Accel Entertainment Inc

Previous wording

We are a leading distributed gaming operator in the United States (“U.S.”) and a preferred partner for local business owners in the markets we serve. We offer turnkey, full-service gaming solutions to bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country. Our focus is providing unmatched customer support, guidance, and expertise so our location partners can grow their businesses with incremental revenue.

Current wording

We are a leading distributed gaming operator in the United States (“U.S.”), as well as a developer of brick-and-mortar casinos that serve local gaming markets and horse racing venues. We are a preferred partner for local business owners in the markets we serve. We offer turnkey, full-service gaming solutions to bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country as well as casinos and horse racing venues. Our focus is providing unmatched customer support, guidance, and expertise so our location partners can grow their businesses with incremental revenue.

Previous wording

We install, maintain, operate and service gaming terminals and related equipment for our location partners as well as redemption devices that have automated teller machine (“ATM”) functionality and stand-alone ATMs. We offer amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment. These operations provide a complementary source of lead generation for our gaming business by offering a “one-stop” source of additional equipment for our location partners. We also design and manufacture gaming terminals and related equipment. We are continuously evaluating additional opportunities that are complementary to our core business, such as our pending acquisition of the FanDuel Sportsbook & Horse Racing in Collinsville, Illinois, as discussed in Note 10 to the condensed consolidated financial statements.

Current wording

We install, maintain, operate and service gaming terminals and related equipment for our location partners as well as redemption devices that have automated teller machine (“ATM”) functionality and stand-alone ATMs. We offer amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment. These operations provide a complementary source of lead generation for our gaming business by offering a “one-stop” source of additional equipment for our location partners. We also design and manufacture gaming terminals and related equipment. We are continuously evaluating additional opportunities that are complementary to our core business, such as our recent acquisition of the FanDuel Sportsbook & Horse Racing, which has been rebranded as Fairmount Park - Casino & Racing (“Fairmount”) in Collinsville, Illinois. In April 2025, the casino opened and the racing season began at Fairmount.

Previous wording

We currently operate as a distributed gaming operator in the following states:

Current wording

We currently operate in the following states:

Previous wording

Ongoing interest rate uncertainty, persistent inflation and actual or perceived instability in the U.S. and global banking systems may increase the risk of an economic recession and volatility in the capital or credit markets in the U.S. and other markets globally. Our location partners may be adversely impacted by changes in overall economic and financial conditions, and certain location partners may cease operations in the event of a recession or inability to access financing. Furthermore, our revenue is largely driven by players’ disposable incomes and level of gaming activity, and economic conditions that adversely impact players’ ability and desire to spend disposable income at our locations partners may adversely affect our results of operations and cash flows.

Current wording

Ongoing interest rate uncertainty, persistent inflation and increased and/or reciprocal tariffs may increase the risk of an economic recession and volatility in the capital or credit markets in the U.S. and other markets globally. Our location partners may be adversely impacted by changes in overall economic and financial conditions, and certain location partners may cease operations in the event of a recession or inability to access financing. Furthermore, our revenue is largely driven by players’ disposable incomes and level of gaming activity, and economic conditions that adversely impact players’ ability and desire to spend disposable income at our locations partners may adversely affect our results of operations and cash flows.

Previous wording

To date, we have not observed material impacts in our business or outlook, outside of observed increases in our costs related to higher wages and increased interest expense on our debt. In 2023 and the first half of 2024, we accelerated certain of our capital expenditures related to gaming machines and related components to manage our supply chain.

Current wording

To date, we have not observed material impacts in our business or outlook, outside of observed increases in our costs related to higher wages and increased interest expense on our debt. In the first half of 2024, we accelerated certain of our capital expenditures related to gaming machines and related components to manage our supply chain.

Previous wording

ATM fees and other. ATM fees and other primarily represents fees charged for the withdrawal of funds from our redemption devices and stand-alone ATMs and is recognized at the time of the ATM transaction.

