Accel Entertainment, Inc. (NYSE: ACEL) today announced certain
financial and operating results for the three-months and full year
ended December 31, 2021.
Highlights:
- Ended 2021 with 2,584 locations; an increase of 6% compared to
2020
- Ended 2021 with 13,639 VGTs; an increase of 11% compared to
2020
- Record year for Revenue, Net Income, and Adjusted EBITDA
- Revenue of $192 million for Q4 2021 and $735 million for YE
2021
- Net income of $7 million for Q4 2021 and $32 million for YE
2021
- Adjusted EBITDA of $33 million for Q4 2021 and $140 million for
YE 2021
- 2021 ended with $143 million of net debt; a decrease of 31%
compared to 2020
- Repurchased $9 million of Accel Class A-1 common stock in 2021;
repurchased an additional $11 million of Accel Class A-1 common
stock in January and February 2022
- Began operations in Iowa on December 30, 2021 with the
acquisition of Rich and Junnie's, an amusement device and ATM
operator
- Acquisition of Century Gaming, Inc. ("Century") expected to
close by the end of May 2022
Reiterating 2022
Guidance:
Given the current momentum and small impact from the Omicron
variant, Accel is reiterating 2022 guidance. 2022 guidance will be
provided without Century and pro forma assuming Century's results
are included for the full year. 2022 guidance also assumes Georgia
will no longer be an "emerging market" for the second half of 2022
because it has operated for more than 24 months. Accordingly, the
results from Georgia will not be added back to our Adjusted EBITDA
during the second half 2022
2022 guidance without Century acquisition:
- End 2022 with an estimated 2,760 - 2,795 locations
- End 2022 with an estimated 14,560 - 14,750 VGTs
- 2022 Revenue estimated to be $820 - $870 million
- 2022 Adjusted EBITDA[*] estimated to be $160 - $170
million
- 2022 capital expenditures estimated to be $20 - $25 million of
cash spend
2022 guidance pro forma for Century acquisition:
- End 2022 with an estimated 3,700 - 3,800 locations
- End 2022 with an estimated 23,000 - 25,000 VGTs
- 2022 Revenue estimated to be $1.07 - $1.18 billion
- 2022 Adjusted EBITDA[*] estimated to be $182 - $198
million
- 2022 capital expenditures estimated to be $25 - $35 million of
cash spend
Accel Entertainment CEO Andy Rubenstein commented, “We are
pleased to report another strong quarter of results which led to a
record full year 2021. In the year ahead, we look forward to
capitalizing on this momentum and remain focused on growing our
business both organically and inorganically while continuing to
return capital to shareholders. Our asset-light and hyper-local
business model remains proven and continues to give us a truly
unique competitive advantage in the industry as we further cement
Accel’s position as the preferred choice in distributed
gaming.”
Consolidated Statements of Operations
and Comprehensive Income (Loss) and Other Financial Data
Three Months Ended
December 31,
Year Ended December
31,
(in thousands)
2021
2020
2021
2020
Total net revenues
$
192,313
$
74,414
$
734,707
$
316,352
Operating income (loss)
17,063
(11,966
)
70,192
(24,679
)
Income (loss) before income taxes
10,050
(13,650
)
46,576
(17,328
)
Net income (loss)
6,806
(8,519
)
31,559
(410
)
Other Financial Data:
Adjusted EBITDA(1)
33,236
4,709
139,663
33,901
Adjusted net income (loss) (2)
17,301
(2,243
)
71,407
18,350
(1)
Adjusted EBITDA is defined as net income
(loss) plus amortization of route and customer acquisition costs
and location contracts acquired; stock-based compensation expense;
loss (gain) on change in fair value of contingent earnout shares;
(gain) loss on change in fair value of warrants; other expenses,
net; tax effect of adjustments; depreciation and amortization of
property and equipment; interest expense, net; emerging markets;
income tax expense (benefit); and loss on debt extinguishment. For
additional information on Adjusted EBITDA and a reconciliation of
net income (loss) to Adjusted EBITDA, see “Non-GAAP Financial
Measures—Adjusted EBITDA and Adjusted net income (loss).”
