– Pure Sunfarms Brand Achieves 15.2% Dried
Flower Market Share (by Volume) with OSC in October
–
VANCOUVER, BC, Nov. 13, 2020 /PRNewswire/ - Village Farms
International, Inc. ("Village Farms" or the "Company") (NASDAQ:
VFF) (TSX: VFF) today announced its financial results for the three
and nine months ended September 30,
2020. All figures are in U.S. dollars unless otherwise
indicated.
The Company's financial statements for the three and nine months
ended September 30, 2020, as well as
the comparative periods for 2019, have been prepared and presented
under United States Generally Accepted Accounting Principals
("GAAP"). On September 30, 2020,
Village Farms had a majority (non-controlling) interest of 58.7% of
Pure Sunfarms Corp. ("Pure Sunfarms"), as the full acquisition of
the remaining interest in Pure Sunfarms did not occur till
November 2, 2020. Accordingly, Pure
Sunfarms results are not consolidated for the third quarter.
Pure Sunfarms' Third Quarter and Other Recent
Highlights
(Dollar Amounts are Before Village Farms'
Proportionate Share)
- Achieved significant sequential quarterly growth in key
financial metrics for the third quarter of 2020 compared to the
second quarter of 2020:
-
- Net sales increased 75% to C$22.6
million;
- Net sales to provincial buyers (retail) increased 30% to
C$12.0 million;
- Gross profit increased 81% to C$7.8
million;
- Net income increased 200% to C$3.2
million; and
- Adjusted EBITDA increased 125% to C$5.6
million.
- Achieved 15.2% brand market share of the dried flower category
(by kilograms sold) in October 2020
with the Ontario Cannabis Store ("OCS")*;
- Remained the top-selling brand of dried flower products with
the OCS (by kilograms sold and dollars sold) for the year-to-date
ended October 31, 2020, with a market
share of 13.6% (by kilograms sold)*;
- Launched its first Cannabis 2.0 products, specifically Full
Spectrum Vapes in 510 Thread Cartridges and first bottled oil
products, in September 2020;
and,
- Received an amendment to its standard cannabis processing
license from Health Canada permitting internal extraction
operations, which are currently ramping up.
*Data cited has been calculated by Pure Sunfarms from sales
information provided by OCS.
Village Farms' Financial Summary for the Three and Nine
Months Ended September 30, 2020 and
Corporate Highlights
($US millions except
per share metric)
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2020
|
2019
|
Change
|
|
2020
|
2019
|
Change
|
Produce
Sales
|
$43.0
|
$38.3
|
+12%
|
|
$122.7
|
$111.5
|
+10%
|
Net Income
(Loss)1
|
$0.5
|
($0.7)
|
+171%
|
|
$4.63
|
$9.52
|
-52%
|
Income (Loss) Per
Share1
|
$0.01
|
($0.01)
|
+200%
|
|
$0.083
|
$0.202
|
-60%
|
Adjusted
EBITDA4
|
$4.6
|
$2.9
|
+59%
|
|
$7.9
|
$8.3
|
-5%
|
|
|
1.
|
Net income includes
the net income contribution from Pure Sunfarms of US$1.4 million
and US$3.7 million (Village Farms' proportionate share) for the
three-month periods ended September 30, 2020 and 2019, respectively
and US$5.4 million and US$14.5 million (Village Farms'
proportionate share) for the nine-month periods ended September 30,
2020 and 2019, respectively.
|
2.
|
Net income for the
nine months ended September 30, 2019 includes a one-time gain on
the sale of Delta 2 greenhouse facility of $13.6
million.
|
3.
|
Net income for the
nine months ended September 30, 2020 includes a $4.7 million gain
on receipt of Pure Sunfarms shares from Emerald Health Therapeutics
as per the Settlement Agreement and Mutual Release, dated March 2,
2020, by and between Village Farms International, Inc., Emerald
Health Therapeutics Inc., Emerald Health Therapeutics Canada Inc.,
and Pure Sunfarms Corp. (the "Settlement Agreement").
|
4.
|
Adjusted EBITDA
includes the positive EBITDA contribution from Pure Sunfarms of
US$2.5 million and US$5.0 million (Village Farms' proportionate
share) for the three-month periods ended September 30, 2020 and
2019, respectively and US$6.4 million and US$17.7 million (Village
Farms' proportionate share) for the nine-month periods ended
September 30, 2020 and 2019, respectively. Adjusted EBITDA
includes the Company's majority non-controlling interest in Pure
Sunfarms and 65% equity interest in Village Fields Hemp USA LLC
("VF Hemp"), (together the "Joint Ventures" or "JVs"). Adjusted
EBITDA is not a recognized earnings measure and does not have a
standard meaning prescribed in by GAAP. See "Non-GAAP Measures"
below.
|
- On November 2, 2020 (subsequent
to quarter end), the Company acquired all issued and outstanding
shares of Pure Sunfarms, as a result of which the Company now
wholly owns 100% of Pure Sunfarms;
- In September 2020, the Company
completed a registered direct offering of 9,396,226 units at a
purchase price of US$5.30 per unit
with certain institutional investors for gross proceeds of
approximately $49.8 million, of which
a portion of the proceeds were used to finance the Pure Sunfarms
acquisition;
- The Company initiated its international cannabis strategy with
investments in Australia-based
Altum International Pty Ltd, one of Asia-Pacific's leading cannabinoid platforms,
and DutchCanGrow, a Netherlands-based cannabis enterprise pursuing
the opportunity to become one of a limited number of licensed
cannabis growers when the Dutch government permits the first legal
recreational cannabis market in Europe; and
- Subsequent to quarter end, the Company's wholly owned
subsidiary, Village Farms Clean Energy, Inc. ("VFCE"), renewed and
extended its existing contract with the City of Vancouver under which VFCE receives
landfill gas captured by the City of
Vancouver at the City's landfill site in Delta, BC, enabling the transition of VFCE to
a more attractive long-term business model based on the conversion
of landfill gas to high-demand Renewable Natural Gas.
