Q1 2025 Accel Entertainment Inc Earnings Call
Speaker Change: Ladies and gentlemen, thank you for joining today's call. The call will begin momentarily. Please remain on the line. Again, the call will begin momentarily. Thank you.
Speaker Change: Good afternoon and thank you for attending today's Excel Entertainment Q1 2025 earnings call.
Speaker Change: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to queue for a question on today's call, you can do so by dialing star one on your telephone keypad. And I hand the call over to Scott Levin, chief legal officer, to begin. You may proceed.
Speaker Change: Welcome to Accel Entertainment's first quarter 2025 earnings call. Participating on the call today are Andy Rubenstein, Accel's Chief Executive Officer, Matt Ellis, Accel's Chief Financial Officer, and Mark Beynon, Accel's President of U.S. Gaming.
Speaker Change: Please refer to our website for the press release and supplemental information that will be discussed on this call.
Speaker Change: Today's call is being recorded and will be available on our website under events and presentations within the Investor Relations section of our website.
Speaker Change: Some of the comments in today's call may constitute forward-looking statements within a meeting of the private security litigation reform act of 1995. These forward-looking statements are subject to risk and uncertainties.
Speaker Change: Actual results made different materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law.
Speaker Change: for a more detailed discussion of these and other risk factors. Investors should review the forward-looking statement section of the earnings press release available on our website as well as other risk factor disclosures in our filings with the SEC.
Speaker Change: Any projected financial information presented in this call is for illustrative purposes only and should not be relied upon as being predictive of future results.
Speaker Change: The inclusion of any financial forecast information in this call should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved.
Speaker Change: During the call we made a certain non-GAAP financial measures for reconciliation of the non-GAAP measures as well as other information regarding these measures, please refer to our earnings release and other materials in the investor relations section of our website. I will now turn the call over to Andy.
Andy Rubenstein: Thank you Scott, and good afternoon everyone. Thank you for joining today's call. And please report we had another record set in quarter with full revenue of $344 million, which is our highest quarterly revenue since going public.
and we also had strong adjusted EBITDA for $50 million.
Andy Rubenstein: Both revenue and adjusted even a group 7% year over year, demonstrating again the strength of our local distributed gaming model operated in ten states and four time zones.
Andy Rubenstein: During the first quarter we continue to see stable revenue growth in our largest markets of Illinois and Montana, with 4% and 8% to 1 year-over-year revenue growth respectively.
We see this trend continuing into Q2.
Andy Rubenstein: Nebraska and Georgia continue to generate strong double-digit revenue growth, albeit from a smaller base, while Nevada experienced a small revenue decline in the first quarter as we work through the loss of a key customer due to an ownership change.
Andy Rubenstein: We've now completed the integration of our recently acquired operations in Louisiana and are looking forward to the revenue growth opportunities that this acquisition should generate.
Andy Rubenstein: As a reminder, in late 2024, we took control over QCAN gaming, with the continued to be led by a founder, Stan Gidruss, who has over 22 years of local market industry experience.
Andy Rubenstein: Operationally, the acquisition further expands Accel's south-eastern exposure, adding 96 locations and 614 terminals as of the end of the first quarter.
as the combined entity continues to roll out operations.
Andy Rubenstein: bringing together previously separate businesses, including legacy truck stops and organically developed distributed gaming routes. We expect to drive further synergies and performance improvements over time.
Andy Rubenstein: Finally, we have proud to announce that Paramount Park Casino opened on April 18th, being the first casino in Illinois's history.
Speaker Change: Mark will provide more details on Fairmont, and we look forward to it being another growth driver for Accel.
[inaudible]
Speaker Change: Across our national footprint, we continue to refine our customer acquisition and retention efforts to drive profitable sales growth.
Speaker Change: Distributed Gaming is a dynamic and competitive market, and Accel is differentiated by its scale and innovation, which will enable us to continue to grow and prosper.
Speaker Change: In addition, we continue to review our markets and operations to find areas of improvement. As a result, we identified additional efficiencies and opportunities for growth that will contribute to expanding free cash flow.
Speaker Change: We'd like to remind analysts, investors, and potential investors that are business, providing safe, convenient, and fun local gaming entertainment.
is fundamentally straightforward to deliver compelling returns on invested capital.