(2)
Adjusted net income is defined as net
income (loss) plus amortization of route and customer acquisition
costs and location contracts acquired; stock-based compensation
expense; loss (gain) on change in fair value of contingent earnout
shares; (gain) loss on change in fair value of warrants; other
expenses, net; and tax effect of adjustments. For additional
information on Adjusted net income and a reconciliation of net
income (loss) to Adjusted net income, see "Non-GAAP Financial
Measures—Adjusted EBITDA and Adjusted net income.”
Key Business Metrics
As of December 31,
2021
2020
Licensed establishments (1)
2,584
2,435
Video gaming terminals (2)
13,639
12,247
Average remaining contract term (years)
(3)
6.8
6.8
December 31,
2021
2020
Location hold-per-day – for the three
months ended (4) (in whole $)
$782
$583
Location hold-per-day – for the year ended
(4) (in whole $)
$806
$585
(1)
Based on Scientific Games International
third-party terminal operator portal data, which is updated at the
end of each gaming day and includes licensed establishments that
may be temporarily closed, but still connected to the central
system. This metric is utilized by Accel to continually monitor
growth from existing locations, organic openings, acquired
locations, and competitor conversions.
(2)
Based on Scientific Games International
third-party terminal operator portal data, which is updated at the
end of each gaming day and includes VGTs that may be temporarily
shut off, but still connected to the central system. This metric is
utilized by Accel to continually monitor growth from existing
locations, organic openings, acquired locations, and competitor
conversions.
(3)
Calculated by determining the average
expiration date of all outstanding contracts, and then subtracting
the applicable measurement date. The IGB limited the length of
contracts entered into after February 2, 2018 to a maximum of eight
years with no automatic renewals.
(4)
Calculated by dividing the difference
between cash deposited in all VGTs at each licensed establishment
and tickets issued to players at each licensed establishment by the
number of locations in operation each day during the period being
measured. Then divide the calculated amount by the number of
operating days in such period. Location hold per-day for the year
ended December 31, 2021 is computed based on 347-eligible days of
gaming (excludes 18 non-gaming days due to the IGB mandated
COVID-19 shutdown). Location hold-per-day for the year ended
December 31, 2020 is computed based on 217-eligible days of gaming
(excludes 148 non-gaming days due to the IGB-mandated COVID-19
shutdown).
Consolidated Statements of Cash Flows
Data
Year Ended December
31,
(in thousands)
2021
2020
Net cash provided by (used in) operating
activities
$
110,755
$
(3,705
)
Net cash used in investing activities
(34,544
)
(61,435
)
Net cash (used in) provided by financing
activities
(11,876
)
74,188
Non-GAAP Financial Measures
Three Months Ended December
31,
Year Ended December
31,
(in thousands)
2021
2020
2021
2020
Net income (loss)
$
6,806
$
(8,520
)
$
31,559
$
(410
)
Adjustments:
Amortization of route and customer
acquisition costs and location contracts acquired(1)
3,551
5,830
22,040
22,608
Stock-based compensation(2)
1,696
1,483
6,403
5,538
Loss (gain) on change in fair value of
contingent earnout shares(3)
2,895
(1,851
)
9,762
(8,484
)
Loss on change in fair value of
warrants(4)
—
—
—
(12,574
)
Other expenses, net(5)
4,076
3,229
12,989
8,948
Tax effect of adjustments(6)
(1,723
)
(2,414
)
(11,346
)
(9,850
)
Adjusted net income (loss)
17,301
(2,243
)
$
71,407
$
5,776
Depreciation and amortization of property
and equipment
5,816
5,670
24,636
20,969
Interest expense, net
2,966
3,535
12,702
13,707
Emerging markets(7)
1,034
463
3,403
517
Income tax expense (benefit)
4,967
(2,716
)
26,363
(7,068
)
