investor overviews22.q4cdn.com/316621966/files/doc_presentations/investor-deck_m… · this...

INVESTOR OVERVIEWMay 2019

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This presentation contains statements that constitute forward-looking statements which involve risks and uncertainties, including suchrisks and uncertainties detailed in the Annual report on Form 10-K of PlayAGS, Inc. (“AGS” or the “Company”) filed with the U.S.Securities and Exchange Commission (the “SEC”) by the Company on March 5, 2019. These statements include descriptions regardingthe intent, belief or current expectations of AGS or its officers with respect to the consolidated results of operations and financialcondition, future events and plans of AGS. These statements can be recognized by the use of words such as "expects," "plans," "will,""estimates," "projects," or words of similar meaning. Such forward-looking statements are not guarantees of future performance andactual results may differ from those in the forward-looking statements as a result of various factors and assumptions. These statementsare subject to risks, uncertainties, changes in circumstances, assumptions and other important factors, many of which are outsidemanagement’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements.You are cautioned not to place undue reliance on these forward looking statements, which are based on the current view of themanagement of AGS on future events. We undertake no obligation to publicly update or revise any forward-looking statementcontained in this presentation, whether as a result of new information, future events or otherwise, except as required by law. In light ofthe risks, uncertainties and assumptions, the forward-looking events discussed in this presentation might not occur, and our actualresults could differ materially from those anticipated in these forward-looking statements.

This presentation also contains references to Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), and AdjustedEBITDA, which are non-GAAP financial measures. Management believes that EBITDA and Adjusted EBITDA and related measures arecommonly reported by companies and widely used by investors as indicators of a company’s operating performance. There are othernon-GAAP financial measures which should be considered only as a supplement to, and not as a superior measure to, financialmeasures prepared in accordance with GAAP. Please refer to the last slide of this presentation for a reconciliation of certain non-GAAPfinancial measures included in this presentation to the most directly comparable financial measure prepared in accordance with GAAP.

Unless otherwise noted, information included herein is presented as of the dates indicated. This presentation is not complete and theinformation contained herein may change at any time without notice. Except as required by applicable law, we do not have anyresponsibility to update the presentation to account for such changes.

Certain information in this presentation is based upon management forecasts and reflects prevailing conditions and management’sviews as of this date, all of which are subject to change. In preparing this presentation, we have relied upon and assumed, withoutindependent verification, the accuracy and completeness of all information available from public sources or which was provided to usby third parties. The information contained herein is subject to change, completion or amendment and we are not under any obligationto keep you advised of such changes. We make no representation or warranty, express or implied, with respect to the accuracy,reasonableness or completeness of any of the information contained herein, including, but not limited to, information obtained fromthird parties.

The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice orinvestment recommendations.

1

INVESTMENT HIGHLIGHTS

2

Attractive

Business

Model w/

High-

Performing

Products

Favorable

Market

Backdrop

▪ Consistent historical growth: U.S. gaming revenue has grown ~2% annually since 2014

▪ Strong future growth prospects: U.S. unemployment remains under 4% and continued expansion of the experience economy

▪ Potential acceleration of replacement cycle

• AGS not dependent on the replacement cycle, but acceleration could enhance Class III growth

▪ Leases drive 70% recurring revenue(1), which provides high revenue visibility

• Sales provide a tremendous opportunity to expand and diversify product and customer mix

▪ AGS generates one of the top EGM Adjusted EBITDA margins in the industry, which fund high-ROI growth opportunities

▪ Strong recurring cash flow with 8-12 month payback periods on new leased EGMs

▪ Market-leading and high-performing products

• Casino-owned and leased EGMs generated win per day of ~1.5x and ~1.4x, respectively

Multiple

Levers for

Growth

▪ Industry-leading game performance drives continued market share growth

▪ Recent ship share gains far in excess of current market share: ~5% U.S. ship(2) share vs ~3% market share

▪ Material whitespace opportunity due to substantial increases in TAM: Grew TAM and new licenses by 125% and117%, respectfully, since 2012

▪ Meaningful international expansion opportunities in Philippines, Canada and Brazil

Source: Eilers & Krejcik, The AGA Survey of the Casino Industry (2018)

U.S. Department of Commerce, Bureau of Economic Analysis

(1) For LTM 3/31/19

(2) Eilers – Fantini Quarterly Slot Surveys

$34.3 $36.7

$34.5$36.3

Q1 '18 Q1 '19

216.2

279.4

5.1

8.1

7.8

5.9

180

230

280

LTM 3/31/2018 LTM 3/31/2019

EGM Table Products Interactive

61.3

69.71.7

2.2

1.9

1.2

55

60

65

70

75

Q1 2018 Q1 2019

EGM Table Products Interactive

3

Q1 2019 FINANCIAL PERFORMANCE HIGHLIGHTS

Note: Adjusted EBITDA allows us to add back certain non-cash charges that are deducted in calculating net income and to deduct certain gains that are included in

calculating net income. However, these expenses and gains vary greatly, and are difficult to predict. They can represent the effect of long-term strategies as opposed to

short-term results. In addition, in the case of charges or expenses, these items can represent the reduction of cash that could be used for other corporate purposes.