Speaker Change: Unlike larger gaming operators with capital tight up in large, immobile projects, our model spreads capital across thousands of retail locations.
in Multiple Sates and Regents [inaudible]
Speaker Change: This decentralized approach gives us the diversification and flexibility to re-allocate capital efficiently based on local demand trends.
Speaker Change: Over the past four years, we've expanded beyond our home market of Illinois into new gaming jurisdictions who are distributed gaming models.
We've made significant investments to integrate key operating platforms for a general minute.
Speaker Change: Logistics, Finance, and Reporting, and have worked closely with our local leaders to ensure all the excel is aligned in delivering a superior gaming experience for our local players.
Speaker Change: Today, I'm confident in our ability to scale our proprietary products and services across our national footprint, delivering unmatched value to our retail location partners.
Speaker Change: I also believe our growing scale will continue to drive operational efficiencies, enhance financial performance and deliver enhanced free cash flow growth.
Speaker Change: With that, I'm going to turn it over to Mark to provide an update on Pharma.
Mark Phelan: Thanks Andy. From day one of the Fairmont acquisition, we had a clear goal to complete the construction of phase one of the Fairmont casino project at or below budget. This project included the construction of our phase one casino, the addition of high quality student average humanities.
Mark Phelan: Improvements to the track infrastructure and the recruitment licensing and training of a premier customer service team. All well ahead of Fairmont Park's biggest racing event of the year, Derby Day, which coincided with the Kentucky Derby this past weekend.
Mark Phelan: Thanks to the relentless commitment of both our on-site team and shared services team, Fairmont, Park, Casino, and Racing successfully opened its casino on April 18th.
Mark Phelan: Approximately four and a half months after the acquisition was completed in just two weeks ahead of Derby Day, and all slightly under our phase one construction budget.
The racing season of Fairmont started on April 22nd.
Mark Phelan: Despite minimal marketing and the head of the opening, our team has done an outstanding job generating interest in both the casino and the broader improvements at Fairmont Park.
Mark Phelan: Now open for just over two weeks, we are encouraged by the early results. This past Saturday, May 3rd, 2025, we hosted Derby Day at the track despite the implement weather forcing us to cancel races. We still had a fantastic turnout that drove very strong play the casino.
Mark Phelan: As marketing efforts ramp up and our full service free standing restaurant, Long Shots comes online, we are increasingly confident in the casino's appeal of the most engaging and precious slot floor in the greater St. Louis area.
Mark Phelan: as well as in Fairmont Park's growing reputation as a premier regional destination for racing and entertainment.
Andy Rubenstein: Before Matt walks through the numbers, I'd like to quickly turn it back to Andy.
Andy Rubenstein: Thanks. If you probably saw, we issued a press release last week announcing that's the part for a CFO affected May 9th.
Andy Rubenstein: I want to express my gratitude to Matt for his leadership and partnership to Accel these last six years. Matt has played a pivotal role in shaping our company's growth initiatives, financial social strength and company culture.
We wish Matt the very best in this feature endeavours.
Andy Rubenstein: While that's the part that represents the leadership change, we are pleased that Mark will be stepping into the role of acting the F.O.
Andy Rubenstein: With Mark's experience in finance and financial markets and deep operational insight as President of US Gaming, we expect a stable and seamless transition while we conduct a search to build a position on a permanent basis.
With that, we'll turn it over to Matt.
Matt Ellis: Thanks, Andy, and good afternoon everyone. I'd like to thank Andy, our management team, board of directors, stakeholders, partners, customers, and the entire team at Accel for all their support over the last six years.
Matt Ellis: I am proud that I'm leaving Accel in a strong and stable position, supported by a resilient business model that gives me great confidence in its continued success for years to come.
Speaker Change: For the first quarter, we had total revenue of $324 million, a year-over-year increase of 7.3% and adjusted even a 50 million dollars, a year-over-year increase of 7.1%.
Speaker Change: As of March 31st, we had 27,180 terminals in 4,391 locations, year-over-year increases of 4.4, and 2.9% respectively.
Speaker Change: Revenue per location for the quarter in our core states was as follows.
Illinois was $885 per day, an increase of 2.9% year-over-year.
Montana was $610 per day, an increase of 2.7% year over year.
