Accel Entertainment, Inc. · NYSE:ACEL
Accel Entertainment — Investor Day (June 2021)
44 slides from Accel Entertainment's investor day presentation, Jun 2, 2021
Slide 1: Investor Day June 2021
AE ENTERTAINMENT. Investor Day June 2021
Slide 2: Important Information: Forward-Looking Statements
Important Information Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical
Slide 3: Important Information: Use of Non-GAAP Financial Measures
Important Information Use of Non-GAAP Financial Measures This presentation includes non-GAAP financial measures, including Adjusted EBITDA. Adjusted EBITDA is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; change in fair value
Slide 4: Agenda
Agenda Introduction Georgia Century Gaming Operational Illinois Other Excellence States 4
Slide 5: Michael Marino
Michael Marino Chief Commercial Officer As Chief Commercial Officer, Michael leads the company’s strategic development with a focus on partnerships, marketing, and player rewards 4 years management consulting and nearly 8 years of gaming experience working in various roles at Caesars Entertainment M
Slide 6: Accel at a Glance
Accel at a Glance Average Daily Net Video Gaming Revenue(1) ($ in thousands) $2,142 High Quality $1,687 Service Strong Track Company Record of $882 $1,125 in Gaming Growth $458 $658 $353 Vertical As of March 31, 2021, Accel owns and operates 12,720 Video $256 Gaming Terminals (“VGTs”) across 2,470 t
Slide 7: Accel has a Clear Path to Growing its Core Gaming Business
Accel has a Clear Path to Growing its Core Gaming Business Grow Illinois Market Position Expand Opportunistically into New Markets GA Georgia Coin Operated Amusement Machines 6th VGT per Higher Bet Tuck-in Location Limits M&A MT NV Century Gaming OR WV Enter Existing Markets SD LA through M&A Compet
Slide 8: Most Experienced Management Team
Most Experienced Management Team Executives Andy Rubenstein Mike Pappas President, CEO & Director EVP of Business Development & Government Relations • Chairman and CEO, responsible for overall business operations • Over 40 years of route gaming / amusements experience • Prior to Accel, Andy was the
Slide 9: Agenda
Agenda Introduction Georgia Century Gaming Operational Illinois Other Excellence States 9
Slide 10: Accel has made substantial progress since our Nov-2019 Transaction
Accel has made substantial progress since our Nov-2019 Transaction 500% 24% >50% Growth Growth Growth June 2021 June 2021 June 2021 Commitments to 2021 Guidance ~13,000 Gaming Terminals $650-$705mm Revenue operate in 5 states >21,000 with Century $117-$127mm Adjusted EBITDA November 2019 November 20
Slide 11: Recent Highlights
Recent Highlights Q1 ‘21 Mar ‘21 Apr ‘21 May ‘21 Late ‘21 COVID Highest revenue Highest revenue Average daily Video Gaming Century Gaming COVID-19 and adjusted month in Accel’s revenue Revenue of acquisition Update: All EBITDA quarter in history exceeded $65 million expected to Illinois regions Acce
Slide 12: Accel is a Disciplined Buyer with an Integration Playbook
Accel is a Disciplined Buyer with an Integration Playbook to Apply to Fragmented Markets Playbook to Drive Synergies Track Record of Successful Acquisition Operational Improvement A B C D E F G H I Optimize Equipment Mix +9% +8% +7% +5% 298 +4% +8% 238 Implement Relationship Management +9% 164 +10%
Slide 13: Agenda
Agenda Introduction Georgia Century Gaming Operational Illinois Other Excellence States 13
Slide 14: Georgia Route Gaming Opportunity
Georgia Route Gaming Opportunity Accel believes there is an opportunity for a different skill gaming experience within the state of Georgia More than 90% of GA skill gaming locations are independently owned convenience stores Players receive winnings in the form of merchant credit, which must be red
Slide 15: Current Georgia Growth
Current Georgia Growth Summer ‘20 Jul ‘20 May ‘21 Jun ‘21 Jun ‘21 Accel created Bulldog purchased Bulldog purchased Currently have Bulldog sales Bulldog Gaming, LLC Tom’s Amusement Island Games – a ~ 60 live teams have (“Bulldog”) as its – a northern Georgia southern Georgia locations contracted wit
Slide 16: Agenda
