Accel Entertainment Inc.

11/04/2025 | Press release | Distributed by Public on 11/04/2025 15:23

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "expect," "plans," "intend," "may," "strategy," "prospects," "estimate," "will," "should," "could," "project," "target," "anticipate," and other similar words and involve risks and uncertainties. Our actual results could differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include those discussed in the section titled "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2024. Any forward-looking statements made by us speak only as of the date on which they are made. We are under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise, except as required by law. This discussion and analysis should also be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations", set forth in our Annual Report on Form 10-K for the year ended December 31, 2024.
Company Overview
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.
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 acquisition of Fairmount Park - Casino & Racing ("Fairmount") in Collinsville, Illinois. In April 2025, the casino opened and the racing season began at Fairmount.
We currently operate in the following states:
State
Year Operations Started or Year of Acquisition
Branding
Operations
Illinois 2012 Accel Entertainment
•Establishments with a liquor license (Up to 6 gaming terminals)
-Bars/restaurants/retail
-Gaming cafes
-Fraternal organizations
-Veterans' organizations
•Truck stops (Up to 6 gaming terminals)
•Large truck stops (Up to 10 gaming terminals)
Illinois 2024
Fairmount Park - Casino + Racing
•Operates a thoroughbred horse race track with ~50 annual race days since April 2025
•Operates a casino with ~270 gaming positions
•Revenue share agreement with FanDuel to operate a sportsbook
•Offers attractive food and beverage offerings throughout the year
State
Year Operations Started or Year of Acquisition
Branding
Operations
Montana 2022 Century Gaming
•Business locations licensed to sell alcoholic beverages for on-premises consumption only, including locations restricted to offering a maximum of 20 gaming terminals
Montana 2022 Grand Vision Gaming
•Designs and manufactures gaming terminals and software that are sold to Montana, South Dakota, and West Virginia
•Develops proprietary gaming terminals and related software as well as other ancillary equipment for our distributed gaming routes in Montana, Nevada, Nebraska and Georgia
Montana 2023 Yellowstone Casino and other local retail/parlor locations
•Retail gaming locations licensed to sell alcoholic beverages and offering a maximum of 20 gaming terminals
•Certain locations have attractive food offerings
•Currently, we have five parlor locations
Nevada 2022 Century Gaming
•Non-casino locations where gaming is incidental to the primary business being conducted at the location, including:
-Grocery/drug/convenience stores
-Bars/restaurants/taverns
-Liquor stores
•Games are generally limited to 15 or fewer gaming terminals with no other forms of gaming activity permitted
Nebraska 2022 Accel Entertainment
•Operate cash devices in retail locations throughout the state
•Retail establishments include any business location that is open to the public for the sale of goods other than gaming terminals and that possesses a valid sales tax permit
Georgia 2020 Bulldog Gaming
•Operate gaming terminals which are skill-based coin-operated amusement machines with winnings paid in points that may be redeemed for noncash merchandise, prizes, toys, gift cards, or novelties
Louisiana 2024 Toucan Gaming
•Truck stop gaming parlors (up to 60 gaming terminals)
•Establishments with a liquor license (up to 4 gaming terminals)
-Bars/restaurants/retail
-Fraternal organizations
-Veterans' organizations
Iowa 2021 Accel Entertainment
•Operate amusement concessions, including games of chance and games of skill, which we define as gaming terminals
•Bars, taverns, and restaurants with a certain class of liquor license are permitted to operate up to four electrical or mechanical games of chance
Pennsylvania 2023 Accel Entertainment
•Licensed to operate at qualified truck stops
•Actively exploring opportunities
Distributed Gaming Competitive Landscape
We compete in the distributed gaming landscape on the basis of the responsiveness of our service to our locations and players, and the popularity, content, features, quality, functionality and reliability of our products. In the distributed gaming industry, we generally operate in markets where our terminal revenue splits are either statutorily determined or negotiated, as follows:
Statutory Splits
Negotiated Splits
Net terminal income splits are statutorily predetermined; minimum and maximum wagers are mandated by the applicable governing bodies
Net terminal income splits are negotiated
Pricing is not considered a factor as revenue splits with our locations are mandated by law
Pricing is a driver in contract negotiations as all revenue splits are negotiated
Location and customer experience are key differentiating factors for selecting us over our competitors
Our focus on player appeal, customer service and reputation are also key factors impacting competition
Our markets with statutory splits are: Illinois, Georgia, Pennsylvania
Our markets with negotiated splits are: Montana, Nevada, Nebraska, Iowa, Louisiana
Macroeconomic Factors
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 location partners may adversely affect our results of operations and cash flows.
