Accel Entertainment, Inc. · NYSE:ACEL
Accel Entertainment — SPAC Merger (September 2019)
26 slides from Accel Entertainment's SPAC merger presentation, Sep 4, 2019
Slide 1: Accel Entertainment – Investor Presentation
September 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 August 29, 2019, Accel announced that it entered into a definitive agreement to acquire Gran
Slide 5: 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 6: Distributed Gaming… Standout for Growth Prospects
Distributed Gaming… Standout for Growth Prospects Making the most popular form of gaming… … more convenient drives outsized growth Nevada 1H19 LTM Revenue $ Millions Low-limit slots are a huge market that has been growing at double-digit rates in Illinois Source: Nevada Gaming Control Board, Illinoi
Slide 7: Gaming-as-a-Service Business Model
Licensed Establishments Gaming-as-a-Service Business Model 1. Some large truck stops are eligible to host up to 10 VGTs. Terminal operators may also sell and maintain other amusement machines or other devices 2. Newly legislated tax / revenue sharing enacted to begin July 1, 2020 vs. current tax rat
Slide 8: Favorable Tailwinds for Continued Growth
Favorable Tailwinds for Continued Growth Stable New License Issuance (IL)… …Drives New Location Openings… ... And Steady VGT Growth Accel continues to outpace market growth Accel % Total 19% 18% 26% 26% 26% Source: Illinois Gaming Board, Accel management Statewide Licenses Issued # of Locations Tota
Slide 9: Accel has Strong Track Record of Growth Since Inception
Accel has Strong Track Record of Growth Since Inception Annual Gross Revenue ($mm) 50% CAGR Annual Adjusted EBITDA ($mm) 68% CAGR Accel has grown rapidly over the last 6 years through a combination of organic growth and M&A Source: Accel management Note: With respect to Non-GAAP financial measures,
Slide 10: Significant Total Addressable Market Opportunity
Significant Total Addressable Market Opportunity Gaming-as-a-Service is the fastest growing segment in gaming and has a very large TAM New Markets(3) Existing Markets(2) 2025E TAM +New Products(4) $30-35bn +New Markets(3) $20-25bn Existing Markets(2) $10+bn Illinois 2025E(1) $3+bn Accel 2019E PF Rev
Slide 11: 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 12: Attractive Unit Economics
Attractive Unit Economics 20% Corporate ROICs(2) Sustained ~20% Adj. EBITDA Margins 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 an
Slide 13: 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 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: Management as of Ju
Slide 15: Grand River Jackpot – Company Overview
Grand River Jackpot – Company Overview Accel’s M&A Playbook Grand River Jackpot – Key Facts As of May 2019: Locations: 446 Live VGTs: 1,854 Average HPD: ~$84 Average Remaining Contract Term: 5.8 years 2019E Revenue: $57 million 2019E Adjusted EBITDA: $12 million Outlook: low to mid-teens near-term E
Slide 16: Grand River Jackpot – Geographic Location Density
Grand River Jackpot – Geographic Location Density Accel Standalone Locations (as of 1H19) Grand River Jackpot Locations (as of May 2019) 18 5 4 11 10 10 13 2 1 5 2 14 13 8 2 1 2 3 16 6 1 2 6 1 16 9 1 6 2 8 11 3 24 38 1 3 5 6 1 18 57 8 100 104 34 6 24 9 29 47 11 104 18 3 7 8 27 12 28 85 310 19 24 20
Slide 17: Accel – Pro Forma Financials
Accel – Pro Forma Financials # Locations Revenue ($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 c
Slide 18: 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 / FCF(2) 2021E TEV / Adj. EBITDA 2021E TEV / FCF(2) Accel vs. Publicly-Traded Comparable Companies Accel is well-pos
Slide 19: Summary Transaction Terms
Summary Transaction Terms – Pro Forma Grand River Acquisition Sources & Uses (Estimated) Pro Forma Valuation Post Transaction Ownership (Estimated)(6) PF Capitalization (Nov-19 Est. Closing) (5) (5) 1. Transaction share price based on amount of cash in trust including interest as of 6/30/2019; PIPE
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 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 22: Record Q2 Results Validate Pace's Investment Thesis
Accel’s Record Q2 Results and Recent Add-On Transaction Validate Pace’s Investment Thesis Multiple Opportunities to Invest for Growth Attractive Fundamental Valuation Highly Visible EBITDA Growth Substantial FCF Generation from a Unique Asset-Light Model Strong Balance Sheet
Slide 23: Appendix
Appendix
Slide 24: Gaming Has Been Resilient in Recessions
Gaming Has Been Resilient in Recessions Low-limit slots are resilient as consumers typically continue to engage in locally convenient, low cost forms of entertainment even in a recession Accel’s pipeline of signed locations provides a solid cycle buffer and as the economy weakens creates added incen
Slide 25: Location Trends by Vintage
Location Trends by Vintage Revenue by Vintage ($mm)(1) Stable base of topline growth and predictable revenue maturation curve as new locations are signed up Hold Per Day per Month since Opening by Vintage ($)(2) 1. Run-rate revenue based on annualized revenue from pre-2019 installed base and adjuste
Slide 26: 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