Accel Entertainment(ACEL) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Accel Entertainment achieved record Q2 2025 revenues and Adjusted EBITDA, driven by disciplined expansion and strong performance across core and developing markets, despite a net income decrease CEO Commentary CEO Andy Rubenstein highlighted record Q2 results, attributing success to disciplined expansion and improved operating results in new and acquired locations - Record Q2 results demonstrate continued progress and consistent execution with year-over-year revenue and Adjusted EBITDA growth in all core and developing markets[3] - Disciplined expansion strategy and successful improvement of operating results in new and acquired locations contributed to performance[3] - Strategic early investments in developing markets (Nebraska, Georgia, Nevada) are now beginning to contribute to overall growth[4] - Recent results from Toucan Gaming in Louisiana and Fairmount Park Casino & Racing in Illinois reinforce confidence in future contributions from these acquisitions[4] Q2 2025 Financial & Operational Highlights Accel Entertainment reported record quarterly revenues and Adjusted EBITDA for Q2 2025, alongside growth in locations and gaming terminals Q2 2025 Key Financial & Operational Highlights: | Metric | Q2 2025 | Q2 2024 | Change (%) | | :------------------------- | :---------- | :---------- | :--------- | | Quarterly Revenues | $335.9 million | $309.4 million | +8.6% | | Locations | 4,427 | 4,294 | +3.1% | | Gaming Terminals | 27,388 | 26,481 | +3.4% | | Net Income | $7.3 million | $14.6 million | -50.2% | | Adjusted EBITDA | $53.2 million | $49.7 million | +7.1% | | Net Debt (as of June 30, 2025) | $331 million | $310.8 million (June 30, 2024) | +6.5% | - Net income decrease partially attributable to a loss on the change in the fair value of contingent earnout shares compared to a gain in the prior period[5] - Repurchased 0.6 million shares of Accel Class A-1 common stock for approximately $6.7 million in Q2 '25[5] - Commenced casino and racing operations at Fairmount Park Casino & Racing in April 2025[5] Financial Performance Accel Entertainment reported significant increases in total net revenues and operating income for Q2 and H1 2025, with Illinois as the primary revenue driver and strong growth in Nebraska and Georgia Condensed Consolidated Statements of Operations Accel Entertainment reported a significant increase in total net revenues for both the three and six months ended June 30, 2025, driven primarily by net gaming revenue Condensed Consolidated Statements of Operations (Three Months Ended June 30, 2025 vs 2024): | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Total net revenues | $335,909 | $309,413 | $26,496 | +8.6% | | Operating income | $26,874 | $22,683 | $4,191 | +18.5% | | Income before income tax expense | $12,352 | $18,519 | $(6,167) | -33.3% | | Net income | $7,262 | $14,586 | $(7,324) | -50.2% | | Adjusted EBITDA | $53,180 | $49,665 | $3,515 | +7.1% | | Adjusted net income | $22,491 | $21,383 | $1,108 | +5.2% | Condensed Consolidated Statements of Operations (Six Months Ended June 30, 2025 vs 2024): | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total net revenues | $659,821 | $611,230 | $48,591 | +7.9% | | Operating income | $52,826 | $48,242 | $4,584 | +9.5% | | Income before income tax expense | $31,958 | $30,702 | $1,256 | +4.1% | | Net income | $21,875 | $22,002 | $(127) | -0.6% | | Adjusted EBITDA | $102,694 | $95,912 | $6,782 | +7.1% | | Adjusted net income | $42,709 | $40,888 | $1,821 | +4.5% | Net Revenues by State Illinois remains the largest revenue contributor, showing growth, while Nebraska and Georgia demonstrated strong revenue growth Net Revenues by State (Three Months Ended June 30, 2025 vs 2024): | State | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :-------- | :------------------ | :------------------ | :--------- | :--------- | | Illinois | $245,434 | $227,093 | $18,341 | +8.1% | | Montana | $40,107 | $42,583 | $(2,476) | -5.8% | | Nevada | $27,078 | $29,322 | $(2,244) | -7.7% | | Louisiana | $9,630 | — | $9,630 | N/A | | Nebraska | $7,881 | $6,249 | $1,632 | +26.1% | | Georgia | $4,814 | $3,137 | $1,677 | +53.5% | - Net gaming