Pure Sunfarms' Financial Summary for the Three and Nine
Months Ended September 30, 2020
(Before Village Farms' Proportionate
Share)
(millions except %
metrics)
|
Three Months Ended
September 30,
|
|
|
2020
|
2019
|
Change of
C$
|
|
C$
|
US$
|
C$
|
US$
|
|
Total Gross
Sales
|
$28.8
|
$21.7
|
$24.8
|
$18.7
|
+16%
|
Total Net
Sales
|
$22.6
|
$17.0
|
$24.0
|
$18.1
|
-6%
|
Gross
Margin
|
34%
|
35%
|
69%
|
69%
|
-51%
|
SG&A
|
$3.3
|
$2.4
|
$3.7
|
$2.8
|
-11%
|
Net income
|
$3.2
|
$2.5
|
$8.9
|
$6.7
|
-64%
|
Adjusted
EBITDA5
|
$5.6
|
$4.3
|
$13.4
|
$10.1
|
-58%
|
Adjusted EBITDA
Margin
|
25%
|
25%
|
56%
|
56%
|
-55%
|
(millions except %
metrics)
|
Nine Months Ended
September 30,
|
|
|
2020
|
2019
|
Change of
C$
|
|
C$
|
US$
|
C$
|
US$
|
|
Total Gross
Sales
|
$69.6
|
$51.4
|
$71.5
|
$53.8
|
-2%
|
Total Net
Sales
|
$53.5
|
$39.6
|
$70.7
|
$53.1
|
-24%
|
Gross
Margin
|
40%
|
40%
|
75%
|
75%
|
-47%
|
SG&A
|
$9.1
|
$6.7
|
$7.5
|
$5.6
|
+21%
|
Net
income6
|
$12.9
|
$9.4
|
$32.1
|
$24.1
|
-60%
|
Adjusted
EBITDA5
|
$14.9
|
$11.0
|
$47.1
|
$35.4
|
-68%
|
Adjusted EBITDA
Margin
|
28%
|
28%
|
67%
|
67%
|
-58%
|
5.
|
Adjusted EBITDA is
not a recognized earnings measure and does not have a standard
meaning prescribed in by GAAP. See "Non-GAAP Measures"
below.
|
6.
|
Net income includes
C$6.0 million of debt forgiveness income as an outcome of the
Settlement Agreement.
|
Pure Sunfarms' Percent of Sales by Product Group
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
Channel
|
2020
|
2019
|
2020
|
2019
|
Retail,
Flower
|
48.5%
|
11.1%
|
52.3%
|
3.8%
|
Retail, 2.0
Product
|
4.5%
|
0.0%
|
1.9%
|
0.0%
|
Wholesale, Flower and
Trim
|
47.0%
|
88.9%
|
45.8%
|
96.2%
|
Management Commentary
"With 75% sequential growth in dollar sales, Pure Sunfarms'
third quarter highlighted its strong sales momentum as its leading
brand continues to resonate with consumers," said Michael DeGiglio, CEO, Village Farms.
"Importantly, this sales momentum was achieved with only a small
contribution from Pure Sunfarms' Cannabis 2.0 and bottled oil
products, which were launched late in the quarter. Pure
Sunfarms' third quarter results are yet further evidence of its
earnings power, based on our unique approach to the cannabis
industry, with net income nearly tripling from the second quarter
of this year, marking Pure Sunfarms seventh consecutive quarter of
profitability. It is an achievement that is unmatched in our
industry, and further underscores the significant value in
acquiring the entirety of Canada's
premier cannabis company."
Mr. DeGiglio added, "The deep experience and organizational
strength underlying our legacy produce business, which delivered
another solid quarter, combined with our proven cannabis
capabilities provides Village Farms with a rock-solid foundation as
we transform to a vertically integrated, agriculturally-based CPG
business to aggressively pursue high-growth opportunities in
emerging legal cannabis and related markets in the United
States and other targeted markets. There is no cannabis
supplier in Canada or the U.S.
with our combination of experience, capabilities and more than ten
million square feet of greenhouse assets, and we are encouraged by
the evolving regulatory environment in the U.S. and are developing
multiple strategies to capitalize on any favourable U.S. regulatory
developments in 2021. We will pursue these opportunities with
prudent, disciplined capital allocation and focus on return on
invested capital."
COVID-19 Update
All Village Farms' production facilities in Texas, British
Columbia, and Pure Sunfarms' facilities in Canada remain open and operational. The
Company has experienced a small number of COVID-19 illnesses at its
facilities, however, the Company's protocols were followed and
there has been no material disruption to operations. Village Farms
and Pure Sunfarms adhere to the highest health and safety standards
in their operations and each has put in place heightened hygiene
practices and safety protocols, including more stringent cleaning
and sanitization, and are taking appropriate precautions throughout
all operations as per the recommendations of health
authorities. The Company will continue to enhance and evolve
such practices and protocols as the situation warrants.
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,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Sales
|
$43,037
|
|
$38,293
|
|
$122,722
|
|
$111,512
|
Cost of
sales
|
(37,418)
|
|
(38,904)
|
|
(112,809)
|
|
(114,418)
|
Selling, general and
administrative expenses
|
(4,942)
|
|
(3,739)
|
|
(12,676)
|
|
(11,899)
|
Stock compensation
expense
|
(472)
|
|
(666)
|
|
(1,329)
|
|
(2,663)
|
Interest
expense
|
(299)
|
|
(655)
|
|
(1,273)
|
|
(2,018)
|
Interest
income
|
101
|
|
304
|
|
577
|
|
651
|
Foreign exchange
(loss) gain
|
(484)
|
|
(183)
|
|
(880)
|
|
338
|
Gain on
settlement
|
-
|
|
-
|
|
4,681
|
|
-
|
Other income,
net
|
27
|
|
69
|
|
92
|
|
219
|
(Loss) gain on
disposal of assets
|
-
|
|
(8)
|
|
(6)
|
|
13,558
|
(Provision for)
recovery of income taxes
|
(336)
|
|
1,266
|
|
607
|
|
114
|
Equity earning from
unconsolidated entities
|
1,306
|
|
3,519
|
|
4,885
|
|
14,115
|
Net income
(loss)
|
$520
|
|
($704)
|
|
$4,591
|
|
$9,509
|
Adjusted
EBITDA7
|
$4,556
|
|
$2,881
|
|
$7,921
|
|
$8,326
|
Income (loss) per
share – basic
|
$0.01
|
|
($0.01)
|
|
$0.08
|
|
$0.20
|
Income (loss) per
share – diluted
|
$0.01
|
|
($0.01)
|
|
$0.08
|
|
$0.19
|
7.
|
Adjusted EBITDA is
not a recognized earnings measure and does not have a standard
meaning prescribed in by GAAP. See "Non-GAAP Measures"
below.
|
Pure Sunfarms (in C$)
Three months ended September 30, 2020 compared to the
three months ended June 30, 2020.
