ACEL - Earnings call transcript Q4 2024 | Accel Entertainment, Inc.

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Operator

Good afternoon, and thank you for joining the Accel Entertainment Q4 and Full Year 2024 Earnings Call. My name is Kate, and I will be the moderator for today's call. [Operator Instructions]

I would now like to turn the call over to Derek Harmer, General Counsel and Chief Compliance Officer. Please proceed.

Derek Harmer

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

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

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

projected predictive not Any not representation as this forecast should in upon in for as is regarded that The relied be and such call being purposes information this only will by in be future of illustrative any forecasts any should results. call inclusion results financial information a person the be of financial presented reflected achieved.

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

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

over Andy. turn call now the to will I

Andrew Rubenstein

local on X. X, Louis call. I'm resiliency a $XXX adjusted had $X.X report the December offering. everyone. million, on Thank St. total billion of you and Thanks, for Louisiana joining another revenue Derek, acquired for us. with proof we of for afternoon, was to convenient and today's of We us pleased EBITDA and November Fairmount of outside into record-setting entered year good Park It our busy quarter gaming

this Louisiana integrating Phase and the in work opening of at Casino hard are Fairmount X of the preparing teams Our year. for quarter second the

In growth outperforming performance, on Casinos, X% our basis. terms market, largest year-over-year, down which X% year-over-year market-wide were GGR of Illinois Illinois, a financial posted comparable of

our in we model We are have that's our in a of a strong state, win for state, leading the win, foundation built like partners providers convenience-based local home us. win, proud our gaming and

locations. location in sequentially. again was would location During strategic This count closures, count our for the our quarter. been to the have underperforming down was the Without quarter, Illinois closures of due these XX flat

in year, rightsize locations, the which July XX we tax X% on XXXX. gaming us strategically underperforming our For the full increase helped the X, closed operations response in to state

look locations We bottom will expect performance. we as this our opportunities to our out phase a financial portfolio within for continue identified we that review process subset to of and coming performers decile over We've improve quarters.

Given impacts pipeline we rotate expect returns be have promising as flat we EBITDA Illinois planned locations, invested capital to on potentially locations. of growth greater and near-term unit positive with an to we attractive net

model, focusing resource line operating the the top day growth drive Across line in The our locations. on choiceful portfolio both improvement help bottom segmentation our and driven refine of our hold to footprint, by highest continue will sales and and we per composition allocation.

operations just of to process In our into our find addition reviewing I continuous improvement. lead areas to we of what mentioned, and markets

and in we've that and additional growth identified will free improved efficiencies increase for in result, opportunities cash flow. performance a an As result

groundwork in-ticket continues lay to processing Illinois efficient. out, more as the cash also the regulatory front, for should which known TITO, On ticket make

hopeful to games them in and switch and without TITO each in making akin XXXX. sites experience rolled convenient between our will More to casino allowing for be cashing our importantly, time. We're experience. cashing more it will create locations a out our more players, out a

We continue this. monitor regulation to related to

Before about where value talk few minutes I'm going to opportunities it take for a Mark, and over growth. proposition we to see Accel's to I turn our greatest

high-quality providing self-service provide by customers our slot in their from experience gaming retail can XX gaming and our players, that labor-light partners products high-margin be a a of accessed We price with convenient revenue technology. at both point For low minutes home. choosing gaming or players a local, location and we at support their retail less by them

creating generating by diverse capital while collaborative instill We the maintain selection. loyalty regulatory gaming on our finally, structures, in XX reliable rewards through low different with and our partnerships we attractive player And memorable regulators returns experiences across all programs player with teens.

business In both mid-single-digit target steady flow algorithm single-digit growth, assuming high normalized levels, low our CapEx EBITDA will and growth single-digit and our model, We revenue Matt address cash growth which simple is route-based later. free core compelling. growth,

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

Outside remains our acquisitions. of business, as pipeline Louisiana active, and demonstrated by the M&A core our Fairmount

