Accel (ACEL) Q1 2026 Earnings Call Transcript

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DATE

Tuesday, May 5, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Andrew Harry Rubenstein
• President and Chief Operating Officer — Mark T. Phelan
• Chief Financial Officer — Brett Summerer

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TAKEAWAYS

• Revenue -- $352 million, up 9% year over year and a quarterly company record.
• Adjusted EBITDA -- $54 million, representing 9% year-over-year growth and highest-ever Q1 result.
• Net Gaming Revenue -- $331 million, an increase of 10% year over year, drove overall top-line performance.
• Net Income -- $15 million, flat year over year due to higher depreciation and amortization and revised Fairmont Park purse expense timing.
• Diluted EPS -- $0.17, unchanged from the prior-year period.
• Locations and Terminals Nationwide -- 4,540 locations and 28,353 gaming terminals, representing 3% and 4% increases, respectively.
• Illinois Revenue -- $242 million (excluding Fairmont Park), up 6% year over year.
• Illinois Average Location Hold Per Day -- $962, up 9% from the prior year with stable VGT counts.
• TITO Adoption in Illinois -- Achieved 100% rollout; current player adoption at 13% and rising, with benefits expected to continue building through 2026.
• Chicago Market Update -- Regulatory process ongoing, with potential for first locations to go live in late 2026 or 2027.
• Montana Average Location Hold Per Day -- Increased 5% year over year.
• Nebraska Revenue -- Rose 57% year over year; average location hold per day also up 57% due to new machine placements.
• Georgia Revenue -- Increased 43% year over year; average location hold per day up 14%.
• Nevada Expansion -- Location count up 27% and terminals up 28%, reflecting Dynasty Games acquisition and Rebel Convenience Stores partnership.
• Louisiana Revenue -- Grew 12% year over year, supported by a pipeline of bolt-on acquisitions.
• Fairmont Park Table Games Launch -- Introduced live dealer blackjack, roulette, and other games, enhancing casino operations.
• Share Repurchases -- 1.1 million shares repurchased for $12 million in 2026 to date; 18.7 million total since program started, totaling $195.6 million; $151.2 million remains authorized.
• Balance Sheet and Liquidity -- $274 million in cash; net debt of $306 million; net leverage of approximately 1.4x; $300 million revolving credit facility undrawn.
• CapEx -- $23 million in Q1, down from $27 million previous year; full-year 2026 guidance $60 million–$70 million, mostly maintenance-focused.
• Free Cash Flow -- $20 million in Q1; 38% cash conversion relative to adjusted EBITDA; management commits to discussing this metric more regularly.
• Interest Rate Collar -- New collar for term loan effective January 2026, capping at 4% and floored at 2.92%, maturing September 2029.
• Leadership Transition -- Mark T. Phelan to assume CEO role on August 7, 2026.

SUMMARY

Management confirmed distributed gaming model resilience, citing no material consumer weakness in operational metrics through the start of the second quarter despite external macro pressures. Expansion efforts included major investments in content and infrastructure across both mature and high-growth markets, such as proprietary machine development and new location partnerships. The integration of the Dynasty Games acquisition and the roll-out of exclusive content demonstrated an ongoing focus on margin expansion and product differentiation. The live dealer table games initiative at Fairmont Park and an updated expense recognition approach resulted in more balanced quarterly financial reporting for gaming operations. Management outlined that most 2026 capital expenditures are maintenance-oriented but deliver attractive payback periods, reflecting a disciplined, return-focused allocation approach.

• Management noted, "We believe our distributed, local, and community-rooted business model represents one of the most resilient profiles in the gaming space," providing explicit confidence in mitigating cyclical risks.
• Brett Summerer stated, "We define free cash flow as net cash provided by operating activities less CapEx net of PP&E disposals" and prioritizes this metric as the key performance measure going forward.
• Excluding a one-time shift in Fairmont Park purse expense timing, adjusted EBITDA and net income would have been approximately $2 million and $1.5 million higher, providing clearer insight for comparative analysis.
• No indication of major legislative progress for gaming expansion in 2026, as Mark T. Phelan said, "we are not particularly optimistic about any sort of legislative movement in 2026."
• Hyperlocal market positioning may attract incremental customers seeking affordable, convenient entertainment, particularly visible in truck stop venues with large terminal counts in Louisiana.

