Pollard Banknote Announces 3rd Quarter Financial Results

Manish Arya / On 2017-11-09 05:32:30

Pollard Banknote Limited (TSX: PBL) ("Pollard") today released its financial results for the three and nine months ended September 30, 2017, continuing the strong net income and Adjusted EBITDA trends.

"Our third quarter results continue to reflect the investments we have made in our business over the last few years with significantly higher production volumes and increased levels of revenue, net income and Adjusted EBITDA in comparison to last year," commented Co-Chief Executive Officer John Pollard. "Our mix of work included high levels of specialty work comprising large amounts of our Scratch FX® product and our Playbooks®, both of which generate premium pricing due to the higher return generated for our lottery customers."

"Our third quarter results, while lower than the second quarter, are consistent with our expectations and continue our strong positive trends in all key financial metrics. As previously reported, a number of positive factors impacted our second quarter results including sales volumes boosted by the significant amount of product in transit at the end of the first quarter."

"A portion of our third quarter production was not recognized as revenue due to the timing of certain shipments and an increase in work in process relating to some of our more complex proprietary products. This incremental production value was not as significant as the value of the goods in transit at the end of the first quarter, however we do anticipate the revenue and margin associated with this work will be recognized in the fourth quarter."

"Our cash flow was high during the quarter mirroring the strong income level combined with low levels of capital expenditures. Consistent with the increase in the level of production in transit, a significant amount of our cash flow was invested in higher amounts of working capital, which we anticipate will reverse in the coming quarters. Our overall levels of debt increased during the quarter due to the purchase of INNOVA Gaming Group Inc., however our leverage ratio remains among the lowest levels we have enjoyed in many years, leaving considerable capital capacity for future investments."

"We believe Pollard has established itself as one of the thought leaders in the lottery industry," commented Doug Pollard, Co-Chief Executive Officer, "And this status allows us to expand our relationships with our lottery customers. In addition to growing our core instant ticket business, our ancillary products such as digital products including game apps, our PlayOn® loyalty program and other marketing support programs continue to expand and provide important tools to support lottery growth."

"During the quarter we completed the 100% acquisition of INNOVA Gaming Group Inc. including the Diamond Game operating business. The integration of Diamond Game and Pollard is proceeding well and we look forward to leveraging our lottery and charitable gaming relationships to help grow this business. The recent signing of a new long term contract with the Missouri Lottery is evidence of the success and growing demand for the Diamond Game product line. Over the short term we expect to see savings from the elimination of INNOVA's public company expenses and reduced corporate overhead, while long term we are confident the unique product offering of our LT-3 and new NextPlay gaming devices will provide an important revenue source for our lottery and charitable gaming customers."

"2017 has been a very good year for Pollard and we continue to be very excited about the future," concluded John Pollard. "Our market dynamics remain very positive with continued strong consumer demand. Our volume levels have increased significantly from 2016 and the expansion of our product offerings with the addition of Diamond Game has opened up new opportunities for our growth. The remainder of 2017 and 2018 should be a very exciting time for Pollard from both an organic growth perspective as well as greater opportunities to expand our business through additional acquisitions."

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