Accel Entertainment, Inc. · NYSE:ACEL
Accel Entertainment — SPAC Merger (June 2019)
36 slides from Accel Entertainment's SPAC merger presentation, Jun 13, 2019
Slide 1: Accel Entertainment – Investor Presentation June 2019
Exhibit 99.2 Accel Entertainment – Investor Presentation June 2019 TPG PACE HOLDINGS CORP.Exhibit 99.2 Accel Entertainment – Investor Presentation June 2019 TPG PACE HOLDINGS CORP.
Slide 2: Important Information
Important Information Use of Projections This presentation contains financial forecasts prepared by TPG Pace Holdings Corp. (“Pace”) with respect to certain financial metrics of Accel Entertainment, Inc. (“Accel”), including, but not limited to, revenues (gaming, other, and gross), gross profit, EBI
Slide 3: Important Information (continued)
Important Information (continued) No Representations or Warranties This presentation does not purport to contain all of the information that may be required to evaluate a possible transaction. No representation or warranty, express or implied, is or will be given by Pace or Accel or any of their res
Slide 4: Transaction Summary
Transaction Summary Sponsored Public Listing NYSE: TPGH NYSE: ACEL Transaction Overview ▪ TPG Pace Group raised $450 million through the IPO of a special purpose acquisition company (“SPAC”) in June 2017, called TPG Pace Holdings Corp. (“Pace” or “TPGH”) ▪ Pace has entered into a transaction agreeme
Slide 5: Introduction to Accel
Introduction to Accel (2) Key Metrics Growth of Video Gaming Portfolio (End of Period) ▪ ~25% segment share in Illinois Biggest Video 11,196 ▪ ~1,700 locations Gaming Terminal 10,084 9,096 (3) Operator in the 7,649 ▪ Revenue: 19E $423mm, 20E $527mm 6,439 (1) U.S. (3) 4,947 ▪ EBITDA: 19E $83mm, 20E $
Slide 6: Key Investment Highlights
Key Investment Highlights Signed Contract Portfolio Guides Highly visible path to growing EBITDA 1 EBITDA Forecast & Visibility through multiple avenues 2019E-2021E (2)(3) – Organic / new locations at attractive Run-Rate EBITDA ($mm) EBITDA Growth: ROICs in states in which Accel is licensed 111 +46%
Slide 7: Gaming-as-a-Service – Accel’s Turnkey Solution
Gaming-as-a-Service – Accel’s Turnkey Solution for State of the Art Gaming Redemption Machines / Video Gaming Terminals Accel is Best-in-Class Other Amusements Highly Effective Full Suite of Marketing Strategies Products Data-Driven Analytics & Optimization ▪ Improves visibility and appeal of small
Slide 8: Gaming Has Been Resilient in Recessions
Gaming Has Been Resilient in Recessions Total U.S. Gaming: Representative Cycle-Resistant Market: YoY Revenue Growth % Iowa Gaming Historical Performance (2007-2017) Commercial regional gaming markets are more stable Domestic gaming revenues are generally quite defensive than Las Vegas due to a more
Slide 9: Accel’s Senior Management Team
Accel’s Senior Management Team Executive Relevant Experience ▪ Chairman and CEO, responsible for overall business operations Andy Rubenstein ▪ Prior to Accel, Andy was the owner and operator of the largest liquor store chain in central Illinois by revenue after starting his career at Arthur Andersen
Slide 10: Investment Highlights
Investment Highlights TPG PACE HOLDINGS CORP.Investment Highlights TPG PACE HOLDINGS CORP.
