0001698991false00016989912024-05-082024-05-08

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2024
ACCEL ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware001-3813698-1350261
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(IRS Employer
Identification No.)
140 Tower Drive
Burr Ridge,Illinois60527
(Address of principal executive offices)(Zip Code)

(630) 972-2235
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Class A-1 common stock, par value $0.0001 per shareACELNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02 Results of Operations and Financial Condition.
On May 8, 2024, Accel Entertainment, Inc. (the "Company") issued a press release announcing its financial and operating results for the first quarter ended March 31, 2024. Copies of the Company’s press release and investor presentation are attached and furnished herewith as Exhibits 99.1 and 99.2 to this Form 8-K and are incorporated herein by reference.
Information in this report (including Exhibits 99.1 and 99.2) furnished pursuant to Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. 
The Company announces material information to the public through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, and the Company’s investor relations website (https:// ir.accelentertainment.com) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number		Description
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
ACCEL ENTERTAINMENT, INC.
Date: May 8, 2024
By:/s/ Mathew Ellis
Mathew Ellis
Chief Financial Officer
 

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accel_logographicxglossy.jpg

Accel Entertainment Announces Q1 2024 Operating Results

Chicago, IL – May 8, 2024 – Accel Entertainment, Inc. (NYSE: ACEL) today announced certain financial and operating results for the first quarter ended March 31, 2024.

Highlights:
•Ended Q1 2024 with 3,987 locations; an increase of 5.1% compared to Q1 2023
•Ended Q1 2024 with 25,321 gaming terminals; an increase of 5.6% compared to Q1 2023
•Revenues of $301.8 million for Q1 2024; an increase of 2.9% compared to Q1 2023
•Net income of $7.4 million for Q1 2024; a decrease of 19.2% compared to Q1 2023
•Adjusted EBITDA of $46.2 million for Q1 2024; an increase of 0.3% compared to Q1 2023
•Q1 2024 ended with $286 million of net debt; a decrease of 7% compared to Q1 2023
•Repurchased approximately $6.1 million of Accel Class A-1 common stock in Q1 2024

Accel CEO Andy Rubenstein commented, “I am happy to report that we delivered another solid quarter despite some unfavorable weather early on, once again demonstrating the strength of our business model. We are cautiously optimistic about legislative trends we are seeing outside of Illinois and continue to explore opportunities to expand our national footprint. Given the strength of our balance sheet and experience with locally-focused gaming markets, we continue to believe that we offer one of the best investments in the industry.”
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Condensed Consolidated Statements of Operations and Other Data
Three Months Ended
March 31,
(in thousands)20242023
Total net revenues
$301,817 $293,208 
Operating income25,559 27,672 
Income before income tax expense12,183 15,182 
Net income7,416 9,182 
Other Financial Data:  
Adjusted EBITDA(1)
46,247 46,118 
Adjusted net income (2)
19,505 21,064 
(1)Adjusted EBITDA is defined as net income plus amortization of intangible assets and route and customer acquisition costs; stock-based compensation expense; loss 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. For additional information on Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA, see “Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net income.”
(2)
Adjusted net income is defined as net income plus amortization of intangible assets and route and customer acquisition costs; stock-based compensation expense; loss on change in fair value of contingent earnout shares; other expenses, net; and tax effect of adjustments. For additional information on Adjusted net income and a reconciliation of net income to Adjusted net income, see "Non-GAAP Financial Measures—Adjusted net income and Adjusted EBITDA.”

Net Revenues
(in thousands)Three Months Ended
March 31,		Increase / (Decrease)
20242023Change ($)Change (%)
Net revenues by state:
Illinois$224,863 $219,843 $5,020 2.3 %
Montana38,141 36,451 1,690 4.6 %
Nevada29,209 29,961 (752)(2.5)%
Nebraska5,834 3,924 1,910 48.7 %
Other3,770 3,029 741 24.5 %
Total net revenues$301,817 $293,208 $8,609 2.9 %
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Key Business Metrics
Locations (1)
As of March 31,
Increase / (Decrease)
20242023Change
Change (%)
Illinois2,786 2,663 123 4.6 %
Montana609 620 (11)(1.8)%
Nevada355 345 10 2.9 %
Nebraska237 165 72 43.6 %
Total locations3,987 3,793 194 5.1 %

