Global Cash Access Investor Presentation

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Global Cash Access Investor Presentation

Transcript of Global Cash Access Investor Presentation

Page 1: Global Cash Access Investor Presentation

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GLOBAL CASH ACCESS Investor Presentation 2013

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Safe Harbor Disclosure

This presentation contains forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation

Reform Act of 1995. All statements included in this presentation, other than statements that are purely historical, are

forward-looking statements. Words such as “going forward,” “believes,” “intends,” “expects,” “forecasts,” “anticipate,” “plan,”

“seek,” “estimate” and similar expressions also identify forward-looking statements. Forward-looking statements in this

presentation include, without limitation: (a) our estimates of 2013 cash earnings per share and Adjusted EBITDA and the

assumptions and factors upon which they are based; and (b) our belief that cash earnings per share and Adjusted EBITDA

are widely-referenced financial measures in the financial markets and that references to the foregoing are helpful to

investors.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially

from those projected or assumed, including but not limited to the following: the timing and the extent of a recovery in the

gaming industry; our ability to replace revenue associated with terminated contracts; our ability to introduce new products

and services; gaming establishment and patron preferences; national and international economic conditions; changes in

gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties; competitive pressures;

operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate

fluctuations; inaccuracies in underlying operating assumptions; unanticipated expenses or capital needs; technological

obsolescence; and employee turnover. If any of these assumptions prove to be incorrect, the results contemplated by the

forward-looking statements regarding our future results of operations are unlikely to be realized.

The forward-looking statements in this presentation are subject to additional risks and uncertainties set forth under the

heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in

our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report filed on Form 10-

K on March 12, 2013, and subsequent periodic reports and are based on information available to us on the date hereof.

We do not intend, and assume no obligation, to update any forward-looking statements. Readers are cautioned not to

place undue reliance on forward-looking statements, which speak only as of the date of this presentation.

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GCA Investment Highlights

Dominant market share with over $19bn cash to floor & over 90mm transactions/year Industry Leader

Superior Product/

Technology Innovation

Proprietary “3 IN 1” technology

Full Service Kiosk (“FSK”) a leading provider to gaming industry

At forefront of cashless gaming solutions-(QuikTicket & TableXchange)

High Barriers to Entry

Stability/Predictability

of Customer Base

Exceptional win & renewal rates (new & major contracts)

Average length of contract: 3 to 5 years

Balanced customer base

Strong Balance Sheet Jun-13 Leverage 1.55x

Share Repurchase Program ($40mm Jan-13 to Jan-15)

Internet Gaming

Strong Free Cash Flow Minimal CapEx, Working Capital and benefits of deferred tax asset

Market leader Single Point of Accountability (“SPOA”), cash access solutions for land-based

and virtual gaming customers Strategic Position

everi tm product suite e-Wallet & Payment Processing solutions (iGaming customers)

US iGaming approved several states (NV, NJ, DE, others considering)

New deal Scientific Games iLottery business

Market share and unique position/offerings & increased casino floor integration

Scarcity value: Highly regulated industries both financial services and gaming, difficult to

open/compete in this space GCA holds 300+ gaming licenses

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About GCA

Only provider of cash access and cash handling services

exclusively focused on the gaming industry - US & Internationally

Offices in Las Vegas (HQ), Atlantic City & Macau

400 plus employees

125 sales and service team members

1,000 plus casino relationships

8,000 plus touch points

Products offered in 35 plus countries

Database of over 8 million unique patrons

GCA, intersecting Gaming, Payments & Technology The Single Point of Accountability for all your needs

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Diverse Skill-Set of Management Team

GCA Revenue Benefits From These Funds

David Lopez CEO, President & Director 15+

Mary E. Higgins EVP & CFO 20+

David D. Johnson EVP & General Counsel 25+

Rob Myhre EVP & CIO 25+

Scott Dowty EVP, CMO 15+

David Lucchese EVP, Sales 20+

Diallo Gordon EVP, Kiosk Development and Service 10+

Proven and complete management team with deep industry experience

Name Position Years Background

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Financial Overview

Cash Advance - Cash access at a casino through the use of debit and credit cards

ATM - Cash access at a casino through the use of ATM cards

Check Services - Cash access at casino through use of check cashing system provided by GCA

Other - Kiosk Sales and Services, Central Credit, and Marketing Services

– Kiosk Sales and Services - Manufactures, sells and services Kiosk devices

– Central Credit - Industry-wide centralized credit bureau data base

– Quik-Marketing & Casino Share Intelligence (“CSI”) - Database marketing products based on

all GCA compiled transaction databases

Cash advance

Revenue: $227.5

Segment Op profit : $63.8

Check services

Revenue: $25.4

Segment Op profit: $13.9

Kiosk Sales, Central

Credit, and Other

Revenue: $28.4

Segment Op profit: $14.5

LTM 9/30/10 Revenue:

