Q2 2026 Pollard Banknote Ltd Earnings Call

August 13, 2026

Operator: Good morning, everyone, and welcome to the Pollard Banknote Limited Q2 2026 results conference call. Listeners are reminded that certain matters discussed in today's conference call, or answers that may be given to questions asked, could constitute forward-looking statements that are subject to risks and uncertainties related to Pollard's future financial or business performance. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements.

Speaker #1: Good morning, everyone, and welcome to the Pollard Banknote Limited second quarter 2026 results conference call. Listeners are reminded that certain matters discussed in today's conference call are answers that may be given to questions asked, "Could constitute forward-looking statements that are subject to risk and uncertainties related to Pollard's future financial or business performance?" Certain material factors or assumptions are applied in making forward-looking statements.

Speaker #1: Actual results may differ materially from those expressed or implied in such statements. The risk factors that may affect the results are detailed in Pollard's Annual Information Form and other periodic filings and registration statements.

Operator: The risk factors that may affect the results are detailed in Pollard's annual information form and other periodic filings and registration statements. You may access these documents at SEDAR+ database found at sedarplus.ca. I would like to remind everyone that this conference call is being recorded today, Thursday, 13 August 2026. I would now like to introduce Mr. Doug Pollard, Co-Chief Executive Officer of Pollard Banknote Limited. Please go ahead, sir.

Speaker #1: You may access these documents at the CEDAR Plus database, found at cedarplus.ca. I would like to remind everyone that this conference call is being recorded today, Thursday, August 13, 2026.

Speaker #1: And I would now like to introduce Mr. Doug Pollard, co-chief executive officer of Pollard Banknote Limited. Please go ahead, sir.

Doug Pollard: Okay. Thank you, operator. Thank you, everyone, for joining us this morning. With us on the call today are John Pollard, Co-CEO, and Rob Rose, our CFO. We released our 2026 Q2 results yesterday. Reminder, you can access our news release as well as the complete financial statements and MD&A on our website at pollardbanknote.com and on SEDAR+. Today, as usual, we will start with some prepared remarks from me providing an overall business update. Then John will follow up with a discussion of our Q2 results, and we will then open up to questions. We are very pleased with the financial results we achieved in the Q2, which reflect the underlying strength across all of our business units.

Speaker #2: Okay. Thank you, operator. John, and thank you, everyone, for joining us this morning. With us on the call today are John Pollard, co-CEO, and Rob Rose, our CFO.

Speaker #2: We released our 2026 second quarter results yesterday, a reminder you can access our news release as well as the complete financial statements and MD&A on our website at pollardbanknote.com and on Cedar Plus.

Speaker #2: Today, as usual, we'll start with some prepared remarks from me, providing an overall business update. Then John will follow up with the discussion of our second quarter results, and we'll then open up to questions.

Speaker #2: You know, we are very pleased with the financial results we achieved in the second quarter. Which reflect the underlying strength across all of our business units.

Doug Pollard: As discussed during our Q1 investor call, we were expecting a return to stronger revenue and profitability trends, especially in our instant ticket operations, as well as increased contributions from our expanding digital lines, and continuing strength in the charitable sector, all of which were achieved. During Q2, our instant ticket production volumes returned to our historic levels from 2025. Plus, we got the additional incremental volumes from the impact of our new primary supply position for the California Lottery. In fact, the transition to primary supplier for California has gone extremely well and exceeded our expectations. We are looking forward to continuing to support them and looking to grow their retail business.

Speaker #2: As discussed during our first quarter investor call, we were expecting a return to stronger revenue and profitability trends, especially in our instant ticket operations.

Speaker #2: As well as increased contributions from our expanding digital lines and then continuing strength in the charitable sector. All of which were achieved. During the second quarter, our instant ticket production volumes returned to our historic levels from 2025, plus we got the additional incremental volumes from the impact of our new primary supply position for the California lottery.

Speaker #2: In fact, the transition to primary supplier for California has gone extremely well, and exceeded our expectations. We're looking forward to continuing to support them and looking to grow their retail business.

Doug Pollard: The important measure of average selling price we achieved for our instant ticket sales, that also increased in Q2 compared to both Q2 of 2025 and Q1 in 2026, which reflects the mix of higher value-added tickets we sold during this period. Our scheduled ticket volume for the rest of 2026 remains robust for instant tickets. We remain focused on improving our manufacturing efficiencies, and we have attained some positive momentum during this period with lower amounts of spoilage and improved processes that will allow us to develop an efficient cost base for our instant ticket production. In fact, all of this success is reflected in our overall gross margin exceeding 18% in Q2. Undoubtedly, one of the highlights of Q2 for our digital business was the announcement of the Colorado Lottery's intent to award their digital solutions contract.

Speaker #2: The important measure of average selling price we achieved in the second in the for our instant ticket sales that also increased in the second quarter compared to both second quarter of 2025 and the first quarter in 2026, which reflects the mix of higher value-added tickets we sold during this period.

Speaker #2: And our scheduled ticket volume for the rest of 2026 remains robust for instant tickets. We remain focused on improving our manufacturing efficiencies, and we've attained some positive momentum during this period with lower amounts of spoilage and improved processes that will allow us to develop an efficient cost base for our instant ticket production.

Speaker #2: In fact, all of this success is reflected in our overall gross margin exceeding 18% in the second quarter. Undoubtedly, one of the highlights of the second quarter for our digital business was the announcement of the Colorado Lottery's intent to award their digital solutions contract.

Doug Pollard: Reminder that we won this contract in a formal competitive RFP process, which included not just iLottery, but also a loyalty program where we bid our playON solution, in addition to the iLottery platform and game content solutions. We are very thankful for the opportunity with Colorado, and we look forward to working with the lottery as we begin the development and implementation of this fall and then through 2027. Work is also proceeding well on our Belgium Lottery omni-channel gaming contract, with activity and resources moving from the scoping and planning phases into the early development phase. This allows for greater revenue recognition during Q2 compared to Q1 of 2026.

Speaker #2: Reminder that we won this contract in a formal competitive RFP process, which included not just a lottery, but also a loyalty program where we bid our play-on solution.

Speaker #2: In addition to the iLottery platform and game content solutions, we are very thankful for the opportunity with Colorado, and we look forward to working with the lottery as we begin the development and implementation of this this fall and then through 2027.

Speaker #2: Work is also proceeding well on our Belgium lottery omnichannel gaming contract. With activity and resources moving from the scoping and planning phases into the early development phase.

Speaker #2: This allows for greater revenue recognition during the second quarter compared to the first quarter of 2026. And then, as you know, our Kansas lottery eye lottery contract was required to go out for bid, as the existing contract to operate expires in the fall of '26.