For the first nine months of 2025, we have not observed material impacts to our business or outlook from the macroeconomic factors noted above. In the first half of 2024, we accelerated certain of our capital expenditures related to gaming terminals and related components to manage our supply chain.
We intend to continue to monitor macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions to the extent our business begins to be adversely impacted.
The One Big Beautiful Bill Act (the "Act") was signed into law on July 4, 2025. The Act contains significant tax law changes impacting business tax payers with various effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. Among the tax law changes that impact us are those that relate to the timing of certain tax deductions including depreciation expense, interest expense and research and development expenditures. Because these tax law changes impact the timing of these deductions, they will not reduce our overall effective tax rate. However, these tax law changes have resulted in a favorable reduction in our current tax expense which is offset by an increase to deferred tax expense.
Components of Performance
Net revenues
Net gaming. Net gaming revenue represents net cash received from gaming activities, which is the difference between gaming wins and losses. Net gaming revenue includes the amounts earned by our locationpartners and is recognized at the time of gaming play.
Amusement. Amusement revenue represents amounts collected from amusement devices operated at various locationpartnersand is recognized at the point the amusement device is used.
Manufacturing. Manufacturing revenue represents sales of gaming terminals and software as well as other ancillary equipment.
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.
Operating expenses
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 casino and racing operations.
Cost of manufacturing goods sold. Cost of manufacturing goods sold consists of costs associated with the sale of gaming terminals and software as well as other ancillary equipment.
General and administrative. General and administrative expenses consist of operating expense and general and administrative expense. Operating expense includes compensation-related costs 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.
Depreciation and amortization of property and equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the individual assets. Leasehold improvements are amortized over the shorter of the useful life or the lease.
Amortization of intangible assets and route and customer acquisition costs. Route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and our gaming locations, which allows us to install and operate gaming terminals. The route and customer acquisition costs and route and customer acquisition costs payable are recorded at the net present value of the future payments using a discount rate equal to our incremental borrowing rate associated with its long-term debt. Route and customer acquisition costs are amortized on a straight-line basis over 18 years, which is the expected estimated life of the contract, including expected renewals.
Location contracts acquired in a business combination are recorded at fair value and then amortized as an intangible asset on a straight-line basis over the expected useful life of 15 years.
Other intangible assets acquired in a business acquisition are recorded at fair value and then amortized as an intangible asset on a straight-line basis over their estimated 7 to 20-year useful lives.
Interest expense, net
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 Secured Overnight Financing Rate ("SOFR") rate plus an applicable margin, as defined under the terms of the credit facility, ranging from 1.5% to 2.5% depending on the first lien net leverage ratio.
Income tax expense
Income tax expense consists mainly of taxes payable to federal, state and local authorities. Deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities.