INDUSTRY GLOSSARY

• TITO (Ticket-In, Ticket-Out): Technology that allows players to receive and redeem barcoded tickets for their winnings at gaming terminals, reducing handling of physical cash.
• VGT (Video Gaming Terminal): Electronic gaming machines placed in licensed non-casino venues such as bars, restaurants, or truck stops.
• Hold Per Day: Average daily net revenue retained from players at each location after payouts.
• Fairmont Park Purse Expense: The allocated funds paid out as prizes to race participants at Fairmont Park Casino and Racing, recognized in financial reporting per accrual methodology.

Full Conference Call Transcript

Scott D. Levin: Welcome to Accel Entertainment, Inc.'s First Quarter 2026 Earnings Call. Participating on the call today are Andrew Harry Rubenstein, Accel’s chief executive officer; Brett Summerer, Accel’s chief financial officer; and Mark T. Phelan, Accel’s president and chief operating officer. 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.

Andrew Harry Rubenstein: Thank you, Scott, and good afternoon, everyone. Accel Entertainment, Inc. delivered a strong start to 2026, the company’s highest-ever Q1 adjusted EBITDA result. First quarter revenue increased 9% year over year to $352 million, marking an all-time quarterly record for the company. Adjusted EBITDA also grew 9% to $54 million, reflecting solid underlying performance across the business. These results reflected the continued strength of our distributed gaming model, ongoing momentum in our developing markets, and our team’s disciplined execution across each of our businesses. We ended the quarter operating 4,540 locations and 28,353 gaming terminals nationwide, representing year-over-year increases of 3% and 4% respectively.

Turning to our core markets, Illinois remains the foundation of our business and continued to deliver strong results in the first quarter. Total Illinois revenue, excluding Fairmont Park, increased 6% year over year to $242 million. Our distributed gaming operations in the state continue to benefit from strategic location optimization and new machine placements, with total average location hold per day increasing 9% year over year to $962. This performance underscores the effectiveness of our ongoing strategy to improve route quality and concentrate investment in higher-yielding placements, even as we maintain broadly flat VGT counts in this mature market. Our rollout of ticket-in, ticket-out technology in Illinois, or more commonly referred to as TITO, continues to progress well.

With all of our terminals now TITO-enabled, we are beginning to realize the benefit of TITO. We expect that benefit to build through the remainder of 2026 as players become accustomed to the convenience of TITO. Chicago represents one of the most exciting near-term growth opportunities we have seen in some time. The Illinois Gaming Board is actively processing applications from Chicago establishments as we continue signing up locations while waiting for final regulatory approvals. As the market leader in Illinois, with 2,678 locations and 15,413 gaming terminals, and an established platform of infrastructure, people, and relationships, we believe we are uniquely positioned to move quickly and efficiently when the market opens.

We currently anticipate the first Chicago locations could go live in late 2026 or in 2027. We will continue to provide updates as the process unfolds. Montana delivered steady performance in the first quarter, with total average location hold per day increasing 5% year over year. In addition, our Grand Vision Gaming subsidiary continues to develop exciting and engaging new content that enhances margins through exclusivity while supporting our broader business. Across our developing markets, we continue to build momentum. Nebraska delivered outstanding results with revenue increasing 57% year over year and total average location hold per day up 57%, supported by new machine placements.

