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Accel Entertainment Announces Q2 2024 Operating Results

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

Highlights:

  • Ended Q2 2024 with 4,034 locations; an increase of 4.7% compared to Q2 2023
  • Ended Q2 2024 with 25,757 gaming terminals; an increase of 5.7% compared to Q2 2023
  • Record revenues of $309.4 million for Q2 2024; an increase of 5.7% compared to Q2 2023
  • Net income of $14.6 million for Q2 2024; an increase of 46.1% compared to Q2 2023
  • Record Adjusted EBITDA of $49.7 million for Q2 2024; an increase of 6.5% compared to Q2 2023
  • Q2 2024 ended with $311 million of net debt; an increase of 9% compared to Q2 2023
  • Repurchased approximately $9.2 million of Accel Class A-1 common stock in Q2 2024
  • Announced acquisition of Fairmount Holdings, the owner of the FanDuel Sportsbook & Horse Racing in Collinsville, Illinois, which is expected to close in Q4 2024

Accel CEO Andy Rubenstein commented, “I am happy to report that we delivered another record-setting quarter, continuing to demonstrate the strength of our local, convenience-based gaming model. We are excited to leverage our strengths in catering to local markets with our announcement to acquire the FanDuel Sportsbook & Horse Racing, a single-site, easily accessible, local gaming venue and a natural extension of our route-based gaming platform. As we continue to strengthen our core and expand 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

June 30,

 

Six Months Ended

June 30,

(in thousands)

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

Total net revenues

$

309,413

 

$

292,647

 

$

611,230

 

$

585,855

Operating income

 

22,683

 

 

29,164

 

 

48,242

 

 

56,836

Income before income tax expense

 

18,519

 

 

16,085

 

 

30,702

 

 

31,267

Net income

 

14,586

 

 

9,983

 

 

22,002

 

 

19,165

Other Financial Data:

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

49,665

 

 

46,612

 

 

95,912

 

 

92,730

Adjusted net income (2)

 

21,383

 

 

20,435

 

 

40,888

 

 

41,499

 

(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

June 30,

 

Six Months Ended

June 30,

 

2024

 

2023

 

2024

 

2023

Net revenues by state:

 

 

 

 

 

 

 

Illinois

$

227,093

 

$

215,947

 

$

451,956

 

$

435,790

Montana

 

42,583

 

 

39,275

 

 

80,724

 

 

75,726

Nevada

 

29,322

 

 

29,869

 

 

58,531

 

 

59,830

Nebraska

 

6,249

 

 

4,488

 

 

12,083

 

 

8,412

Other

 

4,166

 

 

3,068

 

 

7,936

 

 

6,097

Total net revenues

$

309,413

 

$

292,647

 

$

611,230

 

$

585,855

 

Key Business Metrics

Locations (1)

As of June 30,

 

Increase / (Decrease)

 

2024

 

2023

 

Change

 

Change (%)

Illinois

2,816

 

2,690

 

126

 

4.7

%

Montana

620

 

610

 

10

 

1.6

%

Nevada

359

 

355

 

4

 

1.1

%

Nebraska

239

 

197

 

42

 

21.3

%

Total locations

4,034

 

3,852

 

182

 

4.7

%

 

Gaming terminals (1)

As of June 30,

 

Increase / (Decrease)

 

2024

 

2023

 

Change

 

Change (%)

Illinois

15,743

 

14,767

 

976

 

 

6.6

%

Montana

6,435

 

6,210

 

225

 

 

3.6

%

Nevada

2,735

 

2,782

 

(47

)

 

(1.7

)%

Nebraska

844

 

609

 

235

 

 

38.6

%

Total gaming terminals

25,757

 

24,368

 

1,389

 

 

5.7

%

 

 

 

 

 

 

 

 

Location hold-per-day (2)

Three Months Ended

June 30,

 

Increase / (Decrease)

 

2024

 

2023

 

Change ($)

 

Change (%)

Illinois

$

862

 

$

858

 

$

4

 

 

0.5

%

Montana

 

612

 

 

569

 

 

43

 

 

7.6

%

Nevada

 

843

 

 

860

 

 

(17

)

 

(2.0

)%

Nebraska

 

255

 

 

237

 

 

18

 

 

7.6

%

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

 

Increase / (Decrease)

 

2024

 

2023

 

Change ($)

 

Change (%)

Illinois

$

861

 

$

871

 

