Accel Entertainment Announces Q3 2021 Operating Results
Accel Entertainment, Inc. (NYSE: ACEL) announced strong Q3 2021 results, featuring a 43% revenue increase to $193.4 million and a 58% rise in net income to $10.8 million.
The company expanded its operations to 2,549 locations and increased video gaming terminals (VGTs) to 13,384, reflecting growth of 8% and 15% respectively year-over-year. Adjusted EBITDA rose 63% to $37.6 million. Accel revised its 2021 guidance with projected revenue of $725-$750 million and adjusted EBITDA of $140-$145 million. The company also expanded borrowing capabilities to support future growth, including an upcoming acquisition of Century Gaming, Inc.
- Revenue increased by 43% to $193.4 million.
- Net income rose 58% to $10.8 million.
- Adjusted EBITDA increased by 63% to $37.6 million.
- Expansion to 2,549 locations and 13,384 VGTs, up 8% and 15% respectively.
- None.
Highlights:
-
Q3 2021 ended with 2,549 locations; an increase of
8% compared to Q3 2020 -
Q3 2021 ended with 13,384 video gaming terminals (“VGTs”); an increase of
15% compared to Q3 2020 -
Revenue of
$193.4 million 43% compared to Q3 2020 -
Q3 2021 revenue per location per day increased
34% vs Q3 2020 -
Net income of
$10.8 million 58% compared to Q3 2020 -
Adjusted EBITDA of
$37.6 million 63% compared to Q3 2020 -
Q3 2021 ended with
$148 million 13% compared to Q3 2020 -
Senior secured credit facility amended to increase borrowing capacity from
$438 million $900 million -
$150 million -
$350 million -
$400 million - Interest rates and covenants remain unchanged
-
As of
November 3, 2021 , the Revolver and Delayed Draw Term Loan were fully available
-
-
Acquisition of
Century Gaming, Inc. ("Century") on track to close in the first half of 2022
2021 Revised Guidance:
Based on another quarter of strong performance, 2021 guidance increased to:
- End 2021 with an estimated 2,600 - 2,620 locations
- End 2021 with an estimated 13,660 -13,775 VGTs
-
2021 Revenue estimated to be
$725 $750 million -
2021 Adjusted EBITDA[*] estimated to be
$140 $145 million -
2021 capital expenditures estimated to be
$20 $25 million -
End 2021 with
$110 $115 million
Revised guidance includes the
2022 Guidance:
Due to the uncertainty on the exact timing of the Century acquisition, 2022 guidance will be provided without Century and pro forma assuming Century's results are included for the full year. 2022 guidance also assumes
2022 guidance without Century acquisition:
- End 2022 with an estimated 2,760 - 2,795 locations
- End 2022 with an estimated 14,560 - 14,750 VGTs
-
2022 Revenue estimated to be
$820 $870 million -
2022 Adjusted EBITDA[*] estimated to be
$160 $170 million -
2022 capital expenditures estimated to be
$20 $25 million
2022 guidance pro forma for Century acquisition:
- End 2022 with an estimated 3,700 – 3,800 locations
- End 2022 with an estimated 23,000 – 25,000 VGTs
-
2022 Revenue estimated to be
$1.07 $1.18 billion -
2022 Adjusted EBITDA[*] estimated to be
$182 $198 million -
2022 capital expenditures estimated to be
$25 $35 million
Accel CEO
Condensed Consolidated Statements of Operations and Other Data |
|||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||
(in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||
|
|
|
|
|
|
|
|
||||||
Total revenues |
$ |
193,351 |
|
$ |
135,097 |
|
$ |
542,394 |
|
$ |
241,939 |
|
|
Operating income (loss) |
|
18,647 |
|
|
8,984 |
|
|
53,129 |
|
|
(12,713 |
) |
|
Income (loss) before income tax (benefit) expense |
|
14,743 |
|
|
241 |
|
|
36,526 |
|
|
(3,678 |
) |
|
Net income |
|
10,807 |
|
|
6,835 |
|
|
24,753 |
|
|
8,110 |
|
|
Other Financial Data: |
|
|
|
|
|
|
|
||||||
Adjusted EBITDA(1) |
|
37,631 |
|
|
23,098 |
|
|
106,427 |
|
|
29,192 |
|
|
Adjusted net income (2) |
|
17,317 |
|
|
15,422 |
|
|
54,106 |
|
|
8,019 |
|
|
(1) Adjusted EBITDA is defined as net income plus amortization of route and customer acquisition costs and location contracts acquired; change in fair value of contingent earnout shares; change in the fair value of warrants; stock-based compensation expense; other expenses, net; tax effect of adjustments; depreciation and amortization of property and equipment; interest expense; emerging markets; and provision for income taxes. For additional information on Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA, see “Non-GAAP Financial Measures—Adjusted net income and Adjusted EBITDA.”