Doug Pollard: As you know, our Kansas Lottery iLottery contract was required to go up for bid as the existing contract to operate expires in the fall of 2026, and we have responded to the bid subsequent to the end of Q2 with what we believe is a very compelling response. A reminder that the ongoing operation of the Kansas Lottery iLottery is performing very well still. Interest in iLottery operations from lotteries remains high in both the United States and internationally based lotteries. Among our valuable digital offerings, our proprietary lottery-specific loyalty solution, playON, is a very effective tool for lotteries to improve their offerings and bridge into the digital channels. Implementation is proceeding well with the Oklahoma Lottery offering, which will take us to six installations in the lottery market, with further opportunities to deploy on the horizon.

Speaker #2: And we have responded to the bid subsequent to the end of the second quarter with what we believe is a very compelling response, and, as a reminder, the ongoing operation of the Kansas Lottery iLottery is performing very well still.

Speaker #2: And then, interest in eye lottery operations from lotteries remains high in both the United States and internationally based lottery-specific loyalty solution, Play-On, is a very effective tool for lotteries to improve their offerings and bridge into the digital channels. Implementation is proceeding well with the Oklahoma lottery offering, which will take us to six installations in the lottery market with further opportunities to deploy on the horizon.

Doug Pollard: Each of these installations showcases the strength of our technologies as well as our implementation experience and opportunities to expand our suite of other services and solutions. Our NeoPollard iLottery joint venture operations remain an important contributor to our profitability. As previously disclosed, our 50% interest in the Michigan iLottery contract terminated at the end of Q2. As we reflect on the growth of our internal digital strategy, in the past two years, our Catalyst technology is confirmed as a preeminent state-of-the-art solution through winning these three contracts, including two greenfield opportunities and one replacement of an existing vendor. To understand our strategy, you should know that we see digital solutions as critical, not just for lotteries to generate sales via the iLottery and mobile platforms, but increasingly, digital solutions are a critical part of driving lottery retail sales.

Speaker #2: Each of these installations showcases the strength of our technologies as well as our implementation experience, and an opportunities to expand our suite of other services and solutions.

Speaker #2: operations remain an important contributor to our profitability. As previously disclosed, our 50% risk in the Michigan eye lottery contract terminated at the end of the second quarter.

Speaker #2: As we reflect on the growth of our internal digital strategy in the past two years, our Catalyst technology has confirmed itself as a preeminent, state-of-the-art solution through winning these three contracts.

Speaker #2: Including two Greenfield opportunities and one replacement of an existing vendor. Now, to understand our strategy, you should know that we see digital solutions as critical not just for lotteries to generate sales via the eye lottery and mobile platforms, but increasingly digital solutions are a critical part of driving lottery retail sales.

Doug Pollard: For example, our playON loyalty solution helps lotteries to know their players, which enables more effective player acquisition. Through one-to-one messaging capabilities, we can help achieve objectives for player retention and responsible gaming within that retail space. Our charitable gaming operations produced strong results with revenues and margins ahead of last year, supported by robust demand for both printed and electronic products. The eTab market in Minnesota continues to generate record revenue and contributions after facing significant negative pressure in 2025 due to regulatory changes, which reduced the gaming revenue across all suppliers, including Pollard. Additional markets have expressed and are continuing to express interest in eTab product, and we are actively pursuing these new opportunities with expanded deployments and pilot test projects.

Speaker #2: For example, our Play-On loyalty solution helps lotteries to know their players which enables more effective player acquisition. And through one on one-to-one messaging capabilities, we can help achieve objectives for player retention and responsible gaming within that retail space.

Speaker #2: Our charitable gaming operations produce strong results with revenues and margins ahead of last year, supported by robust demand for both printed and electronic products.

Speaker #2: The ETAB market in Minnesota continues to generate record revenue and contributions. However, after facing significant negative pressure in 2025 due to regulatory changes, which reduced the gaming revenue across all suppliers, including Pollard.

Speaker #2: Additional markets have expressed, and continue to express, interest in the ETAB product, and we are actively pursuing these new opportunities with expanded deployments and pilot test projects.

Doug Pollard: During the quarter, our board of directors implemented the previously announced normal course issuer bid, or NCIB, to purchase up to approximately 976,000 of our common shares, representing approximately 10% of our outstanding common shares in our current public float over the next year. This mechanism got underway right at the end of June and will be an important tool in our capital allocation process. In summary, all of our major business lines performed well in Q2. We expanded our digital presence, we improved our volumes and selling prices of instant tickets, and we had strong results in charitable. This positive momentum generated in Q2 is expected to continue throughout 2026. Now I'll turn it over to John Pollard to discuss in detail the Q2 results.

Speaker #2: During the quarter, our Board of Directors implemented the previously announced normal course issuer bid, or NCIB, to purchase up to approximately $976,000 of our common shares, representing approximately 10% of our outstanding common shares in our current public float over the next year.

Speaker #2: This mechanism got underway right at the end of June and will be an important tool in our capital allocation process. So, in summary, all of our major business lines performed well in the second quarter.

Speaker #2: We expanded our digital presence. We improved our volumes and selling prices of instant tickets, and we had strong results in charitable. This positive momentum generated in the second quarter is expected to continue throughout 2026.

Speaker #2: Now, I'll turn it over to John Pollard to discuss in detail the second quarter results.

John Pollard: Thanks, Doug. During the three months ended 30 June 2026, Pollard achieved revenue of CAD 154.8 million, compared to CAD 142.7 million in the three months ended 30 June 2025. The factors impacting that CAD 12.1 million revenue increase were higher instant ticket sales volumes increased revenue by CAD 3.3 million as compared to the prior year. In addition, higher instant ticket average selling price in Q2 2026 further increased revenue by CAD 0.8 million compared to 2025. That was primarily due to a change in customer mix. Also, higher sales of ancillary lottery products and services increased revenue in Q2 2026 by CAD 5.3 million compared to 2025. This growth was primarily due to increased digital sales, including our iLottery contracts with the Belgium and Kansas Lotteries and higher distribution-related sales.

Speaker #3: Thanks, Doug. During the three months ended June 30, 2026, Pollard achieved revenue of $154.8 million, compared to $142.7 million in the three months ended June 30, 2025.

Speaker #3: The factors impacting that $12.1 million revenue increase were higher instant ticket sales volumes, which increased revenue by $3.3 million as compared to the prior year. In addition, a higher instant ticket average selling price in the second quarter of 2026 further increased revenue by $0.8 million compared to 2025. That was primarily due to a change in customer mix.

Speaker #3: Also, higher sales of ancillary lottery products and services increased revenue in the second quarter of 2026 by $5.3 million compared to 2025. This growth was primarily due to increased digital sales, including our iLottery contracts with the Belgium and Kansas lotteries, and higher distribution-related sales.