Slide 11: Investment Highlights
Investment Highlights 1 2 3 4 5 Industry Favorable Leading Superior Multiple Attractive Industry Gaming-as- Financial Ways to Fundamental Tailwinds a-Service Model Grow Valuation (1) Platform 1. Accel is the largest video gaming terminal operator on an EBITDA basis in the U.S. TPG PACE HOLDINGS CORP
Slide 12: Significant Total Addressable Market Opportunity
1 Significant Total Addressable Market Opportunity Video Gaming is the Fastest Growing Segment 2025E TAM (5) Accel 2019E Slot Machine Growth Total Slots 895 108 31 Revenue: $0.4bn Illinois (000s) (2018) 11% (1) 2025E $3+bn 5% (2) 1% Existing Markets $10+bn Total U.S. Casino All VGTs IL VGTs Slots (1
Slide 13: Video Gaming Regulations and Tax Benefits in Illinois
1 Video Gaming Regulations and Tax Benefits in Illinois Illinois Video Gaming Act & Recently Passed Gaming Expansion Bill (1) ▪ Illinois passed the Video Gaming Act in 2009 → operations began in 2012 Net Terminal Income Split ▪ After the 2019 amendment, up to 6 VGTs in licensed liquor, fraternal and
Slide 14: Fragmented Landscape in Illinois
2 Fragmented Landscape in Illinois Top 6 Terminal Operators by Location (2018 End of Period) Segment 25% 16% 7% 6% 6% 6% 35% Share # Add’l Locations +524 +363 +134 +18 +84 (49) (18) since YE16 2,381 1,686 1,060 464 439 403 382 (1) 47 Other Terminal Operators Accel’s cost efficiency enables it to ope
Slide 15: Steady Expansion of Accel’s Location Portfolio
3 Steady Expansion of Accel’s Location Portfolio Annual Licenses Won Accel’s Annual Competitive Conversions Assumptions 149 1,077 1,035 1,037 985 ~1,000 licenses 197 285 109 177 270 104 issued per year 838 808 792 767 34 2015 2016 2017 2018 Accel to obtain Other TOs Accel's New Licenses ~25% of tota
Slide 16: Accel’s Location Trends by Vintage
3 Accel’s Location Trends by Vintage (1) Revenue by Vintage ($mm) No evidence of vintage erosion as churn is offset by revenue growth 396 332 248 173 2016 2017 2018 Run-Rate 1Q19 Before 2014 2014 2015 2016 2017 2018 Q1 2019 Non-Gaming Revenue (2) Hold Per Day per Month since Opening by Vintage ($) 2
Slide 17: Accel has Consistent Success in Improving Acquisition Performance
3 Accel has Consistent Success in Improving Acquisition Performance LTM Hold Per Day at Acquisition ($) LTM Hold Per Day as of Mar-19 ($) Hold Per Day CAGR (%) +4% 244 238 +7% +17% 190 +11% 180 +8% +10% 168 165 164 147 +10% 141 +4% 122 107 105 103 95 85 80 A B C D E F G H Acquisition 2013 2014 2014
Slide 18: Simple Economic Model
3 Simple Economic Model Building Blocks → Key Guidance Assumptions Market Growth / Competitive Expansion in Acquisitions: New Openings: Conversions: Pennsylvania: Annual Location 40-60 acquired 240-260 openings 40-60 ~5 new Growth locations less 125 closures conversions openings Consistent trend acr
Slide 19: Accel’s Historical Financials and Annual Forecasts
3 Accel’s Historical Financials and Annual Forecasts (1)(4) (2)(4) # of Locations and VGTs (End of Period) Revenue ($mm) Continued portfolio build-up through organic openings, acquired Steady double digit topline growth through higher betting limits, locations, competitive conversions, and expansion
Slide 20: Multiple Additional Non-modeled Growth Levers
4 Multiple Additional Non-modeled Growth Levers New Products ▪ Potential to put sports Legalization in betting kiosks into New States existing locations ▪ Potential for other Expansion in Other ▪ Accel can provide states to expand above-board and Existing States gaming laws in the competitive near-t
Slide 21: Potential Expansion of Video Gaming in Other States
4 Potential Expansion of Video Gaming in Other States Gaming Adoption Increasing States Currently Considering Adoption of VGTs ▪ Missouri 50 48 42 – Revenue shortfall of $251mm in 2018 ▪ Mississippi – Revenue shortfall of $169mm in 2017 4 ▪ Georgia 1 7 – Exploring expansion of existing route gaming
Slide 22: Accel vs. Gaming Peers
5 Accel vs. Gaming Peers (2) Valuation vs. Growth ROIC (1) (2) Avg Gaming Comps ROIC: 9% x20E FCF Bubble represents ROIC 21% 20.0x Regional / Local Casino Operators ALL.AX 23% Electronic Gaming & Technology CHDN LVS 21% 18.0x WYNN 12% Destination w/Asian Exposure MCRI 12% ALL.AX EVRI 10% 16.0x CHDN
Slide 23: Accel’s Business Model vs. Peers
5 Accel’s Business Model vs. Peers TEV / 2020E EBITDA ~14x Headline: ~9x 8.6x PF Signed Contracts: 7.9x Regional / Local Casino Operators Route-Based Service Providers Focus on Route Density & Optimization ✔✘✔ Strong Recurring Revenue ✔✘✔ High Customer Retention ✔✘✔ Low Fixed Costs ✔✘✔ Low Capital I
Slide 24: Key Takeaways
Key Takeaways Highly Visible Growth • Long-term contracted revenue • Strong backlog of new locations Compelling B2B Service Model (1) • Leader in gaming-as-a-service → largest video gaming terminal operator in the U.S. • Compelling returns on invested capital driven by asset light model Attractive C
Slide 25: Transaction Overview
Transaction Overview TPG PACE HOLDINGS CORP.Transaction Overview TPG PACE HOLDINGS CORP.
