Accel Entertainment, Inc. · NYSE:ACEL
Accel Entertainment — SPAC Merger (October 2019)
29 slides from Accel Entertainment's SPAC merger presentation, Oct 15, 2019
Slide 1: Accel Entertainment – Investor Presentation
October 2019 Accel Entertainment – Investor Presentation Exhibit 99.1
Slide 2: Use of Projections
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, adjusted EBITDA, adjusted
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: TPG Pace Holdings transaction agreement with Accel Entertainment
TPG Pace Holdings Corp. (“Pace” or “TPGH”) a $460 million special purpose acquisition company (“SPAC”) has entered into a transaction agreement with the shareholders of Accel Entertainment, Inc. (“Accel”) On September 17, 2019, Accel announced that it completed the acquisition of Grand River Jackpot
Slide 5: Introduction to Accel
Introduction to Accel High Quality Service Company in Gaming Vertical Contracted, Recurring Revenue Strong Track Record of Growth Disciplined Stewards of Capital Accel owns and operates more than 10,000 Video Gaming Terminals across 2,237 third-party licensed establishments in Illinois. Accel operat
Slide 6: Why Invest in Accel Entertainment?
Why Invest in Accel Entertainment? Delivering Industry Leading Growth Favorable tailwinds expect to continue with significant backlog of locations yet to go-live Unique Asset Light Business Model Contracted-recurring revenues and best-in-class ROICs Multiple Ways to Create Value Organic expansion op
Slide 7: Accel has a Straightforward Value Creation Plan
Accel has a Straightforward Value Creation Plan Execute on Backlog to Deliver Growth Benefit from Gaming Expansion Bill Invest for Sustained Growth Use Strong Balance Sheet Accel is executing on its strategic vision to drive value creation for shareholders New Locations Competitor Conversion Refill
Slide 8: Accel Revenue Growth Outstripping Industry at Large
Accel Revenue Growth Outstripping Industry at Large Year over Year Revenue Growth (%) Accel has grown revenue well in excess of the broader industry over the last two years Source: Accel management as of June 2019, SunTrust Robinson Humphrey Research, Illinois Gaming Board.
Slide 9: Favorable Industry Tailwinds for Continued Growth
Favorable Industry Tailwinds for Continued Growth Stable New License Issuance (IL)… …Drives New Location Openings… ... And Steady Illinois VGT Growth Accel continues to outpace market growth Accel % Total 19% 18% 26% 26% 26% Note: All figures are for Accel standalone and do not include recent Grand
Slide 10: Growth Opportunities Both In and Out of Illinois
Growth Opportunities Both In and Out of Illinois Addition of 6th VGT at Each Licensed Establishment Legalization of VGTs in Chicago Potential Addition of Sports Betting Player Tracking / Loyalty Programs Other use of “tethered distribution” model Accel has numerous avenues available to pursue future
Slide 11: Attractive Unit Economics
Attractive Unit Economics 20% Corporate ROICs(1) ~78% Cash Flow Conversion(2) Maintenance Capex: 1-2% of Revenue Average Payback on New Location: ~1.5 Years Average Residual Contract Length: 7.1 Years(3) 98% Contract Renewal Rate Robust unit economics driven by differentiated business model and stro
Slide 12: Fragmented Landscape in Illinois
Fragmented Landscape in Illinois (1) Prairie State Gaming is also known as Illinois Gaming Investors, LLC and was acquired by Penn National Gaming in July 2015 Represents total signed contracts pending go-live as of 6/30/19 Source: Illinois Gaming Board, Scientific Games terminal operator portal, Ac
Slide 13: Why Choose Accel? – Pitch to Location Owners
Why Choose Accel? – Pitch to Location Owners Data & Analytics Service Culture Scale and Know-how Differentiated Relationship Manager Model (with incentives to drive same-store sales growth) In-house cash collection and treasury services 50-60 minute average response time with 92% first time fix rate
Slide 14: Accel is a Disciplined Buyer
Accel is a Disciplined Buyer Acquired locations typically improve performance as a result of Accel’s operating rigor Acquired Year: 2013 2014 2014 2014 2016 2017 2018 2018 # Locations Acquired 51 8 10 27 122 121 23 71 Total % Increase +68% +59% +58% +41% +13% +14% +4% +8% Source: Accel management as
Slide 15: Unique Illinois Footprint Enables M&A
Unique Illinois Footprint Enables M&A 100+ 51 - 100 26 - 50 11 - 25 1 - 10 18 5 4 11 10 11 15 2 1 6 2 16 14 40 2 4 18 11 42 29 24 5 6 1 56 21 6 3 19 5 8 11 3 24 39 4 3 7 14 5 14 36 60 11 100 106 36 11 24 10 29 48 12 104 18 5 7 8 27 12 28 85 310 19 24 20 70 17 50 39 3 9 1 2 1 1 2 6 109 138 10 3 15 14
