Accel Entertainment (NYSE: ACEL), a prominent gaming company, has revealed its robust performance for the third quarter of the year, reporting revenues of $287 million. This marks an impressive 8% year-on-year increase. The company’s adjusted EBITDA also demonstrated strong growth, standing at $44 million, marking a 7% year-on-year rise. These positive results were primarily driven by the addition of new locations in Illinois and a 1% increase in same-store sales.
Despite the ongoing challenges posed by inflationary pressures, Accel Entertainment successfully maintained a stable cost structure. In a further display of confidence in its financial health and future prospects, the company has also announced a share repurchase program worth $200 million.
Key Takeaways from the Earnings Call:
Accel’s growth was primarily driven by the addition of new locations in Illinois and a 1% same-store sales growth.
The company effectively managed its cost structure despite inflation’s impact on labor and other expenses.
Accel’s $200 million share repurchase program reflects the company’s optimism about its financial position and future potential.
The company is actively exploring multiple growth opportunities across the country, with the aim of increasing the percentage of revenue generated outside of Illinois.
As of September 30, 2023, Accel had 24,016 terminals and 3,687 locations, with low location attrition.
Management expressed plans for expansion in various markets in 2024, including tuck-in opportunities in Illinois and other markets, as well as expanding retail operations in Montana.
Accel views Illinois as a strong gaming market and intends to continue exploring acquisition opportunities in the state.
The company is optimistic about growth prospects in Montana, Nebraska, Georgia, and South Dakota, expecting significant progress in these markets in the second half of 2024 and into 2025.
During the earnings call, the management team conveyed their optimism for the future, emphasizing the company’s plans for expansion and growth in various markets. They believe that gaming is gaining wider acceptance in Illinois and consider it a strong market for the industry. Accel is also open to partnerships and exploring tuck-in opportunities in Illinois. Looking ahead, the company is excited about the growth potential in Montana and sees promising opportunities in states like Georgia and South Dakota. They anticipate sharing more positive news in the coming year.
InvestingPro Insights:
Accel Entertainment’s aggressive share buyback program and accelerating revenue growth reinforce the management’s positive outlook, as highlighted in the InvestingPro Tips. It’s important to note that the company demonstrates a high return on invested capital and has consistently increased its earnings per share, indicating strong financial performance.
Additional financial insights provided by InvestingPro reveal that Accel Entertainment has a market capitalization of $885.27 million and a P/E ratio of 16.45, which adjusts to 15.88 as of Q2 2023. The Price/Book ratio stands at 4.67 as of Q2 2023, indicating a relatively high valuation. The company’s revenue growth has been impressive, with a 39.54% increase for the last twelve months as of Q2 2023.
In addition to these insights, InvestingPro offers various other tips and data metrics for Accel Entertainment and various other companies, which can enhance understanding of the company’s performance and market position.
In conclusion, Accel Entertainment’s strong Q3 results, steady cost management in the face of inflation, and the announcement of a substantial share repurchase program underscore its resilience and optimism for future growth. The company is actively pursuing opportunities in various markets and remains confident about its positioning in the gaming industry.