Note: Please refer to appendix for Net Income to Adjusted EBITDA reconciliation

$116.9 $139.8

$116.4

$138.0

LTM 3/31/18 LTM 3/31/19

ADJUSTED EBITDA

($ in mm)($ in mm)

Tables: ($0.2)

Interactive: ($0.3)

Tables: $1.2

Interactive: ($3.1)

Recurring

Revenue

$205.0

REVENUE

Recurring

Revenue

$52.9

Tables: $0.5

Interactive: ($0.9)

Tables: $0.2

Interactive: $0.0

$64.9

$73.0

$293.5

$229.0

4

PERFORMANCE DRIVEN BY A CULTURE OF INNOVATION

EGM Installed Units 8,735 27,308 213%

EGM Sold Units 255 4,573 1,693%

Domestic RPD $21.23 $26.94 27%

Gaming Licenses 161 275 71%

Revenue ($ in mm) $72 $293 307%

Years Experience

Years at AGS

KPIs 2014 3/31/19 Δ

David Lopez

Kimo Akiona

Sigmund Lee

Matt Reback

Julia Boguslawski

John Hemberger

Andrew Burke

Title

▪ 725+ employees around the globe

▪ R&D employees represent ~30% of total AGS employees

▪ Unique culture sets us apart from other companies

▪ Expect employee-centric culture to continue attracting high-caliber talent

AGS Drives Innovation Through its Unique Culture

Note: EGM sold units, domestic RPD and revenue as of respective LTM periods; 2014 figures are as reported and are not pro forma to include the acquisitions of

Cadillac Jack or RocketPlay

5

AGS COMPANY OVERVIEW

Table Products: $8mm+59% Y-o-Y

CORPORATE EVOLUTION

SEGMENT BREAKDOWN

$293mm Revenue+28% Y-o-Y

47% Adj. EBITDA margin

$138mm Adj. EBITDA+18% Y-o-Y

LTM 3/31/19Revenue

70%

FINANCIAL SNAPSHOT SIGNIFICANT WHITESPACE

OPPORTUNITY

RECURRING REVENUE

EGM: $279mm+29% Y-o-Y

Interactive: $6mm-24% Y-o-Y

CanadaMexico Philippines Brazil

RampingEstablished Early Entry

LTM 3/31/19

(1)

Prospective No Gaming

Note: All figures as of LTM 3/31/19. Y-o-Y growth is from LTM 3/31/18 to LTM 3/31/19

(1) Denotes AGS acquired by funds managed by Apollo, not Apollo Global Management itself

~50% gross profit margin(2)

13,139 13,953 16,078 16,29618,798

6,1126,898

7,727 8,3518,510

2015 2016 2017 2018 3/31/2019

Domestic International

6

EGM SEGMENTSTRONG RECURRING REVENUE BASE WITH INDUSTRY-LEADING MARGINS

Note: All financial figures include contribution of Cadillac Jack following acquisition in May 2015(1) Gross Profit Margin for leased units = EGM gaming operations revenue less EGM cost of gaming operations, divided by EGM gaming operations revenue for LTM 3/31/19(2) Gross Profit Margin for sold units defined as EGM equipment sales revenue less costs of equipment sales, divided by EGM equipment sales revenue for LTM 3/31/19(3) Q1 2019 EILERS-FANTINI Quarterly Slot Survey

$120 $156

$200

$271 $279

$66 $92 $108

$137 $140

2015 2016 2017 2018 LTM

3/31/2019

EGM Revenue EGM Adjusted EBITDA

203 465

2,565

4,387 4,573

2015 2016 2017 2018 LTM

3/31/2019

Class II

12,191

Intl

8,510

Class III

5,940

VLT

667

EGM Installed Base

27,308 leased EGMs

EGM Revenue and EGM Adj. EBITDA

($ in mm)

45%

Huge Growth in Sold EGMs

Achieved +5% ship

share in TTM period

ending Q1 ’19 vs.

<1% two years

ago(3)

31%

22%

5%

Brazil &

Philippines

upside

Steady Ramp in Number of Leased EGMs

~100% recurring business; ~80% gross profit margin(1)

-1%

+93%

14%

Y-o-Y Growth

▪ Second largest Class II Installed Base

▪ High recurring revenue

▪ Strong relationships

▪ Stable business

2%

7

EGM SEGMENTCOMPREHENSIVE EGM PRODUCT LINE-UP

Cabinet

Type

Specialty Large Format

Core Premium Core Plus CoreLatin-Style

Bingo

Year

Introduced2014 2016 2017 2018 2019

Initial units in Q1 2019

Installed

Base (1) 230 4,711 2,120 1,042 N/A <20 (2)

RPD ~$85 ~$25 ~$50 ~$35 ~$30 $10-$30

Units Sold

LTMN/A 1,015 2,604 889 N/A N/A

Selling

PriceN/A ~$15,500 ~$20,500 ~$19,000 ~$18,000 N/A

Planning

~60 new

titles &

~1 cabinet

a year

Best value in the industry and smartest

price point. Core cabinet for mass

market

Big Red ICON Orion SlantOrion Portrait

Performance focused, premium portrait. One of the

top-performing cabinets in the U.S.