$616.5

Check Services

Revenue: $29.8

Operating Profit:$17.2

Cash Advance

Revenue: $253.9

Operating Profit: $52.5

ATM

Revenue: $315.5

Operating Profit: $41.8

Central Credit & Other

Revenue: $17.3

2012

Revenue: $584.5

Adjusted EBITDA1 $79.3

CORPORATE EXPENSE

($68.5)

ATM

Revenue: $303.2

Segment Op profit: $32.3

($ in millions)

(1) Adjusted EBITDA defined as Operating Income plus depreciation and amortization plus non cash stock compensation

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GCA 2013

Financial Strength, Technology Lead & Strong Balance Sheet

– FSK Sales (momentum & replacement cycle)

– Technology Stride (QuikTicket/TableXchange, Core Products & Innovation)

– Free Cash Flow for Equity Repurchase and Debt Reduction

– Flexibility for Accretive Strategic Opportunities

Winning new casino openings in 2013 (Graton) with opportunity in 2014 (Ohio, MA, NY)

US Market Recovery (Market Stabilization) and GCA well-positioned to capitalize

International Growth (Margin Improvement)

– UK Reopened (5 year government mandated hiatus)

– Galaxy Casino Macau contract

iGaming Position

– Well-positioned (everi tm product suite Cash Mgmt. & Pmt. Processing Solutions Land/Online Customers)

– Won Scientific Games contract for iLottery business

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Products

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Cash Access Services Kiosks

Information

Services

Cashless

Gaming

Internet

Gaming

Standard

ATM

3-in-1

ATM

Cash

advance

Check

warranty FSK Reporting Marketing

Central

Credit Marketing

QCP

Web

QuikTicket/

Table

Xchange

everi tm

GCA E-

wallet

Global

Payments

US Bank

NRT

All Others

Proprietary

GCA – Single Point of Accountability Vs. the Competition

GCA’s comprehensive product suite makes it one-stop vendor for uptime & efficiency-focused customers

The iGaming space is still in its infancy & competitive landscape not clearly identifiable

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Credit Card Cash Advance- Credit, Debit, Signature and Pin

ATM- Both site funded and GCA funded

Check Services- GCA guaranteed check cashing product

Casino Floor Delivery Systems-

Stand Alone ATM devices

Full Service Kiosk

Quik Cash Kiosk

Cage software programs

Proprietary Patented “3-in-1” technology

Core Cash Access

Strong Core Cash Access Product Suite

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CXC 4.0 Full Service Kiosk

Ticket Redemption

Bill Breaking

ATM, Credit Card, POS Debit Transactions

GCA Patented ATM 3-in-1 Rollover

Points to Cash / Points to Voucher / Other

Ticket Out – Coinless Operation

Quik Ticket – Slot Ticket or Cash Option

Dual PC, High Velocity, Customize

New Models to be Introduced Fall 2013

Xchange – Kiosk Cashless Gaming Solutions

Strategy is working- GCA’s CXC4.0 has won the

majority of the most recent Kiosk RFPs and

pipeline is robust.

This product fulfills GCA’s strategy of providing a Single

Point of Accountability for our gaming customer for both

cash access software and hardware.

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Xchange New Technologies for Cashless Gaming Solutions*

The TableXchange device connects table games to a casino’s existing TITO network allowing

for scanning and printing TITO vouchers.

This technology creates:

a common currency across the casino

a bridge between slots and tables

and helps casinos identify valuable crossover players

operational efficiencies (cashier to kiosk)

The TableXchange device further streamlines casino operations by virtually eliminating the

need to replenish chips at table games

QuikTicket Cashless gaming solution

QuikTicket - cash access transaction to be completed with barcoded ticket (TITO) in lieu of cash

Operational as well as cash saving technology for our casino partners

*We are in various stages of obtaining regulatory & card association approvals for both TableXchange & QuikTicket.

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GCA - Cashless Ecosystem

2. Funds are redeemed at table, for chips or inserts into a slot machine

for credits.

3. When the patron wants to leave the

table, the dealer can “color-up” the chips

in exchange for a ticket.

4. Patron moves to the next gaming position or returns to a GCA Full Service Kiosk

to redeem the ticket for cash, thereby bypassing the

casino cashier.

1. Patron withdrawals funds from GCA full service kiosk. Kiosk

offers ATM, TITO, cash advance, marketing

and connection to GCA ewallet

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GCA Product Suite- Information Services

Casino Share Intelligence (“CSI”) - Database marketing and patron tool

– as a result of its large industry presence; GCA has developed a unique and sophisticated tool

to assess industry share, wallet share (loyalty) and player share (trial) for any specific

population a casino wants to view

– currently, casinos only have access to data regarding the carded-patron’s play and behavior

inside the four walls of the gaming floor – CSI provides a view “outside” their four walls.

