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Pollard Banknote Announces 1st Quarter Financial Results

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Pollard Banknote Announces 1st Quarter Financial Results

Canada NewsWire

WINNIPEG, May 9, 2018 /CNW/ - Pollard Banknote Limited (TSX:PBL) ("Pollard") today released its financial results for the three months ended March 31, 2018, generating record quarterly revenue and strong net income trends.

Pollard Banknote Limited (CNW Group/Pollard Banknote Limited)

"Our first quarter results reflect continued strength in our core lottery products," stated John Pollard, Co-Chief Executive Officer, "as well as the positive impact of our recent acquisitions.  All of our key metrics such as revenue, net income and adjusted EBITDA were significantly higher than the comparative period from 2017 and build on the positive results of the last few quarters."

"Consolidated revenue exceeded $80 million, which is a record quarterly revenue level. We also achieved a high level of income before income taxes and our adjusted EBITDA of $13 million is a great result to start the year."

"Our first quarter instant ticket production volumes reached record levels, reflecting continued higher orders from our existing lottery customers.  The success of our proprietary products remains a key factor propelling our growth."

"On February 1, 2018, we completed the acquisition of International Gamco, Inc., one of the leading pull-tab ticket manufacturing companies in the charitable gaming industry.  While still early, the integration with our existing charitable gaming business American Games is proceeding very well and we are looking forward to capitalizing on our new strong position as an industry leader."

"We were also very pleased with the success of our $35.4 million equity raise, which closed on February 21, 2018.  In addition to providing capital to help fund our internal and external growth, it provides additional liquidity in the equity market by increasing our float."

"The nature of our instant ticket business impacts the variability of our financial results on a quarter to quarter basis. The comparative first quarter of 2017 was negatively impacted by a large amount of instant ticket shipments in transit which significantly reduced earnings that quarter.  A much better comparison is to average the earnings for the first two quarters of 2017.  Even after doing so, however, our first quarter 2018 net income and adjusted EBITDA were still higher by 16% and 34% respectively over this normalized 2017 comparative."  

"Our Diamond Game acquisition from late 2017 continues to meet our high expectations", stated Doug Pollard, Co-Chief Executive Officer.  "Both the lottery and charitable gaming markets have been very receptive to Pollard and Diamond Game joining forces and we also see some interesting future synergies with the Oasis electronic gaming product line of International Gamco.  The lottery market is in a very exciting time as products and distribution channels continue to develop and evolve.  The core instant ticket market remains a critical driver of overall lottery results and Pollard will continue to benefit from this environment.  Our digital initiatives have been accepted throughout the industry as leading edge and are great examples of our commitment to innovation."

"We continue to follow our strategic focus as the partner of choice for the lottery and charitable gaming industry," summarized John Pollard, "and the results of this quarter confirm both our strategy and execution are being very well received amongst key players in the market."

HIGHLIGHTS

           

Three months ended

March 31, 2018

Three months ended

March 31, 2017




Sales

$

 80.3 million

$

 57.4 million

Gross profit

$

 19.4 million

$

  11.4 million

Gross profit % of sales


24.2%


19.9 %




Administration expenses

$

 8.0 million

$

 5.3 million

Selling expenses

$

2.8 million

$

 2.0 million




Net income

$

4.5 million

$

  1.8 million

Adjusted EBITDA:







Pollard Banknote Limited    

$

10.6 million

$

 6.3 million


Diamond Game

$

2.4 million

$




Total adjusted EBITDA

$

13.0 million

$

 6.3 million

 

POLLARD BANKNOTE LIMITED

Pollard is one of the leading providers of products and services to lottery and charitable gaming industries throughout the world.  Management believes Pollard is the largest provider of instant-win scratch tickets ("instant tickets") based in Canada and the second largest producer of instant tickets in the world.  With the acquisition of International Gamco, Inc. ("Gamco"), on February 1, 2018, management believes Pollard has also become the second largest bingo paper and pull-tab supplier to the charitable gaming industry in North America.

Use of Non-GAAP Financial Measures

Reference to "Adjusted EBITDA" is to earnings before interest, income taxes, depreciation and amortization, unrealized foreign exchange gains and losses, mark-to-market gains and losses on foreign currency contracts, and certain non-recurring items including severance costs and acquisition costs.  Adjusted EBITDA is an important metric used by many investors to compare issuers on the basis of the ability to generate cash from operations and management believes that, in addition to net income, Adjusted EBITDA is a useful supplementary measure.

Adjusted EBITDA is a measure not recognized under GAAP and does not have a standardized meaning prescribed by GAAP.  Therefore, this measure may not be comparable to similar measures presented by other entities.  Investors are cautioned that Adjusted EBITDA should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of Pollard's performance or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows.

SELECTED FINANCIAL INFORMATION






(millions of dollars)


Three months ended

Three months ended




March 31, 2018

March 31, 2017




(unaudited)

(unaudited)

Sales


$80.3

$57.4

Cost of sales


60.9

46.0

Gross profit


19.4

11.4






Administration expenses


8.0

5.3


Selling expenses


2.8

2.0


Other expenses


-

0.3

Income from operations


8.6

3.

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