The following is a summary of the Accel Entertainment, Inc. (ACEL) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Accel reported Q3 revenue of $302 million, an increase of 5.1% year-over-year, and adjusted EBITDA of $46 million, a 3.9% increase. This was driven by market-wide GGR growth of 5% year-over-year in Illinois, their largest market, which outperformed local casinos.

• Exceptionally, the closure of 22 underperforming locations and recent taxation increases have compelled a review for further optimization, expected to enhance profitability moving forward.

• The company highlighted a $17 million capital expenditure for Q3, aimed at deploying new high-performing gaming terminals, which they see as one-time elevated expenditures.

• Accel Entertainment has a strong balance sheet with approximately $289 million in net debt and $538 million of liquidity, combining cash and credit facility availability. They've also advanced through a $200 million share repurchase program, having bought back 13.5 million shares for $140 million.

Business Progress:

• Accel Entertainment is progressing with the acquisition of Fairmont Park, which includes a master sports betting license in partnership with FanDuel, and expects closure by early December. The project's Phase 1 development, scheduled for 2Q 2025, will feature around 250 slot machines, table games, and a sportsbook. Phase 2 plans are in the works to further expand this facility.

• The company has also enhanced operational efficiency through strategic closures and advancing plan openings, and technological innovations such as ticket in, ticket out (TITO) systems, to start in 2Q 2025, are expected to improve the customer experience significantly.

Opportunities:

• With an active M&A pipeline and strategic expansion plans, such as the Fairmont Park acquisition and leverage in upcoming markets, Accel is positioned to capitalize on the `$15 billion GGR local gaming market`. The company plans to strengthen profitability through operational improvements and strategic market penetration, especially in states likely to legalize local gaming.

Risks:

• Regulatory changes like increased taxation have affected the profitability of certain gaming locations, requiring strategic closure of underperforming sites. This indicates potential vulnerability to further regulatory or taxation changes in the gaming industry.

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