– Pure Sunfarms is Top Performing Dried
Flower Brand with 16% Market Share and Number One Selling Dried
Flower Product in October with Ontario Cannabis Store –
VANCOUVER, Nov. 14, 2019 /CNW/ - Village Farms
International, Inc. ("Village Farms" or the "Company") (TSX: VFF)
(NASDAQ: VFF) today announced its financial results for the third
quarter and nine-month period ended September 30, 2019. All figures are in U.S.
dollars unless otherwise indicated.
Village Farms' Financial and Corporate Highlights for the
Third Quarter Ended September 30,
2019
(All comparable figures are for the third
quarter ended September 30,
2018)
- Produce sales were US$38.3
million compared with US$39.7
million;
- Net loss before tax of (US$6.5
million) and included the loss from Pure Sunfarms Corp.
("Pure Sunfarms") of (US$0.9 million)
(Village Farms' share based on its 50% ownership). This
compares with a net loss before tax of (US$2.7 million);
- Loss per share was (US$0.10)
compared with loss per share of (US$0.04);
- EBITDA loss was (US$2.4 million),
including the positive contribution from Pure Sunfarms of
US$5.0 million (C$6.6 million) (Village Farms' 50% share).
This compares with an EBITDA loss of (US$2.0
million); and
- Subsequent to quarter end, completed a bought deal offering of
3,059,000 common shares at a price of C$9.40 per share for aggregate gross proceeds to
the Company of C$28,754,600.
Third Quarter Financial Results for Village Farms' Canadian
Cannabis Joint Venture, Pure Sunfarms
(There were are no
comparable results for the third quarter ended September 30, 2018 as no production
existed.)
- Net sales (before Village Farms' 50% share), which consisted
entirely of dried cannabis sold predominantly to other licensed
producers, were C$24.0 million
(US$18.1 million). Late in the
third quarter, Pure Sunfarms began shipping branded packaged
product to the Ontario Cannabis Store ("OCS");
- Sales for the third quarter did not include C$7.2 million that was invoiced to Emerald Health
Therapeutics (see "Update on Pure Sunfarms' Supply Agreement with
Emerald Health Therapeutics" below);
- Cost of goods sold ("all in cost") per gram was C$0.63 (US$0.48)
per gram;
- Gross margin was 69%;
- Selling, general and administrative expenses (before Village
Farms' 50% share) of C$3.7 million
(US$2.8 million) or 12% of
revenue;
- Net loss (before Village Farms' 50% share) of (C$2.4 million) ((US$1.8
million)) which included the non-cash impact of a net charge
of (C$12.6 million) due to a change
in value of the biological asset; and,
- EBITDA (before Village Farms' 50% share) was C$13.3 million (US$10.1
million), marking Pure Sunfarms' fourth consecutive quarter
of positive EBITDA and resulting in an EBITDA margin of 56%.
Recent Highlights for Village Farms' Canadian Cannabis
Joint Venture, Pure Sunfarms
- Pure Sunfarms was the top performing brand of dried flower by
both kilograms sold and dollar sales with the OCS in October 2019, achieving 16% market share (by
kilograms sold). Pure Sunfarms' dried flower products outsold
the second ranked dried flower brand's products two to one (by
kilograms sold). In addition:
-
- Pure Sunfarms' Afghan Kush was the top selling dried flower
product with the OCS in October;
- Three of the seven top selling dried flower products with the
OCS in October were Pure Sunfarms products
Pure Sunfarms shipped its first order of branded dried cannabis
products to the OCS in late September (followed by multiple
reorders) following receipt from Health Canada on September 6, 2019 of the amendment to its license
permitting it to sell and distribute packaged, branded dried
cannabis products directly to provincial/territorial wholesalers
and authorized private retailers in Canada;
- In B.C., Pure Sunfarms' sold out its first order to the BC
Liquor Distribution Branch ("BCLDB") (which has since re-ordered)
in under three weeks to rank among the top ten brands by sales for
all product categories in October. Pure Sunfarms began
selling branded, packaged dried cannabis products to the BCLDB in
October following entry into a supply agreement in September;
- Completed installation of extraction equipment (with processing
capacity of 35,000 kilograms of biomass annually) in its new 65,000
square foot state-of-the-art processing center within the Delta 3
greenhouse facility in preparation for Cannabis 2.0. The processing
centre has been designed for full GMP compliance and certification
to allow for future exportation, and is expected to be operational
as soon as possible, subject to Health Canada licensing and
in-house calibration and testing;
- Achieved full run-rate annual production of 75,000 kilograms of
dried cannabis at its 1.1 million square foot Delta 3 greenhouse
facility; and
- Commenced conversion of the interior of its second 1.1 million
square foot greenhouse operation, the Delta 2 greenhouse facility,
for cannabis production, which is conservatively expected to double
Pure Sunfarms' annual output at full production to more than
150,000 kilograms. Conversion of the Delta 2 greenhouse
facility, which has been designed for full GMP compliance and
certification to all for future exportation, remains on schedule,
with cannabis production expected to commence during the second
quarter of 2020 and the facility is expected to be operating at
full run rate production by the end of 2020. Pure Sunfarms
has submitted to Health Canada its application for the initial
Cultivation License for the Delta 2 greenhouse facility.