Results of Operations
The following table summarizes our results of operations on a consolidated basis for the threemonths ended September 30, 2025 and 2024:
(in thousands, except %'s) Three Months Ended
September 30, 		Increase / (Decrease)
2025 2024 Change ($) Change (%)
Net revenues:
Net gaming $ 308,481 $ 289,923 $ 18,558 6.4 %
Amusement 4,977 5,104 (127) (2.5) %
Manufacturing 1,678 1,705 (27) (1.6) %
ATM fees and other 14,557 5,495 9,062 164.9 %
Total net revenues 329,693 302,227 27,466 9.1 %
Operating expenses:
Cost of revenue (exclusive of depreciation and amortization expense shown below) 225,511 210,841 14,670 7.0 %
Cost of manufacturing goods sold (exclusive of depreciation and amortization expense shown below) 916 962 (46) (4.8) %
General and administrative 55,600 47,930 7,670 16.0 %
Depreciation and amortization of property and equipment 13,339 11,001 2,338 21.3 %
Amortization of intangible assets and route and customer acquisition costs 6,389 5,781 608 10.5 %
Other expenses, net 2,577 3,867 (1,290) (33.4) %
Total operating expenses 304,332 280,382 23,950 8.5 %
Operating income 25,361 21,845 3,516 16.1 %
Interest expense, net 8,622 9,164 (542) (5.9) %
Loss from unconsolidated affiliates
22 1 21 2,100.0 %
(Gain) loss on change in fair value of contingent earnout shares
(2,170) 4,216 (6,386) (151.5) %
Loss on debt extinguishment
1,090 - 1,090 N/A
Income before income tax expense 17,797 8,464 9,333 110.3 %
Income tax expense 4,492 3,569 923 25.9 %
Net income $ 13,305 $ 4,895 $ 8,410 171.8 %
Net revenues
Total net revenues for the three months ended September 30, 2025 were $329.7 million, an increase of $27.5 million, or 9.1%, compared to the prior-year period. This increase was primarily driven by higher net gaming revenue of $18.6 million, which reflected an increase in gaming locations, terminals and revenue from our casino operations, as well as higher ATM fees and other revenue of $14.6 million, an increase of $9.1 million, or 164.9%, which included revenue from our racing operations. Net revenues by state are presented below:
(in thousands) Three Months Ended
September 30, 		Increase / (Decrease)
2025 2024 Change ($) Change (%)
Net revenues by state:
Illinois $ 239,041 $ 223,338 $ 15,703 7.0 %
Montana 40,471 39,648 823 2.1 %
Nevada 26,238 28,350 (2,112) (7.4) %
Louisiana
9,465 - 9,465 N/A
Nebraska 8,501 6,538 1,963 30.0 %
Georgia 5,092 3,410 1,682 49.3 %
Other
885 943 (58) (6.2) %
Total net revenues $ 329,693 $ 302,227 $ 27,466 9.1 %
Cost of revenue
Cost of revenue for the three months ended September 30, 2025 was $225.5 million, an increase of $14.7 million, or 7.0%, compared to the prior-year period, driven by higher net gaming revenue and revenue from our racing operations, as described above.
Cost of manufacturing goods sold
Cost of manufacturing goods sold for the three months ended September 30, 2025 was $0.9 million, which is essentially flat compared to the prior-year period.
General and administrative
General and administrative expenses for the three months ended September 30, 2025 were $55.6 million, an increase of $7.7 million, or 16.0%, compared to the prior-year period. The increase was attributable to higher compensation-related costs, as we continue to grow our operations.
Depreciation and amortization of property and equipment
Depreciation and amortization of property and equipment for the three months ended September 30, 2025 was $13.3 million, an increase of $2.3 million, or 21.3%, compared to the prior-year period due to an increased number of gaming terminals.
Amortization of intangible assets and route and customer acquisition costs
Amortization of intangible assets and route and customer acquisition costs for the three months ended September 30, 2025 were $6.4 million, an increase of $0.6 million, or 10.5%, compared to the prior-year period due to higher amortization expense on location contracts acquired.
Other expenses, net
Other expenses, net for the three months ended September 30, 2025 were $2.6 million, a decrease of $1.3 million, or 33.4%, compared to the prior-year period. The decrease was primarily attributable to lower non-recurring expenses, lower non-recurring lobbying and legal expenses related to new markets, and lower fair value adjustments associated with the revaluation of contingent consideration liabilities.
