bank of america gaming conference...
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Bank of America Gaming Conference Bank of America Gaming Conference PresentationPresentation
June 2006June 2006
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Agenda Agenda Company OverviewCompany Overview
Slot Route OperationsSlot Route Operations
Nevada Casino OperationsNevada Casino Operations
Midwest Casino Operations (Grace)Midwest Casino Operations (Grace)
Financial OverviewFinancial Overview
Key TakeawayKey Takeaway
Company OverviewCompany Overview
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Background of Herbst GamingBackground of Herbst GamingStarted operations in 1987 with Terrible Herbst as the sole gamiStarted operations in 1987 with Terrible Herbst as the sole gaming route customerng route customerExpanded through Expanded through ““street routestreet route”” (bar and restaurant) contracts(bar and restaurant) contractsBegan chain store route operations in 1994Began chain store route operations in 1994Expanded locals casino businessExpanded locals casino business
““TERRIBLETERRIBLE’’SS”” Town Casino (Pahrump) opened in March 1997Town Casino (Pahrump) opened in March 1997““TERRIBLETERRIBLE’’SS”” Casino & Bowl (Henderson) opened in June 1997Casino & Bowl (Henderson) opened in June 1997““TERRIBLETERRIBLE’’SS”” Lakeside Casino & RV Park (Pahrump) opened in April 1999Lakeside Casino & RV Park (Pahrump) opened in April 1999““TERRIBLETERRIBLE’’SS”” Hotel & Casino (Las Vegas) opened in December 2000Hotel & Casino (Las Vegas) opened in December 2000““TERRIBLETERRIBLE’’SS”” Searchlight Casino (Searchlight) opened in July 2003Searchlight Casino (Searchlight) opened in July 2003
Acquired attractive businessesAcquired attractive businessesAcquired JackpotAcquired Jackpot’’s slot route business in November 2000s slot route business in November 2000Acquired Anchor Coin in February 2003Acquired Anchor Coin in February 2003Acquired three casinos from Grace Entertainment in February 2005Acquired three casinos from Grace Entertainment in February 2005Announced acquisition of the Sands Regent 5 properties in NortheAnnounced acquisition of the Sands Regent 5 properties in Northern Nevada May 2006 rn Nevada May 2006 (anticipated closing Dec 31 2006)(anticipated closing Dec 31 2006)
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$241.6
$323.2
$557.5 $580.1
$0
$100
$200
$300
$400
$500
$600
2002 2003 2004 2005 3/31/2006-LTM
Slot Route Casino Other
$388.1
Historical Revenue GrowthHistorical Revenue Growth
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Historical EBITDA GrowthHistorical EBITDA Growth
$35.2 $40.0
$55.8
$76.7
$124.9 $128.1
$0
$20
$40
$60
$80
$100
$120
$140
20012002
20032004
2005
ltm 3/31/06
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EBITDA ContributionEBITDA Contribution
Nevada Casinos
17%
Route Operations
46%
Midwest Casinos
37%
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Company HighlightsCompany HighlightsDominant route operator, with longDominant route operator, with long--term, major chain store term, major chain store contracts and 7,000 slot machinescontracts and 7,000 slot machinesFive casinos throughout Southern Nevada with 1,700 slot Five casinos throughout Southern Nevada with 1,700 slot machinesmachinesThree casinos located in the Midwest with 2,100 slot machinesThree casinos located in the Midwest with 2,100 slot machinesAll properties target attractive locals marketAll properties target attractive locals marketIndustryIndustry--leading technologyleading technologyDemonstrated ability to increase revenue and EBITDADemonstrated ability to increase revenue and EBITDAProven track record of integrating acquisitionsProven track record of integrating acquisitions
Announced purchase of Sands RegentAnnounced purchase of Sands Regent--Northern NevadaNorthern NevadaWellWell--known known ““TERRIBLETERRIBLE’’SS”” brandbrand
Overview of Slot Route OperationsOverview of Slot Route Operations
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Slot Route OperationsSlot Route Operations
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Overview of Slot Route OperationsOverview of Slot Route Operations7,000 slot machines in strategic, high traffic locations7,000 slot machines in strategic, high traffic locationsOwn and operate gaming devices in retail locations:Own and operate gaming devices in retail locations:
