Accel Entertainment, an Illinois video gaming terminal provider that went public earlier this month, said its revenue and its adjusted cash flow for the first nine months of the year both grew 26%.
In its first earnings release late Tuesday, the company combined its results through September.
Revenues were $30 million and while cash flow reached $59 million. Follow two acquisitions in September, Accel ended the quarter with 2,290 video lottery terminal locations in Illinois; up 48%. Accel is currently the largest slot machine operator in the Illinois video gaming market, providing more than 10,300 video gaming terminals at the end of September.
“We enter the fourth quarter of the year with a significant lift in total locations from our two recent acquisitions, a new credit facility with significant firepower and we continue to see multiple opportunities to invest for growth,” Accel Entertainment CEO Andy Rubenstein said in a statement. “We are seeking to build a large-scale company that, with unique assets and long-term contracts, can generate steady top-line growth.”
Earlier this month, Accel merged with TPG Pace Holdings Corp., a special-purpose acquisition company created by an affiliate of private equity giant TPG Capital. The company is now trading on the New York Stock Exchange under the ticker symbol ACEL.
At the end of October, Illinois had 7,121 locations with 32,823 video gaming terminals. The locations include bars, taverns, restaurants, convenience stores, fraternal lodges, gas stations and truck stops – anywhere with a liquor license.
Accel also owns a conditional slot route operator license in Pennsylvania but has yet to open operations in the state.
Under a gaming expansion plan approved by Illinois earlier this year, locations will be able to add one additional video lottery terminal, bumping the number up to six games. Some of Illinois’ high-volume truck stops can offer up to 10 games, double the previous allotment.
Also maximum wagers on gaming terminals will increase from $2 to $4. The maximum payout will grow from $500 to $1,199, with progressive jackpots up to $10,000.
Union Gaming Group analyst John DeCree told investors in a research note Accel’s results “were a bit noisy” because of the two acquisitions. He expects the company’s results to improve once it “optimizes” the acquisitions and “upgrades VGTs enterprise-wide to accept higher wagers (with higher jackpots) when the software is finally approved by regulators.”
#exclusive – Accel touts increases in revenue and cash flow in first release as a public company. –@howardstutz, CDC Gaming. https://t.co/vkMUORAy5j @AccelEntertain #CDCgaming
— CDC Gaming (@CDCNewswire) November 28, 2019
DeCree added the roll-out of the expansion in Illinois, including software upgrades to allow for higher bet limits under recent legislative changes, has been “slower-than-expected to existing locations.”
“We are also taking a more conservative approach to 2020,” DeCree said.
Still, the analyst said growth opportunities abound for Accel in Illinois “through mergers and acquisitions and the expanded VGT legislation along with continued organic growth.”
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
