Pollard Banknote Limited · TSX:PBL
Pollard Banknote — Shareholder Meeting (May 2023)
39 slides from Pollard Banknote's shareholder meeting presentation, May 12, 2023
Slide 1: 2023 Annual General Meeting
POLLARD banknote limited 2023 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. 2022 Highlights by Division 3. 2022 Annual Results 4. 2023 First Quarter Results
Slide 4: Financial Highlights
Financial Highlights ($ Millions) 2016 2017 2018 2019 2020 2021 2022 COMBINED $246.4 $286.0 $332.6 $400.3 $426.9 $499.2 $537.4 SALES(1) SALES $246.4 $285.7 $331.9 $397.8 $414.1 $459.0 $482.3 ADJUSTED $29.7 $44.0 $48.8 $60.2 $80.6 $84.0 $80.5 EBITDA(1) NET DEBT $63.4 $79.0 $104.6 $119.8 $129.2 $111.6
Slide 5: Financial Highlights
Financial Highlights • Strong demand for all products and solutions. • Instant ticket profit margins were significantly negatively impacted by inflation cost increases on inputs including paper, ink and other items. • Success with a number of instant ticket contract renewals and awards including sig
Slide 6: Partner of Choice
Partner of Choice Outstanding Games. Retail Excellence. Digital Innovation. POLLARD nknote limited
Slide 7: 2022 Highlights by Division
2022 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 17% $110,000 4.2% $105,159 3-YR CAGR Growth $100,000 10-YR $90,000 Instant Sales ($ US Millions) $80,000 Worldwide 22% $70,000 5.5% $66,842 3-YR CAGR Growth $60,000 10-YR $50,000 North America $40,000 $30,000 $20,000 CY2012 CY2013 CY2014 CY2015 CY2016 CY2
Slide 10: Retail Instant Sales Growth (North America)
Retail Instant Sales Growth (North America) 3% $80,000 2023 YTD $70,000 Instant Sales ($US Millions) $60,000 $50,000 $40,000 $30,000 $20,000 CY2011 CY2012 CY2013 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022 CY2023 Notes: Includes Pulltab sales & excludes China
Slide 11: US Retail Instant Sales
US Retail Instant Sales Instant Sales by Retailer Type Instants as a % of Total Retail Sales Convenience stores / Convenience Gas stations 6% stores, 20% Gas- Convenience Grocery stores, 16% stores, 49% All other Grocery stores 1% stores, 14%
Slide 12: In-Lane ITVM
In-Lane ITVM ae ; easy VEND BUY INSTANT t LOTTERY TICKETS HERE! A ‘ ees Pes 4
Slide 13: Schafer Retail Solutions
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Slide 14: Retail Lottery
Retail Lottery • In 2022, retail instant ticket sales in dollars decreased slightly, after 25% very strong increase during 2020-2021. • Preliminary retail sales data in Q1 2023 show sales growth compared to 2022. • Continuing trend for higher price points at retail. This provides Pollard opportuniti
Slide 15: iLottery
ILOTTERY POLLARD banknote limited
Slide 16: NPi powers the most profitable iLotteries in the United States
Now, NPi powers the most profitable iLotteries in the United States 2022 Gross iLottery Sales Per Capita 68% $300 $250 $200 $150 $100 $50 Lotto Only $0 GROSS WAGER MARKET SHARE “NeoPollard continues to be the leading iLottery platform provider in the U.S. due to its success in Michigan and Virginia
Slide 17: 2022 iLottery Operations
2022 iLottery Operations 2019 2020 2021 2022 Q1 2023 Revenue - Pollard Share Michigan iLottery $16.4 $33.5 $26.7 $26.5 $7.3 NeoPollard JV $2.5 $12.6 $40.1 $55.1 $18.5 Combined Revenue(1) $18.9 $46.1 $66.8 $81.6 $25.8 Income before Profit Share & Income Taxes – Pollard Share Michigan iLottery $7.4 $1
Slide 18: Pollard Digital Solutions
(2 POLLARD DIGITAL SOLUTIONS POWARD DIGITAL POLLARD LOTTERY GAMING PLATFORM
Slide 19: Pollard Digital Games Studio
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Slide 20: Pollard Digital Solutions
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Slide 21: Charitable Gaming
CHARITABLE GAMING POLLARD banknote limited
Slide 22: Pollard Charitable Games Group
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Slide 23: Charitable Gaming & eGaming Systems Sales Trend 2016-2022
Pollard Charitable Gaming & eGaming Systems ($US) Sales Trend 2016-2022 $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 2016 2017 2018 2019 2020 (Covid) 2021 2022 Note: Sales include historical results of acquisitions back to 2017