Fills the need for the fastest-growing

segment of the market

New

Ultra Jumbo Format with classic gameplay

Robust product pipeline fuels future growth

Alora

Utility cabinet designed specifically

for video-bingo players

Note: Based on our list price of EGMs

(1) Leased units

(2) Initial units placed into the Philippines in March 2019

Orion Upright

Broadens product portfolio and allows

for greater penetration

1.5X

1.2X 1.2X1.0X

1.0X 1.0X0.9X

0.8X 0.8X

Pe

rfo

rma

nc

e o

ve

r h

ou

se a

ve

rag

e

8

EGM SEGMENTGAME PERFORMANCE OVERVIEW

▪ More than 99% of customer trials of Orion Portrait and Orion Slant cabinets resulted in conversion to a lease or sale

▪ Designed to address Class II and Class III EGM markets

▪ AGS casino-owned games generated win per day that was ~1.5x the house average, leading the industry by a significant margin (1)

▪ AGS leased games generated win per day that was ~1.4x the house average(2)

▪ Two large R&D studios in premier locations that continually produce top-performing game titles

▪ Achieved +5% ship share in the TTM period ending Q1 (3)

Leased Domestic Game Performance(2)Casino-Owned Domestic Game Performance(1)

(1) Eilers-Fantini Game Performance Report – April 2019 (suppliers with more than 100 games)(2) Eilers-Fantini Game Performance Report – April 2019 (suppliers with more than 50 games)(3) Eilers-Fantini Quarterly Slot Surveys

2.6X

1.8X 1.7X1.6X

1.5X 1.4X1.4X 1.4X 1.3X

Pe

rfo

rma

nc

e o

ve

r h

ou

se a

ve

rag

e

9

EGM SEGMENTSUSTAINABLE GROWTH THROUGH MARKET EXPANSION AND PRODUCT PERFORMANCE

AGS Licenses

AGS Total Addressable Market(3)

AGS Domestic Leased Units

AGS Domestic Leased + Sold Units

161

~650,000

8,735

9,403

127

~400,000

7,720

7,755

AGS’s Total Addressable Market has Doubled and is Growing Faster than the Industry

117%

125%

143%

267%

275

~900,000

18,798

28,484

(1) AGS installed base as a % of total domestic EGM market, which was ~960,000, ~970,000 and ~995,000 as of 2012, 2014 and 3/31/19, respectively

(2) AGS sold units as a % of total domestic EGM market, which was ~960,000, ~970,000 and ~995,000 as of 2012, 2014 and 3/31/19, respectively

(3) Total addressable markets in which AGS is licensed to place EGMs in U.S. & Canada

2012 2014 3/31/2019

Total Domestic Market

AGS Market Share Leased Units(1)

0.8%

0.9%

1.9%} 2.9%Lease + Sold

Growth

2012-3/31/19

AGS Market Share Sold Units(2)

1.0%

74%

6%

12%

8%

10

FOOTPRINTAGS HAS SIGNIFICANTLY EXPANDED ITS FOOTPRINT, BUT STILL HAS MANY NEW GAMING JURISDICTIONS WHERE IT IS NOT YET LICENSED

CA74,100

NV160,677

UT

AZ16,762

TX3,737

OR19,269

WA31,559

ID3,604

MT17,565

WY1,675

CO14,072

NM19,971

OK74,410

KS8,492

NE674

SD14,749

ND3,959

MN21,325

WI18,061

MI31,214IA

19,114

IL40,405

MO16,625

AR2,786

LA41,484

FL22,817

GAAL6,441

MS30,148

SC

NC4,419TN

KY2,734

IN20,029

OH18,686

WV13,183 VA

MD11,535

NJ17,947

PA25,443

NY37,410

ME1,665

VTNH MA

3,731

CT8,595

RI5,180

DE6,696

MB10,099

RampingEstablished Early Entry Prospective No Casino Gaming

AK90

% of total units

BC15,490

NB2,711

NL1,896

SK7,600

AB20,400

ON23,914

QC16,900

NS2,919

PE505

Note: Eilers: Slot & Table Count – 4Q18

11

MARKET SHAREAGS IS TAKING MARKET SHARE IN CURRENTLY LICENSED STATES

▪ Solid recurring revenue base and

market leadership in core markets of

OK, AL and TX

▪ AGS has successfully secured

licenses in, and begun to penetrate,

key Class III markets (e.g., NV,

Canada, LA)

▪ Recent ship share gains far in excess

of current market share of 2.9%

▪ AGS is not dependent on the

replacement cycle to grow

▪ <1% market share when excluding

established markets

▪ 2019 key markets include Canada,

Florida, California, Ohio, and

Pennsylvania

▪ Q1 2018 market share of 2.3%

Note: Market share is calculated based on the # of units on participation plus the cumulative amount of units sold to date and estimated to remain on casino floors(1) Per Eilers& Krejcik - Slot & Table Count - 4Q18(2) Other Early Entry jurisdictions include AZ, CT, DE, ID, IA, IL, KS, MD, MA, MN, ND, NE, NJ, NC, OR, SD, WA, WI, WY and the Canadian provinces of British Columbia, New Brunswick, Newfoundland &

