Earnings call transcript: Accel Entertainment Q1 2025 revenue hits record

Accel Entertainment Inc. reported a record revenue of $344 million for the first quarter of 2025, surpassing its forecast. Despite this, the company missed its earnings per share (EPS) forecast, recording an actual EPS of $0.17 against a projected $0.24. Following the earnings announcement, Accel’s stock rose 4.74% in after-hours trading, reflecting investor confidence in the company’s robust revenue performance. According to InvestingPro analysis, the company maintains a "GOOD" overall financial health score, and current market prices suggest the stock is undervalued relative to its Fair Value.

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Key Takeaways

• Accel Entertainment’s Q1 2025 revenue reached a record $344 million.
• EPS fell short of expectations at $0.17, compared to the forecasted $0.24.
• Stock price increased by 4.74% in after-hours trading.
• The company completed the integration of its Louisiana operations.
• Strong performance noted in key states like Illinois and Georgia.

Company Performance

Accel Entertainment demonstrated impressive growth in the first quarter of 2025, with a 7% year-over-year increase in both revenue and adjusted EBITDA. The company’s last twelve months EBITDA stands at $165.87 million, with a healthy gross profit margin of 30.18%. The company operates 27,180 terminals across 4,391 locations, marking a year-over-year increase of 4.4% and 2.9%, respectively. Key state performances included Illinois, with $885 per day per location, and Georgia, which saw a significant 59.3% year-over-year increase to $145 per day per location.

Financial Highlights

• Revenue: $344 million, a 7% increase year-over-year.
• Adjusted EBITDA: $50 million, up 7% from the previous year.
• Terminals: 27,180 across 4,391 locations, with a 4.4% and 2.9% increase, respectively.

Earnings vs. Forecast

Accel Entertainment’s actual EPS of $0.17 fell short of the forecasted $0.24, marking a significant miss. However, the company’s revenue of $344 million exceeded the forecast of $310.34 million, highlighting strong operational performance despite the EPS shortfall.

Market Reaction

Following the earnings release, Accel’s stock price rose by 4.74% in after-hours trading, reaching $11.26. This positive movement reflects investor confidence, driven by the company’s record revenue performance. The stock’s performance stands out against its 52-week range, which fluctuated between $9.02 and $12.96. InvestingPro data shows analysts maintain a strong buy consensus, with price targets ranging from $15 to $16, suggesting significant upside potential.

Outlook & Guidance

Accel Entertainment remains optimistic about its growth prospects, with plans for normalized annual capital expenditures of $40-45 million following the completion of the Fairmont project. The company is also exploring a Phase Two expansion at Fairmont, pending market analysis. Future revenue forecasts for 2025 and 2026 suggest continued growth, with projections of $1.31 billion and $1.36 billion, respectively. InvestingPro analysis indicates strong fundamentals, with net income expected to grow this year and the company maintaining profitable operations over the last twelve months.

For comprehensive analysis including detailed financial metrics, growth projections, and expert insights, access the full Pro Research Report available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Andy Rubinstein emphasized the attractiveness of local gaming, stating, "Local gaming is an attractive growing niche within the broader gaming market." CFO Matt Ellis highlighted the company’s financial strategy, saying, "We are in a unique position where we can invest in and grow our business while returning capital to shareholders."

Risks and Challenges

• Potential market saturation in key regions.
• Economic uncertainties impacting consumer spending.
• Competition from other gaming companies.
• Regulatory changes affecting operations.
• Dependence on successful integration of acquisitions, such as Kucan Gaming.

Q&A

During the earnings call, analysts inquired about the impact of tariffs and weather on operations, to which management reported no significant effects. Questions also focused on the company’s strategy for location optimization and the early positive indicators from the Louisiana acquisition.

Full transcript - Accel Entertainment Inc (ACEL) Q1 2025:

Conference Operator: Good afternoon, and thank you for attending today’s Xcel Entertainment Q1 twenty twenty five Earnings Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I’ll now hand the call over to Scott Levin, Chief Legal Officer, to begin. You may proceed.