Sales
Sales for three months ended September
30, 2020 increased to $22,627
as compared to $12,902, or a 75%
quarter on quarter increase from the three months ended
June 30, 2020 sales . The
increase was primarily driven by a 148% increase in sales in the
wholesale channel, a 30% quarter on quarter increase in sales to
provincial (retail) boards and the September launch of Pure
Sunfarms Cannabis 2.0 derivative products, which includes cannabis
oil and vape pens. The quarter on quarter growth in retail sales is
directly attributable to a 165.7% increase in Pure Sunfarms retail
small format, a 29.7% quarter on quarter increase in pre-rolls and
a (42.7%) decrease in Pure Sunfarms retail large format, as the
large format was launched in the second quarter of 2020 and the
third quarter retail large format sales consisted of ongoing
replenishment sales.
The channel makeup of the third quarter sales was 53% to the
retail channel and 47% to the wholesale channel. The channel
makeup of the second quarter sales was 69% to the retail channel
and 31% to the wholesale channel. Cannabis 2.0 derivative
products were 4.5% of third quarter sales, which are included in
the retail channel.
The net average selling price for the three months ended
September 30, 2020 was higher than
the net average selling price for the three months ended
June 30, 2020 by 13.3% due to an
increase in small format retail sales versus large format retail
sales, a quarter on quarter increase in the sales price of retail
flower SKUs and a slight increase in wholesale pricing, which is
impacted by the makeup of the potency of flower biomass sold to
various wholesale customers.
Cost of Sales
Cost of sales for the three months ended September 30, 2020
and three months ended June 30, 2020
was $14,826 and $8,594, respectively, an increase of 73%. The
third quarter of 2020 cost of sales includes an inventory write
down of ($1,412) for distillate
inventory purchased from third party extraction companies for which
the market value has dropped since the initial purchase. The
quarter on quarter increase in costs excluding the distillate
inventory write down was 56%, primarily due to a 143% increase in
wholesale kilograms sold, a 120% increase in retail small format
kilograms sold which has higher overhead and labor cost compared to
retail large format, and the launch of recently approved Cannabis
2.0 products which was co-manufactured by another licensed
producer.
Gross Margin
Gross margin for the three months ended September 30, 2020 and three months ended
June 30, 2020 was 34.5% and 33.2%,
respectively, excluding the distillate inventory write down the
third quarter gross margin was 40.7%. The quarter on quarter
improvement was due to an increase in wholesale sell price and an
increase in small format retail flower sales as compared to higher
sales of Pure Sunfarms retail large format products in the second
quarter of 2020, which have a lower gross margin.
Net Income
Net income for the three months ended September 30, 2020
and three months ended June 30, 2020
was $3,240 and $1,079 respectively, an increase of 200%. The
increase was primarily due to the increase in gross margin.
Adjusted EBITDA
Adjusted EBITDA for the three months ended September 30,
2020 increased 125% to $5,642 from
$2,509 for the second quarter.
The third quarter Adjusted EBITDA figure includes the third-party
distillate inventory write down of ($1,412).
Pure Sunfarms (in C$)
Three months ended September 30, 2020 compared to the
three months ended September 30, 2019.
Sales
Sales for the three months ended September 30, 2020 and
2019 was $22,627 and $23,953, respectively, a decrease of (5.5%). The
change was due to 362% increase in provincial (retail) sales and
(51.6%) decrease in wholesale selling price for the three months
ended September 30, 2020 compared to
the three months ended September 30,
2019. The net average selling price of retail flower for the
three months ended September 30, 2020
was lower than the net average selling price for the three months
ended September 30, 2019 by
(35.8%).
Cost of Sales
Cost of sales for the three months ended September 30, 2020
and 2019 was $14,826 and $7,536, respectively, an increase of 97%. The
third quarter 2020 cost of sales includes an inventory write down
of ($1,412) for distillate inventory
purchased from their third-party extraction companies for which the
market value has dropped since the initial purchase. The year on
year increase in costs excluding the distillate inventory write
down was 78%, primarily due to a 553% increase in retail kilograms
sold which require incremental packaging, overhead and logistics
expenses compared to product sold through the wholesale channel, as
well as higher depreciation expense charge (a year on year increase
of 91%).
Gross Margin
Gross margin for the three months ended September 30, 2020 and 2019 was 34.5% and 68.5%,
respectively. The decline was due to the ($1,412) inventory write down for distillate
inventory in 2020, a lower price environment for the wholesale
channel in 2020 as compared to the third quarter of 2019, as well
as an increase in costs as a result of Pure Sunfarms' increase in
provincial (retail) sales in 2020, as the majority of sales in the
third quarter of 2019 were made through the wholesale channel.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three
months ended September 30, 2020 and 2019 were $3,261 and $3,741,
respectively, a decrease of 12.8%. The decrease was primarily due
to wage subsidies received from the Government of Canada as a result of the federal COVID-19
program. Without the subsidy, the year on year selling, general and
administrative expenses were essentially flat.
Net Income
Net income for the three months ended September 30, 2020
and 2019 was $3,240 and $8,860 respectively, a decrease of (63.4%). The
decrease was primarily due to the decrease in gross margin.
Adjusted EBITDA
Adjusted EBITDA for the three months ended September 30,
2020 declined (57.7%) to $5,642 from
$13,352 for the same prior year
period. The decrease was primarily due to the decrease in gross
margin.
Produce (in US$)
Three months ended September 30,
2020 compared to the three months ended September 30, 2019.