Central Credit Services - Casino credit bureau

– GCA provides the only credit bureau for the gaming industry.

– this product gives casinos a current view into the credit lines and credit behavior of their

patrons across the industry

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iGaming- everi tm Product Suite

Live Gamer- strategic partnership

Bridge gap between on-line and on-site play

Multiple currencies, including virtual and real world

Payment Wallet

Easy to integrate

Process straight through payments for all forms of iGaming

Customizable UI

Debit, Credit, and ACH transactions

Gaming Wallet

Single source of funding

Securely store card and bank information

Manage velocity limits and responsible gaming features

Withdrawal of funds

Private Label Wallet

Fully customizable wallet

Facilitate play and increase velocity

Single, enterprise-wide wallet to use anywhere on your property

Recently announced Scientific Games contract for iLottery to utilize digital wallet

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Opportunities

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Opportunities

Organic

Cash Access

Check Cashing

Information Services

Kiosks – Gaming Refresh

Economic Recovery

Casino Expansion

Developmental

Kiosks – Gaming Refresh, Net New Customers, New Products, Non-Gaming (Resorts, Other)

Cashless Solutions

Internet & Mobile -everi tm product suite

Expanded margins through innovation and value added services

International

Cash Access solutions with high barriers to entry

Monetary Authorities, Payment Associations, Gaming Commissions, Customer/Fee Dynamics

Kiosks sales continued focus on international markets

Focus - Canada, Europe, Asia

Strategic Acquisitions

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Historical Financial Information

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Historical Income Statement

June 30 Sept 30 Dec 31 March 31 June 30 Sept 30 Dec 31 March 31 June 30

Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

(unaudited $000's)

Revenues

Cash Advance 50,251$ 50,913$ 51,833$ 58,361$ 56,675$ 57,520$ 54,961$ 58,695$ 57,292$

ATM 71,214 71,044 70,277 80,348 76,602 76,411 69,797 75,276 72,972

Check Services 6,924 6,479 6,455 6,516 6,605 6,611 5,670 5,871 5,530

Other 6,664 8,453 9,167 5,842 7,582 9,281 5,704 6,980 13,272

Total Revenues 135,053 136,889 137,732 151,067 147,464 149,823 136,132 146,822 149,066

Cost of Revenues (excl dep and amort) 105,714 106,953 101,705 113,815 108,378 111,373 102,493 111,099 111,724

Operating expenses (excl Non Cash Items) 15,050 16,628 16,023 16,646 17,692 17,622 17,192 17,813 18,195

Depreciation and Amortization 4,908 3,797 4,194 4,067 4,165 4,345 4,062 3,838 4,230

Stock Compensation 2,238 1,902 1,572 842 1,266 1,842 2,704 1,171 1,284

Operating Income 7,143 7,609 14,238 15,697 15,963 14,641 9,681 12,901 13,633

Total Interest Income (Expense), net 4,606 4,414 4,471 4,483 4,063 3,586 3,387 3,163 2,733

Income from Operations Before Tax 2,537 3,195 9,767 11,214 11,900 11,055 6,294 9,738 10,900

Income Tax Provision 1,526 1,356 5,230 4,085 4,816 3,977 1,896 3,602 4,124

Net Income 1,011$ 1,839$ 4,537$ 7,129$ 7,084$ 7,078$ 4,398$ 6,136$ 6,776$

Cash EPS 0.12$ 0.11$ 0.21$ 0.21$ 0.23$ 0.23$ 0.17$ 0.19$ 0.21$

Adjusted EBITDA 14,289$ 13,308$ 20,004$ 20,606$ 21,394$ 20,828$ 16,447$ 17,910$ 19,147$

(Adj EBITDA=NI plus Dep amort int and non cash stock comp)

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Historical Balance Sheet

At

Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

(unaudited 000's)

ASSETS

Cash and Cash Equivalents 55,535 40,566 39,961 46,940 153,020 70,702 65,448

Restricted Cash 455 200 200 200 200 200 200

Settlement Receivables 80,246 73,197 67,389 113,989 29,484 118,886 123,283

Other Receivables, net 16,885 11,922 11,613 10,076 11,571 11,123 14,102

Inventory 7,087 7,930 7,924 7,267 7,126 7,029 7,567

Prepaid and Other Assets 15,405 14,431 16,156 16,564 18,254 18,144 19,156

Property, Equipment and Leasehold Improvements, net 15,577 14,942 14,882 14,357 15,441 15,459 19,491