John Pollard: Partially offsetting those increases in ancillary lottery sales were the decreases in the sales of retail solutions and licensed products. Charitable gaming print volumes increased revenue by CAD 0.7 million in Q2 2026 compared to 2025, and in addition, higher average selling prices of charitable printed products further increased revenue by CAD 0.2 million. Charitable gaming eTabs generated an increase of CAD 2.2 million in revenue compared to 2025, with revenue generated in our Minnesota market reaching new records. New game content and a greater number of sites have driven revenue higher in Minnesota than the pre-regulatory change levels in 2024. Higher Michigan iLottery revenues increased revenue in Q2 2026 by CAD 0.6 million compared to 2025. Cost of sales was CAD 126.8 million in Q2 2026 compared to CAD 118.8 million in Q2 2025.

Speaker #3: Partially offsetting those increases in ancillary lottery sales were the decreases in the sales of retail solutions and licensed products. Charitable gaming print volumes increased revenue by 0.7 million in the second quarter of 2026 compared to 2025.

Speaker #3: And in addition, higher average selling prices of charitable printed products further increased revenue by 0.2 million. Charitable gaming ETABs generated an increase of 2.2 million in revenue compared to 2025 with revenue generated in our Minnesota market reaching new records.

Speaker #3: New game content and a greater number of sites have driven revenue higher in Minnesota than pre-regulatory change levels in 2024. Higher Michigan iLottery revenues increased revenue in the second quarter of 2026 by $0.6 million compared to 2025.

Speaker #3: Cost of sales was $126.8 million in the second quarter of 2026 compared to $118.8 million in the second quarter of '25. The increase of $8 million in cost of sales was primarily the result of the additional cost associated with higher instant ticket volumes and increased Pollard eye lottery operations including ramping up resources for the Belgium lottery contract development efforts.

John Pollard: The increase of CAD 8 million in cost of sales was primarily the result of the additional cost associated with higher instant ticket volumes and increased Pollard iLottery operations, including ramping up resources for the Nationale Loterij contract development efforts. These increases of cost of goods sold were partially offset by the impact of lower exchange rates on USD-denominated expenses. The gross profit increased to CAD 28 million, or 18.1% of sales in Q2 this year, compared to CAD 23.9 million or 16.7% of sales in Q2 2025. The increase of CAD 4.1 million in gross profit and the increase in gross profit percentage were primarily the result of three things. One, increased instant ticket sales margins, largely because of the higher volumes. Two, the higher charitable eTab sales obviously positively impacted our gross profit.

Speaker #3: These increases of cost of goods sold were partially offset by the impact of lower exchange rates on US dollar denominated expenses. So following from that, the gross profit increased to $28 million or 18.1% of sales in the second quarter of this year, compared to 23.9 million or 16.7% of sales in the second quarter of 2025.

Speaker #3: The increase of $4.1 million in gross profit and the increase in gross profit percentage were primarily the result of three things. One, increased instant ticket sales margins, largely because of the higher volumes.

Speaker #3: Two, the higher charitable eTab sales obviously positively impacted our gross profit. And three, the increased margin recognized on the Belgium Lottery contract as we transitioned into more development work in the second quarter of 2026.

John Pollard: And three, the increased margin, recognized on the Belgium lottery contract as we transitioned into more development work in Q2 2026. Our administration expenses were CAD 19.4 million in Q2 this year, compared to CAD 17.6 million in Q2 2025. That increase of CAD 1.8 million was a result of increased compensation costs, as well as higher professional fees and ERP implementation expenses. Selling expenses were CAD 6.5 million in Q2 this year, very similar to the CAD 6.5 million in Q2 last year. Our share of income from our iLottery joint venture decreased to CAD 15 million in Q2 2026 from CAD 17.7 million in 2025.

Speaker #3: Our administration expenses were 19.4 million in the second quarter of this year compared to 17.6 in the second quarter of 2025. That increase of 1.8 million was a result of increased compensation costs as well as higher professional fees and ERP implementation expenses.

Speaker #3: Selling expenses were 6.5 million in the second quarter of this year, very similar to the 6.5 million in the second quarter of last year.

Speaker #3: Our share of income from our eye lottery joint venture decreased to 15 million dollars in the second quarter of 2026 from 17.7 million in 2025.

John Pollard: This CAD 2.7 million decrease was primarily due to the expiry of a customer contract at the end of Q2 last year, as well as lower foreign exchange gains and higher third-party content costs in 2026. Those decreases, however, were partially offset by the increased eInstant sales in North Carolina and Virginia and higher casino content-related sales in Alberta. Other expenses were CAD 1.6 million this year, compared to CAD 0.1 million in Q2 last year. That increase of CAD 1.5 million was primarily due to the consultant transfer fee that we paid in 2026. During the quarter, Pollard entered into a transaction with an external consulting supplier to transition a dedicated team of outsourced consultants into internal direct hire employees.

Speaker #3: This 2.7 million decrease was primarily due to the expiry of a customer contract at the end of the second quarter of last year, as well as lower foreign exchange gains and higher third-party content costs in 2026.

Speaker #3: Those decreases, however, were partially offset by the increased e-instant e-instant sales in North Carolina and Virginia and higher casino content-related sales in Alberta. Other expenses were 1.6 million, this year compared to 0.1 million in the second quarter of last year.

Speaker #3: That increase of 1.5 million was primarily due to the consultant transfer fee that we paid in 2026. During the quarter, Pollard entered into a transaction with an external consulting supplier to transition a dedicated team of outsourced consultants into internal direct hire employees.

John Pollard: In connection with the termination of the prior vendor arrangement and the release of exclusivity rights, Pollard paid a lump sum transition fee to the supplier, including incidental expenses of CAD 1.8 million. The foreign exchange loss was CAD 0.7 million in Q2 2026 compared to a net foreign exchange loss of CAD 3.5 million in Q2 of last year. The 2026 foreign exchange loss of CAD 0.7 million consisted of a net unrealized foreign exchange loss of CAD 0.7 million, primarily a result of an unrealized loss on the increased Canadian equivalent value of US dollar-denominated accounts payable and long-term debt due to the weakening of Canadian dollar relative to the US dollar, which was partially offset by an unrealized gain on foreign currency-denominated accounts receivable and net intercompany receivables.

Speaker #3: And in connection with the termination of the prior vendor arrangement and the release of exclusivity rights, Pollard paid a lump sum transition fee to the supplier including incidental incidental expenses of $1.8 million.

Speaker #3: The foreign exchange loss was 0.7 million in the second quarter of 2026 compared to a net foreign exchange loss of 3.5 million in the second quarter of last year.

Speaker #3: The 2026 foreign exchange loss of 0.7 million consisted of a net unrealized foreign exchange loss of 0.7 million, primarily a result of an unrealized loss on the increased Canadian equivalent value of US dollar denominated accounts payable and long-term debt due to the weakening of the Canadian dollar relative to the US dollar.

