ACEL — Accel Entertainment, Inc.

Summary of ACEL Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: Increased 9% year-over-year to $352 million, marking a record for Q1.
• Adjusted EBITDA: Grew 9% to $54 million.
• Net Gaming Revenue: Rose 10% year-over-year to $331 million.
• Operating Income: $27 million, slightly up from $26 million in Q1 2025.
• Net Income: $15 million, flat year-over-year; diluted EPS remained at $0.17.
• Cash Flow: Operating cash flow was $43 million; free cash flow was $20 million, with a cash conversion rate of 38%.
• Balance Sheet: $274 million in cash, net debt of approximately $306 million, and net leverage of 1.4x.

2. Strategic Updates and Business Highlights:

• Location Growth: Operated 4,540 locations and 28,353 gaming terminals, increases of 3% and 4% year-over-year, respectively.
• Illinois Market: Revenue (excluding Fairmount Park) rose 6% to $242 million; average location hold per day increased 9% to $962.
• TITO Rollout: All terminals in Illinois are now TITO-enabled, with early adoption metrics at 13%.
• Expansion in Developing Markets: Nebraska revenue surged 57%, Georgia up 43%, and Nevada locations grew 27%.
• Fairmount Park: Launched live dealer table games, enhancing its transformation into a full-scale gaming destination.
• Share Repurchase: Approximately 1.1 million shares repurchased for $12 million in Q1.

3. Forward Guidance and Outlook:

• Anticipate first Chicago locations to go live in late 2026 or early 2027.
• Expect continued growth in free cash flow as capital expenditures normalize and developing markets scale profitably.
• Maintaining a disciplined capital allocation strategy focused on organic growth, acquisitions, and shareholder returns.

4. Challenges and Points of Concern:

• Regulatory Uncertainty: The Illinois Gaming Control Board's recent vertical integration rules are contested in court, creating uncertainty.
• Market Sensitivity: Potential impacts from gas prices on consumer spending, although not currently observed.
• Legislative Environment: Limited optimism for new legislation to expand gaming opportunities in various states.

5. Notable Q&A Insights:

• TITO Adoption: Early player adoption is at 13%, with potential for further growth; cash handling costs may increase due to overall play rising.
• Illinois Pruning Strategy: Ongoing optimization of locations to improve cash flow; no significant low-hanging fruit remains.
• Legislative Momentum: Limited progress on gaming legislation; no major changes expected in 2026.
• Acquisition Focus: Louisiana remains a priority for M&A, with a healthy pipeline of opportunities; all markets are being evaluated for potential growth through acquisitions.

Overall, Accel Entertainment reported strong financial performance in Q1 2026, driven by growth in key markets and strategic initiatives, while navigating regulatory uncertainties and potential consumer spending challenges.