VANCOUVER, March 30, 2020 /PRNewswire/ - Village Farms
International, Inc. ("Village Farms" or the "Company") (TSX: VFF)
(NASDAQ: VFF) today announced its financial results for the fourth
quarter and year ended December 31,
2019. All figures are in US dollars unless otherwise
indicated. Village Farms currently has a majority
(non-controlling) interest of 57.4% of its cannabis joint venture,
Pure Sunfarms Corp. ("Pure Sunfarms"), however, at December 31, 2019 had a majority
(non-controlling) interest of 53.5%.
The Company's financial statements for the three months and
twelve months ended December 31,
2019, as well as the comparative periods for 2018, have been
prepared and presented under United States General Accepted
Accounting Principals ("GAAP"). Prior thereto, the Company's
financial statements were prepared and presented under
International Financial Reporting Standards ("IFRS"). Under GAAP,
the Company reports Biological Asset at historical cost rather than
at fair value, which is required under IFRS. Accordingly, net
income and earnings per share for prior periods prepared and
presented under IFRS are not comparable to those contained
herein.
Village Farms' Financial Results for the Year Ended
December 31, 2019
(All
comparable figures are for the year ended December 31, 2018)
- Produce sales were US$144.6
million compared with US$150.0
million;
- Net income of US$2.3 million,
which included the positive net income from Pure Sunfarms of
US$16.3 million (C$21.7 million) (Village Farms' proportionate
share). This compares with a net loss of (US$7.5 million);
- Earnings per share was US$0.05
compared with a loss per share of (US$0.17);
- Adjusted EBITDA was US$0.9
million, including the positive contribution from Pure
Sunfarms of US$20.6 million
(C$27.3 million) (Village Farms'
proportionate share). This compares with adjusted EBITDA of
US$2.6 million;
Pure Sunfarms' (Cannabis Joint Venture) Financial Results for
the Year Ended December 31,
2019
(All comparable figures are for the year
ended December 31, 2018.)
- Net sales (before Village Farms' proportionate share), which
consisted entirely of dried cannabis, were C$82.8 million (US$62.3
million) compared with C$4.9
million (US$3.7 million);
- "All-in" cost of cultivation (including depreciation) was
C$0.78 (US$0.59) per gram;
- Gross margin was 76% compared with 69%;
- Selling, general and administrative expenses (before Village
Farms' proportionate share) were C$10.4
million (US$7.9 million)
compared with C$3.4 million
(US$2.5 million);
- Net income (before Village Farms' proportionate share) of
C$36.5 million (US$27.4 million); and,
- EBITDA (before Village Farms' proportionate share) was
C$54.1 million (US$40.7 million), resulting in an EBITDA margin
of 65%, compared with C$0.3 million
(US$0.2 million).
Village Farms' Financial and Corporate Highlights for the
Fourth Quarter Ended December 31,
2019
(All comparable figures are for the fourth
quarter ended December 31,
2018)
- Produce sales were US$33.1
million compared with US$38.8
million;
- Net loss was (US$7.2 million),
which included the positive net income from Pure Sunfarms of
US$1.8 million (C$2.3 million) (Village Farms' proportionate
share). This compares with a net loss of (US$2.4 million);
- Loss per share was (US$0.14)
compared with loss per share of (US$0.05);
- Adjusted EBITDA loss was (US$8.3
million), including the positive contribution from Pure
Sunfarms of US$2.8 million
(C$3.7 million) (Village Farms'
proportionate share) and including the write off of a portion of
the Company's hemp investment and its proportionate share of the
write down of hemp inventory, which combined were US$2.7 million. This compares with positive
adjusted EBITDA of US$1.0
million;
- Subsequent to quarter end, completed an underwritten public
offering of 3,125,000 common shares plus the exercise in full of
the over-allotment option of 468,750 common shares at a price of
C$3.20 per share for aggregate gross
proceeds to the Company of C$11,500,000; and,
- Increased its ownership of its cannabis joint venture, Pure
Sunfarms, to 53.5% at December 31,
2019 and subsequently to 57.4% as of March 3, 2020.
Pure Sunfarms' (Cannabis Joint Venture) for the Fourth
Quarter Ended December 31,
2019
(All comparable figures are for the fourth
quarter ended December 31,
2018.)