We continue to see the benefit of our operating leverage with the business growth and market density. Georgia also delivered strong growth, with revenue up 43% year over year and total average location hold per day up 14%. In Nevada, we grew locations 27% and terminals 28% year over year, reflecting the significant footprint expansion from the Dynasty Games acquisition and our new route partnership with Rebel Convenience Stores. Mark will discuss Nevada in more detail shortly. Louisiana continued to grow with revenue up 12% year over year, and our bolt-on acquisition pipeline remains active and attractive.

At Fairmont Park Casino and Racing, we are excited to have launched live dealer table games last month, including blackjack, roulette, and novelty games, marking a significant step in Fairmont’s evolution into a full-scale gaming and entertainment destination. Reflecting our continued confidence in the long-term value of Accel Entertainment, Inc. shares and our commitment to returning capital to shareholders, we repurchased approximately 1.1 million shares of our common stock for $12 million in 2026 to date. Our balance sheet remains strong, with $274 million in cash and net debt of approximately $306 million, representing net leverage of approximately 1.4x.

Our $300 million revolving credit facility remains fully undrawn, providing significant financial flexibility as we continue to evaluate organic growth, tuck-in acquisitions, and capital return opportunities. I want to take a moment to address the broader macroeconomic environment and the resilience of our business model. We are operating in a period of heightened uncertainty brought on by tariffs, inflation, and geopolitical instability. I want to be clear about why we believe Accel Entertainment, Inc. is well positioned in this environment. Our business is fundamentally hyperlocal. We operate gaming terminals in neighborhood bars, restaurants, convenience stores, and truck stops—the kinds of places people visit in their daily lives.

Our customers are local players engaging in local entertainment, and that behavior has proven remarkably resilient across economic cycles. We also believe the current environment may be driving incremental trade-down activity toward local, convenient, and affordable entertainment options. This is exactly the kind of experience our location partners provide, and which we view as a stabilizing tailwind for our business. Our cost to serve allows us to flex, which means we have the ability to manage our business efficiently even in periods of softer consumer demand. Tax refund season provided its typical seasonal tailwind as we moved through the quarter, and we continue to monitor the broader consumer environment for any signs of impact on player activity.

Continuing through the beginning of the second quarter to date, we have not observed any material impact to our business. On the contrary, volumes remain strong. We believe our distributed, local, and community-rooted business model represents one of the most resilient profiles in the gaming space. Lastly, before I turn the call over to Mark, I want to briefly touch on our leadership transition. As we announced in February, I have stepped into the chairman role, and Mark will assume the chief executive officer role effective August 7.

I am incredibly proud of what this team has built over the past seven years, and I have full confidence in Mark and the entire Accel Entertainment, Inc. leadership team to continue to grow this business and capitalize on the significant opportunities ahead. With that, I will turn the call over to Mark to review our operations in more detail.

Mark T. Phelan: Thank you, Andy. From an operational standpoint, Q1 2026 reflected continued disciplined execution across each of our markets with a focus on route quality, hold-per-day improvement, and targeted growth investment. In Illinois, our team remained focused on improving location mix, redeploying underperforming assets, and deploying capital into higher-yielding machine placements. Illinois location count declined modestly year over year as we continued our deliberate strategy of optimizing the route rather than growing for the sake of location count. The result of that strategy is clear in our hold-per-day performance.

Illinois location hold per day increased 9% year over year to $902 per location, which is a strong result and reflective of the quality improvements we have made across the route over the past several years. In Chicago, our team has been actively preparing for the market opening. We have been working closely with city leadership to support the development of best practices and an efficient regulatory framework. We have begun signing up Chicago locations and are well positioned to mobilize when the Illinois Gaming Board begins issuing approvals. In Nevada, our focus in Q1 2026 was integration and building out our newly expanded footprint.

As a reminder, we completed the acquisition of Dynasty Games in December 2025, adding 20 locations and approximately 120 gaming terminals across Northern Nevada. We also launched our route partnership with Rebel Convenience Stores in January 2026, adding 55 locations and over 400 gaming machines across Southern Nevada. That rollout was executed efficiently. Our team has been working to elevate the gaming experience at these Rebel locations with new machines and proprietary content, and we are encouraged by the early increases in play we are seeing. We expect those trends to continue building through the back half of the year.

