Accel Entertainment, Inc.

ladies and gentlemen thank you for standing by and welcome to the excel entertainment fourth quarter and full year 2020 earnings call at this time all participants are in a listen-only mode after the speaker's presentation there will be a question and answer session to ask a question during the session you will need to press star 1 on your telephone if you require any further assistance please press star 0. I would now like to hand the conference over to your speaker today, Matthew Ellis. Thank you. Please go ahead.

Welcome to Excel Entertainment's fourth quarter and full year 2020 earnings call. Participating on the call today are Andy Rubenstein, Excel's Chief Executive Officer, and Brian Carroll, Excel's Chief Financial Officer. Please refer to our website for the press release and supplemental information that will be discussed on this call. Today's call is being recorded and will be available on our website under events and presentations within the investor relations section of our website. Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and the current health concerns. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the forward-looking statements section of the earnings press release available on our website, as well as other risk factor disclosures in our filings with the SEC. During the call, we may discuss certain non-GAAP financial measures. For reconciliations of the non-GAAP measures, as well as other information regarding these measures, please refer to our earnings release and other materials in the investor relations section of our website. I will now turn the call over to Mr. Andy Rubenstein.

Thanks, Matt. Good morning, everyone. Thank you for joining us for Excel's fourth quarter and full year 2020 earnings call. We had a strong start to the fourth quarter, but as everyone is aware, Illinois VGTs were shut down for the second time on November 19th. Similar to last time, we reduced our cash burn and furloughed idle employees, but unlike the last shutdown, we were allowed to install, swap, and upgrade our VGTs. We took this opportunity to clear most of our backlog and position Excel and our location partners for a strong relaunch. In mid-January, regions throughout the state began to reopen with limited gaming hours. By February 5th, all regions returned to normal hours of gaming operations with limited indoor dining. As reported in the IGB data, Excel generated more than $48 million of gaming revenue in February, the best month in our history, despite extreme temperatures, multiple snowstorms, and only being 28 days long. Revenue and locations opened in both February 2020 and February 2021 was up almost 20%, mostly driven by the higher bet limit software and the additional six VGT. These initial results continue to demonstrate the resilience and strength of our local business model. Turning to M&A, it was a busy quarter and start to 2021. On December 30, 2020, we acquired American Video Gaming, a Northern Illinois operator, for $30 million. The integration went smoothly, and we are pleased to welcome American Video Gaming's 49 locations to the Excel family, as well as Bill, Mary, and John Feiler, whose family has owned and operated American Video Gaming for more than 70 years. This acquisition further demonstrates our ability to find well-run, financially attractive opportunities that complement our business. On March 2nd, we announced our expansion into the western United States with the acquisition of Century Gaming, a route operator in Montana and Nevada, as well as a manufacturer of gaming terminals. Century has more than 8,500 gaming terminals in over 900 locations. We expect them to generate $220 million of revenue and $20 million of adjusted EBITDA in 2021. We will pay $140 million in applying a purchase multiple of seven times adjusted EBITDA. We have full confidence in Steve Artson and his management team to continue successfully running the business and look forward to sharing and implementing the best practices of both companies. While we like the financial economics on their own, I would like to spend some time discussing additional benefits of the acquisition. Century brings two new states to the Excel family, further diversifying our geographical footprint outside of Illinois. Century owns GrandVision Gaming, which designs gaming software and assembles gaming terminals. A proprietary terminal known as PowerVision is exclusively provided on Century's Nevada route. GrandVision is also licensed to sell gaming terminals in Montana, South Dakota, West Virginia, and Louisiana. While GrandVision will not be able to sell gaming terminals in Illinois because Excel cannot hold both a terminal operator's license and a manufacturer and distributor's license in its home market, we think this offering will be valuable and a differentiator in other states. Finally, Sentry designs and owns Gambler's Bonus, a popular player rewards product offered at their Nevada locations. While player rewards has not yet been approved in the Illinois market, we believe this technology, combined with our own expertise, will provide a powerful and cost-effective platform to launch our own product when and if appropriate. Before turning it over to Brian, our CFO, to walk you through our results in more detail, I would like to briefly discuss one final item. On December 18th, we received a disciplinary complaint from the IGB alleging violations of the Video Gaming Act and the IGB's adopted rules for video gaming. The complaint seeks to fine Excel $5 million. Reiterating our previous public comments, we intend to vigorously defend the company against the allegations in the complaint, and we deny any allegations of wrongdoing. We filed our initial answer to the IGB's complaint on January 11th and have begun the administrative hearing process. As this is an open matter, we cannot take questions or comment further. Over to you, Brian. Thank you, Andy. Thank you.