- Net sales (before Village Farms' proportionate share), which
consisted entirely of dried cannabis, were C$12.1 million (US$9.2
million) compared with C$4.7
million (US$3.5 million);
- "All-in" cost of cultivation (including depreciation) was
C$0.66 (US$0.50) per gram;
- Gross margin was 74% compared with 71%;
- Selling, general and administrative expenses (before Village
Farms' proportionate share) of C$3.0
million (US$2.3 million)
compared with C$1.3 million
(US$1.0 million);
- Net income (before Village Farms' proportionate share) of
C$4.4 million (US$3.3 million) compared with C$1.8 million (US1.4 million); and,
- EBITDA (before Village Farms' ownership share) was C$6.9 million (US$5.3
million), resulting in an EBITDA margin of 57%, compared
with C$2.3 million (US$1.7 million), resulting in an EBITDA margin of
44%.
Recent Highlights for Village Farms' Canadian
Cannabis Joint Venture, Pure Sunfarms
- Launched its branded products in Alberta, increasing its market presence to
three of Canada's four most
populous provinces (also including Ontario and British
Columbia) or nearly two-thirds of the Canadian recreational
cannabis market (by population);
- Remained the top-selling brand of dried flower with the Ontario
Cannabis Store (OCS) by both dollars sold and kilograms sold for
the year to date ended February 29,
2020, achieving a 13.5% market share (by kilograms sold),
with two of the top four dried cannabis products by both dollars
sold and kilograms sold and the top selling dried cannabis product
by both dollars sold and kilograms sold;
- Launched a new large-format 28-gram (1 ounce) high-quality
cannabis product;
- Received approval from Health Canada to operate the final
components of its 65,000 square foot, state-of-the-art processing
center located within the 1.1 million square foot Delta 3
greenhouse facility. The expanded processing area will enable Pure
Sunfarms to generate additional production cost efficiencies,
further elevate the quality of its products, expand its product
offerings and increase its processing throughput. The processing
centre includes an extraction area that will have processing
capacity of 35,000 kilograms of biomass annually and the new area
has been designed to satisfy full European Union GMP compliance and
certification, which Pure Sunfarms is currently pursuing;
- Continued to prepare for the introduction of new product forms
under Cannabis 2.0, expected to commence in the second half of this
year; and,
- Expanded its credit facility with its existing lender to
$59 million, including accordion
provisions of $22.5 million.
Management Commentary
"2019 was an outstanding year for Pure Sunfarms that saw it
generate more than C$35 million in
net income and EBITDA of C$54 million
on sales of C$83 million, with a
full-year, all-in cost of production of C$0.78, even as it was ramping up operations for
much of the year," said Michael
DeGiglio, CEO Village Farms. "In an industry that has
been broadly impacted by inexperience and imprudence, Pure Sunfarms
continues to set itself apart both operationally and
financially."
"Even amidst the continuing challenging macro environment,
partially due to slower than expected retail store openings, Pure
Sunfarms reported positive net income and positive EBITDA in the
fourth quarter – its fifth consecutive quarter of positive EBITDA.
Fourth quarter sales reflect Pure Sunfarms' transition from its
focus entirely on the wholesale market to its focus on the branded
retail market. As expected, during the fourth quarter Emerald
did not take any of its 40% commitment under its supply agreement
with Pure Sunfarms, which could not readily be redirected given the
inactive wholesale market. In addition, one of the three
large initial branded retail product shipments to provincial boards
occurred before the fourth quarter, with one of the other three
occurring after the fourth quarter."
"Immediately out of the gate, Pure Sunfarms established itself
as a leading cannabis brand, highlighted by its number one dried
cannabis sales performance in Ontario. This bodes very well for Pure
Sunfarms as the Canadian market continues to grow, as provinces,
especially Ontario, expand their
retail store counts, and Pure Sunfarms expands into other
provinces, and introduces new products, including new product forms
under Cannabis 2.0. Importantly, Pure Sunfarms' industry
leading cost of production, with opportunities to drive that cost
even lower, provides it with significant pricing flexibility to
capture even greater market share."
"In our U.S. hemp and CBD business, 2019 saw us build the
foundation to capitalize on this transformative long-term
opportunity, highlighted the formation of joint ventures with
high-caliber partners for outdoor cultivation, a very successful
inaugural outdoor growing season, the start of conversion of a
greenhouse operation for hemp production and significant
advancement on our consumer packaged goods strategy. At this
time, we have deemed it prudent to pause capital investment given
the current uncertain regulatory environment and limited
visibility, which has had significant negative impact on hemp
demand and pricing. As we await regulatory clarity, we remain
committed to the industry, and continue to actively pursue
opportunities in the near term."
"2019 continued to see the transition of our produce business as
we experienced ongoing pricing pressure from U.S. and Canadian
retailers and, as expected, had lower volumes due to the
displacement of production capacity for both cannabis in
Canada and hemp production in the
U.S., ahead of bringing our significantly expanded growing partner
production on board. At the same time, we have
maintained our corporate cost structure to support our significant
opportunities in hemp and CBD, as well as cannabis in Canada. Notwithstanding the potential impacts
of the COVID-19 pandemic, we expect to see significant partner
capacity this year as we continue to execute on our plan to return
the produce business to positive EBITDA generation."