We now operate in Nevada across 450 locations and 3,348 gaming terminals, representing a market we continue to be excited about for the long term. The Nebraska team delivered exceptional results. Revenue was up 57% year over year, driven by new machine placements featuring our proprietary content and ongoing investment in the market. As our terminal density increases in Nebraska, we continue to see strong operating leverage. In Georgia, we continue to expand our footprint, with locations up 28%, terminals up 35% year over year, and hold per day up 14%, reflecting Accel Entertainment, Inc.’s continued development of this market. In Louisiana, we continue to execute our bolt-on acquisition strategy. The pipeline of opportunities remains active.

We believe we remain the buyer of choice in this market given our size and track record of accretive integration. At Fairmont Park, the property continues to evolve. Casino operations remain the primary driver of performance, with hold per day continuing steady upward growth. We launched live dealer table games in April 2026, including blackjack, roulette, Ultimate Texas Hold ’Em, and baccarat, marking a significant step in Fairmont’s evolution to a full-scale gaming and entertainment destination. Importantly, revenue from these new gaming positions is being reinvested in the racing product. For the 2026 season, we increased total purses by $500,000, which is already attracting larger field sizes and more competitive racing.

Our second racing season is now underway, and we are watching customer behavior closely as the season builds. We continue to evaluate the timing and scope of the overall Fairmont investment as we gain more operating experience in the property. For the meantime, we are pleased with its contributions and prospects for further growth of the live table games. Across all of our markets, our operational approach remains consistent: disciplined capital deployment, service excellence at the location level, data-driven decision making, and strong local relationships. That operating discipline underpins our financial performance and supports our ability to generate growing free cash flow over time.

Before I turn it over to Brett, I want to share a broader thought on where we see this business heading. When we think about what Accel Entertainment, Inc. is building, we increasingly view it less as a logistics business and more as a gaming and hospitality business. A logistics business competes on efficiency, scale, and cost. A gaming and hospitality business competes on experience, content, relationships, and differentiation—and it commands meaningfully better economics as a result.

Everything we are doing, including new exclusive content in Nebraska and Georgia, table games launch and increased purses at Fairmont, the TITO rollout that improves the player experience in Illinois, the quality upgrades at our Rebel locations in Nevada—all of it is oriented around delivering a better, more engaging entertainment experience for our players and a more valuable relationship for our location partners. That is a key driver of our next phase of margin expansion and profitability growth at Accel Entertainment, Inc., and it is what gets me most excited as I prepare to step into the CEO role later this year. With that, I will turn the call over to Brett to review the financial results in greater detail.

Brett Summerer: Thank you, Mark, and good afternoon, everyone. I will begin with our first quarter results and then provide additional detail on cash flow, the balance sheet, and capital allocation. As Andy mentioned, for the first quarter, total revenue increased 9% year over year to $352 million, an all-time quarterly record for Accel Entertainment, Inc. Growth was broad-based with strength in Illinois, Nebraska, Georgia, Nevada, and Louisiana. Net gaming revenue increased 10% year over year to $331 million, which was the primary driver of our top-line performance. Operating income for the quarter was $27 million compared to $26 million in the prior-year period.

Net income was $15 million, essentially flat year over year, as higher operating income was offset by higher depreciation and amortization associated with our growing asset base, and also the timing of our purse expense, as I will discuss later. On a per-share basis, diluted EPS was $0.17 for both Q1 2026 and 2025. Adjusted EBITDA for the first quarter was $54 million, an increase of 9% compared to the prior-year period. Our underlying operating performance was solid, and growth was essentially in line with our strong revenue performance. It is important to note that adjusted EBITDA and net income were impacted by the timing of our purse expense accrual in Fairmont Park.

