Good afternoon. Thank you for attending the Excel Entertainment third quarter 2025 earnings call. My name is Cameron and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. And I would now like to pass the conference over to your host, Scott Levin. You may proceed.

Welcome to Accel Entertainment's third quarter 2025 earnings call. Participating on the call today are Andy Rubenstein, Accel's Chief Executive Officer, Brett Sommerer, Accel's Chief Financial Officer, and Mark Phelan, Accel'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 Litigation Reform Act of 1995. These forward-looking statements are subject to risk and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update those statements unless required by law. For a 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-gap financial measures for reconciliations of the non-gap 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 third quarter, Excel delivered another strong and resilient performance. For the quarter, total revenue increased 9.1% year-over-year to $330 million, net income was $13 million, and adjusted EBITDA grew 11.5% to $51 million, reflecting consistent execution and expansion across our markets. Growth this quarter was supported by higher gaming terminal accounts, stable machine performance, and improved efficiency in capital deployment. This demonstrates the strength and resilience of our distributed gaming model and our disciplined, return-focused approach to growth investments, including Vermont Park. In our core markets, Illinois and Montana, we continue to build on our leading positions and leverage our scale to drive efficiencies, optimize our location mix, and expand margins. Together, Illinois and Montana represent approximately 82% of our revenue. In Illinois, top-line growth continues to be driven by same-store performance and new machine placements. Our focus on higher-yielding locations and disciplined capital management remains a key driver of consistent results. We are also advancing the rollout of ticket-in, ticket-out functionality, which enhances player convenience and streamlines operations. In our developing markets, Nebraska, Georgia, and Nevada, we continue to build scale and make steady progress in growing profitability. Nebraska and Georgia both delivered strong double-digit revenue growth driven by location expansion and market share gains. As previously discussed, this compensated for a modest decline in year-over-year revenue for Nevada. due to the loss of a key customer in 2024 resulting from a change in ownership across these markets our capital investments are translating into stronger returns with nebraska and georgia delivering the highest quarterly revenue growth within our developing portfolio both markets continue to experience significant profitable growth and are tracking toward market expansion through 2026, consistent with our expectations and long-term model. Developing markets currently represent just over 12% of our total revenue. In our new markets, performance continues to ramp up steadily. In Louisiana, which currently represents about 3% of revenue, results continue to impress and scale, reflecting the successful integration of our Toucan Gaming acquisition. The Louisiana market now includes 670 terminals across nearly 100 locations, and we continue to optimize our routes to drive higher returns for the future. We look forward to developing a strong pipeline of bolt-on acquisitions of truck stops in Louisiana. At Fairmont Park, we continue to see strong player engagement and revenue growth since opening the casino in April. In these early months of the park's operations, we've gained valuable insight, which will be helpful in evaluating the timing and scope for our phase two expansion. Early results support our long-term confidence in the property's contribution through the Racino, food and beverage offerings, and our sports betting partnership with FanDuel. We are highly encouraged by sequential monthly revenue growth, reflecting the steady ramp-up of customer engagement as we refine the gaming experience and expand brand awareness heading into next year. Across all of our markets, we continue to benefit from the diversification and flexibility of our distributed gaming model. This allows us to allocate capital efficiently and capture growth opportunities across both new and established markets. Our CapEx execution process is rigorous and data-driven, supporting deployment of capital where it is expected to generate the highest incremental return. During the quarter, we completed a $900 million senior secured credit facility, consisting of a $600 million term loan and a $300 million revolver, each with a five-year maturity. This refinancing strengthens our balance sheet, enhances liquidity, and lowers our cost of capital while extending maturities to 2030. We also repurchased $6.8 million of our common stock during the quarter, bringing total year-to-date stock repurchases to roughly 2.2 million shares, or $23.7 million. We look forward our growth investments, including software, technology, and data analytics upgrades, in addition to machine refreshes, remain balanced across our core and developing markets, as well as our new markets, where early investments are producing solid returns. As it relates to M&A, we continue to evaluate opportunities within the large and fragmented local gaming market, estimated at over $15 billion nationally. Our approach remains being disciplined and focused on accretive opportunities that strengthen our gaming platform without stretching our balance Looking ahead, our priorities remain clear, driving steady growth and efficiency in our core markets, scaling profitability in our developing and new markets, and maintaining financial discipline while returning capital to shareholders through opportunistic share repurchases. With strong recash flow generation, enhanced capital efficiency, and scalable opportunities across both existing and emergent markets, we believe Excel is well positioned to deliver steady top-line growth and improving returns as we move into 2026. This quarter results demonstrate the strength of our unique business model and our success in generating consistent financial performance and cash flow across a diversified, locals-focused gaming portfolio. With that, I want to take a moment to thank Mark Phelan for leading our finance team as interim CFO over the past seven months, all while continuing his role as the president of U.S. Gaming. Mark brought focus and steady leadership through this transition and has played a big part in helping our new CFO, Brett Summerer, as he gets up to speed across all of Excel's operations. Mark will continue to join our quarterly earnings call as Excel's operational leader, providing valuable insight into our business performance and growth potential from an operations perspective. I will now hand it over to Mark.