Gaming terminals (1)
As of March 31,
Increase / (Decrease)
20242023Change
Change (%)
Illinois15,494 14,546 948 6.5 %
Montana6,280 6,247 33 0.5 %
Nevada2,714 2,704 10 0.4 %
Nebraska833 488 345 70.7 %
Total gaming terminals25,321 23,985 1,336 5.6 %
Location hold-per-day (2)
Three Months Ended March 31,Increase / (Decrease)
20242023
Change ($)
Change (%)
Illinois$860 $887 $(27)(3.0)%
Montana594 567 27 4.8 %
Nevada847 866 (19)(2.2)%
Nebraska233 228 5 2.2 %
(1)Based on a combination of third-party portal data and data from our internal systems. This metric is utilized by Accel to continually monitor growth from existing locations, organic openings, acquired locations, and competitor conversions.
(2)
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 used to determine the change in same-store sales.

Condensed Consolidated Statements of Cash Flows Data 
Three Months Ended
March 31,
Increase / (Decrease)
(in thousands)20242023Change ($)Change (%)
Net cash provided by operating activities$28,750 $37,983 $(9,233)(24.3)%
Net cash used in investing activities(25,896)(23,585)(2,311)(9.8)%
Net cash used in financing activities(10,546)(9,982)(564)(5.7)%

