EX-99.1 2 q32024earningspressrelease.htm EX-99.1 Document

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Accel Entertainment Announces Q3 2024 Operating Results

Chicago, IL – October 30, 2024 – Accel Entertainment, Inc. (NYSE: ACEL) today announced certain financial and operating results for the third quarter ended September 30, 2024.

Highlights:
•Ended Q3 2024 with 4,014 locations; an increase of 2.8% compared to Q3 2023
•Ended Q3 2024 with 25,729 gaming terminals; an increase of 4.1% compared to Q3 2023
•Record revenues of $302.2 million for Q3 2024; an increase of 5.1% compared to Q3 2023
•Net income of $4.9 million for Q3 2024; a decrease of 53.2% compared to Q3 2023 partially attributable to a higher loss on the change in fair value of the contingent earnout shares
•Adjusted EBITDA of $45.9 million for Q3 2024; an increase of 3.9% compared to Q3 2023
•Q3 2024 ended with $289 million of net debt; an increase of 2.4% compared to Q3 2023
•Repurchased approximately $6.2 million of Accel Class A-1 common stock in Q3 2024
•Acquisition of a distributed gaming operator in the state of Louisiana expected to close in Q4 2024
•Acquisition of the FanDuel Sportsbook & Horse Racing in Collinsville, Illinois, expected to close in Q4 2024

Accel CEO Andy Rubenstein commented, “I am happy to report that we delivered another strong quarter and are making substantial progress closing our acquisition of FanDuel Sportsbook & Horse Racing, a natural extension of our convenient, local gaming platform. We continue to outperform casinos in our largest market, Illinois, and posted significant revenue increases in our fastest growing market, Nebraska. By strengthening our core and expanding 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.”
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Condensed Consolidated Statements of Operations and Other Data
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2024202320242023
Total net revenues
$302,227 $287,497 $913,457 $873,352 
Operating income21,845 25,120 70,087 81,956 
Income before income tax expense8,464 15,080 39,166 46,347 
Net income4,895 10,450 26,897 29,615 
Other Financial Data:  
Adjusted EBITDA(1)
45,880 44,138 141,792 136,869 
Adjusted net income (2)
18,350 19,067 59,238 60,566 

(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
September 30,		Nine Months Ended
September 30,
2024202320242023
Net revenues by state:
Illinois$223,338 $212,113 $675,294 $647,903 
Montana39,648 39,362 120,372 115,088 
Nevada28,350 28,003 86,881 87,833 
Nebraska6,538 4,802 18,621 13,213 
Other4,353 3,217 12,289 9,315 
Total net revenues$302,227 $287,497 $913,457 $873,352 
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Key Business Metrics
Locations (1)
As of September 30,
Increase / (Decrease)
20242023Change
Change (%)
Illinois2,791 2,724 67 2.5 %
Montana615 611 4 0.7 %
Nevada356 352 4 1.1 %
Nebraska252 219 33 15.1 %
Total locations4,014 3,906 108 2.8 %

Gaming terminals (1)
As of September 30,
Increase / (Decrease)
20242023Change
Change (%)
Illinois15,714 15,020 694 4.6 %
Montana6,448 6,252 196 3.1 %
Nevada2,685 2,744 (59)(2.2)%
Nebraska882 688 194 28.2 %
Total gaming terminals25,729 24,704 1,025 4.1 %
Location hold-per-day (2)
Three Months Ended September 30,Increase / (Decrease)
20242023
Change ($)
Change (%)
Illinois$839 $825 $14 1.7 %
Montana613 591 22 3.7 %
Nevada802 802 — — %
Nebraska257 220 37 16.8 %

Nine Months Ended
September 30,		Increase / (Decrease)
20242023
Change ($)
Change (%)
Illinois$859 $854 $5 0.6 %
Montana608 579 29 5.1 %
Nevada835 849 (14)(1.6)%
Nebraska244 228 16 7.0 %
(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.


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Condensed Consolidated Statements of Cash Flows Data 

Nine Months Ended
September 30,
Increase / (Decrease)
(in thousands)20242023Change ($)Change (%)
Net cash provided by operating activities$107,665 $92,007 $15,658 17.0 %
Net cash used in investing activities(90,224)(35,404)(54,820)(154.8)%
Net cash used in financing activities(13,967)(50,328)36,36172.2 %

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
•Loss from unconsolidated affiliates
•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
•Loss from unconsolidated affiliates
•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

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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
September 30,		Nine Months Ended
September 30,
(in thousands)2024202320242023
Net income$4,895 $10,450 $26,897 $29,615 
Adjustments:
Amortization of intangible assets and route and customer acquisition costs
5,781 5,299 16,808 15,825 
Stock-based compensation expense
3,342 2,718 8,927 6,973 
Loss from unconsolidated affiliates1 — 1 — 
Loss on change in fair value of contingent earnout shares
4,216 1,625 4,190 11,063 
Other expenses, net
3,867 1,682 13,620 5,006 
Tax effect of adjustments
(3,752)(2,707)(11,205)(7,916)
Adjusted net income18,350 19,067 59,238 60,566 
Depreciation and amortization of property and equipment11,001 9,405 32,229 27,914 
Interest expense, net9,164 8,415 26,730 24,546 
Emerging markets
43 (86)121 (805)
Income tax expense7,322 7,337 23,474 24,648 
Adjusted EBITDA$45,880 $44,138 $141,792 $136,869 