Interest expense, net
Interest expense, net for the three months ended September 30, 2025 was $8.6 million, which was a decrease of $0.5 million, or 5.9%, compared to the prior-year period. We experienced lower interest rates and the benefit realized on our interest rate caplets, partially offset by an increase in average outstanding debt. For the three months ended September 30, 2025, the weighted average interest rate, excluding the impact of our interest rate caplets, was approximately 6.4% compared to 7.6% in the prior-year period.
(Gain) loss on change in fair value of contingent earnout shares
The change in the fair value of contingent earnout shares for the three months ended September 30, 2025 was a gain of $2.2 million, compared to a loss of $4.2 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.
Loss on debt extinguishment
A loss on debt extinguishment of $1.1 million was recorded for the three months ended September 30, 2025 in connection with the entry into a new Credit Agreement (as defined below). For more information on our new Credit Agreement and the related loss on debt extinguishment, see the discussion within the Liquidity and Capital Resources later in this section.
Income tax expense
Income tax expense for the three months ended September 30, 2025 was $4.5 million, an increase of $0.9 million, or 25.9%, compared to the prior-year period. The effective tax rate for the three months ended September 30, 2025 was 25.2% compared to 42.2% in the prior-year period. Our effective income tax rate can vary from period to period depending on, among other factors, the amount of permanent tax adjustments and discrete items. The change in the fair value of the contingent earnout shares is considered a discrete item for tax purposes and can be the primary driver for the fluctuations in the tax rate year over year.
The following table summarizes our results of operations on a consolidated basis for the nine months ended September 30, 2025 and 2024:
(in thousands, except %'s) Nine Months Ended
September 30, 		Increase / (Decrease)
2025 2024 Change ($) Change (%)
Net revenues:
Net gaming $ 924,351 $ 871,300 $ 53,051 6.1 %
Amusement 16,402 16,772 (370) (2.2) %
Manufacturing 7,299 9,122 (1,823) (20.0) %
ATM fees and other 41,462 16,263 25,199 154.9 %
Total net revenues 989,514 913,457 76,057 8.3 %
Operating expenses:
Cost of revenue (exclusive of depreciation and amortization expense shown below) 676,741 633,325 43,416 6.9 %
Cost of manufacturing goods sold (exclusive of depreciation and amortization expense shown below) 3,878 5,283 (1,405) (26.6) %
General and administrative 163,482 142,105 21,377 15.0 %
Depreciation and amortization of property and equipment 38,735 32,229 6,506 20.2 %
Amortization of intangible assets and route and customer acquisition costs 19,001 16,808 2,193 13.0 %
Other expenses, net 9,490 13,620 (4,130) (30.3) %
Total operating expenses 911,327 843,370 67,957 8.1 %
Operating income 78,187 70,087 8,100 11.6 %
Interest expense, net 26,078 26,730 (652) (2.4) %
Loss from unconsolidated affiliates
55 1 54 5,400.0 %
Loss on change in fair value of contingent earnout shares
1,209 4,190 (2,981) (71.1) %
Loss on debt extinguishment
1,090 - 1,090 N/A
Income before income tax expense 49,755 39,166 10,589 27.0 %
Income tax expense 14,575 12,269 2,306 18.8 %
Net income $ 35,180 $ 26,897 $ 8,283 30.8 %
Net revenues
Total net revenues for the nine months ended September 30, 2025 were $989.5 million, an increase of $76.1 million, or 8.3%, compared to the prior-year period. This increase was primarily driven by higher net gaming revenue of $53.1 million, which reflected an increase in gaming locations, terminals and revenue from our casino operations, as well as higher ATM fees and other revenue of $41.5 million, an increase of $25.2 million, or 154.9%, which included revenue from our racing operations. Net revenues by state are presented below:
(in thousands) Nine Months Ended
September 30, 		Increase / (Decrease)
2025 2024 Change ($) Change (%)
Net revenues by state:
Illinois $ 717,954 $ 675,294 $ 42,660 6.3 %
Montana 121,715 120,372 1,343 1.1 %
Nevada 80,933 86,881 (5,948) (6.8) %
Louisiana
28,119 - 28,119 N/A
Nebraska 23,612 18,621 4,991 26.8 %
Georgia 14,231 9,171 5,060 55.2 %
Other 2,950 3,118 (168) (5.4) %
Total net revenues $ 989,514 $ 913,457 $ 76,057 8.3 %
Cost of revenue
Cost of revenue for the nine months ended September 30, 2025 was $676.7 million, an increase of $43.4 million, or 6.9%, compared to the prior-year period, driven by higher net gaming revenue and revenue from our racing operations, as described above.