$

(10

)

 

(1.1

)%

Montana

 

601

 

 

573

 

 

28

 

 

4.9

%

Nevada

 

845

 

 

860

 

 

(15

)

 

(1.7

)%

Nebraska

 

243

 

 

229

 

 

14

 

 

6.1

%

 

 

 

 

 

 

 

 

(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

 

Six Months Ended

June 30,

 

Increase / (Decrease)

(in thousands)

2024

 

2023

 

Change ($)

 

Change (%)

Net cash provided by operating activities

$

57,614

 

 

$

63,845

 

 

$

(6,231

)

 

(9.8

)%

Net cash used in investing activities

 

(69,324

)

 

 

(16,245

)

 

 

(53,079

)

 

326.7

%

Net cash provided by (used in) financing activities

 

5,022

 

 

 

(38,279

)

 

 

43,301

 

 

113.1

%

 

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
  • (Gain) 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
  • (Gain) 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

June 30,

 

Six Months Ended

June 30,

(in thousands)

2024

 

2023

 

2024

 

2023

Net income

$

14,586

 

 

$

9,983

 

 

$

22,002

 

 

$

19,165

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets and route and customer acquisition costs

 

5,589

 

 

 

5,284

 

 

 

11,027

 

 

 

10,526

 

Stock-based compensation expense

 

3,235

 

 

 

2,567

 

 

 

5,585

 

 

 

4,255

 

(Gain) loss on change in fair value of contingent earnout shares

 

(4,742

)

 

 

4,836

 

 

 

(26

)

 

 

9,438

 

Other expenses, net

 

7,327

 

 

 

73

 

 

 

9,753

 

 

 

3,324

 

Tax effect of adjustments

 

(4,612

)

 

 

(2,308

)

 

 

(7,453

)

 

 

(5,209

)

Adjusted net income

 

21,383

 

 

 

20,435

 

 

 

40,888

 

 

 

41,499

 

Depreciation and amortization of property and equipment

 

10,794

 

 

 

9,446

 

 

 

21,228

 

 

 

18,509

 

Interest expense, net

 

8,906

 

 

 

8,243

 

 

 

17,566

 

 

 

16,131

 

Emerging markets

 

38

 

 

 

78

 

 

 

78

 

 

 

(720

)

Income tax expense

 

8,544

 

 

 

8,410

 

 

 

16,152

 

 

 

17,311

 

Adjusted EBITDA

$

49,665

 

 

$

46,612

 

 

$

95,912

 

 

$

92,730

 

Net Debt

 

As of June 30,

(in thousands)

2024

 

2023

Debt, net of current maturities

$

537,252

 

 

$

489,721

 

Plus: Current maturities of debt

 

28,489

 

 

 

28,472

 

Less: Cash and cash equivalents

 

(254,923

)

 

 

(233,434

)

Net debt

$

310,818

 

 

$

284,759

 

Conference Call

Accel will host an investor conference call on July 30, 2024 at 4:00 p.m. Central time (5:00 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=70f3f5e5&confId=66550 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.

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

June 30,

 

Six Months Ended

June 30,

 

2024

 

2023

 

2024

 

2023

Net revenues:

 

 

 

 

 

 

 

Net gaming

$

293,240

 

 

$

277,551

 

$

581,377

 

 

$

556,931

Amusement

 

5,539

 

 

 

5,630

 

 

11,668

 

 

 

12,428

Manufacturing

 

5,208

 

 

 

4,430

 

 

7,417

 

 

 

6,552

ATM fees and other

 

5,426

 

 

 

5,036

 

 

10,768

 

 

 

9,944

Total net revenues

 

309,413

 

 

 

292,647

 

 

611,230

 

 

 

585,855

Operating expenses:

 

 

 

 

 

 

 

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

 

213,317

 

 

 

202,306

 

 

422,484

 

 

 

405,860

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

 

3,162

 

 

 

2,154

 

 

4,321

 

 

 

3,562

General and administrative

 

46,541

 

 

 

44,220

 

 

94,175

 

 

 

87,238

Depreciation and amortization of property and equipment

 

10,794

 

 

 

9,446

 

 

21,228

 

 

 

18,509

Amortization of intangible assets and route and customer acquisition costs

 

5,589

 

 

 

5,284

 

 

11,027

 

 

��

10,526

Other expenses, net

 

7,327

 

 

 

73

 

 

9,753

 

