Pollard Banknote Limited · TSX:PBL
Pollard Banknote — Shareholder Meeting (May 2022)
46 slides from Pollard Banknote's shareholder meeting presentation, May 12, 2022
Slide 1: 2022 Annual General Meeting
POLLARD banknote |imited 2022 ANNUAL GENERAL MEETING
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain statements in this presentation may constitute “forward-looking” statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, perfor
Slide 3: Today's Agenda
Today’s Agenda 1. Financial Highlights 2. 2021 Highlights by Division 3. Acquisition Update 4. 2021 Annual Results 5. 2022 First Quarter Results
Slide 4: Financial Highlights
Financial Highlights ($ Millions) 2021 2020 2019 2018 2017 2016 COMBINED SALES(1) $499.2 $426.9 $400.3 $332.6 $286.0 $246.4 SALES $459.0 $414.1 $397.8 $331.9 $285.7 $246.4 ADJUSTED EBITDA(1) $84.0 $80.6 $60.2 $48.8 $44.0 $29.7 NET DEBT $111.6 $129.2 $119.8 $104.6 $79.0 $63.4 Adjusted EBITDA prior to
Slide 5: Financial Highlights
Financial Highlights • Strong retail sales of instant tickets throughout 2021. • Retail sales growth translated into growing orders for instant ticket from our lottery customers. • After pandemic spike, iLottery revenue resumed strong organic growth. • Success with many new contract renewals and awa
Slide 6: Partner of Choice
Partner of Choice Outstanding Games. Retail Excellence. Digital Innovation.
Slide 7: 2021 Highlights by Division
2021 HIGHLIGHTS BY DIVISION POLLARD banknote limited
Slide 8: Retail Lottery
RETAIL LOTTERY POLLARD banknote limited
Slide 9: 10 Year Instant Ticket Sales Growth
10 Year Instant Ticket Sales Growth $120,000 22% $110,254 $110,000 5.4% 2 YR CAGR Growth $100,000 10 YR $90,000 Instant Sales ($ US Millions) $80,000 Worldwide 6.8% $69,666 $70,000 $65,018 CAGR $60,000 10 YR North America $50,000 $40,000 $36,066 $30,000 $20,000 CY2011 CY2012 CY2013 CY2014 CY2015 CY2
Slide 10: Pollard Instant Ticket Sales
Pollard Instant Ticket Sales $300 $268 $270 $255 $250 $227 $223 $200 $200 $187 7.6% $162 CAGR Millions $155 $150 $140 $100 $50 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Note: 2021 Stronger CDN $ reduced instant ticket sales approximately $11MM from 2020
Slide 11: State of the Industry: Lottery
State of the Industry: Lottery • Significant growing demand for lottery products, particularly instant tickets. • Limited existing industry capacity for instant ticket manufacturing. • High barriers to entry for potential new suppliers. • Lotteries are looking to their supply chain for ways to grow
Slide 12: Schafer Retail Solutions
¢S Schafer &P RETAIL SOLUTIONS + POLLARD banknote limited
Slide 13: Retail Lottery
Retail Lottery • In 2021, retail instant ticket sales continued their strong growth, up 22% in the last two years. • Preliminary retail sales data in Q1 2022 show sales growth levelling off, but still maintain the higher level of dollar sales experienced in 2021. • Lottery order levels have remained
Slide 14: iLottery
ILOTTERY POLLARD banknote limited
Slide 15: iLottery Portfolio
iLottery Portfolio Michigan(1) New Hampshire North Carolina Virginia(2) Alberta(3) (1) Michigan contract extended to 2026 (2) Virginia e-instants live July 1 2020 (3) Alberta live September 20 2020
Slide 16: iLottery NGR for NeoPollard Clients
iLottery NGR for NeoPollard Clients(1) ($ US M) $200 $180 $160 iLottery Net Gaming Revenue $140 $120 $100 $80 $60 $40 $20 $0 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 (1) Net Gaming Revenue
Slide 17: 2021 iLottery Operations
2021 iLottery Operations 2021 2020 2019 Revenue - Pollard Share Michigan iLottery $26.7 $33.5 $16.4 NeoPollard JV $40.1 $12.6 $2.5 Combined Revenue(1) $66.8 $46.1 $18.9 Income before Profit Share & Income Taxes – Pollard Share Michigan iLottery $10.6 $18.5 $7.4 NeoPollard JV $12.3 $1.6 ($4.0) Combin
Slide 18: 2022 iLottery Operations
2022 iLottery Operations Q1 Q4 Q3 Q2 Q1 2022 2021 2021 2021 2021 Revenue - Pollard Share Michigan iLottery $5.9 $5.6 $5.9 $6.8 $8.4 NeoPollard JV $11.3 $10.5 $9.8 $9.9 $9.9 Combined Revenue(1) $17.2 $16.1 $15.7 $16.7 $18.3 Income before Profit Share & Income Taxes – Pollard Share Michigan iLottery $
Slide 19: FY21 Per Capita iLottery Net Gaming Revenue
FY21 Per Capita iLottery Net Gaming Revenue $30.00 $26.39 $25.00 $20.69 $20.00 $15.00 $13.11 $10.00 $7.20 $6.62 $4.60 $5.00 $1.74 COMPETITOR COMPETITOR COMPETITOR COMPETITOR $- MI Michigan NH New Hampshire VA Virginia GA Georgia PA Pennsylvania KY Kentucky DC
Slide 20: Next Generation Lotteries (NGL) Update
Next Generation Lotteries (NGL) Update • Games and platforms operating in European jurisdictions. • Further platform development underway. • Continuing investment in additional game studio resources.
