Accel Entertainment (ACEL) Q4 2019 earnings summary

Executive summary

• FY19 revenue rose 27.8% YoY to $424.4M; Adjusted EBITDA increased 24.8% to $79.6M, while GAAP net income shifted to a $5.9M loss.

• Gaming footprint expanded to 10,499 VGTs at 2,312 Illinois locations; hold-per-day was $130, and voluntary contract renewals exceeded 98% over three years.

Financial highlights

• FY19 net video gaming revenue was $410.6M, up 27.6%; total revenue was $424.4M, up 27.8% from $332.0M in FY18.

• Operating income fell 46.4% to $13.3M; net loss was $5.9M versus FY18 net income of $10.8M; diluted EPS was $(0.09) versus $0.17.

• Adjusted EBITDA was $79.6M versus $63.8M; Adjusted net income was $22.7M versus $23.1M.

• Operating cash flow was $45.6M; investing cash outflow was $151.5M, including acquisitions and a $30M convertible-note investment.

• Q4 revenue was $121.4M; operating loss was $5.7M, net loss $12.6M and diluted EPS $(0.18), including elevated one-time and fair-value expenses.

Outlook and guidance

• Planned 2020 capital expenditures were approximately $25M; cash, operating cash flow and available credit were expected to cover capital needs for the next 12 months.

• Pennsylvania expansion remained a growth opportunity: a conditional operator license was held and a binding VGT installation agreement was in place with a conditionally licensed truck-stop partner.

• Illinois gaming tax was scheduled to rise from 33% to 34% on July 1, 2020, creating a potential expense headwind.