Cost of manufacturing goods sold
Cost of manufacturing goods sold for the nine months ended September 30, 2025 was $3.9 million, a decrease of $1.4 million, or 26.6%, compared to the prior-year period primarily due to lower manufacturing revenue.
General and administrative
General and administrative expenses for the nine months ended September 30, 2025 were $163.5 million, an increase of $21.4 million, or 15.0%, compared to the prior-year period. The increase was attributable to higher compensation-related costs, as we continue to grow our operations.
Depreciation and amortization of property and equipment
Depreciation and amortization of property and equipment for the nine months ended September 30, 2025 was $38.7 million, an increase of $6.5 million, or 20.2%, compared to the prior-year period due to an increased number of gaming terminals.
Amortization of intangible assets and route and customer acquisition costs
Amortization of intangible assets and route and customer acquisition costs for the nine months ended September 30, 2025 were $19.0 million, an increase of $2.2 million, or 13.0%, compared to the prior-year period due to higher amortization expense on location contracts acquired.
Other expenses, net
Other expenses, net for the nine months ended September 30, 2025 were $9.5 million, a decrease of $4.1 million, or 30.3%, compared to the prior-year period. The decrease was primarily attributable to lower fair value adjustments associated with the revaluation of contingent consideration liabilities and lower non-recurring lobbying and legal expenses related to new markets.
Interest expense, net
Interest expense, net for the nine months ended September 30, 2025 was $26.1 million, a decrease of $0.7 million, or 2.4%, compared to the prior-year period. We experienced lower interest rates and the benefit realized on our interest rate caplets, partially offset by an increase in average outstanding debt. For the nine months ended September 30, 2025, the weighted average interest rate, excluding the impact of our interest rate caplets, was approximately 6.5% compared to a rate of approximately 7.6% for the prior-year period.
Loss on change in fair value of contingent earnout shares
The change in the fair value of contingent earnout shares for the nine months ended September 30, 2025 was a loss of $1.2 million, compared to a loss of $4.2 million in 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.
Loss on debt extinguishment
A loss on debt extinguishment of $1.1 million was recorded for the nine months ended September 30, 2025 in connection with the entry into a new Credit Agreement. For more information on our new Credit Agreement and the related loss on debt extinguishment, see the discussion within the Liquidity and Capital Resources later in this section.
Income tax expense
Income tax expense for the nine months ended September 30, 2025 was $14.6 million, an increase of $2.3 million, or 18.8%, compared to the prior-year period. The effective tax rate for the nine months ended September 30, 2025 was 29.3% compared to 31.3% 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.
Key Business Metrics
We use statistical data and comparative information commonly used in the gaming industry to monitor the performance of the business, none of which are prepared in accordance with U.S. GAAP, and therefore should not be viewed as indicators of operational performance. Our management uses these key business metrics for financial planning, strategic planning and employee compensation decisions. The key business metrics include:
•Number of locations;
•Number of gaming terminals; and
•Location hold-per-day
We also periodically review and revise our key business metrics to reflect changes in our business.