This was a $2 million shift in the timing of how our Fairmont Park purse expense accrual is recorded. In 2025, our first year of racing operations, purse expense was recognized as races were conducted, which concentrated expense in Q2 and Q3. In 2026, we determined it was more appropriate to accrue this expense in line with revenue recognition, as revenues are generated throughout the year and contribute to the annual purse obligation. As a result, expense is now being recognized earlier in the year and more evenly across periods. This change impacts the timing of expense recognition by quarter, but does not impact full-year results other than the $500,000 strategic increase to the purse that Mark referenced earlier.

Excluding this item, adjusted EBITDA and net income would have been approximately $2 million and $1.5 million higher, respectively, to enable easier comparison to prior periods. Turning to capital expenditures, total CapEx in the first quarter was $23 million, down from $27 million in the prior-year period. We continue to expect full-year 2026 CapEx to be in the range of $60 million to $70 million, which compares to approximately $89 million in 2025, which included elevated investment in Fairmont Park. The majority of our 2026 CapEx is maintenance-oriented, with growth capital concentrated in our developing markets. It is worth noting that our maintenance capital spending is not like other companies.

There is an incremental return on this investment with a reasonable payback. From a cash flow perspective, operating cash flow for the quarter was $43 million. We used approximately $23 million in investing activities, primarily for CapEx, and $42 million in financing activities, reflecting debt repayment, share repurchases, and other items. I also want to highlight free cash flow as a metric we intend to discuss more regularly going forward, as we believe it best reflects the underlying cash generation strength of our business. We define free cash flow as net cash provided by operating activities less CapEx net of PP&E disposals.

With CapEx normalizing in 2026 and our developing markets scaling profitably, we expect free cash flow to continue to grow and view this as a key priority. Given our adjusted EBITDA of $54 million and our free cash flow of $20 million, we have a cash conversion of 38%. Moving to the balance sheet and liquidity, we ended the quarter with $274 million in cash and cash equivalents. Total debt, net of debt issuance cost, was $581 million, resulting in net debt of approximately $306 million and net leverage of approximately 1.4x on a trailing twelve-month adjusted EBITDA basis. Our $300 million revolving credit facility remains fully available.

We entered into a new interest rate collar on 01/30/2026, which replaced our prior interest rate cap arrangement. The collar establishes a cap rate of 4% and a floor of 2.92% on our term loan and matures in September 2029. This instrument is designed to provide continued protection against interest rate volatility while optimizing our cost of capital. As of 03/31/2026, we repurchased a total of 18.7 million shares under our share repurchase program that began in November 2021, at a total purchase price of approximately $195.6 million, leaving approximately $151.2 million remaining under the current program authorization.

Our board has historically been thoughtful about the share repurchase program authorization, and we will evaluate next steps in the context of our broader capital allocation priorities. Our capital allocation framework remains disciplined and return-focused. We continue to evaluate each dollar of capital across our organic investment, bolt-on strategic acquisitions, debt reduction, and share repurchases, always with an eye toward generating the highest risk-adjusted return for our shareholders. Looking ahead, our recurring revenue model, disciplined capital deployment, and continued operating leverage position us well to convert earnings into free cash flow and fund our growth initiatives while maintaining a strong balance sheet. We remain confident in our ability to continue delivering on our commitments in 2026 and beyond.

With that, operator, please open the line for questions.

Operator: We will now open the call for questions. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of Patrick Keough with Truist Securities. Your line is now open. Please go ahead.

Patrick Keough: Great. Hey, guys. Thank you so much for taking the question. Sorry, am I echoing? Okay, great. Apologies. So early days with TITO, obviously, in Illinois, but could you give any color on early player adoption metrics and any impact you are seeing on cash-handling costs thus far? Thank you.

Brett Summerer: Yes, sure. So a couple different things to set the table. When we initially thought about TITO and what it could mean for us, we had some internal estimates, and we have talked a little bit about it in the past—potentially up to around that 20% mark. What we are seeing so far in adoption is around 13%, and it has not fully tapered off yet, so there is still potentially upside there. If we think about what it can mean for us, I wish it were a simple answer.