Current wording

ATM fees and other. ATM fees and other consist of fees charged for the withdrawal of funds from our redemption devices and stand-alone ATMs and is recognized at the time of the ATM transaction. Beginning in the first quarter of 2025, revenues from our racing operations are also included.

Previous wording

Cost of revenue. Cost of revenue consists of (i) taxes on net gaming revenue that is payable to the appropriate jurisdiction (effective July 1, 2024, the tax on net gaming revenue in the State of Illinois increased from 34% to 35%, which is split equally between us and our locations in Illinois), (ii) licenses, permits and other fees required for the operation of gaming terminals and other equipment, (iii) location revenue share, which is governed by local governing bodies and location contracts, (iv) ATM and amusement commissions payable to locations, and (v) ATM and amusement fees.

Current wording

Cost of revenue. Cost of revenue consists of (i) taxes on net gaming revenue that is payable to the appropriate jurisdiction (effective July 1, 2024, the tax on net gaming revenue in the State of Illinois increased from 34% to 35%, which is split equally between us and our locations in Illinois), (ii) licenses, permits and other fees required for the operation of our business, (iii) location revenue share, which is governed by local governing bodies and location contracts, (iv) ATM and amusement commissions payable to locations, (v) ATM and amusement fees and (vi) expenses from our racing operations.

Previous wording

General and administrative. General and administrative expenses consist of operating expense and general and administrative expense. Operating expense includes payroll and related expense for service technicians, route technicians, route security, and preventative maintenance personnel. Operating expense also includes vehicle fuel and maintenance, and non-capitalizable parts expenses. Operating expenses are generally proportionate to the number of locations and gaming terminals. General and administrative expense includes payroll and related expense for account managers, business development managers, marketing, and other corporate personnel. In addition, general and administrative expense also includes marketing, information technology, insurance, rent and professional fees.

Current wording

General and administrative. General and administrative expenses consist of operating expense and general and administrative expense. Operating expense includes payroll and related expense for service technicians, route technicians, route security, and preventative maintenance personnel. Operating expense also includes vehicle fuel and maintenance, and non-capitalizable parts expenses. Operating expenses are generally proportionate to the number of locations and gaming terminals. General and administrative expense includes compensation-related costs for account managers, business development managers, marketing, and other corporate personnel. In addition, general and administrative expense also includes marketing, information technology, insurance, rent and professional fees.

Previous wording

Interest expense, net consists of interest on our current credit facilities, amortization of financing fees, accretion of interest on route and customer acquisition costs payable, and interest (income) expense on the interest rate caplets. Interest on the current credit facility is payable monthly on unpaid balances at the variable per annum LIBOR/SOFR rate plus an applicable margin, as defined under the terms of the credit facility, ranging from 1.75% to 2.75% depending on the first lien net leverage ratio.

Current wording

Interest expense, net consists of interest on our current credit facilities, amortization of financing fees, accretion of interest on route and customer acquisition costs payable, and interest (income) expense on the interest rate caplets. Interest on the current credit facility is payable monthly on unpaid balances at the variable per annum SOFR rate plus an applicable margin, as defined under the terms of the credit facility, ranging from 1.75% to 2.75% depending on the first lien net leverage ratio.

Previous wording

Total net revenues for the nine months ended September 30, 2024 were $913.5 million, an increase of $40.1 million, or 4.6%, compared to the prior-year period. This increase was primarily driven by higher net gaming revenue of $40.2 million, which reflected an increase in gaming locations and terminals. Net revenues by state are presented below (in thousands):

Current wording

Total net revenues for the three months ended March 31, 2025 were $323.9 million, an increase of $22.1 million, or 7.3%, compared to the prior-year period. This increase was primarily driven by higher net gaming revenue of $13.8 million, which reflected an increase in gaming locations and terminals, and higher ATM fees and other revenue of $12.2 million, an increase of $6.9 million, or 128.3%, which included revenue from our racing operations. Net revenues by state are presented below:

Previous wording

Cost of revenue for the three months ended September 30, 2024 was $210.8 million, an increase of $12.1 million, or 6.1%, compared to the prior-year period, driven by higher net gaming revenue, as described above.