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

turn it to Fairmount. over on I'm provide to going that, to update With an Mark

Mark Phelan

best-in-class license acquisition betting with sports December close. million years Thanks, with cash partnership price in the a a This Accel adjusting attractive builds Andy. and develop over betting of local capital our casino. transaction approximately returns working XX long-term We horse last FanDuel, on for and gaming honed The closed facility $XX a locally stock capabilities stock the Fairmount we've track, X Accel and race flow. capital on free on that with includes the after core focused for in off-track the acquisition at ability master to a opportunities

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

Immediately our food significantly reminder, and existing XXX in expect for project with Phase of electronic built to beverage we which a grandstand As on be devices, amenities. develop phases. in X the this approximately improved games started X closing, will construction and gaming we casino, table electronic after

second we look players forward open. XXXX, Phase and X to the once quarter of the facility As of welcoming now, we expect is to open during

For and for Phase on new site X, amenities XX with machines, games, FanDuel we'll food detailed build improved and plans Sportsbook. slot a and table beverage a permanent casino XXX-plus

of With the that, over I'll quarter. go to pass fundamentals the it over to Matt

Mathew Ellis

good everyone. Thanks, afternoon, Mark, and

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

year, new For of billion $XXX Accel with of set the X.X% record increases X.X%, $X.X revenue total and respectively. million, of and a full we year-over-year adjusted EBITDA

and respectively. increases we XX, of December of XX,XXX As terminals X% X.X%, X,XXX year-over-year and locations, had

was of our X.X% as year-over-year; follows: an location and decrease $XXX day, of an choose quarter was more for Nebraska X.X% who Louisiana and increases to day, per increase really both consumers increase continue day, was of X.X% of increase per of and offering. states per $XXX Illinois was Illinois, year-over-year; $XXX emphasize a core and the per per Nebraska our in strength an per $XXX was year-over-year; Montana our Revenue business convenient was Montana $XXX in importantly, Nevada day, high-quality The year-over-year; day. the and resilience model X.X% local

Capital fourth cash expenditures for spend. capital were quarter $XX spend were million XXXX and of for $XX of the expenditures cash million

the approximately full balance At sheet $XXX the spend of debt million fourth of our of year, Fairmount on we and of $XXX $XX our $XXX and consisting leaving of on million Louisiana, credit end million on the facility. quarter, we had cash million net our million liquidity, For markets. million spent availability $XXX in and existing $X of cash of

both million $XX $XX $XX to Louisiana, existing we Fairmount. on includes note in to initial construction $X initial that for million, company-wide like and expect we which X million for CapEx encouraging cash capital. Phase million CapEx forecasting Phase comprised in to and million ahead, $XX markets, Fairmount for CapEx in returns return million of CapEx flow and XXXX and are Looking the X. our to an of will I'd to $XX boost Fairmount to normalized $X After $XX to to to million million $XX free Louisiana be for million million $XX

capital effective to continue to favorably view allocation repurchases capital to we our way as shareholders. our return On strategy, an share

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

of at approximately week, year, the an million. of program repurchase and average back sheet where to purchase a Directors shares unique full repurchased price For of total Earlier capital our can we $XX.XX grow strong continue $XX our are authorized Board replenishing With leverage, we this to low and million business $XXX X.X shareholders. our our position to share return balance million. in a we and for

to back Andy. to over like turn it With that, I'd

Andrew Rubenstein

Thanks, Matt.

very on are the the are Casino. fact working pleased Phase we and to strong of complete earlier, our mentioned X I this that construction our year As hard teams with Fairmount performance

we with look and improving our cash we to forward capitalizing us term, significant aligned immediate opportunities on executing term, incentivized team. flow the and growth For remain Accel ahead algorithm Long an as focused of the returns. on growth

multipronged investment. strong and an multiple Local gaming revenue cash sheet, our balance growth niche to within capital. remains with broader pursue and the a growing a market capital EBITDA to to gaming well Accel strong us and strong as free flow healthy and generate opportunities on returns by making enabling allocation, results is compelling as as consistent attractive evidenced us approach

We take will questions. now your

Operator

first Bank. line come Steve Instructions] [Operator with of Pizzella from the The will question Deutsche

Steven Pizzella

and how temporary about to adding Louisiana Thanks, of for added Fairmount lot moving the months and should contributions 'XX, think that model the everything to we are a Matt, the Andy. the XX parts with casino, with in comes model? There

Mathew Ellis

Thanks, Steve, it's Matt.