Sales
Produce sales for the three months ended September 30, 2020
increased $4,744, or 12.4%, to
$43,037 compared to $38,293 for the three months ended
September 30, 2019. The improvement in sales is due to an
increase in pricing for tomatoes during the three months ended
September 30, 2020 compared to the same prior year period. The
average net selling price for total tomato pounds sold increased
30% for the three months ended September 30, 2020 compared to
the three months ended September 30, 2019, generated primarily
from our commodity items, which includes beefsteak tomatoes and
tomatoes on the vine ("TOVs"). The increase in net selling price in
the commodity items was primarily the result of a supply shortage
throughout most of 2020, due to an increase in grocery store
traffic, driven by COVID-19 measures, as well as a global tomato
virus that is negatively impacting tomato supplies. Pepper prices
increased 19% and pepper pounds sold increased 47% when compared to
the same prior year period, due to an increase in our third-party
pepper contracts. Cucumber prices increased 1% and cucumber pieces
sold decreased (12%) for the three months ended September 30,
2020 as compared to the three months ended September 30,
2019.
Cost of Sales
Cost of sales for the three months ended September 30, 2020
decreased ($1,486), or (3.8%), to
$37,418 from $38,904 for the three months ended
September 30, 2019, as the Company produced less tomatoes at
its facilities in the third quarter of 2020 compared to the same
period in 2019 due to the transition of the Delta 2 facility, which converted from tomato
production in 2019 to cannabis production for Pure Sunfarms in
2020.
Adjusted EBITDA
Adjusted EBITDA for the three months ended September 30,
2020 increased $4,168 to $2,223 from ($1,945) for the three months ended
September 30, 2019 due primarily to an increase in gross
margin, partially offset by an increase in selling, general and
administrative expenses. See the reconciliation of Adjusted EBITDA
to net income in "Non-GAAP Measures" below.
Non-GAAP 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, and adjusts for the difference
in accounting treatment of Pure Sunfarms, which we believe is
necessary to reflect the true economic value of our interest in
Pure Sunfarms. 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. Although
net income or loss is the most directly comparable financial
measure calculated and presented in accordance with GAAP, 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 tables below that present a reconciliation of
GAAP results 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.
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 September 30,
|
|
For the nine
months
ended September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
(loss)
|
$520
|
|
($704)
|
|
$4,591
|
|
$9,509
|
Add:
|
|
|
|
|
|
|
|
Amortization
|
1,518
|
|
2,360
|
|
4,540
|
|
5,587
|
Foreign currency
exchange loss (gain)
|
484
|
|
183
|
|
880
|
|
(338)
|
Interest expense,
net
|
198
|
|
351
|
|
696
|
|
1,367
|
Provision for
(recovery of) income taxes
|
336
|
|
(1,266)
|
|
(607)
|
|
(114)
|
Stock based
compensation
|
472
|
|
666
|
|
1,329
|
|
2,663
|
Interest expense for
JVs
|
240
|
|
276
|
|
636
|
|
506
|
Amortization for
JVs
|
598
|
|
414
|
|
1,276
|
|
1,125
|
Foreign currency
exchange loss (gain) for JVs
|
33
|
|
(8)
|
|
118
|
|
(21)
|
Income taxes
provision from JVs
|
245
|
|
1,355
|
|
1,736
|
|
5,572
|
(Gain) loss on
disposal of assets
|
(88)
|
|
8
|
|
(97)
|
|
(13,558)
|
Gain on settlement
agreement
|
-
|
|
-
|
|
(4,681)
|
|
-
|
JV gain on settlement
of net liabilities
|
-
|
|
-
|
|
(2,496)
|
|
-
|
True economic benefit
Pure Sunfarms8
|
-
|
|
(754)
|
|
-
|
|
(3,972)
|
Adjusted
EBITDA
|
$4,556
|
|
$2,881
|
|
$7,921
|
|
$8,326
|
Adjusted EBITDA for
JVs (See table below)
|
$2,333
|
|
$4,826
|
|
$6,050
|
|
$17,346
|
Adjusted EBITDA
excluding JVs(produce)
|
$2,223
|
|
($1,945)
|
|
$1,871
|
|
($9,020)
|
8.
|
The GAAP treatment of
our equity earning of Pure Sunfarms is different than under
International Financial Reporting Standards ("IFRS"). Under GAAP
the Emerald shares held in escrow are not considered issued until
paid for pursuant to the GAAP concept of 'hypothetical
liquidation'. As a result, our ownership percentage for the three
and nine months ended September 30, 2019 was 61.4% and 60.8%,
respectively, compared to our economic interest under IFRS of 50%
for the same periods.
|
Breakout of JV's
Adjusted EBITDA
(in thousands of
U.S. dollars)
|
For the three
months
ended September 30,
|
|
For the nine
months
ended September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Pure Sunfarms
Adjusted EBITDA
|
$2,551
|
|
$5,035
|
|
$6,365
|
|
$17,710
|
VFH Adjusted
EBITDA
|
(178)
|
|
(209)
|
|
(315)
|
|
(364)
|
Total JV's Adjusted
EBITDA
|
$2,333
|
|
$4,826
|
|
$6,050
|
|
$17,346
|
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 September 30, 2020
|
|
(in thousands of
U.S. dollars)
|
Produce
|
|
Pure
Sunfarms9
|
|
Hemp9
|
|
Total
|
Sales
|
$43,037
|
|
$10,007
|
|
$-
|
|
$53,044
|
Cost of
sales
|
(37,418)
|
|
(6,547)
|
|
-
|
|
(43,965)
|
Gross
margin
|
5,619
|
|
3,460
|
|
-
|
|
9,079
|
Selling, general and
administrative expenses
|
(4,942)
|
