.X a sportsbook games outlet. on-site done the X reminder, with FanDuel Accel to will million, project FanDuel expect total be approximately of the capital relatively beverage second to new million will development is This machines, with continuing casino quarter sportsbook. to this table and of XXXX. The intensity built utilize XXX plans Phase and larger table $XX to for food the to be phases, direct in X low games XX a existing for and million expected detailed X X XXX slot grandstand X slot with in exchanged Fairmount and assets. develop and adding Phase the $XX the open in addition in

gaming combining core key partnerships offering. expertise are to our our create with We outside areas in local exceptional an

on consultation experts. For as the Fairmount's horse build track, well we as long-term horseracing from industry team management will

acquisition the assuming CEO existing food several the conservative several sportsbook sports takes over is and our to Gagnon, Broadly, and to over distributed betting, $XX partnerships Accel's with long-term former million In underwriting opportunity. CEO milestone FanDuel, multiple CEO Accel's fundamentals RRC implies quarter. adjusted Within to of that For complement expected in be with to local accretive we're will national local opportunity an these EBITDA Rodio, F&B implied that, a is of years, free experienced amenities an I'll #X route-based efficient EBITDA capital with expertise our market. With on gaming beverage relationship allocation. operators. flow expansion in regulatory Illinois. expertise partners and pass former gaming X food companies, of Caesars adjusted and in Holly and excited advantage build including casino Seneca strong X.Xx. This Hospitality Mat to Tony go million and the including and core approximately Entertainment the of and gaming of we're the cash in the we're management, discussing Gaming. In $XX our the of Gaining HGC casino, We're engaged platform exciting at beverage, it

Mathew Ellis

good afternoon, Mark, everyone. Thanks, and

second of $XX million, X.X% year-over-year of X.X%. of adjusted increase quarter, of revenue had For EBITDA record a year-over-year and the increase a $XXX million, we

player The The play due X.X%. of a Nebraska increase was driving XX, Location new attrition demand, to XX,XXX respectively. Montana and of more equipment per terminals increase X.X%. Nevada and Nevada X.X%. performing decline $XXX the to Las were the attributable of Nebraska As continues in an locations combination we quarter was an in day, per of was an per increase of weather. states favorable and year. $XXX $XX increase of for $XXX to increases payments had decrease and supply low is was X.X%, expenditures a increased due June outstanding increase per of was Illinois, million the overall $XXX second Montana invoices X.X% market. Capital from The in follows: last X,XXX quarter was mostly day, doors. Revenue closing was Vegas year and per in location locations, over as core cash day, our last locals remain to an year-over-year lowest X% in day, Illinois increase the spend. our for greater their to attributable of and was

in high-performing elevated of driver view We Illinois. CapEx new last is at and quarter's a introduction time our As reminder, gaming this the of elevated primary nature. same in terminals onetime was CapEx the the year X

from be still a we than XX% decrease and projecting $XX last of to are between XXXX, year. more CapEx million, million For $XX

of our on our decrease balance the continue second Over $XXX Andy $XXX million program. availability million million annual depreciation to $XXX $XXX make allocation towards on end net of to our even credit on and capital of and our the $XX term, progress we we consisting the $XXX longer our of repurchase facility. On share liquidity, of CapEx of million had million approximately strategy, debt expect cash million highlighted quarter, further sheet, earlier. At as we of

$XX.XX $X purchase million. total we During XXX,XXX for shares of quarter, of an at a the average repurchased price

repurchased to balance $XXX shareholders. With XX.X I'd the to are cost and return to business sheet We way a low position over in our of capital X/X of at the turn that, are leverage, unique grow With like and through million back strong million. we our program Andy. a it we can repurchase with where shares

Andrew Rubenstein

Thanks, Mat.