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Non-GAAP Financial Measures
 Three Months Ended
March 31,		Increase / (Decrease)
(in thousands)20242023Change ($)Change (%)
Net income$7,416 $9,182 $(1,766)(19.2)%
Adjustments:
Amortization of intangible assets and route and customer acquisition costs (1)
5,438 5,242 196 3.7 %
Stock-based compensation (2)
2,350 1,688 662 39.2 %
Loss on change in fair value of contingent earnout shares (3)
4,716 4,602 114 2.5 %
Other expenses, net (4)
2,426 3,251 (825)(25.4)%
Tax effect of adjustments (5)
(2,841)(2,901)60 2.1 %
Adjusted net income19,505 21,064 (1,559)(7.4)%
Depreciation and amortization of property and equipment10,434 9,063 1,371 15.1 %
Interest expense, net8,660 7,888 772 9.8 %
Emerging markets (6)
40 (798)838 105.0 %
Income tax expense7,608 8,901 (1,293)(14.5)%
Adjusted EBITDA$46,247 $46,118 $129 0.3 %
(1)Amortization of intangible assets and route and customer acquisition costs consist of upfront cash payments and future cash payments to third-party sales agents to acquire the location partners that are not connected with a business acquisition, as well as the amortization of other intangible assets. We amortize the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognize non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to the established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as we do not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 15 years. “Amortization of intangible assets and route and customer acquisition costs” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired, as well as the amortization of other intangible assets.
(2)Stock-based compensation consists of options, restricted stock units, and performance-based restricted stock units.
(3)Loss on change in fair value of contingent earnout shares represents a non-cash fair value adjustment at each reporting period end related to the value of these contingent shares. Upon achieving such contingency, shares of Class A-2 common stock convert to Class A-1 common stock resulting in a non-cash settlement of the obligation.
(4)Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring lobbying and legal expenses related to distributed gaming expansion in current or prospective markets, and (iii) other non-recurring expenses.
(5)Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.
(6)Emerging markets consist of 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. We currently view Pennsylvania as an emerging market. Prior to January 2024, Iowa was considered an emerging market. Prior to April 2023, Nebraska was considered an emerging market.
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Reconciliation of Debt to Net Debt
As of March 31,
(in thousands)20242023
Debt, net of current maturities$511,425 $514,146 
Plus: Current maturities of debt28,485 23,469 
Less: Cash and cash equivalents(253,919)(228,529)
Net debt$285,991 $309,086 
Conference Call
Accel will host an investor conference call on May 8, 2024 at 4:30 p.m. Central time (5:30 p.m. Eastern time) to discuss these financial and operating results. Interested parties may join the live webcast by registering at https://www.netroadshow.com/events/login?show=029ad323&confId=63414 or accessing the webcast via the company’s investor relations website: ir.accelentertainment.com. Following completion of the call, a replay of the webcast will be posted on Accel’s investor relations website.
About Accel
Accel is a leading distributed gaming operator in the United States and a preferred partner for local business owners in the markets it serves. Accel offers turnkey full-service gaming solutions to authorized non-casino locations such as bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country. Accel installs, maintains, operates and services gaming terminals and related equipment for its location partners as well as redemption devices, stand-alone ATMs and amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment. Accel also designs and manufactures gaming terminals and related equipment.
Media Contact:
Eric Bonach
H/Advisors Abernathy
212-371-5999
eric.bonach@h-advisors.global
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, contained in this press release are forward-looking statements, including, but not limited to, any statements regarding our estimates of number of gaming terminals, locations, revenues, Adjusted EBITDA and capital expenditures. The words “predict,” “estimated,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “continue,” and similar expressions or the negatives thereof are intended to identify forward-looking statements. These forward-looking statements represent our current reasonable expectations and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors including, but not limited to: Accel’s ability to operate in existing
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markets or expand into new jurisdictions; Accel’s ability to offer new and innovative products and services that fulfill the needs of location partners and create strong and sustained player appeal; Accel’s dependence on relationships with key manufacturers, developers and third parties to obtain gaming terminals, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms; the negative impact on Accel’s future results of operations by the slow growth in demand for gaming terminals and by the slow growth of new gaming jurisdictions; Accel’s heavy dependency on its ability to win, maintain and renew contracts with location partners; unfavorable macroeconomic conditions or decreased discretionary spending due to other factors such as interest rate volatility, persistent inflation, actual or perceived instability in the U.S. and global banking systems, high fuel rates, recessions, epidemics or other public health issues, terrorist activity or threat thereof, civil unrest or other macroeconomic or political uncertainties, that could adversely affect Accel’s business, results of operations, cash flows and financial conditions and other risks and uncertainties indicated from time to time in documents filed or to be filed with the Securities and Exchange Commission (“SEC”).
Accordingly, forward-looking statements, including any projections or analysis, should not be viewed as factual and should not be relied upon as an accurate prediction of future results. The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on Accel. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled “Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended December 31,2023 filed by Accel with the SEC on February 28, 2024 (the "Form 10-K"), as well as Accel’s other filings with the SEC. Except as required by law, we do not undertake publicly to update or revise these statements, even if experience or future changes make it clear that any projected results expressed in this or other press releases or future quarterly reports, or company statements will not be realized. In addition, the inclusion of any statement in this press release does not constitute an admission by us that the events or circumstances described in such statement are material. We qualify all of our forward-looking statements by these cautionary statements. In addition, the industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors including those described in the section entitled “Risk Factors” in the Form 10-K, as well as Accel’s other filings with the SEC. These and other factors could cause our results to differ materially from those expressed in this press release.
Non-GAAP Financial Information
This press release includes certain financial information not prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”), including Adjusted EBITDA, Adjusted net income, and Net Debt. Adjusted EBITDA, Adjusted net income, and Net Debt are non-GAAP financial measures and are key metrics used to monitor ongoing core operations. Management of Accel believes Adjusted EBITDA, Adjusted net income, and Net Debt enhance the understanding of Accel’s underlying drivers of profitability and trends in Accel’s business and facilitates company-to-company and period-to-period comparisons, because these non-GAAP financial measures exclude the effects of certain non-cash items, represents certain nonrecurring items that are unrelated to core performance, or excludes non-core operations. Management of Accel also believes that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance.

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Adjusted EBITDA, Adjusted net income, and Net Debt
Although Accel excludes amortization of intangible assets and route and customer acquisition costs from Adjusted EBITDA and Adjusted net income, Accel believes that it is important for investors to understand that these route, customer and other intangible assets contribute to revenue generation. Any future acquisitions may result in amortization of intangible assets and route and customer acquisition costs.
Adjusted EBITDA, Adjusted net income, and Net Debt are not recognized terms under GAAP. These non-GAAP financial measures exclude some, but not all, items that affect net income, and these measures may vary among companies. These non-GAAP financial measures are unaudited and have important limitations as an analytical tool, should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance.

