POLLARD BANKNOTE REPORTS 3RD QUARTER FINANCIAL RESULTS

Executive Summary

• Pollard Banknote reported Q3 2025 revenue of $156.3 M (up 2 % YoY) and a record combined sales figure of $187.3 M, reflecting new long‑term contracts with the California Lottery (12‑year primary instant ticket supply) and Belgium Lottery (12‑year Catalyst™ platform).
• Adjusted EBITDA fell slightly to $32.0 M versus $33.3 M YoY, while net income declined to $10.3 M from $18.2 M due to higher start‑up costs in the Kansas iLottery operation and ERP implementation expenses.
• The company highlighted strategic wins: a 12‑year California Lottery contract valued at ~US$375 M (including extensions) and a 12‑year Belgium Lottery Catalyst™ contract valued at ~US$289 M, both expected to drive volume growth from 2026 onward.

Key Details

• Financial Highlights – Q3 2025
• Revenue: $156.3 M (+2 % YoY)
• Combined sales (including 50 % NPi share): $187.3 M (+3.8 % YoY)
• Adjusted EBITDA: $32.0 M (‑4 % YoY)
• Gross margin: 18 % (down from 20.5 % YoY)
• Net income: $10.3 M (‑43 % YoY)

• EPS – basic/diluted: $0.38 / $0.37 (down from $0.67 / $0.66)

• Nine‑Month Highlights

• Sales (9 mo): $445.3 M vs. $416.8 M YoY (+7 %)

• Adjusted EBITDA (9 mo): $91.8 M vs. $89.3 M YoY (+2.8 %)

• Contract Wins

• California Lottery: Primary instant ticket supply, 12‑year term with up to six one‑year extensions; expected start Dec 1 2025; estimated contract value ≈ US$375 M.
• Belgium Lottery (Loterie Nationale): Catalyst™ omni‑channel platform, 12‑year term; estimated contract value ≈ US$289 M.

• North Carolina Lottery (NPi JV): Two‑year extension to June 2028, with an additional one‑year option.

• Operational Updates

• Instant ticket production volumes up 18 % sequentially; overall volumes similar YoY.
• Kansas iLottery start‑up costs and ERP implementation added $2.2 M to administration expenses.
• New ERP system implementation began for lottery and corporate operations.

• Charitable gaming volume increase driven by recent acquisitions of Venne (bingo daubers) and Pacific Gaming (bingo electronics).

• Acquisitions (historical context)

• July 2024: Acquired Clarence J. Venne, LLC for US$12.6 M (US$17.4 M CAD).
  – April 2025: Acquired Pacific Gaming, LLC & LIF Capital Group for US$10.0 M (US$14.4 M CAD).

• Cash Flow

• Generated significant positive operating cash flow; reduced non‑cash working capital; used excess cash to fund capex and pay down long‑term debt.

• Outlook

• Anticipates higher instant ticket volumes in Q1 2026 from California contract.
• Expect modest decline in Q4 2025 instant ticket volume (seasonality).
• Continued investment in ICON kiosks, eTab content, and manufacturing efficiencies.
• Ongoing discussions with jurisdictions for additional iLottery opportunities; long sales cycles noted.

Notable Quotes

“We are pleased with our financial results and significant milestone business achievements during this past quarter,” – John Pollard, Co‑Chief Executive Officer.

“The award to Pollard of the contract for primary instant ticket supply by the California Lottery… lays the base for higher ticket volumes in 2026.” – John Pollard, Co‑CEO.

“Our Kansas iLottery operation continues to meet expectations… initiatives are underway now and over the next few quarters to expand gross gaming revenue which will allow us to move to profitability as the operation matures.” – Doug Pollard, Co‑CEO.