Net Debt
As of September 30,
(in thousands)20242023
Debt, net of current maturities$525,572 $484,004 
Plus: Current maturities of debt28,490 28,479 
Less: Cash and cash equivalents(265,085)(230,388)
Net debt$288,977 $282,095 

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Conference Call
Accel will host an investor conference call on October 30, 2024 at 4:30 p.m. Central time (5:30 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=a8e678a0&confId=71436 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.
Media Contact:
Eric Bonach
H/Advisors Abernathy
212-371-5999
eric.bonach@h-advisors.global
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
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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.
Industry and Market Data
Unless otherwise indicated, information contained in this press release concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity, and market size, is based on information from various sources, on assumptions that we have made that are based on those data and other similar sources, and on our knowledge of the markets for our services. This information includes a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. In addition, projections, assumptions, and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the Annual Report on Form 10-K filed by Accel with the SEC, as well as Accel's other filings with the SEC. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us.

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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.

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ACCEL ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Net revenues:
Net gaming$289,923 $274,123 $871,300 $831,054 
Amusement5,104 5,411 16,772 17,839 
Manufacturing1,705 3,334 9,122 9,886 
ATM fees and other5,495 4,629 16,263 14,573 
Total net revenues302,227 287,497 913,457 873,352 
Operating expenses:
Cost of revenue (exclusive of depreciation and amortization expense shown below)210,841 198,743 633,325 604,603 
Cost of manufacturing goods sold (exclusive of depreciation and amortization expense shown below)962 2,065 5,283 5,627 
General and administrative47,930 45,183 142,105 132,421 
Depreciation and amortization of property and equipment11,001 9,405 32,229 27,914 
Amortization of intangible assets and route and customer acquisition costs5,781 5,299 16,808 15,825 
Other expenses, net3,867 1,682 13,620 5,006 
Total operating expenses280,382 262,377 843,370 791,396 
Operating income21,845 25,120 70,087 81,956 
Interest expense, net9,164 8,415 26,730 24,546 
Loss from unconsolidated affiliates1 — 1 — 
Loss on change in fair value of contingent earnout shares4,216 1,625 4,190 11,063 
Income before income tax expense 8,464 15,080 39,166 46,347 
Income tax expense3,569 4,630 12,269 16,732 
Net income$4,895 $10,450 $26,897 $29,615 
Earnings per common share:
Basic$0.06 $0.12 $0.32 $0.34 
Diluted0.06 0.12 0.32 0.34 
Weighted average number of common shares outstanding:
Basic82,952 85,865 83,718 86,305 
Diluted84,322 87,114 84,890 87,022 


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ACCEL ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands, except par value and share amounts)
September 30,December 31,
20242023
Assets
Current assets:
Cash and cash equivalents$265,085 $261,611 
Accounts receivable, net7,830 13,467 
Prepaid expenses8,168 6,287 
Inventories9,090 7,681 
Interest rate caplets5,510 8,140 
Deposits
18,293 6,555 
Other current assets9,347 8,853 
Total current assets323,323 312,594 
Property and equipment, net281,917 260,813 
Noncurrent assets:
Route and customer acquisition costs, net23,725 19,188 
Location contracts acquired, net176,793 176,311 
Goodwill102,151 101,554 
Other intangible assets, net18,715 20,542 
Interest rate caplets, net of current1,176 4,871 
Other assets22,406 17,020 
Total noncurrent assets344,966 339,486 
Total assets$950,206 $912,893 
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of debt$28,490 $28,483 
Current portion of route and customer acquisition costs payable2,122 1,505 
Accrued location gaming expense8,921 9,350 
Accrued state gaming expense30,503 18,364 
Accounts payable and other accrued expenses36,462 36,012 
Accrued compensation and related expenses10,108 12,648 
Current portion of consideration payable2,766 3,288 
Total current liabilities119,372 109,650 
Long-term liabilities:
Debt, net of current maturities525,572 514,091 
Route and customer acquisition costs payable, less current portion7,306 4,955 
Consideration payable, less current portion10,882 4,201 
Contingent earnout share liability36,017 31,827 
Other long-term liabilities6,188 7,015 
Deferred income tax liability, net38,150 42,750 
Total long-term liabilities624,115 604,839 
Stockholders’ equity:
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2024 and December 31, 2023
— — 
Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 95,409,648 shares issued and 82,430,205 shares outstanding at September 30, 2024; 95,016,960 shares issued and 84,123,385 shares outstanding at December 31, 2023
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Additional paid-in capital210,225 203,046 
Treasury stock, at cost(133,760)(112,070)
Accumulated other comprehensive income3,865 7,936 
Accumulated earnings126,381 99,484 
Total stockholders' equity206,719 198,404 
Total liabilities and stockholders' equity$950,206 $912,893 
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