Slide 21: mkodo Update
mkodo Update • mkodo has grown its customer base during 2021 and increased the number of ongoing support contracts with certain large lotteries, generating ongoing recurring revenue. • As iGaming in general, including iLottery, continues to grow, mkodo has opportunities to grow revenue for its uniqu
Slide 22: Charitable Gaming
CHARITABLE GAMING POLLARD banknote limited
Slide 23: Charitable Gaming
Charitable Gaming as ir ’ <> DiamondGame Compliant Gaming AMERICAN : GAMES International Gamco
Slide 24: Charitable Gaming Update
Charitable Gaming Update • The charitable gaming market has come out of the pandemic with unprecedented demand, far higher than pre-pandemic levels. • Both printed products (pull-tabs and bingo paper) and eGaming systems (tablet and kiosk based) have seen significant growth in 2021 and to date in 20
Slide 25: Charitable Gaming & eGaming Systems Sales Trend 2017-2021
Pollard Charitable Gaming & eGaming Systems ($US) Sales Trend 2017-2021 $85,000,000 $80,000,000 $75,000,000 $70,000,000 $65,000,000 $60,000,000 $55,000,000 $50,000,000 $45,000,000 $40,000,000 2017 2018 2019 2020 (Covid) 2021 Note: Sales include historical results of acquisitions back to 2017
Slide 26: Acquisition Update
ACQUISITION UPDATE POLLARD banknote limited
Slide 27: Acquisition Strategy
Acquisition Strategy • Over the last five years we have completed nine acquisitions, providing significant additional product and solutions as well as expanded complimentary offerings to our lottery and charitable gaming customers. • Internal focus on integrating our recent acquisitions remains an i
Slide 28: Capital Strategy
Capital Strategy • Our capital strategy remains to ensure sufficient capital is available to support our internal and external growth initiatives. • Operations generates significant free cash flow to support our capital expenditure investments, acquisitions and maintaining a regular dividend. • A ne
Slide 29: 2021 Annual Results
2021 ANNUAL RESULTS POLLARD banknote limited
Slide 30: 2021 Highlights
2021 Highlights ($M) 2021 2020 2019 Combined Sales(1) $499.2 $426.9 $400.3 Sales $459.0 $414.3 $397.8 Gross Margin $91.1 $91.0 $91.1 SG + A $64.7 $54.9 $56.5 NPi JV Income (Loss) $12.3 $1.6 ($3.9) Other Income (Expense) ($5.2) $12.4 $2.0 Adjusted EBITDA(1) $84.0 $80.6 $60.2 Net Income $19.7 $33.3 $2
Slide 31: Fiscal Combined Sales
Fiscal Combined Sales (1) ($M) $499 $499 $499 $500 Foreign Exchange Rate Adjusted $450 $409 $398 $400 $337 $350 $290 $300 $246 $250 $218 $195 $198 $198 $206 $209 $200 $182 $186 $179 $182 $186 $166 $161 $154 $150 $124 $107 $100 $50 $0 Annual sales adjusted to 2021 average rate of $1.25 CDN per USD
Slide 32: Adjusted EBITDA
Adjusted EBITDA (1) $84.0 ($M) $80.6 $80.0 $70.0 $60.2 $60.0 $48.4 $50.0 $44.0 $40.0 $29.7 $26.8 $30.0 $25.8 $20.2 $21.8 $17.3 $17.8 $20.0 $10.0 $0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 *Adjusted EBITDA prior to 2019 does not include the impact of IFRS 16 (1) See Non-GAAP mea
Slide 33: Strong Cashflow
Strong Cashflow ($M) 2021 2020 2019 Cash Flow before CAPEX & W/C $47.3 $70.6 $51.8 Change in Working Capital $9.2 ($11.0) ($22.5) Net Cash Flow before CAPEX $56.5 $59.6 $29.3 CAPEX ($34.8) ($18.9) ($25.8) Net Cash Flow $21.7 $40.7 $3.5 (b4 dividend, debt repayment & acquisitions)* *Source: 2021 PBL
Slide 34: Fiscal 2021 Sales