Speaker Change: Nevada was $802 per day by decrease of 5.3% year over year. Louisiana was $972 per day.
Speaker Change: Nebraska was $263 per day, an increase of 12.9% year over year, and Georgia was $145 per day, an increase of 59.3% year over year.
Speaker Change: Our growth in Illinois, Montana, Nebraska, and Georgia emphasizes the strength and resilience of both our business model, and more importantly, the fact that consumers continue to choose and use our high quality local and convenient gaming offerings.
Speaker Change: Capital Expenditures for the first quarter were $27 million of cash spent.
Speaker Change: At the end of the first quarter, we had approximately $309 million of net debt and $422 million of liquidity, consisting of $272 million of cash on our balance sheet, and $150 million of availability on our credit facility.
Speaker Change: We are reiterating our full year CAPEX forecast of $75 to $80 million, comprised of $39 to $41 million in our existing markets.
5-7 million in Louisiana, and 31-32 million per fair month.
Speaker Change: As a reminder, the CAPEX for Fairmont includes both Phase 1 and initial construction for Phase 2.
Speaker Change: After Fairmont and the initial Catholics in Louisiana, we expect company-wide, normalized annual Catholics to return to $40 to $45 million, which will be an encouraging boost to free cash flow and returns on capo.
Speaker Change: On our capital allocation strategy, we continue to view Sherry purchases favorably as an effective way to return capital to our shareholders.
Speaker Change: During the first quarter, we repurchased 1 million shares at an average purchase price of $10.34 per share for a total of $10 million.
Speaker Change: With our strong balance sheet and low leverage, we are in a unique position where we can invest in and grow our business while returning capital to shareholders.
Andy Rubenstein: With that, I'd like to turn it back over to Andy.
Andy Rubenstein: Thanks, Matt. As I mentioned earlier, we are very pleased with our strong first quarter performance and the continued and growing momentum of lots of businesses.
and we are proud that while delivering Record Q1 Revenue,
Andy Rubenstein: We also reached our first major milestone at Fairmont with the opening of the casino a few weeks ago.
Andy Rubenstein: We remain focused on executing our simple, but compelling growth model of generating solid, organic revenue growth with expanding margins and improve free cash flow.
Andy Rubenstein: Accel continues to have a strong competitive position as evidence by a result in healthy balance
Andy Rubenstein: would enable us to pursue a multi-pronged approach to return focus capital allocation, making us a compelling investment.
Andy Rubenstein: Local gaming is an attractive growing niche within the broader gaming market with multiple opportunities to generate strong and consistent revenue and even the growth as well as strong free cash flow. We will now take your questions.
Andy Rubenstein: We will now open the line for questions. If you would like to ask a question at this time please dial star one on your telephone keypad. If for any reason you need to remove that question, you can dial star two. Again to ask a question, dial star one.
Andy Rubenstein: As a reminder, if you're using a speaker phone on today's call, please remember to pick up your handset before asking your question. We'll pause here briefly to allow questions to generate in the queue.
Speaker Change: The first question is from the line of Chad Beynon with Macquarie. Your line is now open.
Thank you very much.
Chad Bainon: Good afternoon, Andy Matt Mark, congrats on the record Q1 and Matt Best of luck with everything
Thanks for all the help.
Chad Bainon: I wanted to start with the tariff impact. So, you know, it's been several weeks since the liberation day we've heard from some of the competitors.
Chad Bainon: or other players in the space with maybe bigger projects that they have.
Chad Bainon: This is a year where you do actually have a slightly bigger project, so just wondering how you're thinking about...
Chad Bainon: This impact in your term, I know you just give guidance for CAPEX, but how you're thinking about what this could mean and if this changes at all how you're thinking about future growth with other opportunities. Thanks.
Thanks, Chad. This is Andy.
Chad Bainon: As far as our existing business, most of our CAPX spend for the year has been, the questions have been locked in, so we...
Chad Bainon: We'll have minimal effect on us. We've seen minor effect in parts.
as we look forward in terms of...
Chad Bainon: The Fairmont construction, I'll let Mark give that answer, but consumer demand continues to be strong, so we haven't seen any turf impact from that perspective. Go ahead, Mark.
Hey Chad.
