Accel Entertainment(US:ACEL)2025-08-05 20:20Financial Performance - Net revenues for Q2 2025 increased by 8.6% to $335.9 million, compared to $309.4 million in Q2 2024[140] - Net gaming revenue rose by 7.1% to $313.9 million, up from $293.2 million in the same period last year[140] - Total net revenues for the three months ended June 30, 2025 were $335.9 million, an increase of $26.5 million, or 8.6%, compared to the prior-year period[141] - Net gaming revenue increased by $20.7 million, reflecting growth in gaming locations and terminals, while ATM fees and other revenue rose by $14.7 million, an increase of 171.1%[141] - Total net revenues for the six months ended June 30, 2025 were $659.8 million, an increase of $48.6 million, or 7.9%, compared to the prior-year period[154] - Net gaming revenue for the six months ended June 30, 2025 was $615.9 million, an increase of $34.5 million, or 5.9%[154] Operating Income and Expenses - Operating income for Q2 2025 was $26.9 million, an increase of 18.5% from $22.7 million in Q2 2024[140] - General and administrative expenses increased by 17.9% to $54.9 million, compared to $46.5 million in Q2 2024[140] - Cost of revenue (exclusive of depreciation and amortization) rose by 7.7% to $229.8 million, up from $213.3 million in Q2 2024[140] - Cost of revenue for the three months ended June 30, 2025 was $229.8 million, an increase of $16.4 million, or 7.7%, driven by higher net gaming revenue[142] - General and administrative expenses for the three months ended June 30, 2025 were $54.9 million, an increase of $8.3 million, or 17.9%, due to higher compensation-related costs[144] - Cost of revenue for the six months ended June 30, 2025 was $451.2 million, an increase of $28.7 million, or 6.8%[155] Net Income and Tax - Net income decreased by 50.2% to $7.3 million, down from $14.6 million in Q2 2024[140] - Income tax expense for the six months ended June 30, 2025 was $10.1 million, an increase of $1.4 million, or 15.9%[164] - The tax on net gaming revenue in Illinois increased from 34% to 35% effective July 1, 2024[131] Cash Flow and Capital Expenditures - Net cash provided by operating activities was $64.6 million for the six months ended June 30, 2025, an increase of $6.9 million or 12.1% compared to the prior-year period[184] - Net cash used in investing activities decreased to $60.0 million, a reduction of $9.4 million or 13.5% compared to the prior-year period[185] - The company anticipates capital expenditures of approximately $75-80 million in 2025, with $31-32 million allocated to Fairmount[187] Debt and Interest Rates - As of June 30, 2025, borrowings under the senior secured credit facility amounted to $597.2 million[193] - The weighted-average interest rate on borrowings under the Credit Agreement was approximately 6.5%[179] - A 1.0% increase in underlying interest rates would lead to an annual increase in interest expense of approximately $3.0 million, assuming the balance remains at $597.2 million[193] - The company hedged against interest rate fluctuations by entering into a 4-year series of 48 caplets for the first $300 million of the term loan, initiated on January 12, 2022[193] - The caplets are designed to protect against exposure when the 1-month SOFR interest rate exceeds 2%[193] - Cash and cash equivalents are maintained in highly liquid accounts and are not materially affected by changes in interest rates[194] Business Expansion - The company opened Fairmount Park - Casino & Racing in April 2025, which includes a thoroughbred horse race track and a casino with 271 gaming positions[122] - As of June 30, 2025, the total number of locations increased to 4,427, up by 133 locations or 3.1% from 4,294 in 2024[167] - The number of gaming terminals in operation reached 27,388, an increase of 907 terminals or 3.4% compared to 26,481 in 2024[170] - The company is continuously evaluating additional opportunities complementary to its core business, including acquisitions[121] EBITDA - Adjusted EBITDA for the three months ended June 30, 2025, was $53.2 million, reflecting a $3.5 million increase or 7.1% from the prior-year period[175] Depreciation and Amortization - Depreciation and amortization of property and equipment for the three months ended June 30, 2025 was $13.1 million, an increase of $2.3 million, or 21.3%[145] Unrealized Loss - The company recognized an unrealized loss on the change in fair value of interest rate caplets of $0.8 million for the three months ended June 30, 2025[182] Compliance - The company remains in compliance with all debt covenants under the Credit Agreement as of June 30, 2025[180]