Recent Highlights for Village Farms' U.S. Hemp/CBD
Program
The Company's joint ventures for outdoor hemp production and
processing in the U.S. recently completed harvesting of
approximately 625 acres of the approximately 870 acres of hemp
planted in 2019, achieving an average yield of approximately 1,600
pounds per acre harvested, well in excess of its projections. The
Company expects to commence sales of hemp biomass as early as the
fourth quarter of 2019.
"We are pleased to report another quarter in which Pure Sunfarms
continued to set the standard for performance as a best-in-class
cannabis operation, which again drove strong financial
performance," said Michael DeGiglio,
Chief Executive Officer, Village Farms. "Pure Sunfarms'
achieved its fourth consecutive quarter of positive EBITDA, with an
industry leading all-in cost of production of C$0.63, gross margin of 69% and EBITDA margin of
56%. In the 12 months since adult-use cannabis was legalized
in Canada in October 2018, Pure Sunfarms has already generated
C$47 million in EBITDA, an especially
impressive number given that its operations were ramping up
throughout most of that period."
"Pure Sunfarms is now proving itself as a leading cannabis
brand, ranking as the number one selling dried flower brand by a
wide margin with the Ontario Cannabis Store in October, and having
the overall top selling dried flower product, as well as three of
the seven top-selling dried flower product. We look forward to Pure
Sunfarms building on this tremendous initial success as it launches
its pre-rolled dried products, adds provincial supply agreements,
starts its extraction operations online for the roll out of oils
and other new product forms under Cannabis 2.0 in the first half of
next year, and more than doubles its output, further supporting its
low production costs."
"Pure Sunfarms continues to execute very well on what is under
its control. Even as one of the largest Canadian adult-use
cannabis suppliers by dollars sold, third quarter sales were
constrained by the limited physical retail store infrastructure in
Canada, as well as the
C$7.2 million that could not be
recognized. We built Pure Sunfarms, however, for profitability out
of the gate, even in a commoditized environment, and it is one of
the few and most profitable Canadian cannabis companies. With
industry-leading cost production and a brand and products that are
clearly resonating with consumers, Pure Sunfarms remains well
positioned to continue to be a dominant supplier as the Canadian
adult-use cannabis market continues to develop and expand."
"In our U.S. outdoor hemp program, we recently completed harvest
of our 2019 crop, highlighted by yields that were well above our
projections. We remain on track to begin generating
profitable hemp sales as early as the fourth quarter of this
year. Importantly, our first growing season has provided
significant learnings that will be invaluable going forward.
In our greenhouse hemp program, we continue to work with Texas
Department of Agriculture on the implementation of its hemp
regulatory framework subject to the recently published US
Department of Agriculture rules and are optimistic that licensing
could commence in the first quarter of 2020. As we did in
Canada with Pure Sunfarms, we are
building a rock-solid foundation of exceptional growing operations
from which to aggressively pursue our objective to launch our own
white-labelled and branded CBD products in 2020."
"In our produce business, we continue to make steady progress in
the transition of the production displaced for cannabis and hemp
production to third-party growing partners, recently adding
approximately 120 acres with partners in Mexico and Canada to bring the total to nearly 300 acres.
During this period of transition, we will continue to
experience some impact on our financial results, more so in some
quarters than others, which in the third quarter contributed to a
net loss for the produce business of US$5.1
million."
Update on Pure Sunfarms' Supply Agreement with Emerald Health
Therapeutics
Pursuant to the terms of a Supply Agreement that Pure Sunfarms
has with Emerald Health, Emerald has an obligation to
purchase 40% of Pure Sunfarms cannabis production at a fixed
price, subject to the terms and conditions of the Supply Agreement.
To the extent that Emerald does not fulfill its purchase
obligation, Pure Sunfarms is able to sell that excess production to
other parties in the open market. The Supply Agreement stipulates
that Emerald is required to pay Pure Sunfarms the difference
between the fixed price and the selling price realized from other
parties. During the quarter ended September 30, 2019, Emerald did not fulfill its
purchase obligation and Pure Sunfarms sold the product on the open
market to arm's length parties at prices lower than the fixed price
in the Supply Agreement. As a result, under the terms of the Supply
Agreement, Pure Sunfarms billed Emerald for the difference
which amounted to approximately C$7.2
million. On October 15, 2019,
Emerald issued a press release that indicated they do not agree
that they have any liability with respect to these
amounts.
Under IFRS 15 - Revenue from contracts with customers
(paragraph 9 (e)), a customer needs to have an intent and
ability to pay in order for a company to recognize revenue. Given
that Emerald has issued a press release indicating that they do not
agree that they have a liability with respect to these amounts,
Pure Sunfarms has determined that all of the criteria under IFRS 15
to recognize this revenue were not met as Emerald has demonstrated
that they do not have an intent to pay, and as a result has not
recorded the revenue related to these amounts.
