Q4 2024 Accel Entertainment Inc Earnings Call

Good afternoon, ladies and gentlemen, we do appreciate your patience and we do ask that you remain holding for a few more minutes conference call will begin shortly.

Operator: Good afternoon, ladies and gentlemen. We do appreciate your patience and we do ask that you remain holding for a few more moments. Conference call will begin shortly. Again, the conference call will begin shortly.

Again, the conference call will begin shortly.

[music].

Yeah.

Kate: Good afternoon, and thank you for joining the Accel Entertainment Q4 and Full Year 2024 Earnings Call.

Kate: Good afternoon, and thank you for joining the Accel Entertainment Q4, and full year 2024 earnings call. My name is Kate and I will be the moderator for today's call at.

Kate: 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 1 on your telephone keypad.

Kate: 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.

Derek Harmer: I would now like to turn the call over to Derek Harmer, General Counsel and Chief Compliance Officer. Please proceed.

Eric Karma: I would now like to turn the call over to Eric Karma.

Eric Karma: General Counsel and Chief compliance Officer. Please proceed.

Derek Harmer: Welcome to Accel Entertainment's Q4 and Full Year 2024 Earnings Call. Participating on the call today are Andy Rubenstein, Accel's Chief Executive Officer, Matt Ellis, 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.

Eric Karma: Two accel Entertainment's fourth quarter and full year 2024 earnings call.

Andy Rubenstein: Anticipating on the call today are Andy Rubenstein, <unk>, Chief Executive Officer.

Speaker Change: Ellis <unk>, Chief Financial Officer, and Mark <unk> President of U S gaming.

Speaker Change: Please refer to our website for the press release and supplemental information 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.

Derek Harmer: 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 four 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.

Speaker Change: Some of the comments in today's call may constitute forward looking statements within the meaning of the private Securities Reform Act of 995.

Speaker Change: These forward looking statements are subject to risks and uncertainties.

Speaker Change: Results may differ materially from those discussed today and the company undertakes no obligation to update these statements unless required by law.

Speaker Change: A more detailed discussion of these and other risk factors investors should review the forward looking statements section in the earnings press release available on our website as well as other risk factor disclosures.

Speaker Change: <unk> with the SEC.

Derek Harmer: 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.

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.

Speaker Change: 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 forecast will be achieved.

Speaker Change: During the call we may discuss certain non-GAAP financial measures.

Derek Harmer: 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.

Speaker Change: 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.

Andrew Rubenstein: I will now turn the call over to Andrew. 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.

Andy Rubenstein: I will now turn the call over to Andy.

Andy Rubenstein: 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.

Andy Rubenstein: It was a busy quarter for us we entered into Louisiana in November one.

Andy Rubenstein: Acquired Fairmont Park outside St. Louis on December 2nd.

Andy Rubenstein: Our teams are hard at work integrating Louisiana.

Andy Rubenstein: For the phase one opening of the Fairmont casino in the second quarter of this year.

Andrew Rubenstein: 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 helped us right size our operations in response to the 1% increase in the state gaming tax on July 1st, 2024.

Andy Rubenstein: In terms of financial performance, Illinois, our largest market posted market why <unk> growth of 4% year over year.

Andy Rubenstein: Performing, Illinois, casinos, which were down 3% year over year on a comparable basis.

Andy Rubenstein: We are proud of the strong foundation, we have built in our home state, leading and a model. That's a win win win for our state partners and local convenience space gaming providers like us.

Andy Rubenstein: During the quarter, our location count in Illinois was down again sequentially.

Andy Rubenstein: This was due to the strategic closures of 16 underperforming locations.

Andy Rubenstein: Without these closures our location count would have been flat for the quarter.

Andy Rubenstein: For the full year, we strategically closed 54 underperforming locations, which helped US right size our operations in response to the 1% increase in the state gaming tax on July one 2024.

Andy Rubenstein: We expect this process to continue as we review our portfolio and look for opportunities to improve financial performance.

Andrew Rubenstein: 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 whole per day location. 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.

Andy Rubenstein: We've identified a subset of locations within our bottom decile performers, 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.

Andy Rubenstein: Invested capital as we rotate locations.

Andy Rubenstein: Across our footprint, we continue to refine our sales and operating model focusing on the highest hold per day locations.

Andy Rubenstein: The improvement in the composition of our portfolio will help drive both topline and bottomline growth driven by its wasteful segmentation and resource allocation.

Andy Rubenstein: In addition to what I just mentioned, we've leaned into our continuous process of reviewing our markets and operations defined areas of improvement as.

Andrew Rubenstein: 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. 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.

Andy Rubenstein: 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.

Andy Rubenstein: On the regulatory front, Illinois continues to lay the groundwork for ticket in ticket out also known as Tito.

Andy Rubenstein: We should make cash processing more efficient.