with performance for excited our very earlier, we the Park. Fairmount record mentioned pleased this I at what and quarter future are holds As

our the acquisition For live. casino remain focused the closing we algorithm, the getting on immediate term, executing and growth

enterprise as opportunities ahead Accel We and growth on significant multiple. a will mid-single-digit improving and move profile invested this Despite we cash free us to we EBITDA needle. look on this, growth Looking strong incentivized trade flow double-digit yield further of financial the returns aligned trajectory, have a value low and capitalizing position, at to forward an a team strong capital. ahead, demonstrated cash flow

Accel to with as a strong EBITDA by to gaming return, as remains to gaming quarter well healthy an our second multiple compelling enables multipronged balance growth is the free consistent market, within generate flow. Local a cash strong segment evidenced capital as our making attractive, approach investment. us pursue revenue sheet. record This opportunities and growing us broader and and strong results

now your We will take questions.

Operator

Bank. Instructions] Deutsche The with [Operator first Pizzella comes Steve from

Steven Pizzella

Andy, And to on on noted return the Fairmount do active. size pipeline these of while projects bandwidth type profile? front, in remain the development? Are the the M&A Fairmount on to have of similar working continues you assets, terms additional you opportunities take to and

Andrew Rubenstein

the at other resemblance the looking Thanks type dollars and entertainment have from $XX -- of million million few the local I EBITDA. million an Their lot little Steve. for resemblance. gaming, $XX ranges opportunities a of Their EBITDA that in Fairmount -- is different and scale other. each say, some we're question, opportunities. of Each The into of a are a them upwards they from

of are any or advantages slot the they customer there's can't to competitive our entertainment. able machines, lot and I but So accentuate say alike, local the with working X in providing a value operating that And similarities. in

to far absolutely. these more take of the on opportunities, As ability as

team. great a have We

and be it's themselves, of great opportunities the are country. have across some over States going the to or that you'll the We in operating in pursuing the that we're when opportunities they region. markets one adjacent all And we already in geography because that not and present partners the United see are many

building to. set team. take excited. more that on So there's super We're got forward look skill and to we've a more, able and be lot a to to great We're

Steven Pizzella

gaming talking do tax talk Illinois can Okay. Great. to And regarding then the opportunity that? Can about you increase. offset about What believe I is you you TITO. the anything there? started

Andrew Rubenstein

continue getting TITO has our in provides historically, cashing to markets market time, the be will we they'll players XX%. as far play. value it more that And where believe to in X% TITO of really all be as So to They a able help won't the for facilitate time. their introduced, been concerned, out lift the their this about

So just focused this some X.X% tax we feel of help tax mitigate increased of really bottom addition, will that that that's we our part received. kind our core portfolio we And expenses accounts maybe And really that not we the revenue operations. we allowed in in of to the of opportunities route that margin profitable. what no and more outlying identify back those for make operate the to profitable at some cut and to us longer centers on the call the overall

Steven Pizzella

through demand in some go at noticed the you same-store or increased lastly, of Have shoots? green local as just And Okay. all modest seen due Nevada we July in changes to supply. you any a there any declines

Mathew Ellis

Mat. it's think including would that question. It's real the just influx seeing Nevada, I I really you're our the noticeable. everywhere, across overall, the customer we're Thanks say, for But offering. supply for a nothing Steve, seeing. business no, overall, healthy

Operator

Chad next question comes Beynon The Macquarie. with from

Chad Beynon

to about nice some how that just evolving there. you certainly you to growth growth in new and you that that the how market the XX over talk a acquisition ago, a portfolio new still -- see you big respect Montana, if post With percentage standpoint, made months? a guys the from locations if that see you XX over next for as there's year opportunities Could

Andrew Rubenstein

Andy. Yes. Thanks, It's Chad.

our grow the to establishments. in excited many are opportunities to We've found market offerings We the Montana. about

some of And opened new AE new allowed has which up to own provider us program of as strategy, for be ourselves we're operations to the -- to [ the existing some our had ways software we've obviously offered contracts, we've to seen identify more premier partners. their Rewards locations models identified opportunities by put the lot to win help is continues some on a our market, the You've preferred systems few businesses. that players. we've to games, We've our partners existing a our ] in that most to we've test that us improve