Thanks, Andy. I really appreciate the trust you and the board place in me to lead the finance team during this transition. It's been a privilege to work alongside such a strong group as we set the stage for our next phase of growth. I'm also really excited to introduce our new CFO, Brett Sommer. As we mentioned in our September release, Brett brings more than 25 years of experience in senior finance, operations, and IT roles at Kraft Heinz, Corning, and General Motors. Most recently, as CFO of Verano Holdings, he built a 70-person finance and IT team, led major system implementations, and completed over 20 M&A deals in a highly regulated, fast-growing industry. Please join me in welcoming Brett to Excel.

Thanks, Mark, and good afternoon, everyone. Before reviewing the financial results, I want to say how excited I am to be part of I joined the company in late September because I see a truly compelling opportunity. Excel's unique local model, consistent execution, strong financial foundation, and a clear focus on both near- and long-term growth create an exceptional platform for continued success. I look forward to working with Andy, Mark, and the broader Excel team as we continue to enhance operational excellence and deliver value for our shareholders. Now turning to the results for the quarter, total revenue was $330 million, an increase of 9.1% year-over-year, driven by growth in our core markets and incremental contributions from our developing and new markets. Breaking that down by state, Illinois revenue increased 7% year-over-year to $239 million, supported by stable demand and continued location optimization. The rollout of Tito continues as planned, improving player convenience and reducing cash-handling costs across the network. Montana revenue increased 2.1% to $40 million, with our proprietary gaming content and systems continuing to enhance profitability per location. Nebraska revenue grew 30% to $9 million, driven by steady adoption and market share gain. Georgia revenue rose 49.3% to $5 million, reflecting continued growth as we leverage our technology platform and route management expertise. Nevada revenue declined 7.4% to $26 million due to the loss of a key customer in 2024, resulting from a change in ownership. Louisiana contributed revenue of $9 million, driven by continued ramp-up and integration of the Toucan Gaming acquisition, which expands our footprint with 670 gaming terminals in nearly 100 locations. And finally, Fairmount Park continued to ramp-up operations following its April launch, with monthly gaming revenue increasing sequentially through the summer. Operating income for the quarter was $25 million, up 16.1% year-over-year, while net income increased to $13 million. Adjusted EBITDA was $51 million, up 11.5% year-over-year, driven by top-line growth and strong cost discipline. Capital expenditures were approximately $21 million for the quarter and $72 million year-to-date. As we've discussed, roughly 40% of our CapEx directly supports growth initiatives, including Fairmont Park and continued investment across our markets. We are affirming our full-year 2025 CapEx forecast of $75 to $80 million. Turning to the balance sheet, we ended the quarter with $290 million of cash and cash equivalents and net debt of approximately $305 million. As Andy mentioned, we completed our new $900 million senior secured credit facility during the quarter. Proceeds were used to repay and terminate all outstanding commitments under our prior credit agreement. The new facility enhances liquidity, extends maturities, and reduces our cost of capital, further strengthening our financial position and supporting disciplined growth and shareholder returns. Our balance sheet remains strong with ample liquidity and conservative leverage, providing the flexibility to invest in growth while continuing to return capital to shareholders. I look forward to share my plans with you on the next call as we kick off and move into 2026. With that, I'll turn the call over to the operator. Please open the line for questions.

Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you'd like to remove your question, press star followed by two. Again, to ask a question, press star one. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question and we will pause here briefly as questions are registered. The first question is from the line of Steve Pizzello with Deutsche Bank. You may proceed.

Order of optimization with locations down and win per day up. How should we think about the Illinois strategy into the 4Q in 2026? And what is the potential upside from the rollout of the ticket in, ticket out from a revenue and cost standpoint?

Hi, Steve. Thanks for the question. Can you repeat it again? You got cut off at the beginning, so we didn't hear the very beginning of the question.

Yeah, just in Illinois, it looks like another quarter of optimization with locations down and wind per day up. How should we think about the Illinois strategy going into the 4Q in 2026?

And what is the potential upside from the rollout of the ticket in, ticket out from a revenue and cost standpoint? okay yeah so we will continue to optimize uh our route in illinois and as we sign up locations on average they're significantly better than the locations that close down so we'll to continue to see the machine counts be relatively stable maybe slight growth where the average revenue per machine should continue growing and we're that is kind of the strategy that we're pursuing and I think you'll see that play out through 26 as far as the effects of tito uh we're still in what we refer to the early stages of the rollout there's only um a like mid single digit uh utilization of tito in our overall um kind of payment uh into the machines and we'll we'll see that continue to grow as we've seen it literally almost every day so as more and more machines have the uh become tito enabled that should naturally lift that number into the the double digits and where we probably will see uh the number b by the time we report again uh at the end of february but that that tito effect probably will take well into the second quarter for it to really be noticeable, whether it's in our overall cash balances or any type of performance enhancement.

Okay, thank you. And then on the balance sheet, you do have a fair amount of cash considering your size and should generate a decent amount each of the next couple of years, even with the Fairmont CapEx. How do you think about the uses of the free cash flow moving forward?

Hey, Steve, it's Mark Phelan. Just remember, a large amount of the cash is used to load our redemption terminals on our bigger routes like Illinois. That being said, I think we're fairly under-levered relative to our peers and in terms of M&A I would say if you group them into two buckets that would include like transformational M&A versus bolt-on transformational we still see some interesting things and they become they become cheaper but it's still a you know still getting rewarded for our patients and I think we will continue to be patient on those and bolt-on we actually see a lot of interesting stuff particularly in our growth markets and you know we have been patient on those as well and I think we've got the capacity now to absorb

some new additions yeah just just add to what Mark said you know obviously when we're seeing on any influx of cash we're going to look at it and use it in the best way possible so we look at all opportunities we we have a pretty rigorous process to look at return on investment across share buybacks versus debt payoffs versus M&A etc. So it's going to be case by case and as things come in we will evaluate them and decide accordingly.

Okay great thank you.

The next question comes from the line of Sam Gaffir with Macquarie. You may proceed.

Hi thanks for taking our questions. I wanted to quickly touch on the M&A environment. Curious if you guys have seen any shift in seller expectations over the last couple months, just given that public equities for other stocks in the gaming sector have come down a bit. Wondering if there's been any change there. Thanks.