Andy Rubenstein: More importantly, it will create a more convenient experience for our players, allowing them to switch between games and our locations without cashing out.

Speaker Change: And each time.

Speaker Change: Our sites more akin to a casino experience.

Andrew Rubenstein: We're hopeful PETA will be rolled out in 2025. We continue to monitor regulation related to this.

Speaker Change: We're hopeful Peter will be rolled out in 2025, we continue to monitor regulation related to this.

Speaker Change: Before I turn it over to Mark I'm going to take a few minutes to talk about it sells value proposition and where we see our greatest opportunities for growth.

Andrew Rubenstein: Before I turn it over to Mark, I'm going to take a few minutes to talk about Accel'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.

Speaker Change: For both our customers and players we provide a high quality slot gaming experience at a low price point that can be accessed by other players in our local convenient retail locations of their choosing.

Speaker Change: 15 minutes or less from their home.

Speaker Change: We support retail gaming partners by providing them with high margin revenue gaming products and labor light self service technology.

Speaker Change: We instill player loyalty through our rewards programs by creating memorable player experiences with our diverse gaming selection.

Andrew Rubenstein: 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 team.

Speaker Change: And finally, we maintain collaborative and reliable partnerships with regulators across 11 different regulatory structures.

Speaker Change: All while generating attractive returns on capital.

Speaker Change: The low teens.

Andrew Rubenstein: 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 free cash flow growth, assuming normalized CAPEX levels. which Matt will address later.

Speaker Change: And our core route based business model, our steady growth algorithm is both simple and compelling.

Speaker Change: We target low single digit revenue growth mid single digit EBIT growth and high single digit free cash flow growth, assuming normalized capex levels.

Matt: Which Matt will address later.

Speaker Change: Looking ahead, the primary levels from growth in our core business are.

Andrew Rubenstein: 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. to driving profitability in Nebraska and Georgia through operational execution and strategically position ourselves in the face of favorable legislation. 3. Collecting a greater share of location economics through selectively owning establishments and markets where this is permitted and is otherwise profitable.

Speaker Change: One growing organically in the Illinois, Nebraska, and Georgia through both newly licensed establishment and converting competitors locations.

Speaker Change: Two driving profitability in Nebraska, and Georgia through operational execution, and strategically positioning ourselves in the face of favorable legislation.

Speaker Change: Three collecting a greater share of location economics through selectively owning the establishments in markets, where this is permitted and is otherwise profitable.

Andrew Rubenstein: and four, preparing ourselves for future opportunities in new states likely to legalize local gaming in the future.

Speaker Change: And for preparing ourselves for future opportunities, new states likely to legalize local gaming in the future.

Speaker Change: Outside of our core business, our M&A pipeline remains active as demonstrated by the Fairmont and Louisiana acquisitions.

Andrew Rubenstein: 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 strength.

Speaker Change: We are confident and we can leverage our proven capabilities as a local gaming operator to convert opportunities in the attractive and.

Speaker Change: Sizable nationwide $15 billion, plus GG or local gaming market.

Speaker Change: Most assets in this market are unconsolidated and.

Speaker Change: And EBITDA levels that are below the radar of larger gaming companies conditions that play to our strengths.

Mark Phelan: With that, I'm going to turn it over to Mark to provide an update on the ceremony. Thanks, Andy. We closed the Fairmont acquisition on December 2 for approximately $40 million in Accel stock after adjusting for working capital and the price of Accel stock at close. The acquisition includes a master sports betting license with a long-term partnership with FanDuel, a horse racetrack, off-track betting facility opportunities, and the ability to develop a best-in-class, locally-focused casino. This transaction builds on our core capabilities in local gaming that we've honed over the last 15 years with attractive returns on capital and free cash.

Mark: With that I'll turn it over to Mark.

Mark: An update on Fairmount.

Mark: Thanks, Andy we closed a fair amount of acquisition on December 2nd for approximately $40 million in excel stock.

Mark: After adjusting for working capital in the price of <unk> stock at close.

The acquisition includes a master sports betting license with a long term partnership with Sandal a horse race track off track betting facility opportunities and the ability to develop a best in class locally focused casino.

Mark: This transaction builds on our core capabilities and local gaming that we've honed over the last 15 years.

Mark: The returns on capital and free cash flow.

Mark Phelan: We are combining our local gaming expertise with key partnerships in areas outside our core business to create an exceptional customer offer.

Mark: We're combining our local gaming expertise with key partnerships in areas outside our core business to create an exceptional customer offering.

Mark Phelan: As a reminder, we expect to develop this project in two phases. Immediately after closing, we started construction on phase one of our casino, which will be built in the existing grandstand with approximately 255 electronic gaming devices, four electronic table games, and significantly improved food and beverage amenities. As of now, we expect to open phase one during the second quarter of 2025, and we look forward to welcoming players once the facility is open.

