Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Accel Entertainment Inc (ACEL, Financial) reported a revenue of $302 million, marking a year-over-year increase of 2.9%.
- Adjusted EBITDA for the quarter was $46 million, a slight increase of 0.3% year-over-year.
- The company has expanded its operational footprint by adding new locations in Illinois and Nebraska, contributing to revenue growth.
- Accel Entertainment Inc (ACEL) continues to maintain a strong balance sheet with $553 million of liquidity, enhancing its financial stability.
- The company is actively pursuing growth opportunities and remains optimistic about future expansions across multiple markets.
Negative Points
- Accel Entertainment Inc (ACEL) experienced negative same-store sales growth in Illinois, primarily due to unfavorable weather conditions in January.
- The company noted a cautious approach towards adding new locations due to economic pressures on business owners, potentially slowing down expansion.
- Capital expenditures for the quarter were high at $21 million, mainly due to payments of outstanding invoices from the previous year.
- While there is active legislation in various states that could benefit the company, the probability of favorable outcomes remains uncertain and below 50% in the next two years.
- Revenue growth, although positive, was modest at 2.9%, indicating potential challenges in significantly boosting revenue streams.
Q & A Highlights
Q: Afternoon, Andy, Matt, thanks for taking my question. I wanted to start with on just kind of the legislation landscape, places like Virginia, North Carolina, Georgia, et cetera, and not necessarily for 24, but kind of where things are shaping up and if you think any of these have a decent probability of passing something favorable for your business in '25? Thanks.
A: Thanks, Chad. This is Andy. As far as risk of go down the states that you mentioned and a few others, Virginia has legislation that's kind of pending not probable of getting passed and signed by the governor, but somebody has to given that state because of the existing equipment that's out in the field and on the governor's desire to kind of clean up an illegal industry.
Q: That's great. Thanks for running through that, Andy. And then just in terms of what you're seeing with the consumer in your establishments. So the revenue growth was was stronger than I guess what we've seen in a lot of weather impacted markets and kind of what we've seen from other operators in the first quarter. That would tell me that the February March, I guess exit rate was fairly stable or maybe even healthy. I would say is that kind of what you're you were seeing some in your establishments? Were you pretty happy with how the business recovered throughout the quarter after a tough January?
A: Yes, it was a very strong recovery from kind of getting us a real punched in the mouth early in the day in the year and who kind of gives us confidence that our where we sit in kind of the world of gaming. We talk at the time about like the vertical of gaming that where we are the arms, the gaming entertainment that is closest to home. It takes the least investment to participate.
Q: Hey, can you hear me now?
A: Yes.
Q: Hey, Matt, Andy. Thanks and good evening, everyone. Just wanted to ask from an M&A perspective, what's kind of holding back deals from getting to the finish line and what geographies have you guys been looking at.
A: So unless there's anything there's been holding them back. We take a very disciplined approach going through diligence on making sure that any regulatory questions are answered. Prior to closing. And I believe that on those things that we're pursuing on, we'll get there. It's just more important to us to get there in a very confident way, minimizing any future risks on and to fully understand the business and the potential revenue, and that makes us price accordingly.
Q: Okay, thanks. And then always nice to see revenue growth in Illinois, even when the location hold per day is down year over year, driven by the actual location growth. Can you give us any color on the pipeline you have for on location growth moving forward? Are there new, Illinois or some of your other states and how we should think about that, the remainder of the year?
A: Yes. I mean, we continue to have the opportunities. We have the establishment owners and select us consistently over our competition. And we tend to win on the sales front over and over again and that whether that's Illinois, whether it's Montana, whether it's Nevada, Georgia, and I think that that team will continue to carry us as we move forward.
Q: Okay, thanks. And then just one more for me, if I may. The Nevada location hold per day, it was just slightly negative year over year in the quarter. Was there anything you're seeing in that market for highway? And how should we think about that moving forward?
A: Thanks, Steve, this is Matt. Tom. I think similar to what Andy said earlier, players push to our local close to home offering, and there's a very local regional offering there as well. But we don't see anything systemic. I think demand's still there. You look at that overall locals market, I think we're on the better end of that spectrum.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