Scott Levin, Chief Legal Officer, Xcel Entertainment: Welcome to Xcel Entertainment’s first quarter twenty twenty five earnings call. Participating on the call today are Andy Rubinstein, Xcel’s Chief Executive Officer Matt Ellis, Xcel’s Chief Financial Officer and Mark Phelan, Xcel’s President of U. S. Gaming. Please refer to our website for the press release and supplemental information that will be discussed on this call.

Today’s call is being recorded and will be available on our website under Events and Presentations within the Investor Relations section of our website. Some of the comments in today’s call may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the forward looking statements section of the earnings press release available on our website as well as other risk factor disclosures in our filings with the SEC.

Any projected financial information presented in this call is for illustrative purposes only and should not be relied upon as being predictive of future results. The inclusion of any financial forecast information in this call should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved. During the call, we may discuss certain non GAAP financial measures. For reconciliations of the non GAAP measures as well as other information regarding these measures, please refer to our earnings release and other materials in the Investor Relations section of our website. I will now turn the call over to Andy.

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: Thank you, Scott, and good afternoon, everyone. Thank you for joining today’s call. I’m pleased to report we had another record setting quarter with total revenue of $344,000,000 which is our highest quarterly revenue since going public. And we also had strong adjusted EBITDA of $50,000,000 Both revenue and adjusted EBITDA grew 7% year over year, demonstrating again the strength of our local distributed gaming model operated in 10 states and four time zones. During the first quarter, we continue to see stable revenue growth in our largest markets of Illinois and Montana with 48% Q1 year over year revenue growth respectively.

We see this trend continuing into Q2. Nebraska and Georgia continue to generate strong double digit revenue growth, albeit from a smaller base, while Nevada experienced a small revenue decline in the first quarter as we work through the loss of a key customer due to an ownership change. We’ve now completed the integration of our recently acquired operations in Louisiana and are looking forward to the revenue growth opportunities that this acquisition should generate. As a reminder, in late twenty twenty four, we took control over Kucan Gaming, which will continue to be led by its founder, Dan Guitros, who has over twenty two years of local market industry experience. Operationally, the acquisition further expands Xcel’s southeastern exposure, adding 96 locations and 614 terminals as of the end of the first quarter.

As the combined entity continues to roll out operations, bringing together previously separate businesses, including legacy truck stops and organically developed distributed gaming routes, we expect to drive further synergies and performance improvements over time. Finally, we are proud to announce that Fairmont Park Casino opened on April 18, being the first casino in Illinois’ history. Mark will provide more details on Fairmont, and we look forward to it being another growth driver for Xcel. Across our national footprint, we continue to refine our customer acquisition and retention efforts to drive profitable sales growth. Distributed gaming is a dynamic and competitive market, and Xcel is differentiated by its scale and innovation, which will enable us to continue to grow and prosper.

In addition, we continue to review our markets and operations to find areas of improvement. As a result, we’ve identified additional efficiencies and opportunities for growth that will contribute to expanding free cash flow. We’d like to remind analysts, investors and potential investors that our business providing safe, convenient, and fun local gaming entertainment is fundamentally straightforward and delivers compelling returns on invested capital. Unlike larger gaming operators with capital tied up in large, immobile projects, our model spreads capital across thousands of retail locations in multiple states and regions. This decentralized approach gives us the diversification and flexibility to reallocate capital efficiently based on local demand trends.

Over the past four years, we’ve expanded beyond our home market of Illinois into new gaming jurisdictions through our distributed gaming model. We’ve made significant investments to integrate key operating platforms, procurement, logistics, finance, and reporting, and have worked closely with our local leaders to ensure all of Xcel is aligned in delivering a superior gaming experience for our local player. Today, I’m confident in our ability to scale our proprietary products and services across our national footprint, delivering unmatched value to our retail location partners. I also believe our growing scale will continue to drive operational efficiencies, enhance financial performance and deliver enhanced free cash flow growth. With that, I’m going to turn it over to Mark to provide an update on Fairmont.