We understand that Emerald is in the process of investigating
its liability to Pure Sunfarms. If Emerald does not agree to
the liability, Pure Sunfarms has reserved the right to take such
actions as it considers necessary and appropriate to recover its
losses from Emerald for non-payment of amounts owing under the
Supply Agreement. If Emerald were to agree to the liability
in the future, such liability would be recognized in the revenue
and profits of Pure Sunfarms, at such time in accordance with
generally accepted accounting principles.
Summary Statutory Results
(in thousands of U.S.
Dollars unless otherwise indicated)
|
For the three
months
ended September 30,
|
|
For the Nine
months
ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Produce
sales
|
$38,293
|
|
$39,684
|
|
$111,512
|
|
$111,213
|
Cost of
sales
|
(38,866)
|
|
(36,862)
|
|
(114,711)
|
|
(103,915)
|
Selling, general and
administrative expenses
|
(3,739)
|
|
(3,442)
|
|
(11,682)
|
|
(10,486)
|
Stock compensation
expense
|
(868)
|
|
(190)
|
|
(3,190)
|
|
(447)
|
Change in biological
asset (1)
|
(627)
|
|
(1,189)
|
|
(97)
|
|
(992)
|
Loss from
operations
|
(5,807)
|
|
(1,999)
|
|
(18,168)
|
|
(4,627)
|
Interest expense,
net
|
(393)
|
|
(618)
|
|
(1,503)
|
|
(1,906)
|
Foreign exchange gain
(loss)
|
(183)
|
|
(73)
|
|
338
|
|
(87)
|
Other income,
net
|
69
|
|
17
|
|
219
|
|
61
|
Share of income
(loss) from joint ventures
|
(171)
|
|
(28)
|
|
17,939
|
|
(369)
|
Gain on disposal of
assets
|
(8)
|
|
-
|
|
13,558
|
|
-
|
(Provision for)
recovery of income taxes
|
1,421
|
|
712
|
|
81
|
|
1,513
|
Net income
(loss)
|
(5,072)
|
|
(1,989)
|
|
12,464
|
|
(5,415)
|
Consolidated EBITDA
(2)
|
2,383
|
|
897
|
|
8,256
|
|
1,394
|
Earnings (loss) per
share – basic
|
($0.10)
|
|
($0.04)
|
|
$0.26
|
|
($0.12)
|
Earnings (loss) per
share – diluted
|
($0.10)
|
|
($0.04)
|
|
$0.25
|
|
($0.12)
|
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 International Financial Reporting Standards
("IFRS") refer to the "Reconciliation of IFRS to Proportionate
Results" as presented below and in Management's Discussion &
Analysis ("MD&A").
(in thousands of U.S. Dollars unless otherwise
indicated)
|
For the three
months
ended September 30,
|
|
For the six
months
ended September 30,
|
|
2019(3)
|
|
2018(3)
|
|
2019(3)
|
|
2018(3)
|
Consolidated
sales
|
$47,335
|
|
$39,779
|
|
$138,076
|
|
$111,308
|
Cost of
sales
|
(41,711)
|
|
(36,934)
|
|
(121,443)
|
|
($103,987)
|
Selling, general and
administrative expenses
|
(5,376)
|
|
(3,756)
|
|
(14,860)
|
|
(11,302)
|
Change in biological
asset (1)
|
(4,057)
|
|
(921)
|
|
6,873
|
|
(564)
|
Gain on disposal of
assets
|
(8)
|
|
-
|
|
13,558
|
|
-
|
Net income
(loss)
|
(5,072)
|
|
(1,989)
|
|
12,464
|
|
(5,415)
|
EBITDA(2)
|
$2,377
|
|
$897
|
|
$8,256
|
|
$1,394
|
Earning (loss) per
share – basic
|
($0.10)
|
|
($0.04)
|
|
$0.26
|
|
($0.12)
|
Earning (loss) per
share – diluted
|
($0.10)
|
|
($0.04)
|
|
$0.25
|
|
($0.12)
|
Notes:
|
|
(1)
|
Biological asset
consists of the Company's produce on the vines and Pure Sunfarms'
crop at the period end. Details of the changes are described
in note 5 of the Company's interim condensed consolidated financial
statements for the nine months ended September 30, 2019.
|
|
|
(2)
|
EBITDA is not a
recognized earnings measure and does not have a standardized
meaning prescribed by IFRS. Therefore, EBITDA may not be
comparable to similar measures presented by other issuers.
See "Non-IFRS Measures". Management believes that EBITDA is a
useful supplemental measure in evaluating the performance of the
Company. Consolidated EBITDA includes the Company's 50% interest in
Pure Sunfarms, 65% interest in VFH and 60% (effective 63.25% with
VFH interest) interest in AVGGH.
|
|
|
(3)
|
The consolidated
financial results above reflect the proportionate share of the
Company's share of revenues and expenses from its joint venture
operations, as this is the basis which management bases its
operating decisions and performance evaluation. IFRS does not
allow for the inclusion of the joint venture on a proportionate
basis. These results include additional non-IFRS measures
such as EBITDA.
|
|
|
|
The results are not
generally accepted measures of financial performance under
IFRS. 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 MD&A for a reconciliation of
these non-IFRS measures and proportionate results.
|
Financial Highlights
(All amounts in U.S. Dollars
unless otherwise indicated.)
