Accel Entertainment posts mixed results; full-year loss, but rise in revenue

March 17, 2020 12:45 PM
  • Matthew Crowley, CDC Gaming Reports
March 17, 2020 12:45 PM
  • Matthew Crowley, CDC Gaming Reports

Accel Entertainment, an Illinois video gaming terminal provider that went public in November, posted a full-year net loss, reversing year-earlier income, but said revenue rose.

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Accel, based in Burr Ridge, Illinois, in November merged with TPG Pace Holdings Corp., a special-purpose acquisition company created by an affiliate of private equity giant TPG Capital to become the publicly traded company. In a statement, the company said its net loss for the year ended Dec. 31 was $5.9 million, reversing net income of $10.8 million a year earlier.

Adjusted net earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes nonrecurring costs, was $79.6 million, up 24.8% from $63.8 million, a year earlier.

Full-year revenue rose 27.8% to $424.4 million from $332 million.

The company’s stock sold off with the rest of the broader market Monday. Accel shares fell $1.84, or 21.15%, to close at $6.86 on the New York Stock Exchange. Continuing coronavirus fears again drove down the Dow Jones industrial average, which dropped 2,997.10m or 12.93%, to close at 20,188.52.

After acquiring Grand River Jackpot LLC in September, Accel ended the third quarter with 2,290 video lottery terminal locations in Illinois. The company is Illinois’ video gaming market’s largest slot machine operator, with than 10,300 video gaming terminals as of Sept. 30.

Accel stands to gain from Illinois’ 2019 gaming expansion plan, which will allow locations to add one additional video lottery terminal, bumping the number to six games. The plan also will let some Illinois’ high-volume truck stops offer up to 10 games, double the previous allotment.

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.

However, on Monday following earning, Illinois gaming regulators ordered all video gambling machines shut down across the state until the end of March in response to the COVID-19 coronavirus outbreak. Illinois Gov. J.B. Pritzker previously ordered the shutdown of all bars and restaurants in the state.

In December, both Union Gaming and Goldman Sachs expressed optimism for Accel. Goldman Sachs rated the stock “buy” and set a $16 a price target to represent the 34% upside it saw for potential for shares. Union Gaming also rated the stock “buy” and analyst John DeCree said Accel stood to benefit with more video gaming terminal business as Missouri moves closer to approving gaming expansion. Union Gaming’s price target for Accel in $13 and set a 52-week trading range of $10.30 to $11.78.

Accel said this month it’s building an executive team to drive further success. The company named Ryan Hammer president of gaming operations and named Michael Marino chief commercial officer.

In a statement, the company said Hammer will work at first from Chicago and lead the company’s video gaming business in Illinois and additional states. Marino will lead the company’s strategic development with a focus on incremental service offerings, partnerships, marketing, analytics, and loyalty.

“The opportunities for Accel to rapidly expand beyond our current footprint are steadily increasing,” Accel CEO Andy Rubenstein said in a statement. “And with these two key hires, we are now even better positioned to execute our vision of being a multistate operator with a differentiated range of gaming-as-a-service solutions.”

Follow Matthew Crowley on Twitter @copyjockey