(2) Adjusted net income is defined as net income plus amortization of route and customer acquisition costs and location contracts acquired; change in fair value of contingent earnout shares; change in the fair value of warrants; stock-based compensation expense; other expenses, net; and tax effect of adjustments. For additional information on Adjusted net income and a reconciliation of net income to Adjusted net income, see "Non-GAAP Financial Measures— Adjusted net income and Adjusted EBITDA.”
| Key Metrics | ||||
|
As of |
|||
|
2021 |
|
2020 |
|
Licensed establishments (1) |
2,549 |
|
2,363 |
|
Video gaming terminals (2) |
13,384 |
|
11,597 |
|
Average remaining contract term (years) (3) |
6.7 |
|
6.9 |
|
|
|
|
|
|
|
|
|||
|
2021 |
|
2020 |
|
Location hold-per-day – for the three months ended(4) (in whole $) |
|
|
|
|
Location hold-per-day – for the nine months ended(4) (in whole $) |
|
|
|
|
(1) Based on
(2) Based on
(3) Calculated by determining the average expiration date of all outstanding contracts, and then subtracting the applicable measurement date. The IGB limited the length of contracts entered into after
(4) Calculated by dividing the difference between cash deposited in all VGTs at each licensed establishment and tickets issued to players at each licensed establishment by the number of locations in operation each day during the period being measured. Then divide the calculated amount by the number of operating days in such period. Location hold per-day for the nine months ended
| Condensed Consolidated Statements of Cash Flows Data | ||||||||
|
Nine Months Ended
|
|||||||
(in thousands) |
2021 |
|
2020 |
|||||
Net cash provided by operating activities |
$ |
80,262 |
|
|
$ |
4,118 |
|
|
Net cash used in investing activities |
|
(21,220 |
) |
|
|
(23,148 |
) |
|
Net cash (used in) provided by financing activities |
|
(13,610 |
) |
|
|
72,735 |
|
|
Non-GAAP Financial Measures |
||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||
(in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
Net income |
$ |
10,807 |
|
|
$ |
6,835 |
|
|
$ |
24,753 |
|
|
$ |
8,110 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|||||||||
Amortization of route and customer acquisition costs and location contracts acquired (1) |
|
6,221 |
|
|
|
5,648 |
|
|
|
18,489 |
|
|
|
16,778 |
|
|
Stock-based compensation (2) |
|
966 |
|
|
|
1,668 |
|
|
|
4,707 |
|
|
|
4,055 |
|
|
Loss (gain) on change in fair value of contingent earnout shares (3) |
|
888 |
|
|
|
3,599 |
|
|
|
6,867 |
|
|
|
(6,633 |
) |
|
Loss (gain) on change in fair value of warrants(4) |
|
— |
|
|
|
1,710 |
|
|
|
— |
|
|
|
(12,574 |
) |
|
Other expenses, net (5) |
|
4,173 |
|
|
|
1,383 |
|
|
|
8,913 |
|
|
|
5,719 |
|
|
Tax effect of adjustments (6) |
|
(5,738 |
) |
|
|
(5,421 |
) |
|
|
(9,623 |
) |
|
|
(7,436 |
) |
|
Adjusted net income |
$ |
17,317 |
|
|
$ |
15,422 |
|
|
$ |
54,106 |
|
|
$ |
8,019 |
|
|
Depreciation and amortization of property and equipment |
|
6,518 |
|
|
|
5,361 |
|
|
|
18,820 |
|
|
|
15,299 |
|
|
Interest expense, net |
|
3,016 |
|
|
|
3,434 |
|
|
|
9,736 |
|
|
|
10,172 |
|
|
Emerging markets (7) |
|
1,106 |
|
|
|
54 |
|
|
|
2,369 |
|
|
|
54 |
|
|
Income tax expense (benefit) |
|
9,674 |
|
|
|
(1,173 |
) |
|
|
21,396 |
|
|
|
(4,352 |
) |
|
Adjusted EBITDA |
$ |
37,631 |
|
|
$ |
23,098 |
|
|
$ |
106,427 |
|
|
$ |
29,192 |
|
|
(1) Route and customer acquisition costs consist of upfront cash payments and future cash payments to third-party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired.