Mark Phelan, President of U.S. Gaming / Acting CFO, Xcel Entertainment: Thanks, Andy. From day one of the Fairmont acquisition, we had a clear goal to complete the construction of Phase one of the Fairmont Casino project at or below budget. This project included the construction of our Phase one casino, the addition of high quality food and beverage amenities, improvements to the track infrastructure and the recruitment, licensing and training of our premier customer service team, all well ahead of Fairmont Park’s biggest racing event of the year, Derby Day, which coincided with the Kentucky Derby this past weekend. Thanks to the relentless commitment of both our on-site team and shared services team, Fairmont Park Casino and Racing successfully opened its casino on April 18, approximately four point five months after the acquisition was completed and just two weeks ahead of Derby Day and all slightly under our Phase one construction budget. The racing season at Fairmont started on April 22.

Despite minimal marketing ahead of the opening, our team has done an outstanding job generating interest in both the casino and the broader improvements at Fairmont Park. Now open for just over two weeks, we are encouraged by the early results. This past Saturday, 05/03/2025, we hosted Derby Day at the track. Despite the inclement weather forcing us to cancel races, we still had a fantastic turnout that drove very strong play at the casino. As marketing efforts ramp up and our full service freestanding restaurant, LongShots, comes online, we are increasingly confident in the casino’s appeal as the most engaging and freshest slot floor in the Greater St.

Louis area as well as in Fairmont Park’s growing reputation as a premier regional destination for racing and entertainment. Before Matt walks us through the numbers, I’d like to quickly turn it back to Andy.

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: Thanks. As you probably saw, we issued a press release last week announcing Matt’s departure as CFO, effective May 9. I wanna express my gratitude to Matt for his leadership and partnership to excel these last six years. Matt has played a pivotal role in shaping our company’s growth initiatives, financial strength, and company culture. We wish Matt the very best in his future endeavors.

While Matt’s departure represents a leadership change, we are pleased that Mark will be stepping into the role of acting CFO. With Mark’s experience in finance and financial markets and deep operational insight as president of US Gaming, we expect a stable and seamless transition while we conduct a search to build a position on a permanent basis. With that, we’ll turn it over to Matt.

Matt Ellis, Chief Financial Officer (Outgoing), Xcel Entertainment: Thanks, Andy, and good afternoon, everyone. I’d like to thank Andy, our management team, Board of Directors, stakeholders, partners, customers, and the entire team at Xcel for all their support over the last six years. I am proud that I’m leaving Xcel in a strong and stable position supported by a resilient business model that gives me great confidence in its continued success for years to come. For the first quarter, we had total revenue of $324,000,000 a year over year increase of 7.3% and adjusted EBITDA of 50,000,000 a year over year increase of 7.1%. As of March 31, we had 27,180 terminals in 4,391 locations, year over year increases of 4.42.9% respectively.

Revenue per location for the quarter in our core states was as follows. Illinois was $885 per day, an increase of 2.9% year over year. Montana was $610 per day, an increase of 2.7% year over year. Nevada was $8.00 $2 per day, a decrease of 5.3% year over year. Louisiana was $972 per day Nebraska was $263 per day, an increase of 12.9% year over year and Georgia was $145 per day, an increase of 59.3% year over year.