Summary Statutory Results
(in thousands of U.S.
Dollars unless otherwise indicated)
|
For the three
months
ended December 31,
|
|
For the Year
ended
December 31,
|
|
2019
|
2018
|
|
2019
|
2018
|
Produce
sales
|
$33,056
|
$38,787
|
|
$144,568
|
$150,000
|
Cost of
sales
|
(37,494)
|
(36,768)
|
|
(151,913)
|
(140,683)
|
Selling, general and
administrative expenses
|
(5,390)
|
(3,622)
|
|
(16,762)
|
(14,108)
|
Stock compensation
expense
|
(1,524)
|
(1,007)
|
|
(4,714)
|
(1,454)
|
Interest
expense
|
(596)
|
(720)
|
|
(2,614)
|
(2,794)
|
Interest
income
|
385
|
200
|
|
1,036
|
311
|
Foreign exchange gain
(loss)
|
95
|
(960)
|
|
433
|
(1,047)
|
Other income,
net
|
49
|
70
|
|
268
|
131
|
Gain on disposal of
assets
|
6
|
-
|
|
13,564
|
-
|
Loss on write-off of
investment
|
(1,184)
|
-
|
|
(1,184)
|
-
|
(Provision for)
recovery of income taxes
|
5,752
|
908
|
|
5,866
|
2,300
|
Share of income
(loss) from joint ventures
|
(338)
|
687
|
|
13,777
|
(171)
|
Net income
(loss)
|
($7,183)
|
($2,425)
|
|
$2,325
|
($7,515)
|
Adjusted EBITDA
(1)
|
($8,371)
|
$1,179
|
|
$851
|
$2,638
|
Earnings (loss) per
share – basic
|
($0.14)
|
($0.05)
|
|
$0.05
|
($0.17)
|
Earnings (loss) per
share – diluted
|
($0.14)
|
($0.05)
|
|
$0.05
|
($0.17)
|
Summary Results Including Joint Ventures, on a Proportionate
Basis
The following results reflect the Company's proportionate share
of the Pure Sunfarms joint venture operations, as this is the basis
on which management bases its operating decisions and
performance. For a reconciliation to the results in
accordance with GAAP refer to the "Reconciliation of GAAP to
Proportionate Results" as presented below.
(in thousands of U.S. Dollars unless otherwise
indicated)
|
For the three
months
ended December 31,
|
|
For the year
ended
December 31,
|
|
20192
|
|
20182
|
|
20192
|
|
20182
|
Consolidated
sales
|
$38,112
|
|
$40,538
|
|
$181,673
|
|
$151,845
|
Cost of
sales
|
(40,458)
|
|
(37,274)
|
|
(162,604)
|
|
($141,259)
|
Selling, general and
administrative expenses
|
(6,537)
|
|
(3,204)
|
|
(21,921)
|
|
(15,457)
|
Gain on disposal of
assets
|
(72)
|
|
-
|
|
13,486
|
|
-
|
Net income
(loss)
|
($6,003)
|
|
($1,718)
|
|
$2,325
|
|
($7,515)
|
Adjusted
EBITDA(1)
|
($8,371)
|
|
$1,179
|
|
$851
|
|
$2,638
|
Earning (loss) per
share – basic
|
($0.13)
|
|
($0.04)
|
|
$0.05
|
|
($0.17)
|
Earning (loss) per
share – diluted
|
($0.13)
|
|
($0.04)
|
|
$0.05
|
|
($0.17)
|
|
|
Notes:
|
|
(1)
|
Adjusted EBITDA is
not a recognized earnings measure and does not have a standardized
meaning prescribed by GAAP. Therefore, Adjusted EBITDA may
not be comparable to similar measures presented by other
issuers. See "Non-GAAP Measures". Management believes
that Adjusted EBITDA is a useful supplemental measure in evaluating
the performance of the Company. Consolidated Adjusted EBITDA
includes the Company's majority non-controlling Pure Sunfarms, 65%
interest in VFH and 60% (effective 63.25% with VFH interest)
interest in AVGGH.
|
|
(2)
|
The adjusted
consolidated financial results have been adjusted to include the
Company's share of revenues and expenses from its Pure Sunfarms and
Hemp joint ventures on a proportionate accounting basis, on which
management bases its operating decisions and performance
evaluation. GAAP does not allow for the inclusion of the
Joint Venture on a proportionate basis. These results include
additional non-GAAP measures such as EBITDA.
|
|
|
The adjusted results
are not generally accepted measures of financial performance under
GAAP. The Company's method of calculating these financial
performance measures may differ from other companies and
accordingly, they may not be comparable to measures used by other
companies. Refer to the Company's 10-K for a reconciliation
of these non-GAAP measures and adjusted results.
|
Financial Highlights
(All amounts in U.S. Dollars
unless otherwise indicated.)