Labrador, Nova Scotia, Manitoba, and Saskatchewan. (3) AGS is not currently licensed in U.S. states of AK, AR, CO, KY, ME, MO, RI, WV and the Canadian province of Prince Edward Island. (4) Ship share is average 3/31/2019 TTM ship share Per Eilers& Krejcik

Market Stage JurisdictionEstimated TotalUnits in State(1)

AGS Estimated Current Market Share

Established

/ Class II

Alabama 6,441 44.3%

Texas 3,737 37.9%

Oklahoma 74,410 13.9%

Ramping

Florida 22,817 11.0%

Montana 17,565 3.1%

California 74,100 2.8%

Early Entry

Indiana 20,029 1.8%

New Mexico 19,971 1.4%

Ontario - CAN 23,914 1.4%

Mississippi 30,148 1.3%

New York 37,410 0.9%

Louisiana 41,484 0.9%

Michigan 31,214 0.9%

Alberta - CAN 20,400 0.8%

Nevada 160,677 0.8%

Ohio 18,686 0.3%

Pennsylvania 25,443 0.1%

Quebec - CAN 16,900 0.0%

Other(2) 291,895 1.6%

Prospective Other(3) 58,231 0.0%

Total 995,472 2.9%

15%

9%

5%

13%

9%

Ship

Share(4)

4%

12

EMERGING SUPPLIERSWINNING SHIP SHARE FROM BIG-3

Non-Big-4 Ship Share Increasing as Customers Prefer More Diversification Given Industry Consolidation(1)

17%

20%

17% 16%

25%27%

28%

31%

35%

10%

20%

30%

40%

12/10 12/11 12/12 12/13 12/14 12/15 12/16 12/17 12/18 12/19

Industry consolidation triggered

shift towards Non-Big-3 suppliers

North American Expected FORWARD 12-Month Replacement Ship Share(2)

26% 25%

20%

8%6% 5% 4% 3% 2%

0% 0% 1%

Other

Big-3 Non-Big-3

(1) EILERS: Gaming Supplier KPIs - 4Q18. 3/19 is based on Eilers estimates.

(2) 1Q19 EILERS-FANTINI Quarterly Slot Survey; expected forward replacement ship share includes route ops

3/19

37%

13

INTERNATIONAL EXPANSION STRATEGY

Philippines

▪ Initial ALORA units currently installed and live

▪ Target 3,000-5,000 unit leased footprint over 3-5 year period, representing ~4-7% of market

▪ ~70,000 unit market size

Other

International

Opportunities

Brazil

▪ When legislation is approved, AGS is poised to capitalize on what is considered one of the most significant expansions in gaming

▪ Potential to be a 500,000 gaming machine market

▪ MOUs in place for ~8,700 leased units representing ~1.7% of market

Canada

▪ Canada is a large untapped market, currently represent <1% of the market

▪ Now approved in +90% of the Canadian market

▪ Recent BCLC approval

▪ First installations of ICON and Orion cabinets have been successful

▪ OLG privatization has brought a positive change in the market

Imm

ed

iate

Up

sid

ePe

nd

ing

Leg

isla

tio

n

▪ Latin America, Asia, Australia and Europe all represent future opportunities for growth

Fu

rth

er

Up

sid

e

14

TABLE PRODUCTS SEGMENTSIGNIFICANT UPSIDE IN A HIGH-DEMAND SPACE

1,500

2,400

2016 2017 2018 3/31/2019

$2.7

$4.1

2016 2017 2018 LTM 3/31/19

▪ Over 40 different products, including progressive

systems, premium table games (poker and

blackjack derivatives), side bets, a card shuffler,

and table signage

▪ Table Products segment has reported positive

Adjusted EBITDA for 6 consecutive quarters

▪ Progressives have grown 364 units year-over-year,

up 55%

• Currently have over 1,100 progressive units in

the field(1)

• Over 300 progressive conversions to date with

approximately $1 million in annual savings.

▪ 45 Dex S shufflers in the field(1)

▪ ~75% gross margin

Table Products Installed Base and ALP

~65% Side Bets

~30% Progressives

~5% Premium

$194 $167 $218

Table Products Revenue Table Products Adj. EBITDA

($ in mm) ($ in mm)Nearly 100%

Recurring

$7.7

($1.7)

($0.5)

$0.9

$1.2

2016 2017 2018 LTM 3/31/19

3,162

ALP:

(1) As of May 2019(2) LTM 3/31/2019

$8.1

3,285

$217(2)

15

INTERACTIVE SEGMENTINDUSTRY-LEADING CONTENT DRIVES B2B & B2C CUSTOMER ENGAGEMENT

▪ Signed Jamul Casino▪ Signed The Plaza Las Vegas▪ 5 new potential deals in the pipeline▪ Leverage land-based relationships

Social White Label Casino (ConnexSys) Real Money Gaming (AxSys)

