A change in fair value of contingent earn-out shares haunted Accel Entertainment for a second consecutive quarter. Earnings per share dropped in the third quarter as they had in Q2. But a key cash-flow measure and revenue both rose.
In an 8-K filing Tuesday with the Securities and Exchange Commission, Burr Ridge, Illinois-based Accel, a video- gaming-terminal provider, said its net income was $10.5 million, or 12 cents per diluted share, for the three months ended Sept. 30. That was down from $22.5 million, or 25 cents per diluted share, a year earlier.
The latest results matched the 12-cents-per-share consensus forecast of analysts surveyed by Seeking Alpha.
Accel attributed the drop to a $1.6 million loss on the change in fair value of contingent earn-out shares in Q3 compared with a $10.4 million gain in the year-earlier third quarter.
Adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that excludes one-time costs, rose 7.3% to $44.1 million from $41.1 million.
Revenue rose 7.7% to $287.5 million from $266.9 million and topped the $278.8 million consensus forecast of Seeking Alpha-polled analysts.
Accel ended the quarter with 3,687 locations, up 5% from a year earlier, and 24,016 gaming terminals, up 7% from a year earlier.
In a statement, Chief Executive Officer Andy Rubenstein said his company hung in during economic uncertainty to deliver growth. He added that the company continues to consider ways to expand its business, but gave no specifics.
“We continue to evaluate opportunities to further expand our reach outside of Illinois and solidify our position as a national leader in distributed gaming,” he said. “We believe that our strong balance sheet and locally focused business model offer one of the best returns in gaming.”
In October, Accel promoted Mark Phelan, who’d been chief revenue officer since 2017, to president of U.S. gaming, a new position. He’ll set and guide Accel’s growth strategy and continue to lead Accel’s business-development and mergers-and-acquisitions strategy.
During the quarter, Accel bought back about $3 million of its Class A-1 common stock.
Accel shares fell 4 cents, or 0.39%, Tuesday to close at $10.34 on the New York Stock Exchange. The shares have risen 30.1% in 2023.