Goodwill, net 180,122 180,141 180,118 180,152 180,141 180,124 180,097

Other Intangibles, net 38,216 36,648 35,504 33,327 33,994 33,022 31,821

Deferred Income Taxes, net 119,538 115,606 110,861 106,484 104,664 101,265 97,453

Total Assets 529,067 495,582 484,607 529,355 553,895 555,953 558,619

LIABILITIES AND STOCKHOLDERS' EQUITY

Settlement Liabilities 141,827 124,677 116,608 158,438 182,446 180,903 186,557

Accounts Payable and Accrued Expenses 53,382 59,534 54,431 53,416 51,190 55,697 55,870

Borrowings 174,000 142,000 134,000 126,500 121,500 117,500 112,000

Total Liabilities 369,209 326,210 305,038 338,354 355,136 354,101 354,427

Common stock 86 86 87 87 88 88 88

Additional paid-in capital 204,735 207,030 210,428 214,612 217,990 220,090 222,797

Retained Earnings 97,925 105,054 112,137 119,216 123,614 129,750 136,526

Accumulated other comprehensive income 2,340 2,485 2,268 2,504 2,558 2,143 2,046

Treasury stock (145,228) (145,283) (145,351) (145,419) (145,490) (150,218) (157,265)

Total Stockholders' Equity 159,858 169,372 179,569 191,001 198,759 201,853 204,192

Total Liabilities and Stockholders' Equity 529,067 495,582 484,607 529,355 553,895 555,953 558,619

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Selected Financial Data

Strong Current Financial Ratios (June 30, 2013)

Current Leverage 1.55x

Interest Coverage 8.19x

2013 FYE Guidance

Adjusted EBITDA $70-74 Million

Cash EPS (as defined) $0.74-0.83

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Why Invest in GCA?

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Why Invest in GCA?

Market leadership

– Market dominant position, innovator

Stability and Predictability of Business

– Core GCA metrics are strong: B/S, FCF, low CapEx, recurring revenue, high renewal rates

Obvious Growth Opportunities

– Kiosk replacement cycle, IGaming, International growth, other ancillary services, new add on products

Undervalued

– Enterprise Value to EBITDA low

– Opportunity for stock grow (majority of analysts covering believe GCA is double-digit stock)

Strength of Management Team

– Seasoned team with expertise in both payments and gaming

Strategic Opportunities

– B/S allows for strategic acquisitions

Overall Return

– EBITDA and FCF contribution

– Equity repurchases

– De-levering

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Appendices

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Appendix I: How GCA Makes Money

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How GCA Makes Money - Cash Advance Services

Credit Card or Debit Card Transaction A customer will

access cash from

their credit card or

bank account

through a GCA

sponsored ATM or

3-in-1 enabled

device at a casino

The gross fees

charged to the

customer are then

allocated as

follows:

Patron’s credit

card balance

increased

$XXX

Patron receives

$XXX

GCA revenue

$XX

Commission to

Casino Operator

and COGS

$XX

GCA gross profit

$X

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How GCA Makes Money – ATM and Check Services

ATM cash withdrawal Check warranty A customer will

access cash from

their bank account

through a GCA

sponsored ATM or

3-in-1 enabled

device or cash a

check at a casino

The fees that result

from these

transactions are as

follows:

Check draftee’s

balance debited

$XXX

Patron receives

$XXX

Patron’s bank

account debited

$XXX

ATM revenue has 2

components:

Surcharge-(Patron

pays) and Reverse

Interchange-(Issuing

Bank pays)

$X

Commission +

Cogs

$X

GCA Operating profit

$X

GCA – casino

charged

$XX

Warranty losses

and other cogs

$X

GCA Credit

operating profit

$X

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Partnerships

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Partnerships Drive Value

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Product Summary

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Superior Products and Innovation

Enables cash access services specific to meeting casino requirement

– ATM cash withdrawals, including patented 3-in-1 Rollover

– Point-of-sale (POS) debit card transactions, and credit card cash advances

– Check Warranty services to reduce risk on patron checks

– Proprietary cage management systems

– Proprietary Self Exclusion programs

– Enhanced AML and Title 31 reporting

Provides a full line of self service kiosks specific to the casino industry – linked to the casino system – current

strategic driver

– Full service kiosks

– Ticket redemption and bill breaking

– Points and promotional transactions

– Jackpot Kiosks

A leader in innovative products

– “Cashless Gaming” products – including “QuikTicket “ and “TableXchange”

– Cash recycling

– Interactive marketing at kiosks

– IGaming- everi tm product suite Digital Wallet solutions

Provides critical gaming specific information service

– Central Credit, a gaming patron credit bureau

– Casino Share Intelligence, marketing diagnostics and patron behavior

– Casino Marketing Services, marketing database on names

Legend:

Green denotes specific requirements for gaming

Red is proprietary to GCA