7


ACCEL ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)Three Months Ended
March 31,
20242023
Net revenues:
Net gaming$288,137 $279,380 
Amusement6,129 6,798 
Manufacturing2,209 2,122 
ATM fees and other5,342 4,908 
Total net revenues301,817 293,208 
Operating expenses:
Cost of revenue (exclusive of depreciation and amortization expense shown below)209,167 203,554 
Cost of manufacturing goods sold (exclusive of depreciation and amortization expense shown below)1,159 1,408 
General and administrative47,634 43,018 
Depreciation and amortization of property and equipment10,434 9,063 
Amortization of intangible assets and route and customer acquisition costs5,438 5,242 
Other expenses, net2,426 3,251 
Total operating expenses276,258 265,536 
Operating income25,559 27,672 
Interest expense, net8,660 7,888 
Loss on change in fair value of contingent earnout shares4,716 4,602 
Income before income tax expense 12,183 15,182 
Income tax expense4,767 6,000 
Net income$7,416 $9,182 
Earnings per common share:
Basic$0.09 $0.11 
Diluted0.09 0.11 
Weighted average number of common shares outstanding:
Basic84,298 86,885 
Diluted85,300 87,132 


8


ACCEL ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)
March 31,December 31,
20242023
Assets(Unaudited)
Current assets:
Cash and cash equivalents$253,919 $261,611 
Accounts receivable, net13,737 13,467 
Prepaid expenses8,092 6,287 
Inventories7,841 7,681 
Interest rate caplets8,912 8,140 
Other current assets16,763 15,408 
Total current assets309,264 312,594 
Property and equipment, net271,414 260,813 
Noncurrent assets:
Route and customer acquisition costs, net20,458 19,188 
Location contracts acquired, net173,206 176,311 
Goodwill101,554 101,554 
Other intangible assets, net19,933 20,542 
Interest rate caplets, net of current5,342 4,871 
Other assets17,956 17,020 
Total noncurrent assets338,449 339,486 
Total assets$919,127 $912,893 
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of debt$28,485 $28,483 
Current portion of route and customer acquisition costs payable1,480 1,505 
Accrued location gaming expense9,352 9,350 
Accrued state gaming expense19,076 18,364 
Accounts payable and other accrued expenses39,046 36,012 
Accrued compensation and related expenses8,900 12,648 
Current portion of consideration payable2,791 3,288 
Total current liabilities109,130 109,650 
Long-term liabilities:
Debt, net of current maturities511,425 514,091 
Route and customer acquisition costs payable, less current portion4,702 4,955 
Consideration payable, less current portion4,252 4,201 
Contingent earnout share liability36,544 31,827 
Other long-term liabilities7,144 7,015 
Deferred income tax liability, net43,801 42,750 
Total long-term liabilities607,868 604,839 
Stockholders’ equity:
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2024 and December 31, 2023
— — 
Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 95,266,660 shares issued and 83,778,268 shares outstanding at March 31, 2024; 95,016,960 shares issued and 84,123,385 shares outstanding at December 31, 20238 8 
Additional paid-in capital204,456 203,046 
Treasury stock, at cost(118,252)(112,070)
Accumulated other comprehensive income9,017 7,936 
Accumulated earnings106,900 99,484 
Total stockholders' equity202,129 198,404 
Total liabilities and stockholders' equity$919,127 $912,893 
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First Quarter 2024 Earnings Presentation May 2024