As you can probably appreciate, our overall play is increasing, and because our overall play increases, the amount of cash that is out there on the street is higher for us to go pick up. So that actually drives additional cost, but it has nothing to do with TITO. On the flip side of that, TITO is helping us reduce that. It is happening organically. As you can probably appreciate, we do our cash routes and pickups on a weekly basis. We have some automation behind it, but ultimately, it comes down to humans and the practices that we have throughout the organization.

As cash gets to certain collection levels, we are picking it up and taking it off the street. So it is not a one-time cash benefit or a one-time cost reduction that we are going to see. It will be something that plays out over time. I would just caution that we only got to 100% fully TITO-enabled a handful of weeks ago as well, so again, more to come on that. It is just a piece of the overall picture, and teasing it out specifically is going to be difficult, but you should overall see a little bit of a benefit in terms of additional cash in our banks as well as in our cost structure.

Patrick Keough: Okay. Understood. That is very helpful. Thank you. And for my follow-up, the JCAR recently approved the Illinois Gaming Control Board’s vertical integration rules. From your perspective, could you talk a bit about what this entails and if you see yourself as the best beneficiary as these are enforced? Thanks so much.

Andrew Harry Rubenstein: Hi, Patrick. Although that rule was passed by JCAR, it has recently been contested by some of the operators in circuit court, so we are going to wait to see how that plays out before we draw any conclusions.

Operator: Your next question comes from the line of Steven Donald Pizzella with Deutsche Bank. Your line is now open. Please go ahead.

Steven Donald Pizzella: Hey, good afternoon, thank you for taking our questions. Maybe we can start with some of the recent trends. It looks like from the data we can see out of the IGB, January and February were very strong, then slowed down a little bit. March was still solid. What did you see in terms of April? I know, Andy, you mentioned potential benefits from a trade-down effect, the tax refunds potentially maybe offset by some gas prices. Then I guess just on that latter point, as you look at your history, to what extent has your customer base been sensitive to gas prices? Thank you.

Andrew Harry Rubenstein: From our perspective, we really have not seen any noticeable impact from gas prices yet. Historically, it has not been a major factor, and I am speaking mostly from the Illinois market. Our players actually need to travel less to reach our establishments, as opposed to going to a regional casino. So we tend to benefit when the player wants to stay closer to home. Whether it is going to impact their overall budget for entertainment spending, we are unsure, but we do know that they will be spending less on gas to come play at our establishments.

So we may get a benefit where they will elect to play with us even though they have less dollars in their total budget.

Operator: Your next question comes from the line of Jordan Bender with Citizens. Your line is now open. Please go ahead.

Jordan Bender: Hey, everyone. Good afternoon. Thanks for the question. Maybe to start with the pruning in Illinois—another quarter in which you took out a good amount of locations and units. Can you maybe just update us on where we stand there? And then, related to that, are the units or locations that you are going to take out today or going forward going to have less of an impact versus maybe some of the low-hanging fruit that we saw over the last two years? Thank you.

Mark T. Phelan: Hey, Jordan. The strategy on pruning is really just opportunistic. When we see opportunities to reduce locations that actually burn our cash, we tend to do it. I do not think there is particularly low-hanging fruit that is still out there. We are always mindful of that, and we are also mindful of our organic revenue that is coming online. So it is a balance between new revenue and revenue that is actually costing us.

Jordan Bender: Understood. Thanks. And just a follow-up: the plans for the permanent at Fairmont—you kind of said there is nothing to maybe report today. I think the original expectations were maybe there would be some sort of plan in ’26. Is there some sort of timeframe or plan when we might be able to hear more about something definite there?

Mark T. Phelan: We are still in the maturation stage of the temporary. As Andy mentioned, we rolled out table games about a month ago, and we just had over 700 people at the Derby Day on Saturday. We are still contemplating and trying to figure out what the optimal size looks like. When we do figure it out, we will obviously let everyone know.