Cannabis
For the three months ended September 30, 2019. There are
no comparable results for the three months ended September 30, 2018 as no production
existed.
The Company's 50% share of net sales of Pure Sunfarms for the
three months ended September 30, 2019
was $9,042. Total Pure Sunfarms
sales consisted of close to approximately 12,000 kilograms of
flower and trim sold at an average selling price of over
$1.50 per gram (C$2.00 per gram) during the three months ended
September 30, 2019. Sales for the
three months ended September 30, 2019
were predominantly to other licensed producers and do not include
$5.4 million (C$7.2 million) invoiced to Emerald that was not
able to be recognized as per the discussion above.
The Company's 50% share of cost of sales of Pure Sunfarms for
the three months ended September 30,
2019 was $2,845.
The Company's 50% share of selling, general and administrative
expenses of Pure Sunfarms for the three months ended September 30, 2019 was $1,415.
The Company's 50% share of net loss for the three months ended
September 30, 2019 was ($918) compared to ($28) for the three months ended September 30, 2018. The net loss for the
three months ended September 30, 2019
is due to a change in the biological asset of ($4.8 million).
The Company's 50% share of EDITDA for the three months ended
September 30, 2019 was $5,033 compared to ($12) for the three months ended September 30, 2018.
For the nine months ended September
30, 2019. There are no comparable
results for the nine months ended September
30, 2018 as no production existed.
The Company's 50% share of net sales of Pure Sunfarms for the
nine months ended September 30, 2019
was $26,564. Total Pure
Sunfarms sales consisted of close to 24,600 kilograms of flower and
trim during the nine months ended September
30, 2019, at an average sales price of approximately
$2.15 per gram (C$2.85 per gram).
The Company's 50% share of cost of sales of Pure Sunfarms for
the nine months ended September 30,
2019 was $6,732 (based on
total grams sold of close to 24,600 kilograms), or approximately
$0.55 per gram (C$0.73 per gram).
The Company's 50% share of selling, general and administrative
expenses of Pure Sunfarms for the nine months ended September 30, 2019 was $2,808 and primarily consisted of personnel costs
and Health Canada fees.
Income from operations for the Company's 50% share of Pure
Sunfarms was $22,658 for the nine
months ended September 30, 2019.
The Company's 50% share of net income for the nine months ended
September 30, 2019 was $17,342 versus a loss of ($369) for the nine months ended September 30, 2018.
The Company's 50% share of EBITDA for the nine months ended
September 30, 2019 was $17,704 versus ($363) for the same period in
2018.
Produce
For the three months ended September 30, 2019 compared to the three months
ended September 30,
2018.
Sales for the three months ended September 30, 2019 decreased by ($1,391), or (4%), to $38,293 from $39,684 for the three months ended September 30, 2018. The decrease in sales
is primarily due to a decrease in the Company's product volume, as
well as a decrease in supply partner revenue.
Cost of sales for the three months ended September 30, 2019 increased by $2,004, or 5%, to $38,866 from $36,862 for the three months ended September 30, 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.
For the nine months ended September
30, 2019 compared to the nine months ended September 30, 2018.
Sales for the nine months ended September
30, 2019 increased $299, or
less than 1%, to $111,512 compared to
$111,213 for the nine months ended
September 30, 2018. The
increase in net sales is due to an increase in supply partner
revenues of 12% over the comparable period in 2018 partially offset
by a (14%) decrease in the Company's production volume. The
decrease in the Company's production volume is primarily due to a
clean-out in one of Company's facilities (which did not occur in
the last three years) and ongoing virus pressure at the Company's
Texas facilities.
Cost of sales for the nine months ended September 30, 2019 increased $10,796, or 10%, to $114,711 from $103,915 for the nine months ended September 30, 2018, due to an increase in supply
partner purchases of 12% and an increase in the cost per pound of
the Company's own grown product in Texas due to decreased pounds and higher labor
costs, due to the higher utilization of hourly rate contract
laborers versus Village Farms' employees for the 2018/2019 crop as
compared to the prior crop.
Consolidated EBITDA
EBITDA for the three months ended September 30, 2019 increased by $4,339 to $5,236
from $897 for the three months ended
September 30, 2018. The increase is
primarily as a result of an increase in the Company's share of
EDITDA from Pure Sunfarms of $7,886
partially offset by an increase in the loss from operations for the
Company's produce business.
EBITDA for the nine months ended September 30, 2019 increased $9,713 to $11,109
from $1,394 for the nine months ended
September 30, 2018, primarily as a
result of an increase in the Company's share of income from Pure
Sunfarms (Pure Sunfarms EBITDA - $20,558) partially offset by an increase in the
loss from the Company's produce business.