Fiscal 2021 Sales ($M) $490.0 $13.2 $22.3 $13.0 $470.0 $5.1 $19.1 $459.0 $450.0 $27.0 $430.0 $414.1 $410.0 $390.0 Higher Charitable 2020 2020 Gaming Higher and eGaming Systems CharitableImpact Higher of Volumes Acquisitions Avg of Impact Selling and ASP Price and Volumes Higher Sales Higher - Instan
Slide 35: 2021 Adjusted EBITDA
($M) 2021 Adjusted EBITDA (1) $105.0 $100.0 $2.8 $7.2 $15.0 $95.0 $3.8 $90.0 $2.6 $0.8 $84.0 $85.0 $80.6 $80.0 $75.0 $70.0 Net Higher 2020 2020Charitable Higher GamesCharitable and eGaming Higher HigherSystem iLottery Revenue SGA Revenue Expenditures Higher SG&Aof Acquisitions Higher SG+A Expenditur
Slide 36: 2021 Highlights
2021 Highlights • Record revenue of $459 million despite negative impact of strengthening Canadian Dollar. • Record levels of demand in both Lottery and Charitable Gaming Businesses. • Charitable Gaming, both printed and eGaming systems, generated record revenue and earnings. • Record Adjusted EBITD
Slide 37: 2022 First Quarter Results
2022 FIRST QUARTER RESULTS POLLARD banknote limited
Slide 38: Q1 2022 Highlights
Q1 2022 Highlights ($M) Q1 2022 Q1 2021 Combined sales(1) $125.2 $122.1 Sales $113.9 $112.2 Gross Margin $22.0 $24.8 SG + A $16.5 $15.9 NPi JV Income $4.0 $4.0 Adjusted EBITDA(1) $19.0 $23.3 Net Income $6.4 $7.5 (1) See Non-GAAP measures for explanation
Slide 39: Q1 2022 Sales
($M) Q1 2022 Sales $125.0 $123.0 $2.0 $3.9 $121.0 $2.1 $119.0 $5.6 $2.5 $117.0 $1.6 $115.0 $113.9 $113.0 $112.2 $111.0 $109.0 $107.0 $105.0 Q1 Q1 2021 2021 Higher Charitable Higher Higher Charitable Ancillary Higher Ancillary Higher Instant Higher Instant Lower LowerInstant Instant Lower LowerMichig
Slide 40: Q1 2022 Adjusted EBITDA
($M) Q1 2022 Adjusted EBITDA (1) $29.0 $1.2 $2.9 $27.0 $2.5 $25.0 $2.1 $23.3 $23.0 $1.9 $21.0 $1.1 $19.0 $19.0 $17.0 $15.0 Q1 2021 Q1 2021 Higher Charitable Higher Charitable Other Oher Net Net Lower Instant Lower Instant Lower Lower iLottery iLottery ReductionofofCanada Reduction Canada Increased S
Slide 41: Strong Q1 Cashflow
Strong Q1 Cashflow ($M) 2022 2021 Cash Flow before CAPEX & W/C $13.7 $9.4 Change in Working Capital $0.7 $6.0 Net Cash Flow before CAPEX $14.4 $15.4 CAPEX ($7.4) ($6.8) Net Cash Flow (b4 dividend, debt repayment & acquisitions)* $7.0 $8.6 *Source: 2021 PBL Statement of Cash Flow
Slide 42: Q1 Highlights
Q1 Highlights • Worldwide demand for instant tickets at retail continues to be very strong. • Overall gross margin percentage increased 150 basis points to 19.3% in the first quarter compared to Q4 2021. • iLottery sales show strong organic growth across all contracts. • Charitable gaming, both prin
Slide 43: Thank you for your time and your attention today
Thank you for your time and your attention today. FOR MORE INFORMATION CONTACT: Doug Pollard John Pollard Co-Chief Executive Officer Co-Chief Executive Officer Telephone: (204) 474-2323 Telephone: (204) 474-2323 E-mail: dpollard@pbl.ca E-mail: jpollard@pbl.ca Rob Rose Chief Financial Officer Telepho
Slide 44: Outstanding Games. Retail Excellence. Digital Innovation.
Outstanding Games. Retail Excellence. Digital Innovation. h“N RB 2 . Arsazes Compliant Gaming @>DiamondGame mkodo (NGL Schafer International Gamco XP RETAIL SOLUTIONS + NEOPOLLARD POLLARD banknote limited
Slide 45: Appendix
APPENDIX POLLARD banknote limited
Slide 46: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (1) 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Net income $19.7 $33.3 $22.0 $14.9 $16.8 $12.3 $7.5 $8.7 $5.4 $6.5 $3.1 $1.8 Adjustments: Amortization & depreciation $39.5 $31.5 $27.1 $18.0 $13.1 $10.6 $8.4 $7.9 $8.6 $7.8 $8.4 $8.6 Interest $5.0 $4.8 $6