revenues for Q2 2025 were $38.3 million, up from $37.4 million in Q2 2024[8] - Manufacturing revenues for Q2 2025 were $1.8 million, down from $5.2 million in Q2 2024[8] Key Business Metrics The company experienced overall growth in total locations and gaming terminals, with strong performance in Georgia and Nebraska, and increased location hold-per-day across most states Locations Total locations increased by 3.1% year-over-year to 4,427, with significant growth in Georgia and Nebraska Locations as of June 30, 2025 vs 2024: | State | 2025 | 2024 | Change | Change (%) | | :-------- | :--- | :--- | :----- | :--------- | | Illinois | 2,741 | 2,816 | (75) | (2.7)% | | Montana | 616 | 620 | (4) | (0.6)% | | Nevada | 355 | 359 | (4) | (1.1)% | | Louisiana | 98 | — | 98 | N/A | | Nebraska | 275 | 239 | 36 | 15.1% | | Georgia | 342 | 260 | 82 | 31.5% | | Total locations | 4,427 | 4,294 | 133 | 3.1% | Gaming Terminals Total gaming terminals increased by 3.4% year-over-year to 27,388, driven by strong growth in Georgia and Nebraska Gaming Terminals as of June 30, 2025 vs 2024: | State | 2025 | 2024 | Change | Change (%) | | :-------- | :--- | :--- | :----- | :--------- | | Illinois | 15,670 | 15,743 | (73) | (0.5)% | | Montana | 6,508 | 6,435 | 73 | 1.1% | | Nevada | 2,650 | 2,735 | (85) | (3.1)% | | Louisiana | 626 | — | 626 | N/A | | Nebraska | 975 | 844 | 131 | 15.5% | | Georgia | 959 | 724 | 235 | 32.5% | | Total gaming terminals | 27,388 | 26,481 | 907 | 3.4% | Location Hold-Per-Day Location hold-per-day increased across most states for Q2 2025, with Georgia showing the highest growth and Louisiana reporting a hold-per-day of $994 Location Hold-Per-Day (Three Months Ended June 30, 2025 vs 2024): | State | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :-------- | :------- | :------- | :--------- | :--------- | | Illinois | $910 | $862 | $48 | 5.6% | | Montana | $622 | $612 | $10 | 1.6% | | Nevada | $784 | $843 | $(59) | (7.0)% | | Louisiana | $994 | — | $994 | N/A | | Nebraska | $285 | $255 | $30 | 11.8% | | Georgia | $149 | $111 | $38 | 34.2% | - Location hold-per-day is calculated by dividing net gaming revenue by the average number of locations and then by the number of operational days, used to compare market and location performance on a normalized basis[12] Cash Flow Information Net cash provided by operating activities increased, while net cash used in investing activities decreased, and net cash used in financing activities significantly increased Condensed Consolidated Statements of Cash Flows Data Net cash provided by operating activities increased by 12.1% for the year ended June 30, 2025, while net cash used in financing activities significantly increased Condensed Consolidated Statements of Cash Flows Data (Year Ended June 30, 2025 vs 2024): | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------- | :--------- | :--------- | :--------- | | Net cash provided by operating activities | $64,557 | $57,614 | $6,943 | 12.1% | | Net cash used in investing activities | $(59,963) | $(69,324) | $9,361 | 13.5% | | Net cash (used in) provided by financing activities | $(21,269) | $5,022 | $(26,291) | (523.5)% | Non-GAAP Financial Measures Accel Entertainment utilizes non-GAAP financial measures like Adjusted EBITDA, Adjusted net income, and Net debt to provide clearer insights into core operational performance and business trends Overview and Rationale Accel Entertainment uses non-GAAP financial measures like Adjusted EBITDA, Adjusted net income, and Net debt to monitor core operations and enhance understanding of profitability drivers and business trends - Non-GAAP measures (Adjusted EBITDA, Adjusted net income, Net debt) are key metrics used to monitor ongoing core operations and enhance understanding of underlying profitability and business trends[11] - These measures exclude effects of certain non-cash or nonrecurring items unrelated to core operating performance to facilitate comparisons[11] Definition of Adjusted Net Income Adjusted net income is defined as net income adjusted for amortization of intangible assets, stock-based compensation, loss from unconsolidated affiliates, loss/gain on contingent earnout shares, other net expenses, and the tax effect