Speaker #3: Which was partially offset by an unrealized gain on foreign currency denominated accounts receivable and net intercompany receivables. Adjusted EBITDA increased to 31.1 million in the second quarter of this year compared to 29.2 million in the second quarter of 2025.

John Pollard: Adjusted EBITDA increased to CAD 31.1 million in Q2 of this year, compared to CAD 29.2 million in Q2 2025. The primary reasons for this CAD 1.9 million increase were the increase in gross profit, a net of amortization and depreciation of CAD 5 million, substantially as a result of the increased instant ticket, eTab, and Pollard iLottery margins that we spoke about previously. Also increasing Adjusted EBITDA in 2026 was the lower realized foreign exchange loss of CAD 0.6 million. Partially offsetting these increases to Adjusted EBITDA was the decrease in our equity investment income from our NPI joint venture of CAD 2.7 million, and the increase in administration expenses, net of ERP implementation and acquisition costs of CAD 1.4 million.

Speaker #3: The primary reasons for this 1.9 million dollar increase were the increase in gross profit and net of amortization and depreciation of $5 million substantially as a result of the increased instant ticket ETAB and Pollard eye lottery margins that we spoke about previously.

Speaker #3: Also increasing adjusted EBITDA in 2026 was the lower realized foreign exchange loss of 0.6 million. Partially offsetting these incre increases to adjusted EBITDA was the decrease in the our equity investment income from our NPI joint venture of 2.7 million.

Speaker #3: And the increase in administration expenses, net of ERE, ERP implementation, and acquisition costs of $1.4 million. I am also very happy to note, of course, that our second quarter adjusted EBITDA of $31.1 million was also significantly higher than our adjusted EBITDA in the first quarter of this year of only $21.5 million, driven by those higher instant ticket volumes and average selling price, as well as the increased contributions from Digital.

John Pollard: I am also very happy to note, of course, that our Q2 Adjusted EBITDA of CAD 31.1 million was also significantly higher than our Adjusted EBITDA in Q1 of this year of only CAD 21.5 million, driven by those higher instant ticket volumes and average selling price, as well as the increased contributions from digital. Interest expense decreased to CAD 2.4 million in Q2 of this year from CAD 3.1 million in Q2 2025, primarily as a result of lower interest rates in Q2 of this year, as well as the reduction in average long-term debt outstanding compared to 2025. Amortization and depreciation, including amortization and depreciation of our equity investment, totaled CAD 13.2 million during Q2 2026, which increased from CAD 12.3 million in Q2 2025.

Speaker #3: Interest expense decreased to 2.4 million in the second quarter of this year from 3.1 million in the second quarter of 2025, primarily the result of lower interest rates in the second quarter of this year, as well as the reduction in average long-term debt outstanding compared to 2025.

Speaker #3: Amortization and depreciation including amortization and depreciation of our equity investment totaled 13.2 million during the second quarter of 2026, which increased from 12.3 million in the second quarter of 2025.

John Pollard: The increase of CAD 0.9 million was the result of the increased additions of property, plant, and equipment, and intangible assets. Income tax expense was CAD 3.7 million in Q2 of this year, an effective rate of 30.4%, which was higher than our domestic rate of 27.0%, due primarily to the effective withholding and other taxes, partially offset by lower income tax in foreign jurisdictions and the effect of non-taxable items. Finally, net income was CAD 8.7 million in Q2 2026, compared to CAD 8.0 million in Q2 2025. The increase in net income of CAD 0.7 million was primarily due to the increase in gross profit of CAD 4.1 million, primarily a result of increased instant ticket, eTab, and Pollard iLottery margins. Further increasing net income was the decrease in foreign exchange loss of CAD 2.8 million and the decrease in interest expense of CAD 0.7 million.

Speaker #3: The increase of $0.9 million was the result of increased additions of property, plant, and equipment, and intangible assets. Income tax expense was $3.7 million in the second quarter of this year, with an effective rate of 30.4%, which was higher than our domestic rate of 27.0%, due primarily to the effect of withholding and other taxes, partially offset by lower income tax in foreign jurisdictions and the effect of non-taxable items.

Speaker #3: Finally, net income was 8.7 million in the second quarter of 2026 compared to 8.0 million in the second quarter of 2025. The increase of in net income of 0.7 million was primarily due to the increase in gross profit of 4.1 million, primarily a result of increased instant ticket ETAB and Pollard eye lottery margins.

Speaker #3: Further increasing net income was the decrease in foreign exchange loss of 2.8 million and the decrease in interest expense of 0.7 million, partially offsetting these increases to net income where the decrease in equity investment income of 0.7 million the increase in administration expense is 1.8 million and the increase in other expenses of 1.5 million sorry, and lastly, increase in income tax expense of 0.9 million.

John Pollard: Partially offsetting these increases in net income were the decrease in equity investment income of CAD 0.7 million, the increase in administration expense of CAD 1.8 million, and the increase in other expenses of CAD 1.5 million. Sorry, and lastly, an increase in income tax expense of CAD 0.9 million. Net income per share, basic and diluted, increased to CAD 0.32 and CAD 0.32 per share respectively in Q2 2026 from CAD 0.30 and CAD 0.30 per share, basic and diluted, in Q2 2025. That is the end of the prepared part of our discussions. Operator, we would be happy to entertain any questions at this time.

Speaker #3: Net income per share, basic and diluted, increased to $0.32 and $0.32 per share, respectively, in the second quarter of 2026, from $0.30 and $0.30 per share, basic and diluted, in the second quarter of 2025.

Speaker #3: That is the end of the prepared part of our discussions. Operator, we would be happy to entertain any questions at this time.

Operator: Yes, sir. Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. Once again, star and one if you wish to ask a question. Please stand by while we compile the Q&A roster. Thank you for waiting. We now have our first question, and this comes from Stephen Boland from Raymond James. Your line is now open. Please go ahead.

Speaker #1: Yes, sir. Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced.

Speaker #1: Once again, star and one if you wish to ask a question. Please stand by while we compile the Q&A roster. Thank you for waiting.

Speaker #1: We now have our first question. And this comes from Stephen Bolen. From Raymond James, your line is now open. Please go ahead.

Stephen Boland: Morning, everyone. Can you remind me the Belgium revenue recognition? I guess the lottery and the iLottery. I am just trying to get an idea of where this is not actually live yet, right? It is still in development. Like you said, you have gone from scoping to development. So I am just trying to get an idea of how do we look at the revenue recognition quarter by quarter by quarter, or is it a little bit difficult to do that?

Speaker #4: Good morning, everyone. Can you remind me about the Belgium revenue recognition? I mean, it's not, I guess, the lottery and the iLottery.

Speaker #4: I'm just trying to get an idea of, you know, where—like, this is not actually live yet, right? It's still in development. Like you said, you've gone from scoping to development.