Loss on debt extinguishment
1,152
—
1,152
—
Adjusted EBITDA
33,236
4,709
$
139,663
$
33,901
(1)
Amortization of route and customer
acquisition costs and location contracts acquired consist of
upfront cash payments and future cash payments to third-party sales
agents to acquire the licensed video gaming establishments that are
not connected with a business combination. Accel amortizes the
upfront cash payment over the life of the contract, including
expected renewals, beginning on the date the location goes live,
and recognizes non-cash amortization charges with respect to such
items. Future or deferred cash payments, which may occur based on
terms of the underlying contract, are generally lower in the
aggregate as compared to established practice of providing higher
upfront payments, and are also capitalized and amortized over the
remaining life of the contract. Future cash payments do not include
cash costs associated with renewing customer contracts as Accel
does not generally incur significant costs as a result of extension
or renewal of an existing contract. Location contracts acquired in
a business combination are recorded at fair value as part of the
business combination accounting and then amortized as an intangible
asset on a straight-line basis over the expected useful life of the
contract of 15 years. “Amortization of route and customer
acquisition costs and location contracts acquired” aggregates the
non-cash amortization charges relating to upfront route and
customer acquisition cost payments and location contracts
acquired.
(2)
Stock-based compensation consists of
options, restricted stock units and warrants.
(3)
(Gain) loss on change in fair value of
contingent earnout shares represents an unrealized fair value
adjustment at each reporting period end related to the value of
these contingent shares. Upon achieving such contingency, shares of
our Class A-2 common stock convert to shares of our Class A-1
common stock resulting in a non-cash settlement of the
obligation.
(4)
(Gain) loss on change in fair value of
warrants represents a non-cash fair value adjustment at each
reporting period end related to the value of these warrants.
(5)
Other expenses, net consists of (i)
non-cash expenses including the remeasurement of contingent
consideration liabilities, (ii) non-recurring expenses relating to
lobbying efforts and legal expenses in Pennsylvania and lobbying
efforts in Missouri, (iii) non-recurring costs associated with
COVID-19 and (iv) other non-recurring expenses.
(6)
Calculated by excluding the impact of the
non-GAAP adjustments from the current period tax provision
calculations.
(7)
Emerging markets consist of the results,
on an Adjusted EBITDA basis, for non-core jurisdictions where our
operations are developing. Markets are no longer considered
emerging when Accel has installed or acquired at least 500 gaming
terminals in the jurisdiction, or when 24 months have elapsed from
the date Accel first installs or acquires gaming terminals in the
jurisdiction, whichever occurs first.
Reconciliation of Debt to Net
Debt
As of December 31,
(in thousands)
2021
2020
Debt, net of current maturities
$ 324,022
$ 321,891
Plus: Current maturities of debt
17,500
18,250
Less: Cash and cash equivalents
(198,786)
(134,451)
Net debt
$ 142,736
$ 205,690
Conference Call
Accel will host an investor conference call on March 10, 2022 at
11 a.m. Central time (12 p.m. Eastern time) to discuss these
financial and operating results. Interested parties may join the
live webcast by registering at
https://www.incommglobalevents.com/registration/q4inc/9890/accel-entertainment-q4-2021-earnings-call/
or accessing the webcast via the company’s investor relations
website: ir.accelentertainment.com. Following completion of the
call, a replay of the webcast will be posted on Accel’s investor
relations website.