Slide 16: Accel Location Growth Components
Accel Location Growth Components Steady organic growth enhanced by strategic M&A Source: Accel management as of June 2019 (1) Net 2016+ Acquisitions are net of rationalization of underperforming locations. (2) 1H19 Actual figures. Does not include Grand River Jackpot and IGS acquisitions closed in S
Slide 17: Strong Expected Revenue Growth: Multiple Ways to Win
Strong Expected Revenue Growth: Multiple Ways to Win Accel has multiple avenues for both organic and inorganic growth Illustrative Annual Revenue Growth Rate Supported by its existing backlog, Accel will continue to add both new locations and competitive conversions Addition of 6th VGT and higher be
Slide 18: Clear Path to Growth
Clear Path to Growth Visible growth from a combination of new location openings and same store sales growth rapidly reduce Accel EBITDA multiple to 6.8x – 7.3x YE 2021 Run-Rate EBITDA EBITDA Bridge PF 2019 represents a full year impact of the Grand River acquisition and 40 additional acquired locati
Slide 19: Free Cash Flow Generation Engine
Free Cash Flow Generation Engine Strong conversion from EBITDA to After-Tax Free Cash Flow results in significant cash yield from day 1 After-Tax Discretionary Cash Flow Yield of 10.0% – 10.6%(4) 2020E Cash Flow Build EBITDA impact of annualization of locations that go live mid-year PF 2019 represen
Slide 20: Post-Transaction Balance Sheet Firepower
Post-Transaction Balance Sheet Firepower Illustrative Balance Sheet Capacity Accel will have significant flexibility to pursue multiple growth avenues for value creation Note: Projections are Pace estimates. With respect to projections, see page 2 “Use of Projections” under “Important Information”
Slide 21: Accel Financials
Accel Financials # Locations Revenue ($mm) Adjusted EBITDA ($mm) Capital Expenditures ($mm) Grand River’s acquisition reinforces Accel’s strong growth and low capital intensity business model (1) (1) (1) (1) PF 2020 and 2021 EBITDA range driven by timing of implementation of regulatory changes (6th
Slide 22: Focus on Route Density & Optimization
Focus on Route Density & Optimization ✔ ✘ ✔ Strong Recurring Revenue ✔ ✘ ✔ High Customer Retention ✔ ✘ ✔ Low Fixed Costs ✔ ✘ ✔ Low Capital Intensity ✔ ✘ ✘ Accretive / High Synergy M&A ✔ ✔ 2018-2020E Organic Revenue CAGR(1) 21% ~8% ~3% 2020E EBITDA Margin 20% ~33% ~23% 2020E Total Capex % Revenue 4%
Slide 23: Accel vs. Publicly-Traded Comparable Companies
PF Accel Gaming Peers Above 10% ROIC Gaming Peers Below 3x Net Leverage Route-Based Service Peers 2019E Net Leverage 2019E-2021E Revenue CAGR ROIC(1) 2020E TEV / Adj. EBITDA 2020E TEV / Unlevered FCF 2021E TEV / Adj. EBITDA 2021E TEV / Unlevered FCF Accel vs. Publicly-Traded Comparable Companies Acc
Slide 24: Summary Transaction Terms – Pro Forma Grand River Acquisition
Summary Transaction Terms – Pro Forma Grand River Acquisition Sources & Uses (Estimated) Pro Forma Valuation Post Transaction Ownership (Estimated)(5) PF Capitalization (Nov-19 Est. Closing) (4) (4) 1. Transaction share price based on amount of cash in trust including interest as of 9/30/2019; PIPE
Slide 25: Why Invest in Accel Entertainment?
Why Invest in Accel Entertainment? Delivering Industry Leading Growth Favorable tailwinds expect to continue with significant backlog of locations yet to go-live Unique Asset Light Business Model Contracted-recurring revenues and best-in-class ROICs Multiple Ways to Create Value Organic expansion op
Slide 26: Appendix
Appendix
Slide 27: Historical Financial Summary
Historical Financial Summary 1. Video Gaming Expenses includes Illinois state gaming taxes, Scientific Gaming revenue sharing, and Location revenue sharing. Note: With respect to Non-GAAP financial measures, see page 2 "Use of Non-GAAP Financial Measures" under Important Information and page 28 "Non
Slide 28: Non-GAAP to GAAP Reconciliation
Non-GAAP to GAAP Reconciliation 1. Stock-based compensation consists of options, restricted stock units and warrants 2. Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations
Slide 29: Illustrative Fully Diluted Share Count
Illustrative Fully Diluted Share Count 1. Of original 11.25mm founder shares, TPGH sponsor has agreed to the cancellation of 1.25mm shares at closing, deferral of 2mm shares subject to earnout triggers, and transfer of 0.5mm shares to a foundation for charitable efforts in the communities Accel curr