Accel Adds 600 Nevada Machines in Green Valley Grocery Deal

Distributed gaming operator Accel Entertainment (NYSE: ACEL) announced today it is bolstering exposure in Nevada through an agreement with Green Valley Grocery Convenience Stores.

Chicago-based Accel said its Century Gaming Technologies Nevada landed a new route agreement with the convenience store operator for approximately 600 gaming devices in the Silver State. Accel distributes video gaming terminals (VGTs) in businesses that are permitted to offer machine-based gaming, but are not casinos. Many Accel customers are bars, convenience stores, gas stations, taverns, truck stops and the like.

Financial terms of the Green Valley agreement weren’t disclosed.

Why It Matters

Wall Street is bullish on Accel, but a portion of the constructive view is rooted in the company’s ability to generate revenue outside of its home state of Illinois, which by some estimates, accounts for nearly 75% of the route operator’s revenue.

That underscores the importance of bolt-on agreements such as the one with Green Valley Grocery. Those accords diversify Accel’s geographic portfolio. Last December, Accel’s Century Gaming Technologies Nevada arm acquired the route business of Dynasty Games in an earnings-additive acquisition that increased the buyer’s exposure in Northern Nevada.

Regarding the Green Valley accord, that company is owned by Anabi Oil — a partner familiar to Accel. In January, the companies notched an agreement through which Accel “became the gaming partner for all of Anabi’s Rebel Convenience Store locations across Las Vegas.”

At the end of the first quarter, Accel had 19,607 machines across 2,110 Nevada locations, making the state the operator’s second-largest jurisdiction by number of devices.

Accel is Active

When it comes to diversifying its geographic reach, Accel is active. In addition to this year’s pair of deals with Anabi Oil, the gaming company in June acquired the owner of a truck stop casino in Louisiana, a state in which it had nearly 12,200 machines across almost 1,400 locations at the end of the first quarter.

Some analysts view Accel, which has one of the largest portfolios of slot machines in the U.S., as an unloved value stock with the potential to materially grow earnings before interest, taxes, depreciation and amortization (EBITDA) over the long-term.