Mark: As a reminder, we expect to develop this project in two phases.

Mark: Immediately after closing we started construction on phase one of our casino, which will be built in the existing grandstand with approximately 255 electronic gaming devices for electronic table games and significantly improved food and beverage amenities.

Mark: As of now we expect to open phase one during the second quarter of 2025.

Mark: Look forward to welcoming players once the facility is open.

The phase III will build a permanent casino on site with detailed plans for 600, plus slot machines for table games, food and beverage amenities and a new and improved sandals sports books.

Mathew Ellis: In Phase 2, we'll build a permanent casino on site with detailed plans for 600-plus slot machines, 24 table games, food and beverage amenities, and a new and improved FanDuel Sports Visit us at www.FanDuelSports.com With that, I'll pass it over to Matt to go over the fundamentals of the quarter. Thanks, Mark, and good afternoon, everyone. For the fourth quarter, we had total revenue of $318 million, a year-over-year increase of 6.9%, and adjusted EBITDA of $47 million, a year-over-year increase of 6.2%. For the full year, we set a new Accel record with total revenue of $1.2 billion and adjusted EBITDA of $189 million, year-over-year increases of 5.2% and 4.2% respectively.

Mark: With that I'll pass it over to Matt to go over the fundamentals of the quarter.

Matt: Thanks, Mark and good afternoon, everyone.

For the fourth quarter, we had total revenue of $318 million a year over year increase of six 9% and.

Matt: And adjusted EBIT of $47 million, a year over year increase of six 2%.

Matt: For the full year, we set a new axtell record with total revenue of $1 2 billion and adjusted EBITDA of $189 million year over year increases of five 2% and four 2% respectively.

Matt: As of December 31, we had 26346 terminals in 4117 locations year over year increases of 5% and three 9% respectively.

Mathew Ellis: As of December 31st, we had 26,346 terminals in 4,117 locations, year-over-year increases of 5% and 3.9% respectively.

Matt: Revenue per location for the quarter and our core states was as follows.

Mathew Ellis: Revenue per location for the quarter in our core states was as follows. Illinois was $868 per day, an increase of 3.5% year-over-year. Montana was $614 per day, an increase of 4.6% year-over-year. Nevada was $786 per day, a decrease of 6.7% year-over-year. Nebraska was $253 per day, an increase of 5.9% year-over-year. And Louisiana was $979 per day. The increases in Illinois, Montana, and Nebraska really emphasize the strength and resilience of both our business model and, more importantly, consumers who continue to choose our high-quality, local, and convenient offerings. Capital expenditures for the fourth quarter were $11 million of cash spend, and capital expenditures for 2024 were $67 million of cash spend.

Matt: Illinois was $868 per day, an increase of three 5% year over year.

Matt: Montana was $614 per day, an increase of four 6% year over year.

Matt: Nevada was $786 per day, a decrease of six 7% year over year.

Matt: <unk> was $253 per day, an increase of five 9% year over year.

Matt: And Louisiana with $979 per day.

Matt: The increases in Illinois, Montana, and Nebraska, really emphasize the strength and resilience of both our business model and more importantly, consumers, who continue to choose our high quality local and convenient offering.

Matt: Capital expenditures for the fourth quarter were $11 million of cash spend and capital expenditures for 2024 were $67 million of cash.

Mathew Ellis: For the full year, we spent $2 million on Fairmont and Louisiana, leaving $65 million of cash spend in our existing market. At the end of the fourth quarter, we had approximately $314 million of net debt and $425 million of liquidity, consisting of $281 million of cash on our balance sheet and $144 million of availability on our credit facility.

Matt: For the full year, we spent $2 million.

Matt: <unk> in Louisiana, leaving $65 million of cash spend in our existing markets.

Matt: At the end of the fourth quarter, we had approximately $314 million of net debt and $425 million of liquidity consisting of $281 million of cash on our balance sheet at $144 million of availability on our credit facility.

Matt: Looking ahead, we are forecasting $75 million to $80 million of Capex for 2025 comprised of $39 million to $41 million in our existing markets.

Mathew Ellis: Looking ahead, we are forecasting $75 to $80 million in CapEx for 2025 comprised of $39 to $41 million in our existing market. $5 to $7 million in Louisiana and $31 to $32 million for family. I'd like to note the CapEx for Fairmont includes both Phase I and initial construction for Phase II. After Fairmont and the initial CapEx in Louisiana, we expect company-wide normalized CapEx to return to $40 to $45 million, which will be an encouraging boost to free cash flow and returns on CapEx.

Matt: The $7 million in Louisiana and.

Matt: And 31% to $32 million for families.

Matt: I'd like to note the Capex for fair amount includes both phase one and initial construction for phase II.