Mark Phelan: So in terms of construction, obviously Phil's going up a significant amount and you'd use a bunch of that in the phase two project.
Mark Phelan: But given the sort of volatility of laws and announcements and tariffs, it's really hard to tell. The project, the Phase I project was well finished.
Mark Phelan: and prices were well set before any of these chairs hit, so right now it doesn't seem to be much of an impact.
Mark Phelan: Okay, great to hear. And then on the performance, I guess.
Speaker Change: The two-parter, we've heard a lot of companies call out weather in the first quarter. Are you able to quantify maybe what this impact may have been for your portfolio? And then more importantly, you said that April trends, I guess we're through all of April , haven't really changed in terms of the strength with the consumer. Can you just confirm that and are you seeing any pockets of weakness across the fleet? Thank you. Thank you.
Matt Ellis: Hey Chad, it's Matt, and thanks for the wishes at the beginning. We'll take that one part of time. Whether all in all, pretty neutral when we look at a quarter over quarter, right? There's always a cold week here or rainy week there, but as Andy talked about, we're well diversified.
Matt Ellis: Weather was a neutral factor in a good, positive way. When it comes to...
The other piece of your question.
Matt Ellis: April is trending like we expected to. We are not seeing sort of that any sort of change in consumer behavior. You know, it's a busy season for us with tax refund season but kind of pleased to report that everything's following our initial forecast for the year despite some of the recent political events.
[inaudible]
It's great. Appreciate it. Thank you very much.
Thank you.
Speaker Change: The next question is from the line of Steve Pizzella with Deutsche Bank, your line is now open.
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Speaker Change: Hey, good afternoon, everybody, Bob. Thanks for all your help over the years. Good luck with your future endeavors.
Speaker Change: Just look at that Illinois, it looks like locations with down, again quarter or quarter location when per day, up year over year. Is that still part of the strategy to kind of prune the bottom part of the portfolio?
Thanks Steve, this is Andy.
Speaker Change: Yeah, we were continuing on that program and to be honest it will be a continuous part of our optimization.
of our business. We are always looking to...
Speaker Change: to increase our profitability, look at evaluate locations that aren't performing, where the margin isn't what we expect and reallocate
Speaker Change: the assets into better performing situations. We have this whole utilization of our equipment.
Speaker Change: His reinforces our efforts to scale to our new markets and prove our return on those investments and really optimize our overall
Speaker Change: and which ultimately will help our free cash flow. So I think you'll see this program and continue market after market as it's a natural evolution of our business.
Speaker Change: Okay, thank you. And then just wanted to follow up if you could give us any more color on how Louisiana is going. If the same kind of Illinois strategy applies to some of the other Montana Nevada, Louisiana, Nebraska markets also, we could get kind of an update there on the strategy.
Thank you for your time, and I'll see you in the next video.
Speaker Change: I'll take Louisiana and I'll let Mark provide some color on Georgia and Nebraska. So Louisiana is very early, obviously we just...
Closed in the latter part of Q4.
It's all friends.
Speaker Change: and early indications are very positive. We were accomplishing a lot of the remodeling, updating optimization that we had planned for.
Speaker Change: And the results of that today has been very positive and indicating that we should continue down that trend. So we'll keep you abreast as that progresses in the future quarters.
Go ahead, Mark.
Mark Phelan: Hey Steve, I'll try to kind of give an overview of all the markets, but generally, as Andy pointed it out, we spent a tremendous amount of time and effort in the last four years expanding outside
Mark Phelan: And I think now you're starting to see the fruits of that process as we've integrated a lot of these markets.
Mark Phelan: I've been able to share with them sort of common technology in the form of like payments and loyalty and
Mark Phelan: customer service, as well as content in the form of electronic gaming machines, some of which are proprietary to Excel, to GDG, and some of which are third party made that we purchase and distribute to our different markets.
Mark Phelan: Illinois continues to be the bedrock of this company and continues outperformed.
Mark Phelan: Nevada, I would point out at a pretty robust growth, and in part that's because of differentiated content strategy we have where we have games that no one else has, and they're for form higher.
Mark Phelan: You can say the same for Nebraska and Georgia as well. Steve, although in those markets in particular, we've been able to scale centuries.
Speaker Change: Technology, Accumen, they've always been really good at technology because their markets are so competitive because it's not a ...