Thanks for the question, Sam. It's Andy. We haven't seen anything significant, but what we are seeing is people's kind of realization that there has been a change. And And how that will affect the overall M&A market, we're not sure. It usually has a lag, but people are definitely recognizing that there has been a reduction in the multiples that the companies transact at and that what is basically acceptable in today's environment.

Okay, great. Thank you. And then as a follow-up, notice that Nevada had a nice uptick in locations. Is there anything specific to call out for that region?

No, we're still transitioning some new locations into our portfolio. Fuel Brothers was a group that we have added. I expect that we'll continue to grow that market. We've been outperforming and have one business more frequently than in the past, and I think that trend is likely to continue.

Awesome. If I could just sneak one more in, just wondering as we head into 26, you know, what are some states that, you know, potentially could make some headway on route gaming expansion?

So I'll take the question in two parts. The first part is states that don't have gaming. We are monitoring Pennsylvania pretty closely, as we have in the past. We're always looking at Missouri. North Carolina got close a few years ago. There's always the potential that that can reignite. And Virginia has definitely considered it again, as they've had legislation that got close. So those are the four markets that we think have the most probability of having a new VGT market. What we have seen in the last year or two is existing markets expanding with the legislation or introducing enhancements to the existing legislation. We've seen that in Georgia. We've seen it in Louisiana. We've seen some modifications in Nebraska. All of those kind of changes have made it, have been relatively favorable for the operator to increase their revenue, to provide better gaming experiences for the player and in turn benefit the overall Excel performance. And so I think you'll see those three markets in particular have a lot of benefit in the future, and Excel will continue to perform in those three markets.

Thanks, Andy. Much appreciated.

The next question comes from the line of Greg Gibbous with Northland. you may proceed great hey andy brett mark thanks for taking the questions um one of the follow-up on on your commentary around bolt on mna um and i guess get a priority of the markets that that you're kind of looking at um you know is it primarily louisiana focused you know you mentioned you know potentially new markets um just wanted to get a sense of maybe priorities for bolt on mna Hey, Greg.

It's Mark. The primary market for bolt-ons is Louisiana. The thesis behind investing in that state was the opportunity to do that kind of activity, and we're seeing a really healthy pipeline. So we're excited about that state for the next couple of years in terms of bolt-ons. Besides that, Illinois is always a good target market, just given the amount of operators available for sale at any one point in time, and we're always working on deals in that state. Again, it's price. This is kind of a key criteria, and as Andy said earlier, people are clearly getting a little more realistic about pricing so um there may be more movement in that going forward um but um the number one priority is really to get our louisiana investment uh to the scale that we um think it will be in the future great makes sense um and do you have a same store sales growth number we don't uh we don't disclose that at this in the quarter we just we're talking just like um yeah yeah exactly yep um okay and then uh i guess i wanted

to just see if kind of anything has changed surrounding you know the opportunity or maybe on the timing of the ongoing ramp of fairmount park um or just anything changing in terms of your future development plans there yeah greg we're still um in the development stage we're As Brett said earlier, and you can verify this on the Illinois Gaming Board site, gross gaming revenue adjusted is increasing every month.

October was very consistent with that and good growth, so we feel good about it. We are still reviewing several different options for the permanent, and we're working hard on that. Maybe at some point in the next six months we'll have some feedback for you guys on that. But as of now, it's all momentum ahead and trying to just acquire customers and provide a great experience.

Got it. Thanks very much.

There are currently no questions registered. So as a brief reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. There are no further questions waiting at this time. I would now like to turn the conference back for any closing remarks.

Thank you. and in closing Excel's excited to continue the strong momentum we've carried throughout the year we remain really confident in our long-term strategy and we're excited to share some new opportunities ahead when we connect in the new year I always appreciate and all of the partners and shareholders but most importantly our employer our employees at Excel for their continued support and I look forward to sharing with all of you our progress when we support results next year thank you for joining us today and we look forward to a good holiday season and wish you all well thank you that concludes today's call thank you for your participation and enjoy the rest of your day