Accel Entertainment, Inc.

Good afternoon and thank you for attending the Excel Entertainment second quarter earnings call. My name is Jason and I'll be the moderator today. All lines will be muted during the presentation portion of the call and opportunity for questions and answers at the end. I'll now pass the conference over to your host, Scott Levin.

Welcome to Excel Entertainment's second quarter 2025 earnings call. Participating on the call today are Andy Rubenstein, Excel's chief executive officer, and mark phelan excels president of us gaming and acting cfo 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 Litigation 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 a more detailed discussion of these and other risk factors, investors should review the forward-looking statements 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. Following management's prepared remarks, we will open the call for a question and answer session. With that, I would now like to introduce Andy. Please go ahead.

Thank you, Scott, and good afternoon, everyone. We appreciate you joining us today. In the 2025 second quarter, Excel generated record quarterly revenue and adjusted EBITDA of $336 million and $53 million, respectively. We continue to build on our leading position in delivering the best gaming experience to the U.S. locals market. as we support more than 27,000 legal and regulated gaming terminals at over 4,400 retail partners across 10 states. Across our broader portfolio, we generated growth in the majority of the markets where we operate. Our Q2 growth reflects our disciplined expansion strategy and consistent execution in our core developing and new markets. Excel's continued growth will benefit from its strong competitive position and healthy balance sheet as we pursue our multi-pronged growth strategy. Today's call should leave everyone with the understanding that local gaming is an incredibly attractive, resilient, and a growing segment within the broader gaming market. And as a leader in this segment, Excel expects to continue to generate near and long-term growth in revenue, adjusted EBITDA, and free cash flow. We plan to achieve these goals by leveraging our operating expertise while also remaining focused on often overlooked M&A opportunities, which I will discuss in more detail later on the call. As a market leader in Illinois, this market remains the foundation of our business. with second quarter revenue up over 8% to a quarterly record $245 million. This increase was driven by our strategic game enhancements and location optimization initiatives, which resulted in a 6% year-over-year increase in location hold per day to $910. Our second largest core market, the Montana Distributed Gaming Route, grew revenue by 2.6% as it continues to scale its content and systems products to support its dominant market share. Our developing markets, Nebraska and Georgia, grew revenue by 26.1% and 53.5% respectively, while Nevada revenue declined by 7.7%. As Nebraska and Georgia continue to take market share with superior service and products, Nevada's decline reflects a loss of a key customer in 2024 due to a change in ownership. We remain optimistic about our growth potential in all three markets, where strategic investments are now beginning to contribute to Accel's overall growing adjusted EBITDA. In our new markets, we are seeing tangible contributions from our Toucan Gaming acquisition in Louisiana. That acquisition further expanded our operations in the southeast by adding over 600 terminals across nearly 100 locations. Toucan Gaming generated approximately $10 million of second quarter revenue, and we expect to realize additional synergies and revenue as well as adjusted EBITDA performance gains. Our performance reinforces our confidence that these benefits will become even more apparent into next year. In April, Excel's installation of 271 gaming positions completed phase one of its casino at Fairmont Park. Our soft opening just prior to the Kentucky Derby generated a strong turnout bringing excitement to this historic venue. Fairmont continues to ramp up steadily, and we remain confident in its long-term contribution. We expect our player acquisition and retention strategy to expand our player database and drive market share gains. In addition to our racing and casino business at Fairmont, Excel benefits from a long-term revenue sharing agreement tied to FanDuel's online sports betting operations across the state of Illinois. When taken together, the early operational progress at Fairmont and the FanDuel revenue sharing arrangement reinforce our confidence that Fairmont Park Casino and Racing will continue to contribute to our adjusted EBITDA growth as we move into 2026. Looking ahead, Our M&A pipeline remains active. We continue to evaluate opportunities across the large and fragmented local gaming market, estimated at over $15 billion nationally. We remain focused on disciplined, accretive transactions that do not stretch our balance sheet. Most of these assets are below the radar of larger operators, creating attractive opportunities for Excel to expand our footprint while maintaining strong financial discipline. Our consistently strong financial performance and ongoing progress reflect the inherent resilience of our business model and its ability to generate compelling returns on invested capital. Our decentralized approach, spanning thousands of retail locations, provides the diversification and the flexibility to efficiently allocate capital in line with local demand and market dynamics with that i'm going to turn it over to marks to walk us through the financial results in added detail thanks andy for second quarter total revenue was 336 million dollars representing year-over-year growth of nine percent without the acquisition of fairmont park