|
(1,436)
|
|
(213)
|
|
(6,591)
|
Share-based
compensation
|
(472)
|
|
-
|
|
-
|
|
(472)
|
Interest
expense
|
(299)
|
|
(227)
|
|
(14)
|
|
(540)
|
Interest
income
|
101
|
|
-
|
|
-
|
|
101
|
Foreign exchange
loss
|
(484)
|
|
(33)
|
|
-
|
|
(517)
|
Other income
(expense)
|
27
|
|
(76)
|
|
1
|
|
(48)
|
Gain on disposal of
assets
|
-
|
|
-
|
|
89
|
|
89
|
(Loss) income before
taxes
|
(450)
|
|
1,688
|
|
(137)
|
|
(1,101)
|
Recovery of
(provision for) income taxes
|
(336)
|
|
(245)
|
|
-
|
|
(581)
|
Net (loss)
income
|
($786)
|
|
$1,443
|
|
($137)
|
|
$520
|
Adjusted
EBITDA10
|
$2,223
|
|
$2,511
|
|
($178)
|
|
$4,556
|
(Loss) income per
share – basic
|
($0.01)
|
|
$0.02
|
|
($0.00)
|
|
$0.01
|
(Loss) income per
share – diluted
|
($0.01)
|
|
$0.02
|
|
($0.00)
|
|
$0.01
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended September 30, 2019
|
|
(in
thousands of U.S. dollars)
|
Produce
|
|
Pure
Sunfarms9
|
|
Hemp9
|
|
Total
|
Sales
|
$38,293
|
|
$10,217
|
|
$-
|
|
$48,510
|
Cost of
sales
|
(38,904)
|
|
(3,211)
|
|
-
|
|
(42,115)
|
Gross
margin
|
(611)
|
|
7,006
|
|
-
|
|
6,395
|
Selling, general and
administrative expenses
|
(3,739)
|
|
(1,635)
|
|
(229)
|
|
(5,603)
|
Share-based
compensation
|
(666)
|
|
-
|
|
-
|
|
(666)
|
Interest
expense
|
(655)
|
|
(175)
|
|
-
|
|
(830)
|
Interest
income
|
304
|
|
-
|
|
-
|
|
304
|
Foreign exchange
(loss) gain
|
(183)
|
|
8
|
|
-
|
|
(175)
|
Other
income
|
69
|
|
5
|
|
-
|
|
74
|
Loss on disposal of
assets
|
(8)
|
|
-
|
|
-
|
|
(8)
|
(Loss) income before
taxes
|
(5,489)
|
|
5,209
|
|
(229)
|
|
(509)
|
Recovery of
(provision for) income taxes
|
1,266
|
|
(1,461)
|
|
-
|
|
(195)
|
Net (loss)
income
|
($4,223)
|
|
$3,748
|
|
($229)
|
|
($704)
|
Adjusted
EBITDA10
|
($1,945)
|
|
$5,035
|
|
($209)
|
|
$2,881
|
(Loss) income per
share – basic
|
($0.09)
|
|
$0.08
|
|
($0.00)
|
|
($0.01)
|
(Loss) income per
share – diluted
|
($0.09)
|
|
$0.08
|
|
($0.00)
|
|
($0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine
months ended September 30, 2020
|
|
(in thousands of
U.S. dollars)
|
Produce
|
|
Pure
Sunfarms9
|
|
Hemp9
|
|
Total
|
Sales
|
$122,722
|
|
$22,958
|
|
$98
|
|
$145,778
|
Cost of
sales
|
(112,809)
|
|
(13,782)
|
|
(120)
|
|
(126,711)
|
Gross
margin
|
9,913
|
|
9,176
|
|
(22)
|
|
19,067
|
Selling, general and
administrative expenses
|
(12,676)
|
|
(3,870)
|
|
(500)
|
|
(17,046)
|
Share-based
compensation
|
(1,329)
|
|
-
|
|
-
|
|
(1,329)
|
Interest
expense
|
(1,273)
|
|
(425)
|
|
(211)
|
|
(1,909)
|
Interest
income
|
577
|
|
-
|
|
-
|
|
577
|
Foreign exchange
loss
|
(880)
|
|
(117)
|
|
-
|
|
(997)
|
Gain on
settlement
|
4,681
|
|
-
|
|
-
|
|
4,681
|
JV gain on
settlement
|
-
|
|
2,496
|
|
-
|
|
2,496
|
Other income
(expense)
|
92
|
|
(92)
|
|
82
|
|
82
|
(Loss) gain on
disposal of assets
|
(6)
|
|
5
|
|
99
|
|
98
|
(Loss) income before
taxes
|
(901)
|
|
7,173
|
|
(552)
|
|
5,720
|
Recovery of
(provision for) income taxes
|
607
|
|
(1,736)
|
|
-
|
|
(1,129)
|
Net (loss)
income
|
($294)
|
|
5,437
|
|
(552)
|
|
4,591
|
Adjusted
EBITDA10
|
$1,871
|
|
6,365
|
|
(315)
|
|
7,921
|
(Loss) income per
share – basic
|
($0.01)
|
|
$0.10
|
|
($0.01)
|
|
$0.08
|
(Loss) income per
share – diluted
|
($0.01)
|
|
$0.10
|
|
($0.01)
|
|
$0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine
months ended September 30, 2019
|
|
(in
thousands of U.S. dollars)
|
Produce
|
|
Pure
Sunfarms9
|
|
Hemp9
|
|
Total
|
Sales
|
$111,512
|
|
$32,011
|
|
$-
|
|
$143,523
|
Cost of
sales
|
(114,418)
|
|
(8,137)
|
|
-
|
|
(122,555)
|
Gross
margin
|
(2,906)
|
|
23,874
|
|
-
|
|
20,968
|
Selling, general and
administrative expenses
|
(11,899)
|
|
(3,334)
|
|
(378)
|
|
(15,611)
|
Share-based
compensation
|
(2,663)
|
|
-
|
|
-
|
|
(2,663)
|
Interest
expense
|
(2,018)
|
|
(356)
|
|
-
|
|
(2,374)
|
Interest
income
|
651
|
|
-
|
|
-
|
|
651
|
Foreign exchange
gain
|
338
|
|
22
|
|
-
|
|
360
|
Other
income
|
219
|
|
12
|
|
-
|
|
231
|
Gain on disposal of
assets
|
13,558
|
|
-
|
|
-
|
|
13,558
|
(Loss) income before
taxes
|
(4,720)
|
|
20,218
|
|
(378)
|
|
15,120
|
Recovery of
(provision for) income taxes
|
114
|
|
(5,725)
|
|
-
|
|
(5,611)
|
Net (loss)
income
|
($4,606)
|
|
$14,493
|
|
($378)
|
|
$9,509
|
Adjusted
EBITDA10
|
($9,020)
|
|
$17,710
|
|
($364)
|
|
$8,326
|
(Loss) income per
share – basic
|
($0.09)
|
|
$0.30
|
|
($0.01)
|
|
$0.20
|
(Loss) income per
share – diluted
|
($0.09)
|
|
$0.29
|
|
($0.01)
|
|
$0.19
|
|
|
|
|
|
|
|
|
|
9.
|
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.
|
10.
|
Adjusted EBITDA is
not a recognized earnings measure and does not have a standard
meaning prescribed in by GAAP. See "Non-GAAP Measures"
above.
|
Pro Forma Results
The combined pro forma financial information being presented is
for informational purposes only and is not necessarily indicative
of the results of operations that actually would have been achieved
had the transaction occurred as of January
1, 2020, nor do they purport to project the future operating
results of the consolidated company. The pro forma financial
information also does not reflect the costs of any integration
activities or cost savings or synergies expected to be achieved as
a result of the transaction and, accordingly, do not attempt to
predict or suggest future results.
