global cash access investor presentation
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Global Cash Access Investor PresentationTRANSCRIPT
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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
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
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
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
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
Appendices
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
Partnerships
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Partnerships Drive Value
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