Cannabis
For the three months ended December
31, 2019 compared to the three months ended December 31, 2018.
Pure Sunfarms' total sales for the three months ended
December 31, 2019 consisted of over
1,100 kilograms sold at an average selling price of over
C$3.59 per gram. During the
fourth quarter all the cannabis sales were branded retail sales to
provincial boards and for the most part represented replenishment
orders during the quarter. Additionally, Pure Sunfarms
recognized $8.1 million upon the
completion of the Settlement Agreement with Emerald, which
represented 2019 wholesale revenues. For the period ended
December 31, 2018, sales were 100%
wholesale to other licenced producers such as Emerald.
Pure Sunfarms' total cost of sales for the three months ended
December 31, 2019 was $873, up from $506
during the three months ended December 31,
2018. Cost of sales includes, cost of dried flower
production, which was C$0.66 per
gram, packaging and transportation. Sales to date have been solely
dried flower, so packaging costs have not been material to date.
The cost of dried flower production per gram for the fourth quarter
of 2018 was substantially higher due to the substantive increase in
cultivation space throughout 2019, and as such, should not be used
for comparison.
Pure Sunfarms' overhead costs for the three months ended
December 31, 2019 were C$2,990 (US$2,267)
up from C$1,540 (US$952) for the three months ended December 31, 2018, due to a substantive increase
in headcount during 2019, as well as 2019 fourth quarter brand
launch costs in Ontario and
British Columbia.
Pure Sunfarms' net income for the three months ended
December 31, 2019 was C$4,354 up from $1,814 for the three months ended December 31, 2018, due to increased sales and the
Emerald settlement (which essentially was all net income for Pure
Sunfarms as the cost of grams sold relating to the Emerald
settlement had been taken in the third quarter of 2019).
Pure Sunfarms' Adjusted EDITDA for the three months ended
December 31, 2019 was C$6,945 compared to C$2,286 for the three months ended December 31, 2018. This was the fifth consecutive
quarter with positive EBITDA.
For the year ended December 31,
2019 compared to the year ended December 31, 2018.
Pure Sunfarms' total sales for the year ended December 31, 2019 was C$82,810 (US$62,342) from C$4,917 (US$3,691)
for the year ended December 31,
2018. Total Pure Sunfarms sales consisted of approximately
26,000 kilograms of flower and trim during the year ended
December 31, 2019, at an average
sales price of approximately C$2.90
per gram (US$2.15 per gram). Roughly
92% of 2019 sales were to the wholesale channel and 8% to the
branded retail channel.
Pure Sunfarms' total cost of sales for the year ended
December 31, 2019 was C$20,021 (US$15,067), up from C$1,542 (US$1,154)
for the year ended December 31, 2018
due to substantive growth in operations and cultivation costs.
Based on total grams sold of close to 26,000 kilograms, Pure
Sunfarms "all in" cost of dried flower for the full year of 2019
was approximately C$0.78 per gram
(US$0.59 per gram). Pure Sunfarms
most significant cost of sales is labor at its greenhouse
facility.
Pure Sunfarms' selling, general and administrative
expenses for the year ended December
31, 2019 was C$10,445
(US$7,883) from C$3,385 (US$2,584)
for the year ended December 31, 2108
due to increases in headcount related to expansion of its business
and markets, as well as increases in sales and marketing costs as
well as health Canada Regulatory fees (C$1,200).
Pure Sunfarms' net income for the year ended December 31, 2019 was C$36,457 (US$27,414) versus a loss of (C$171) ((US$222))
for the year ended December 31,
2018.
Pure Sunfarms adjusted EBITDA for the year ended December 31, 2019 was C$54,073 (US$40,692) versus C$288 (US$177) for
the year ended December 31,
2018.
Produce
For the three months ended December
31, 2019 compared to the three months ended December 31, 2018.
Sales for the three months ended December
31, 2019 decreased by ($5,731), or (15%), to $33,056 from $38,787 for the three months ended December 31, 2018. The decrease in sales is
primarily due to a decrease in the Company's revenue of (27%) due
to a decrease of (22%) in product volume, partially offset by an
increase in supply partner revenue of 6%. The decrease in the
Company's own production is due to disease pressure at a
Texas facility and the closure of
half of the Monahans facility in
anticipation of CBD production derived from Hemp.