Number of locations
The number of locations is based on a combination of third-party portal data and data from our internal systems. We utilize this metric to continually monitor growth from existing locations, organic openings, purchased locations, and competitor conversions. Competitor conversions occur when a location chooses to change terminal operators.
The following table sets forth information with respect to our primary locations:
As of September 30,
Increase / (Decrease)
2025 2024 Change
Change (%)
Illinois 2,728 2,791 (63) (2.3) %
Montana 625 615 10 1.6 %
Nevada 370 356 14 3.9 %
Louisiana
96 - 96 N/A
Nebraska 276 252 24 9.5 %
Georgia 356 275 81 29.5 %
Total 4,451 4,289 162 3.8 %
Number of gaming terminals
The number of gaming terminals in operation is based on a combination of third-party portal data and data from our internal systems. We utilize this metric to continually monitor growth from existing locations, organic openings, purchased locations, and competitor conversions.
The following table sets forth information with respect to the number of gaming terminals in our primary locations:
As of September 30,
Increase / (Decrease)
2025 2024 Change
Change (%)
Illinois 15,641 15,714 (73) (0.5) %
Montana 6,628 6,448 180 2.8 %
Nevada 2,757 2,685 72 2.7 %
Louisiana
670 - 670 N/A
Nebraska 991 882 109 12.4 %
Georgia 1,027 780 247 31.7 %
Total 27,714 26,509 1,205 4.5 %
Location hold-per-day
Location hold-per-day is calculated by dividing net gaming revenue in the period by the average number of locations. Then divide the calculated amount by the number of operational days. We utilize this metric to compare market and location performance on a normalized basis. The percent change in location hold-per-day is the underlying metric we use to determine the change in same-store sales.
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:
Three Months Ended
September 30, 		Increase / (Decrease)
2025 2024
Change ($)
Change (%)
Illinois $ 876 $ 839 $ 37 4.4 %
Montana 621 613 8 1.3 %
Nevada 734 802 (68) (8.5) %
Louisiana
977 - 977 N/A
Nebraska 307 257 50 19.5 %
Georgia 146 121 25 20.7 %
Nine Months Ended
September 30, 		Increase / (Decrease)
2025 2024
Change ($)
Change (%)
Illinois $ 888 $ 859 $ 29 3.4 %
Montana 614 608 6 1.0 %
Nevada 761 835 (74) (8.9) %
Louisiana
988 - 988 N/A
Nebraska 284 244 40 16.4 %
Georgia 148 111 37 33.3 %
Non-GAAP Financial Measure
Adjusted EBITDA is a non-GAAP financial measure, but is a key metric management uses to monitor ongoing core operations. Adjusted EBITDA excludes the effects of certain non-cash items or represent certain nonrecurring items that are unrelated to core performance. Management believes this non-GAAP financial measure enhances the understanding of our underlying drivers of profitability and trends in our business and facilitates company-to-company and period-to-period comparisons. Management also believes that this non-GAAP financial measure is used by investors, analysts and other interested parties as a measure of financial performance and to evaluate our ability to fund capital expenditures, service debt obligations and meet working capital requirements.
Adjusted EBITDAis defined as net income plus:
•Amortization of intangible assets and route and customer acquisition costs
•Stock-based compensation expense
•Loss from unconsolidated affiliates
•(Gain) loss on change in fair value of contingent earnout shares
•Other expenses, net
•Depreciation and amortization of property and equipment
•Interest expense, net
•Emerging markets which reflects the results, on an Adjusted EBITDA basis, for non-core jurisdictions where our operations are developing
◦Markets are no longer considered emerging when we have installed or acquired at least 500 gaming terminals in the jurisdiction, or when 24 months have elapsed from the date we first install or acquire gaming terminals in the jurisdiction, whichever occurs first.
◦Prior to June 2025, Pennsylvania was considered an emerging market.