Operator: Your next question comes from the line of Chad C. Beynon with Macquarie Capital. Your line is now open. Please go ahead.

Chad C. Beynon: Andy, Mark, Brett, thanks for taking my question. Wanted to ask about legislative momentum or just any traction that we saw in the first quarter. I know there was a bill in Virginia that was vetoed by the governor. Wondering if you could talk about all states so far this year where we have seen some progress where there could be changes in ’27 or beyond? Thank you.

Mark T. Phelan: Hey, Chad. Unfortunately, again, this is all us handicapping, but it appears that there is not going to be a lot of legislation that progresses legalization of video gaming terminals or skill games in the United States. You mentioned Virginia—the governor did veto that. There is some life still left in that bill, but its life is slowly eking out as time moves on. So we are not particularly optimistic about any sort of legislative movement in 2026.

Chad C. Beynon: Okay. Thank you. Turning to Nevada opportunities, great to see the unit growth sequentially and year over year as a result of the two items that you talked about. When you think about more acquisitions, just from a quantitative standpoint, is Nevada still the biggest growth market, or are some of these emerging markets becoming bigger in terms of the absolute impact to the Accel model? Thank you.

Mark T. Phelan: Nevada actually includes some opportunistic model changes where we are doing space leases instead of revenue shares with participation bars. In terms of our individual markets, we are optimistic about all of them in terms of acquisitions. We have talked a bit about Louisiana. It is a mature market, but we have a great partner down in the state, and we think we can grow that market accretively as well as with significant volume over time. Illinois is always an opportunity to acquire routes at accretive prices, and in most of our other markets, we are always on the lookout. So I would say all markets are aligned toward growing potentially through acquisitions.

Operator: Your next question comes from the line of David Bain with Texas Capital Securities. Your line is now open. Please go ahead.

David Bain: Great. Thank you. First, based on your observations of the licensing process in Chicago—maybe discussions with city council and your overall distributed experience—how is that process going? Is it at the pace you would expect? Is it a little slower? Can you maybe help us with locations blessed before the end of the year and next—just trying to get an idea as to how we are looking?

Mark T. Phelan: Hey, David. We feel good about the Illinois Gaming Board processing applications, but the city has yet to promulgate any rules around VGT gaming, and that is a wild card. We would imagine it would be done in the next, call it, quarter, but that is me just handicapping it.

David Bain: Okay. And then assuming that begins to ramp, my secondary question would be: you mentioned Louisiana valuation rationalizing, and with Chad, you spoke to Illinois still being a good M&A market. Are there valuations moving around perhaps in Illinois, maybe going higher as we get closer to Chicago licensing locations? Does it make it more of an exciting market heading into that? Or how are you thinking about M&A there?

Mark T. Phelan: We are really excited about the market. I would point to our multiple. We are the only public company in this industry, and we are certainly not going to buy anything that is not accretive to us. So you can use that as a benchmark as to what we see in terms of acquisitions and multiples.

Operator: A reminder. Our next question comes from the line of Maxwell James Marsh with CBRE. Your line is now open. Please go ahead.

Maxwell James Marsh: Hi, thanks for taking my question. Maybe to approach gas prices from a different angle—I think it is fairly intuitive that your hyperlocal customer is resilient to gas prices broadly—but is there or could there be a localized impact on the truck stop part of your business, specifically looking at Louisiana with its higher proportion of truck stops through Toucan?

Andrew Harry Rubenstein: The reality of the truck stop business is it is not truckers; it is local people that play at the truck stop because it is a more gaming-focused venue than going into a tavern. People who want to play and have a true gaming experience enjoy playing at the truck stops. In Louisiana, that is even more in focus because the Louisiana truck stops have up to 60 games; it is really like a small casino. Because those establishments are in proximity to where these people live, they tend to thrive in environments where people are watching their entertainment dollars.

