Accel Entertainment Q2FY23 Report 

Accel is a decentralized gaming operator headquartered in the United States. The company specializes in installing, managing, and overseeing gaming terminals and redemption devices, which not only dispense winnings but also offer automated teller machine (“ATM”) capabilities, alongside various other amusement devices. These are strategically positioned in approved non-casino venues, such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores.

Q2FY23 Highlights

• Revenue of $292.647 million for Q2FY23, an increase of 28% compared to Q2FY22 ($227.869 million);
• Net income of $9.983 million for Q2FY23; a decrease of 56% compared to Q2FY22 ($22.464 million) primarily attributable to the $4.8 million loss on the change in fair value of the contingent earnout shares in Q2FY23 compared to the $5.7 million gain in Q2FY22;
• Adjusted EBITDA of $46.612 million for Q2FY23; an increase of 9% compared to Q2FY22 ($42.612 million) primarily due to the acquisition of Century and Illinois same stores sales growth of 0.4%;
• Q2FY23 ended with $284.759 million of net debt; an increase of 1% compared to Q2FY22;
• Reached a settlement to resolve the disciplinary complaint with the Illinois Gaming Board for $1.1 million, which is included in Net income and Adjusted EBITDA in the company’s Q2FY23 results.

Gaming and Financial Technology Solution Segments of Accel Entertainment

Gaming Segment

The gaming segment includes the provision, installation, and maintenance of video gaming terminals (VGTs) in bars, restaurants, and other licensed locations.

Key Elements:

• Video Gaming Terminals (VGTs): A variety of games, including poker and slots.
• Installation and Maintenance: Setup, technical support, and repairs.
• Licensing: Compliance with legal and regulatory requirements.
• Data Analysis: Optimization of placement and profitability.

Goals:

• Increase the number of installed VGTs.
• Boost revenues.
• Implement new technologies.

Financial Technology Solutions Segment

The financial segment includes providing services and technologies for managing financial flows, simplifying transactions, and improving reporting.

Key Elements:

• Financial Transactions: Reliable systems for transaction processing.
• Management Systems: Software solutions for financial management.
• Security: Protection of financial data and transactions.
• Analytics and Reporting: Tools and reports for financial management.

Goals:

• Improve financial control.
• Increase transparency.
• Implement new financial technologies.

Business Outlook

The company remains focused on optimizing its cost structure while maintaining exemplary service standards. However, expansion plans through 2024 are being held back by the regulatory environment, with Missouri, Indiana and Chicago unlikely to legalize gambling in the foreseeable future. A glimmer of hope has glimmered in North Carolina, where legislative changes could pave the way for expansion.

Despite these regulatory challenges, Accel Entertainment expects to utilize the synergies from the Century acquisition to strengthen its market presence and grow revenue in existing markets. This integration is expected to drive expansion initiatives in the coming years, creating a strong foundation for sustained growth.

Accel Entertainment is looking at further growth opportunities in Nebraska, demonstrating a commitment to developing new markets and diversifying its geographic footprint. The company remains poised for growth, fueled by strategic initiatives, synergies and a forward-looking approach to market development.

Final Thoughts

Accel Entertainment’s Q2FY23 report showcases a resilient performance amid a complex regulatory landscape. Despite challenges in certain markets, the company’s strategic focus on cost management and service excellence has positioned it for sustained growth. With ongoing synergies from recent acquisitions and targeted expansion plans, Accel Entertainment remains well-positioned to capitalize on emerging opportunities and deliver value to shareholders in the quarters ahead.