◦Prior to January 2024, Iowa was considered an emerging market.
◦As of June 2025, we no longer have any emerging markets.
•Income tax expense
•Loss on debt extinguishment
Adjusted EBITDA
(in thousands) Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 2025 2024
Net income $ 13,305 $ 4,895 $ 35,180 $ 26,897
Adjustments:
Amortization of intangible assets and route and customer acquisition costs
6,389 5,781 19,001 16,808
Stock-based compensation expense
3,504 3,342 8,384 8,927
Loss from unconsolidated affiliates
22 1 55 1
(Gain) loss on change in fair value of contingent earnout shares
(2,170) 4,216 1,209 4,190
Other expenses, net
2,577 3,867 9,490 13,620
Depreciation and amortization of property and equipment
13,339 11,001 38,735 32,229
Interest expense, net 8,622 9,164 26,078 26,730
Emerging markets
- 43 67 121
Income tax expense 4,492 3,569 14,575 12,269
Loss on debt extinguishment
1,090 - 1,090 -
Adjusted EBITDA $ 51,170 $ 45,879 $ 153,864 $ 141,792
Adjusted EBITDA for the threemonths endedSeptember 30, 2025, was $51.2 million,an increase of $5.3 million, or 11.5%, compared to the prior-year period. Adjusted EBITDA for the nine months ended September 30, 2025, was $153.9 million, an increaseof $12.1 million, or 8.5%, compared to the prior-year period. The increase was attributable to an increase in the number of locations and gaming terminals.
Liquidity and Capital Resources
We believe that our cash and cash equivalents, cash flows from operations and borrowing availability under the Credit Agreement will be sufficient to meet our capital requirements for the next twelve months and the foreseeable future thereafter. 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 ("Board") approved share repurchase program and near-term acquisitions. As of September 30, 2025, we had $290.2 million in cash and cash equivalents.
New Credit Agreement
In order to refinance our prior credit facility, we entered into a Credit Agreement, dated as ofSeptember 10, 2025 (the "Credit Agreement"),by and among us, Accel Entertainment LLC (the "Borrower"), the lenders from time to time party thereto, CIBC Bank USA, as administrative agent and collateral agent for the lenders and lead arranger, Fifth Third Bank, National Association, JPMorgan Chase Bank, N.A., U.S. Bank National Association, and Truist Securities, Inc., as joint lead arrangers, and Bank of America, N.A. as documentation agent.
The Credit Agreement establishes a:
•$300.0 million revolving credit facility, including a letter of credit facility with a $15.0 million sublimit and a swing line facility with a $25.0 million sublimit, and
•$600.0 million term loan facility.
The maturity date of the Credit Agreement is September 10, 2030.
Proceeds of the initial borrowings under the Credit Agreement were used to repay in full all outstanding indebtedness and terminate all commitments under our prior credit agreement, dated as of November 13, 2019, as amended.
We incurred $4.1 million of debt issuance costs related to the Credit Agreement, of which $3.8 million are being amortized over the life of the Credit Agreement. We also recognized a loss on debt extinguishment of $1.1 million due to the partial extinguishment associated with a lender whose borrowing capacity decreased and the complete extinguishment for those lenders who are no longer participating.
The obligations of the Borrower under the Credit Agreement are (i) guaranteed by us and each of the Borrower's existing and future material domestic subsidiaries and (ii) secured by a first-priority lien on substantially all of our assets, as well as substantially all of the assets of the Borrower and the Borrower's existing and future material domestic subsidiaries, in each case subject to certain customary exceptions set forth in the Credit Agreement.