 
Important Information Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, contained in this presentation are forward-looking statements, including, but not limited to, any statements regarding our estimates of number of gaming terminals, locations, revenues, Adjusted EBITDA and capital expenditures. The words “predict,” “estimated,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “continue,” and similar expressions or the negatives thereof are intended to identify forward-looking statements. These forward-looking statements represent our current reasonable expectations and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors including, but not limited to: Accel’s ability to operate in existing markets or expand into new jurisdictions; Accel’s ability to offer new and innovative products and services that fulfill the needs of location partners and create strong and sustained player appeal; Accel’s dependence on relationships with key manufacturers, developers and third parties to obtain gaming terminals, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms; the negative impact on Accel’s future results of operations by the slow growth in demand for gaming terminals and by the slow growth of new gaming jurisdictions; Accel’s heavy dependency on its ability to win, maintain and renew contracts with location partners; unfavorable macroeconomic conditions or decreased discretionary spending due to other factors such as interest rate volatility, persistent inflation, actual or perceived instability in the U.S. and global banking systems, high fuel rates, recessions, epidemics or other public health issues, terrorist activity or threat thereof, civil unrest or other macroeconomic or political uncertainties, that could adversely affect Accel’s business, results of operations, cash flows and financial conditions and other risks and uncertainties indicated from time to time in documents filed or to be filed with the Securities and Exchange Commission (“SEC”). Accordingly, forward-looking statements, including any projections or analysis, should not be viewed as factual and should not be relied upon as an accurate prediction of future results. The forward-looking statements contained in this presentation are based on our current expectations and beliefs concerning future developments and their potential effects on Accel. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled “Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended December 31,2023 filed by Accel with the SEC on February 28, 2024 (the "Form 10-K"), as well as Accel’s other filings with the SEC. Except as required by law, we do not undertake publicly to update or revise these statements, even if experience or future changes make it clear that any projected results expressed in this or other presentations or future quarterly reports, or company statements will not be realized. In addition, the inclusion of any statement in this presentation does not constitute an admission by us that the events or circumstances described in such statement are material. We qualify all of our forward-looking statements by these cautionary statements. In addition, the industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors including those described in the section entitled “Risk Factors” in the Form 10-K, as well as Accel’s other filings with the SEC. These and other factors could cause our results to differ materially from those expressed in this presentation. Industry and Market Data Unless otherwise indicated, information contained in this presentation concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity, and market size, is based on information from various sources, on assumptions that we have made that are based on those data and other similar sources, and on our knowledge of the markets for our services. This information includes a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. In addition, projections, assumptions, and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the Annual Report on Form 10-K filed by Accel with the SEC, as well as Accel’s other filings with the SEC. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us. Use of Non-GAAP Financial Measures This presentation includes non-GAAP financial measures, including Adjusted EBITDA, Adjusted net income, and Net Debt. Adjusted EBITDA is defined as net income plus amortization of intangible assets and route and customer acquisition costs; (gain) loss on change in fair value of contingent earnout shares; stock-based compensation expense; other expenses, net; tax effect of adjustments; depreciation and amortization of property and equipment; interest expense; emerging markets; and income tax expense. Adjusted net income is defined as net income plus amortization of intangible assets and route and customer acquisition costs; (gain) loss on change in fair value of contingent earnout shares; stock-based compensation expense; other expenses, net; and tax effect of adjustments. Net Debt is defined as debt, net of current maturities plus current maturities of debt less cash and cash equivalents. Management believes that these non-GAAP measures of financial results enhance the understanding of Accel’s underlying drivers of profitability and trends in Accel’s business and facilitate company-to-company and period-to period comparisons, because these non-GAAP financial measures exclude the effects of certain non-cash items or represent certain nonrecurring items that are unrelated to core performance. Management of Accel also believes that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate Accel’s ability to fund capital expenditures, service debt obligations and meet working capital requirements. See the slide entitled “Non-GAAP to GAAP Reconciliation” on page 9 for additional information. 2

 
Accel at a Glance 1. Calculated as Net Gaming Revenue in the period divided by the number of operational days. There were 217 and approximately 347 operational days for the years ended December 31, 2020 and 2021, respectively. 2. Calculated as of December 31, 2023. Net Debt is a non-GAAP financial measure that may not be comparable to other similarly titled measures of other companies. Accel does not consider this Non-GAAP measure in isolation or as an alternative to similar financial measures determined in accordance with GAAP. For more information with respect to this Non- GAAP financial measure, see page 2 “Use of Non-GAAP Financial Measures,” and for a reconciliation of this measure to its most directly comparable GAAP measure, see page 9 "Non-GAAP to GAAP Reconciliation.” 3. November 22, 2021, the Company’s Board of Directors approved a share repurchase program of up to $200 million of shares of its Class A-1 common stock. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. Under the repurchase program, repurchases can be made from time to time using a variety of methods, including open market purchases or privately negotiated transactions, in compliance with the rules of the United States SEC and other applicable legal requirements. The repurchase program does not obligate the Company to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. As of March 31, 2024, the Company has purchased a total of 12,004,014 shares under the plan at a cost of $124 million. Strong Track Record of Growth Disciplined Stewards of Capital As of March 31, 2024, Accel owned and operated 25,321 gaming terminals across 3,987 locations in Illinois, Montana, Nevada and Nebraska Average Daily Net Gaming Revenue(1) ($ in thousands) Long, recurring agreements Continued strong customer engagement Firm backlog of contracted locations waiting to go-live High Quality Service Company in Gaming Vertical Contracted, Recurring Revenue 3 Balance sheet strength Conservative net leverage $286 million of Net Debt(2) Over 60% through the $200 million share repurchase program(3) $658 $882 $1,125 $1,383 $2,030 $2,534 $3,051 $3,166 2017 2018 2019 2020 2021 2022 2023 2024 YTD

