Accel Entertainment, Inc. (NYSE:ACEL) Q1 2024 Earnings Call Transcript May 11, 2024
Accel Entertainment, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Hello everyone. Thank you for attending today's Accel Entertainment Q1 2024 Earnings Call. My name is Sierra and I will be your moderator for today. 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 our host, Derek Harmer.
Derek Harmer: Welcome to Accel Entertainment's first quarter 2024 earnings call. Participating on the call today are Andy Rubenstein, Accel's Chief Executive Officer; and Mat Ellis, Accel's Chief Financial Officer. Please refer to our website for the press release and supplemental information that will be discussed on this call. Today's call is being recorded and will be available on our website under Events & Presentations within the Investor Relations section of our website. Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today and the company undertakes no obligation to update these statements unless required by law.
For a more detailed discussion of these and other risk factors, investors should review the forward-looking statements section of the earnings press release available on our website as well as other risk factor disclosures in our filings with the SEC. During the call, we may discuss certain non-GAAP financial measures. For reconciliations 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.
Andrew Rubenstein: Thanks Derek and good afternoon everyone. Thank you for joining us for Accel's first quarter earnings call. I'm pleased to report we once again had a strong quarter. We reported revenue of $302 million, a year-over-year increase of 2.9% and adjusted EBITDA of $46 million, a year-over-year increase of 0.3%. Similar to other companies in Illinois, we saw negative same-store sales growth, primarily due to unfavorable weather, especially in January. However, adding new locations in Illinois and Nebraska allowed us to grow revenue overall. Our location partners recognize the value we provide and rely on the incremental revenues, our convenient, high-quality offering brings to their businesses. On the expense side, we continue to optimize our operations, which has helped us maintain a stable cost structure, despite inflationary impacts.
A customer enjoying a game of pool on a tournament-style pool table at a Gaming Terminal establishment.
Our highly variable cost structure allows us to quickly adjust to any changes in the economy. Looking at future growth, our pipeline remains more active than ever as we evaluate multiple opportunities across the country. We are working hard to get the right opportunities across the finish line and look forward to sharing them with you in the near future. We are also optimistic about the opportunities in the markets where we are currently operating. Our strong balance sheet, proven business model, and consistent growth offer one of the best investments in gaming. With that, I'd like to turn it over to Mat to walk you through our financials in more detail.
Mathew Ellis: Thanks Andy and good afternoon everyone. For the first quarter, we had total revenue of $302 million, a year-over-year increase of 2.9% and adjusted EBITDA of $46 million, a year-over-year increase of 0.3%. As of March 31st, we had 25,321 terminals and 3,987 locations. Year-over-year increases of 5.6% and 5.1%, respectively. Location attrition continues to remain low and is mostly attributable to our lowest performing locations closing their doors. Capital expenditures for the first quarter were $21 million cash spend. The increase was attributable to payments of outstanding invoices from last year. As a reminder, the primary driver of our elevated CapEx was the introduction of four new high-performing gaming terminals at the same time in Illinois.
In the past, we would normally see one high-performing cabinet released every 12 to 18 months. We view last year and this quarter's CapEx is one-time in nature. For 2024, we are still projecting CapEx to be between $55 million and $65 million, a decrease of more than 20%. Over the longer term, we expect CapEx to decrease even further. At the end of the first quarter, we had approximately $286 million of net debt and $553 million of liquidity, consisting of $254 million of cash on our balance sheet and $299 million of availability on our credit facility. On our capital allocation strategy, we continue to make progress on our $200 million share repurchase program. During the quarter, we repurchased 600,000 shares at an average purchase price of $10.60 a share for a total of $6 million.
We are almost 60% through the repurchase program with 12 million shares repurchased at a cost of $124 million. With our strong balance sheet and low leverage, we are in a unique position where we can grow our business and return capital to shareholders. With that, I'd like to turn it back over to Andy.
Andrew Rubenstein: Thanks Mat. We're pleased with another strong quarter and remain focused on executing our growth strategy to create value for our investors. We're confident that our turnkey full-service local gaming solutions provide a platform to continue to produce strong and consistent results. Our focus is to provide unmatched customer support, guidance, and expertise so our location partners can grow their businesses. We will now take your questions.
