Pollard Banknote cites ‘unusual transactions’ as operational income slashes in Q3

Pollard Banknote has published its financial report for Q3 of FY2021, revealing a drop in key performance metrics as the company noted ‘ongoing investments’.
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Pollard Banknote has published its financial report for Q3 of FY2021, revealing a drop in key performance metrics as the company noted ‘ongoing investments’.

The lottery provider reported $116.9m in sales for the period ending September 30, similar to the $116.7m achieved this time last year. However, including combined sales from the company’s NeoPollard Interactive joint venture totalled $126.7m, sales are up 5.8% year-on-year.

The firm’s income from operations was slashed from $16.7m in Q3 2020 down to $4.4m in Q3 2021. Citing ‘unusual transactions’, Pollard included a $4.9m expense in the figure relating to the earnout for the acquisition of Compliant Gaming, due to the ‘continued success of that operation’.

Furthermore, Pollard noted that in Q3 2020, it sold a ‘very large licensed product sale which was not replicated in 2021’.

Adjusted EBITDA was also down year-on-year, decreasing to $19.4m from $24.5m last year. 

“Pollard Banknote’s third-quarter results reflect the ongoing investment and growth in a number of our business lines and, despite some non-routine negative impacts on our financial numbers, we continue to be satisfied with the progress all of our businesses have achieved,” stated John Pollard, Co-Chief Executive Officer.  

“The lottery market for instant tickets continues to see strong levels of retail sales especially in the United States and shows no signs of returning to the lower levels seen prior to COVID-19.”

Pollard continued to explain some of the factors which hampered the company’s operations throughout Q3, including issues in supply chains that “resulted in scheduling inefficiencies and some production delays. Similar to the timing of supply inputs, transportation of our finished goods to lotteries has also been hit with both delays, and increased costs, due to the worldwide transportation backlogs, which is delaying some revenue recognition.”

Despite outwardly looking negative results, charitable gaming sustained high levels of demand throughout Q3, with Pollard stating that consumer demand ‘exceeded pre-COVID-19 levels for the second quarter in a row’.

Furthermore, ilottery combined sales increased to $15.7m from $12.6m in Q3 2020, though, due to sales shifting to lower margin games, the combined ilottery margin decreased by 25.8% to $4.6m.

Looking towards the future, the company’s largest market for its Diamond Game egaming machines, Ontario, re-opened during Q3, allowing the machines to generate revenues for the first time in 2021. 

“We are very excited to see all of our products and services generating significant engagement with lotteries and the retail consumers around the world,” added Doug Pollard, Co-Chief Executive Officer.  

“Our focused strategy of being the partner of choice for the lottery and charitable gaming industry allows us to provide solutions across the spectrum of needs and opportunities for these important organisations.”