About Accel
Accel believes it is the leading distributed gaming operator in
the United States on an Adjusted EBITDA basis, and a preferred
partner for local business owners in the Illinois market. Accel’s
business consists of the installation, maintenance and operation of
VGTs, redemption devices that disburse winnings and contain ATM
functionality, and other amusement devices in authorized non-casino
locations such as restaurants, bars, taverns, convenience stores,
liquor stores, truck stops, and grocery stores.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical fact,
contained in this press release are forward-looking statements,
including, but not limited to, any statements regarding our 2022
guidance, including with respect to the duration and impact of the
COVID-19 pandemic (including expected operating expenses related
thereto), potential acquisitions or strategic alliances, and our
estimates of number of VGTs, locations, revenues, Adjusted EBITDA,
capital expenditures, and Net Debt. The words “predict,”
“estimated,” “anticipates,” “believes,” “estimates,” “expects,”
“intends,” “may,” “plans,” “projects,” “will,” “would,” “continue,”
and similar expressions or the negatives thereof are intended to
identify forward looking statements. These forward looking
statements represent our current reasonable expectations and
involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance and achievements, or
industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. We cannot guarantee the accuracy of the
forward-looking statements, and you should be aware that results
and events could differ materially and adversely from those
contained in the forward looking statements due to a number of
factors including, but not limited to: the existing and potential
future adverse impact of the COVID-19 pandemic on Accel’s business,
operations and financial condition, including as a result the
suspensions of all video gaming terminal operations by the Illinois
Gaming Board between March 16, 2020 and June 30, 2020 and between
November 19, 2020 and January 23, 2021, which suspensions could be
reinstated; Accel’s ability to operate in existing markets or
expand into new jurisdictions; Accel’s ability to manage its growth
effectively; Accel’s ability to offer new and innovative products
and services that fulfill the needs of licensed establishment
partners and create strong and sustained player appeal; Accel’s
dependence on relationships with key manufacturers, developers and
third parties to obtain VGTs, amusement machines, and related
supplies, programs, and technologies for its business on acceptable
terms; the negative impact on Accel’s future results of operations
by the slow growth in demand for VGTs and by the slow growth of new
gaming jurisdictions; Accel’s heavy dependency on its ability to
win, maintain and renew contracts with licensed establishment
partners; unfavorable economic conditions or decreased
discretionary spending due to other factors such as epidemics or
other public health issues (including COVID-19 and its variant
strains), terrorist activity or threat thereof, civil unrest or
other economic or political uncertainties, that could adversely
affect Accel’s business, results of operations, cash flows and
financial conditions and other risks and uncertainties indicated
from time to time in documents filed or to be filed with the
Securities and Exchange Commission (“SEC”).
Anticipated effects or benefits from the contemplated
transaction may not ultimately occur, including expected revenues;
effective integration of Century’s operations, establishments and
terminals with our own; integration of new technology to our own
portfolio; and, integration of player rewards programs into our own
system or expansion of those rewards programs in other US markets.
We cannot guarantee the accuracy of the forward-looking statements,
and you should be aware that results and events could differ
materially and adversely from those contained in the
forward-looking statements due to a number of factors including,
but not limited to the existing and potential future adverse impact
of the COVID-19 pandemic on Century’s business, operations and
financial condition, including as a result of any suspension of
gaming operations in Nevada or Montana; our ability to expand
effectively into Nevada and Montana; our ability to manage growth
effectively; our ability to offer new and innovative products and
services that fulfill the needs of Century’s establishment partners
and create strong and sustained player appeal; Century’s dependence
on relationships with key manufacturers, developers and third
parties; the negative impact on Century’s future results of
operations by the slow growth in demand for gaming terminals and by
slow growth of gaming in Nevada and Montana; Century’s heavy
dependency on its ability to win, maintain and renew contracts with
licensed establishment partners; unfavorable economic conditions or
decreased discretionary spending due to other factors such as
epidemics or other public health issues (including COVID-19),
terrorist activity or threat thereof, civil unrest or other
economic or political uncertainties, that could adversely affect
Accel’s or Century’s business, results of operations, cash flows
and financial conditions and other risks and uncertainties.