Matt: Okay, Fairmont and the initial Capex in Louisiana, we expect companywide normalized capex to return to 40% to $45 million, which will be an encouraging boost to free cash flow and returns on capital.

Matt: On our capital allocation strategy, we continue to favorably do share repurchases.

Mathew Ellis: On our capital allocation strategy, we continue to favorably view share repurchases as an effective way to return capital to our shareholders. During the quarter, we repurchased 361,000 shares at an average purchase price of $11.14 a share for a total of $4 million. For the full year, we repurchased approximately 2.4 million shares at an average purchase price of $10.42 for a total of $25 million. Earlier this week, our Board of Directors authorized replenishing our share repurchase program back to $200 million. With our strong balance sheet and low leverage, we are in a unique position where we can grow our business and continue to return capital to shareholders.

Active way to return capital to our shareholders.

Matt: During the quarter, we repurchased 361000 shares at an average purchase price of $11 14, a share for a total of $4 million.

Matt: For the full year, we repurchased approximately two 4 million shares at an average purchase price of $10 42.

Matt: A total of $25 million.

Matt: Earlier this week, our board of directors authorized replenishing our share repurchase program back to $200 million.

Matt: With our strong balance sheet and low leverage we are in a unique position, where we can grow our business and continue to return capital to shareholders.

Andrew Rubenstein: With that, I'd like to turn it back over to Andrew. Thanks, Matt. As I mentioned earlier, we are very pleased with our strong performance this year. And the fact that our teams are working hard to complete construction on phase one of the Fairmont casino. For the immediate term, we remain focused on executing our growth algorithm with improving cash flow and return. Long term, we look forward to capitalizing on the significant growth opportunities ahead of us as an aligned and incentivized Accel team. Accel remains strong as evidenced by our results and healthy balance sheet, enabling us to pursue a multi-pronged approach to capital allocation, making us a compelling investor.

Andy Rubenstein: With that I'd like to turn it back over to Andy.

Andy Rubenstein: Thanks, Matt as I mentioned earlier, we're very pleased with our strong performance this year and the fact that our teams are working hard to complete construction on phase one of the Fairmont casino.

Andy Rubenstein: For the immediate term, we remain focused on executing our growth algorithm with improving cash flow and returns.

Andy Rubenstein: Long term, we look forward to capitalizing on the significant growth opportunities ahead of us as an aligned and incentivize <unk>.

Andy Rubenstein: If sell remains strong as evidenced by our results and healthy balance sheet, enabling us to pursue a multi pronged approach to capital allocation, making us a compelling investment.

Andrew Rubenstein: Local gaming is an attractive growing niche within the broader gaming market with multiple opportunities to generate strong and consistent revenue and EBITDA growth, as well as strong free cash flow and returns on capital.

Andy Rubenstein: Local gaming is an attractive growing niche within the broader gaming market with multiple opportunities to generate strong and consistent revenue and EBITDA growth as well as strong free cash flow and returns on capital we will now take your questions.

Operator: We will now take your question. We will now begin the question and answer session. If you would like to queue up for a question, please press star followed by a one on your telephone keypad.

Andy Rubenstein: Okay.

Andy Rubenstein: We will now begin the question and answer session.

Andy Rubenstein: If you would like to queue up for a question. Please press star followed by a one on your telephone keypad.

Operator: If for any reason you would like to remove yourself from the queue, please press star followed by a two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Again, to ask a question, please press star followed by a 1.

Andy Rubenstein: If for any reason you would like to remove yourself from the queue. Please press star followed by a tail.

Andy Rubenstein: As a reminder, if you were using a speaker phone. Please remember to pick up your handset before asking your question.

Andy Rubenstein: Again to ask a question. Please press star followed by a one.

Steve Pizzella: The first question will come from the line of Steve Pizzella with Deutsche Bank. Steve, your line is now open. Thanks, Matt, Andy.

Speaker Change: The first question will come from the line of Steve <unk> with Deutsche Bank, Steve. Your line is now open.

Andy Rubenstein: Yeah.

Andy Rubenstein: Thanks, Matt Andy.

Mathew Ellis: There are a lot of moving parts with adding in Louisiana to the model for 10 months and 25. Everything that comes with Fairmont and the added temporary casino. How should we think about the contributions to the model? Thanks, Steve.

Andy Rubenstein: There are a lot of moving parts with adding in Louisiana to the bottle for 10 months and 25.

Andy Rubenstein: Anything that comes with Fairmont and the added temporary casino how should we think about the contribution to the model.

Matt: Thanks, Steve It's Matt.

Mathew Ellis: It's Matt. Let's start with Louisiana. You look back to when we disclosed closing it and we disclosed 6 million of EBITDA. So I think for the full year 25, you should add that and like you called out two months of them in 2024 as results. For Fairmont, as Mark said, we're planning to open in Q2. So might want to split the difference there. But as we sort of talked about earlier, full run Fairmont, all built out, all said and done, we forecasted 25 million of EBITDA. And we've sort of guided that the temp would do about a third of that.