Non-IFRS Measures
References in this MD&A to "EBITDA" are to earnings before
interest, taxes, depreciation, amortization, foreign currency
exchange gains and losses on translation of long-term debt,
unrealized gains on the changes in the value of derivative
instruments, unrealized change in biological asset, stock
compensation, and gains and losses on asset sales. EBITDA is
a cash flow measure that is not recognized under IFRS and does not
have a standardized meaning prescribed by IFRS. Therefore, EBITDA
may not be comparable to similar measures presented by other
issuers. Investors are cautioned that EBITDA should not be
construed as an alternative to net income or loss determined in
accordance with IFRS 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
EBITDA is an important measure in evaluating the historical
performance of the Company.
Reconciliation of Net Income to EBITDA
The following table reflects a reconciliation of net income to
EBITDA, as presented by the Company:
(in thousands of
U.S. dollars)
|
For the three
months
ended September 30,
|
|
For the nine
months
ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
(loss)
|
($5,072)
|
|
($1,989)
|
|
$12,464
|
|
($5,415)
|
Add:
|
|
|
|
|
|
|
|
Amortization
|
1,818
|
|
1,748
|
|
5,587
|
|
5,271
|
Foreign currency
exchange loss (gain)
|
183
|
|
73
|
|
(338)
|
|
87
|
Interest expense,
net
|
393
|
|
618
|
|
1,503
|
|
1,906
|
Income taxes
(recovery)
|
(1,421)
|
|
(712)
|
|
(81)
|
|
(1,513)
|
Stock based
compensation
|
868
|
|
190
|
|
3,190
|
|
447
|
Change in biological
asset
|
627
|
|
1,189
|
|
97
|
|
992
|
Change in biological
asset for JV's
|
3,430
|
|
(267)
|
|
(6,970)
|
|
(428)
|
Interest expense for
JV's
|
249
|
|
-
|
|
446
|
|
-
|
Amortization for
JV's
|
244
|
|
37
|
|
668
|
|
37
|
Foreign currency
exchange loss (gain) for JV's
|
(7)
|
|
10
|
|
(14)
|
|
10
|
Income taxes
(recovery) from JV's
|
1,057
|
|
|
|
5,262
|
|
-
|
Gain on disposal of
assets
|
8
|
|
-
|
|
(13,558)
|
|
-
|
EBITDA
|
$2,377
|
|
$897
|
|
$8,256
|
|
$1,394
|
EBITDA for JV's
(See table below)
|
$4,806
|
|
($248)
|
|
$17,331
|
|
($750)
|
EBITDA excluding
JVs(produce)
|
($2,429)
|
|
$1,145
|
|
($9,076)
|
|
$2,144
|
Breakout of JV's
EBITDA
(in thousands of
U.S. dollars)
|
For the three
months
ended September 30,
|
|
For the nine
months
ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Pure Sunfarms
EBITDA
|
$5,033
|
|
($248)
|
|
$17,704
|
|
($750)
|
VFH EBITDA
|
(204)
|
|
-
|
|
(330)
|
|
-
|
AVGGH
EBITDA
|
(23)
|
|
-
|
|
(43)
|
|
-
|
Total JV's
EBITDA
|
$4,806
|
|
($248)
|
|
$17,331
|
|
($750)
|
|
|
|
|
|
|
|
|
Reconciliation of IFRS to Proportionate Results
The following tables are a reconciliation of the IFRS results to
the proportionate results (which include the Company's
proportionate share of the Pure Sunfarms operations):
|
For the three
months ended September 30, 2019
|
|
|
Produce
|
|
PSF(4)
|
|
Hemp(4)
|
|
Total
|
Sales
|
$38,293
|
|
$9,042
|
|
$-
|
|
$47,335
|
Cost of
sales
|
(38,866)
|
|
(2,845)
|
|
-
|
|
(41,711)
|
Selling, general and
administrative expenses
|
(3,739)
|
|
(1,415)
|
|
(222)
|
|
(5,376)
|
Stock compensation
expense
|
(868)
|
|
-
|
|
-
|
|
(868)
|
Change in biological
asset (5)
|
(627)
|
|
(4,765)
|
|
1,336
|
|
(4,056)
|
Other income
(expense) net
|
(507)
|
|
(140)
|
|
(99)
|
|
(746)
|
(Provision for)
recovery of income taxes
|
1,421
|
|
(794)
|
|
(268)
|
|
359
|
Net income
(loss)
|
($4,901)
|
|
($918)
|
|
$747
|
|
($5,072)
|
EBITDA
(6)
|
($2,422)
|
|
$5,033
|
|
($227)
|
|
$2,383
|
Earnings (loss) per
share – basic
|
($0.10)
|
|
($0.02)
|
|
$0.02
|
|
($0.10)
|
Earnings (loss) per
share – diluted
|
($0.10)
|
|
($0.01)
|
|
$0.01
|
|
($0.10)
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended September 30, 2018
|
|
|
Produce
|
|
PSF(4)
|
|
Hemp(4)
|
|
Total
|
Sales
|
$39,684
|
|
$95
|
|
-
|
|
$39,779
|
Cost of
sales
|
(36,862)
|
|
(72)