Cost of sales for the three months ended December 31, 2019 increased by $726, or 2%, to $37,494 from $36,768 for the three months ended December 31, 2018; primarily due to an increase
in cost per pound from the Texas
facilities, which is due to production issues that caused decreases
in production. The decrease in production for the crop causes
an increase in cost per pound as most costs are fixed and, as
production decreases, cost per pound increases.
Adjusted EBITDA for the three months ended December 31, 2019 decreased by ($9,038) to ($8,028) from $1,010 for the three months ended December 31, 2018. The decrease is primarily as a
result of a decrease in the Company's sales and an increase in cost
of goods sold and selling, general and administrative expenses.
For the year ended December 31,
2019 compared to the year ended December 31, 2018.
Net sales for the year ended December 31,
2019 decreased ($5,432), or
(4%), to $144,568 compared to
$150,000 for the year ended
December 31, 2018. The decrease
in net sales is primarily due to a decrease in the Company's own
production revenues of ($9,348) or
(12%) partially offset by an increase in supply partner revenues of
$5,191. The decrease in the
Company's own production revenues is due to a decrease of (8%) in
the Company's product volume and a (4%) decrease in the average
selling price of tomatoes. The decrease in the Company's own
production volume is primarily due to a clean-out in one of the
Company's facilities (which did not occur in the last three years)
and ongoing disease pressure at the Company's Texas facilities. The decrease in the
Company's average selling price was a decrease in the pricing of
commodity items, due to a continued push by retailers to lower
prices in an over-supplied market.
Cost of sales for the year ended December
31, 2019 increased $11,230, or
8%, to $151,913 from $140,683 for the year ended December 31, 2018, due to an increase in contract
sales cost of 11% and an increase in the cost per pound of the
Company's own grown product in Texas due primarily due to decreased
production and higher labor costs. The increase in labor cost is
due to the utilization of higher hourly rate contract laborers
versus VFF employees for the 2018/2019 crop as compared to prior
years and lower production volumes resulted in a higher per pound
cost of tomatoes.
Adjusted EBITDA for the year ended December 31, 2019 decreased ($20,024) to ($17,581) from $2,443 for the year ended December 31, 2018, primarily as a result of an
increase in the loss from the Company's produce business.
Non-IFRS Measures
References in this news release to "Adjusted EBITDA" are to
earnings (including the equity in earnings of the Joint Ventures)
before interest, taxes, depreciation and amortization ("EBITDA"),
as further adjusted to exclude foreign currency exchange gains and
losses on translation of long-term debt, unrealized gains on the
changes in the value of derivative instruments, stock compensation,
and gains and losses on asset sales. Adjusted EBITDA is a
cash flow measure that is not recognized under GAAP and does not
have a standardized meaning prescribed by GAAP. Therefore, Adjusted
EBITDA may not be comparable to similar measures presented by other
issuers. Investors are cautioned that Adjusted EBITDA should not be
construed as an alternative to net income or loss determined in
accordance with GAAP as an indicator of the Company's performance
or to cash flows from operating, investing and financing activities
as measures of liquidity and cash flows. Management believes that
Adjusted EBITDA is an important measure in evaluating the
historical performance of the Company.
We also present Adjusted EBITDA, earnings per share and diluted
earnings per share on a proportionate segment basis. Each of the
components of Adjusted EBITDA, on a proportionate segment basis,
are presented in the table Reconciliation of GAAP to Proportionate
Results. We believe that the ability of investors to assess our
overall performance may be improved by the disclosure of
proportionate segment Adjusted EBITDA, earnings per share and
diluted earnings per share.
