Accel Entertainment, Inc. (NYSE:ACEL) Q3 2023 Earnings Call Transcript

Operator: Our next question is from Chad Beynon with Macquarie.

Samir Ghafir: This is Sam on for Chad. First question with same-store regional gaming revenues slowing in the broader gaming industry, could you remind us of the various growth opportunities that you guys have in your portfolio that are not dependent on same-store growth such as tuck-ins, new locations, vertical integration? And what would the aggregate growth fee from these avenues assuming same-store trends across the portfolio are flat in ’24 and ’25?

Andrew Rubenstein: Thanks, Sam. This is Andy. The — we have quite a few opportunities, whether it’s tuck-in, here in Illinois or other markets. And I’d expect us to continue those — pursuing those opportunities in ’24. We will expand our retail operations. We have got a couple of locations that will be able to operate the retail business in Montana. You’ll see the opportunities kind of manifest themselves in ’24. And then we’re looking at a lot of new markets. I mean there’s — we — as Accel has expanded its business to places like Nebraska, the success there as indicated to us that there is other real opportunities for us to grow. We are a manufacturer in states like Louisiana, South Dakota. We anticipate getting more involved in the Louisiana market as we get into the second half of ’24.

So the opportunities are there. I think by the time we do this call, at the end — toward the end of the first quarter, you’ll see that we’ve made some progress. And the real results will start to be realized in the second half of ’24 into ’25.

Samir Ghafir: Great. And then as a follow-up, looking at Illinois data, it doesn’t look like the VGT market has been impacted by any of the new casinos that have launched in the last few months. And it actually looks like growth has accelerated. Just wondering what you’ve seen, if anything, in your portfolio at all?

Andrew Rubenstein: I mean we really haven’t felt it. There’s a couple individual locations that are in proximity to the casino that have been — had marginal decrease. We believe that, in general, as gaming becomes more of an acceptable form of entertainment in Illinois similar to how it is in Nevada, that more people see it as a real value in entertainment. We’re in an inflationary environment in many of the other entertainment alternatives where our value proposition of time or the money spent is the same, and people are appreciating what our offer is. So our view is Illinois is a strong market. It will become more and more of a gaming culture, as we’ve seen over the last 11 years of operating, that playing slot machines is an entertainment that people prefer.

Operator: There are no more questions. Sorry, we have another question from Greg Gibas with Northland.

Gregory Gibas: First, I guess, you mentioned just tuck-ins in Illinois continuing to look at those. I just — I think it’s been a little while, so I’m curious if you’re still seeing attractive opportunities in terms of tuck-ins within Illinois.

Andrew Rubenstein: Yes, and we’re evaluating them. And those opportunities will — I think, the presence and I think they’ll continue. The market is always kind of transitioning and a lot of — again, 11 years into this market, there are people that are looking to exit or find a company to partner with. And we’ve demonstrated that we’re a good partner. And when the opportunity is appropriate and we kind of go through the diligence that indicates this is the right spot for both companies, we’ll continue to execute on that.

Gregory Gibas: Great. And then I guess kind of the follow-up there, you mentioned the goal still being to expand revenues outside of Illinois. I’m just curious like where you’d stack up those growth opportunities in terms of markets. With North Carolina up table for the time being, where are you kind of most excited about?