|
|
-
|
|
(36,934)
|
Selling, general and
administrative expenses
|
(3,442)
|
|
(314)
|
|
-
|
|
(3,756)
|
Stock compensation
expense
|
(190)
|
|
-
|
|
-
|
|
(190)
|
Change in biological
asset (5)
|
(1,189)
|
|
268
|
|
-
|
|
(921)
|
Other income
(expense) net
|
(674)
|
|
(5)
|
|
-
|
|
(679)
|
Recovery of income
taxes
|
712
|
|
-
|
|
-
|
|
712
|
Net income
(loss)
|
($1,961)
|
|
($28)
|
|
-
|
|
($1,989)
|
EBITDA
(6)
|
$1,145
|
|
($248)
|
|
-
|
|
$897
|
Earnings (loss) per
share – basic
|
($0.03)
|
|
($0.01)
|
|
-
|
|
($0.04)
|
Earnings (loss) per
share – diluted
|
($0.03)
|
|
($0.01)
|
|
-
|
|
($0.04)
|
|
|
|
|
|
|
|
|
|
|
For the nine
months ended September 30, 2019
|
|
Produce
|
|
PSF(4)
|
|
Hemp(4)
|
|
Total
|
Sales
|
$111,512
|
|
$26,568
|
|
-
|
|
$138,076
|
Cost of
sales
|
(114,711)
|
|
(6,732)
|
|
-
|
|
(121,443)
|
Selling, general and
administrative expenses
|
(11,682)
|
|
(2,808)
|
|
(370)
|
|
(14,860)
|
Stock compensation
expense
|
(3,190)
|
|
-
|
|
-
|
|
(3,190)
|
Change in biological
asset (5)
|
(97)
|
|
5,634
|
|
1,336
|
|
6,873
|
Gain on disposal of
assets
|
13,558
|
|
-
|
|
-
|
|
13,558
|
Other income
(expense) net
|
(946)
|
|
(273)
|
|
(150)
|
|
(1,369)
|
(Provision for)
recovery of for income taxes
|
81
|
|
(5,043)
|
|
(219)
|
|
(5,181)
|
Net income
(loss)
|
($5,475)
|
|
$17,342
|
|
$597
|
|
$12,464
|
EBITDA
(6)
|
($9,076)
|
|
$17,704
|
|
($373)
|
|
$8,256
|
Earnings (loss) per
share – basic
|
($0.11)
|
|
$0.36
|
|
$0.01
|
|
$0.26
|
Earnings (loss) per
share – diluted
|
($0.11)
|
|
$0.34
|
|
$0.01
|
|
$0.25
|
|
For the nine
months ended September 30, 2018
|
|
|
Produce
|
|
PSF(4)
|
|
Hemp(4)
|
|
Total
|
Sales
|
$111,213
|
|
$95
|
|
$-
|
|
$111,308
|
Cost of
sales
|
(103,915)
|
|
(72)
|
|
-
|
|
($103,987)
|
Selling, general and
administrative expenses
|
(10,486)
|
|
(816)
|
|
-
|
|
(11,302)
|
Stock compensation
expense
|
(447)
|
|
-
|
|
|
|
(447)
|
Change in biological
asset (5)
|
(992)
|
|
428
|
|
-
|
|
(564)
|
(Gain) loss on sale
of assets
|
-
|
|
-
|
|
-
|
|
-
|
Other income
(expense) net
|
(1,932)
|
|
(5)
|
|
-
|
|
(1,937)
|
Recovery of income
taxes
|
1,513
|
|
-
|
|
-
|
|
1,513
|
Net income
(loss)
|
($5,046)
|
|
($369)
|
|
$-
|
|
($5,415)
|
EBITDA
(6)
|
$2,149
|
|
($750)
|
|
$-
|
|
$1,394
|
Earnings (loss) per
share – basic
|
($0.11)
|
|
($0.01)
|
|
$-
|
|
($0.12)
|
Earnings (loss) per
share – diluted
|
($0.11)
|
|
($0.01)
|
|
$-
|
|
($0.12)
|
|
|
|
|
|
|
|
|
|
Notes:
|
(4)
|
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. IFRS does not allow for the inclusion of the
Joint Venture on a proportionate basis. These results include
additional non-IFRS measures such as EBITDA.
|
|
|
|
The adjusted results
are not generally accepted measures of financial performance under
IFRS. 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 MD&A for a reconciliation of
these non-IFRS measures and adjusted results.
|
|
|
(5)
|
Biological asset
consists of the Company's produce on the vines and Pure Sunfarms'
crop at the period end. Details of the changes are described
in note 5 of the Company's interim condensed consolidated financial
statements for the nine months ended September 30, 2019.
|
|
|
|
(6)
|
EBITDA is not a
recognized earnings measure and does not have a standardized
meaning prescribed by IFRS. Therefore, EBITDA may not be
comparable to similar measures presented by other issuers.
See "Non-IFRS Measures". Management believes that EBITDA is a
useful supplemental measure in evaluating the performance of the
Company. Consolidated EBITDA includes the Company's 50% interest
Pure Sunfarms, 65% interest in VFH and 60% (effective 63.25% with
VFH interest) interest in AVGGH.
|
Conference Call
Village Farms' management team will host a conference call
Friday, November 15, 2019 at
8:30 a.m. ET to discuss its third
quarter 2019 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/2Wm7dxj.