of these adjustments - Adjusted net income includes adjustments for amortization of intangible assets, stock-based compensation, loss from unconsolidated affiliates, loss (gain) on change in fair value of contingent earnout shares, other expenses (net), and tax effect of adjustments[13] Definition of Adjusted EBITDA Adjusted EBITDA is defined as net income adjusted for items similar to Adjusted Net Income, plus depreciation and amortization of property and equipment, interest expense (net), emerging markets results, and income tax expense - Adjusted EBITDA includes adjustments for amortization of intangible assets, stock-based compensation, loss from unconsolidated affiliates, loss (gain) on change in fair value of contingent earnout shares, other expenses (net), tax effect of adjustments, depreciation and amortization of property and equipment, interest expense (net), emerging markets, and income tax expense[14] - Markets are no longer considered emerging when 500 gaming terminals are installed/acquired or 24 months have passed, whichever comes first; as of June 2025, Accel no longer has any emerging markets[14] Definition of Net Debt Net debt is calculated as total debt (net of current maturities) plus current maturities of debt, minus cash and cash equivalents - Net debt is defined as debt, net of current maturities, plus current maturities of debt, less cash and cash equivalents[14] Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA The reconciliation shows the specific adjustments made to GAAP net income to arrive at Adjusted Net Income and Adjusted EBITDA for both the three and six months ended June 30, 2025 and 2024 Reconciliation of Net Income to Adjusted Net Income and Adjusted EBITDA (Three Months Ended June 30): | Adjustment (in thousands) | 2025 | 2024 | | :-------------------------------------------------- | :----- | :----- | | Net income | $7,262 | $14,586 | | Amortization of intangible assets and route and customer acquisition costs | $6,322 | $5,589 | | Stock-based compensation expense | $2,789 | $3,235 | | Loss (gain) on change in fair value of contingent earnout shares | $5,734 | $(4,742) | | Other expenses, net | $4,096 | $7,327 | | Tax effect of adjustments | $(3,729) | $(4,612) | | Adjusted net income | $22,491 | $21,383 | | Depreciation and amortization of property and equipment | $13,095 | $10,794 | | Interest expense, net | $8,771 | $8,906 | | Income tax expense | $8,819 | $8,544 | | Adjusted EBITDA | $53,180 | $49,665 | Reconciliation of Debt, net of maturities to Net Debt As of June 30, 2025, Accel's net debt stood at $330.9 million, an increase from $310.8 million in the prior year, reflecting changes in debt and cash positions Reconciliation of Debt, net of maturities to Net Debt (As of June 30): | Metric (in thousands) | 2025 | 2024 | | :-------------------------- | :--------- | :--------- | | Debt, net of current maturities | $561,450 | $537,252 | | Plus: Current maturities of debt | $34,033 | $28,489 | | Less: Cash and cash equivalents | $(264,630) | $(254,923) | | Net debt | $330,853 | $310,818 | Company Information This section provides details on the investor conference call and an overview of Accel Entertainment's business as a leading gaming terminal operator and racino owner Conference Call Details Accel Entertainment hosted an investor conference call on August 5, 2025, to discuss financial and operating results, with webcast and replay options available - Accel hosted an investor conference call on August 5, 2025, at 4:30 p.m. Central time to discuss financial and operating results[17] - Webcast registration and replay information are available on the company's investor relations website[17] About Accel Entertainment Accel Entertainment, Inc. (NYSE: ACEL) is a leading provider of locals-focused gaming and one of the largest terminal operators in the U.S., operating over 27,000 electronic gaming terminals in more than 4,400 third-party locations and 20 self-operated sites across ten states - Accel Entertainment is a growing provider of locals-focused gaming and one of the largest terminal operators in the United States[18] - Supports over 27,000 electronic gaming terminals in over 4,400 third-party local and regional