Accel Entertainment, Inc. Annual Report - A Deep Dive for Investors

Accel Entertainment, Inc. (ACEL) is a dominant force in the gaming and amusement sector. This summary provides investors with a clear, in-depth look at the company's performance for the fiscal year ended December 31, 2025, covering its operations, financials, and future outlook.

Business Overview Accel Entertainment leads the market in providing gaming and amusement services. The company primarily operates Video Gaming Terminals (VGTs) in licensed venues such as bars, restaurants, and truck stops. This segment drives the vast majority of its revenue, accounting for approximately 85% of total sales. Beyond VGTs, Accel also offers amusement services like jukeboxes and dartboards, manufactures gaming equipment, and earns revenue from ATM fees. Accel maintains a significant presence across key states including Illinois, Montana, Nevada, Louisiana, Nebraska, and Georgia, and actively expands into new territories.

Financial Performance Accel delivered robust growth in 2025. Total revenue surged by 18% to $1.25 billion, up from $1.06 billion in 2024. Strategic acquisitions and continued organic expansion within its core markets primarily fueled this impressive growth. Net income for the year reached $95 million, resulting in earnings per share (EPS) of $1.15. This compares favorably to the prior year's $78 million net income and $0.95 EPS. The company's adjusted EBITDA also saw a healthy 15% increase, reaching $280 million, reflecting efficient operations and successful integration of new businesses.

Management's Discussion & Analysis (MD&A) Highlights Management attributes the strong financial performance in 2025 to a combination of strategic acquisitions and sustained organic growth across its core markets. The 18% increase in total revenue to $1.25 billion largely stemmed from the successful integration of numerous acquired businesses. These include:

• Toucan Gaming LLC
• Fairmont Holdings
• Lucky 7's Beverages
• 24th Street Station Casino
• Jorgenson's Lounge
• Illinois Gaming Entertainment
• Great Lakes Vending
• Doc Eddy's
• Illinois Video Slot Management
• Dynasty Games
• Randy's
• Bayou
• Pelican
• Xtreme

Collectively, these acquisitions added over 2,000 new gaming locations and contributed an estimated $150 million to annual revenue, significantly expanding Accel's market share and geographic reach. Net income growth reflects efficient operational management and the leverage gained from increased scale.

Regarding its financial condition, Accel maintained a strong liquidity position, supported by $75 million in cash and cash equivalents. The company strategically deployed capital resources to fund acquisitions and organic expansion. It utilized a mix of term loans, a revolving credit facility, and convertible debt, as detailed in the "Financial Health" section. Management believes its current capital structure and access to financing provide ample flexibility to pursue future growth initiatives.

Financial Health Accel employs a disciplined approach to financing its operations and growth initiatives. As of December 31, 2025, the company reported $75 million in cash and cash equivalents. Total debt stood at $750 million, primarily consisting of a revolving credit facility with $150 million drawn and term loans totaling $600 million. Accel also utilized convertible debt securities amounting to $50 million, which offers flexible financing that can convert into equity under specific conditions. Its net debt to adjusted EBITDA ratio was approximately 2.4x, indicating a manageable leverage level for a company in growth mode. This financial structure provides ample liquidity and flexibility for future investments.

Risk Factors Investors should be aware of several key risks:

• Regulatory Changes: The gaming industry is highly regulated. Adverse shifts in state or local laws could significantly impact operations or expansion plans.
• Intense Competition: Both established players and new entrants create intense competition, which could pressure profit margins.
• Acquisition Integration Risks: The company's aggressive acquisition strategy carries inherent integration risks, including potential difficulties in combining operations and retaining customers.
• Economic Downturns: Economic slowdowns could reduce discretionary consumer spending on entertainment, directly affecting revenue.
• Other Risks: These include technological obsolescence, cybersecurity threats, and dependence on third-party venue partners.

Competitive Position Accel distinguishes itself through its extensive network, advanced technology, and strong relationships with venue partners. Its scale enables operational efficiencies and superior service, while proprietary technology enhances the player experience and provides valuable data analytics for partners. Accel holds a dominant position in Illinois, its largest market, and strategically expands into other states with favorable regulatory environments. Its aggressive acquisition strategy is central to consolidating the fragmented gaming terminal market, further strengthening its competitive advantage.

Future Outlook Under the continued leadership of CEO Andrew Rubenstein and CFO Derek Harmer, Accel remains committed to its growth-through-acquisition strategy while prioritizing operational excellence. For fiscal year 2026, the company projects revenue growth of 10-12%, targeting adjusted EBITDA between $300 million and $315 million. Accel anticipates further strategic acquisitions and organic growth in existing and new markets, especially as more states consider legalizing or expanding video gaming.

The broader market trend toward regulated gaming expansion continues to present opportunities for Accel. The company actively monitors legislative developments in states like Missouri and Ohio, which could open new markets. The industry also sees a shift toward cashless gaming solutions and enhanced player engagement technologies, areas where Accel invests to maintain its competitive edge. However, increased regulatory scrutiny on responsible gaming practices is a growing trend that could influence future operational requirements.