Speaker Change: Let's start with Louisiana, you look back to when we disclose closing it and we disclosed 6 million of EBITDA. So I think for the full year 25, you should add that in like you called out two months of them.

Matt: In 2020 fours results.

Matt: For Fairmount.

Matt: As Mark said, we're planning to open in Q2.

Matt: So might want to split the difference there, but as we sort of talked about earlier full run Fairmont all built out all set and done we forecast a $25 million of EBITDA.

Matt: We've sort of guided that the <unk> would do about a third of that so you've got a third of that 25, and then you need to prorate. It for opening in we'll call it the middle of Q2.

Mathew Ellis: So you've got a third of that 25. And then you need to prorate it for opening in, we'll call it the middle of Q2. Okay, thanks. That makes sense.

Matt: Okay. Thanks that makes sense.

Steve Pizzella: And then, just looking in Illinois in January, it looked like it started off pretty strong, at least looking at the data we can see. Did you see similar trends in other markets?

Matt: And then just looking at an Illinois in January looks like it's turned out pretty strong at.

Matt: At least looking at the data we can see.

Matt: You see similar trends in other markets.

Steve Pizzella: And are you able to comment at all on February?

Speaker Change: Are you able to comment at all on <unk>.

Matt: Alrighty.

Matt: Yes.

Andrew Rubenstein: Yeah, I mean, this is Andy. Thanks, Steve. The we had very favorable weather in January this year, where last year, it was a bit rough. And then the weather in February here has been not as good as it was last year. I wouldn't say they, they, we don't know whether they'll actually balance themselves out. But All four in the country, we haven't seen the extremes that we've experienced here in Illinois. the weather factor. Overall, I think there's been a well-received demand. for our gaming product and I think we're seeing good results early from some of the remodels we're doing in Louisiana, some of the new product we're introducing in some of the other markets to kind of upgrade our routes has all been very positive from a consumer perspective.

Matt: Zandy Thanks, Steve.

Matt: <unk>.

Matt: We had very favorable weather in January of this year, where last year. It was a bit rough and then.

Matt: The weather in <unk>.

Matt: That'd be wary here has been not as good as it was last year I wouldn't say that.

Matt: We don't know whether it will actually balance themselves out.

Matt: But.

Matt: Elsewhere in the country, we havent seen the.

Matt: The extremes that we experienced in Illinois.

Matt: The weather factor.

Matt: Overall I think.

Matt: There is then.

Matt: Well receive the <unk>.

Land.

Matt: For our gaming products and I think.

Matt: We're seeing.

Matt: Good results early.

Matt: Some of the Remodels, we're doing in.

Matt: Louisiana.

Matt: The new product, we're introducing and some of the other markets too.

Matt: Kind of upgrades.

Matt: Our routes.

Matt: <unk> been very positive.

Matt: From a consumer perspective.

Matt: Okay. Thank you I appreciate it.

Steve Pizzella: Okay, thank you. Appreciate it. Thank you for your questions.

Matt: Thank you for your questions.

Chad Beynon: The next question comes from the line of Chad Beynon with Macquarie. Chad, your line is now open. Hi, good afternoon, Andy and Matt, thanks for taking my question. Andy, you mentioned the just the pruning of the Illinois units, really to focus on on free cash flow per location. So, you know, definitely appreciate the discipline there.

Speaker Change: The next question comes from the line of Chad Beynon with Macquarie Chad. Your line is now open.

Chad Beynon: Hi, Good afternoon, Andy and Matt Thanks for taking my question.

Chad Beynon: And you mentioned the just the pruning of the Illinois units.

Chad Beynon: Really to focus on.

Chad Beynon: Free cash flow.

Chad Beynon: Our location.

Chad Beynon: <unk>.

Chad Beynon: I appreciate the discipline there.

Andrew Rubenstein: At what point will you be through this? And then we should expect for some growth in the market. Thanks. Yeah, so I don't think they're totally tied together. The pruning is really that bottom, the very bottom of our portfolio and there will always be some that need to be pruned. And we make investments, or we have confidence in our ability to either reignite poor-performing locations, or locations that we think will be. Decent performers, the owners of the facilities aren't that committed to gaming, and therefore we're not getting the returns that we need. So that part of our business will be a constant process.

Chad Beynon: What point will you be through this and then we should expect for <unk>.

Chad Beynon: Some growth.

Chad Beynon: And the market. Thanks.

Speaker Change: Yeah. So I don't think they are totally tied together.

Speaker Change: The pruning is really that bottom.

Speaker Change: The very bottom of our portfolio and there will always be.