Instead of driving a greater distance to a regional casino—which they have throughout Louisiana—they tend to stay closer to home, either in the tavern market or, in this case, the truck stop market. So although they may have reduced disposable income, we may get a bigger share of their entertainment wallet.

Mark T. Phelan: Max, I would just add that truck stops are a bit of a misnomer in terms of who plays there. That is usually local people, not truck drivers. In Louisiana, they are probably benefiting from the increase in energy prices and natural gas particularly, so we do not necessarily view that as a vulnerable part of our portfolio. And the offshore drilling industry is a major source of employment in Louisiana, so those individuals probably have more dollars in their pocket than they do in a normal situation.

Maxwell James Marsh: Okay. Understood. Thanks for that clarity. And if we could just touch on EBITDA margins quickly—approaching 16% this quarter when we adjust for Fairmont’s purse expense—following a really strong 4Q. Could you take us under the hood on EBITDA margins and how to think about that going forward?

Brett Summerer: Since it is forward-looking, I cannot really talk too much about it, but I would point you to two things. One, look at the EBITDA margins that we have delivered in the past. What you saw last year is Q4 was a little higher, and Q1, Q2, and Q3 were all in the mid-15% range. So there is some seasonality associated with that, which you can see play out. The other thing to be thoughtful about—in our earnings release, we have a gross margin table that shares the gross margin within each of our business pieces.

In the “all other” space, which we do not disclose the individual components for, you can see the overall movement of the non-regulated markets increasing. I think that is the right way to think about where this is going and our performance year on year.

Operator: Your next question comes from the line of Gregory Thomas Gibas with Northland Securities. Your line is now open. Please go ahead.

Gregory Thomas Gibas: Great. Good afternoon, Andy, Mark. Thanks for taking the questions. In terms of capital expenditures, how much was allocated for Fairmont this year out of your $60 million to $70 million outlook, and how much is more maintenance?

Brett Summerer: Thanks for the question. We do not usually talk about the forecast and how we break down the different pieces of it. What I will say is, year over year, the primary piece of lower capital is because Fairmont construction is not in there—in at least not in a big way like it was last year. So the vast majority of about a 20% decline in capital is because we are investing less into Fairmont, because we have most of the hard structure out of the way. On maintenance versus growth, we also have what I would consider to be non-return maintenance capital, which is like most businesses—but in our business, we really do not have much of that.

The way that I look at it is: growth capital is generally stuff that pays back within a year—adding a machine to a place that does not have a machine. The maintenance capital has a return on investment—depends on the market and the machine and other factors—but call it a two- to three-year payback, which is still a good project to invest in. That is separate and distinct from, you know, fixing the walls when somebody backs a truck into them.

Most of our capital this year is in the maintenance bucket, so you are going to get that kind of payback, which is in that two- to three-year timeframe, but it is still a very high IRR and well in excess of our WACC.

Gregory Thomas Gibas: Okay, great. That is helpful. And as it relates to the tuck-in acquisition strategy, is Louisiana still maybe the top priority relative to other markets, and how does your pipeline of potential opportunities look in that market?

Mark T. Phelan: Louisiana is definitely a focus of ours in terms of M&A. That has always been our thesis there, and the pipeline is good. We are excited about that state growing. But as I said earlier, there are other states that also have very accretive acquisition candidates that we are always viewing and reviewing.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Andrew Harry Rubenstein for closing remarks.

Andrew Harry Rubenstein: Thank you, operator, and thank you to everyone who joined us today. We enter the remainder of the year with a clear set of priorities. We have a strong balance sheet and what we believe is one of the most compelling near-term growth opportunities in our company’s history with the pending launch of the Chicago VGT market. As always, I want to thank our employees, whose dedication and execution make these results possible; our location partners, who trust us to help grow their businesses; and our shareholders for their continued support and confidence in our team. We look forward to updating you on our progress when we report our second quarter results in August. Thank you.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.

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