Pollard Banknote (PBL) Q1 2026 earnings summary

Executive summary

• Q1 2026 was challenging due to temporary issues in the instant ticket segment, mainly from timing of customer orders, production inefficiencies, and a less favorable product mix, but no systemic business changes occurred.

• Digital contracts, especially in Kansas and Belgium, performed well, and charitable gaming exceeded expectations, driven by Minnesota eTab sales and new content.

• The onboarding of the California contract is progressing positively, contributing to future order volumes.

• Board authorized a Normal Course Issuer Bid to repurchase up to 10% of public float, pending TSX approval.

• Income from operations fell 58.5% to $7.6 million compared to Q1 2025.

Financial highlights

• GAAP revenue for Q1 2026 was CAD 141.7 million, down from CAD 146.2 million in Q1 2025, mainly due to a CAD 11.7 million drop in instant ticket ASP, partially offset by higher volumes and digital sales.

• Gross profit was CAD 16.6 million (11.7% margin), down from CAD 25.4 million (17.4%) year-over-year, primarily due to lower instant ticket margins and production inefficiencies.

• Adjusted EBITDA decreased to CAD 21.5 million from CAD 30.6 million, reflecting lower gross profit and higher admin expenses.

• Net income dropped to CAD 3.5 million (CAD 0.11 per share) from CAD 11.7 million (CAD 0.43 per share) in Q1 2025.

• Administration expenses rose to CAD 19.2 million, mainly due to ERP implementation and Pacific acquisition.

Outlook and guidance

• Confirmed order volumes for Q2 and Q3 2026, including California, are higher than Q1 and comparable quarters last year.

• Consolidated adjusted EBITDA for Q2 2026 is expected to exceed Q2 2025.

• Revenue recognition from the Belgium omni-channel contract will ramp up through 2026.

• Charitable gaming and eTab demand is expected to remain strong throughout 2026, especially in Minnesota.

• Overall outlook for the remainder of 2026 is positive, with a return to traditional customer mix and higher-value sales.