▪ Launched AGS content in Europe▪ Golden Wins launched on GVC in March▪ Jade Wins launched on BetVictor in April▪ Fu Nan Fu Nu, Rakin’ Bacon!, and Olympus

Strikes to launch soon

$7.7 $8.0 $6.6

$5.9

2016 2017 2018 LTM 3/31/19

($4.7)

($0.4)($2.1) ($3.1)

2016 2017 2018 LTM 3/31/19

Interactive Revenue Interactive Adj. EBITDA

($ in mm) ($ in mm)

16

INTERACTIVE SEGMENTNEW RMG PLATFORM (AxSys)

▪ Acquired platform in June 2018▪ Robust, scalable Remote Gaming Server▪ Single integration can deliver content from

wide network of game providers▪ Opportunity to connect to numerous RMG

operators overseas

Real-Money iGaming

$107

$62

$85

$136 $138

51% 51% 50% 48% 47%

2015 2016 2017 2018 LTM 3/31/19Adj. EBITDA margin

$123$167

$212

$285

2015 2016 2017 2018 LTM 3/31/19

$293

17

AGS’S STRONG FINANCIAL TRACK RECORD OF SUCCESS

▪ 70% of the $293(1) million total revenue is recurring

• ~80% gross profit margin for leased units(2) and ~50% gross profit margin for sold units(3)

▪ 47% LTM Total Adjusted EBITDA Margin

▪ Payback period of only ~8-12 months on capital spent for new leased machines

Strong Revenue Growth with Robust Margins

($ in mm)

Total Adjusted EBITDA(4)Total Revenue(4)

LTMRevenues by Segment 2015 2016 2017 2018 3/31/2019

EGM $119.6 $156.4 $199.9 $271.0 $279.4

Table Products 1.7 2.7 4.1 7.7 8.1

Interactive 2.0 7.7 8.0 6.6 5.9

LTMAdjusted EBITDA by Segment 2015 2016 2017 2018 3/31/2019

EGM $66.3 $91.7 $107.8 $137.4 $139.8

Table Products (1.4) (1.7) (0.5) 0.9 1.2

Interactive (2.5) (4.7) (0.4) (2.1) (3.1)

($ in mm)

(1) Total Revenue for LTM 3/31/19

(2) Gross Profit Margin for leased units = EGM gaming operations revenue less EGM cost of gaming operations, divided by EGM gaming operations revenue for LTM 3/31/19

(3) Gross Profit Margin for sold units = EGM equipment sales revenue less EGM cost of equipment sales, divided by EGM equipment sales revenue for LTM 3/31/19

(4) As reported figures

LTM

3/31/19

Net cash provided by operating activities 89,982

Purchase of intangible assets (1,782)

SW development and other expenditures (10,639)

Purchases of property and equipment (57,776)

Free Cash Flow 19,785

18

FAVORABLE CASH FLOW DYNAMICS INVESTMENTSPRODUCE HIGH DISCRETIONARY CASH FLOW AND PERMIT ATTRACTIVE ROI

▪ Total Adj. EBITDA – One of the industries

leading Adj. EBITDA margin of 47% (1)

▪ Cash taxes – significant NOLs of over

$100 million and high D&A result in no

cash taxes

▪ Maintenance capex – refurbishment

obligations on existing installed base are

low and decreasing

Strong Cash Flow Conversion

Favorable Cash Flow Drivers

in 000’s

▪ Growth capex – builds recurring revenue

base by placing higher yielding leased

cabinets with highly compelling ROIs

• 12 month payback on core units and 8 months on premium units

▪ Intangibles – primarily capitalized R&D

that facilitates cutting edge hardware

and content development

Strong

cashflow for

high-ROI

investments,

growth and

deleveraging

>90% cash flow conversion(2)

▪ Reinvestment in

high ROI growth

▪ Significant

potential for future

deleveraging

92%

99%98%

97%

2016 2017 2018 LTM 3/31/19

(1) Adjusted EBITDA margin for LTM 3/31/19

(2) Percentages equal (LTM 3/31/19 EGM Adjusted EBITDA – LTM 3/31/19 maintenance capex) / LTM 3/31/19 EGM Adjusted EBITDA

19

CAPITAL STRUCTURE OVERVIEW

Capitalization

12/31/2018 3/31/2019 Rate Maturity

Capitalization

Cash $71 $10

$30 million existing revolver – – L+5.50% 06/06/22

First lien term loan 538 536 L+3.50% 02/15/24

Other 1 2

Total first lien debt $539 $538

Total debt $539 $538

Total net debt $468 $527

LTM Adjusted EBITDA $136 $138

Net leverage 3.4x 3.8x

Integrity LTM Adjusted EBITDA – $8

Post-Integrity LTM Adjusted EBITDA(1) $136 $146

Adjusted total net debt leverage ratio 3.4x 3.6x

(1) Represents Integrity's 2017 Adjusted EBITDA, which we believe is indicative of Integrity’s performance in subsequent periods, adjusted for the time period for which Integrity’s financial measures are included in AGS’s results.