Our growth in Illinois, Montana, Nebraska and Georgia emphasizes the strength and resilience of both our business model and more importantly, the fact that consumers continue to choose and use our high quality local and convenient gaming offerings. Capital expenditures for the first quarter were $27,000,000 of cash spent. At the end of the first quarter, we had approximately $3.00 $9,000,000 of net debt and $422,000,000 of liquidity consisting of $272,000,000 of cash on our balance sheet and $150,000,000 of availability on our credit facility. We are reiterating our full year CapEx forecast of 75,000,000 to $80,000,000 comprised of 39,000,000 to $41,000,000 in our existing markets, dollars 5,000,000 to $7,000,000 in Louisiana and 31,000,000 to $32,000,000 for Fairmont. As a reminder, the CapEx for Fairmont includes both Phase one and initial construction for Phase two.

After Fairmont and the initial CapEx in Louisiana, we expect company wide normalized annual CapEx to return to 40,000,000 to $45,000,000 which will be an encouraging boost to free cash flow and returns on capital. On our capital allocation strategy, we continue to view share repurchases favorably as an effective way to return capital to our shareholders. During the first quarter, we repurchased 1,000,000 shares at an average purchase price of $10.34 per share for a total of $10,000,000 With our strong balance sheet and low leverage, we are in a unique position where we can invest in and grow our business while returning capital to shareholders. With that, I’d like to turn it back over to Andy.

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: Thanks, Matt. As I mentioned earlier, we are very pleased with our strong first quarter performance and the continued and growing momentum across our businesses. And we are proud that while delivering record Q1 revenue, we also reached our first major milestone at Fairmont with the opening of the casino a few weeks ago. We remain focused on executing our simple but compelling growth model of generating solid organic revenue growth with expanding margins and improved free cash flow. Xcel continues to have a strong competitive position as evidenced by our results and healthy balance sheet, which enable us to pursue a multi pronged approach to return focused capital allocation, making us a compelling investment.

Local gaming is an attractive growing niche within the broader gaming market with multiple opportunities to generate strong and consistent revenue and EBITDA growth as well as strong free cash flow. We will now take your questions.

Conference Operator: We will now open the line for questions. You. The first question is from the line of Chad Beynon with Macquarie. Your line is now open.

Chad Beynon, Analyst, Macquarie: Hi. Good afternoon, Andy, Matt, Mark. Congrats on the record Q1. And, Matt, best of luck with, everything going forward. Thanks for all the help.

Wanted to start with the tariff impact. So, you know, it’s been several weeks since Liberation Day. We’ve heard from some of the competitors or other players in the space with maybe bigger projects that they have. This is a year where you do actually have a slightly bigger project. So just wondering how you’re thinking about this impact near term.

I know you just gave guidance for CapEx, but how you’re thinking about what this could mean? If this changes at all, how you’re thinking about, future, growth with other, opportunities. Thanks.

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: Thanks, Chad. This is Andy. As far as our existing business, most of our CapEx spend for the year has been the prices have been locked in, so we well, it’ll have minimal effect on us. We’ve seen minor effect in in parts. As we look forward in terms of the Fairmont construction, I’ll let Mark give that answer.

But consumer demand continues to be strong, so we haven’t seen any tariff impacts from that perspective. Go ahead, Mark.

Mark Phelan, President of U.S. Gaming / Acting CFO, Xcel Entertainment: Hey, Chad. So in terms of construction, obviously, steel has gone up a significant amount and you’d use a bunch of that in the Phase two project. But given the sort of volatility of laws and announcements and tariffs, it’s really hard to tell. Project that the Phase one project was well finished and prices were well set before any of these tariffs hit. So right now, there doesn’t seem to be much of an impact.

Chad Beynon, Analyst, Macquarie: Okay. Great to hear. And then on the performance, I guess, two parter. We’ve heard a lot of companies call out weather in the first quarter. Are you able to quantify maybe what this impact may have been for your portfolio?

And then more importantly, you said that April trends, I guess, through all of April, haven’t really changed in terms of the strength with the consumer. Can you just confirm that? And are you seeing any pockets of weakness across the fleet? Thank you.