Slide 24: Minnesota Charitable Gambling Sales
Minnesota Charitable Gambling $4,500 5-Year CAGR FY2022 vs. FY2017 $4,000 Overall 20% $3,500 Charity Gambling Sales (Millions) $3,000 Paper Bingo/Pulltabs 8% $2,500 and others $2,000 Electronic Bingo/ Pulltabs 57% $1,500 Note: Total gaming sales in the first 8 $1,000 months of FY2023 are up by 13% o
Slide 25: 2022 Annual Results
2022 ANNUAL RESULTS POLLARD banknote limited
Slide 26: 2022 Highlights
2022 Highlights ($M) 2019 2020 2021 2022 Combined Sales(1) $400.3 $426.9 $499.2 $537.4 Sales $397.8 $414.3 $459.0 $482.3 Gross Margin $91.1 $91.0 $90.7 $81.8 SG + A $56.5 $54.9 $64.4 $67.3 NPi JV Income (Loss) ($3.9) $1.6 $12.3 $23.7 Other Income (Expense) $2.0 $12.4 ($5.2) ($4.1) Adjusted EBITDA(1)
Slide 27: Fiscal Combined Sales
Fiscal Combined Sales (1) ($M) $600 Foreign Exchange Rate Adjusted $537 $513 $500 $409 $420 $400 $346 $298 $300 $253 $224 $200 $204 $204 $212 $215 $187 $191 $184 $187 $191 $200 $158 $171 $166 $127 $110 $100 $0 Annual sales adjusted to 2022 average rate of $1.30 CDN per USD (1) See Non-GAAP measure
Slide 28: Adjusted EBITDA
Adjusted EBITDA (1) $84.0 ($M) $80.6 $80.5 $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 $0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 *Adjusted EBITDA prior to 2019 not including impact of IFRS 16 (1) See Non-GAAP
Slide 29: Fiscal 2022 Combined Sales
($M) Fiscal 2022 Combined Sales (1) $560.0 $550.0 $540.0 $8.9 $537.4 $13.8 $4.1 $530.0 $520.0 $6.3 $4.9 $510.0 $8.4 $500.0 $499.2 $490.0 $480.0 2021 Higher eGaming Higher Charitable Higher Sales of Higher iLottery Lower Avg Selling Impact of Foreign 2022 Systems revenue Gaming Volume Ancillary Produ
Slide 30: 2022 Adjusted EBITDA
($M) 2022 Adjusted EBITDA (1) $105.0 $100.0 $11.4 $7.5 $95.0 $90.0 $3.8 $84.0 $5.4 $85.0 $1.8 $80.5 $80.0 $75.0 $70.0 $65.0 $60.0 2021 Higher iLottery Lower net Gross Higher SG+A Lower CEWs Income Impact of Foreign 2022 Revenue Margins in Instant Expenditures Exchange and Other Tickets and Charitabl
Slide 31: 2022 Highlights
2022 Highlights • Record revenue of $482 million. • Strong levels of demand in both Lottery and Charitable Gaming Businesses. • Charitable Gaming, both printed and eGaming systems, generated record revenue and earnings. • Adjusted EBITDA(1) achieved of $80.5 million despite significant negative pres
Slide 32: 2023 First Quarter Results
2023 FIRST QUARTER RESULTS POLLARD banknote limited
Slide 33: Q1 2023 Highlights
Q1 2023 Highlights ($M) Q1 2022 Q1 2023 Combined sales(1) $125.2 $143.1 Sales $113.9 $124.6 Gross Margin $21.6 $17.1 SG + A $16.1 $18.0 NPi JV Income $4.0 $8.6 Adjusted EBITDA(1) $19.0 $18.6 Net Income $6.4 $4.2 (1) See Non-GAAP measures for explanation
Slide 34: Q1 2023 Adjusted EBITDA
Q1 2023 Adjusted EBITDA (1) ($M) $20.0 $19.0 $3.6 $4.7 $0.3 $18.6 $18.0 $16.0 $1.8 $14.0 $12.0 $10.0 Q1 2022 Lower net Gross Margins in Higher SGA expenses Higher income in NPi Impact of foreign exchange Q1 2023 Instant Tickets and iLottery JV and other Charitable Gaming (1) See Non-GAAP measures fo
Slide 35: Strong Cashflow
Strong Cashflow ($M) 2019 2020 2021 2022 Cash Flow before CAPEX & W/C $47.8 $72.5 $59.9 $69.6 Change in Working Capital ($22.5) ($11.0) $9.2 ($15.4) Net Cash Flow before CAPEX (subtotal) $25.3 $61.5 $69.1 $54.2 CAPEX ($25.8) ($18.9) ($34.8) ($33.2) Net Operating Cash Flow less CAPEX ($0.5) $42.6 $34
Slide 36: Q1 Highlights
Q1 Highlights • Worldwide strong demand for all of our products and solutions. • iLottery sales continue to generate organic growth across all contracts. • Charitable gaming, both printed and eGaming systems, are experiencing strong demand and strong revenue and earnings. • Generated significant pos
Slide 37: 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 38: Appendix
APPENDIX POLLARD banknote limited
Slide 39: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (1) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Net income $1.8 $3.1 $6.5 $5.4 $8.7 $7.5 $12.3 $16.8 $14.9 $22.0 $33.3 $19.7 $19.3 Adjustments: Amortization & depreciation $8.6 $8.4 $7.8 $8.6 $7.9 $8.4 $10.6 $13.1 $18.0 $27.1 $31.5 $39.5 $41.0 Inte