(2) Stock-based compensation consists of options, restricted stock units and warrants.
(3) Loss (gain) on change in fair value of contingent earnout shares represents a non-cash fair value adjustment at each reporting period end related to the value of these contingent shares. Upon achieving such contingency, shares of Class A-2 common stock convert to Class A-1 common stock resulting in a non-cash settlement of the obligation.
(4) Loss (gain) on change in fair value of warrants represents a non-cash fair value adjustment at each reporting period end related to the value of these warrants.
(5) Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses relating to lobbying efforts and legal expenses in
(6) Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.
(7) Emerging markets consist of the results, on an Adjusted EBITDA basis, for non-core jurisdictions where our operations are developing. Markets are no longer considered emerging when Accel has installed or acquired at least 500 gaming terminals in the jurisdiction, or when 24 months have elapsed from the date Accel first installs or acquires gaming terminals in the jurisdiction, whichever occurs first.
Reconciliation of Debt to Net Debt |
||||||||
|
As of |
|||||||
(in thousands) |
2021 |
|
2020 |
|||||
Debt, net of current maturities |
$ |
309,717 |
|
|
$ |
330,757 |
|
|
Plus: Current maturities of debt |
|
18,250 |
|
|
|
18,250 |
|
|
Less: Cash and cash equivalents |
|
(179,883 |
) |
|
|
(179,108 |
) |
|
Net debt |
$ |
148,084 |
|
|
$ |
169,899 |
|
|
Conference Call
Accel will host an investor conference call on
About Accel
Accel believes it is the leading distributed gaming operator in
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, contained in this press release are forward-looking statements, including, but not limited to, any statements regarding our 2021 guidance, including with respect to the duration and impact of the COVID-19 crisis (including expected operating expenses related thereto), potential acquisitions or strategic alliances, and our estimates of number of VGTs, locations, revenues, Adjusted EBITDA, capital expenditures, and Net Debt. The words “predict,” “estimated,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “continue,” and similar expressions or the negatives thereof are intended to identify forward looking statements. These forward looking statements represent our current reasonable expectations and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward looking statements due to a number of factors including, but not limited to: the existing and potential future adverse impact of the COVID-19 pandemic on Accel’s business, operations and financial condition, including as a result the suspensions of all video gaming terminal operations by the Illinois Gaming Board between
Anticipated effects or benefits from the contemplated transaction may not ultimately occur, including expected revenues; effective integration of Century’s operations, establishments and terminals with our own; integration of new technology to our own portfolio; and, integration of player rewards programs into our own system or expansion of those rewards programs in other US markets. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors including, but not limited to the existing and potential future adverse impact of the COVID-19 pandemic on Century’s business, operations and financial condition, including as a result of any suspension of gaming operations in
Accordingly, forward-looking statements, including any projections or analysis, should not be viewed as factual and should not be relied upon as an accurate prediction of future results. The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on the Accel. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the sections entitled “Risk Factors” in the Quarterly Reports on Form 10-Q and in the Annual Report on Form 10-K filed by Accel with the
Non-GAAP Financial Information
This press release includes certain financial information not prepared in accordance with Generally Accepted Accounting Principles in
Although Accel excludes amortization of route and customer acquisition costs and location contracts acquired from Adjusted EBITDA and Adjusted net income, Accel believes that it is important for investors to understand that these route, customer and location contract acquisitions contribute to revenue generation. Any future acquisitions may result in amortization of route and customer acquisition costs and location contracts acquired.
