Summary:
- Accel posted $329.7m in third-quarter revenue, up 9.1%.
- Net income rose to $13.4m, with adjusted EBITDA increasing 11.5%.
- Management says M&A opportunities are being considered, but no near-term deals are planned.
Accel Entertainment isn’t rushing into any big acquisitions, even with nearly $290 million in cash ready to deploy. That was the message from company leadership during Tuesday’s earnings call, where management said they’re keeping an eye on potential deals but waiting for the right moment.
According to Mark Phelan, Accel’s President of U.S. Gaming, the company has seen a few interesting opportunities but doesn’t plan to move quickly. Prices, he said, tend to come down over time, and patience can pay off.
We’ve got the capacity now to absorb some new additions. Obviously, when we’re sitting on any influx of cash, we’re going to look at it and use it the best way possible. We look at all opportunities. We have a pretty rigorous process to look at return on investment, share buybacks versus debt payoffs versus M&A. It’s going to be case by case and as things come in, we’ll evaluate them and decide accordingly.
Accel reported third-quarter revenue of $329.7 million, up 9.1% from the same period last year. Net income came in at $13.4 million, a sharp increase of 171.8%.
That jump included a $2.2 million gain from changes in the fair value of contingent earnout shares, compared to a $4.2 million loss in the prior year’s quarter. Adjusted EBITDA rose to $51.2 million, up 11.5% year-over-year.
Gaming Expansion Continues
The company continues to expand its route gaming footprint, operating 4,451 locations and 27,714 gaming terminals at the end of the quarter, both up about 4% from last year.
CEO Andy Rubenstein said Accel’s growth strategy focuses on both new and existing gaming markets. He pointed to several states the company is watching closely.
We’re monitoring Pennsylvania pretty closely, as we have in the past We’re always looking at Missouri. North Carolina got close a few years ago. There’s always the potential that that can reignite, and Virginia has definitely considered it again, as they’ve had legislation that got close. Those are the four markets that we think have the most probability of having a new VGT market.
He also noted that recent legislative updates in Georgia, Louisiana and Nebraska have created favorable conditions for operators, which could boost Accel’s performance moving forward.
Accel’s stock closed Tuesday at $9.93 on the Nasdaq, down 60 cents, or 0.6%.
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