Company: ACEL
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001698991-25-000034
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Company: Accel Entertainment, Inc.
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 3
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Table of Contents

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Market risk exposure is primarily the result of fluctuations in interest rates. 

Interest rate risk

We are exposed to interest rate risk in the ordinary course of business. Borrowings under our senior secured credit facility were $597.2 million as of June 30, 2025. If the underlying interest rates were to increase by 1.0%, or 100 basis points, the increase in interest expense on our floating rate debt would negatively impact future earnings and cash flows by approximately $3.0 million annually, assuming the balance outstanding under the credit facility remained at $597.2 million. In order to protect against higher interest rates in the future on our credit facility, we hedged the variability of the cash flows attributable to the changes in the 1-month SOFR interest rate on the first $300 million of the term loan by entering into a 4-year series of 48 caplets on January 12, 2022. The caplets mature at the end of each month and are used to protect our exposure as the 1-month SOFR interest rate exceeded 2%. 

Cash and cash equivalents are held in cash vaults, highly liquid checking and money market accounts, gaming terminals, redemption terminals, ATMs, and amusement equipment. As a result, these amounts are not materially affected by changes in interest rates.