 
Q1 2024 Highlights • Q1 2024 Revenue of $302 million, an increase of 3% compared to Q1 2023 • Q1 2024 Net Income of $7 million, a decrease of 19% compared to Q1 2023 • Q1 2024 Adjusted EBITDA(1) of $46 million, an increase of 0.3% compared to Q1 2023 • Repurchased $6 million of Accel Class A-1 Common Stock in Q1 2024, and $124 million since the repurchase program was announced in November 2021(2) 4 1. Adjusted EBITDA is a non-GAAP financial measure that may not be comparable to other similarly titled measures of other companies. Accel does not consider non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. For more information with respect to our non-GAAP financial measures, see page 2 “Use of Non-GAAP Financial Measures,” and for a reconciliation of each of these measures to their most directly comparable GAAP measure, see page 9 "Non-GAAP to GAAP Reconciliation.” 2. On November 22, 2021, the Company’s Board of Directors approved a share repurchase program of up to $200 million of shares of its Class A-1 common stock. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. Under the repurchase program, repurchases can be made from time to time using a variety of methods, including open market purchases or privately negotiated transactions, in compliance with the rules of the United States SEC and other applicable legal requirements. The repurchase program does not obligate the Company to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. As of March 31, 2024, the Company has purchased a total of 12,004,014 shares under the plan at a cost of $124 million.

 
$46 $47 $44 $45$46 Q1 Q2 Q3 Q4 2023 2024 $293 $293 $287 $297$302 Q1 Q2 Q3 Q4 2023 2024 Accel Quarterly KPIs 1. Adjusted EBITDA is a non-GAAP financial measure that may not be comparable to other similarly titled measures of other companies. Accel does not consider this Non-GAAP measure in isolation or as an alternative to similar financial measures determined in accordance with GAAP. For more information with respect to this Non-GAAP financial measure, see page 2 “Use of Non-GAAP Financial Measures,” and for a reconciliation of this measure to its most directly comparable GAAP measure, see page 9 "Non-GAAP to GAAP Reconciliation.” Locations (#) Terminals (#) Revenue ($ in millions) Adjusted EBITDA(1) ($ in millions) 5 2,663 2,690 2,724 2,762 620 610 611 609 345 355 352 352 165 197 219 238 2,786 609 355 237 3,793 3,987 3,852 3,906 3,961 Q1 Q2 Q3 Q4 2023 IL 2023 MT 2023 NV 2023 NE 2024 IL 2024 MT 2024 NV 2024 NE 14,546 14,767 15,020 15,276 6,247 6,210 6,252 6,276 2,704 2,782 2,744 2,704 488 609 688 827 15,494 6,280 2,714 833 23,985 25,321 24,368 24,704 25,083 Q1 Q2 Q3 Q4 2023 IL 2023 MT 2023 NV 2023 NE 2024 IL 2024 MT 2024 NV 2024 NE

 
2024 Results 6 1. Adjusted EBITDA is a non-GAAP financial measure that may not be comparable to other similarly titled measures of other companies. Accel does not consider this Non-GAAP measure in isolation or as an alternative to similar financial measures determined in accordance with GAAP. For more information with respect to this Non-GAAP financial measure, see page 2 “Use of Non-GAAP Financial Measures,” and for a reconciliation of this measures to its most directly comparable GAAP measure, see page 9 "Non-GAAP to GAAP Reconciliation.” 2. Presented as cash spend. 3. Net Debt is a non-GAAP financial measure that may not be comparable to other similarly titled measures of other companies. Accel does not consider this non-GAAP measure in isolation or as an alternative to similar financial measures determined in accordance with GAAP. For more information with respect to this Non-GAAP financial measure, see page 2 “Use of Non-GAAP Financial Measures,” and for a reconciliation of this measures to its most directly comparable GAAP measure, see page 9 "Non-GAAP to GAAP Reconciliation.” Note: Numbers may not total due to rounding. Percent change may not recalculate due to rounding. $ in millions Q1 2023 Q1 2024 % Change Locations 3,793 3,987 5% Terminals 23,985 25,321 6% Revenue $293 $302 3% Adj EBITDA(1) $46 $46 0% CapEx(2) $21 $21 -4% Net Debt(3) $309 $286 -7%