Adjusted EBITDA, Adjusted net income (loss), and Net Debt are not recognized terms under GAAP. These non-GAAP financial measures excludes some, but not all, items that affect net income, and these measures may vary among companies. These non-GAAP financial measures are unaudited and have important limitations as an analytical tool, should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance.
[*] Although we provide guidance for Adjusted EBITDA, we are not able to provide guidance for net income, the most directly comparable GAAP measure. Certain elements of the composition of GAAP net income, including stock-based compensation expenses, are difficult to predict and estimate, and are often dependent on future events which may be uncertain or outside of our control. These elements make it impractical for us to provide guidance on net income or to reconcile our Adjusted EBITDA guidance to net income without unreasonable efforts. For the same reason, we are unable to address the probable significance of the unavailable information.
|
|||||||||||||||
(In thousands, except per share amounts) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Revenues: |
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||||
Net gaming |
$ |
186,017 |
|
|
$ |
129,635 |
|
|
$ |
520,915 |
|
$ |
231,210 |
|
|
Amusement |
|
4,010 |
|
|
|
3,031 |
|
|
|
12,338 |
|
|
6,123 |
|
|
ATM fees and other revenue |
|
3,324 |
|
|
|
2,431 |
|
|
|
9,141 |
|
|
4,606 |
|
|
Total net revenues |
|
193,351 |
|
|
|
135,097 |
|
|
|
542,394 |
|
|
241,939 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenue (exclusive of depreciation and amortization expense shown below) |
|
129,739 |
|
|
|
90,556 |
|
|
|
364,402 |
|
|
161,795 |
|
|
General and administrative |
|
28,053 |
|
|
|
23,165 |
|
|
|
78,641 |
|
|
55,061 |
|
|
Depreciation and amortization of property and equipment |
|
6,518 |
|
|
|
5,361 |
|
|
|
18,820 |
|
|
15,299 |
|
|
Amortization of route and customer acquisition costs and location contracts acquired |
|
6,221 |
|
|
|
5,648 |
|
|
|
18,489 |
|
|
16,778 |
|
|
Other expenses, net |
|
4,173 |
|
|
|
1,383 |
|
|
|
8,913 |
|
|
5,719 |
|
|
Total operating expenses |
|
174,704 |
|
|
|
126,113 |
|
|
|
489,265 |
|
|
254,652 |
|
|
Operating income (loss) |
|
18,647 |
|
|
|
8,984 |
|
|
|
53,129 |
|
|
(12,713 |
) |
|
Interest expense, net |
|
3,016 |
|
|
|
3,434 |
|
|
|
9,736 |
|
|
10,172 |
|
|
Loss (gain) on change in fair value of contingent earnout shares |
|
888 |
|
|
|
3,599 |
|
|
|
6,867 |
|
|
(6,633 |
) |
|
Loss (gain) on change in fair value of warrants |
|
— |
|
|
|
1,710 |
|
|
|
— |
|
|
(12,574 |
) |
|
Income (loss) before income tax expense (benefit) |
|
14,743 |
|
|
|
241 |
|
|
|
36,526 |
|
|
(3,678 |
) |
|
Income tax expense (benefit) |
|
3,936 |
|
|
|
(6,594 |
) |
|
|
11,773 |
|
|
(11,788 |
) |
|
Net income |
$ |
10,807 |
|
|
$ |
6,835 |
|
|
$ |
24,753 |
|
$ |
8,110 |
|
|
Net income per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.11 |
|
|
$ |
0.08 |
|
|
$ |
0.26 |
|
$ |
0.10 |
|
|
Diluted |
|
0.11 |
|
|
|
0.08 |
|
|
|
0.26 |
|
|
0.09 |
|
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
94,004 |
|
|
|
82,785 |
|
|
|
93,607 |
|
|
79,708 |
|
|
Diluted |
|
94,728 |
|
|
|
83,560 |
|
|
|
94,469 |
|
|
80,578 |
|
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