Agenda Introduction Georgia Century Gaming Operational Illinois Other Excellence States Note: Accel’s proposed acquisition of Century is subject to the satisfaction of customary closing conditions, including regulatory approvals from applicable gaming authorities, and there can be no assurance that
Slide 17: Steve Arntzen
Steve Arntzen President and CEO, Century Gaming, Inc. President and CEO since 2010 Co-Founded CGI in 1989 Gaming Career Began in Montana in 1987 Became President of 30 Unit Regional Franchised Pizza Chain in 1980 BS Finance w/ High Honors – University of Montana 1977 Active on several boards, includ
Slide 18: Century at a Glance
Century at a Glance Montana Headquarters Nevada Headquarters Class III Video Gaming in Billings in Las Vegas Machine (“VGM”) Developer Ten Customer Service Additional Customer Service and Manufacturer Centers across Montana Centers in Reno and Elko 18
Slide 19: Montana Route
Montana Route Largest VGM operator in Montana 610 Locations (~40% of Market) 5,907 VGM’s (~40% of Market) $1,369 Average VGM Handle(1) per day $86 Average VGM Win(2) per day 15% State Gaming Tax Rate 109 Employees Vending splits with locations are individually negotiated contracts 1. Handle defined
Slide 20: Nevada Route
Nevada Route Second largest VGM operator in Nevada 399 Locations 2,462 VGM’s $2,444 Average VGM Handle(1) per day $139 Average VGM Win(2) per day 135 Employees State and Local Government share is based on Fixed License Fees Vending splits with locations are individually negotiated contracts 1. Handl
Slide 21: Gamblers Bonus – Player Rewards
Gamblers Bonus – Player Rewards 127,000 current players in database in Nevada Individualized Player Accounts that are accessible in any Gamblers Bonus location in Nevada Unique, cardless login Over $1B in logged-in play annually Over $1.25M paid annually in Proprietary Four of a Kind Bingo Awards 21
Slide 22: Grand Vision Gaming
Grand Vision Gaming Century owns Grand Vision Gaming, a VGM manufacturer licensed to sell in MT, SD, WV, LA, and OK − GVG is also the developer of “Power Vision” software exclusive to Century VGM’s in Nevada. (Century locations experience a 17% win increase when adding “Power Vision” VGMs into the g
Slide 23: Century Strategy
Century Strategy The Accel/Century combination allows for some very exciting opportunities Combine the best practices − Route territory expansion, of both companies technology background and experience, VGM manufacturing Century has been capital constrained (heavy legacy Mix Century’s efficiencies w
Slide 24: Agenda
Agenda Introduction Georgia Century Gaming Operational Illinois Other Excellence States 24
Slide 25: Ryan Hammer
Ryan Hammer President of Gaming Operations As president of Gaming Operations, Ryan leads the company’s video gaming business More than 16 years of gaming experience working in various roles at Caesars Entertainment Most recently served as Senior Vice President & General Manager, where he oversaw ope
Slide 26: Operational Approach
Operational Approach View each and every location as a business partner Pursue growth at partner locations through product, service and analytical rigor Devote substantial resources to our Sales organization − Motivating incentive structure to attract quality partners − Deep support team in-house to
Slide 27: Agenda
Agenda Introduction Georgia Century Gaming Operational Illinois Other Excellence States 27
Slide 28: Favorable Industry Tailwinds for Continued Growth in Illinois
Favorable Industry Tailwinds for Continued Growth in Illinois Stable New License Issuance (IL)… …drives New Location Openings… ...and Steady Illinois VGT Growth Statewide Licenses Issued (# of Locations) Total Illinois Open Locations (End of Period) Total In-Service VGTs (End of Period) 7,558 7,378
Slide 29: Estimated Video Gaming Opportunity in Illinois
Estimated Video Gaming Opportunity in Illinois Based on Establishments that Currently Have Liquor Licenses(1) Based on Density of Comparable Video Gaming States(2) Addressable Today Locations (k) Potentially Addressable VGTs (k) Implied Add’l IL VGTs at Each State Density (k) 23.8 21.2 2.6 194 4.3 1
Slide 30: Illinois Growth