 
Historical Financial Summary 7 $ in millions 1. Cost of Revenue consists of (i) taxes on net gaming revenue that is payable to the appropriate jurisdiction, (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, (v) ATM and amusement fees, and (vi) costs associated with the sale of gaming terminals. 2. Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures that may not be comparable to other similarly titled measures of other companies. Accel does not consider these non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. For more information with respect to these non-GAAP financial measures, see page 2 “Use of Non-GAAP Financial Measures,” and for a reconciliation of each of these measures to their most directly comparable GAAP measure, see page 9 "Non-GAAP to GAAP Reconciliation.” 3. Loss on change in fair value of contingent earnout shares represents a non-cash fair value adjustment at each reporting period end related to the value of these contingent shares. Upon achieving such contingency, shares of Class A-2 common stock convert to Class A-1 common stock resulting in a non-cash settlement of the obligation. Note: Numbers may not total due to rounding. Q1 YoY 2020 2021 2022 2023 2023 2024 Growth No. of Locations 2,435 2,584 3,741 3,961 3,793 3,987 5% No. of Terminals 12,247 13,639 23,541 25,083 23,985 25,321 6% Net Gaming Revenue 301 706 925 1,114 279 288 3% Other Revenue 16 29 45 57 14 14 (1%) Gross Revenues 316 735 970 1,170 293 302 3% % YoY Growth (26%) 132% 32% 21% 3% Less: Cost of revenue (exclusive of amortization and depreciation expense show n below )(1) (211) (494) (671) (817) (205) (210) 3% Gross Profit 105 241 299 353 88 91 4% % Margin 33% 33% 31% 30% 30% 30% Less: G&A Expenses (77) (111) (146) (180) (43) (48) 11% EBITDA 28 130 153 173 45 44 (3%) Adjusted EBITDA(2) 34 140 162 181 46 46 0% % Margin 11% 19% 17% 16% 16% 15% % YoY Growth (57%) 312% 16% 12% 0% Less: Depreciation & amortization of property & equipment (21) (25) (29) (38) (9) (10) Less: Amortization of intangible assets and route and customer acquisition costs (23) (22) (17) (21) (5) (5) EBIT (16) 83 106 114 31 28 Less: Other expenses, net (9) (13) (9) (6) (3) (2) Less: Interest expense, net (14) (13) (22) (33) (8) (9) Less: Income tax benefit (expense) 17 (15) (21) (20) (6) (5) Less: (Loss) gain on change in fair value of contingent earnout shares(3) 8 (10) 20 (9) (5) (5) Less: (Loss) gain on change in fair value of w arrants 13 -- -- -- -- -- Less: Loss on debt extinguishment -- (1) -- -- -- -- Reported Net Income (Loss) (0) 32 74 46 9 7 Adjusted Net Income(2) 6 71 80 83 21 20 Twelve Months Ended Three Months Ended December 31, March 31,

 
Accel Balance Sheet 8 Note: Numbers may not total due to rounding. $ in millions December 31, 2023 March 31, 2024 Assets Current Assets: Cash and cash equivalents $262 $254 Other current assets 51 55 Total current assets $313 $309 Property and equipment, net 261 271 Route and customer acquisition costs, net 19 20 Location contracts acquired, net 176 173 Goodwill 102 102 Other assets 42 43 Total assets $913 $919 Liabilities and Stockholders' Equity Current liab ilities: Short term debt and current maturities $28 $28 Accrued state and location gaming expense 28 28 Other current liabilities 53 52 Total current liabilities $110 $109 Long-term liab ilities: Long-term debt $514 $511 Contingent earnout share liability 32 37 Other liabilities 59 60 Total liabilities $714 $717 Total stockholders' equity $198 $202 Total liabilities and stockholders' equity $913 $919