20

SUMMARIZING THE AGS OPPORTUNITY

Attractive high-margin, recurring revenue model

Pure-play casino gaming supplier with outsized growth potential

Capitalizing on strong Class II position while continuing to penetrate Class III markets

Growth from international expansion in Philippines, Brazil and other markets

Strong free cash flow generation allows for reinvestment in business at attractive ROIs

Industry-leading R&D platform in both hardware and content

Diversified product suite

Proven ability to successfully integrate acquisitions and scale the platform

1

2

3

4

5

6

7

8

APPENDIX

21

22

TERMS USED IN THIS PRESENTATION

▪ Average Monthly Lease Price (ALP): Average monthly lease price is calculated by dividing (a) total revenues recognized

and directly attributable to Table Products by (b) the number of Table Products Installed Base and by (c) the number of

months in such period.

▪ Average Revenue per Daily Active User (ARPDAU): ARPDAU is calculated by dividing (a) daily revenue by (b) the number

of Daily Active Users.

▪ Average Sales Price (ASP): Average sales price is calculated by dividing (a) total revenues recognized and directly

attributable to EGM unit sales in a period by (b) the number of EGM units sold over that same period.

▪ Daily Active Users (DAU): DAU is a count of daily unique visitors to a site.

▪ EGM Installed Base: EGM Installed Base is the number of recurring revenue EGM units installed on a specified date.

▪ Electronic Gaming Machine (EGM): EGMs include but are not limited to slot machines, Class II machines, video poker and

video lottery machines.

▪ House Average (HA): House average is the average casino win from slot machines or table products.

▪ Monthly Active Users (MAU): MAU is a count of monthly unique visitors to a site.

▪ Revenue Per Day (RPD): RPD is calculated by dividing (a) total revenues over a specified period recognized and directly

attributable to units on lease (whether on a participation or daily fee arrangement) by (b) the number of units installed

over that period and by (c) the number of days in such period.

▪ Ship Share: Ship Share is the share of all slots sold in a specified period.

▪ Table Products Installed Base: Table Products Installed Base is the number of table products installed on a specified date.

▪ TAM: Total addressable markets are markets in which we are currently licensed, or could be licensed with minimal effort,

to place EGMs in the United States and Canada.

▪ Win Per Day (WPD): WPD is the total revenue generated by an EGM per day.

Unless otherwise indicated or the context otherwise requires, the following terms in this presentation have the meanings set forth below:

23

FY 2019 OUTLOOK

($ in mm) FY 2018 2019 Guidance

Adjusted EBITDA1 $136.2 $160 - $164

Capex $66.2 $65 - $69

▪ AGS continues to expect to generate Adjusted EBITDA, a non-GAAP financial measure (see footnote below), of $160 - $164 million in 2019, representing growth of approximately 17%-20% compared to the prior year period

▪ AGS continues to expect 2019 capital expenditures to be in the range of $65 -$69 million, reflecting an expectation for a continued increase in its installed base in both existing and new markets.

1) Please refer to appendix for Adjusted EBITDA reconciliation. We have not provided a reconciliation of forward looking total Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income (loss), due primarily to the variability and difficulty in making accurate forecasts and projections of the variable and individual adjustments for a reconciliation to Net income (loss), as not all of the information necessary for a quantitative reconciliation is available to us without unreasonable effort. We expect that the main components of Net income (loss) for fiscal year 2019 shall consist of operating expenses, interest expenses as well as other expenses (income) and income tax expenses, which are inherently difficult to forecast and quantify with reasonable accuracy without unreasonable efforts. The amounts associated with these items have historically and may continue to vary significantly from quarter to quarter and material changes to these items could have a significant effect on our future GAAP results.

24

ROAD TO $250M AEBITDA

$50-$80$10-$15

$15-$20

$15-$25 ~$230-$290

$45-$70

($ in mm)

EG

M

Tab

le P

rod

uc

ts

Inte

rac

tive

Tuc

k in

M&

A

Bra

zil

Targ

et

AEB

ITD

A

20

18

AEB

ITD

A

$136

$10-$15

Inte

rna

tio

na

l

Road to $250M AEBITDA is an aspirational goal set by the Company to achieve $250M of Adjusted EBITDA within 3-5 years

CAGRs(1)

Target

AEBITDA 5 Years 4 Years 3 years

Low: $230 11% 14% 19%

Mid: $250 13% 16% 22%

High: $290 16% 21% 29%

(1) Calculated based on FY 2018 AEBITDA of $136M

25

iGAMING ECOSYSTEM

26

CONSOLIDATED OPERATIONAL SUMMARY

($ in mm, except RPD, ASP, ALP and ARPDAU)

Operational and other data Q1 Q2 Q3 Q4 2017 Q1 Q2 Q3 Q4 2018 Q1 LTM 3/31/19

Revenues by segmentEGM $45.0 $47.4 $53.3 $54.2 $199.9 $61.3 $69.3 $71.8 $68.7 $271.0 $69.7 $279.4Table products 0.6 0.7 1.1 1.6 4.1 1.7 1.8 2.1 2.1 7.7 2.2 8.1Interactive 2.1 2.0 2.0 1.9 8.0 1.9 1.7 1.7 1.3 6.6 1.2 5.9Total revenue $47.8 $50.1 $56.4 $57.7 $212.0 $64.9 $72.8 $75.5 $72.1 $285.3 $73.0 $293.5