establishments and 20 self-operated gaming locations across ten states[18] - Provides a turnkey, full-service, capital-efficient gaming solution including manufacturing, content, payments, loyalty, customer service, data analysis, and cash logistics[19] - Owns and operates Fairmount Park - Casino & Racing, which opened in April 2025, featuring over 270 electronic gaming machines, food/beverage, sports book, and horse racing[19] Forward-Looking Statements & Disclaimers This section outlines the inherent risks and uncertainties associated with forward-looking statements and the limitations of industry and market data presented in the report Forward-Looking Statements The press release contains forward-looking statements regarding future estimates, growth, profitability, market opportunities, and expansion, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially - The press release contains forward-looking statements regarding estimates of gaming terminals, locations, revenues, Adjusted EBITDA, Adjusted net income, ability to generate strong returns, and expansion into casino operations[20] - These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from expectations[20] - Risks include variability in operating results, ability to offer new products, dependence on manufacturers, slow growth in demand/jurisdictions, dependence on location partner contracts, expansion into casino operations, economic conditions, regulatory changes, and competition[20][21] Industry and Market Data Information concerning the industry and markets is based on various sources, assumptions, and company knowledge, and is subject to a high degree of uncertainty and risk - Industry and market data presented are based on information from various sources, company assumptions, and knowledge, and should not be given undue weight due to inherent assumptions and limitations[23] - Projections of future performance are subject to a high degree of uncertainty and risk, as detailed in the Form 10-K and other SEC filings[23] Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated statements of operations and balance sheets, detailing revenues, expenses, net income, assets, and liabilities for the reported periods Consolidated Statements of Operations The detailed unaudited consolidated statements of operations show net revenues of $335.9 million for Q2 2025, with net gaming as the primary driver, resulting in diluted EPS of $0.08 Consolidated Statements of Operations (Three Months Ended June 30): | Metric (in thousands, except per share) | 2025 | 2024 | | :-------------------------------------- | :----- | :----- | | Net gaming revenues | $313,919 | $293,240 | | Total net revenues | $335,909 | $309,413 | | Total operating expenses | $309,035 | $286,730 | | Operating income | $26,874 | $22,683 | | Net income | $7,262 | $14,586 | | Net income attributable to Accel Entertainment, Inc. | $7,315 | $14,586 | | Diluted EPS | $0.08 | $0.17 | Consolidated Statements of Operations (Six Months Ended June 30): | Metric (in thousands, except per share) | 2025 | 2024 | | :-------------------------------------- | :----- | :----- | | Net gaming revenues | $615,870 | $581,377 | | Total net revenues | $659,821 | $611,230 | | Total operating expenses | $606,995 | $562,988 | | Operating income | $52,826 | $48,242 | | Net income | $21,875 | $22,002 | | Net income attributable to Accel Entertainment, Inc. | $21,954 | $22,002 | | Diluted EPS | $0.25 | $0.26 | Consolidated Balance Sheets As of June 30, 2025, Accel Entertainment reported total assets of $1,056.3 million, a slight increase from December 31, 2024, with total liabilities at $791.5 million and total stockholders' equity at $260.5 million Consolidated Balance Sheets (As of June 30, 2025 vs December 31, 2024): | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $264,630 | $281,305 | | Total current assets | $310,175 | $326,152 | | Property and equipment, net | $328,304 | $307,997 | | Total noncurrent assets | $417,777 | $414,249 | | Total assets | $1,056,256 | $1,048,398 | | Total current liabilities | $117,281 | $118,353 | | Total long-term liabilities | $674,237 | $670,738 | | Total liabilities | $791,518 | $789,091 | | Total stockholders' equity | $260,539 | $255,029 |