Pollard Banknote (PBL) Q1 2026 earnings summary

Executive summary

• Q1 2026 was challenging, with revenue at CAD 141.7M (down 3.1% YoY) and net income at CAD 3.5M, mainly due to temporary instant ticket timing, production inefficiencies, and lower margins.

• No systemic changes in core business or client portfolio; California contract onboarding is progressing well.

• Digital contracts, especially in Kansas and Belgium, and charitable gaming outperformed expectations.

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

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

Financial highlights

• Q1 2026 revenue was CAD 141.7M, down from CAD 146.2M in Q1 2025, mainly due to lower instant ticket ASP and customer mix.

• Gross profit fell to CAD 16.6M (11.7% margin) from CAD 25.4M (17.4%) year-over-year, driven by lower instant ticket margins and production inefficiencies.

• Adjusted EBITDA decreased to CAD 21.5M from CAD 30.6M in Q1 2025, primarily due to lower gross profit and higher admin expenses.

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

• Interest expense decreased to CAD 2.3M from CAD 2.8M due to lower rates and reduced debt.

Outlook and guidance

• Q2 2026 adjusted EBITDA is expected to exceed Q2 2025, supported by recovery in instant ticket volumes and margins.

• Confirmed instant ticket order volumes for Q2 and Q3 are at multi-year highs, expected to drive improved results.

• Revenue recognition from the Belgium omni-channel contract will ramp up through Q2 and the rest of 2026.

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

• Management sees no significant economic headwinds impacting customer demand.