Pollard Banknote Reports 2nd Quarter Financial Results & Reappointment of Independent Director.

WINNIPEG, MB: Pollard Banknote Limited (TSX: PBL) ("Pollard") today released its financial results for the three and six months ended June 30, 2022 and announced the reappointment of Dr. Jerry Gray to the Board of Directors.

Results and Highlights for the Second Quarter ended June 30, 2022

Sales reached $115.9 million, up 2.2% from the second quarter of 2021

Combined sales(1) in the quarter, including our share of our NeoPollard Interactive LLC ("NPi") joint venture's sales, reached $128.3 million, up 4.1% from the $123.3 million achieved in 2021

Income from operations was $8.7 million, compared to $12.1 million in the second quarter of 2021. A significant factor impacting the decline was the receipt of $3.2 million in Canada Emergency Wage Subsidy ("CEWS") in 2021, recorded as other income, compared to $nil received in 2022

Adjusted EBITDA(1) achieved in the second quarter of 2022 of $18.9 million decreased from $22.6 million in the second quarter of 2021, also reflecting the reduction in CEWS received relative to 2021 of $3.2 million

NPi continued to demonstrate strong organic growth when compared to the second quarter of 2021, and both NPi and the Michigan iLottery operation have grown sequentially over the past year, achieving our second highest quarterly margin of $7.5 million

Charitable gaming and eGaming systems businesses continue to experience unprecedented demand, achieving strong revenues and earnings

Our instant ticket production and sales volumes were negatively impacted due to a number of factors including staffing and production challenges

Retail sales of instant ticket products remain at strong levels

Ongoing inflationary cost increases on our key instant ticket inputs (paper, ink and freight) continue to negatively impact margins

Our strategy of increased selling prices on contract extensions and RFP's is seeing success in its early roll out and will help mitigate our current margin pressures in the quarters to come

Effective immediately, our former Director Dr. Jerry Gray has been reappointed to serve as a Director until the May 2023 Annual General Meeting

(1) See Non-GAAP measures for explanation

"Our second quarter results are comparable with our first quarter of 2022, reflecting the strong demand in our main product categories," declared John Pollard, Co-Chief Executive Officer. "In particular our charitable gaming businesses, including eGaming systems, and our iLottery operations generated very strong results again, combining strong revenue with effective cost management to produce very positive margins."

Our largest business remains instant tickets, and we continued to see challenges in this area, notwithstanding the ongoing significant demand...