Having more video gambling terminals in more places, a new deal with sports betting operator DraftKings and reaping $90 million from a share offering had Accel Entertainment officials feeling positive during their third-quarter earnings call.
The company’s earnings per share, which reversed a year-earlier loss, and revenue both topped Wall Street forecasts.
In a 10-K filing with the Securities and Exchange Commission Thursday, the Burr Ridge, Illinois-based video gaming terminal provider said its net income was $12.1 million, or 14 cents per diluted share, for the three months ended Sept. 30, reversing a loss of $1.6 million, or 3 cents per share, a year earlier. The latest result smashed the 1-cent-per-share average estimate of analysts surveyed by Yahoo Finance.
Adjusted earnings before interest, taxes depreciation, and amortization, a cash flow measure that excludes one-time costs, rose 27.7% to $23.1 million from $18.1 million.
Revenue rose 34.6% to a record $136.3 million from $101.3 million and topped the $132.8 million average estimate of Yahoo Finance-polled analysts.
During a conference call with analysts and journalists, Accel CFO Brian Carroll reported rises in the company’s quarter’s end video gambling terminal count (11,597, up 12% from a year earlier) and locations (2,363, up 3%) from a year earlier. Also, he said, the company installed more than 806 game terminals and expects to install 1,000 more by year’s end.
Also, CEO Andrew Rubenstein said Accel is rolling with coronavirus pandemic-related health protocols that require gambling machines to be 6 feet apart and played by masked patrons from 8 a.m. to 11 p.m. only. He said that despite the reduced hours, Accel has seen a minimal impact to net video gaming revenue, which he said the Illinois Gaming Board will publish in the coming weeks.
As the Motley Fool noted, Accel said 90% of the company’s games were back operating within three days after Illinois’ statewide coronavirus shutdown ended in July. The shutdown started April 16 and lasted more than two months.
Deutsche Bank gaming analyst Steven Pizzella, in a research note published Sunday, said Accel had “several positives” in the first full quarter opened since COVID-19 forced shutdowns. He highlighted the “advantages” of the local drive to nature of the locations and a loyal customer base.
“That said, COVID-19 still remains a headwind in the current operating environment, as the rise in cases in Illinois triggered the Illinois Gaming Control Board to announce further mitigation protocols, driven by three consecutive days of positivity rates that are higher than or equal to 8%,” Pizzella said.
Rubenstein said a deal to promote DraftKings content and programming across Accel’s marketing channels and in-location digital display screens would deepen relationships with its customers, but he gave no fiscal projections. Neither DraftKings nor Accel disclosed the value of the deal when they announced it on Sept. 9.
“This partnership will help us retain and extend agreements with existing locations, attract new organic and competitor locations, and most importantly, drive additional players to our locations,” Rubenstein said.
Rubenstein suggested that the company, which acquired Marietta, Georgia-based U.S. Tom’s Amusement Co. in June for an undisclosed price, might expand in the coming year.
“There’s lots of opportunities. … And as we have the focus to explore new markets and really establish ourselves. Those opportunities are also presenting themselves,” Rubenstein said in response to a question from Union Gaming analyst John Decree. “So I think you’ll see us move in a couple of different directions.
“And, hopefully,” he added. “2021 will be a pretty acquisitive year.”
Accel Entertainment shares fell 2 cents, or 0.19%, Friday to close at $10.27 on the New York Stock Exchange. The share price has dropped by 17.4% in 2020.
Follow Matthew Crowley on Twitter @copyjockey