Speaker #4: So I'm just trying to get an idea of how do we look at the revenue recognition quarter by quarter by quarter, you know, is it is it a little bit difficult to do that?

Rob Rose: Morning, Steven. It is Rob Rose here. I will take a shot at that one. So there is a number of deliverables under this contract. We are providing a number of different services and solutions, and they will be rolled out and implemented over the course of the next couple of years. Then there is ongoing support and additional work as we support the contract going forward. So really, the revenue recognition really is like a percentage of completion contract basis for construction of a building. So the whole contract will be based on the work we provide, and as we provide and do the work, we will be recognizing a portion of that revenue that we will be able to bill related to that work. The billing is a little bit different than the actual work and recognition of it.

Speaker #2: Good morning, Stephen. It's Rob Rose here. I'll take a shot at that one. So, there's a number of deliverables under this contract for providing a number of different services and solutions.

Speaker #2: and they'll be, rolled out and implemented over the course of the next couple of years. And then there's ongoing support, and, additional work, as we support the contract going forward.

Speaker #2: So really, the revenue recognition is kind of like a percentage of completion contract basis for construction of a building. So the whole contract will be based on the work we provide.

Speaker #2: And as we provide and do the work, we'll be recognizing a portion of that revenue that we will be able to bill, related to that work.

Speaker #2: The billing is a little bit different than the actual work and recognition of it, so really think of it as a percentage of completion that's driven by the amount of work we're doing.

John Pollard: So really think of it as a percentage of completion that gets driven by the amount of work we are doing. It will not be lumpy. It will be somewhat smooth as we build up the work, increasing, and then we will slide down as we change some of the work later on. But that is the revenue driver. And the billing is done separately based on milestones of delivery of the services.

Rob Rose: So really think of it as a percentage of completion that gets driven by the amount of work we are doing. It will not be lumpy. It will be somewhat smooth as we build up the work, increasing, and then we will slide down as we change some of the work later on. But that is the revenue driver. And the billing is done separately based on milestones of delivery of the services.

Speaker #2: So, it would—it will—it won't be lumpy. It will be somewhat smooth as we build up the work, increasing, and then we'll slide down as we, you know, change some of the work later on.

Speaker #2: But that that's the the revenue driver. And the billing is done separately based on milestones of delivery of the services.

Stephen Boland: Okay. Just on the, you said, lower spoilage, manufacturing efficiency. Could you explain what you had to do to get the manufacturing efficiencies to improve? I am just curious, what was the spend? What had to happen to improve that?

Speaker #4: Okay. just on on the you said, you know, lower lower spoilage manufacturing efficiency. Like, could you explain what you had to do to, you know, get that, you know, the the manufacturing efficiencies to to improve?

Speaker #4: you know, not I don't we don't need just I'm just curious, like, you know, what was the spend? What was what what had to happen to to improve, improve that?

John Pollard: It is John Pollard. I will answer that question. The cause of a good portion of some of the high spoilage that we had in the Q1 was due to the fact that the nature of the products we produce is constantly evolving. We are constantly bringing in new innovations and new kinds of products for our customers. And in the Q1, we had some brand-new products that we were launching, that because they were going through some of our manufacturing for the first time, there were just some slightly more unexpected difficulties in manufacturing those than we thought. So to some extent, the problems in the Q1 were just ironing out the initial times that we produced that particular iteration of. It was part of our Scratch FX family of games that we are constantly evolving with new innovations there.

Speaker #2: It's John Pollard. I'll answer that question. I mean, the cause of a good portion of some of the high spoilage that we had in the first quarter was due to the fact that the nature of the products we produce is constantly evolving.

Speaker #2: We're constantly bringing in new innovations and new kinds of products for our customers. And in the first quarter, we had some brand new products that we were launching.

Speaker #2: that because they were going through some of our manufacturing for the first time, there were just some sort of un slightly more unexpected difficulties in the manufacturing those than we thought.

Speaker #2: So to some extent, the problems in the first quarter were just ironing out the initial times that we produced that particular iteration of it was part of our scratch FX family of games that we were constantly evolving with new innovations there.

Doug Pollard: And so it was ironing out those problems on implementing that new product type. But other than that, it is a constant process of continuous improvement that we are always dealing with in trying to improve our efficiencies. And we have a relatively new Executive VP of Operations, Jeff Versterre, working with us, just started in the last year. And he has got all kinds of exciting projects going to make improvements to our process.

Speaker #2: And so it was ironing out those problems. on on implementing that that new product type but of network. It's a it's a constant process of continuous improvement that we're always dealing with in trying to improve our efficiencies.

Speaker #2: And we have a relatively new head executive VP of operations, Jeff Rester, working with us just in started in the last year. And he's got all kinds of exciting projects going to make improvements to our process.

Stephen Boland: Okay. I will just do one more. You mentioned in the press release about game content, that you are always looking for more of that. Is that something you can continue to do organically? Or in the past, you had talked about looking at different studios that might have some innovation in content. I am just wondering if that is still on the table.

Speaker #4: Okay. And I just I'll just do one more. mentioned in the the press release or Dunkin content. that you're always looking for for for more of that.

Speaker #4: Is that something you can continue to do organically or in the past you had talked about looking at different studios that might have some innovation in in content?

Speaker #4: so I'm just wondering if that's still on the table.

Doug Pollard: Hi. Good morning, Stephen. It is Doug Pollard speaking here. The reality for game content is we are looking at both. The roots of our company are in game content, right? We have been doing instant tickets for a long time. We understand content fairly well. So we are building up a game studio internally by adding some various resources, developing games. We keep adding customers all the time who are receiving our games. But it is an important area that is going to only become bigger through both the iLottery channel and the charitable gaming space. The games are quite similar. In fact, one of the games we developed, "Bacon Me Crazy," was developed for an iLottery channel, and it is a record-breaker in the charitable space as well. But because this area is growing and important, we are still looking at outside acquisition opportunities to grow even faster.

Speaker #2: I I again, good morning, Stephen. It's Doug, Pollard calling or speaking here. The the reality for game content is we're looking at both. You know, the roots of our company are in game content, right?

Speaker #2: We've been doing instant scratch-off games for a long time. We understand content fairly well. So we are building up a game studio internally by adding some various resources, developing games.

Speaker #2: You know, we keep adding customers all the time who are receiving our games. But it is an important area that's gonna only become bigger through both the eye lottery channel and the charitable gaming space.

Speaker #2: You know, the games are quite similar in fact, one of the games we developed, Bacon Me Crazy, was developed for an eye lottery channel and and it's a it's a record breaker on the in the charitable space as well.

Speaker #2: But because this area is growing and important, we are still looking at outside acquisition opportunities to grow even faster. But this is definitely an area of emphasis for us.

Doug Pollard: This is definitely an area of emphasis for us.