Current wording

Cost of revenue for the three months ended March 31, 2025 was $221.5 million, an increase of $12.3 million, or 5.9%, compared to the prior-year period, driven by higher net gaming revenue and revenue from our racing operations, as described above.

Previous wording

Cost of manufacturing goods sold for the three months ended September 30, 2024 was $1.0 million, a decrease of $1.1 million, or 53.4%, compared to the prior-year period driven by lower equipment sales, as described above.

Current wording

Cost of manufacturing goods sold for the three months ended March 31, 2025 was $2.1 million, an increase of $0.9 million, or 79.1%, compared to the prior-year period .

Previous wording

General and administrative expenses for the three months ended September 30, 2024 were $47.9 million, an increase of $2.7 million, or 6.1%, compared to the prior-year period. The increase was attributable to higher payroll-related costs, as we continue to grow our operations, as well as higher stock-based compensation expense, partially offset by lower parts and repair expense.

Current wording

General and administrative expenses for the three months ended March 31, 2025 were $53.0 million, an increase of $5.4 million, or 11.3%, compared to the prior-year period. The increase was attributable to higher compensation-related costs, as we continue to grow our operations, partially offset by lower parts and repair expense.

Previous wording

Depreciation and amortization of property and equipment for the three months ended September 30, 2024 was $11.0 million, an increase of $1.6 million, or 17.0%, compared to the prior-year period due to an increased number of gaming terminals.

Current wording

Depreciation and amortization of property and equipment for the three months ended March 31, 2025 was $12.3 million, an increase of $1.9 million, or 17.9%, compared to the prior-year period due to an increased number of gaming terminals.

Previous wording

Amortization of intangible assets and route and customer acquisition costs for the three months ended September 30, 2024 were $5.8 million, an increase of $0.5 million, or 9.1%, compared to the prior-year period.

Current wording

Amortization of intangible assets and route and customer acquisition costs for the three months ended March 31, 2025 were $6.3 million, an increase of $0.9 million, or 15.7%, compared to the prior-year period due to higher amortization expenses on location contracts acquired.

Previous wording

Other expenses, net for the three months ended September 30, 2024 were $3.9 million, an increase of $2.2 million, or 129.9%, compared to the prior-year period. The increase was primarily attributable to higher fair value adjustments associated with the revaluation of contingent consideration liabilities and higher non-recurring expenses related to acquisitions.

Current wording

Other expenses, net for the three months ended March 31, 2025 were $2.8 million, an increase of $0.4 million, or 16.1%, compared to the prior-year period. The increase was primarily attributable to higher non-recurring expenses related to acquisitions.

Previous wording

Interest expense, net for the three months ended September 30, 2024 was $9.2 million, an increase of $0.7 million, or 8.9%, compared to the prior-year period primarily due to an increase in average outstanding debt, partially offset by the benefit realized on our interest rate caplets. For the three months ended September 30, 2024, the weighted average interest rate, excluding the impact of our interest rate caplets, was approximately 7.6% for both periods.

Current wording

Interest expense, net for the three months ended March 31, 2025 was $8.7 million, which was essentially flat compared to the prior-year period. We experienced an increase in average outstanding debt, which was offset by lower interest expense. For the three months ended March 31, 2025, the weighted average interest rate, excluding the impact of our interest rate caplets, was approximately 6.5% compared to 7.7% in the prior-year period.

Previous wording

Loss on change in fair value of contingent earnout shares

Current wording

(Gain) loss on change in fair value of contingent earnout shares

Previous wording

The change in the fair value of contingent earnout shares for the three months ended September 30, 2024 was a loss of $4.2 million, compared to a loss of $1.6 million the prior-year period. The change was primarily due to the change in the market value of our Class A-1 common stock, which is the primary input to the valuation of the contingent earnout shares.

Current wording

The change in the fair value of contingent earnout shares for the three months ended March 31, 2025 was a gain of $2.4 million, compared to a loss of $4.7 million the prior-year period. The change was primarily due to the change in the market value of our Class A-1 common stock, which is the primary input to the valuation of the contingent earnout shares.