Accordingly, forward-looking statements, including any
projections or analysis, should not be viewed as factual and should
not be relied upon as an accurate prediction of future results. The
forward-looking statements contained in this press release are
based on our current expectations and beliefs concerning future
developments and their potential effects on the Accel. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond our control), or other assumptions that
may cause actual results or performance to be materially different
from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not
limited to, those factors described in the sections entitled “Risk
Factors” in the Quarterly Reports on Form 10-Q and in the Annual
Report on Form 10-K filed by Accel with the SEC, as well as Accel’s
other filings with the SEC. Except as required by law, we do not
undertake publicly to update or revise these statements, even if
experience or future changes make it clear that any projected
results expressed in this or other press releases or future
quarterly reports, or company statements will not be realized. In
addition, the inclusion of any statement in this press release does
not constitute an admission by us that the events or circumstances
described in such statement are material. We qualify all of our
forward-looking statements by these cautionary statements. In
addition, the industry in which we operate is subject to a high
degree of uncertainty and risk due to a variety of factors
including those described in the section entitled “Risk Factors” in
the Quarterly Reports on Form 10-Q and in the Annual Report on Form
10-K filed by Accel with the SEC, as well as Accel’s other filings
with the SEC. These and other factors could cause our results to
differ materially from those expressed in this press release.
Non-GAAP Financial Information
This press release includes certain financial information not
prepared in accordance with Generally Accepted Accounting
Principles in the United States (“GAAP”), including Adjusted
EBITDA, Adjusted net income (loss), and Net Debt. Adjusted EBITDA,
Adjusted net income (loss), and Net Debt are non-GAAP financial
measures and are key metrics used to monitor ongoing core
operations. Management of Accel believes Adjusted EBITDA, Adjusted
net income (loss), and Net Debt enhance the understanding of
Accel’s underlying drivers of profitability and trends in Accel’s
business and facilitates company-to-company and period-to-period
comparisons, because these non-GAAP financial measures exclude the
effects of certain non-cash items, represents certain nonrecurring
items that are unrelated to core performance, or excludes non-core
operations. Management of Accel also believes that these non-GAAP
financial measures are used by investors, analysts and other
interested parties as measures of financial performance.
Adjusted EBITDA, Adjusted net income (loss), and Net
Debt
Although Accel excludes amortization of route and customer
acquisition costs and location contracts acquired from Adjusted
EBITDA and Adjusted net income (loss), Accel believes that it is
important for investors to understand that these route, customer
and location contract acquisitions contribute to revenue
generation. Any future acquisitions may result in amortization of
route and customer acquisition costs and location contracts
acquired.
Adjusted EBITDA, Adjusted net income (loss), and Net Debt are
not recognized terms under GAAP. These non-GAAP financial measures
excludes some, but not all, items that affect net income, and these
measures may vary among companies. These non-GAAP financial
measures are unaudited and have important limitations as an
analytical tool, should not be viewed in isolation and do not
purport to be alternatives to net income as indicators of operating
performance.
[*] Although we provide guidance for Adjusted EBITDA, we are not
able to provide guidance for net income, the most directly
comparable GAAP measure. Certain elements of the composition of
GAAP net income, including stock-based compensation expenses, are
difficult to predict and estimate, and are often dependent on
future events which may be uncertain or outside of our control.
These elements make it impractical for us to provide guidance on
net income or to reconcile our Adjusted EBITDA guidance to net
income without unreasonable efforts. For the same reason, we are
unable to address the probable significance of the unavailable
information.