Stephen Boland: Okay. Thanks very much.

Speaker #4: Okay. Thanks very much.

Operator: Thank you. The next question comes from Robert Young from Canaccord Genuity. Your line is now open. Please go ahead.

Speaker #1: Thank you. And the next question comes from Robert Young from Canaccord Genuity. Your line is now open. Please go ahead.

Robert Young: Hi. Good morning. Thanks for taking the question. I wanted to dig a little deeper on the gross margins. You gave three reasons why gross margins are better. Great to see that. Looking specifically at the instant ticket margins, where I'm guessing is the biggest factor, it would be nice to know if that assumption is correct. You are highlighting volumes, so that would mean that the ASP improvement this quarter and the recovery of the efficiencies in manufacturing, those would be lower impact factors than just the higher volumes. Is that the correct way to think about it? As we go forward here, should we expect those gross margins to continue to improve and maybe the efficiencies build over into Q2? Or maybe if you can just talk about where you expect that to go.

Speaker #3: Hi. Good morning. Thanks for taking the question. I wanted to dig a little deeper on the gross margins. You gave, you know, three reasons why gross margins are better.

Speaker #3: great to great to see that. looking specifically at the instant ticket margins, what I'm guessing is the biggest factor, be nice to know if that assumption is correct.

Speaker #3: But your your hi-highlighting volumes and so that would mean that the ASP improvement this quarter and the the recovery of the efficiencies in manufacturing that would be lower those would be lower impact factors than just the the higher volumes.

Speaker #3: Is that the correct way to think about it? And then you know, as we go forward here, should we expect those gross margins to continue to improve?

Speaker #3: And maybe the efficiencies build over into Q2 of it or is there maybe if you just talk about where that you expect that to go?

Rob Rose: It's Rob here. Good morning. Respective to your question, the answer is at a broad agreement. It was certainly driven by the instant ticket improvement. Certainly sequentially, that was the big driver. It's really a combination of all three of those things. I wouldn't necessarily pull them out and separate them. It's a combination of certainly additional volume gives you leverage on your fixed cost, which works positively for your margin. Our ASP was certainly up as well, depending what comparison you're using, last year or the sequential year. So those are all very important. Probably maybe the lesser of the three right now are the efficiency improvements. That's a bit more of a longer-term process. We've certainly made some improvements, and we talk about the momentum that we've gained as opposed to the absolute CAD dollar improvements.

Speaker #2: Mm-hmm. It's Rob here. Good morning. So, sort of respective to your question, the answer is sort of a broad agreement.

Speaker #2: So it was certainly driven by the instant ticket improvement, certainly sequentially. That was the big driver. And it and it and and it's really a combination of all three of those things.

Speaker #2: I wouldn't necessarily pull them out and separate them. It's a combination of, certainly, additional volume gives you leverage on your fixed cost, which works positively for your margin.

Speaker #2: Our ASP was certainly up as well competing on what depending what comparison you're using last year or the sequential year. so those are all very important.

Speaker #2: Probably maybe the lesser of the three right now are the efficiency improvements. That's a bit more of a longer-term process. We certainly made some improvements and we talk about them momentum that we've gained as opposed to the absolute dollar improvements.

Rob Rose: Certainly longer term, those efficiencies will be just as important. It's really a combination of all three of those factors, Rob. It's hard to pull them apart. We don't give guidance, as you know, in terms of where we expect the gross margin to be. 18.1%, of course, is the highest we've had in a couple of years on a quarterly number, so that's very positive. We expect and know there's more improvement in that. We're still absorbing the startup operations in some of our iLottery and digital spend. So that's not positive into our gross margins. Over time, that will improve, and we think we can continue on our instant tickets, particularly as we have higher volume in California, continuing focus on the new innovations and driving up that ASP.

Speaker #2: But certainly longer-term, that efficiencies will be just as important. So it's really a combination of all three of those factors, Rob. It it it's hard to pull them apart.

Speaker #2: and you know, we we don't give guidance, as you know, in terms of where we expect the gross margin to be. 18.1% of course is the highest we've had in a couple of years on a quarterly number.

Speaker #2: So that's very positive. But we a-expect and know there's a more improvement in that. So we're still absorbing sort of the startup operations and some of our eye lottery and digital spend.

Speaker #2: So that's not positive into our our gross margins. So over time, that will improve. And we think we can continue on our instant tickets, particularly as we have higher volume in California, continuing focus on the new innovations and driving up that ASP.

Doug Pollard: All those factors will give us more positive momentum, not necessarily immediately, but over the next number of quarters. If you look back historically, you have seen us a few years ago in that low 20% range. Again, our company has changed quite a bit, but there is certainly no reason why we cannot move toward that going ahead.

Rob Rose: All those factors will give us more positive momentum, not necessarily immediately, but over the next number of quarters. If you look back historically, you have seen us a few years ago in that low 20% range. Again, our company has changed quite a bit, but there is certainly no reason why we cannot move toward that going ahead.

Speaker #2: So, all those factors will give us more positive momentum—not necessarily immediately, but over the next number of quarters. And if you look back historically, if you've seen us, you know, a few years ago, we were in that low 20% range.

Speaker #2: And again, our companies changed quite a bit, but there's certainly no reason why we can't move toward that going ahead.

Robert Young: Okay, that is great color. The California contract volumes, you said you are exceeding expectations. That is a large volume contract. Should we think of that as something that is good for margins, or is overperformance there dilutive to the instant ticket margins, if you can share that?

Speaker #3: Okay, that's great color. The California contract volumes—you said you're exceeding expectations, and that's a large volume contract. Should we think of that as something that's good for margins?

Speaker #3: or or or is that a i-i-is overperformance there dilutive to the instant ticket margins if you could share that?

John Pollard: Hey Rob, it is John Pollard answering this one. Let me be clear, it is positive for margins. Although, just the nature and the size of the California contract means that the price we had to bid is going to be lower than our average price on some of our other contracts. But because of the volume, it is still definitely positive in margins. We have actually seen two benefits on California that are, when we say exceeding expectations, the volumes themselves have been slightly higher than we expected. Also, we have been more successful in raising the projected average selling price on that account from what we expected going in, just due to success in selling them on some of our value-added innovations that are optional to the contract. We have achieved a slightly higher ASP than we thought.

Speaker #2: hey, Rob. It's John, Pollard answering this one. So look, the i-it the well, let me be clear. It's positive for margins. although, you know, the the just the nature and the size of the California contract means that, you know, the price we had to bid is gonna be lower than our the average price in some of our other contracts.

Speaker #2: But it's def because of the volume, it's still definitely positive in margins. And so we've actually seen two benefits on California that are when we say ex-exceeding expectations, the volumes themselves have been slightly higher than than we expected.

Speaker #2: And also, we've been more successful in raising our the projected average selling price on that on that account from what we expected going in just due to success in selling them on some of our value-added innovations.

