POLLARD BANKNOTE REPORTS 2ND QUARTER FINANCIAL RESULTS

Executive Summary

• Pollard Banknote reported Q2 2025 revenue of $142.7 M (up 3.6% YoY) but adjusted EBITDA fell 9.5% to $29.2 M and net income declined 33% to $8.0 M.
• The company completed the acquisition of Pacific Gaming on April 1 2025 for a purchase price of US$10.0 M (CAD 14.4 M).
• Management highlighted record iLottery joint‑venture profit ($19.5 M) and strong growth in eInstant deployments, while noting lower instant‑ticket volumes and margin pressure from timing shifts.

Key Details

• Revenue & Sales – Total sales $142.7 M (↑3.6% YoY); combined sales including 50% share of NeoPollard Interactive LLC (“NPi”) $174.8 M (↑5.3%).
• Profitability – Adjusted EBITDA $29.2 M vs. $32.3 M prior year; income from operations $17.4 M vs. $19.9 M YoY; net income $8.0 M vs. $11.9 M YoY.
• Margins – Gross margin 16.7% (down from 21.2%); gross profit $23.9 M vs. $29.2 M YoY.
• iLottery Joint Venture – Record quarterly contribution $19.5 M (up 20.4% YoY).
• Acquisitions – Pacific Gaming acquisition completed April 1 2025; purchase price US$10.0 M (CAD 14.4 M), funded from credit facility and cash on hand. Prior Venne acquisition (July 31 2024) noted for context.
• Operating Highlights –
• Instant‑ticket average selling price ↑≈8% YoY; volumes ↓ due to order timing.
• Charitable gaming sales up $6.8 M YoY, driven by Venne & Pacific acquisitions.
• Kansas iLottery first full quarter – operating losses absorbed as market ramps.
• New eInstant contracts with Norsk Tipping (Norway), West Virginia Lottery and Virginia Lottery; partnership with third‑party game designer for Catalyst™ platform.
• Cost Structure – Cost of sales $118.8 M (+$10.2 M YoY) reflecting higher iLottery start‑up costs, charitable gaming volume increase, and FX effects. Administration expenses $17.6 M (+$1.1 M); selling expenses $6.5 M (+$0.8 M).
• Foreign Exchange – Net foreign exchange loss $3.5 M (vs. $2.8 M prior year), driven by unrealized losses on USD‑denominated receivables.
• Cash Flow & Outlook – Positive cash flow in Q2 after reduction in non‑cash working capital; expects stronger Q3 ticket volumes and higher ASPs, continued investment in Catalyst™ iLottery platform and eInstants/eTabs.

Notable Quotes

“Our second quarter results build on the strong operational and financial performance experienced in the past few quarters,” – John Pollard, Co‑Chief Executive Officer.
“We are very excited about the opportunities in all areas of our business including instant tickets, eInstants, iLottery and charitable gaming,” – John Pollard, Co‑CEO.

Materiality Assessment: Material – Neutral (quarterly earnings release materially impacts investors’ assessment of financial performance and outlook).