Reconciliation of Net Income to Adjusted EBITDA
The following table reflects a reconciliation of net
income to Adjusted EBITDA, as presented by the Company:
(in thousands of
U.S. dollars)
|
For the three
months ended
December 31,
|
|
For the year
ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
(loss)
|
($7,183)
|
|
($2,425)
|
|
$2,325
|
|
($7,515)
|
Add:
|
|
|
|
|
|
|
|
Amortization
|
1,855
|
|
1,756
|
|
7,442
|
|
7,103
|
Foreign currency
exchange loss (gain)
|
(95)
|
|
960
|
|
(433)
|
|
1,047
|
Interest expense,
net
|
211
|
|
520
|
|
1,578
|
|
2,483
|
Income taxes
(recovery)
|
(5,752)
|
|
(908)
|
|
(5,866)
|
|
(2,300)
|
Stock based
compensation
|
1,524
|
|
1,007
|
|
4,714
|
|
1,454
|
Interest expense for
JVs
|
305
|
|
72
|
|
811
|
|
72
|
Amortization for
JVs
|
102
|
|
169
|
|
1,227
|
|
209
|
Foreign currency
exchange loss (gain) for JVs
|
19
|
|
83
|
|
(2)
|
|
92
|
Income taxes
provision / (recovery) from JVs
|
624
|
|
(55)
|
|
6,575
|
|
(55)
|
Gain on disposal of
assets
|
3
|
|
-
|
|
(13,564)
|
|
-
|
True Economic benefit
Pure Sunfarms
|
16
|
|
-
|
|
(3,956)
|
|
48
|
Adjusted
EBITDA
|
($8,371)
|
|
$1,179
|
|
$851
|
|
$2,638
|
Adjusted EBITDA for
JVs (See table below)
|
$677
|
|
$956
|
|
$18,432
|
|
$195
|
Adjusted EBITDA
excluding JVs(produce)
|
($9,048)
|
|
$223
|
|
($17,581)
|
|
$2,443
|
Breakout of JV's
Adjusted EBITDA
(in thousands of
U.S. dollars)
|
For the three
months
ended December 31,
|
|
For the year
ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Pure Sunfarms
Adjusted EBITDA
|
$2,848
|
|
$956
|
|
$20,558
|
|
$195
|
VFH Adjusted
EBITDA
|
(1,762)
|
|
-
|
|
(2,106)
|
|
-
|
AVGGH Adjusted
EBITDA
|
-
|
|
-
|
|
(20)
|
|
-
|
Total JV's Adjusted
EBITDA
|
$1,086
|
|
$956
|
|
$18,432
|
|
$195
|
Reconciliation of GAAP to Proportionate Results
The following tables are a reconciliation of the GAAP results to
the proportionate results (which include the Company's
proportionate share of the Pure Sunfarms operations):
|
For the three
months ended December 31, 2019
|
|
Produce
|
|
PSF(3)
|
|
Hemp(3)
|
|
Total
|
Sales
|
$33,056
|
|
$4,987
|
|
$69
|
|
$38,112
|
Cost of
sales
|
(37,494)
|
|
(873)
|
|
(2,091)
|
|
(40,458)
|
Selling, general and
administrative expenses
|
(5,390)
|
|
(1,236)
|
|
(221)
|
|
(6,847)
|
Stock compensation
expense
|
(1,524)
|
|
-
|
|
-
|
|
(1,524)
|
Loss on write-off of
investment
|
(1,184)
|
|
-
|
|
-
|
|
(1,184)
|
Other income
(expense) net
|
(67)
|
|
(124)
|
|
(148)
|
|
(339)
|
(Gain) loss on sale
of assets
|
6
|
|
(78)
|
|
-
|
|
(72)
|
(Provision for)
recovery of income taxes
|
5,752
|
|
(846)
|
|
222
|
|
5,128
|
Net income
(loss)
|
($6,845)
|
|
$1,831
|
|
($2,169)
|
|
($7,183)
|
Adjusted
EBITDA(4)
|
($9,048)
|
|
$2,848
|
|
($1,762)
|
|
($8,371)
|
Earnings (loss) per
share – basic
|
($0.13)
|
|
$0.04
|
|
($0.04)
|
|
($0.14)
|
Earnings (loss) per
share – diluted
|
($0.13)
|
|
$0.04
|
|
($0.04)
|
|
($0.14)
|
|
For the three
months ended December 31, 2018
|
|
Produce
|
|
PSF(3)
|
|
Hemp(3)
|
|
Total
|
Sales
|
$38,787
|
|
$1,751
|
|
$-
|
|
$40,538
|
Cost of
sales
|
(36,768)
|
|
(506)
|
|
-
|
|
(37,274)
|
Selling, general and
administrative expenses
|
(3,622)
|
|
(476)
|
|
-
|
|
(4,098)
|
Stock compensation
expense
|
(1,007)
|
|
-
|
|
-
|
|
(1,007)
|
Loss on write-off of
investment
|
-
|
|
-
|
|
-
|
|
-
|
Other income
(expense) net
|
(1,410)
|
|
(146)
|
|
-
|
|
(1,556)
|
(Gain) loss on sale
of assets
|
|
|
|
|
|
|
|
Recovery of income
taxes
|
908
|
|
55
|
|
-
|
|
963
|
Net income
(loss)
|
($3,112)
|
|
$687
|
|
$-
|
|
($2,425)
|
Adjusted
EBITDA(4)
|
$223
|
|
$956
|
|
$-
|
|
$1,179
|
Earnings (loss) per
share – basic
|
($0.07)
|
|
$0.02
|
|
$-
|
|
($0.05)
|
Earnings (loss) per
share – diluted
|
($0.07)
|
|
$0.01
|
|
$-
|
|
($0.05)
