Accel Entertainment, Inc.

Good afternoon and thank you for joining the Excel Entertainment Q4 and full year 2024 earnings call. My name is Kate and I will be the moderator for today's call. At this time, all lines are in a listen only mode and will be until the question and answer portion. If you would like to queue up for a question, please press star one on your telephone keypad. I would now like to turn the call over to Derek Harmer, General Counsel and Chief Compliance Officer. Please proceed.

Welcome to Excel Entertainment's fourth quarter and full year 2024 earnings call. Participating on the call today are Andy Rubenstein, Excel's Chief Executive Officer, Matt Ellis, Excel's Chief Financial Officer, and Mark Phelan, Excel's President of U.S. Gaming. Please refer to our website for the press release and supplemental information that will be discussed on this call. Today's call is being recorded and will be available on our website under Events and Presentations, within the investor relations section of our website. Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today and the company undertakes no obligation to update these statements unless required by law. For more detailed discussion of these and other risk factors, investors should review the forward-looking statement section of the earnings press release available on our website, as well as other risk factor disclosures in our filings with the SEC. Any projected financial information presented in this call is for illustrative purposes only and should not be relied upon as being predictive of future results. The inclusion of any financial forecast information in this call should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved. During the call, we may discuss certain non-GAAP financial measures. For reconciliations of the non-GAAP measures, as well as other information regarding these measures, please refer to our earnings release and other materials in the investor relations section of our website. I will now turn the call over to Andy.

Thanks, Derek, and good afternoon, everyone. Thank you for joining us for today's call. I'm pleased to report we had another record-setting year with total revenue of $1.2 billion and adjusted EBITDA of $189 million, proof of the resiliency of our convenient local gaming offering. It was a busy quarter for us. We entered into Louisiana on November 1st and acquired Fairmont Park outside St. Louis on December 2nd. Our teams are hard at work integrating Louisiana and preparing for the phase one opening of the Fairmont Casino in the second quarter of this year. In terms of financial performance, Illinois, our largest market, hosted market-wide GGR growth of 4% year-over-year, outperforming Illinois casinos, which were down 3% year-over-year on a comparable basis. We are proud of the strong foundation we have built in our home state. leading in a model that's a win-win-win for our state, our partners, and local convenience-based gaming providers like us. During the quarter, our location count in Illinois was down again sequentially. This was due to the strategic closures of 16 underperforming locations. Without these closures, our location count would have been flat for the quarter. For the full year, we strategically closed 54 underperforming locations, which helps us right size our operations in response to the 1% increase in the state gaming tax on July 1st, 2024. We expect this process to continue as we review our portfolio and look for opportunities to improve financial performance. We've identified a subset of locations within our bottom decile performers that we will phase out over coming quarters. Given we have an attractive pipeline of promising locations, we expect near-term Illinois net unit growth to potentially be flat, with planned positive impacts to EBITDA and greater returns on invested capital as we rotate locations. Across our footprint, we continue to refine our sales and operating model, focusing on the highest hold per day locations. The improvement in the composition of our portfolio will help drive both top-line and bottom-line growth, driven by choiceful segmentation and resource allocation. In addition to what I just mentioned, we've leaned into our continuous process of reviewing our markets and operations to find areas of improvement. As a result, we've identified additional efficiencies and opportunities for growth that will result in improved performance and an increase in free cash flow. On the regulatory front, Illinois continues to lay the groundwork for Ticket In, Ticket Out, also known as TITO, which should make cash processing more efficient. More importantly, it will create a more convenient experience for our players, allowing them to switch between games in our locations without cashing out and cashing in each time, making our sites more akin to a casino experience. We're hopeful TIDA will be rolled out in 2025. We continue to monitor regulation related to this. Before I turn it over to Mark, I want to take a few minutes to talk about Excel's value proposition and where we see our greatest opportunities for growth. For both our customers and players, we provide a high-quality slot gaming experience at a low price point that can be accessed by our players at a local, convenient retail location of their choosing in 15 minutes or less from their home. We support retail gaming partners by providing them with high margin revenue gaming products and labor light self-service technology. We instill player loyalty through our rewards programs by creating memorable player experiences with our diverse gaming selection. And finally, we maintain collaborative and reliable partnerships with regulators across 11 different regulatory structures, all while generating attractive returns on capital in the low teens. In our core route-based business model, our steady growth algorithm is both simple and compelling. We target low single-digit revenue growth, mid single-digit EBITDA growth, and high single-digit pre-cash flow growth, assuming normalized CapEx levels, which Matt will address later. Looking ahead, the primary levels for growth in our core route business are one, growing organically in Illinois, Nebraska, and Georgia through both newly licensed establishment and converting competitors' locations. Two, driving profitability in Nebraska and Georgia through operational execution and strategically positioning ourselves in the face of favorable legislation. Three, collecting a greater share of location economics through selectively owning establishments and markets where this is permitted and is otherwise profitable. And four, preparing ourselves for future opportunities in new states likely to legalize local gaming in the future. Outside of our core business, our M&A pipeline remains active, as demonstrated by the Fairmont and Louisiana acquisitions. We are confident that we can leverage our proven capabilities as a local gaming operator to convert opportunities in the attractive and sizable nationwide $15 billion plus GGR local gaming market. Most assets in this market are unconsolidated and sit at EBITDA levels that are below the radar of larger gaming companies, conditions that play to our strengths. With that, I'm going to turn it over to Mark to provide an update on Fairmont.