ACCEL ENTERTAINMENT,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS and COMPREHENSIVE INCOME(LOSS)
(in thousands, except per share
amounts)
Years ended December
31,
2021
2020
2019
Revenues:
Net gaming
$
705,784
$
300,520
$
410,636
Amusement
16,667
9,247
9,749
ATM fees and other revenue
12,256
6,585
8,311
Total net revenues
734,707
316,352
428,696
Operating expenses:
Cost of revenue (exclusive of depreciation
and amortization expense shown below)
494,032
211,086
282,008
General and administrative
110,818
77,420
69,330
Depreciation and amortization of property
and equipment
24,636
20,969
26,398
Amortization of route and customer
acquisition costs and location contracts acquired
22,040
22,608
17,975
Other expenses, net
12,989
8,948
19,649
Total operating expenses
664,515
341,031
415,360
Operating income (loss)
70,192
(24,679
)
13,336
Interest expense, net
12,702
13,707
12,860
Loss (gain) on change in fair value of
contingent earnout shares
9,762
(8,484
)
9,837
(Gain) loss on change in fair value of
warrants
—
(12,574
)
21,063
Loss on debt extinguishment
1,152
—
1,141
Income (loss) before income tax expense
(benefit)
46,576
(17,328
)
(31,565
)
Income tax expense (benefit)
15,017
(16,918
)
5,199
Net income (loss)
$
31,559
$
(410
)
$
(36,764
)
Earnings (loss) per share:
Basic
$
0.34
$
0.00
$
(0.59
)
Diluted
0.33
(0.02
)
(0.59
)
Weighted average number of shares
outstanding:
Basic
93,781
83,045
61,848
Diluted
94,638
83,113
61,848
Comprehensive income (loss)
Net income (loss)
$
31,559
$
(410
)
$
(36,764
)
Unrealized (loss) gain on investment in
convertible notes (net of income taxes of $(36) and $36,
respectively)
$
(93
)
93
—
Comprehensive income (loss)
$
31,466
$
(317
)
$
(36,764
)
ACCEL ENTERTAINMENT,
INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except par value and share
amounts)
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
198,786
$
134,451
Prepaid expenses
6,998
5,549
Income taxes receivable
—
3,341
Investment in convertible notes
(current)
32,065
—
Other current assets
10,146
8,643
Total current assets
247,995
151,984
Property and equipment, net
152,251
143,565
Other assets:
Route and customer acquisition costs,
net
15,913
15,251
Location contracts acquired, net
150,672
167,734
Goodwill
46,199
45,754
Investment in convertible notes, less
current portion
—
30,129
Deferred income tax asset
—
3,824
Other assets
3,043
2,000
Total noncurrent assets
215,827
264,692
Total assets
$
616,073
$
560,241
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of debt
$
17,500
$
18,250
Current portion of route and customer
acquisition costs payable
2,079
1,608
Accrued location gaming expense
3,969
—
Accrued state gaming expense
11,441
—
Accounts payable and other accrued
expenses
14,616
23,666
Accrued compensation and related
expenses
8,886
5,853
Current portion of consideration
payable
13,344
3,013
Total current liabilities
71,835
52,390
Long-term liabilities:
Debt, net of current maturities
324,022
321,891
Route and customer acquisition costs
payable, less current portion
3,953
4,064
Consideration payable, less current
portion
12,706
20,943
Contingent earnout share liability
42,831
33,069
Warrant and other long-term
liabilities
17
13
Deferred income tax liability
2,248
—
Total long-term liabilities
385,777
379,980
Stockholders’ equity:
Preferred Stock, par value of $0.0001;
1,000,000 shares authorized; 0 shares issued and outstanding at
December 31, 2021 and December 31, 2020
—
—
Class A-1 Common Stock, par value $0.0001;
250,000,000 shares authorized; 93,410,563 shares issued and
outstanding at December 31, 2021; 93,379,508 shares issued and
outstanding at December 31, 2020
9
9
Treasury stock, at cost
(8,983
)
—
Additional paid-in capital
187,656
179,549
Accumulated other comprehensive income
—
93
Accumulated deficit
(20,221
)
(51,780
)
Total stockholders' equity
158,461
127,871
Total liabilities and stockholders'
equity
$
616,073
$
560,241
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220309005901/en/
Media Contact: Eric Bonach Abernathy MacGregor
212-371-5999 ejb@abmac.com
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