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 4987345 followed by the pound key. The telephone replay
will be available until Friday, November 22,
2019 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 50% 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
USA, LLC, and Arkansas Valley
Green and Gold Hemp LLC, for multi-state outdoor hemp cultivation
and CBD extraction and plans to pursue controlled environment hemp
production at its Texas greenhouse
operations, which total 5.7 million square feet of production area,
subject to legalization of hemp in Texas.
Cautionary Language
Certain statements contained in this press release constitute
forward-looking information within the meaning of applicable
securities laws ("forward-looking statements"). Forward-looking
statements may relate to the Company's future outlook or financial
position and anticipated events or results and may include
statements regarding the financial position, business strategy,
budgets, litigation, projected production, projected costs, capital
expenditures, financial results, taxes, plans and objectives of or
involving the Company. Particularly, statements regarding future
results, performance, achievements, prospects or opportunities for
the Company, Pure Sunfarms, the greenhouse vegetable industry or
the cannabis and hemp industries are forward-looking statements. In
some cases, forward-looking information can be identified by such
terms as "outlook", "may", "might", "will", "could", "should",
"would", "occur", "expect", "plan", "anticipate", "believe",
"intend", "estimate", "predict", "potential", "continue", "likely",
"schedule", "objectives", or the negative or grammatical variation
thereof or other similar expressions concerning matters that are
not historical facts.
Although the forward-looking statements contained in this press
release 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 U.S. and Canadian securities regulators, including as detailed
in the Company's annual information form and management's
discussion and analysis for the year-ended December 31, 2018.
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 press release only
relate to events or information as of the date on which the
statements are made in this press release. 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.
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Financial
Position
|
(In thousands of
United States dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
6,726
|
|
$
|
11,920
|
|
|
Trade
receivables
|
9,970
|
|
11,292
|
|
|
Amounts due from
joint ventures
|
10,690
|
|
10,873
|
|
|
Other
receivables
|
265
|
|
332
|
|
|
Inventories
|
16,201
|
|
22,485
|
|
|
Biological
asset
|
4,414
|
|
4,230
|
|
|
Prepaid expenses and
deposits
|
1,892
|
|
889
|
|
Total current
assets
|
50,158
|
|
62,021
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment
|
67,965
|
|
77,479
|
|
|
Due from joint
ventures
|
9,500
|
|
-
|
|
|
Right-of-use
assets
|
3,733
|
|
-
|
|
|
Investment in joint
ventures
|
55,026
|
|
18,108
|
|
|
Other
assets
|
1,768
|
|
2,207
|
|
Total
assets
|
$
|
188,150
|
|
$
|
159,815
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Line of
credit
|
$
|
4,000
|
|
$
|
2,000
|
|
|
Trade
payables
|
9,270
|
|
14,601
|
|
|
Current maturities of
long-term debt
|
3,424
|
|
3,414
|
|
|
Accrued
liabilities
|
6,320
|
|
3,509
|
|
|
Lease liabilities -
current
|
927
|
|
78
|
|
Total current
liabilities
|
23,941
|
|
23,602
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
Long-term
debt
|
29,911
|
|
32,445
|
|
|
Deferred tax
liability
|
210
|
|
1,920
|
|
|
Lease
liabilities
|
2,973
|
|
102
|
|
|
Other
liabilities
|
1,237
|
|
1,050
|
|
Total
liabilities
|
58,272
|
|
59,119
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Share
capital
|
76,484
|
|
60,872
|
|
|
Contributed
surplus
|
4,216
|
|
2,198
|
|
|
Revaluation
surplus
|
3,351
|
|
4,321
|
|
|
Accumulated other
comprehensive loss
|
(504)
|
|
(562)
|
|
|
Retained
earnings
|
46,331
|
|
33,867
|
|
Total shareholders'
equity
|
129,878
|
|
100,696
|
|
Total liabilities and
shareholders' equity
|
$
|
188,150
|
|
$
|
159,815
|
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Income (Loss) and Comprehensive
Loss
|
(In thousands of
United States dollars, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Sales
|
$
|