Speaker Change: It's not the red shirt that's negotiated, so they really had to differentiate themselves, and we've been able to use their products and enhance them and apply them to the other markets where they're really differentiated and been able to allow us to grow much higher than than the market rate.
[inaudible]
[inaudible]
Speaker Change: Okay, great things. And then just real quick. And the one cue, was there any impact from Sarah Monk in the sports blogger, any startup costs, we should be aware of?
Hey, Steve, it's Matt. I can take that.
Speaker Change: Yes, there were startup costs, right? We started the main hiring both came in March. So, you know, we had that period of calling a month and a half where the labor started hitting us ahead of any revenue.
Speaker Change: but as Mark discussed, and Andy discussed, we're off to a good start in Fairmont, but yes, there were some start-up in Q1.
Okay, I appreciate it. Thank you guys.
Thank you.
Speaker Change: Again, if you'd like to ask a question, please dial star one. The next question is from the line of Greg Gibas with Northland, your line is now open.
Greg Gibbous: Great. Good afternoon, Andy Mattenmark. Thanks for taking the questions. Matt has been really appreciate the help over the years and I wish you all the best going forward. To touch on phase 1 with that being completed at Pharemont, could you maybe give us an update on the timing of phase 2 and what are the key next steps from a regulatory standpoint?
Speaker Change: I'll take that one Greg, so one of the great things about Fair Monty is it provides us a lot of optionality and that's why we chose sort of phase one approach and so now that we have...
Greg Gibbous: A casino up with improved food beverage amenities in this single-site location called Long Shots.
Greg Gibbous: which will be forthcoming. We have a potential in the ability to sort of see how it operates and see what kind of demand and supply we have there in terms of our competitors.
Greg Gibbous: And so I would say, you know, we'll have a lot more clarity on this, once the race and season comes to an end, which is in October .
Greg Gibbous: Before we really want to sort of say what we're going to do for phase two, we're definitely going to have phase two, but we want to learn from the field and take a spin, put a feedback
I'm going to give a more formal answer
You know, in Q-1,
Greg Gibbous: You know, certainly a step up from, you know, the run rates when you acquire the business is one of the see if there's any drivers worth calling out there. Is that kind of see the analogy or do you kind of view this as, you know, maybe the run rate being pretty sustainable, you know, prior to future growth in the state.
Thanks, Gregor Sandy. I would say...
Greg Gibbous: The run rate will continue to improve throughout the year, as we are optimizing, remodeling a lot of the truck stops.
Greg Gibbous: I don't know where we're going to land, but I think we're on a real upward trend.
and the market, although it's a mature market.
Greg Gibbous: There's a lot of legacy equipment and as we upgrade and do what we consider as best practices and as well as bring proprietary technology to the market, we will see us up for form.
What our competitors are doing in that market.
Greg Gibbous: Okay, that's very handy. And I guess the last quick one, I'm pretty sure you touched on cat-dex expectations, but I wanted to follow up, I think I missed that piece of the prepared comments. What are the expectations for 2025 versus kind of the normalized levels?
Greg Gibbous: Hey, Greg, it's Matt and thanks for the wishes at the beginning of the Q&A. So 75-80 for 2025, split as follows.
Thank you. Bye.
5-7 for Louisiana, 31-32 for Fairmont [inaudible]
and that fair amount includes some phase two initial construction.
Greg Gibbous: and then 39-41 for our main market, shall we call it. Now, that's for this year. When we get everything done, we expect 40-45 for everything, including Paramount and Louisiana, plus all the main markets.
Perfect. Thanks for clearing that up.
Boris.
[inaudible]
Speaker Change: Thank you. There are no further questions in queue, so as a final reminder, it is Star One if you'd like to ask a question.
Speaker Change: There are no further questions. I'll hand the call back over to Andy Rubenstein for concluding remarks.
Andy Rubenstein: Thank you everyone for joining us for this Q1 call. We're excited to...
Speaker Change: Share with you more growth that we're seeing at Fair Mosses, Mark alluded to and we will be talking to you in July with
Speaker Change: some good news and continued positive improvement in a lot of our markets.
Speaker Change: Have a good spring and we'll talk to you in summer.
[inaudible]
Speaker Change: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.