The silence was leaden for Accel Entertainment. The Illinois video gaming terminal provider called the second quarter “quiet” — government ordered gaming shutdowns to slow the spreading coronavirus pandemic flattened its business.
During its earnings correspondence, company leaders looked forward, highlighting hopeful glimmers.
Accel said last week it had a second-quarter loss with per-share results that matched estimates; revenue fell and missed. Accel’s share price rose Friday in the aftermath.
In a 10-Q filing with the Securities and Exchange Commission, Accel said its net loss was $2.7 million, or 27 cents per share, for the three months ended June 30, reversing year-earlier income of $4.3 million, or 7 cents per share.
The per-share loss matched the average 27 cents-per-share loss forecast of analysts polled by Seeking Alpha.
Accel noted that the Illinois Gaming Board shut down all video gambling terminals across Illinois from March 16 to June 30.
Adjusted earnings before interest, taxes depreciation, and amortization, a cash flow measure that excludes one-time costs, was a negative $8.7 million, reversing a positive $20.9 million, a year earlier.
Revenue fell to $379,000 from $104.3 million. Seeking Alpha-polled analysts forecast $6.4 million in earnings.
“With one of the toughest quarters in our company’s history behind us, I’m pleased to be focused on continuing our mission to be the leader in route gaming,” Accel CEO Andy Rubenstein said in a conference call with analysts. “I have been extremely proud of how the Accel team has responded to the current environment and continue to provide the same great customer service that we have been known for.”
On July 1, the Illinois Gaming Board said gambling could reopen as long as its video gambling terminals were 6 feet apart.
“Given VGTs were forced to shut down for the whole quarter, we view results as inconsequential to the overall story,” Deutsche Bank gaming analyst Steven Pizzella said in a research note. He said there were still risks that balance out the company’s positives, including the possibility that Illinois gaming locations could be forced to shut down again” if there is another rise in COVID-19 cases.”
Rubenstein said more than 80% of locations were live on the first day of reopening and more than 90 percent were live on the third day of reopening. In a question and answer session, Rubenstein said some of the remaining 10% of still-closed locations may not come back.
In its earnings statement, Accel said it ended the second quarter with 2,335 locations, a 33 percent rise from a year earlier, boosted partly by the August 2019 acquisition of Grand River Jackpot LLC, one of Illinois’ first licensed video gaming terminal operators.
Accel ended the second quarter with 11,108 video gambling terminals, a 37% increase from a year earlier, also boosted by the Grand River deal.
In the second quarter, Accel stabilized its liquidity, amending its 2019 senior secured credit facility, providing covenant relief through 2021’s first quarter, and expanded, acquiring Tom’s Amusements Co., a Southeastern U.S. amusement operator and master licensee in Georgia, for an undisclosed price.
“The Georgia market is large and underpenetrated,” Rubenstein said. “We believe that the Accel playbook will help us grow the market and allow us to take significant share. We’re encouraged by other discussions that additional state expansion may occur even faster than we had previously anticipated.”
Accel shares rose 99 cents, or 10.75%, to close at $10.20 on the New York Stock Exchange. The share price is down 18.4% in 2020.
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