Adjusted EBITDA by segmentEGM $25.2 $26.5 $29.8 $26.3 $107.8 $34.3 $36.9 $34.0 $32.2 $137.4 $36.7 $139.8

% margin 56.0% 55.9% 55.8% 48.6% 53.9% 56.0% 53.2% 47.4% 46.9% 50.7% 52.7% 50.0%Table products (0.2) (0.3) (0.2) 0.2 (0.5) 0.2 0.1 0.4 0.3 0.9 0.5 1.2Interactive (0.1) (0.1) (0.1) (0.1) (0.4) 0.0 (0.4) (0.9) (0.9) (2.1) (0.9) (3.1)Total Adjusted EBITDA $24.9 $26.1 $29.4 $26.4 $106.8 $34.5 $36.6 $33.6 $31.5 $136.2 $36.3 $138.0

% margin 52.1% 52.1% 52.1% 45.9% 50.4% 53.2% 50.2% 44.5% 43.8% 47.7% 49.6% 47.0%

EGM segmentDomestic installed base 14,025 14,246 14,544 16,078 16,078 16,553 16,647 16,068 16,296 16,296 18,798 18,798Domestic RPD $25.84 $25.89 $25.44 $25.88 $25.77 $26.72 $27.79 $27.14 $26.41 $27.02 $26.42 $26.94

International installed base 7,179 7,233 7,471 7,727 7,727 7,480 7,876 8,116 8,351 8,351 8,510 8,510International RPD $8.20 $8.58 $8.33 $8.14 $8.31 $8.27 $8.80 $8.52 $8.07 $8.41 $8.68 $8.52– – – –Total recurring units 21,204 21,479 22,015 23,805 23,805 24,033 24,523 24,184 24,647 24,647 27,308 27,308Total RPD $19.93 $19.99 $19.65 $19.95 $19.88 $20.94 $21.77 $20.95 $20.20 $20.96 $20.73 $20.91– –EGM units sold 452 574 842 697 2,565 838 1,058 1,332 1,159 4,387 1,024 4,573Average sales price $15,695 $15,840 $15,890 $17,676 $16,329 $17,758 $18,728 $18,051 $18,782 $18,360 $18,738 $18,575

Table products segmentTable products install base 1,691 1,754 2,350 2,400 2,400 2,631 2,737 3,065 3,162 3,162 3,285 3,285Average monthly lease price $128 $125 $167 $226 $167 $220 $213 $214 $224 $218 $217 $217

27

TOTAL ADJUSTED EBITDA RECONCILIATION

▪ Write downs and other include items related to loss on disposal or impairment of long lived assets, fair value adjustments to contingent consideration and acquisition costs

▪ Loss on extinguishment and modification of debt primarily relates to the refinancing of long-term debt, in which deferred loan costs and discounts related to old senior secured credit facilities were written off

• Other adjustments are primarily composed of professional fees incurred for projects, corporate and public filing compliance, contract cancellation fees and other transaction costs deemed to be non-operating in nature

▪ Other non-cash charges are costs related to non-cash charges and losses on the disposition of assets, non-cash charges on capitalized installation and delivery, which primarily includes the

costs to acquire contracts that are expensed over the estimated life of each contract and non-cash charges related to accretion of contract rights under development agreements

▪ New jurisdiction and regulatory license costs relate primarily to one-time non-operating costs incurred to obtain new licenses and develop products for new jurisdictions

▪ Legal & litigation expenses include payments to law firms and settlements for matters that are outside the normal course of business

▪ Acquisition & integration costs include restructuring and severance and are related to costs incurred after the purchase of businesses, such as the acquisitions of Rocket and Gameiom, to integrate operations

▪ Non-cash stock compensation includes non-cash compensation expense related to grants of options, restricted stock, and other equity awards

1

2

3

4

5

6

7

8

234567

1

8

12345678

($ in mm)

Adj. EBITDA reconciliation Q1 Q2 Q3 Q4 2017

Net loss attributable to PlayAGS, Inc. ($12.4) ($20.1) ($4.1) ($8.5) ($45.1)

Income tax expense (benefit) 2.2 1.3 1.1 (6.5) (1.9)

Depreciation and amortization 18.5 18.2 16.9 18.1 71.6

Other (income) expense (2.8) (1.5) (0.5) 1.9 (2.9)

Interest income (0.0) (0.0) (0.0) (0.0) (0.1)

Interest expense 15.2 14.6 12.7 13.1 55.5

Write downs and other 0.2 1.9 0.5 1.8 4.5

Loss on extinguishment and modification of debt – 8.1 – 0.9 9.0

Other adjustments 0.6 0.9 0.5 0.8 2.9

Other non-cash charges 2.1 1.8 1.6 2.3 7.8

New jurisdiction and regulatory licensing costs 0.2 0.5 0.6 0.8 2.1

Legal & litigation expenses including settlement payments 0.4 0.2 0.2 (0.2) 0.5

Acquisition & integration related costs 0.6 0.2 0.1 2.0 2.9

Non-cash stock compensation – – – – –

Adjusted EBITDA $24.9 $26.1 $29.4 $26.4 $106.8

($ in mm)

