Accel Entertainment posted record second-quarter revenue, a 19% jump in placed video lottery terminals and an 8% jump in placements in its second quarter. But the revenue, though historically high, and earnings, though they reversed a year-earlier loss, missed Wall Street forecasts.
In a statement Wednesday, Burr Ridge, Illinois-based Accel said it earned $12.4 million, or 13 cents per share, for the three months ended June 30, reversing a year-earlier loss of $46.7 million, or 46 cents per share.
The latest result missed the 16-cents-per-share consensus estimate of analysts surveyed by Seeking Alpha.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash-flow measure that excludes one-time costs, was a record $42.9 million, up from a year-earlier $8.7 million cash flow loss.
Revenue roared back from the coronavirus, surged to $202 million from $379,000, but missed the $202.3 million in revenue forecast by Seeking Alpha.
In the statement, Accel listed its many ups for the quarter — the record revenue and cash flow, a 33% year-to-year reduction in net debt to $166.5 million, and revenue per location per day that exceeded 2019’s pre-COVID-19 second-quarter by 35%.
The bounceback fulfilled Macquarie Securities gaming analyst Jordan Bender’s May prediction. “We expect that distributed gaming, which has proven to be the most resilient form of gaming through economic cycles, will see revenue return to normalized levels in mid-2021 given the hyperlocal focus,” Bender told CDC Gaming then.
Meanwhile, Accel said the closing of its $140 million deal to acquire Billings, Montana-based slot route operator Century Gaming will now happen in the first half of 2022, instead of this year’s fourth quarter, because of a licensing- applications backlog. (The deal was announced March 2.)
Century Gaming controls more than 8,500 machines in 900 Montana and Nevada locations, including small casinos, taverns, and convenience stores.
Montana and Nevada are among eight U.S. states that allow legal video gaming terminals in non-casino businesses (Illinois, except for the Chicago area; Louisiana; Oregon; Pennsylvania; South Dakota; and West Virginia are the others). But Missouri, Mississippi, and Indiana are considering adding slot routes. (With slot machine routes, an operator manages from five to 15 gaming terminals for a space fee or a revenue share with the business owner.)
When the Century-Accel deal was announced, Union Gaming Group analyst John DeCree told CDC Gaming it gave Accel important geographic expansion and diversification.
In a June investor’s note highlighted on Seeking Alpha, DeCree called Accel an “underappreciated growth story,” especially given that the company could expand in its home state of Illinois. “One of the biggest misconceptions about ACEL is that the Illinois market is maturing,” DeCree said.
DeCree said 9,400 potential establishments are in municipalities that have opted in for video gaming terminals and Illinois municipalities that have not yet opted in have 6,900 more potential locations.
Accel raised its 2021 revenue outlook to $700 million to $725 million and its adjusted EBITDA estimate to $133 million to $138 million.
Accel Entertainment shares flagged in regular trading, falling 15 cents, or 1.34%, to close at $11.03. But the shares rallied after hours, rising 14 cents, or 1.27%, to settle at $11.17. The share price has risen 9% in 2021.
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