Speaker #2: that our option to the contract. So we've achieved a slightly higher A-ASP than we than we thought. So it is it's sort of an interesting dynamic there because it's it's it's a lower overall margin for sure than some of our other higher margin accounts.

Doug Pollard: It is sort of an interesting dynamic there because it is a lower overall margin for sure than some of our other higher-margin accounts, but it is overall positive.

John Pollard: It is sort of an interesting dynamic there because it is a lower overall margin for sure than some of our other higher-margin accounts, but it is overall positive.

Speaker #2: but it is overall positive.

Robert Young: Yeah, that is great to hear. Last question from me, I think just on the Kansas iLottery. You noted in the prepared remarks that it expires in October. I think we all knew that. You have already submitted an RFP response. I would assume that you are in a very good position given that you already had some ramp start-up costs that are absorbed into that contract. I guess the first part of my question would be that if you were to lose the contract, what would the financial impact be, given you have already absorbed a bunch of ramp costs? What is your confidence on extending that, given how the performance has gone thus far? I will pass the line.

Speaker #3: Yeah, that's great to hear. Last question from me, I think, just on the Kansas iLottery. You noted in the prepared remarks that it expires in October.

Speaker #3: I think we all knew that. you've you've already submitted an RFP response. I would assume that you're in a very good position given that you've already had some ramp startup costs that are absorbed into that contract.

Speaker #3: And so I guess the first part of my question would be that, you know, if you were to lose the contract, what would the financial—sorry, the financial impact be?

Speaker #3: Given you've already absorbed a bunch of ramp costs. And then what's your confidence on, you know, extending that? given you know, how the performance has gone thus far?

Speaker #3: And I'll pass the line.

Doug Pollard: Hi, it is Doug Pollard here. Maybe I will answer the second part first, because I would say that we are very confident, but we are not taking the Kansas Lottery contract for granted. We worked very hard to put in what we believe is a very compelling proposal for the Kansas Lottery, where we can continue the partnership and help grow their business. The Kansas Lottery is thrilled with what we have achieved together over the last year, frankly, and so are we. I do not expect they are going to want to change. That said, there is no certainty. It is a public bid process and you just do not know what is going to come out of that. As far as what the negative financial consequences would be, I do not know that I could begin to speculate.

Speaker #2: Hi. It's Doug Pollard here. Maybe I'll answer the second part first 'cause I would say that we are very confident, but we are not taking the Kansas lottery contract for granted.

Speaker #2: And so we work very hard to put in what we believe is a very compelling proposal for the Kansas Lottery, where we can continue the partnership and help grow their business.

Speaker #2: the Kansas lottery is thrilled with what we've achieved together over the last year, frankly. And so are we. So I don't expect they're going to want to change.

Speaker #2: But that said, there's no certainty. It's a public bid process, and you just don't know what's going to come out of that. As far as what the negative financial consequences would be, I don't know that I could begin to speculate.

Doug Pollard: Obviously there are some variable costs, but mostly we are developing platforms and capabilities and I suppose we would have to go and deploy those elsewhere.

Speaker #2: You know, obviously, there are some variable costs, but but mostly, we're developing platforms and capabilities and I'd have I suppose we'd have to go and deploy those elsewhere.

Robert Young: Thanks for taking the questions.

Speaker #3: Thanks for taking the questions.

Doug Pollard: Thank you, Rob.

Operator: Thank you. Yes, sir. Thank you. The next question comes from David McFadgen from ATB Cormark. Your line is now open. Please go ahead.

Speaker #2: Thank you, Rob.

Speaker #1: Thank you. Yes, sir. Thank you. And the next question comes from David McFagin from ATB Carmark, your line is now open. Please go ahead.

David McFadgen: Oh, yes. Hi. I have a few questions. Maybe I'll just start with Kansas. Are you still incurring EBITDA losses on Kansas?

Speaker #4: Oh, yes. Hi. Yeah. I have a few questions. so maybe I'll just start with Kansas. are you still incurring EBITDA losses on Kansas?

Rob Rose: It's Rob here, David. Morning. Kansas continues to be in that build-up mode. We're not in a profitable level, but certainly that we want to be, but we're seeing some good momentum in that way, but it will take some time. We all get a little bit forgetful that of course, with the money that we're making on mature iLottery operations such as NPI, it took many years to get to that level. You'd only have to go back a couple of years to see our joint venture wasn't even contributing anything. It's been quite successful once it gets to a mature level. So we're still working through that with Kansas. There's lots of opportunities to improve their work. Some of these are kind of postponed or not actively done when it's an RFP process. It's sort of status quo while they work through that process.

Speaker #2: It's Rob here, David. Good morning. You know, Kansas continues to be in that buildup mode, so we're not at a profitable level, but certainly, that's where we want to be.

Speaker #2: But we're seeing some good momentum in that way. But it will take some time. we we all get a little bit forgetful that of course, with the money that we're making on mature eye lottery operations such as the the NPI, you know, it took many years to get to that level.

Speaker #2: You could you'd only have to go back a couple of years to see our joint venture wasn't even contributing anything. So, you know, it's been quite successful once it gets to the mature level.

Speaker #2: So we're still working through that with Kansas. there's lots of opportunities to improve their their work. some of these are are are kind of postponed or not actively done when it's an RFP process.

Speaker #2: It's sort of status quo while they work through that process. But we're very optimistic that, you know, if and when we expect to return to that contract, we'll have more opportunities to really continue to build that base with more players and get back to a mature state, as these iLottery contracts normally follow.

Rob Rose: We are very optimistic that if and when we expect to return to that contract, we will have more opportunities to really continue to build that base with more players and get back to a mature state as these iLottery contracts normally follow.

David McFadgen: Okay. In the event that, let us say you do not win on this RFP, is there a cure? Is there a make-whole given the losses you have incurred to date and then they pull it from you?

Speaker #4: Okay. So in the event that let's say you don't win on this RFP, is there a is there a ma is there a cure?

Speaker #4: Is there a make-all given the losses you've incurred to date? And then they pull it from you?

Doug Pollard: No, there is not. That reflects our. We believe that if we can get these contracts and we can be successful, we will continue to be a provider and we believe in the long term there is money to be made in this digital iLottery space. That does require taking some risks. Taking Kansas on that short term that was remaining with our loyalty contract was a risk, no question about it. We believe it was a good one and we continue to believe it was a good one.

Speaker #2: no. There's not. And and that reflects, you know, we believe that if we can get these contracts and we can be successful, we'll continue to be a provider.

Speaker #2: And we believe in the long term, there's money to be made in this digital iLottery space. But that does require taking some risks.

Speaker #2: So taking Kansas on on that short term that was remaining with our loyalty contract was a risk, no question about it. We believe it was a good one, and we continued to believe it was a good one.

