Bank of America Gaming Conference Presentation June 2006
Agenda Company Overview Slot Route Operations Nevada Casino Operations Midwest Casino Operations (Grace) Financial Overview Key Takeaway 1
Company Overview
Background of Herbst Gaming Started operations in 1987 with Terrible Herbst as the sole gaming route customer Expanded through street route (bar and restaurant) contracts Began chain store route operations in 1994 Expanded locals casino business TERRIBLE TERRIBLE S Town Casino (Pahrump) opened in March 1997 TERRIBLE TERRIBLE S Casino & Bowl (Henderson) opened in June 1997 TERRIBLE TERRIBLE S Lakeside Casino & RV Park (Pahrump) opened in April 1999 TERRIBLE TERRIBLE S Hotel & Casino (Las Vegas) opened in December 2000 TERRIBLE TERRIBLE S Searchlight Casino (Searchlight) opened in July 2003 Acquired attractive businesses Acquired Jackpot s slot route business in November 2000 Acquired Anchor Coin in February 2003 Acquired three casinos from Grace Entertainment in February 2005 Announced acquisition of the Sands Regent 5 properties in Northern rn Nevada May 2006 (anticipated closing Dec 31 2006) 3
Historical Revenue Growth $600 $557.5 $580.1 $500 $388.1 $400 $323.2 $300 $241.6 $200 $100 $0 2002 2003 2004 2005 3/31/2006-LTM Slot Route Casino Other 4
Historical EBITDA Growth $140 $120 $124.9 $128.1 $100 $80 $60 $40 $35.2 $40.0 $55.8 $76.7 $20 $0 2001 2002 2003 2004 2005 ltm 3/31/06 5
EBITDA Contribution Nevada Casinos 17% Midwest Casinos 37% Route Operations 46% 6
Company Highlights Dominant route operator, with long-term, major chain store contracts and 7,000 slot machines Five casinos throughout Southern Nevada with 1,700 slot machines Three casinos located in the Midwest with 2,100 slot machines All properties target attractive locals market Industry-leading technology Demonstrated ability to increase revenue and EBITDA Proven track record of integrating acquisitions Announced purchase of Sands Regent-Northern Nevada Well-known TERRIBLE S brand 7
Overview of Slot Route Operations
Slot Route Operations 9
Overview of Slot Route Operations 7,000 slot machines in strategic, high traffic locations Own and operate gaming devices in retail locations: Chain Stores (3,400 machines) Grocery stores, drug stores, and convenience stores Street Routes (3,600 machines) Bars and restaurants Pay rent to location owner Fixed space leases (real estate lease) chain stores and convenience stores Participation leases (revenue share) bars and restaurants Maintain machines, pay out jackpots, replenish coin supply Actively manage slot route operations Utilize technology to minimize capex and reduce expenses 10
Strengthening Market Position Improved competitive dynamics Chain stores continue new openings to keep up with growth of Las Vegas market Value added service technologies to assist street route Tavern POS system, Tavern promotional system, Tavern patron tracking Economies of scale 11
Overview of Casino Operations - Nevada
TERRIBLE S Casinos-Nevada TERRIBLE S Hotel & Casino TERRIBLE TERRIBLE S Lakeside Casino & RV Park TERRIBLE S Town Casino 13
TERRIBLE S Casino Overview Operate five locals casinos in Southern Nevada Casino Overvie w Property Location Slots Tables Hotel Rooms Additional Amenities Terrible s Hotel & Casino Las Vegas 873 9 257 Race and sports book 185-seat bingo hall Terrible s Town Casino Pahrump 403 6 - Race and sports book 145-seat bingo facility Terrible s Lakeside Casino Pahrump 265-159 RV Race and sports book & RV Park Spaces 232-seat bingo facility Terrible s Casino & Bowl Henderson 157 - - 16 lane bowling alley Terrible s Searchlight Casino Searchlight 75 - - - Total 1,775 15 14
TERRIBLE S Growth Initiatives Doubling down at TERRIBLE S Parking structure construction 450-space parking structure Casino expansion 120 additional slot machines Estimated cost of $20 million Completion expected in third quarter 2006 15
TERRIBLE S Expansion 16
TERRIBLE S Other Casino Initiatives Expansion at TERRIBLE S Town Pahrump 10 movie theaters in partnership with Brendan Theaters Added casino floor space Improved parking Began Installation of IGT ACRES player tracking and promotion software at TERRIBLE S Las Vegas 17
Overview of Casino Operations Midwest
TERRIBLE S Midwest Casino Overview 19
Midwest Casinos Three locals-focused casinos TERRIBLE S Lakeside Casino Resort in Osceola, Iowa 1045 slot machines and 19 table games TERRIBLE S St. Jo Frontier Casino in St. Joseph, Missouri 591 slot machines and 14 table games TERRIBLE S Mark Twain Casino in La Grange, Missouri 585 slot machines and 11 table games 20
TERRIBLE S Capital Projects Capital Expenditure Strategy-Midwest Year 1 100% TITO 85% replace ment of games at all properties 100% re-branding to TERRIBLE S Complete renovation of all casino floors Year 2 Continue improve ments on to land based facilities Renovate all common areas, restaurants, buffets and bars Completion expected by July 2006 Year 3 and beyond Opportunistically utilize excess land 21
TERRIBLE S Progress in the Midwest 22
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Financial Overview 30
Capitalization and Credit Statistics Cash Revolving Credit Facility Term B 8.125% Senior Sub. Notes due 2012 7.000% Senior Sub. Notes due 2014 Other Debt Total Debt LTM EBITDA LTM Interest Expense 3/31/06 $85.2 $70.0 99.0 159.1 170.0.2 $498.3 $128.1 37.4 31 (a) (b) Per Covenant calculation excludes cash in excess of $25 million Excludes all cash
Capitalization and Credit Statistics 3/31/06 Secured Debt / EBITDA (a) Net Debt / EBITDA (a) Total Debt / EBITDA (b) EBITDA / Interest.85X 3.42X 3.89X 3.4X 32 (a) (b) Per Covenant calculation includes cash in excess of $25 million Excludes all cash
Herbst Gaming Net Revenue and EBITDA ($ in millions) Herbst Herbst Historical Net Net Revenue $535,841 $555,193 $241,602 $259,453 $323,224 $338,126 2001 2002 2003 2004 2005 LTM 3/31/06 ($ in millions) $150 Herbst Herbst Historical EBITDA $120 $90 $60 $30 $0 $125 $128 $80 $35 $40 $56 2001 2002 2003 2004 2005 LTM 3/31/06 33
TERRIBLE S Takeaways
Key TERRIBLE S Takeaways Leading Southern Nevada locals route and casino operator Strong, growing company with stable cash flows 6 year track record in the public market Proven history and continued focus on operations, cash flow generation and de-leveraging Successful track record of integrating acquisitions Announced strategic acquisition of Sands Regent casinos Right-sized acquisition consistent with core competencies Long term EBITDA contributor Great management team Business (casino vs. route) and geographic diversification 35
Bank of America Gaming Conference Presentation June 2006