Speaker Change:

Speaker Change: Some that need to be approved and.

Speaker Change: We make investments or are we.

Speaker Change: <unk> have.

Speaker Change: We have confidence in our ability to either reignite poor performing locations.

Speaker Change: For locations that we think.

Speaker Change: We will be.

Speaker Change: Decent performers the owners of the facilities.

Speaker Change: Arent that committed to the gaming and therefore, we're not getting the returns that we need so.

Speaker Change: That part of our business will be a constant process.

Speaker Change: And I think as we've been a little more aggressive.

Andrew Rubenstein: And I think as we've been a little more aggressive in the pruning, as we've seen costs. We've seen a tax increase from labor. We've seen a tax increase last summer. Our focus is to obviously increase the free cash flow. And I think The growth will be continuous because our assets will be redeployed into better accounts. And I think you see it constantly, but I think it will really kind of manifest itself probably later this year into next year where the average profitability of the location will be noticeably better. Okay, great. Thank you.

Speaker Change: The pruning.

Speaker Change: As we have seen costs.

Speaker Change: Crease from labor, we've seen tax increases last summer.

Speaker Change:

Speaker Change: Our focus is to.

Speaker Change: Obviously increase the free cash flow.

Speaker Change: And I think.

Speaker Change: The the growth will be continuous because as the our assets will be redeployed into better accounts and I think.

Speaker Change: You see it constantly but I think it will.

Speaker Change: Really kind of manifest itself.

Speaker Change: Probably later this year.

Speaker Change: Into next year, where.

Speaker Change: The average.

Speaker Change: The profitability of the location.

Speaker Change: Will be noticeably better.

Speaker Change: Okay, great. Thank you and then.

Chad Beynon: And then last week, one of the big manufacturers in the space acquired a ePull tab, or a company in the charitable gaming space, and they were able to shine some more light on that sector. I believe when you guys talked about, you know, the potential areas of expansion for Accel, ePull tabs was in there. I don't think a lot of investors or analysts had a full appreciation of the sector.

Speaker Change: Last week.

Speaker Change: The big manufacturers in the space acquired.

Speaker Change: <unk>.

Speaker Change: Equal tab.

Speaker Change: Our company and the charitable gaming space and then we're able to shine some more light on that sector I believe when you guys talked about.

Speaker Change: The potential areas of expansion for excel equal tabs within there I don't think a lot of.

Speaker Change: Investors or analysts had a full appreciation of.

Chad Beynon: But now that another company in the space has shined light on that, and they talked about, you know, potential expansion, and yeah, how large the sector is, is that something that you think is a little bit more front and center in the near term? Uh, just given some of the heightened awareness for that sector, or does that kind of weigh on the scale equal to some of the other opportunities for future growth? Thanks.

Speaker Change: The sector, but know that.

Speaker Change: Another company in the space to Shine light on that.

Speaker Change: They talked about potential expansion and how.

Speaker Change: How large the sector is is that something that you think is a little bit more front and center in the near term.

Speaker Change: Just given some of the heightened awareness for that sector or does that.

Speaker Change: Kind of weigh on the scale equal to some of the other opportunities for future growth. Thank you.

Mark: Hey, Chad its mark good.

Mark Phelan: Hey, Chad's Mark. Good question. So that market is a really interesting one, but it's, and by the way, it was a great outcome for the company that was purchased Grover and we're friendly with that management team and happy that they were able to realize the value they did.

Speaker Change: Good question.

Speaker Change: So that market is a really interesting one but its and.

Speaker Change: By the way it was.

Speaker Change: Great outcome for us.

Speaker Change: The company that was purchased Kroger and were friendly with that management team and happy that they were able to.

Speaker Change: Realize the value they did.

Mark Phelan: But that's a real content market. It's less of a product and service market that we're familiar with. So it made a lot of sense for Light & Wonder to purchase them because of the superiority of their content. In terms of Accel participating in that market, we would really have to have a partner who could provide that kind of superior content, and we could complement that with our... are ground game. So it's an interesting market, but it's one where it's It's something we have to partner with someone to really participate in.

Speaker Change: But that's a real content market.

Speaker Change: It's less.

Speaker Change: Product and service market that were familiar with.

Speaker Change: So maybe a lot of sense for like one or two purchase them because of their the superiority of their content.

Speaker Change: In terms of excel participate in that market.

Speaker Change: We would really have to have a partner who could provide.

Speaker Change: Provide that kind of superior content, and we can complement that with our.

Speaker Change: Our ground game so.

Speaker Change: It's an interesting market, but it's one where it's.

It's something we have to partner with someone to really participate in.

Eric Karma: Okay. Thanks, Mark and then lastly, if I can sneak in one more theres been some legislation here in January and February I think most of it has been around just.

Chad Beynon: Okay, thanks, Mark.

