Accel Entertainment, Inc.

Good afternoon. Thank you for attending today's Excel Entertainment Q1 2022 earnings call. My name is Tania, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Derek Harmon, General Counsel and Chief Compliance Officer. Please go ahead.

Welcome to Accel Entertainment's first quarter 2022 earnings call. Participating on the call today are Andy Rubenstein, Accel's chief executive officer, and Matt Ellis, Accel'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, including those relating to COVID-19 and its variant strains. 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 statement 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 Andy.

Thanks, Derek, and good morning, everyone. Thank you for joining us for Accel's first quarter earnings call. Before we dive in, I would like to thank Brian Carroll for his hard work and dedication over the last eight years as our chief financial officer. We would not be the company we are today without him. I would also like to congratulate Matt Ellis on his promotion to succeed Brian. Matt has played an integral role in our transformation into a public company, and we're confident he's the right person to lead our financial organization as we continue to expand into new markets. Turning to the quarter, I'm pleased to report we had another strong quarter despite the impact of Omicron. We reported revenue of $197 million with year-over-year same-store sales growth of 3%. When you think about the Omicron headwinds we experienced this quarter versus the fourth round of stimulus checks going out in March of 2021, the year-over-year growth we achieved further demonstrates the strength and resilience of our business. In the current inflationary environment, the cost of virtually everything is increasing. For example, it costs more to eat, travel, shop, and commute. Our offering, however, has not increased in price, and our players usually live less than 15 minutes from our locations. We believe local businesses will continue to invest in gaming due to the incremental profits they receive, and players will continue to choose our local, price stable, high quality offering due to its appeal and convenience. Looking at our number of locations, this is the first quarter where our number of locations dropped due to a change in regulatory practices. While we usually see an increase in closures after the holidays, The reason for this decrease is due to the IGB's recent enforcement of the 72-hour rule. The rule requires terminal operators to disconnect and remove their equipment from a location if there is no activity for 72 hours. In the past, we could leave our equipment if a location was temporarily closed for repairs, remodeling, or an ownership change. In addition, if a location went out of business, we could remove our equipment at our convenience. The 72-hour rule accelerated all planned removals for the next several months. As a result, we removed our equipment from approximately 30 locations totaling 150 VGTs. We view the drop as one time in nature, and we expect to resume our normal growth trend going forward. More importantly, this change has almost no impact on our revenue. On the expense side, just like most other businesses, we experienced higher than expected costs from COVID related and macroeconomic related impacts, such as increased expenses for overtime, fuel and parts. We're continually monitoring our spend and looking for ways to mitigate increased costs without sacrificing our best in class service. Our asset life business model will allow us to quickly adjust to any further changes in the market. Turning to Century, we believe we are on track to close at the end of May. Century continues to outperform our original estimates and we're looking forward to combining the best practices of both companies. We plan to share more about Century at our next earnings call after the acquisition closes. Sticking with M&A, our pipeline remains active and we are evaluating multiple opportunities in Illinois and across the country. Our long-term goal is to continue to increase the percentage of our revenue generated outside of Illinois. Century is the first step towards achieving our goal, and we hope to announce additional opportunities in the future. On the organic front, our sales team continues to sign additional competitor and organic locations. For the first quarter, Accel was awarded 67 new licenses, or 35% of the total new licenses awarded. Our ability to continually win more licenses than our current market share is a strong testament to our sales capabilities, brand awareness, and location owners believing in the Excel difference. Whether we look at the number of eligible businesses without gaming or the number of VGTs per capita, we believe Illinois still has a significant amount of highly visible growth. Looking at other states. we remain cautiously optimistic that several states will consider distributed gaming in the future. We continue to work with the various stakeholders to educate them about the benefits of distributed gaming and the incremental revenues it generates for state and local governments and small businesses alike. We are confident the growth playbook we built in Illinois can be replicated in any future market, and our leadership position nationally will create advantages for us. Overall, Excel is in a very strong position to capitalize on the future. Our hyper-local business model, low capital requirements, and highly visible growth offers one of the best returns in gaming. With that, I'd like to turn it over to Matt to walk you through the numbers in more detail.