10,807 |
|
|
$ |
6,835 |
|
|
$ |
24,753 |
|
$ |
8,110 |
|
|
Unrealized (loss) gain on investment in convertible notes (net of income taxes of |
|
(315 |
) |
|
|
— |
|
|
|
5,358 |
|
|
— |
|
|
Comprehensive income |
$ |
10,492 |
|
|
$ |
6,835 |
|
|
$ |
30,111 |
|
$ |
8,110 |
|
|
|
||||||||
(In thousands, except par value and share amounts) |
|
|
|
|||||
Assets |
(Unaudited) |
|
(As Restated) |
|||||
Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
179,883 |
|
|
$ |
134,451 |
|
|
Prepaid expenses |
|
5,655 |
|
|
|
5,549 |
|
|
Income taxes receivable |
|
723 |
|
|
|
3,341 |
|
|
Other current assets |
|
11,960 |
|
|
|
8,643 |
|
|
Total current assets |
|
198,221 |
|
|
|
151,984 |
|
|
Property and equipment, net |
|
147,687 |
|
|
|
143,565 |
|
|
Other noncurrent assets: |
|
|
|
|||||
Route and customer acquisition costs, net |
|
15,658 |
|
|
|
15,251 |
|
|
Location contracts acquired, net |
|
152,344 |
|
|
|
167,734 |
|
|
|
|
45,754 |
|
|
|
45,754 |
|
|
Investment in convertible notes |
|
37,622 |
|
|
|
30,129 |
|
|
Deferred income tax asset |
|
— |
|
|
|
3,824 |
|
|
Other assets |
|
3,059 |
|
|
|
2,000 |
|
|
Total other noncurrent assets |
|
254,437 |
|
|
|
264,692 |
|
|
Total assets |
$ |
600,345 |
|
|
$ |
560,241 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Current maturities of debt |
$ |
18,250 |
|
|
$ |
18,250 |
|
|
Current portion of route and customer acquisition costs payable |
|
2,018 |
|
|
|
1,608 |
|
|
Accrued location gaming expense |
|
2,923 |
|
|
|
— |
|
|
Accrued state gaming expense |
|
10,300 |
|
|
|
— |
|
|
Accounts payable and other accrued expenses |
|
9,962 |
|
|
|
23,666 |
|
|
Accrued compensation and related expenses |
|
7,679 |
|
|
|
5,853 |
|
|
Current portion of consideration payable |
|
14,392 |
|
|
|
3,013 |
|
|
Total current liabilities |
|
65,524 |
|
|
|
52,390 |
|
|
Long-term liabilities: |
|
|
|
|||||
Debt, net of current maturities |
|
309,717 |
|
|
|
321,891 |
|
|
Route and customer acquisition costs payable, less current portion |
|
3,495 |
|
|
|
4,064 |
|
|
Consideration payable, less current portion |
|
13,015 |
|
|
|
20,943 |
|
|
Contingent earnout share liability |
|
39,936 |
|
|
|
33,069 |
|
|
Warrant and other long-term liabilities |
|
17 |
|
|
|
13 |
|
|
Deferred income tax liability |
|
4,497 |
|
|
|
— |
|
|
Total long-term liabilities |
|
370,677 |
|
|
|
379,980 |
|
|
Stockholders’ equity : |
|
|
|
|||||
Preferred Stock, par value of |
|
— |
|
|
|
— |
|
|
Class A-1 Common Stock, par value |
|
9 |
|
|
|
9 |
|
|
Additional paid-in capital |
|
185,711 |
|
|
|
179,549 |
|
|
Accumulated other comprehensive income |
|
5,451 |
|
|
|
93 |
|
|
Accumulated deficit |
|
(27,027 |
) |
|
|
(51,780 |
) |
|
Total stockholders' equity |
|
164,144 |
|
|
|
127,871 |
|
|
Total liabilities and stockholders' equity |
$ |
600,345 |
|
|
$ |
560,241 |
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20211103006177/en/
Media Contact:
212-371-5999
ejb@abmac.com
Source:
FAQ
What were Accel Entertainment's Q3 2021 revenue figures?
What is the net income for Accel Entertainment in Q3 2021?
How many locations and VGTs did Accel Entertainment have at the end of Q3 2021?
What is the revised guidance for Accel Entertainment's 2021 revenue?
What is the adjusted EBITDA for Accel Entertainment in Q3 2021?