Previous wording

Income tax expense for the three months ended September 30, 2024 was $3.6 million, a decrease of $1.1 million, or 22.9%, compared to the prior-year period. The effective tax rate for the three months ended September 30, 2024 was 42.2% compared to 30.7% in the prior-year period. Our effective income tax rate can vary from period to period depending on, among other factors, the amount of permanent tax adjustments and discrete items. The change in the fair value of the contingent earnout shares is considered a discrete item for tax purposes and can be the primary driver for the fluctuations in the tax rate year over year.

Current wording

Income tax expense for the three months ended March 31, 2025 was $5.0 million, an increase of $0.2 million, or 4.7%, compared to the prior-year period. The effective tax rate for the three months ended March 31, 2025 was 25.5% compared to 39.1% in the prior-year period. Our effective income tax rate can vary from period to period depending on, among other factors, the amount of permanent tax adjustments and discrete items. The change in the fair value of the contingent earnout shares is considered a discrete item for tax purposes and can be the primary driver for the fluctuations in the tax rate year over year.

Previous wording

The following tables set forth information with respect to our location hold-per-day in our primary locations for the three and nine months ended:

Current wording

The following tables set forth information with respect to our location hold-per-day in our primary locations for the three months ended:

Previous wording

Adjusted EBITDA for the three months ended September 30, 2024, was$45.9 million, an increase of $1.7 million, or 3.9%, compared to the prior-year period. Adjusted EBITDA for thenine months ended September 30, 2024, was$141.8 million, an increase of $4.9 million, or 3.6%, compared to the prior-year period. The increase for both periods was attributable to an increase in the number of locations and gaming terminals.

Current wording

Adjusted EBITDA for the three months ended March 31, 2025, was$49.5 million, an increase of $3.3 million, or 7.1%, compared to the prior-year period. The increase was attributable to an increase in the number of locations and gaming terminals.

Previous wording

We believe that our cash and cash equivalents, cash flows from operations and borrowing availability under the Credit Agreement (as defined below) will be sufficient to meet our capital requirements for the next twelve months. Our primary short-term cash needs are paying operating expenses and contingent earnout payments, purchases of property and equipment, servicing outstanding indebtedness, and funding our Board of Directors approved share repurchase program and near-term acquisitions. As of September 30, 2024, we had $265.1 million in cash and cash equivalents.

Current wording

We believe that our cash and cash equivalents, cash flows from operations and borrowing availability under the Credit Agreement (as defined below) will be sufficient to meet our capital requirements for the next twelve months. Our primary short-term cash needs are paying operating expenses and contingent earnout payments, purchases of property and equipment, servicing outstanding indebtedness, and funding our Board of Directors approved share repurchase program and near-term acquisitions. As of March 31, 2025, we had $271.9 million in cash and cash equivalents.

Previous wording

The maturity date of the Credit Agreement is October 22, 2026.

Current wording

Our ability to borrow on the DDTL ended on October 22, 2024. The maturity date of the Credit Agreement is October 22, 2026.

Previous wording

As of September 30, 2024, there remained $273 million of availability under the Credit Agreement and the weighted-average interest rate on our borrowings under the Credit Agreement was approximately 7.6%.

Current wording

As of March 31, 2025, there remained $150 million of availability under the Credit Agreement and the weighted-average interest rate on our borrowings under the Credit Agreement was approximately 6.5%.

Previous wording

We manage our exposure to some of our interest rate risk through the use of interest rate caplets, which are derivative financial instruments. On January 12, 2022, we hedged the variability of the cash flows attributable to the changes in the 1-month LIBOR/SOFR interest rate on the first $300 million of the term loan under the Credit Agreement by entering into a 4-year series of 48 deferred premium caplets (“caplets”).