Illinois Growth Locations and VGTs Location Hold per Day(1) 14000 3000 CAGR: 12,826 12,248 24% 12000 10,500 2500 10000 41% 2000 7,649 8000 6,439 1500 CAGR: CAGR: 6000 4,947 2,481 $826 2,312 2,435 20% 14% 3,777 1000 4000 3,232 1,686 $575 $590 $585 1,442 $503 $418 $441 1,162 $367 898 500 2000 800 0 0
Slide 31: Data to Drive Location Performance
Data to Drive Location Performance • Bring new products to market • Negotiate volume discounts • Actively purchase refurbished machines • In-house repair shop • Use data to model location performance to install the optimal machine mix for the location and player base Data & Analytics Real Life Examp
Slide 32: Accel is a Distributed Gaming Leader for Player Marketing
Accel is a Distributed Gaming Leader for Player Marketing Multi-channel Marketing Sweepstakes Partnerships Accel gave away more Accel scale enables appealing than $1mm to players partnerships for players In-Location AE Player Content Rewards Screens Launched March 1st Loyalty program designed to dri
Slide 33: Accel will Deepen our Relationships with Players to Drive Greater Loyalty
Accel will Deepen our Relationships with Players to Drive Greater Loyalty Accel has the primary Accel will continue to deepen relationship …and Player Rewards relationship with players with players through partnerships… Convenience and Grow with Consumer Frequency in Gaming and their Preferences Les
Slide 34: Agenda
Agenda Introduction Georgia Century Gaming Operational Illinois Other Excellence States 34
Slide 35: Additional Growth
Additional Growth Louisiana, West Virginia, South Pennsylvania Expansion Dakota, & Oregon On November 28th, Accel received its four-year Other states with regulated distributed gaming Terminal Operator License in Pennsylvania Accel is evaluating each state for financially The PA Legislature is expec
Slide 36: Substantial Growth Opportunity Outside of Illinois
Substantial Growth Opportunity Outside of Illinois TAM of Over $20bn ~15,000 • States are looking VGMs 2025E TAM for additional tax ~12,000 VGTs ~9,200 revenues as MT VGTs Accel 2021 Guidance: $0.7bn ~650+ budgets are OR VGTs constrained SD Illinois 2025E(2) PA $4+bn • Near-term NV ~39,500 IL VGTs l
Slide 37: Why Invest in Accel Entertainment?
Why Invest in Accel Entertainment? Contracted recurring revenues, Proven Asset Light Numerous Advantages vs. Casinos Business Model nimble operations and best-in- class ROICs 1 • Asset light business model provides more strategic Favorable tailwinds expected to flexibility with less legacy costs and
Slide 38: Illustrative Future Growth
Illustrative Future Growth $117M - $127M 2021 Annualization Century Organic Potential Legislation Legislation Future Adjusted of 6th VGT, Gaming Growth Future Passes – Passes – State EBITDA New Software, M&A New New Guidance and COVID-19 State 1 State 2 38
Slide 39: Q&A
Q&A 39
Slide 40: Appendix
Appendix 40
Slide 41: Historical Financial Summary
Historical Financial Summary End of Period Live Locations / VGTs (#) Location Hold per Day(1) ($) 12,247 12,720 11,164 11,108 11,597 $784 2,353 2,335 2,363 2,435 2,470 $572 $596 $583 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q1 Q2 Q3 Q4 Locations VGTs 2020 2021 Revenue ($mm) Adjusted EBITDA(2) ($mm) $147 O
Slide 42: Historical Financial Summary
Historical Financial Summary $ in millions Twelve Months Ended Three Months Ended Q1 December 31, March 31, YoY 2017 2018 2019 2020 2020 2021 Growth (As Restated) (As Restated) (As Restated) No. of Locations 1,442 1,686 2,312 2,435 2,353 2,470 5% No. of VGTs 6,439 7,649 10,499 12,247 11,164 12,720 1
Slide 43: Accel Balance Sheet
Accel Balance Sheet Twelve Months Ended Three Months Ended $ in millions December 31, 2020 March 21, 2021 Assets (As Restated) Current Assets: Cash and cash equivalents $134 $173 Investment in convertible notes (current) – – Other current assets $18 $15 Total current assets $152 $188 Property and eq
Slide 44: Non-GAAP to GAAP Reconciliation
Non-GAAP to GAAP Reconciliation $ in millions Twelve Months Ended Three Months Ended December 31, March 31, Standalone Accel 2017 2018 2019 2020 2020 2021 (As Restated) (As Restated) (As Restated) Reported Net Income (Loss) 8 11 (37) (0) 48 2 (+) Amortization of Op Routes 10 15 18 23 6 6 (+) Stock B