The Stars Group provides update for Investor Day

27 Mar 2019

(PRESS RELEASE) -- The Stars Group Inc. will host its 2019 Investor Day today in New York City beginning at 8 a.m. ET.

The day will include presentations by Executive Chairman Dave Gadhia, Chief Executive Officer Rafi Ashkenazi, Chief Financial Officer Brian Kyle, and other senior executives who will provide certain highlights and updates, including potential growth opportunities, medium-term financial and leverage targets, an update on Sky Betting & Gaming cost synergies and a first quarter 2019 performance update. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars.

"The Stars Group is now a diversified global market leader with what we believe to be leading product offerings and an expansive geographic reach. Building on this strong foundation, we are introducing medium-term growth targets as we continue to progress with our vision to be the world's favorite iGaming destination," said Mr. Ashkenazi.

"Looking ahead, we will strive to enhance our leadership positions within the high-growth markets in which we operate, as well as leverage the full suite of assets and capabilities across our businesses to provide what we believe to be the most exciting and engaging gaming experience to our customers. With powerful structural growth drivers in our industry, including a broad trend towards locally licensed online gaming, we believe that as one of the most licensed online gaming operators in the world, with proprietary technology that supports a highly scalable business model with limited capex, we are well-positioned to capitalize on this trend. We are focused on using our competitive advantages to continue to deliver strong organic growth and steady free cash flow generation to support our accelerated deleveraging plans while driving long-term shareholder value," concluded Mr. Ashkenazi.

Financial and leverage targets
In conjunction with its Investor Day, The Stars Group is announcing the following financial and leverage target ranges that it currently believes it has an opportunity to achieve over the three to five year period from its previously announced full year 2019 financial guidance ranges, as applicable:

Annual Constant Currency Revenue growth of 8% to 12%;
Adjusted EBITDA Margin range broadly in line with the implied Adjusted EBITDA Margin from The Stars Group's 2019 financial guidance, with fluctuations during the period based on potential investments in new and existing markets to support growth;
Annual Adjusted Diluted Net Earnings per Share growth of at least 10%; and
Leverage of 3.5x or lower.

Supporting assumptions are detailed below in "Financial and Leverage Target Assumptions."

Constant Currency Revenue, Adjusted Diluted Net Earnings per Share, Adjusted EBITDA Margin, and Leverage are non-IFRS measures. For important information on The Stars Group's non-IFRS measures, see below under "Non-IFRS Measures."

Sky Betting & Gaming cost synergies
The Stars Group has identified incremental recurring cost synergies beginning in 2020 from its acquisition of Sky Betting & Gaming and related operational efficiencies across the International and United Kingdom segments of approximately $30 million, for a currently expected total of approximately $100 million per year. The Stars Group continues to expect related implementation costs to remain at approximately $84 million, the majority of which will be incurred in 2019.

First quarter 2019 performance update
With respect to the first quarter of 2019, The Stars Group currently expects that consolidated revenue and Adjusted EBITDA will be in-line and consistent with its expectations and assumptions used in its previously announced 2019 full year financial guidance. In particular, it expects International segment revenues of approximately $345 to $355 million with strong underlying growth in most markets offset by certain market closures, challenging operating conditions in other markets, and unfavorable movements in foreign exchange rates. On a local currency basis, The Stars Group also expects strong operational trends in the United Kingdom segment, with mid-teens growth in Stakes, high double-digit growth in Gaming revenue and Adjusted EBITDA Margin slightly higher than the prior year period. The Stars Group expects that Betting Net Win Margin for the first quarter will be between 6% and 7%, which is at the lower end of its historical range, primarily due to the success of its Cheltenham Festival promotions, which contributed to over 20% growth in QAUs in that segment and which The Stars Group believes will support its anticipated double-digit United Kingdom revenue growth in the full year in local currency. The Australia segment had strong first quarter revenue growth of over 75% year-over-year in local currency.

The foregoing represent The Stars Group's current estimates as it relates to the anticipated performance of its three reporting segments for the first quarter of 2019, including, as it relates to the United Kingdom and Australia segments, as if it had completed the acquisitions of Sky Betting & Gaming and BetEasy on 1 January 2018. These estimated anticipated results are based solely on information available to The Stars Group as of the date of this news release, and are subject to change.