At the Borrower's election, borrowings under the Credit Agreement bear interest at either (i) a base rate equal to the highest of (a) the federal funds effective rate plus 0.5%, (b) the prime rate announced by CIBC Bank USA, or (c) 1-month Term SOFR plus 1% or (ii) Term SOFR for an applicable interest period, in each case plus an applicable margin. The applicable margin is determined by reference to the Borrower's First Lien Net Leverage Ratio (as defined in the Credit Agreement) and ranges from (i) 0.75% to 1.75% for base rate borrowings and (ii) 1.5% to 2.5% for Term SOFR borrowings.As of September 30, 2025, the weighted-average interest rate on our borrowings was approximately 6.5%.
The Credit Agreement contains customary affirmative and negative covenants including limitations on the ability of the Company, the Borrower, and their restricted subsidiaries to, amongst other things, grant additional liens, incur additional indebtedness, merge or consolidate, dispose of assets, engage in certain transactions with affiliates, and make restricted payments. The Credit Agreement also requires the Borrower to maintain, as of the last day of each fiscal quarter, (i) a First Lien Net Leverage Ratio no greater than 4.75 to 1.00 and (ii) a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of at least 1.20 to 1.00. The Credit Agreement includes customary events of default, the occurrence of which could permit the administrative agent to, amongst other things, declare all amounts owing under the credit facilities to be immediately due and payable, exercise remedies with respect to the collateral, and terminate the lenders' commitments thereunder. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.
We were in compliance with all debt covenants under the Credit Agreement as of September 30, 2025and expect to remain in compliancefor the next 12 months.
Interest rate caplets
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 prior credit agreement by entering into a 4-year series of 48 deferred premium caplets ("caplets"), which remain in effect under the new Credit Agreement and are set to expire in January 2026.
We recognized an unrealized loss, net of taxes, on the change in fair value of the caplets of $1.1 million and $3.0 million for the three and nine months ended September 30, 2025. In comparison, we recognized an unrealized loss, net of taxes, of $4.1 million for both the three and nine months ended September 30, 2024.We also recognized interest income on the caplets of $1.8 millionand $5.3 million for the three and ninemonths ended September 30, 2025, respectively. In comparison, we recognized interest income on the caplets of $2.6 millionand $7.7 millionfor the three and ninemonths ended September 30, 2024, respectively. These amounts are reflected in interest expense, net in the condensed consolidated statements of operations and other comprehensive income.
Cash Flows
The following table summarizes net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our condensed consolidated financial statements and the notes thereto included in this filing:
(in thousands) Nine Months Ended
September 30, 		Increase / (Decrease)
2025 2024
Change ($)
Change (%)
Net cash provided by operating activities $ 119,795 $ 107,666 $ 12,129 11.3 %
Net cash used in investing activities (80,697) (90,225) 9,528 10.6 %
Net cash used in financing activities
(30,168) (13,967) (16,201) (116.0) %
Net cash provided by operating activities
For the nine months ended September 30, 2025, net cash provided by operating activities was $119.8 million, an increase in cash of $12.1 million compared to the prior-year period due primarily to higher deferred income taxes and changes in working capital adjustments.
Net cash used in investing activities
For the nine months ended September 30, 2025, net cash used in investing activities was $80.7 million, a decrease in cash used of $9.5 million compared to the prior-year period. The decrease in cash used was primarily attributable to less cash used for acquisitions and an investment in an unconsolidated affiliate in the prior year, partially offset by higher purchases of property and equipment and an acquisition of an indefinite-lived operating license at Fairmount. 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.
Net cash used in financing activities
For the nine months ended September 30, 2025, net cash used in financing activities was $30.2 million, an increase in cash used of $16.2 million compared to the prior-year period. The increase is primarily attributable to lower net borrowings, payments for debt issuance cost on our new credit facility and higher repurchases of our common stock.
Critical Accounting Policies and Estimates
In preparing our condensed consolidated financial statements, we applied the same critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2024, that affect judgments and estimates of amounts recorded for certain assets, liabilities, revenues, and expenses.
Seasonality
Our results of operations can fluctuate due to seasonal trends and other factors. For example, the gross revenue per gaming terminal 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.
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