38,293
|
|
$
|
39,684
|
|
$
|
111,512
|
|
$
|
111,213
|
Cost of
sales
|
(38,866)
|
|
(36,862)
|
|
(114,711)
|
|
(103,915)
|
Change in biological
asset
|
(627)
|
|
(1,189)
|
|
(97)
|
|
(992)
|
Selling, general and
administrative expenses
|
(4,607)
|
|
(3,632)
|
|
(14,872)
|
|
(10,933)
|
Loss from
operations
|
(5,807)
|
|
(1,999)
|
|
(18,168)
|
|
(4,627)
|
Interest
expense
|
(697)
|
|
(709)
|
|
(2,154)
|
|
(2,017)
|
Interest
income
|
304
|
|
91
|
|
651
|
|
111
|
Foreign exchange
(loss) gain
|
(183)
|
|
(73)
|
|
338
|
|
(87)
|
Other income,
net
|
69
|
|
17
|
|
219
|
|
61
|
Share of income
(loss) from joint ventures
|
(171)
|
|
(28)
|
|
17,939
|
|
(369)
|
(Loss) gain on
disposal of assets
|
(8)
|
|
-
|
|
13,558
|
|
-
|
Income (loss) before
income taxes
|
(6,493)
|
|
(2,701)
|
|
12,383
|
|
(6,928)
|
Recovery of income
taxes
|
1,421
|
|
712
|
|
81
|
|
1,513
|
Net income
(loss)
|
$
|
(5,072)
|
|
$
|
(1,989)
|
|
$
|
12,464
|
|
$
|
(5,415)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss)
per share
|
$
|
(0.10)
|
|
$
|
(0.04)
|
|
$
|
0.26
|
|
$
|
(0.12)
|
|
|
|
|
|
|
|
|
Diluted income (loss)
per share
|
$
|
(0.10)
|
|
$
|
(0.04)
|
|
$
|
0.25
|
|
$
|
(0.12)
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss) :
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
(22)
|
|
40
|
|
58
|
|
(48)
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
$
|
(5,094)
|
|
$
|
(1,949)
|
|
$
|
12,522
|
|
$
|
(5,463)
|
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Cash Flows
|
(In thousands of
United States dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash flows used in
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(5,072)
|
|
$
|
(1,989)
|
|
$
|
12,464
|
|
$
|
(5,415)
|
Adjustments to
reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
1,821
|
|
1,748
|
|
5,587
|
|
5,271
|
Share of (income) loss
from joint ventures
|
171
|
|
28
|
|
(17,939)
|
|
369
|
Interest
expense
|
697
|
|
709
|
|
2,154
|
|
2,017
|
Interest
income
|
(304)
|
|
(91)
|
|
(651)
|
|
(111)
|
Gain on disposal of
assets
|
8
|
|
-
|
|
(13,558)
|
|
-
|
Share-based
compensation
|
867
|
|
190
|
|
3,190
|
|
447
|
Deferred income
taxes
|
(1,178)
|
|
(1,481)
|
|
(840)
|
|
(2,301)
|
Change in biological
asset
|
627
|
|
1,189
|
|
97
|
|
992
|
Changes in non-cash
working capital items
|
4,904
|
|
1,073
|
|
4,375
|
|
(4,493)
|
Net cash used in
operating activities
|
2,541
|
|
1,376
|
|
(5,121)
|
|
(3,224)
|
|
|
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Purchases of property,
plant and equipment, net of rebate
|
(1,155)
|
|
(1,105)
|
|
(2,251)
|
|
(2,546)
|
Note receivables to
joint ventures
|
(3,842)
|
|
(5,890)
|
|
(9,302)
|
|
(6,781)
|
Proceeds from sale of
asset
|
(9)
|
|
-
|
|
52
|
|
-
|
Investment in joint
ventures
|
-
|
|
-
|
|
(332)
|
|
-
|
Net cash used in
investing activities
|
(5,006)
|
|
(6,995)
|
|
(11,833)
|
|
(9,327)
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
borrowings
|
(1,000)
|
|
-
|
|
3,000
|
|
7,000
|
Repayments on
borrowings
|
(882)
|
|
(849)
|
|
(3,591)
|
|
(1,766)
|
Interest paid on
long-term debt, net
|
(392)
|
|
(618)
|
|
(1,455)
|
|
(1,906)
|
Proceeds from issuance
of common stock pursuant to public offering, net
|
(62)
|
|
-
|
|
13,868
|
|
7,755
|
Proceeds from exercise
of stock options
|
35
|
|
12
|
|
109
|
|
275
|
Payments on capital
lease obligations
|
(214)
|
|
(11)
|
|
(637)
|
|
(45)
|
Proceeds from exercise
of warrants
|
-
|
|
-
|
|
466
|
|
-
|
Net cash provided by
financing activities
|
(2,515)
|
|
(1,466)
|
|
11,760
|
|
11,313
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
-
|
|
3
|
|
-
|
|
(2)
|
|
|
|
|
|
|
|
|
Net decrease in
cash and cash equivalents
|
(4,980)
|
|
(7,082)
|
|
(5,194)
|
|
(1,240)
|
Cash and cash
equivalents, beginning of period
|
11,706
|
|
12,933
|
|
11,920
|
|
7,091
|
Cash and cash
equivalents, end of period
|
$
|
6,726
|
|
$
|
5,851
|
|
$
|
6,726
|
|
$
|
5,851
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
Income taxes
paid
|
$
|
-
|
|
$
|
-
|
|
$
|
575
|
|
$
|
-
|
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/village-farms-international-reports-third-quarter-2019-financial-results--canadian-cannabis-jv-pure-sunfarms-achieves-fourth-consecutive-quarter-of-positive-ebitda-all-in-cost-of-production-of-c0-63-per-gram-gross-margin-of--300958844.html
SOURCE Village Farms International, Inc.