Slide 26: Key Transaction Terms
Key Transaction Terms (1) ▪ Enterprise value to Pace shareholders of $884mm (8.6x 2020E EBITDA, 10.2x 2020E FCF ) ▪ $460mm from Pace cash in trust, including interest, and $45mm PIPE raise ▪ Post money net cash balance of $4mm ▪ Pace Sponsor and certain directors of Pace to retain 7.5mm shares at cl
Slide 27: Summary Transaction Terms
Summary Transaction Terms Pro Forma Valuation Sources & Uses (Estimated) At Close Sources $mm (1) $10.22 Illustrative Share Price ($) Existing SPAC Cash in Trust 460 Shares Outstanding (mm) 87 PIPE 45 Initial Market Capitalization ($mm) 888 Total Sources 505 PF Net Debt ($mm) (4) TEV to Market ($mm)
Slide 28: Experienced Board
Experienced Board Proposed Board of Directors Relevant Experience Andy Rubenstein President, CEO & Director Karl Peterson Chairman Gordon Rubenstein Hollie Haynes Kathleen Philips TBD TBD TPG PACE HOLDINGS CORP. 28Experienced Board Proposed Board of Directors Relevant Experience Andy Rubenstein Pres
Slide 29: Anticipated Transaction Timeline
Anticipated Transaction Timeline Date Event ▪ Transaction Agreement Executed June 2019 ▪ Transaction Announced July 2019▪ Preliminary Proxy Materials Filed with the SEC ▪ Mail Final Proxy Materials to Shareholders August 2019 ▪ Set Record Date for Shareholder Vote September 2019▪ Hold Shareholder Vo
Slide 30: Appendix
Appendix TPG PACE HOLDINGS CORP.Appendix TPG PACE HOLDINGS CORP.
Slide 31: Gaming-as-a-Service Model
Gaming-as-a-Service Model Casinos Gaming-as-a-Service Advantages B2B / business service play Players Small Businesses Primary Customer with long-term contracts Relationship ✘ Wide catchment area✔ Highly local footprint Closest option for gamers Winning share and disrupting casinos’ feeder markets gi
Slide 32: Economic Benefits of Video Gaming in Illinois
Economic Benefits of Video Gaming in Illinois Economics Contributions from Video Gaming $1.5 billion State and local taxes generated since 2012 $1 billion Industry investment ($130,000 per business) 32,000 Jobs created and supported Hundreds Small businesses created Millions of dollars Provided to e
Slide 33: Accel’s Financial Summary (2016A-2021E)
Accel’s Financial Summary (2016A-2021E) $ in millions, except where indicated Quarterly (8) (8) 2016A 2017A 2018A 2019E 2020E 2021E 16A-18A 18A-21E 1Q19A 2Q19E (1) # Locations (EOP) 1,162 1,442 1,686 1,886 2,096 2,333 20% 11% 1,740 1,762 (1) # VGTs (EOP) 4,947 6,439 7,649 9,096 10,084 11,196 24% 14%
Slide 34: Accel’s Community Engagement
Accel’s Community Engagement Folds of Honor Run the Ridge 5K Providing Educational Scholarships to the Children and Spouses Supporting Ray Graham Association to of Fallen and Disabled Military Service Members Empower People with Disabilities A foundation will further support the communities where Ac
Slide 35: Illustrative Fully Diluted Share Count
Illustrative Fully Diluted Share Count Illustrative Share Price Share count in millions $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00 $17.00 $18.00 TPGH Public IPO Shares 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 (2, 3) -- -- 0.6 1.7 2.7 3.5 4.2 4.9 5.4 TPGH Public Warrants PIPE Shares 4.4 4.4
Slide 36: Key Definitions
Key Definitions ▪ Go Live – the assigned date a location’s VGTs are activated and available to the public for play ▪ Hold Per Day (HPD) – the average amount of money held after payouts for each VGT on a daily basis → calculated as Net Terminal Income / 365 / # of VGT’s ▪ Illinois Gaming Board (IGB)