The combined pro forma financial information being presented is
based on preliminary estimates, accounting judgments and currently
available information and assumptions that management believes are
reasonable. Accordingly, this pro forma financial data is not
necessarily indicative of our financial position or results of
operations had the Pure Sunfarms acquisition described above for
which we are giving pro forma effect actually occurred on the date
indicated.
The following tables present pro forma GAAP results as if the
Company's owned 100% of the Pure Sunfarms operations as of
January 1, 2020:
|
For the three
months ended September 30, 2020
|
|
(in thousands of
U.S. dollars)
|
Historical
Village
Farms
|
|
Historical
Pure Sunfarms
|
|
Pro Forma
Adjustments
|
|
Pro Forma
Combined
|
Consolidated
sales
|
$43,037
|
|
$17,048
|
|
$-
|
|
$60,085
|
Cost of
sales
|
(37,418)
|
|
(11,154)
|
|
-
|
|
(48,572)
|
Gross
margin
|
5,619
|
|
5,894
|
|
-
|
|
11,513
|
Selling, general and
administrative expenses
|
(4,942)
|
|
(2,447)
|
|
-
|
|
(7,389)
|
Share-based
compensation
|
(472)
|
|
-
|
|
-
|
|
(472)
|
Interest
expense
|
(299)
|
|
(386)
|
|
100
|
|
(585)
|
Interest
income
|
101
|
|
-
|
|
(100)
|
|
1
|
Foreign exchange
loss
|
(484)
|
|
(56)
|
|
-
|
|
(540)
|
Other income
(expense)
|
27
|
|
(131)
|
|
-
|
|
(104)
|
(Loss) income before
taxes
|
(450)
|
|
2,874
|
|
-
|
|
2,424
|
(Provision for)
recovery of income taxes
|
(336)
|
|
(417)
|
|
-
|
|
(753)
|
(Loss) gain from
consolidated entities after income taxes
|
(786)
|
|
2,457
|
|
-
|
|
1,671
|
Equity earnings of
unconsolidated entities
|
1,306
|
|
-
|
|
(1,443)
|
|
(137)
|
Net income
(loss)
|
$520
|
|
$2,457
|
|
($1,443)
|
|
$1,534
|
Income per share –
basic
|
$0.01
|
|
|
|
|
|
$0.02
|
Income per share –
diluted
|
$0.01
|
|
|
|
|
|
$0.02
|
Weighted average
number of common shares – basic
|
58,536
|
|
|
|
7,354
|
|
65,890
|
Weighted average
number of common shares - diluted
|
60,440
|
|
|
|
7,808
|
|
68,248
|
Adjusted
EBITDA
|
$4,556
|
|
$4,277
|
|
($2,511)
|
|
$6,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine
months ended September 30, 2020
|
|
(in thousands of
U.S. dollars)
|
Historical
Village
Farms
|
|
Historical
Pure Sunfarms
|
|
Pro Forma
Adjustments
|
|
Pro Forma
Combined
|
Consolidated
sales
|
$122,722
|
|
$39,571
|
|
$-
|
|
$162,293
|
Cost of
sales
|
(112,809)
|
|
(23,678)
|
|
-
|
|
(136,487)
|
Gross
margin
|
9,913
|
|
15,893
|
|
-
|
|
25,806
|
Selling, general and
administrative expenses
|
(12,676)
|
|
(6,731)
|
|
-
|
|
(19,407)
|
Share-based
compensation
|
(1,329)
|
|
-
|
|
-
|
|
(1,329)
|
Interest
expense
|
(1,273)
|
|
(734)
|
|
309
|
|
(1,698)
|
Interest
income
|
577
|
|
-
|
|
(309)
|
|
268
|
Foreign exchange
loss
|
(880)
|
|
(207)
|
|
-
|
|
(1,087)
|
Gain on
settlement
|
4,681
|
|
4,348
|
|
-
|
|
9,029
|
Other income
(expense)
|
92
|
|
(146)
|
|
-
|
|
(54)
|
Loss on disposal of
assets
|
(6)
|
|
-
|
|
-
|
|
(6)
|
(Loss) income before
taxes
|
(901)
|
|
12,423
|
|
-
|
|
11,522
|
Recovery of
(provision for) income taxes
|
607
|
|
(3,012)
|
|
-
|
|
(2,405)
|
Loss from
consolidated entities after income taxes
|
(294)
|
|
9,411
|
|
-
|
|
9,117
|
Equity earnings of
unconsolidated entities
|
4,885
|
|
-
|
|
(5,438)
|
|
(553)
|
Net income
(loss)
|
$4,591
|
|
$9,411
|
|
($5,438)
|
|
$8,564
|
Income per share –
basic
|
$0.08
|
|
|
|
|
|
$0.13
|
Income per share –
diluted
|
$0.08
|
|
|
|
|
|
$0.13
|
Weighted average
number of common shares – basic
|
55,946
|
|
|
|
8,676
|
|
64,622
|
Weighted average
number of common shares - diluted
|
57,778
|
|
|
|
9,130
|
|
66,908
|
Adjusted
EBITDA
|
$7,921
|
|
$10,980
|
|
($6,365)
|
|
$12,536
|
|
|
|
|
|
|
|
|
|
Within 75 days of November 2, 2020
(the closing date of the Pure Sunfarms acquisition), the Company
will file with the U.S. Securities and Exchange Commission, on Form
8-K/A, historical financial statements for Pure Sunfarms, together
with unaudited pro forma combined financial statements of the
Company as if the Pure Sunfarms Transaction had occurred on
January 1, 2020.