|
|
|
|
|
|
|
|
|
|
For the year ended
December 31, 2019
|
|
Produce
|
|
PSF(3)
|
|
Hemp(3)
|
|
Total
|
Sales
|
$144,568
|
|
$37,000
|
|
$69
|
|
$181,637
|
Cost of
sales
|
(151,913)
|
|
(9,009)
|
|
(1,682)
|
|
(162,604)
|
Selling, general and
administrative expenses
|
(16,762)
|
|
(4,568)
|
|
(591)
|
|
(21,921)
|
Stock compensation
expense
|
(4,714)
|
|
-
|
|
-
|
|
(4,714)
|
Loss on write-off of
investment
|
(1,184)
|
|
-
|
|
-
|
|
(1,184)
|
Gain on disposal of
assets
|
13,564
|
|
(78)
|
|
-
|
|
13,486
|
Other income
(expense) net
|
(877)
|
|
(497)
|
|
(298)
|
|
(1,672)
|
(Provision for)
recovery of for income taxes
|
5,866
|
|
(6,572)
|
|
3
|
|
(703)
|
Net income
(loss)
|
($11,452)
|
|
$16,276
|
|
($2,499)
|
|
$2,325
|
Adjusted
EBITDA(4)
|
($17,581)
|
|
$20,558
|
|
($2,126)
|
|
$851
|
Earnings (loss) per
share – basic
|
($0.23)
|
|
$0.33
|
|
($0.05)
|
|
$0.05
|
Earnings (loss) per
share – diluted
|
($0.22)
|
|
$0.32
|
|
($0.05)
|
|
$0.05
|
|
For the year ended
December 31, 2018
|
|
Produce
|
|
PSF(3)(5)
|
|
Hemp(3)
|
|
Total
|
Sales
|
$150,000
|
|
$1,845
|
|
$-
|
|
$151,845
|
Cost of
sales
|
(140,683)
|
|
(576)
|
|
-
|
|
($141,259)
|
Selling, general and
administrative expenses
|
(14,108)
|
|
(1,349)
|
|
-
|
|
(15,457)
|
Stock compensation
expense
|
(1,454)
|
|
-
|
|
-
|
|
(1,454)
|
(Gain) loss on sale
of assets
|
-
|
|
-
|
|
-
|
|
-
|
Loss on write-off of
investment
|
-
|
|
-
|
|
-
|
|
-
|
Other income
(expense) net
|
(3,399)
|
|
(146)
|
|
-
|
|
(3,545)
|
Recovery of income
taxes
|
2,300
|
|
55
|
|
-
|
|
2,355
|
Net income
(loss)
|
($7,344)
|
|
($171)
|
|
$-
|
|
($7,515)
|
Adjusted
EBITDA(4)
|
$2,443
|
|
$195
|
|
$-
|
|
$195
|
Earnings (loss) per
share – basic
|
($0.17)
|
|
($0.00)
|
|
$-
|
|
($0.17)
|
Earnings (loss) per
share – diluted
|
($0.16)
|
|
($0.00)
|
|
$-
|
|
($0.17)
|
|
Notes:
|
(3)
|
The adjusted
consolidated financial results have been adjusted to include the
Company's share of revenues and expenses from its Pure Sunfarms and
Hemp joint ventures on a proportionate accounting basis, on which
management bases its operating decisions and performance
evaluation. GAAP does not allow for the inclusion of the
Joint Venture on a proportionate basis. These results include
additional non-GAAP measures such as EBITDA.
|
|
|
The adjusted results
are not generally accepted measures of financial performance under
GAAP. The Company's method of calculating these financial
performance measures may differ from other companies and
accordingly, they may not be comparable to measures used by other
companies. Refer to the Company's 10-K for a reconciliation
of these non-GAAP measures and adjusted results.
|
|
(4)
|
Adjusted EBITDA is
not a recognized earnings measure and does not have a standardized
meaning prescribed by GAAP. Therefore, Adjusted EBITDA may
not be comparable to similar measures presented by other
issuers. See "Non-GAAP Measures". Management believes
that Adjusted EBITDA is a useful supplemental measure in evaluating
the performance of the Company. Consolidated Adjusted EBITDA
includes the Company's majority non-controlling Pure Sunfarms, 65%
interest in VFH and 60% (effective 63.25% with VFH interest)
interest in AVGGH.
|
|
(5)
|
The GAAP treatment of
the Company's equity earnings of its Joint Venture ("Pure
Sunfarms") is different than treatment under IFRS. Under
GAAP, the Emerald shares held in escrow and not fully paid for by
Emerald are not considered issued pursuant to the GAAP concept of
'hypothetical liquidation'. As a result, under GAAP, the
Company's ownership percentage for all of 2017, January through
March of 2018 and March through December of 2019 was higher than
its economic interest of 50% (53.5% effective November 19, 2019).
