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Pollard Banknote Announces 2nd Quarter Results

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Pollard Banknote Announces 2nd Quarter Results

Canada NewsWire

WINNIPEG, Aug. 8, 2018 /CNW/ - Pollard Banknote Limited (TSX:PBL) ("Pollard") today released its financial results for the three and six months ended June 30, 2018, achieving strong levels of revenue, net income and Adjusted EBITDA.

Pollard Banknote Limited (CNW Group/Pollard Banknote Limited)

"Our second quarter results reflected the success we are achieving in pursuing our strategic plan," stated John Pollard, Co-Chief Executive Officer, "as both our core instant lottery ticket business and recent acquisitions are performing very well.  Our instant ticket production volumes remained very strong, surpassing the high levels achieved in the second quarter of 2017 and driving revenue levels to almost $87 million for the three months ended June 30, 2018.  We achieved a solid gross margin percentage consistent with what was attained in the first quarter of the year and continued to generate significant levels of operating cash flow."

"As noted last year and in previous communications, the stand alone second quarter results of 2017 were positively impacted by a significant amount of product in transit to international customers at the end of the first quarter.  This had the effect of considerably boosting the revenue and earnings of the second quarter while negatively impacting the first quarter.  A more appropriate benchmark for 2018 is to look at the first six months of 2017 compared to the first six months of 2018 to normalize for the quarterly impact of that unusual in transit activity."

"Revenue for the first half of 2018 is up over 23% reflecting the impact of our two acquisitions as well as approximately 5% growth in our underlying instant ticket volumes.  Our gross margin percentage during the first half of 2018 reached 23.9%, up over 170 basis points from the prior year because of improved efficiencies and the impact of our acquired companies.  Adjusted EBITDA has increased from $19.4 million to $27.1 million in the same six month period of 2018, a noteworthy achievement combining organic growth of our existing instant ticket business with the additional incremental earnings generated from Diamond Game and International Gamco."

"The integrations of both Diamond Game and International Gamco are proceeding smoothly and we remain very excited about the long-term prospects of expanding our charitable electronic gaming machine product line and building upon our new leadership position in the charitable gaming market.  We continue to look at further expanding our organization through the use of selective, accretive acquisitions as a key part of our strategic plan. During the second quarter we renewed our bank facility for a 3-year term, including increasing the amount of capital available to fund our future business needs and providing additional flexibility to grow through acquisitions. We also repaid the remaining principal of the subordinated debt during the quarter."

"In addition to growing instant ticket volumes, we continue to invest in additional products to support our lottery partners as they expand and grow their businesses," commented Doug Pollard, Co-Chief Executive Officer.  "Particularly in areas of digital engagement, we remain focused on developing tools and expertise to help guide lotteries along a successful digital road map, through the use of effective loyalty programs, appealing digital game apps and, of course, fully developed iLottery solutions. We are excited to be launching our third state jurisdiction iLottery offering later this fall in New Hampshire and are responding to increased lottery interest across the broad spectrum of internet based gaming." 

"We are very pleased with our operational and financial results for the first half of 2018," summarized John Pollard, "and we expect these trends will continue going forward for the remainder of 2018 and beyond.  We believe the foundation we are building through organic growth and strategic acquisitions will support our vision to be the partner of choice for the lottery and charitable gaming markets."

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 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.

The selected financial and operating information has been derived from, and should be read in conjunction with, the condensed consolidated unaudited interim financial statements of Pollard as at and for the three and six months ended June 30, 2018.  These financial statements have been prepared in accordance with the International Financial Accounting Standards ("IFRS" or "GAAP").

On February 1, 2018, Pollard acquired International Gamco, Inc. ("Gamco").  Therefore, Gamco's financial results have been included in Pollard's consolidated financial statements since acquisition. Also included in the consolidated financial statements are the results from INNOVA Gaming Group Inc. ("INNOVA", "Diamond Game"), which Pollard acquired on August 3, 2017. 

HIGHLIGHTS

Three months ended

June 30, 2018

Three months ended

June 30, 2017




Sales

$

86.8 million

$

77.9 million

Gross Profit

$

20.5 million

$

18.6 million

Gross Profit % of sales


23.6%


23.9%




Administration expenses

$

7.4 million

$

 6.6 million

Selling expenses

$

3.4 million

$

 2.1 million




Net Income

$

5.0 million

$

 6.0 million




Adjusted EBITDA:







Pollard Banknote Limited

$

11.2 million

$

13.1 million


Diamond Game


2.9 million


-




Adjusted EBITDA

$

 14.1 million

$

13.1 million





Six months ended

June 30, 2018

Six months ended

June 30, 2017




Sales

$

167.2 million

$

135.3 million

Gross Profit

$

39.9 million

$

30.0 million

Gross Profit % of sales


23.9 %


22.2%




Administration expenses

$

15.4 million

$

12.0 million

Selling expenses

$

6.2 million

$

4.1 million




Net Income

$

9.6 million

$

7.8 million




Adjusted EBITDA:


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