Pollard Banknote (PBL) Q4 2024 earnings summary

Executive summary

• Achieved record sales of CAD 557.1 million (up 7.1% year-over-year) and combined sales (including iLottery JV) of CAD 665.9 million (up 10.9%), driven by repricing, ancillary lottery products, and charitable gaming growth.

• Adjusted EBITDA reached a record $114.5 million, up 25.4% year-over-year, with income from operations up 51.7% to $69.8 million.

• Net income rose 12.1% to $35.2 million for 2024; strong operating cash flow of $73.9 million enabled investments and acquisitions while maintaining conservative debt.

• Significant milestones included the Kansas iLottery contract launch, two acquisitions in charitable gaming, and the launch of the Catalyst™ iLottery platform.

• Joint venture iLottery operations contributed $59.3 million in income before taxes, up 20.8% from 2023.

Financial highlights

• Q4 2024 sales were $140.3 million, up from $135.5 million in Q4 2023; combined sales (with JV) hit $180.6 million, up 15% year-over-year.

• Gross profit for 2024 was $104.7 million (18.8% of sales), up from $86.6 million (16.6%) in 2023.

• Q4 gross profit was $22.4 million (16.0% margin), down from $24.8 million (18.3%) in Q4 2023, due to lower instant ticket volumes and production inefficiencies.

• Adjusted EBITDA for Q4 was $25.2 million, nearly flat year-over-year; annual Adjusted EBITDA was $114.5 million, up from $91.3 million.

• Q4 net loss was $1.8 million (EPS: -$0.07 basic, -$0.06 diluted), compared to net income of $11.3 million (EPS: $0.42 basic, $0.41 diluted) in Q4 2023, mainly due to higher FX loss and one-time tax expense.

Outlook and guidance

• 2025 expected to see full impact of repriced instant ticket contracts, supporting higher gross margins.

• Instant ticket sales volumes in 2025 anticipated to be similar to 2024, with strong demand in charitable gaming and digital solutions.

• Kansas iLottery contract expected to reach profitability by end of 2025 as ramp-up costs subside and revenue grows.

• Continued investment in CapEx and intangibles, with over CAD 54 million invested in 2024 and similar levels planned for 2025.

• Ongoing investments in technology, eTab machines, and game content development planned for 2025.