Pollard Banknote Profit Falls 21% as Michigan Exit and Print Problems Bite

Pollard Banknote's net income fell to C$8.1 million in the third quarter as its Michigan iLottery contract ran out and its own printing plants underperformed. Michigan was a known loss; the manufacturing trouble was not.

• Pollard Banknote reported third-quarter net income of C$8.1 million on 6 November, down 21% from C$10.3 million, on revenue up 1.7% to C$158.9 million
• Adjusted EBITDA fell to C$28.3 million from C$32.3 million and gross margin narrowed to 15.3% from 18.0%
• The Michigan Lottery iLottery contract ended on 17 July, which the company says cut gross profit by C$2.1 million in the quarter
• The Canada-based supplier blamed lower-margin international work and production inefficiencies for weaker instant ticket margins, and called its printed ticket execution disappointing
• Pollard cited an iLottery selection in Kansas, a digital award in Colorado and a Norsk Tipping instant ticket award in Norway as the base for a recovery it expects to begin in the fourth quarter

Revenue Edged Up While Margins Fell Back

Pollard Banknote (TSX: PBL), the Winnipeg-based lottery printer, reported its third-quarter results after the market closed on 6 November. Revenue for the three months to 30 September was C$158.9 million, approximately $113 million at the quarter's average exchange rate, against C$156.3 million a year earlier. Including its 50% share of the NeoPollard Interactive (NPi) joint venture, combined sales rose 3.4% to C$193.7 million.

Gross profit fell to C$24.3 million from C$28.1 million. Income from operations was C$14.9 million, down 16.3%, or 5.1% after excluding the C$2.1 million that the Michigan contract contributed a year earlier, according to the release. Net income was C$8.1 million, approximately $5.8 million, or C$0.30 a share against C$0.38. A stronger US dollar, which averaged C$1.403 against C$1.372, added about C$2.4 million to revenue.

Over nine months, net income fell to C$20.2 million from C$30.0 million on revenue of C$455.4 million, against C$445.3 million.

Michigan Gone, NPi Holding Steady

The Michigan Lottery iLottery contract ended on 17 July. In June 2025 Aristocrat Interactive, contracting as NeoGames US, signed a six-year deal to run Michigan's iLottery from July 2026. The release's joint venture table shows Michigan iLottery sales falling to C$1.2 million from C$6.6 million and its contribution to zero from C$2.1 million. NPi's own sales rose to C$34.8 million from C$31.0 million, with income before profit share and taxes flat at C$15.3 million.

Instant Tickets Were the Weak Spot

Instant ticket volumes were slightly higher, but the company says a shift in customer mix lowered its average selling price, and that production was weighted towards lower-value international work. Manufacturing problems also reduced output and increased material spoilage and rework. "Although our third quarter operating results were disappointing," Co-Chief Executive Officer John Pollard said in the release, the company's contract wins and extensions validate its investments in digital and retail. Charitable gaming was stronger, with near-record pull-tab, vending and eTab sales, according to the release.

On the 9 November call, John Pollard said new plant management was in place at the printing facilities in Winnipeg and Ypsilanti, Michigan. He said the problems would not be fixed in one quarter, but that the company expected significant improvement over the next few quarters, according to a transcript of the call.

The quarter also brought new business. The Kansas Lottery named Pollard apparent successful bidder for a five-year iLottery contract on 22 October, Norsk Tipping announced its intent to award Pollard its instant ticket contract from December on 8 October, and the North Carolina Education Lottery extended NPi's contract to June 2029. Colorado's digital contract is expected to go live in late 2027. Verica Simic joins on 16 November and becomes Chief Financial Officer on 1 January, succeeding Rob Rose, who retires on 31 December.

The Printing Problems Are the Part Pollard Did Not Plan For

Michigan explains C$2.1 million of the C$3.8 million fall in gross profit, and the contract's move to Aristocrat Interactive was public from June 2025. The remaining C$1.7 million came from instant ticket margins and lower licensed product sales, problems more within Pollard's control. Excluding Michigan, operating income still fell 5.1% in a quarter when instant ticket volumes rose. That matters because Pollard competes for state contracts against Scientific Games, where reliable delivery is part of the pitch.

The Digital Pipeline Is Real but Back-Loaded

Kansas starts late this year, Colorado not until late 2027, and Belgium is still in development. NPi's flat income without Michigan shows the remaining states holding up, yet John Pollard described the Michigan loss on the call as a lasting drag until other digital revenue catches up. The recovery the company describes depends on contracts that mostly have not started.

Norway Points to Better Pricing

John Pollard said on the call that Pollard won back Norsk Tipping with a significant price increase on its instant tickets. If that holds elsewhere, it answers the weak selling prices behind this quarter's margins, but output has to be fixed first.

Pollard's third quarter was a known contract loss compounded by an unforced manufacturing problem. The new contracts give it a route back, but the printing plants have to deliver before they count.