Chad Beynon: And then lastly, if I can sneak in one more, there's been some legislation here in January and February, I think most of it has been around just moving tax rates around. And, you know, there's been some that have, that would potentially bring in iGaming or sports betting. We haven't seen as much in your sector. Is that something that you think still could come maybe in this legislative session here kind of early in 2025 that we're just, you know, not aware of at this point? Or do you think a lot of future expansion in the route market kind of gets pushed into a later period in terms of legislation?

Eric Karma: Moving tax rates around and there's been some that have.

Eric Karma: That would potentially.

Eric Karma: Bring in gaming our sports betting we haven't seen as much in your sector.

Speaker Change: Is that something that you think still could come maybe in this legislative.

Eric Karma: Session here kind of early in 'twenty five that were just.

Eric Karma: Not aware of at this point or do you think a lot of future expansion.

Eric Karma: And the route market.

Eric Karma: It kind of gets pushed into later periods in terms of the legislation. Thanks.

Andrew Rubenstein: Thanks.

Andy Rubenstein: Thanks, Yeah. This is Andy.

Andrew Rubenstein: Yeah, this is Andy. It's something that we are always aware of. We haven't seen any real iGaming legislation bubble up in this legislative session. Inevitably, we'll see it, whether it will gain any traction. not as likely as in the past. But I believe it will continue to see iGaming legislation in certain markets. I don't think it's as likely to be in some of the route gaming markets first. I think it's more likely to appear in markets that don't have route gaming or have, um, Illinois with extensive bricks-and-mortar route gaming. would I wouldn't say would be the first market that would pass legislation from going forward nor would Nevada but we're constantly monitoring.

Andy Rubenstein: Something that we are always aware of.

Andy Rubenstein: We haven't seen any real.

Andy Rubenstein: Gaming legislation bubble up.

Andy Rubenstein: In this legislative session.

Andy Rubenstein: Inevitably we will see it whether we gain any traction.

Andy Rubenstein: Not as likely as in the past.

Andy Rubenstein: But.

Andy Rubenstein: I believe it will continue to see.

Andy Rubenstein: Hi gaming legislation in certain markets I don't think it's as likely to be in some of the route gaming markets first I think it's more likely to appear in end markets.

Andy Rubenstein: Don't have route gaming.

Andy Rubenstein: Four have.

Minimal casino presence, Illinois.

Andy Rubenstein: With extensive bricks and mortar rock gaming.

Andy Rubenstein: Would I wouldn't say it would be the first market that with pass legislation.

Andy Rubenstein: Going forward.

Andy Rubenstein: Norwood, Nevada, but we're constantly monitoring it yet.

Andrew Rubenstein: And we're trying to educate the legislators that the route gaming market is a much better solution with much more... Regulation and Consumer Protection. Appreciate it. Thanks, Andy.

Andy Rubenstein: And.

Andy Rubenstein: We are trying to educate the legislators that the rock gaming market is a much better solution with much more.

Andy Rubenstein: Regulation and consumer protection then.

Andy Rubenstein: Yes.

Andy Rubenstein: Product.

Andy Rubenstein: I appreciate it thanks Andy.

Andy Rubenstein: Thank you for your question.

Gregory Gibas: Thank you for your questions. The next question comes from the line of Greg Gibas with Northland. Greg, your line is now open. Hey, Andy, Mark, Matt, thanks for taking the questions. Um, you know, wanted to ask, I guess, if you could speak to the growth opportunities you see in Louisiana, you know, do you expect to continue to be acquisitive in that market or focus more on organic growth? Thanks, Greg and Sandy.

Speaker Change: Your next question comes from the line of Greg Davis with Northland, Greg. Your line is now open.

Mark and Matt Thanks for taking the questions.

Greg Davis: Wanted to ask I guess, if you could speak to the growth opportunities you see in Louisiana.

Greg Davis: Expect to continue to be acquisitive in that market are focused more on organic growth there.

Greg Davis: Yes.

Speaker Change: Thanks, Greg and Sandy.

Greg Davis: We see it.

Andrew Rubenstein: We see, it's almost kind of a contradicting market, a mature market, one that's been around for 30 plus years. But at the same time. a market that's not that sophisticated and well-developed. So you still have an incredibly fragmented market, and there's two markets in that that we're looking at in Louisiana. The truck stops, which I think there's, like, a hundred and ninety-seven. truck stops in the state, and it's still. heavily fragmented, and then even more fragmented is the bar market, which most bars in the state of Louisiana are utilizing. very old, legacy equipment, 20 plus years old.

Greg Davis: It's almost kind of contradicting.

Greg Davis: Market a bit.

Greg Davis: Sure market.

Greg Davis: One that's been around for.

Greg Davis: 30 plus years.

Greg Davis: But at the same time.

Greg Davis: A market, that's not that sophisticated and well developed.