This press release is intended to be read in conjunction with
the Company's Consolidated Financial Statements ("Financial
Statements") and Management's Discussion & Analysis
("MD&A") for the three and nine month periods ended
September 30, 2020 in the Company
Form 10-Q, 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,
Friday, November 13, 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/2HoYneE.
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 9199257 followed by the pound key. The telephone replay
will be available until Friday, November 20,
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
greenhouse growers in North
America, and is leveraging its decades of experience in
large-scale, low-cost intensive agriculture and as a vertically
integrated produce supplier to pursue high-value, high-growth
plant-based Consumer Packaged Goods opportunities in cannabis and
CBD in North America and selected
markets internationally.
In Canada, British-Columbia-based Pure Sunfarms is one of
the single largest cannabis operations in the world, the
lowest-cost greenhouse producer, one of the best-selling brands,
and has generated profitability for seven consecutive quarters.
In the U.S., subject to compliance with all applicable U.S.
federal and state laws, Village Farms is pursuing a strategy to
become a leading developer and supplier of branded and
white-labeled CBD products targeting "big box" and other major
retailers and consumer packaged goods companies, and with one the
largest greenhouse operations in country, is well positioned for
the potential federal legalization of high-THC cannabis.
Internationally, Village Farms is strategically targeting
selected, nascent, legal cannabis and CBD opportunities with
significant long-term potential, with an initial focus on the
Asia-Pacific region through its
investment in Australia-based
Altum International.
Cautionary Statement Regarding Forward-Looking
Information
This press release contains forward-looking statements within
the meaning of the United States Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of 1933, as
amended, (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and is
subject to the safe harbor created by those sections. This press
release also contains "forward-looking information" within the
meaning of applicable Canadian securities law. We refer to such
forward-looking statements and forward-looking information
collectively as "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, expansion plans, 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, the greenhouse
vegetable industry or the cannabis industry 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", "try", "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. The
forward-looking statements in this press release are subject to
risks that may include, but are not limited to: our limited
operating history, including that of Pure Sunfarms and our start-up
operations of growing hemp in the United
States; the legal status of Pure Sunfarms cannabis business;
risks relating to obtaining additional financing, including our
dependence upon credit facilities; potential difficulties in
achieving and/or maintaining profitability; variability of product
pricing; risks inherent in the cannabis, hemp and agricultural
businesses; the ability of Pure Sunfarms to cultivate and
distribute cannabis in Canada;
existing and new governmental regulations, including risks related
to regulatory compliance and licenses (e.g., Pure Sunfarms' ability
to obtain licenses for its Delta 2
greenhouse facility as well as additional licenses under the
Canadian act respecting cannabis to amend to the Controlled Drugs
and Substances Act, the Criminal Code and other Acts, S.C. 2018, c.
16 (Canada) for its Delta 3 greenhouse facility), and changes in
our regulatory requirements; risks relating to conversion of our
greenhouses to cannabis production for Pure Sunfarms; risks related
to rules and regulations at the U.S. federal (Food and Drug
Administration and United States Department of Agriculture), state
and municipal levels with respect to produce and hemp; retail
consolidation, technological advances and other forms of
competition; transportation disruptions; product liability and
other potential litigation; retention of key executives; labor
issues; uninsured and underinsured losses; vulnerability to rising
energy costs; environmental, health and safety risks, foreign
exchange exposure, risks associated with cross-border trade;
difficulties in managing our growth; restrictive covenants under
our credit facilities; natural catastrophes; the ongoing and
developing COVID-19 pandemic; and tax risks.
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. 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 securities regulators,
including this press release. In particular, we caution you that
our forward-looking statements are subject to the ongoing and
developing circumstances related to the COVID-19 pandemic, which
may have a material adverse effect on our business, operations and
future financial results.
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 relate
only 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, after the date on which
the statements are made or to reflect the occurrence of
unanticipated events.
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Financial
Position
|
(In thousands of
United States dollars, except share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
54,666
|
|
$
|
11,989
|
Trade
receivables
|
|
10,498
|
|
8,997
|
Inventories
|
|
15,301
|
|
15,918
|
Amounts due from
joint ventures
|
|
10,954
|
|
15,418
|
Other
receivables
|
|
637
|
|
342
|
Income tax
receivable
|
|
440
|
|
713
|
Prepaid expenses and
deposits
|
|
934
|
|
1,259
|
Total current
assets
|
|
93,430
|
|
54,636
|
Non-current
assets
|
|
|
|
|
Property, plant and
equipment
|
|
59,663
|
|
63,158
|
Investment in joint
ventures
