Churchill Downs, Incorporated · NASDAQ:CHDN
Churchill Downs — Merger or Acquisition (December 2014)
23 slides from Churchill Downs's merger presentation, Dec 2, 2014
Slide 1: CDI Acquisition of Big Fish Games
December 2, 2014 CDI Acquisition of Big Fish Games
Slide 2: Forward-Looking Statements
Forward-Looking Statements This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provi
Slide 3: Forward-Looking Statements (cont'd)
Forward-Looking Statements (cont’d) costs associated with customer relationship management initiatives; a substantial change in law or regulations affecting pari-mutuel and gaming activities; a substantial change in allocation of live racing days; changes in Kentucky, Illinois, Louisiana or Ohio law
Slide 4: CDI announced that it intends to acquire Big Fish Games
CDI announced that it intends to acquire Big Fish Games boxshadowdwn Founded in 2002 by Stanford business school grad Paul Thelen, Big Fish is one of the world’s largest producers and distributors of casual games, delivering entertainment to millions of people worldwide boxshadowdwn Through its mobi
Slide 5: Consideration
5 Consideration square6 Upfront consideration: $485 million, on a debt-free, cash-free basis • ~$392 million in cash and ~$15 million in CHDN stock at closing; ~$79 million paid over three years • Represents ~8.5x multiple on 3Q 2014 LTM Adjusted EBITDA of $57.3 million • Adjusted EBITDA includes an
Slide 6: The transaction continues CDI's growth strategy
6 Positions Churchill Downs at the forefront of the mobile and online games industry, particularly social casino genre, which is experiencing strong organic global growth based on positive industry fundamentals and the acceptance of new forms of gaming on mobile devices Strong cultural fit; manageme
Slide 7: The mobile and online gaming industry is growing rapidly
7 The mobile and online gaming industry is growing rapidly boxshadowdwn Large market in early growth stage with no clear, sustainable leaders established boxshadowdwn Global mobile and online gaming revenue growth expected to continue square4 Social Casino is one of the largest genres of mobile and
Slide 8: Growth in mobile devices is driving games industry growth
8 Growth in mobile devices is driving games industry growth Big Fish Games has emerged as a #4 top-grossing mobile publisher Sources: Digi-Capital Global Games Investment Review 3Q 2014 Summary, available at http://www.digi-capital.com/reports Kleiner Perkins Caufield Byers, Internet Trends 2014 – C
Slide 9: Big Fish Games - Annual Bookings Since Founding
9 <$1 $1 $4 $9 $26 $55 $84 $117 $154 $175 $177 $163 $149 $2 $18 $61 $115 $163 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM Big Fish Games - Annual Bookings Since Founding Mobile PC $156 $193 $238 $278 $312 ($ millions) CAGRs Total Mobile PC 2011 – LTM (9/30/2014) 17% 108% (5)% 200
Slide 10: Big Fish is a highly differentiated game platform
10 Big Fish is a highly differentiated game platform Big Fish compares favorably to other public company games providers -
Slide 11: Big Fish game categories: Free-to-Play Casino, Premium Paid, Free-to-Play Non-Casino
11 Free-to-Play Casino Premium Paid Free-to-Play Non-Casino Top Games Big Fish Casino Dark Parables Gummy Drop! Description square6 Casino-style games such as blackjack, poker, slots, craps and roulette square6 PC and Mobile games that customers pay upfront to purchase square6 All non-casino game ty
Slide 12: Social Casino Game Industry Forecast
12 $0 $1 $2 $3 $4 $5 CY13 CY14E CY15E CY16E CY17E CY18E Social Casino Game Industry Forecast ($ in billions) Web/Facebook Mobile/tablets 1 Source: Eilers Research, LLC 2 LTM as of Sept 30, 2014 boxshadowdwn Mobile is the fastest growing Social Casino segment boxshadowdwn Eilers Research, LLC forecas
Slide 13: Big Fish Casino share gains driven by strength of mobile offering
20.7% 14.0% 8.8% 8.6% 8.1% 39.8% Mobile & Tablet Segment Share Caesa rs Intera ctive Big F ish Cas ino DoubleDown/IGT GS N + Bash Gaming Zynga (S ocia l Cas ino Only) Other 13 Big Fish Casino share gains driven by strength of mobile offering Social casino customers have better monetization and reten
Slide 14: Big Fish Casino is a platform, not a single game
14 Big Fish Casino is a platform, not a single game boxshadowdwn Big Fish Casino offers a variety of products – Unique slot games (38 currently on the “floor”) – Card games like Blackjack & Texas Hold’em – Casino games like Roulette & Craps boxshadowdwn Big Fish Casino is the only platform that offe
Slide 15: Social Casino customer retention patterns are very long
15 Bookings per month by install cohort (all platforms) Social Casino customer retention patterns are very long Cohorts are becoming larger with awareness and TV advertising
Slide 16: Big Fish Casino bookings growth and synergy opportunities
$24 $78 $134 2012 2013 LTM Big Fish Casino Bookings 16 244% 179% 120% 100% 100% 112% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Year-Over-Year Bookings Growth boxshadowdwn Big Fish Casino was the top generating casino app on iOS in 2013 and YTD 2014 boxshadowdwn Big Fish acquired Self-Aware Games in April 2012,
Slide 17: Diversified game portfolio with limited revenue concentration
17 Big Fish has a diversified game portfolio with limited revenue concentration boxshadowdwn Social Casino 46%, Other Genres 54% boxshadowdwn U.S. 65%, Rest of World 35% boxshadowdwn F2P Games 54%, Paid Games 46% boxshadowdwn Mobile Games 54%, PC Games 46% boxshadowdwn Largest contributor to Non-Cas
Slide 18: Powerful worldwide game development and distribution capabilities
18 Big Fish has powerful worldwide game development and distribution capabilities A portfolio approach to game development square6 Five internal studios with distinct production strategies square6 Launch more than 100 new titles annually square6 Large, high quality, lower cost, exclusive worldwide d
Slide 19: A pipeline of new games supports revenue growth
19 A pipeline of new games supports revenue growth Anticipate heavy marketing spend in early part of 2015 on new and recently launched games Gummy Drop! boxshadowdwnMatch-3 game boxshadowdwn Players travel across the world and restore historical buildings boxshadowdwn Early results encouraging Vegas
Slide 20: Big Fish is an attractive acquisition and growth opportunity for CDI
20 Big Fish is an attractive acquisition and growth opportunity for CDI checkbld Games industry is a large and rapidly growing worldwide business driven by mobile device growth checkbld Big Fish has strong worldwide game development and distribution capabilities checkbld A seasoned, exceptional team
Slide 21: Appendix
Appendix 21 CrurcHiL, Downs
Slide 22: Reconciliation of Adjusted EBITDA to net income
22 Reconciliation of Adjusted EBITDA to net income BIG FISH GAMES, INC. SUPPLEMENTAL INFORMATION (Unaudited) (in thousands) Twelve months ending, September 30, 2014 Reconciliation of Adjusted EBITDA to net income: Net income $24,922 Income tax provision 11,906 Interest (expense) income, net 9 Deprec
Slide 23: Historical Big Fish Capital Expenditures
23 Historical Big Fish Capital Expenditures 2011 2012 2013 Aug YTD 2014 Hardware & Software $4.9 $5.3 $4.2 $3.5 Furniture & Office Equipment 0.3 0.9 0.2 0.4 Leasehold Improvements 0.0 0.5 0.5 1.3 Total $5.2 $6.7 $5.0 $5.2 ($ in millions)
Churchill Downs — Merger or Acquisition (December 2014) on 6ix