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	The Stars Group provides update for Investor Day 27 Mar 2019 (PRESS RELEASE) -- The Stars Group Inc. will host its 2019 Investor Day today in New York City beginning at 8 a.m. ET. The day will include presentations by Executive Chairman Dave Gadhia, Chief Executive Officer Rafi Ashkenazi, Chief Financial Officer Brian Kyle, and other senior executives who will provide certain highlights and updates, including potential growth opportunities, medium-term financial and leverage targets, an update on Sky Betting & Gaming cost synergies and a first quarter 2019 performance update. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars. "The Stars Group is now a diversified global market leader with what we believe to be leading product offerings and an expansive geographic reach. Building on this strong foundation, we are introducing medium-term growth targets as we continue to progress with our vision to be the world's favorite iGaming destination," said Mr. Ashkenazi. "Looking ahead, we will strive to enhance our leadership positions within the high-growth markets in which we operate, as well as leverage the full suite of assets and capabilities across our businesses to provide what we believe to be the most exciting and engaging gaming experience to our customers. With powerful structural growth drivers in our industry, including a broad trend towards locally licensed online gaming, we believe that as one of the most licensed online gaming operators in the world, with proprietary technology that supports a highly scalable business model with limited capex, we are well-positioned to capitalize on this trend. We are focused on using our competitive advantages to continue to deliver strong organic growth and steady free cash flow generation to support our accelerated deleveraging plans while driving long-term shareholder value," concluded Mr. Ashkenazi. Financial and leverage targets In conjunction with its Investor Day, The Stars Group is announcing the following financial and leverage target ranges that it currently believes it has an opportunity to achieve over the three to five year period from its previously announced full year 2019 financial guidance ranges, as applicable: Annual Constant Currency Revenue growth of 8% to 12%; Adjusted EBITDA Margin range broadly in line with the implied Adjusted EBITDA Margin from The Stars Group's 2019 financial guidance, with fluctuations during the period based on potential investments in new and existing markets to support growth; Annual Adjusted Diluted Net Earnings per Share growth of at least 10%; and Leverage of 3.5x or lower. Supporting assumptions are detailed below in "Financial and Leverage Target Assumptions." Constant Currency Revenue, Adjusted Diluted Net Earnings per Share, Adjusted EBITDA Margin, and Leverage are non-IFRS measures. For important information on The Stars Group's non-IFRS measures, see below under "Non-IFRS Measures." Sky Betting & Gaming cost synergies The Stars Group has identified incremental recurring cost synergies beginning in 2020 from its acquisition of Sky Betting & Gaming and related operational efficiencies across the International and United Kingdom segments of approximately $30 million, for a currently expected total of approximately $100 million per year. The Stars Group continues to expect related implementation costs to remain at approximately $84 million, the majority of which will be incurred in 2019. First quarter 2019 performance update With respect to the first quarter of 2019, The Stars Group currently expects that consolidated revenue and Adjusted EBITDA will be in-line and consistent with its expectations and assumptions used in its previously announced 2019 full year financial guidance. In particular, it expects International segment revenues of approximately $345 to $355 million with strong underlying growth in most markets offset by certain market closures, challenging operating conditions in other markets, and unfavorable movements in foreign exchange rates. On a local currency basis, The Stars Group also expects strong operational trends in the United Kingdom segment, with mid-teens growth in Stakes, high double-digit growth in Gaming revenue and Adjusted EBITDA Margin slightly higher than the prior year period. The Stars Group expects that Betting Net Win Margin for the first quarter will be between 6% and 7%, which is at the lower end of its historical range, primarily due to the success of its Cheltenham Festival promotions, which contributed to over 20% growth in QAUs in that segment and which The Stars Group believes will support its anticipated double-digit United Kingdom revenue growth in the full year in local currency. The Australia segment had strong first quarter revenue growth of over 75% year-over-year in local currency. The foregoing represent The Stars Group's current estimates as it relates to the anticipated performance of its three reporting segments for the first quarter of 2019, including, as it relates to the United Kingdom and Australia segments, as if it had completed the acquisitions of Sky Betting & Gaming and BetEasy on 1 January 2018. These estimated anticipated results are based solely on information available to The Stars Group as of the date of this news release, and are subject to change.