|
|
63,164
|
|
41,334
|
Investment in in
minority interests
|
|
1,226
|
|
—
|
Notes receivable -
joint ventures
|
|
10,713
|
|
10,865
|
Deferred tax
asset
|
|
9,693
|
|
7,999
|
Right-of-use
assets
|
|
4,111
|
|
3,582
|
Other
assets
|
|
1,827
|
|
1,834
|
Total
assets
|
|
$
|
243,827
|
|
$
|
183,408
|
LIABILITIES
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Line of
credit
|
|
$
|
3,000
|
|
$
|
2,000
|
Trade
payables
|
|
9,667
|
|
12,653
|
Current maturities of
long-term debt
|
|
2,294
|
|
3,423
|
Accrued
liabilities
|
|
6,676
|
|
3,017
|
Operating lease
liabilities - current
|
|
1,711
|
|
875
|
Finance lease
liabilities - current
|
|
34
|
|
61
|
Total current
liabilities
|
|
23,382
|
|
22,029
|
Non-current
liabilities
|
|
|
|
|
Long-term
debt
|
|
27,793
|
|
28,966
|
Deferred tax
liability
|
|
2,211
|
|
1,873
|
Operating lease
liabilities - non-current
|
|
2,465
|
|
2,690
|
Finance lease
liabilities - non-current
|
|
12
|
|
34
|
Other
liabilities
|
|
1,437
|
|
1,357
|
Total
liabilities
|
|
57,300
|
|
56,949
|
Commitments and
contingencies (note 15)
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Common stock, no par
value per share -
unlimited shares authorized; 65,959,810
shares issued and outstanding at September
30, 2020 and 52,656,669 shares issued and
outstanding at December 31, 2019
|
|
141,310
|
|
98,333
|
Additional paid in
capital
|
|
16,892
|
|
4,351
|
Accumulated other
comprehensive loss
|
|
(516)
|
|
(475)
|
Retained
earnings
|
|
28,841
|
|
24,250
|
Total shareholders'
equity
|
|
186,527
|
|
126,459
|
Total liabilities and
shareholders' equity
|
|
$
|
243,827
|
|
$
|
183,408
|
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Income (Loss) and Comprehensive
Income (Loss)
|
(In thousands of
United States dollars, except per share data, unless otherwise
noted)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
43,037
|
|
$
|
38,293
|
|
$
|
122,722
|
|
$
|
111,512
|
Cost of
sales
|
|
(37,418)
|
|
(38,904)
|
|
(112,809)
|
|
(114,418)
|
Gross
margin
|
|
5,619
|
|
(611)
|
|
9,913
|
|
(2,906)
|
Selling, general and
administrative expenses
|
|
(4,942)
|
|
(3,739)
|
|
(12,676)
|
|
(11,899)
|
Share-based
compensation
|
|
(472)
|
|
(666)
|
|
(1,329)
|
|
(2,663)
|
Interest
expense
|
|
(299)
|
|
(655)
|
|
(1,273)
|
|
(2,018)
|
Interest
income
|
|
101
|
|
304
|
|
577
|
|
651
|
Foreign exchange gain
(loss)
|
|
(484)
|
|
(183)
|
|
(880)
|
|
338
|
Gain on settlement
agreement
|
|
-
|
|
-
|
|
4,681
|
|
-
|
Other
income
|
|
27
|
|
69
|
|
92
|
|
219
|
(Loss) gain on
disposal of assets
|
|
-
|
|
(8)
|
|
(6)
|
|
13,558
|
Loss before taxes and
earnings from unconsolidated
entities
|
|
(450)
|
|
(5,489)
|
|
(901)
|
|
(4,720)
|
(Provision for)
recovery of income taxes
|
|
(336)
|
|
1,266
|
|
607
|
|
114
|
Loss from
consolidated entities after income taxes
|
|
(786)
|
|
(4,223)
|
|
(294)
|
|
(4,606)
|
Equity earnings from
unconsolidated entities
|
|
1,306
|
|
3,519
|
|
4,885
|
|
14,115
|
Net income
(loss)
|
|
$
|
520
|
|
$
|
(704)
|
|
$
|
4,591
|
|
$
|
9,509
|
Basic income (loss)
per share
|
|
$
|
0.01
|
|
$
|
(0.01)
|
|
$
|
0.08
|
|
$
|
0.20
|
Diluted income (loss)
per share
|
|
$
|
0.01
|
|
$
|
(0.01)
|
|
$
|
0.08
|
|
$
|
0.19
|
Weighted average
number of common shares used in
the computation of net income (loss) per share (in
thousands):
|
|
|
|
|
|
|
|
|
Basic
|
|
58,536
|
|
48,845
|
|
55,946
|
|
48,650
|
Diluted
|
|
60,440
|
|
48,845
|
|
57,778
|
|
50,451
|
Net income
(loss)
|
|
$
|
520
|
|
$
|
(704)
|
|
$
|
4,591
|
|
$
|
9,509
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
31
|
|
(22)
|
|
(41)
|
|
58
|
Comprehensive income
(loss)
|
|
$
|
551
|
|
$
|
(726)
|
|
$
|
4,550
|
|
$
|
9,567
|
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Cash Flows
|
(In thousands of
United States dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2020
|
|
2019
|
Cash flows
provided by (used in) operating activities:
|
|
|
|
|
Net income
|
|
$
|
4,591
|
|
$
|
9,509
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
4,540
|
|
5,587
|
Amortization of
deferred charges
|
|
57
|
|
57
|
Share of income from
joint ventures
|
|
(4,885)
|
|
(14,115)
|
Interest
expense
|
|
1,273
|
|
2,018
|
Interest
income
|
|
(577)
|
|
(651)
|
Interest paid on
long-term debt
|
|
(1,318)
|
|
(2,013)
|
Gain on settlement
agreement
|
|
(4,681)
|
|
—
|
Loss (gain) on
disposal of assets
|
|
6
|
|
(13,558)
|
Non-cash lease
expense
|
|
(935)
|
|
(778)
|
Interest paid on
finance leases
|
|
(3)
|
|
(6)
|
Share-based
compensation
|
|
1,329
|
|
2,663
|
Deferred income
taxes
|
|
(321)
|
|
(749)
|
Changes in non-cash
working capital items
|
|
4,938
|
|
4,149
|
Net cash provided by
(used in) operating activities
|
|
4,014
|
|
(7,887)
|
Cash flows used in
investing activities:
|
|
|
|
|
Purchases of
property, plant and equipment, net of rebate
|
|
(1,076)
|
|
(1,630)
|
Advances to joint
ventures
|
|
(133)
|
|
(9,499)
|
Proceeds from sale of
asset
|
|
—
|
|
52
|
Investment in joint
ventures
|
|
(11,713)
|
|
(13)
|
Investment in
minority interests
|
|
(1,226)
|
|
—
|
Net cash used in
investing activities
|
|
(14,148)
|
|
(11,090)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
borrowings
|
|
3,000
|
|
3,000
|
Repayments on
borrowings
|
|
(4,326)
|
|
(3,591)
|
Proceeds from
issuance of common stock
|
|
46,388
|
|
13,868
|
Issuance
costs
|
|
(3,819)
|
|
—
|
Proceeds from
exercise of stock options
|
|
251
|
|
109
|
Payments on capital
lease obligations
|
|
(51)
|
|
(69)
|
Proceeds from
exercise of warrants
|
|
11,369
|
|
466
|
Net cash provided by
financing activities
|
|
52,812
|
|
13,783
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(1)
|
|
—
|
Net increase
(decrease) in cash and cash equivalents
|
|
42,677
|
|
(5,194)
|
Cash and cash
equivalents, beginning of period
|
|
11,989
|
|
11,920
|
Cash and cash
equivalents, end of period
|
|
$
|
54,666
|
|
$
|
6,726
|
View original
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SOURCE Village Farms International, Inc.