Current wording

We manage our exposure to some of our interest rate risk through the use of interest rate caplets, which are derivative financial instruments. On January 12, 2022, we hedged the variability of the cash flows attributable to the changes in the 1-month SOFR interest rate on the first $300 million of the term loan under the Credit Agreement by entering into a 4-year series of 48 deferred premium caplets (“caplets”).

Previous wording

We recognized anunrealized loss, net of taxes, on the change in fair value of the caplets of$4.1 million for both the three and nine months ended September 30, 2024. In comparison, we recognized an unrealized gain of$0.1 million and an unrealized loss of less than$0.1 million, net of taxes, for the three and nine months ended September 30, 2023, respectively. We also recognized interest income on the caplets of$2.6 million and$7.7 million for thethree and nine months ended September 30, 2024, respectively. In comparison, we recognized interest income on the caplets of$2.5 million and$6.7 million for the three and nine months ended September 30, 2023, respectively. These amounts are reflected in interest expense, netin the condensed consolidated statements of operations and other comprehensive income.

Current wording

We recognized anunrealized loss, net of taxes, on the change in fair value of the caplets of$1.1 million for the three months ended March 31, 2025. In comparison, we recognized an unrealized gain of$1.1 million, net of taxes, for the three months ended March 31, 2024. We also recognized interest income on the caplets of$1.8 million and$2.6 million for the three months ended March 31, 2025 and 2024, respectively, which are reflected in interest expense, netin the condensed consolidated statements of operations and other comprehensive income.

Previous wording

For the nine months ended September 30, 2024, net cash provided by operating activities was $107.7 million, an increase in cash of $15.7 million compared to the prior-year period due primarily to higher working capital adjustments and higher remeasurements on contingent consideration, partially offset by lower deferred income taxes.

Current wording

For the three months ended March 31, 2025, net cash provided by operating activities was $44.8 million, an increase in cash of $16.0 million compared to the prior-year period due primarily to changes in working capital adjustments.

Previous wording

For the nine months ended September 30, 2024, net cash used in investing activities was $90.2 million, a decrease in cash of $54.8 million compared to the prior-year period. The decrease in cash was primarily attributable to the proceeds from the settlement of the convertible notes in the prior year as well as more cash used for business and asset acquisitions, higher deposits paid against a portion of the purchase price on a pending business acquisition and an investment in an equity interest, partially offset by lower purchases of property and equipment. We anticipate our capital expenditures will be approximately $60–65 million in 2024.

Current wording

For the three months ended March 31, 2025, net cash used in investing activities was $26.2 million, an increase in cash of $0.3 million compared to the prior-year period. The increase in cash was primarily attributable to higher purchases of property and equipment, partially offset by less cash used for business and asset acquisitions. We anticipate our capital expenditures will be approximately $75–80 million in 2025, of which $31–32 million relates to Fairmount, $5–7 million relates to Louisiana and the remaining $39–41 million for all other capital expenditures.

Previous wording

For the nine months ended September 30, 2024, net cash used in financing activities was $14.0 million, an increase in cash of $36.4 million compared to the prior-year period. The change reflects higher net borrowings on our debt, partially offset by higher stock repurchases.

Current wording

For the three months ended March 31, 2025, net cash used in financing activities was $27.9 million, an increase in cash used of $17.4 million compared to the prior-year period. The change reflects higher net repayments on our debt and higher stock repurchases.

Previous wording

Our results of operations can fluctuate due to seasonal trends and other factors. For example, the gross revenue per machine per day is typically lower in the summer when players will typically spend less time indoors at our locations, and higher in cold weather between February and April, when players will typically spend more time indoors at our locations. Holidays, vacation seasons, and sporting events may also cause our results to fluctuate.

Current wording

Our results of operations can fluctuate due to seasonal trends and other factors. For example, the gross revenue per machine per day is typically lower in the summer when players will typically spend less time indoors at our locations, and higher in cold weather between February and April, when players will typically spend more time indoors at our locations. Our horse racing operations only operate during the months where the weather is conducive to racing, which is typically from late spring through the early fall. Holidays, vacation seasons, and sporting events may also cause our results to fluctuate.