Accel Entertainment Inc (ACEL) Q1 2025 Earnings Call Highlights: Record Revenue and Strategic ...

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Tue, May 6, 2025, 1:09 AM 4 min read

Total Revenue: $344 million, highest quarterly revenue since going public, 7% year-over-year growth.
Adjusted EBITDA: $50 million, 7% year-over-year growth.
Revenue Growth by State: Illinois 4%, Montana 8%, Nebraska double-digit growth, Georgia double-digit growth, Nevada small decline.
Terminals and Locations: 27,180 terminals in 4,391 locations, year-over-year increases of 4.4% and 2.9%, respectively.
Revenue Per Location: Illinois $885/day, Montana $610/day, Nevada $802/day, Louisiana $972/day, Nebraska $263/day, Georgia $145/day.
Capital Expenditures: $27 million in Q1, full-year forecast $75-$80 million.
Net Debt and Liquidity: $309 million net debt, $422 million liquidity.
Share Repurchases: 1 million shares repurchased at $10.34 per share, totaling $10 million.

Warning! GuruFocus has detected 6 Warning Signs with ACEL.

Release Date: May 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Accel Entertainment Inc (NYSE:ACEL) reported record quarterly revenue of $344 million, the highest since going public, with a 7% year-over-year growth in both revenue and adjusted EBITDA.
The company completed the integration of its recently acquired operations in Louisiana, adding 96 locations and 614 terminals, which is expected to drive future revenue growth.
The opening of Fairmount Park Casino, the first racino in Illinois, is anticipated to be a significant growth driver for Accel Entertainment Inc (NYSE:ACEL).
Accel Entertainment Inc (NYSE:ACEL) continues to expand its national footprint, operating in 10 states and four time zones, which provides diversification and flexibility.
The company maintains a strong balance sheet with $422 million of liquidity, allowing for continued investment in growth and shareholder returns through share repurchases.

Negative Points

Nevada experienced a small revenue decline in the first quarter due to the loss of a key customer following an ownership change.
The departure of CFO Matt Ellis could lead to potential instability during the transition period, although Mark Phelan will step in as acting CFO.
There were startup costs associated with the Fairmount Park Casino, impacting financials before revenue generation began.
The company faces challenges in optimizing and remodeling operations in Louisiana, a mature market with legacy equipment.
Steel price increases due to tariffs could impact future construction costs, particularly for Phase 2 of the Fairmount project.

Q & A Highlights

Q: How is Accel Entertainment managing the impact of tariffs on its projects, particularly regarding CapEx and future growth opportunities? A: Andrew Rubenstein, CEO, stated that most of the CapEx spend for the year has been locked in, minimizing the impact of tariffs. Consumer demand remains strong, and while there have been minor effects on parts, the Fairmount construction is largely unaffected. Mark Phelan, President of U.S. Gaming, added that while steel prices have increased, the Phase 1 project was completed before tariffs hit, so there is minimal impact currently.

Q: Can you quantify the impact of weather on your portfolio in Q1, and how are April trends shaping up? A: Matt Ellis, CFO, noted that weather was a neutral factor overall, with no significant impact on the quarter. April trends are consistent with expectations, with no changes in consumer behavior, and the company is on track with its initial forecast for the year.

Q: Is the strategy to prune the bottom part of the portfolio in Illinois still ongoing, and how does it apply to other markets? A: Andrew Rubenstein confirmed that optimizing the portfolio by reallocating assets from underperforming locations is an ongoing strategy. This approach helps improve profitability and optimize CapEx expenditures, which will continue across all markets.

Q: How is the integration and performance in Louisiana progressing, and does the Illinois strategy apply to other markets like Montana and Nevada? A: Rubenstein mentioned that early indications in Louisiana are positive, with remodeling and optimization efforts showing promising results. Mark Phelan added that the strategy of leveraging technology and differentiated content is being applied across all markets, contributing to growth beyond market rates.

Q: What are the next steps for Phase 2 at Fairmount, and what regulatory hurdles remain? A: Mark Phelan explained that Fairmount provides optionality, and the company will assess operations and demand before finalizing Phase 2 plans. More clarity is expected after the racing season ends in October, with a definite Phase 2 planned but pending further evaluation.

Q: What are the CapEx expectations for 2025 compared to normalized levels? A: Matt Ellis outlined that CapEx for 2025 is expected to be between $75 million and $80 million, with allocations for Louisiana, Fairmount, and main markets. Once these projects are completed, normalized annual CapEx is expected to return to $40 million to $45 million.

Q: Were there any startup costs from Fairmount in Q1, and how did they impact financials? A: Matt Ellis confirmed there were startup costs in Q1 due to hiring ahead of revenue generation. However, the company is off to a good start at Fairmount, and these costs were anticipated as part of the initial setup.

Q: How sustainable is the strong performance in Louisiana, and what are the key drivers? A: Andrew Rubenstein indicated that the positive trends in Louisiana are expected to continue as the company optimizes and remodels locations. The market has potential for growth as Accel introduces proprietary technology and best practices.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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