Matt Ellis, Chief Financial Officer (Outgoing), Xcel Entertainment: Hey, Chad, it’s Matt, and thanks for the wishes at the beginning. We’ll take that one part of day. Weather, all in all, pretty neutral when we look at it quarter over quarter. Right? There’s always a cold week here, a rainy week there, but as Andy talked about, we’re well diversified.

So weather was a neutral factor in a good positive way. When it comes to the other piece of your question, April is trending like we expect it to. We are not seeing sort of that any sort of change in consumer behavior. You know, it’s a it’s a busy season for us with tax refund season, but kind of pleased to report that everything’s following our initial forecast for the year despite some of the recent political events.

Chad Beynon, Analyst, Macquarie: Great. Appreciate it. Thank you very much.

Conference Operator: Thank you. The next question is from the line of Steve Pizzella with Deutsche Bank. Your line is now open.

Steve Pizzella, Analyst, Deutsche Bank: Hey. Good afternoon, everybody, Matt. Thanks thanks for all your help over the years and good luck with your future endeavors. Just looking at Illinois, it looks like locations were down again quarter over quarter, location win per day, up year over year. Is that still part of the strategy to kind of prune the bottom part of the portfolio?

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: Thanks, Steve. This is Andy. Yeah. We are we’re continuing on that program. And and to be honest, it will be a continuous part of our optimization of our business.

We are always looking to increase our profitability, look at evaluate locations that aren’t performing where the margin isn’t what we expect, and reallocate the assets into better performing situations. We have this this whole utilization of our equipment is reinforces our efforts to scale to our new markets, improve our return on the on those investments, and really over optimize our overall CapEx expenditures and which ultimately will help our free cash flow. So I think you’ll see this program continue market after market as it’s a natural evolution of our business.

Steve Pizzella, Analyst, Deutsche Bank: Okay. Thank you. And then just wanted to follow-up if you could give us any more color on how Louisiana is going, if the same kind of Illinois strategy applies to some of the other Montana, Nevada, Louisiana, Nebraska markets also. If we could get kind of an update there on the the strategy.

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: See, yeah, I’ll take Louisiana, and I’ll let Mark provide some color on Georgia and Nebraska. So Louisiana, it’s very early. Obviously, we just closed in the latter part of q four. It’s all trends in early indications are very positive. We were accomplishing a lot of the remodeling, updating optimization that we had planned for, and the results of that today is is been very positive and and indicating that we should continue down that trend.

So we’ll we’ll keep you abreast as that progresses in the future quarters. Go ahead, Mark.

Mark Phelan, President of U.S. Gaming / Acting CFO, Xcel Entertainment: Hey, Steve. I’ll try to kind of give an overview of all the markets. But generally, as Andy pointed out, we spent a fair amount of time and effort in the last four years expanding outside Illinois. And I think now you’re starting to see the the fruits of that process as we’ve integrated a lot of these markets. I’ve been able to share with them sort of common technology, in the in the form of, like, payments and loyalty and customer service, as well as content in the form of electronic gaming machines, some of which proprietary to excel through GDG and some of which are third party made that we purchase and distribute to our our different markets.

Illinois continues to be the bedrock of this company and continues to outperform. Nevada, I would point out, had a pretty robust growth and in part that’s because of differentiated content strategy we have there where we have games that no one else has and therefore perform higher. You could say the same for Nebraska and Georgia as well, Steve. Although in those markets in particular, we’ve been able to scale Century’s technology, Acumen. They’ve they’ve they’ve always been really good at technology because their markets are so competitive because it’s not a it’s not the red shirt there is negotiated.

So they really had to differentiate themselves, and we’ve been able to use their products, enhance them, and apply them to these other markets where they’re really differentiated and been able to allow us to grow much higher than sort of the market rate.

Steve Pizzella, Analyst, Deutsche Bank: Okay. Great. Thanks. And then just real quick. In the 1Q, was there any impact from Fairmont in the sports book or any startup costs we should be aware of?