Louisiana. with start Let's

disclosed it we we look back EBITDA. disclosed You and when of to million $X closing

for full So X the year like add I you you called them out and 'XX, should that of XXXX in results. think months

run about sort planning to temp guided of said as Fairmount, out, that. EBITDA, full open we Fairmount, we're the might there. talked and and the want of QX all about difference all Mark forecasted million split do For done, so built that of we've we $XX would in to X/X earlier, But as of we sort said,

got So for you've and middle QX. in, X/X $XX million of then it, it the prorate opening we'll you need to of that call

Steven Pizzella

And sense. looking at are least you you like looked February? comment we Illinois markets? see looking makes on then see. trends That in pretty it at to the And in strong, all Could able off January, in Okay. data at just similar started other can

Andrew Rubenstein

in year. mean rough. was helpful had in Yes. then Steve. year, this -- year where as in a actually we've last know here Illinois it whether good they the I been January Thanks, in extremes weather this And seen is country, as say balance But the weather bit weather was I February Andy. experienced We very the we it favorable has that will not out. factor. on haven't wouldn't themselves the don't we last

kind And routes in I to been seeing introducing consumer new the of been we're for our products. very in some doing some well-received the remodels positive of all good think of from I our we're from the some results of Overall, early perspective. demand think there's products has we're a other a markets upgrade Louisiana, gaming

Operator

comes The of question with Beynon Chad Macquarie. from line next the

Chad Beynon

just mentioned you per the cash flow free Andy, units the focus to Illinois really location. pruning of on

and I this will should appreciate you So some At be in the through point expect what then market? definitely growth for discipline the there. we

Andrew Rubenstein

Yes.

always getting they're So And I very that or pruned. have portfolio. the the be And ability to performers, think our therefore, to that either locations we some need. bottom the facilities and poor-performing reignite committed The be together. owners is will that the of pruning need will we think investments be totally don't returns bottom we make our of that really tied we're there confidence decent we in gaming aren't that to not locations or

of So business that will process. our a be constant part

aggressive last in we've And labor. I think seen increase more as as costs increase seen tax a we've little We've pruning summer. a from been

you think where of will into see itself later it year this I location will be manifest I free it because And better our obviously think continuous be to redeployed constantly, probably the increase I profitability And the cash next is but better. the growth of kind average assets think the year flow. be will as will into the focus noticeably accounts. Our really

Chad Beynon

of future scale in now on Is Okay. that near and a kind space gaming some and e-pull to able equal to the growth? that, light potential in the the that Great. sector? the on the we're they big about has sector areas space that was opportunities when believe more and talked another a large of little in some how of shine expansion last more expansion shone And then something is week, company the a you that the one think or think the center bit of an of I for some then heightened is. charitable manufacturers you Or in of and investors yes, that But awareness in just the appreciation tab on Accel, sector. company term, lot sector. had that given the light other I for space of there. analysts potential weigh or for the talked guys front about don't e-pull a tabs acquired full does

Mark Phelan

Mark. it's Chad, question. Good

with they market they that happy service were and the familiar with. -- a is we're was of Grover real company really realize market. one, It's content that's that and but a that a team But less friendly to and and that purchased, by we're did. So interesting management the way, outcome product able was that market value great it's a for it the

purchase & content. So superiority it lot made the sense a because Wonder their for of of Light to of them

really kind that superior a who that market, content, In we would have of of partner that and Accel with terms game. ground participating complement our provide have could can to in we

interesting an in. it's to participate but have So where something we it's market, with to someone one it's really partner

Chad Beynon

been more. here and Okay. in And legislation then one There's in January lastly, if I can sneak some February.