Chain Stores (3,400 machines)Chain Stores (3,400 machines)–– Grocery stores, drug stores, and convenience stores Grocery stores, drug stores, and convenience stores
Street Routes (3,600 machines)Street Routes (3,600 machines)–– Bars and restaurantsBars and restaurants
Pay rent to location ownerPay rent to location ownerFixed space leases (real estate lease) Fixed space leases (real estate lease) –– chain stores and convenience storeschain stores and convenience storesParticipation leases (revenue share) Participation leases (revenue share) –– bars and restaurantsbars and restaurants
Maintain machines, pay out jackpots, replenish coin supplyMaintain machines, pay out jackpots, replenish coin supplyActively manage slot route operationsActively manage slot route operations
Utilize technology to minimize capex and reduce expensesUtilize technology to minimize capex and reduce expenses
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Strengthening Market PositionStrengthening Market PositionImproved competitive dynamicsImproved competitive dynamicsChain stores continue new openings to keep up with growth of Chain stores continue new openings to keep up with growth of Las Vegas marketLas Vegas marketValue added service technologies to assist Value added service technologies to assist ““streetstreet”” routeroute
Tavern POS system, Tavern promotional system, Tavern Tavern POS system, Tavern promotional system, Tavern patron trackingpatron tracking
Economies of scaleEconomies of scale
Overview of Casino Operations Overview of Casino Operations --NevadaNevada
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““TERRIBLETERRIBLE’’SS”” CasinosCasinos--NevadaNevada
““TERRIBLETERRIBLE’’SS”” Town Casino
““TERRIBLETERRIBLE’’SS”” Hotel & Casino
““TERRIBLETERRIBLE’’SS”” Lakes ide Casino & RV Park
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““TERRIBLETERRIBLE’’SS”” Casino OverviewCasino OverviewOperate five locals casinos in Southern NevadaOperate five locals casinos in Southern Nevada
Casino Overview
SearchlightSearchlight
HendersonHenderson
PahrumpPahrump
PahrumpPahrump
Las VegasLas Vegas
LocationLocation
15151,7751,775TotalTotal
--
--
159 RV159 RV
SpacesSpaces
--
257257
HotelHotelRoomsRooms
----7575TerribleTerrible’’ss Searchlight CasinoSearchlight Casino
16 lane bowling alley16 lane bowling alley--157157TerribleTerrible’’s s Casino & BowlCasino & Bowl
Race and sports bookRace and sports book
232232--seat bingo facilityseat bingo facility
--265265TerribleTerrible’’s s Lakeside Cas inoLakeside Cas ino
& RV Park& RV Park
Race and sports bookRace and sports book
145145--seat bingo facilityseat bingo facility
66403403TerribleTerrible’’s s Town CasinoTown Casino
Race and sports bookRace and sports book
185185--seat bingo hallseat bingo hall
99873873TerribleTerrible’’s s Hotel & CasinoHotel & Casino
AdditionalAdditionalAmenitiesAmenitiesTablesTablesSlotsSlotsPropertyProperty
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““TERRIBLETERRIBLE’’SS”” Growth InitiativesGrowth Initiatives““Doubling downDoubling down”” at at
““TERRIBLETERRIBLE’’SS””
Parking structure constructionParking structure construction450450--space parking structurespace parking structure
Casino expansionCasino expansion120 additional slot machines120 additional slot machines
Estimated cost of $20 millionEstimated cost of $20 million
Completion expected in third Completion expected in third quarter 2006quarter 2006
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““TERRIBLETERRIBLE’’SS”” ExpansionExpansion
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““TERRIBLETERRIBLE’’SS”” Other Casino InitiativesOther Casino Initiatives
Expansion at Expansion at ““TERRIBLETERRIBLE’’SS”” Town PahrumpTown Pahrump10 movie theaters in partnership with 10 movie theaters in partnership with ““Brendan Brendan TheatersTheaters””Added casino floor spaceAdded casino floor spaceImproved parkingImproved parking
Began Installation of IGT Began Installation of IGT ““ACRESACRES”” player tracking player tracking and promotion software at and promotion software at ““TERRIBLETERRIBLE’’SS”” Las VegasLas Vegas
Overview of Casino Operations Overview of Casino Operations ––MidwestMidwest
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““TERRIBLETERRIBLE’’SS”” Midwest Casino OverviewMidwest Casino Overview
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Midwest CasinosMidwest Casinos
