Accel Entertainment, Inc. (ACEL) - Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Accel Entertainment, Inc. is a leading distributed gaming operator in the United States, operating gaming terminals, amusement devices, and ATMs in non-casino locations across multiple states, as well as developing brick-and-mortar casinos and horse racing venues. As of March 31, 2026, the Company operated 4,540 locations with 28,353 gaming terminals.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Net Revenues | $351.6 million | $323.9 million |
| Net Income | $14.7 million | $14.6 million |
| Diluted EPS | $0.17 | $0.17 |
| Adjusted EBITDA | $53.8 million | $49.5 million |
| Operating Cash Flow | $42.7 million | $44.8 million |
| Cash and Equivalents | $274.1 million | $296.6 million (Dec 31, 2025) |
| Total Debt (Net) | $580.6 million | $607.4 million (Dec 31, 2025) |
| Weighted Avg. Interest Rate | 5.5% | 6.5% (Q1 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Total net revenues increased 8.5% year-over-year, driven primarily by a 9.8% increase in net gaming revenue ($29.5 million increase). This growth was supported by an increase in gaming locations and terminals, as well as revenue from new casino operations.
- Manufacturing Decline: Manufacturing revenue decreased 67.9% to $1.2 million due to lower equipment and software sales timing.
- Expense Increases: Cost of revenue rose 9.1% and General and Administrative (G&A) expenses increased 9.5%, largely due to higher compensation costs associated with operational growth.
- Interest Expense: Net interest expense decreased 2.1% to $8.5 million, benefiting from lower interest rates (weighted average 5.5% vs. 6.5% prior year), partially offset by reduced benefits from interest rate caplets.
- Location Expansion: Total locations increased by 149 (3.4%) and gaming terminals increased by 1,173 (4.3%). Significant growth occurred in Nevada (+26.8% locations), Georgia (+27.7% locations), and Nebraska (+8.6% locations).
Outlook, Commentary, and Risks
- Capital Expenditures: Management anticipates capital expenditures of approximately $60-70 million for the full year 2026.
- Share Repurchases: The Company repurchased 1.1 million shares for $12.1 million during Q1 2026. Approximately $151.2 million remains available under the $200 million repurchase program.
- Tax Credits: On May 1, 2026, the Company purchased $18.2 million of 2025 production tax credits for $16.9 million to be utilized on its 2025 federal tax return.
- Interest Rate Hedging: Following the expiration of previous caplets in January 2026, the Company entered into a new interest rate collar on January 30, 2026, capping rates at 4.00% and flooring at 2.9215% through September 2029.
- Legal Proceedings: Ongoing litigation regarding location agreements with J&J Ventures Gaming, LLC continues, though recent rulings have largely favored Accel. The Company has not established reserves for potential damages as no estimate is currently available.
- Seasonality: Results may fluctuate due to seasonal trends, with gross revenue per machine typically lower in summer months and higher in colder weather (February-April).
Investor Verification Checklist
- Verify the sustainability of the 9.8% growth in net gaming revenue given the decline in manufacturing sales.
- Monitor the impact of the new interest rate collar on future interest expense volatility.
- Review the status of the J&J Ventures Gaming litigation for potential future liability or operational disruption.
- Assess the utilization timeline and tax benefits of the $18.2 million production tax credit purchase.
- Track the Adjusted EBITDA margin as the Company scales operations in emerging markets like Louisiana and Nebraska.