Matt Ellis, Chief Financial Officer (Outgoing), Xcel Entertainment: Hey, Steve. It’s Matt. I can take that. Yes. There were startup costs.

Right? We started the main hiring book came in March. So, you know, we had that period of call it a month, month and a half where the labor started hitting us ahead of any revenue. But as Mark discussed and Andy discussed, we’re off to a good start in Fairmont. But, yes, there were some startup in q one.

Steve Pizzella, Analyst, Deutsche Bank: Okay. I appreciate it. Thank you guys.

Conference Operator: Thank you. The next question is from the line of Greg Gibas with Northland. Your line is now open.

Greg Gibas, Analyst, Northland: Great. Good afternoon, Andy, Matt and Mark. Thanks for taking the questions. Matt, been really appreciate the help over the years and wish you all the best going forward. To touch on I guess Phase one with that being completed at Fairmont, could you maybe give us an update on the timing of Phase two and what are the key next steps from a regulatory standpoint?

Mark Phelan, President of U.S. Gaming / Acting CFO, Xcel Entertainment: I’ll take that one, Greg. So, one of the great things about Fairmont is it provides us a lot of optionality and that’s why we chose sort of the Phase one approach. And so, now that we have a casino up with improved food beverage amenities in this single site location called Longshots, which will be forthcoming, we have the potential and the ability to sort of see how it operates and see what kind of demand and supply we have there in terms of our competitors. And so I would say, we’ll have a lot more clarity on this once sort of the racing season comes to an end, which is in October before we really want to sort of say what we’re going to do for phase two. We’re definitely going to have phase two, but we want to learn from the field and take its input and feedback before we kind of give a more formal answer.

Greg Gibas, Analyst, Northland: Got it. That’s helpful. And if I could follow-up on Louisiana. That was a stronger than expected performance in Q1. Certainly a step up from the run rates when you acquired the businesses.

Wanted to see if there’s any drivers Is that kind of seasonality? Or do you kind of view this as maybe the run rate being pretty sustainable prior to future growth in the state?

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: Thanks, Greg. It’s Andy. The I would say the run rate will continue to improve throughout the year as we are optimizing, remodeling a lot of the truck stops. So don’t know where we’re gonna land, but I think we’re on a real upward trend. And the market, although it’s a mature market, has a lot of legacy equipment.

And as we upgrade and do what we consider as best practices and and as well as bring proprietary technology to the to the market, we will see us outperform what our competitors are doing in that market.

Greg Gibas, Analyst, Northland: Okay. That’s fair, Andy. And I guess a last quick one. I’m pretty sure you touched on CapEx expectations, but I wanted to follow-up. I think I missed that piece of the prepared comments.

What are the expectations for 2025 versus kind of the normalized levels?

Matt Ellis, Chief Financial Officer (Outgoing), Xcel Entertainment: Hey, Greg. It’s Matt, and thanks for the wishes at the beginning of the Q and A. So 75 80 for 2025 split as follows. Five to seven for Louisiana, thirty one to thirty two for Fairmont and that Fairmont includes some Phase two initial construction, and then 39 40 one for our main market, shall we call it. Now that’s for this year.

When we get everything done, we expect 40 to 45 for everything including Fairmont and Louisiana plus all the main markets.

Greg Gibas, Analyst, Northland: Perfect. Thanks for clearing that up.

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: Of course.

Conference Operator: Thank you. There are no further questions in queue. There are no further questions. I’ll hand the call back over to Andy Rubinstein for concluding remarks.

Andy Rubinstein, Chief Executive Officer, Xcel Entertainment: Thank you, everyone, for joining us for this Q1 call. We’re excited to share with you more growth that we’re seeing at Fairmont, as Mark alluded to. And we will be talking to you in July with some some good news and continued positive improvement in a lot of our markets. Have a good spring and we’ll talk to you in summer.

Conference Operator: That concludes today’s conference call. Thank you for your participation. You may now disconnect your lines.

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