ACEL — Accel Entertainment, Inc.

Summary of Accel Entertainment Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $330 million, a 9.1% increase year-over-year.
• Net Income: $13 million.
• Adjusted EBITDA: $51 million, up 11.5% year-over-year.
• Operating Income: $25 million, a 16.1% increase year-over-year.
• Capital Expenditures: Approximately $21 million for the quarter; $72 million year-to-date, with a full-year forecast of $75 million to $80 million.
• Cash Position: $290 million in cash and cash equivalents; net debt of approximately $305 million.
• Stock Repurchases: $6.8 million in Q3, totaling $23.7 million year-to-date.

2. Strategic Updates and Business Highlights

• Market Performance:
  • Illinois: Revenue increased 7% to $239 million, driven by same-store performance and new machine placements.
  • Montana: Revenue grew 2.1% to $40 million.
  • Nebraska: Revenue surged 30% to $9 million.
  • Georgia: Revenue rose 49.3% to $5 million.
  • Nevada: Revenue declined 7.4% to $26 million due to the loss of a key customer.
  • Louisiana: Contributed $9 million, reflecting integration of the Toucan Gaming acquisition.
• Fairmount Park: Continued strong player engagement and revenue growth since opening in April, with plans for Phase 2 expansion.
• TITO Rollout: Enhancing player convenience and expected to improve revenue and operational efficiency as adoption increases.

3. Forward Guidance and Outlook

• Growth Focus: Priorities include driving growth in core markets, scaling profitability in developing markets, and maintaining financial discipline.
• M&A Strategy: Evaluating opportunities in a fragmented local gaming market, with a focus on bolt-on acquisitions, particularly in Louisiana and Illinois.
• 2026 Expectations: Anticipating continued growth and efficiency, with a strong emphasis on capital allocation and shareholder returns.

4. Bad News, Challenges, or Points of Concern

• Nevada Revenue Decline: Experienced a 7.4% drop in revenue due to the loss of a key customer, highlighting potential vulnerability in this market.
• Market Saturation: Challenges in maintaining growth in mature markets like Illinois, where optimization efforts may lead to fewer locations but higher revenue per machine.
• M&A Environment: While there is potential for acquisitions, the market is becoming more competitive, and seller expectations are adjusting, which could impact future deals.

5. Notable Q&A Insights

• Illinois Strategy: Management emphasized ongoing optimization of locations, with expectations for stable machine counts and growing revenue per machine.
• Free Cash Flow Utilization: Discussions on potential uses for free cash flow include share buybacks, debt repayment, and M&A, with a rigorous evaluation process for returns.
• M&A Environment: No significant changes in seller expectations noted, but there is a recognition of reduced transaction multiples in the gaming sector.
• Future State Expansion: Potential for gaming expansion in states like Pennsylvania, Missouri, North Carolina, and Virginia was discussed, indicating ongoing monitoring of legislative changes.

Overall, Accel Entertainment reported solid financial performance in Q3 2025, with strategic growth initiatives underway, particularly in developing markets. However, challenges in Nevada and the competitive M&A landscape present potential headwinds as the company looks to sustain its momentum into 2026.