Chad Beynon

have on the still with post sheet. new stock acquisition, issuance you which a then of cash amount balance the And coming the significant is of

So we CapEx basis terms share in should does how should need an company of you working again, to capital, what which just in Mat, in used terms keep you come be about, of of repurchases, think that on down. annual in the mentioned terms

trying mainly some just of out opportunities to So figure terms in 'XX. in deploying of this cash other

Mathew Ellis

it's question. Chad, the Mat. Thanks for

hit flow the them. pursue always So on us come the the it. for have opportunities you these M&A up. And Free team growth going as I up, head. I mean for said, deployment the first think we is nail generation like cash go is will we Andy to

also for We capacity have financial the it.

that first. So comes

any cash to than our repaying debt. Next to would free attractive think shareholders. that's flow use far want be that capital returning to do because we generally more We

an want I expect been generate to if creep capital number, continue would shareholders to we and exact we've return from of this don't So bit where a cash, to but today. to quite to perform our up get kind to

Operator

[Operator Northland. Instructions] next from with Gibas The comes Greg question

Gregory Gibas

Andy, just Mat. the the follow some on If Mark and could dynamics I in up of quarter.

secondly, kind this that equipment in of to declines growth a we Nevada Illinois. to supply should do the overall, you to in How spoke to I'm increased driving more the then being be more supply. on expect tailwind. more with And slight -- that of long particularly play, And kind new expect guessing market? You related continue

Andrew Rubenstein

Thanks, Greg. It's Andy.

come there's the lot Las saw a on, late same Nevada is population. the growing but new market, coming market market more time, at construction Durango -- you as There's on. have the and Vegas in supply For continues XXXX, new Nevada happened the market, the locals to a especially

So demand continue. we think will

near factors, local macro a don't but in will the of other impact that future. see The the how I know market, demand we continuance

that could the slot to quality there -- basically to underserved population, which the people or Illinois, customer As market the at a continue far you increases the demand. on -- The ratio in relative equipment to improves, still our as we bring look of we're if basis. machines of

always attractive that is cost most by So our local our the affected of continued will and believe inflation. be growth. we we The entertainment convenient not see offering

they proposition for So dollars it is a their that value have for time.

Gregory Gibas

guess I priority Got it. could if going I commentary. we follow purchase. fair? you're changing. of perspective less that recent isn't your really Fairmount That's shouldn't helpful. And near M&A Is to nothing to wanted changed from confirm that I the the it on to up just that Is aggressive a fair on that stance really has be say assume your M&A kind in following term.

Andrew Rubenstein

not not for Fairmount the is that would of such aggressive. less be we a timing allows probably us XX are pursuing last on fair say we've that to the lot I XX Yes. -- to That's to continue months. opportunities We working been of comment. going a these

are see significant think again. opportunities showing team in be that And over liquidity investors continue the successful we're these. that have within -- our entertainment And I we Accel have forward and looking on we'll the over local that and with that market. execute finding to local economics it the delivers you'll we to community gaming gaming to

Gregory Gibas

helpful. it. That's And Got Congrats.

Andrew Rubenstein

you. Thank

Operator

at remarks. this no other Andy [Operator There time. pass Rubenstein Instructions] it for With over question questions are currently queue. I in no closing remaining to back will

Andrew Rubenstein

A update Thank looking Fairmount to ago the for the sharing on call. thank we just We're earnings next transaction. an on you. weeks that -- announced wanted few everyone, you, us today. I joining when to forward

continue a of new the you'll Fairmount I in the trajectory Accel is where is direction see that going the States. across will beginning markets Accel think growing is and United exciting

and in summer, you the fall. the we'll see enjoy Thanks. again So

Operator

Thank call. participation. for the concludes your conference This you

lines. now disconnect may your You

Accel Entertainment (ACEL) 30 Jul 242024 Q2 Earnings call transcript