-- of rates think that in betting. moving just been I bring potentially iGaming most sports that around, has and have would it been there's tax or some around

session -- Or do as early market route maybe a in think pushed that of come we're your expansion the seen in kind aware 'XX in this lot at in in something here you that point? much haven't terms later of of of into of We that legislative sector could still this is think not period just you future gets kind a legislation?

Andrew Rubenstein

is Andy. that This something we of. Chad. always Thanks, It's are aware

not whether in markets but I we'll seen any certain don't haven't some see up legislative as of gain see any real as the in legislation likely to We as iGaming we'll we'll bubble markets. in that Route it, continue this session. first. legislation think I Gaming past, likely traction Inevitably, in iGaming believe it's to be the

constantly to market solution much more to monitoring legislators and we're the product. nor trying would Gaming forward better that be Route I Illinois pass say casino the don't consumer going with Nevada, it's would more we're think extensive protection Gaming I it. than with the market but from a in educate much markets Route regulation And that likely iGaming that the presence. would is appear wouldn't Gaming have or minimal have bricks-and-mortar legislation Route first

Operator

of the Northland. with comes Greg question next Gibas from line The

Gregory Gibas

I you ask, expect Andy, you focus that wanted growth if could to continue be to the more to there? organic Matt, do see opportunities Mark in market on growth in guess, to acquisitive I you speak or Louisiana, and

Andrew Rubenstein

sophisticated at the a Greg, years. around contradicting a same it's market, almost see Thanks, for one a well that market, mature But -- been and it's not Yes. market kind Andy. XX-plus that's developed. We that's of time,

fragmented there's have stops market. I stops, an like the we're that, which there's XXX fragmented markets are most very bar utilizing Louisiana. still heavily state which market, XX-plus fragmented looking truck you that old equipment bars then in state, old. at The years even in So Louisiana the still And in X incredibly the and truck of legacy is think in more and it's

so stops the grow as truck And grow to And or far. may years, we've XX what one our of transitions available truck year with us time. we'll ownership be routes evaluating presence. for and over the well needs we're a to the improve we organically We've that the our be to stops. opportunity I X purchased. see done next acquire believe And done pretty the that some over

Gregory Gibas

Got that of with X to you if guess, I maybe see break I the spoke wonder of And up it. you remind I maybe kind X think follow on to Phase And not, the that? maybe us development. wanted the uplift break That's piece out? expect you helpful. you of component timing Fairmount. relates already that. X/X being in to maybe I of you could Phase And could could out if what to FanDuel one,

Mark Phelan

'XX sort I for to in X. the of of of guided So terms end we've timing, think Phase

we're out, to in would X years Phase QX, a us allowed and pointed revenue, Matt we're facility. a go build the And to more not As but... X-plus with out live give break over to permanent planning that little

Mathew Ellis

We out, think Matt. to little. back it when we it, the making but a it's Greg, breakeven, around announced can't maybe was fully track break if you

of and track with So book F&B the the sort doing would racing, imply of -- sports without how just pre-Racino. that sort was

Operator

we queue. time, the final the registered questions remarks. call for registered any so [Operator over At Instructions] not have I we in this further Rubenstein any questions queue, Andy the will At to further back this turn do in do not any time, have

Andrew Rubenstein

Yes.

everyone Just for thank joining today. wanted to us

months. will be connecting We with X in you about

in think off to excited the and of year May. we really the when some I we've made a again progress is good share to be start, we'll talk

Operator

call. your and concludes you your may you lines. Thank participation, now That for disconnect today's all

Accel Entertainment (ACEL) 27 Feb 252024 Q4 Earnings call transcript