 
Non-GAAP to GAAP Reconciliation 9 1. Amortization of intangible assets and route and customer acquisition costs consist of upfront cash payments and future cash payments to third-party sales agents to acquire the location partners that are not connected with a business acquisition, as well as the amortization of other intangible assets. We amortize the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to the established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as we do not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 15 years. “Amortization of intangible assets and route and customer acquisition costs” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired, as well as the amortization of other intangible assets. 2. Stock-based compensation consists of options, restricted stock units, and performance-based restricted stock units. 3. Loss on change in fair value of contingent earnout shares represents a non-cash fair value adjustment at each reporting period end related to the value of these contingent shares. Upon achieving such contingency, shares of Class A-2 common stock convert to Class A-1 common stock resulting in a non-cash settlement of the obligation. 4. Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring lobbying and legal expenses related to distributed gaming expansion in current or prospective markets, and (iii) other non-recurring expenses. 5. Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations. 6. Emerging markets consist of 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. We currently view Pennsylvania as an emerging market. Prior to January 2024, Iowa was considered an emerging market. Prior to April 2023, Nebraska was considered an emerging market. Note: Numbers may not total due to rounding. $ in millions 2020 2021 2022 2023 2023 2024 Reported Net Income (Loss) (0) 32 74 46 9 7 (+) Amortization of intangible assets and route and customer acquisition costs(1) 23 22 17 21 5 5 (+) Stock-based compensation(2) 6 6 7 9 2 2 (+) (Loss) gain on change in fair value of contingent earnout shares(3) (8) 10 (20) 9 5 5 (+) (Loss) gain on change in fair value of w arrants (13) – – – – – (+) Other expenses, net(4) 9 13 9 6 3 2 (+) Tax effect of adjustments(5) (10) (11) (8) (9) (3) (3) Adjusted Net Income 6 71 80 83 21 20 (+) Depreciation and amortization of property & equipment 21 25 29 38 9 10 (+) Interest expense, net 14 13 22 33 8 9 (+) Emerging markets(6) 1 3 3 (1) (1) 0 (+) Income tax (benefit) expense (7) 26 29 29 9 8 (+) Loss on debt extinguishment – 1 – – – – Adjusted EBITDA 34 140 162 181 46 46 Twelve Months Ended Three Months Ended December 31, March 31, Three Months Ended March 31, June 30, Sep. 30, Dec. 31, March 31, 2023 2023 2023 2023 2024 Reported Net Income 9 10 10 16 7 (+) Amortization of intangible assets and route and customer acquisition costs(1) 5 5 5 5 5 (+) Stock-based compensation(2) 2 3 3 2 2 (+) (Loss) gain on change in fair value of contingent earnout shares(3) 5 5 2 (3) 5 (+) Other expenses, net(4) 3 0 2 1 2 (+) Depreciation & amortization of property & equipment 9 9 9 10 10 (+) Interest expense, net 8 8 8 9 9 (+) Emerging markets(6) (1) 0 (0) (0) 0 (+) Income tax expense 6 6 5 3 5 (+) Loss on debt extinguishment – – – – – Adjusted EBITDA 46 47 44 45 46 Three Months Ended March 31, 2023 2024 Debt, net of current maturities 514 511 (+) Current maturities of debt 23 28 (-) Cash and cash equivalents (229) (254) Net Debt 309 286

 
v3.24.1.u1
Cover
May 08, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 08, 2024
Entity Registrant Name ACCEL ENTERTAINMENT, INC.
Entity Central Index Key 0001698991
Amendment Flag false
Entity Incorporation, State or Country Code DE
Entity File Number 001-38136
Entity Tax Identification Number 98-1350261
Entity Address, Address Line One 140 Tower Drive
Entity Address, City or Town Burr Ridge
Entity Address, State or Province IL
Entity Address, Postal Zip Code 60527
City Area Code 630
Local Phone Number 972-2235
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Class A-1 common stock, par value $0.0001 per share
Trading Symbol ACEL
Security Exchange Name NYSE
Entity Emerging Growth Company false
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