 

 

3,324

Total operating expenses

 

286,730

 

 

 

263,483

 

 

562,988

 

 

 

529,019

Operating income

 

22,683

 

 

 

29,164

 

 

48,242

 

 

 

56,836

Interest expense, net

 

8,906

 

 

 

8,243

 

 

17,566

 

 

 

16,131

(Gain) loss on change in fair value of contingent earnout shares

 

(4,742

)

 

 

4,836

 

 

(26

)

 

 

9,438

Income before income tax expense

 

18,519

 

 

 

16,085

 

 

30,702

 

 

 

31,267

Income tax expense

 

3,933

 

 

 

6,102

 

 

8,700

 

 

 

12,102

Net income

$

14,586

 

 

$

9,983

 

$

22,002

 

 

$

19,165

Earnings per common share:

 

 

 

 

 

 

 

Basic

$

0.17

 

 

$

0.12

 

$

0.26

 

 

$

0.22

Diluted

 

0.17

 

 

 

0.11

 

 

0.26

 

 

 

0.22

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

83,911

 

 

 

86,184

 

 

84,105

 

 

 

86,529

Diluted

 

85,054

 

 

 

86,820

 

 

85,178

 

 

 

86,971

 

 

 

 

 

 

 

 

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands, except par value and share amounts)

June 30,

 

December 31,

 

2024

 

2023

Assets

(Unaudited)

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

254,923

 

 

$

261,611

 

Accounts receivable, net

 

15,149

 

 

 

13,467

 

Prepaid expenses

 

8,765

 

 

 

6,287

 

Inventories

 

7,533

 

 

 

7,681

 

Interest rate caplets

 

8,801

 

 

 

8,140

 

Other current assets

 

11,111

 

 

 

8,853

 

Total current assets

 

322,201

 

 

 

312,594

 

Property and equipment, net

 

276,477

 

 

 

260,813

 

Noncurrent assets:

 

 

 

Route and customer acquisition costs, net

 

23,705

 

 

 

19,188

 

Location contracts acquired, net

 

181,350

 

 

 

176,311

 

Goodwill

 

101,859

 

 

 

101,554

 

Other intangible assets, net

 

19,324

 

 

 

20,542

 

Interest rate caplets, net of current

 

3,730

 

 

 

4,871

 

Other assets

 

21,702

 

 

 

17,020

 

Total noncurrent assets

 

351,670

 

 

 

339,486

 

Total assets

$

950,348

 

 

$

912,893

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Current maturities of debt

$

28,489

 

 

$

28,483

 

Current portion of route and customer acquisition costs payable

 

2,014

 

 

 

1,505

 

Accrued location gaming expense

 

9,129

 

 

 

9,350

 

Accrued state gaming expense

 

17,177

 

 

 

18,364

 

Accounts payable and other accrued expenses

 

34,476

 

 

 

36,012

 

Accrued compensation and related expenses

 

11,195

 

 

 

12,648

 

Current portion of consideration payable

 

3,275

 

 

 

3,288

 

Total current liabilities

 

105,755

 

 

 

109,650

 

Long-term liabilities:

 

 

 

Debt, net of current maturities

 

537,252

 

 

 

514,091

 

Route and customer acquisition costs payable, less current portion

 

7,482

 

 

 

4,955

 

Consideration payable, less current portion

 

9,794

 

 

 

4,201

 

Contingent earnout share liability

 

31,801

 

 

 

31,827

 

Other long-term liabilities

 

6,713

 

 

 

7,015

 

Deferred income tax liability, net

 

42,463

 

 

 

42,750

 

Total long-term liabilities

 

635,505

 

 

 

604,839

 

Stockholders’ equity:

 

 

 

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

 

 

 

 

 

Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 95,352,477 shares issued and 82,958,153 shares outstanding at June 30, 2024; 95,016,960 shares issued and 84,123,385 shares outstanding at December 31, 2023

 

8

 

 

 

8

 

Additional paid-in capital

 

207,199

 

 

 

203,046

 

Treasury stock, at cost

 

(127,545

)

 

 

(112,070

)

Accumulated other comprehensive income

 

7,940

 

 

 

7,936

 

Accumulated earnings

 

121,486

 

 

 

99,484

 

Total stockholders' equity

 

209,088

 

 

 

198,404

 

Total liabilities and stockholders' equity

$

950,348

 

 

$

912,893

 

 

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