Accel Entertainment (ACEL) 3 May 232023 Q1 Earnings call transcript

Good morning. Thank you for attending today's Accel Entertainment Q1 2023 Earnings Call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions]

I would now like to pass the conference over to your host, Derek Harmer, General Counsel and Chief Compliance Officer with Accel Entertainment.

proceed. may You

refer and under be discussed Entertainment's supplemental the section Accel Executive XXXX call. within Investor Officer. Events call and call. on available be of earnings and for will and Welcome Relations recorded today first are on Presentations Please Financial being Chief will call Ellis, information our Chief on our Andy release Participating website Matt the to Accel's quarter to this Today's Rubenstein, press Officer; is our website. website the Accel's

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

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

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

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

call I will Andy. to the now turn over

of year-over-year earnings revenue I'm $XX million, to reported report of pleased good XX%. Thanks, another increase XX%, million, for Accel's quarter. and Derek. of everyone. increase afternoon of We Thank call. EBITDA And first we you us a a for quarter adjusted joining record-breaking year-over-year had $XXX

growth was replacing equipment of by Century primarily acquisition was favorable weather growth machines. in older driven Illinois successful growth driven of QX's The and our newer sales X% same-store Illinois. the in with and some revenue by

uncertainty forms how when Our really in our entertainment business model economic even of of continued well other works hyper-local demonstrates suffer. the face growth

their help high-quality we businesses, of partners recognize rely on value continue. the to to establishment offerings expect Our to come support our a and have trend

share the structure quarters. On remained new for the to stable our expense adjusted I'm pleased three we've side, has last expense to normal and the

While them to it's to that team implemented service faster difficult new and certain we less to also costs elevated We've and members. way, to new more provide our hire as tools remain such expect also parts stay even become consistent locations.

and our business additional business calibrate cost challenges asset-light Our our us quickly model markets. highly to to allows any variable in structure

some to their remain pleased Nebraska, progress to Overall, Turning The of week well, grow best focusing continuing integration most with new markets. the Century. working and locations to on grow introduced our time focused and across on with inorganically. locations organically businesses. is and we every but made, we're our adding going In we've practices we've we're

our players. service helping Our offering remains but relatively location areas, and redesigned new machines gaming partners continue attract new best-in-class unknown,

greenfield front, watching On and we're the North Chicago Carolina. closely

an During this bringing in to year's election, Chicago's gaming mayor-elect distributed interest expressed Chicago.

We remain include trade In our that years. gaming markets, of in may emphasize several open expand distributed new with associations market or cautiously North both legislature will existing In through next optimistic this to the budget. gaming. year's the decision-makers the state Carolina, working coalitions in may market we're the benefits and an a distributed

our evaluating opportunities and M&A, remains multiple across country. at pipeline active, Looking we're the

to is goal long-term of the generated Our our Illinois. continue outside increase percentage of to revenue

about looking the markets we're markets as currently the where execute opportunities to operate well in playbook. enter. the as we continues We Accel its Overall, growth excited remain to new

best one Our gaming. of model, visible highly returns the growth business offers low and capital local in requirements

With to in that, over Matt financials to it through detail. I'd to turn like you our walk more

everyone. afternoon good and Andy, Thanks,

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

operates Century our lower than in reminder, XXXX, far margins Century and a the but split and attractive has the our revenue been included business. The is where As are location Century since negotiated. in existing results markets X, between June

CapEx sales $XX equipment accelerating investments cash is as due first same-store portfolio. of increased purchases chain quarter the markets Illinois avoid developing disruptions some X% Georgia. year-over-year increase for million Illinois to the spend. and The weather and was our due supply to our Nebraska throughout favorable to in in and optimization such

see we're and to recent these We markets, continue of growth. by upside the in excited both

to to investments note may today's for come. it's fully years important realized not be However, several

of At terminals the As averages. increases locations, attrition and respectively. X,XXX with low year-over-year end first and quarter, in our on sheet current $XXX XX%, to of our $XXX $XXX line million on XX,XXX availability million consisting million facility. March XX, of liquidity, Location had of of and and credit approximately cash $XXX we balance of continues of our million the we net had and historical XX% debt remain of

update provide to specifically, our I'd to an on efforts our now program. like to return share repurchase capital shareholders,

we $XXX as strong XXXX, the to share of in capital program form a attractive our and shareholders million the all of November you're use cash flow. we return As repurchase announced find in to buybacks free opportunity aware, of

shares During price $X.XX purchase we share. of an $X.X the purchased per quarter, million at of Accel average

we than cost The started, repurchase a slower the shares quarters to quarter million. X.X pace $XX be repurchased this of quarter. attributed million to program at in longer previous the first more the as blackout have mostly can compared period Since

while sheet continue and relatively capital to to our in strong markets new balance shareholders. investing free under-levered cash flow, we appropriately able returning our Given were

due we this to guidance have the near-term not time, At uncertainty. issue macroeconomic decided to

to strong record-breaking like I'd continue, the should However, deliver a with current trends to results. that emphasize we're year positioned

an more provide get in visibility aim to the we'll future. we update this As summer,

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

our strategy creates in quarter under remain by executing thrive built Thanks, focused and another pleased confident leveraging focused Matt. playbook. We're our locally to on business We're difficult growth platform have circumstances. times our with strong model the a we foundation outperform proven strong normal and with

now take will We your questions.