Adj. EBITDA reconciliation Q1 Q2 Q3 Q4 2018

Net (loss) income attributable to PlayAGS, Inc. ($9.5) ($5.3) $4.3 ($10.3) ($20.8)

Income tax (benefit) expense (12.4) 7.0 (3.5) 0.6 (8.4)


Other expense (income) 9.2 0.5 0.4 0.4 10.5

Interest income (0.1) (0.0) (0.1) (0.0) (0.2)



Loss on extinguishment and modification of debt 4.6 – – 2.0 6.6



New jurisdiction and regulatory licensing costs – – – – –

Legal & litigation expenses including settlement payments – 0.8 (0.0) 0.2 1.0


Non-cash stock compensation 8.2 0.5 0.5 1.8 10.9

Adjusted EBITDA $34.5 $36.6 $33.6 $31.5 $136.2

28

TOTAL ADJUSTED EBITDA RECONCILIATION

▪ Write downs and other include items related to loss on disposal or impairment of long lived assets, fair value adjustments to contingent consideration and acquisition costs

▪ Loss on extinguishment and modification of debt primarily relates to the refinancing of long-term debt, in which deferred loan costs and discounts related to old senior secured credit facilities were written off

• Other adjustments are primarily composed of professional fees incurred for projects, corporate and public filing compliance, contract cancellation fees and other transaction costs deemed to be non-operating in nature

▪ Other non-cash charges are costs related to non-cash charges and losses on the disposition of assets, non-cash charges on capitalized installation and delivery, which primarily includes the

costs to acquire contracts that are expensed over the estimated life of each contract and non-cash charges related to accretion of contract rights under development agreements

▪ New jurisdiction and regulatory license costs relate primarily to one-time non-operating costs incurred to obtain new licenses and develop products for new jurisdictions

▪ Legal & litigation expenses include payments to law firms and settlements for matters that are outside the normal course of business

▪ Acquisition & integration costs include restructuring and severance and are related to costs incurred after the purchase of businesses, such as the acquisitions of Rocket and Gameiom, to integrate operations

▪ Non-cash stock compensation includes non-cash compensation expense related to grants of options, restricted stock, and other equity awards

1

2

3

4

5

6

7

8

234567

1

8

12345678

($ in mm) LTM

Adj. EBITDA reconciliation Q2 '17 Q3 '17 Q4 '17 Q1 '18 3/31/2018

Net loss attributable to PlayAGS, Inc. ($20.1) ($4.1) ($8.5) ($9.5) ($42.3)

Income tax expense (benefit) 1.3 1.1 (6.5) (12.4) (16.6)


Other (income) expense (1.5) (0.5) 1.9 9.2 9.1

Interest income (0.0) (0.0) (0.0) (0.1) (0.1)



Loss on extinguishment and modification of debt 8.1 – 0.9 4.6 13.6



New jurisdiction and regulatory licensing costs 0.5 0.6 0.8 – 1.8

Legal & litigation expenses including settlement payments 0.2 0.2 (0.2) – 0.1


Non-cash stock compensation – – – 8.2 8.2

Adjusted EBITDA $26.1 $29.4 $26.4 $34.5 $116.4

($ in mm) LTM

Adj. EBITDA reconciliation Q2 '18 Q3 '18 Q4 '18 Q1 '19 3/31/19

Net (loss) income attributable to PlayAGS, Inc. ($5.3) $4.3 ($10.3) ($0.1) ($11.4)

Income tax (benefit) expense 7.0 (3.5) 0.6 (5.8) (1.7)


Other expense (income) 0.5 0.4 0.4 5.3 6.5

Interest income (0.0) (0.1) (0.0) (0.0) (0.2)



Loss on extinguishment and modification of debt – – 2.0 – 2.0



New jurisdiction and regulatory licensing costs – – – – –

Legal & litigation expenses including settlement payments 0.8 (0.0) 0.2 – 1.0


Non-cash stock compensation 0.5 0.5 1.8 1.2 4.0

Adjusted EBITDA $36.6 $33.6 $31.5 $36.3 $138.0

29

FREE CASH FLOW RECONCILIATION

($ in 000’s)

Q2 '18 Q3 '18 Q4 '18 Q1 '19 LTM 3/31/19

Free Cash Flow ReconciliationNet cash provided by operating activities 22,497$ 23,639$ 32,191$ 11,655$ 89,982$ Purchase of intangible assets (26) (337) (188) (1,231) (1,782) Software development and other expenditures (2,678) (3,626) (1,666) (2,669) (10,639) Purchases of property and equipment (10,383) (12,143) (20,145) (15,105) (57,776)

Free Cash Flow 9,410$ 7,533$ 10,192$ (7,350)$ 19,785$

CONNECT WITH US

30

investor overviews22.q4cdn.com/316621966/files/doc_presentations/investor-deck_m… · this...

Documents