Pollard Banknote’s leadership has praised the work done in Q3 to navigate a period of global financial uncertainty as it posted a quarterly record for revenues.
Publishing its financial report for the third quarter of 2022, Pollard Banknote recorded total revenues of $125.5m, up 7.4% year-over-year.
The record revenue figure was largely attributed to three key factors: a higher instant ticket average selling price increased sales by $2.7m as compared to 2021, due to increased proprietary product sales; a higher average selling price of charitable games; and increased sales of digital and loyalty products.
Further, the company’s sales including the share of NeoPollard Interactive capital was $139.2m, up 9.9% YoY.
Pollard Banknote instant ticket production returns to efficiency
A key improvement made to the business during Q3 was the volume of instant ticket production, which suffered from global supply chain issues earlier in the year. Quarterly volume production has now reached an all-time record, which has created a greater argument to support ticket sales across its lottery partners.
“Our third quarter results generated improved numbers compared to the third quarter of 2021 and the previous quarters of 2022, due to strong demand across all of our main product categories,” stated John Pollard, Co-Chief Executive Officer.
“Charitable gaming, both printed products and eGaming systems, continues to generate higher revenue and earnings, addressing the significant consumer demand for our product offerings.
“Our instant ticket business attained a quarterly production volume record. This was a nice return to more efficient production following some challenges in the second quarter, which negatively impacted production. Fewer mechanical issues and, while still a challenge, our ability to staff and maintain full operations throughout our production facilities improved in the third quarter.”
Mega Millions boosts lottery earnings
Meanwhile, ilottery operations benefitted from the large Mega Millions jackpot during the quarter, which provided $8.2m in organic gains for the quarter.
Pollard added: “Our ilottery operations grew both revenue and earnings, driven in part by ongoing organic growth experienced over the past few quarters, plus the impact of a large US draw-based jackpot in July, which drove higher sales and increased the number of new customers on our US platforms.
“Our iLottery operations generated earnings of $8.2m in the third quarter, which was a new quarterly record. While the jackpot spike certainly helped this terrific achievement, the ongoing sales strength retained after the large jackpot was won is testament to the growth we are seeing in this business segment.”
Despite the cost of sales increasing during Q3, Pollard Banknote did witness an uptick in adjusted EBITDA for Q3, which stood at $20.2m, up from $19.4m during the same period last year.
Inflationary pressures did put a strain on Pollard Banknote’s margins during Q3, too, with gross profit down to $20.6m from $22.7m in Q321, attributed to increasing costs across key inputs such as paper, ink and freight.
Moreover, the firm lost $4.7m on the net foreign exchange, with the Canadian dollar weakening significantly on the US dollar.
Despite these challenges, Pollard Banknote’s income from operations increased by 52.3% YoY, up to $6.7m compared to $4.4m in Q321.
Moving forward, Pollard Banknote will continue its strategy of increasing the selling price on its contract extensions to help mitigate inflationary pressures, passing those headwinds onwards. This is a strategy to help its margins return to healthier levels.
“The fundamentals of all of our business lines remain very strong,” concluded John Pollard, “and we are confident that our higher pricing strategy for instant tickets will, over time, allow us to increase our margins back to historic levels.
“We believe our charitable gaming operations will continue their market leadership and generate excellent results, and the large investments we are making in the digital areas are laying the foundation for further growth, in partnership with our lottery and charitable gaming customers.”