Greg Davis: So you still have.

Greg Davis: Credibly fragmented market.

Greg Davis: And there are two markets that we're looking at as.

Greg Davis: In Louisiana the truck stops.

Greg Davis: Which is just like a 197.

Greg Davis: <unk> in the state and its still.

Greg Davis: Heavily fragmented and then even more fragmented.

Greg Davis: As the bar market, which the.

Greg Davis: Most borrowers in the state of Louisiana or.

Greg Davis: Utilizing.

Greg Davis: Very old legacy equipment.

Greg Davis: 20, plus years old.

Greg Davis: And.

Andrew Rubenstein: We see the opportunity to improve our truck stops. We've done pretty well so far, and we're evaluating what needs to be done with the routes that we've purchased. I believe that we'll grow organically over time. And the truck stops as some of the ownership transitions over the next 10 years. one or two a year may be available for us to... to acquire and grow our product. Got it. That's helpful.

Greg Davis: We see the opportunity to.

Improve our trucks ops.

Greg Davis: We've done pretty well so far.

Greg Davis: <unk>.

Greg Davis: We're evaluating what needs to be done.

Greg Davis: With the routes that we purchased.

Greg Davis: I believe that we will grow organically over time.

Greg Davis: Bob.

Greg Davis: And the truck stops as.

Hum Mark some of the ownership transitions over the next 10 years.

Greg Davis: One or two a year maybe available for us to.

Greg Davis: Two <unk>.

Greg Davis: Fire and grow our presence.

Greg Davis: Got it that's helpful.

Gregory Gibas: And one of the follow-up on Fairmont, I guess one, could you maybe remind us of the timing of phase two development? And I think you already kind of spoke to the uplift you expect to see with maybe phase one being a third of that. I wonder if you could maybe break out, you know, what piece relates to the FanDuel component in that? And if not, could you maybe break that out?

Greg Davis: And wanted to follow up on Fairmount <unk>.

Greg Davis: I guess, one could you maybe remind us of the timing of phase II development.

Greg Davis: And I think you already kind of spoke to the uplift you expect to see with maybe phase one being a third of that.

Greg Davis: I'm wondering if you could maybe break out.

Greg Davis: What piece relates to the <unk> component in that and if not could you maybe break that out.

Greg Davis: So in terms of timing.

Mathew Ellis: So, in terms of timing, I think we've got it to sort of end of 27 for the Phase 2. As Matt pointed out, we're planning to go live with phase one and Q2, and that would give us a little over two, two plus years to build a more permanent facility. And we're not allowed to break out the annual revenue, but Greg, it's Matt. We can't fully break it out. But if you think back to when we announced it, the track was around break-even, maybe making a little. So that would sort of imply without, with just racing F&B and the sports book, sort of how the track was doing pre-racing.

Greg Davis: I think we've guided to sort of end of 2007 for the phase III.

Speaker Change: As Matt pointed out we're planning to.

Speaker Change: Go live with phase one in Q2 and that would give us a little over two two plus years to build a more permanent facility.

Speaker Change: Facility.

Speaker Change: And we're not allowed to break out.

Speaker Change: Yes, no revenue, but.

Speaker Change: Greg It's Matt we can't fully break it out, but if you think back to when we announced it.

Speaker Change: The track was around breakeven, maybe making a little.

Speaker Change: So that would sort of imply without with just racing F&B and the sports book sort of how the track was doing pre <unk>.

Speaker Change: Got it that's helpful. Thanks, guys.

Gregory Gibas: Got it. That's helpful. Thanks, guys. Thank you for your question.

Speaker Change: Thank you for your questions at.

Operator: At this time, we do not have any further questions registered in the queue. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. We will pause here briefly to allow any remaining questions to be registered.

Speaker Change: At this time, we do not have any further questions registered in the queue. As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Briefly to allow any remaining questions to be registered.

Speaker Change: At this time, we do not have any further questions registered in the queue. So I will turn the call back over to Andy Rubenstein for any final remarks.

Andrew Rubenstein: At this time, we do not have any further questions registered in the queue, so I will turn the call back over to Andy Rubenstein for any final remarks. Yeah, I just wanted to thank everyone for joining us today. We will be connecting with you in about two months. I think the year's off to a really good start, and we'll be excited to share some of the progress we've made when we talk again in May.

Speaker Change: Yes.

Speaker Change: Wanted to thank everyone for joining us today.

Speaker Change: We will be connecting with you in about two months.

Speaker Change: I think.

Speaker Change: The year is off to a really good start and we'll be excited to share some of the progress we've made.

Speaker Change: When we talk again in May.

Speaker Change: That concludes today's call. Thank you all for your participation and you may now disconnect your lines.

Operator: That concludes today's call. Thank you all for your participation, and you may now disconnect your line.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.