Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Accel Entertainment Inc (ACEL, Financial) reported a record-setting year with total revenue of $1.2 billion and adjusted EBITDA of $189 million, showcasing the resilience of their local gaming offerings.
- The company successfully entered the Louisiana market and acquired Fairmont Park, expanding their footprint and preparing for the opening of the Fairmont Casino.
- Illinois, their largest market, posted a 4% year-over-year growth in GTR, outperforming local casinos, indicating strong market performance.
- Accel Entertainment Inc (ACEL) is focusing on refining their sales and operating model, which is expected to drive both top-line and bottom-line growth.
- The company maintains a strong balance sheet with $425 million of liquidity, allowing for continued growth and capital return to shareholders through share repurchases.
Negative Points
- Accel Entertainment Inc (ACEL) experienced a sequential decline in location count in Illinois due to strategic closures of underperforming locations.
- The company faces increased costs from labor and a 1% state gaming tax increase, prompting strategic closures and portfolio adjustments.
- Revenue per location in Nevada decreased by 6.7% year-over-year, indicating challenges in that market.
- The company anticipates flat net unit growth in Illinois in the near term due to ongoing portfolio adjustments.
- There is uncertainty regarding the rollout of ticket in, ticket out (TITO) in Illinois, which could impact cash processing efficiency and player experience.
Q & A Highlights
Q: How should we think about the contributions to the model with the addition of Louisiana and the Fairmont acquisition?
A: Matt Ellis, CFO: For Louisiana, we disclosed $6 million of EBITDA for the full year 2025. For Fairmont, expected to open in Q2, we forecast $25 million of EBITDA when fully built out, with the temporary casino contributing about a third of that. You'll need to prorate it for opening in the middle of Q2.
Q: Did you see similar trends in other markets as Illinois started strong in January?
A: Andy Rubinstein, CEO: Favorable weather in January helped, but February's weather hasn't been as good. Elsewhere, we haven't seen extremes like in Illinois. Overall, demand for our gaming products remains strong, with positive consumer feedback from remodels and new products.
Q: When will the pruning of Illinois units be complete, and when should we expect growth in the market?
A: Andy Rubinstein, CEO: Pruning is an ongoing process focusing on underperforming locations. Growth will be continuous as assets are redeployed into better accounts. We expect noticeable improvements in average profitability later this year into next year.
Q: Is the e-pull tab market a more immediate focus given recent industry attention?
A: Mark Phelan, President, U.S. Gaming: The e-pull tab market is interesting but requires superior content, which we would need a partner to provide. It's an area we could explore with the right partnership.
Q: Do you expect any legislative changes in the route gaming market soon?
A: Andy Rubinstein, CEO: We haven't seen significant iGaming legislation in this session. It's more likely to appear in markets without route gaming or minimal casino presence. We continue to educate legislators on the benefits of route gaming over iGaming.
Q: What growth opportunities do you see in Louisiana, and will you focus on acquisitions or organic growth?
A: Andy Rubinstein, CEO: Louisiana is a mature yet fragmented market. We see opportunities to improve truck stops and bar markets with old equipment. We expect organic growth and potential acquisitions as ownership transitions over the next decade.
Q: Can you provide more details on the timing and expectations for Fairmont's phase two development?
A: Mark Phelan, President, U.S. Gaming: Phase two is expected by the end of 2027. Phase one will go live in Q2, giving us over two years to build a permanent facility. We can't fully break out FanDuel's component but expect improvements over pre-Racino operations.
Q: Are there any further questions registered in the queue?
A: Kate, Moderator: At this time, we do not have any further questions registered in the queue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