The Instructions] Steve session. first [Operator Q&A the question the Bank. begin is with now line of Deutsche from will We Pizzella

proceed. may You

you about the for did Thanks guys there kind Curious And newer talk about guys. you the questions. moving the see evening, opportunity older my the you that with from uplift of good can machines see forward? some of replacing equipment. taking Hey,

Thanks, for We've market. as what's players Steve. that and more that quickly product, of over I that products, is But it there's Andy. as historically -- market games our the lot product they've the that casino of change that regional making to kind they're new a products that the come casino are an seen or tell playing play appreciation as into enjoy a in to it Las been been to whether as available similar playing better recognize Vegas an choice or This you. can't The adaption well they as quality in to visiting the play not, that in casinos. definitely other a a they make real

of trends Okay, to thanks. maybe you XQ the saw cadence has kind Appreciate date XQ of that. about in and trended? then talk the can you And how

Yeah. Thanks, Steve. It's Matt.

strong So obviously like weather months, March talked, optimization. our QX mentioned machine throughout, very in best are and Andy we again. was April the pretty strong. came favorable April

the -- Illinois those see soon. results You'll

exactly will of that of keeps up to seasonality to hard this year our but continues. macroeconomic the to be how year the of go, on. will pinpoint it's really It's So it what up but how a Too the shape going to say beginning of momentum with great going I sort of sort like happen. discussed -- I soon business, would sort if all say the

Thanks, Okay. it. guys. Appreciate

the Thank next from Chad you. with The Macquarie. is Beynon question line of

may proceed. You

opportunities pipeline or progressive question. M&A to for for a And portfolios? any you. terms Hey, there taking there the are this touch the on for deal Has you're for Thank is in your number change tuck-ins that are my bigger you more Aaron of on focused Wanted of for size, been markets any Chad. seeing the Thanks second. like on? in opportunities

The in be with consistent opportunities past. seem to what the we've seen fairly

are aggressive be as do behaved will in see there and we think I with forward, always tuck-ins think we've I be consistent how continue future -- opportunities. that, will historically you'll The these move what we pursuing we behavior. to

what And in on of Georgia? are? And Thanks. you're expectations prepaid impact your any it. what a Got cards of as and on rollout that maybe Thank the color seeing follow-up, performance sort the you.

the card. been gather migration. have value cashless can of to slow elsewhere the a the But just they that the increase. -- on as to introduced the it to to continues ability society prepaid overall marketplace. more we've card seen a seen as the who So ease and use, a think participation the some It's have we've utilize in adaptation move to the appreciated interest We players that society

and quarter. a on Thank congrats very Fantastic. you much great

Thank you.

with you. Greg next Northland the is from Thank question Capital of line Gibas Markets. The

You may proceed.

just event that Is a or the you're from for a maybe guess Illinois from a Hey, taking benefit machines. the mostly should maybe updated I in Andy products QX expect the I we ask, been with results. strong to to benefits thanks on your guess those Wanted or that installing And on going and Congrats those the Matt, network of get questions. seeing that sense, new percentage products? new has that like forward?

a improvement and always optimize thanks Greg, company. a better calling something this is for locations player for -- provide that So development in. the to a We offering. constant the looking of performance increase We're the continuous to kind the is to and it's individual

we lot have think you'll a continue I So equipment. program and see this brought of in

will equipment locations to out months, we migrate the different XX to this field last and this into and equipment throughout purchase the Over year and next. continue new

that in, As there best and opportunity should to get and equipment. by new to believe product that our deploy earn providing first we we're the partners with them we're comes establishment

seems with Yeah, resonated it it Okay. players. sense. Makes like really the

comments So we update follow-up with brief get good think too move more forward North whether to do would they And an gaming? maybe or hear. of your Carolina. Chicago you to distributed regarding When on wanted on

new Today, don't mean, the the Yeah, flip, markets at at are, roulette roulette you're wheel. it's coin wheel. we're I I think sometimes mean a sometimes these I

I there's North ends on think It's not but as -- I a session a chance. this And coin do May there flip, that believe there's is. XX. in adversity Carolina always it's

-- get which that close going be extended, and we the to we've as and -- more So in start of session, happen. be start the It's could could seen on to day challenging. that finality more

still has mayor far the yet passed in number the significant, new gaming not Chicago, but United The of election We stated -- the I've from -- is There's meaningful to election public number gaming topic even be office. there legislation we tell one that. you for a can one in no would City I it's this for before, States vote. the are And XXXX. to priority has the going is since safety. Chicago, the -- the optimistic, take was been but route as

visit to is that most come this as well important Illinois. all the there for believe live people we the who And the people as who

as have So And probably positive a results, summer, the that having good address mayor they'll and that to issue. we see we conversation. open some is

helpful, to what it. same-store Got Fair point. have that's just know me, Century? of for I know Illinois. a was it's if difficult growth for one predict, enough. this know all guess you wondered last at sense X% in I Andy. I and was said inorganic just it's sales you I But but it

was you wondering Just sense it year-over-year. if a have of what

It's well. it's more QX increases pretty market. quite routes also as Matt. Thanks, but see mature not Greg. Illinois, Again, as had as They a a Century's high did nice

got home growing still close and continuing routes cultures. see to those different got there again gaming expand. we But you've to again, trends, So you've population gaming

Okay, great. guys. Thanks,

you. Thank

Instructions] no There questions for call are like further to no turn Rubenstein the in to questions There concluding back in [Operator I'd waiting Andy queue. you. are queue. over Thank further remarks.

you, afternoon. us for this Thank joining everyone,

positive we're XXXX that had very the the We to Matt have and all the start seeing. trends year on said continues. think that good I And a momentum as we're

be I think the will all will impressed be and you performance. with we

we to for look earnings. be talking with second quarter you thank us. Please you the So And safe. to joining forward

That for your call. you concludes today's Thank participation.

You may your lines. now disconnect