Three localsThree locals--focused casinosfocused casinos““TERRIBLETERRIBLE’’SS”” Lakeside Casino ResortLakeside Casino Resort in in Osceola, IowaOsceola, Iowa––1045 slot machines and 19 table games1045 slot machines and 19 table games
““TERRIBLETERRIBLE’’SS”” St. Jo Frontier CasinoSt. Jo Frontier Casino in St. in St. Joseph, MissouriJoseph, Missouri––591 slot machines and 14 table games591 slot machines and 14 table games
““TERRIBLETERRIBLE’’SS”” Mark Twain CasinoMark Twain Casino in La Grange, in La Grange, MissouriMissouri––585 slot machines and 11 table games585 slot machines and 11 table games
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““TERRIBLETERRIBLE’’SS”” Capital ProjectsCapital ProjectsCapital Expenditure StrategyCapital Expenditure Strategy--MidwestMidwest
–– Year 1Year 1–– 100% 100% ““TITOTITO””–– 85% replacement of games at all properties85% replacement of games at all properties–– 100% re100% re--branding to branding to “TERRIBLE’S”–– Complete renovation of all casino floors Complete renovation of all casino floors
–– Year 2Year 2–– Continue improvements on to land based facilitiesContinue improvements on to land based facilities–– Renovate all common areas, restaurants, buffets and barsRenovate all common areas, restaurants, buffets and bars–– Completion expected by July 2006Completion expected by July 2006
–– Year 3 and beyondYear 3 and beyond–– Opportunistically utilize excess landOpportunistically utilize excess land
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““TERRIBLETERRIBLE’’SS””Progress in the MidwestProgress in the Midwest
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Financial OverviewFinancial Overview
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Capitalization and Credit StatisticsCapitalization and Credit Statistics
(a) Per Covenant calculation – excludes cash in excess of $25 million
(b) Excludes all cash
159.1159.1170.0170.0
8.125% Senior Sub. Notes due 20128.125% Senior Sub. Notes due 20127.000% Senior Sub. Notes due 20147.000% Senior Sub. Notes due 2014
.2.2Other DebtOther Debt
37.437.4LTM Interest ExpenseLTM Interest Expense$128.1$128.1LTM EBITDALTM EBITDA$498.3$498.3Total DebtTotal Debt
99.099.0Term BTerm B$70.0$70.0Revolving Credit FacilityRevolving Credit Facility
$85.2$85.2CashCash3/31/063/31/06
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Capitalization and Credit StatisticsCapitalization and Credit Statistics
3.89X3.89XTotal Debt / Total Debt / EBITDA (b)EBITDA (b)
3.4X3.4XEBITDA / EBITDA / InterestInterest
3.42X3.42XNet Debt / Net Debt / EBITDA (a)EBITDA (a)
.85X.85XSecured Debt / Secured Debt / EBITDA (a)EBITDA (a)
3/31/063/31/06
(a) Per Covenant calculation – includes cash in excess of $25 million
(b) Excludes all cash
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$2 4 1,6 0 2 $ 2 59 ,4 53$ 32 3 ,2 24 $ 33 8 ,1 26
$ 53 5,84 1 $5 55 ,19 3
20 01 2 00 2 2 00 3 2 00 4 20 05 LTM 3 /3 1/0 6
Herbst Gaming Net Revenue and EBITDAHerbst Gaming Net Revenue and EBITDAHerbst Historical Net RevenueHerbst Historical Net Revenue
Herbst Historical EBITDAHerbst Historical EBITDA
($ in millions)
($ in millions)
2001 2002 2003 2004 2005 LTM 3/31/06
$56$80
$125 $128
$0
$30
$60
$90
$120
$150
$35 $40
““TERRIBLETERRIBLE’’SS”” TakeawaysTakeaways
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Key Key ““TERRIBLETERRIBLE’’SS”” TakeawaysTakeawaysLeading Southern Nevada locals route and casino operatorLeading Southern Nevada locals route and casino operatorStrong, growing company with stable cash flowsStrong, growing company with stable cash flows6 year track record in the public market6 year track record in the public marketProven history and continued focus on operations, cash flow Proven history and continued focus on operations, cash flow generation and degeneration and de--leveragingleveragingSuccessful track record of integrating acquisitionsSuccessful track record of integrating acquisitionsAnnounced strategic acquisition of Sands Regent casinosAnnounced strategic acquisition of Sands Regent casinos
““RightRight--sizedsized”” acquisition consistent with core competenciesacquisition consistent with core competenciesLong term EBITDA contributorLong term EBITDA contributorGreat management teamGreat management teamBusiness (casino vs. route) and geographic diversificationBusiness (casino vs. route) and geographic diversification
Bank of America Gaming Conference Bank of America Gaming Conference PresentationPresentation
June 2006June 2006