Accordingly, for those periods with a higher deemed ownership
percentage, the Company received a higher allocation of profits and
losses during the periods in which there were outstanding escrow
shares not paid for by Emerald. The effective profit and loss
allocation on a weighted-average basis in 2019 was 57.9%, in 2018
was 52.2% and in 2017 was
87.5%.
|
This press release is intended to be read in conjunction with
the Company's Consolidated Financial Statements ("Financial
Statements") and Management Discussion & Analysis ("MD&A")
for the twelve month periods ended December
31, 2019 in the Company Form 10-K, which will be filed on
(www.sec.gov/edgar.shtml) and SEDAR (www.sedar.com) and will be
available at www.villagefarms.com.
Conference Call
Village Farms' management team will host a conference call
tomorrow, Tuesday, March 31, 2020,
at 8:30 a.m. ET to discuss its financial results.
Participants can access the conference call by telephone by dialing
(647) 427-7450 or (888) 231-8191, or via the Internet at:
https://bit.ly/3dhUkwc.
For those unable to participate in the conference call at the
scheduled time, it will be archived for replay both by telephone
and via the Internet beginning approximately one hour following
completion of the call. To access the archived conference call by
telephone, dial (416) 849-0833 or (855) 859-2056 and enter the
passcode 8152898 followed by the pound key. The telephone replay
will be available until Tuesday, April 7,
2020 at midnight (ET). The conference call will also
be archived on Village Farms' website
at http://villagefarms.com/investor-relations/investor-calls.
About Village Farms International, Inc.
Village Farms is one of the largest and longest-operating
vertically integrated greenhouse growers in North America and the only publicly traded
greenhouse produce company in Canada. Village Farms produces and distributes
fresh, premium-quality produce with consistency 365 days a year to
national grocers in the U.S. and Canada from more than nine million square feet
of Controlled Environment Agriculture (CEA) greenhouses in
British Columbia and Texas, as well as from its partner greenhouses
in British Columbia, Ontario and Mexico. The Company is now
leveraging its 30 years of experience as a vertically integrated
grower for the rapidly emerging global cannabis opportunity through
its majority ownership of British
Columbia-based Pure Sunfarms Corp., one of the single
largest cannabis growing operations in the world. The Company
also intends to pursue opportunities to become a vertically
integrated leader in the U.S. hemp-derived CBD market, subject to
compliance with all applicable U.S. federal and state laws, Village
Farms has established two joint ventures, Village Fields Hemp and
Arkansas Valley Green and Gold Hemp, for outdoor hemp cultivation
and CBD extraction and is pursuing controlled environment hemp
production at a portion of its Texas greenhouse operations, which total 5.7
million square feet of production area.
Cautionary Language
The Company has based these forward-looking statements on
factors and assumptions about future events and financial trends
that it believes may affect its financial condition, results of
operations, business strategy and financial needs, including that
[the Canadian and United States
economies will remain stable over the next 12 months, that
inflation will remain relatively low, that interest rates will
remain stable, that tax laws remain unchanged, that market
conditions within the greenhouse produce and Canadian cannabis
industries generally will be consistent with the current climate,
that the U.S. hemp business will not be adversely impacted by the
evolving United States federal and
state regulatory and statutory regime, and that the United States and Canadian capital markets
will provide the Company with access to equity and/or debt at
reasonable prices or rates when required.
Although the forward-looking statements contained in this report
are based upon assumptions that management believes are reasonable
based on information currently available to management, there can
be no assurance that actual results will be consistent with these
forward-looking statements. Forward-looking statements necessarily
involve known and unknown risks and uncertainties, many of which
are beyond the Company's control, that may cause the Company's or
the industry's actual results, performance, achievements, prospects
and opportunities in future periods to differ materially from those
expressed or implied by such forward-looking statements. These
risks and uncertainties include, among other things, the factors
contained in the Company's filings with securities regulators,
including this Annual Report on Form 10-K.
When relying on forward-looking statements to make decisions,
the Company cautions readers not to place undue reliance on these
statements, as forward-looking statements involve significant risks
and uncertainties and should not be read as guarantees of future
results, performance, achievements, prospects and opportunities.
The forward-looking statements made in this report relate only to
events or information as of the date on which the statements are
made in this report. Except as required by law, the Company
undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise, after the date on which the statements
are made or to reflect the occurrence of unanticipated
events.
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SOURCE Village Farms International, Inc.