David McFadgen: Okay. Just moving to California. Based on the answer to the previous question, it seems like the gross margin percentage would be lower, but given the volume, it is going to be obviously accretive to just gross profit. Is that the correct way to understand this?

Speaker #4: Okay. So then, just moving to California—based on the answers to the previous question, it seems like the gross margin percentage would be lower.

Speaker #4: But given the volume, it's gonna be obviously accretive to just gross profit. Is that their— is that the correct way to understand this?

John Pollard: It's John. I suppose I've never really crunched the numbers exactly as to the exact impact on the margin percentage from California. It depends a little bit on the interplay of variable and fixed costs. The nice thing about our instant ticket operations, when your volumes are going up, it's nice, is that their costs are relatively fixed in a lot of ways. When we calculate our gross margin percentage, of course, that's after a full burden of allocated fixed overhead cost into that number. If I looked at a pure report that would say what my percentage margin was, it's after an allocation of that fixed cost into California. But incrementally, as we've grown, we haven't had to add much to that fixed cost.

Speaker #2: I mean, it's John. We we I I suppose I've never really crunched the numbers exactly as to the the exact impact on the m the margin percentage from California.

Speaker #2: there's it it depends a little bit on the interplay of variable and fixed costs. I mean, the nice thing about our instant ticket operations when your bonds are going up, it's nice, is that the costs are relatively fixed in in a lot of ways.

Speaker #2: And so when we calculate our gross margin percentage, of course, that's kind of after a full burden of allocated fixed overhead costs into that number.

Speaker #2: And so, if I looked at a pure report, you know, that would say what my percentage margin was, it's after an allocation of that fixed cost into California.

Speaker #2: But really, incrementally, as we've grown, we haven't had to add much to that fixed cost. So the you know, it's it's kind of an accounting exercise a little bit, that, you know, a a report might actually say a lower a lower gross margin than average on California.

John Pollard: It's an accounting exercise a little bit, that a report might actually say a lower gross margin than average on California. But if you really backed out the fixed cost allocation, it makes it quite a bit higher. California wouldn't be driving up significantly or maybe much at all our overall gross margin percentage. It's certainly very positive the absolute number of gross margin. In terms of changing the percentage, it's probably not that material one way or the other, frankly, on the actual percentage.

Speaker #2: But if you really backed out the fixed cost allocation, that it it makes it quite a bit higher. So yeah, it's not it wouldn't be it wouldn't California wouldn't be driving up significantly or maybe much at all or overall gross margin percentage.

Speaker #2: it's certainly very positive that absolute number of gross margin. In in terms of changing the percentage, it's probably not that material one way or the other frankly, on the on the actual percentage.

David McFadgen: Okay. Then just on Virginia, can you give us an update on the Virginia RFP?

Speaker #4: Okay. And then just on Virginia, can you give us an update on the Virginia RFP?

Doug Pollard: Virginia Lottery issued an RFP. If you recall a while back, they pulled it, then they reissued it. That RFP is due, I believe, 18 September. That's an open RFP, and it's in with our bid team, and really not much more we can say than that at this juncture.

Speaker #2: Virginia lottery issued an RFP if you re-recall a while back. They pulled it. Then they reissued it. That RFP is due, I believe, September 18th.

Speaker #2: And so that's an open RFP, and it's in with our bid team. There's really not much more we can say than that at this juncture.

David McFadgen: Have they given an indication as to when they will announce the winner of the RFP, and when that winner would take over the contract?

Speaker #4: S have they announced or have they have they given an indication as to when they'll announce the winner of the RFP and then when that winner would take over?

Speaker #4: The the contract?

Doug Pollard: Well, let's go from the end. The contract goes until the summer of 2028. It will run its full course with NPI, and then we will see what happens after that. They would announce their winner. In this case, I think they have expectations to do that later in November. When lotteries indicate that as their timing, that is an indication. That is not a certainty.

Speaker #2: Well, the contract let's let's go from the end. the contract goes until the summer of 2028. So that they'll it'll run its full course with NPI and and then we'll see what happens after that.

Speaker #2: they would announce their winner you know, in this case, I think they've ex they have expectations to do that later in November. But you know, those when lotteries indicate that as their timing, that that's an indication.

Speaker #2: That that's not a certainty.

David McFadgen: Yeah. Okay. Just on NPI, that one customer that negatively impacted the NPI business in the quarter, is that the first quarter where you have experienced the impact from that? We should expect another three quarters to lap it up?

Speaker #4: Yeah, okay. And then just on NPI, that one customer that negatively impacted the NPI business in the quarter, is that the first quarter where you've experienced the impact from that?

Speaker #4: And so then we should expect another three quarters to lap it?

Rob Rose: Sorry, David. It is Rob. No. Last year, New Hampshire contract ended. It was in the comparative numbers for last year, but it is not in the numbers this year.

Speaker #2: sorry, David. It's Rob. No. Last year, New Hampshire contract ended. So it was in the comparative numbers for last year, but it's not in the numbers this this year.

David McFadgen: Okay. All right. Okay. Thank you.

Speaker #4: Okay. All right. Okay. Thank you.

Rob Rose: Thank you.

Doug Pollard: Thanks, David.

Speaker #2: Thank you.

Speaker #3: Thanks, David.

Operator: Thank you. There are no further questions that came through. I will now turn the call back over to Mr. Doug Pollard. Please go ahead, sir.

Speaker #1: Thank you. And there are no further questions that came through. I'll now turn the call back over to Mr. Doug Pollard. Please go ahead, sir.

Doug Pollard: Thank you very much, John. We are very pleased with the results of our Q2, and more importantly, we are very pleased that our results confirm that our underlying strategy, which we have, is the correct strategy to drive our long-term success. It was very nice to see in the quarter all of our major product lines are doing well. That is retail, including instant tickets, charitable gaming, as well as digital, and they all perform strongly, and we are very excited for the opportunities ahead of us for the rest of 2026 and beyond. For those of you on the call, thank you for joining us. Thank you for your support, and we look forward to updating you again next quarter. Until then, have a great rest of your day.

Speaker #2: Okay, thank you very much, John. So we're very pleased with the results of our second quarter, and more importantly, we're very pleased that our results confirm that our underlying strategy is the correct strategy to drive our long-term success.

Speaker #2: It was very nice to see in the quarter all of our major product lines are doing well. That that is retail, including instant tickets.

Speaker #2: Charitable gaming, as well as digital. And they all performed strongly. And we're very excited for the opportunities ahead of us for the rest of 2026 and beyond.

Speaker #2: So for those of you on the call, thank you for joining us. Thank you for your support. And we look forward to updating you again next quarter.

Speaker #2: Until then, have a great rest of your day.

Operator: Thank you. This concludes our conference call for today. Thank you all for participating. You may now disconnect.