ACEL — Accel Entertainment, Inc.

ACEL Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $352 million, up 9% year-over-year, marking an all-time quarterly record.
• Adjusted EBITDA: $54 million, also a 9% increase year-over-year.
• Net Income: $15 million, flat year-over-year; diluted EPS remained at $0.17.
• Operating Income: $27 million, slightly up from $26 million in Q1 2025.
• Cash Flow: Operating cash flow of $43 million; free cash flow of $20 million, indicating a cash conversion of 38%.
• Balance Sheet: $274 million in cash, net debt of approximately $306 million, and net leverage at 1.4x trailing 12-month adjusted EBITDA.

2. Strategic Updates and Business Highlights:

• Location Expansion: Operating 4,540 locations and 28,353 gaming terminals, representing increases of 3% and 4% year-over-year, respectively.
• Illinois Market: Revenue (excluding Fairmount Park) increased 6% to $242 million. The rollout of ticket-in ticket-out (TITO) technology is progressing well, with expectations for increased player adoption.
• Growth in Developing Markets: Nebraska saw a 57% revenue increase, while Georgia grew by 43%. Nevada locations grew by 27% due to the acquisition of Dynasty Games and a partnership with Rebel Convenience Stores.
• Acquisition Strategy: Active pipeline for bolt-on acquisitions, particularly in Louisiana, with favorable seller price expectations.
• Fairmount Park Casino: Launched live dealer table games, enhancing its gaming offerings.

3. Forward Guidance and Outlook:

• Anticipation of Chicago market openings in late 2026 or early 2027, with a strong position to capitalize on this growth.
• Expectations for continued strong performance in existing markets, with a focus on disciplined capital deployment and operational excellence.
• Full-year 2026 CapEx expected to be between $60 million and $70 million, down from $89 million in 2025.

4. Bad News, Challenges, or Points of Concern:

• Regulatory Uncertainty: The recent approval of vertical integration rules by the Illinois Gaming Control Board is contested in court, creating uncertainty around future operations.
• Market Sensitivity: While the company has not yet seen significant impacts from rising gas prices, there are concerns about potential consumer spending pressures in the future.
• Pruning Strategy: Continued pruning of underperforming locations in Illinois may limit growth potential in the short term, although it aims to enhance overall profitability.

5. Notable Q&A Insights:

• TITO Adoption: Early adoption metrics are at 13%, with potential for growth. Initial cash handling costs may rise due to increased overall play.
• Legislative Environment: Limited optimism for new legislation supporting gaming expansion in 2026, particularly following the veto of a bill in Virginia.
• Market Dynamics: The company remains focused on optimizing its Illinois operations while exploring growth opportunities in Nevada and Louisiana.
• Fairmount Park Development: No immediate plans for permanent structures, with ongoing evaluation of the temporary setup's performance.

Overall, Accel Entertainment reported a strong Q1 2026, driven by solid revenue growth and strategic positioning in key markets, while navigating regulatory challenges and maintaining a focus on operational efficiency.