Village Farms International, Inc. (“Village Farms” or the
“Company”) (NASDAQ: VFF) today announced its financial results for
the first quarter ended March 31, 2023. All figures are in U.S.
dollars unless otherwise indicated.
Management Commentary
“The first quarter was a solid start to 2023 as
continued strong growth in our Canadian Cannabis business and
steady sequential performance in our US Cannabis business were
complemented by another quarter of significantly improved results
in our Fresh Produce business,” said Michael DeGiglio, Chief
Executive Officer, Village Farms.
“Our Canadian Cannabis business delivered 40%
year-over-year growth in Retail Branded sales for the first
quarter, once again significantly outpacing overall market growth,
as we maintained our number two market share position nationally
and were one of just three of the top 10 producers to expand market
share from the same period last year1. Combined with our ongoing
focus on production efficiency and cost management, we achieved our
18th consecutive quarter of positive adjusted EBITDA, with a
year-over-year increase of 95%.”
“Canada continues to be an exceptionally
difficult environment in which to operate a legal cannabis business
profitably, most notably due to the absurd level of taxation
relative to all other consumer products, including similarly
regulated products like alcohol. The excessive, flat per-gram
excise tax is handcuffing the very businesses that can ensure that
this historical piece of Canadian legislation is a long-term
success. At the same, it is enabling the illicit market to not only
survive but flourish. We are disappointed that the federal
government has not yet chosen to revisit cannabis taxation in the
context of the economic realities of the market, while concurrently
choosing to limit proposed tax increases in the already favourably
taxed alcohol industry. We implore the federal government to
address fair and equitable taxation for the cannabis industry to
support safe, regulated product in the hands of adults, and a
healthy and competitive legal market that supports profitable
investment in jobs and local communities.”
“We continue to focus on, and excel in, what we
can control. We are focused on leveraging our commercial, branding
and innovation capabilities for additional opportunities in
growing, profitable cannabis categories to continue to drive sales
growth and market share gains. Importantly, higher margin,
rationally taxed export sales from our Canadian Cannabis business
grew more than nine-fold year-over-year as we add international
markets, including the launch this week of Village Farms-grown
products in Germany. We will continue to leverage and exploit our
premier unmatched low-cost, high quality Canadian cannabis
production, track record of success and reputation to aggressively
pursue export and other international opportunities, especially in
the face of the challenging Canadian market economics.”
“In our Fresh Produce business, again this
quarter we achieved considerable improvement in our operations,
which drove a $6.6 million turnaround in adjusted EBITDA. We are
benefitting from the first steps in our multi-part plan to return
this strategic and important part of our business to profitability.
The much improved first quarter, helped by some macro-environment
stabilization, continues to support our confidence in substantially
improved financial performance from Fresh Produce for this
year.”
1. Based on estimated retail sales from HiFyre, other third
parties and provincial boards.
First Quarter Financial
Highlights(All comparable periods are for the
first quarter of 2022 unless otherwise stated)
Consolidated
- Consolidated sales decreased 8%
year-over-year to $64.7 million from $70.2 million;
- Operating loss before tax was ($6.1 million) compared with
($8.3 million);
- Consolidated net loss was ($6.6
million), or ($0.06) per share, compared with ($6.5 million), or
($0.07) per share;
- Consolidated adjusted EBITDA, a
non-GAAP measure, improved to $0.5 million from negative ($6.1
million); and,
- The Pure Sunfarms revolving and
non-revolving credit facilities were extended to a maturity date of
February 7, 2026 under the same terms, conditions and covenants as
the original facilities maturing on February 7, 2024.
Cannabis Segment
- Total Cannabis segment net sales
increased 4% year-over-year to $30.1 million, representing 47% of
total Village Farms’ sales;
- Total Cannabis segment net loss was
($0.5 million), compared to net income of $1.3 million; and,
- Total Cannabis segment adjusted
EBITDA was $3.8 million compared with $2.7 million.
Canadian Cannabis (Pure Sunfarms and Rose LifeScience)
- Canadian Cannabis net sales
increased 23% (on a constant currency basis) to a $25.1 million
(C$34.0 million) from $21.8 million (C$27.6 million);
- Canadian Cannabis retail branded
sales increased 40%;
- Canadian Cannabis international
(export) sales increased 943%;
- Canadian Cannabis gross margin was
33%;
- Canadian Cannabis net loss was
($0.1 million) compared with net income of $1.0 million; and,
- Canadian Cannabis adjusted EBITDA
increased 95% (on a constant currency basis) to $3.9 million (C$5.3
million).
U.S. Cannabis (Balanced Health Botanicals)
- U.S. Cannabis net sales were $5.0
million, with gross margin of 65.1%, net loss of ($0.4 million) and
adjusted EBITDA loss of ($0.1 million).
Village Farms Fresh (Produce)
- Sales were $34.6 million compared
with $41.3 million;
- Net loss was ($2.6 million)
compared with a net loss of ($5.6 million); and,
- Adjusted EBITDA improved
significantly to negative ($1.0 million) from negative ($6.2
million) and was the third consecutive quarter of significant
sequential improvement.
Strategic Growth and Operational
Highlight
Canadian Cannabis
- Remained the number two ranked
cannabis producer nationally and Rose LifeScience remained the
number two producer for Quebec by market share for the first
quarter of 20231;
- Remained the number one ranked
cannabis producer in the dried flower category in Canada; and,
- Rose LifeScience added HEXO to its
commercialization and distribution portfolio for Quebec.
1. Based on estimated retail sales from HiFyre, other third
parties and provincial boards.
U.S. Cannabis
- Balanced Health Botanicals again
received an A-rating by NSF, a highly reputable third-party
assessor of production safety standards; and,
- Village Farms
filed an application for a Texas medicinal cannabis license
subsequent to quarter end. The Company is encouraged by the
potential to contribute its cannabis expertise, decades of
investment in Texas and deep agriculture roots to any future plans
by the State to award additional licenses. If awarded, the Company
will work with the listing authorities with respect to an
acceptable ownership structure.
International Cannabis
- Pure Sunfarms’ first shipment to
Germany was successfully received by a local partner subsequent to
quarter end and is now available to German medicinal patients. In
addition, both Israeli and German partners have placed follow on
orders.
Canadian Cannabis Performance
Summary
|
(in millions except % metrics) |
Three Months Ended March 31, |
Change of C$ |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
C$ |
US$ |
C$ |
US$ |
|
|
Total Net Sales |
$ |
34.0 |
|
$ |
25.1 |
|
$ |
27.6 |
|
$ |
21.8 |
|
+23 |
% |
|
Total Cost of Sales |
$ |
22.5 |
|
$ |
16.7 |
|
$ |
15.6 |
|
$ |
12.3 |
|
+44 |
% |
|
Gross Margin |
$ |
11.5 |
|
$ |
8.4 |
|
$ |
12.0 |
|
$ |
9.5 |
|
-4 |
% |
|
Gross Margin % |
|
33 |
% |
|
33 |
% |
|
44 |
% |
|
44 |
% |
-25 |
% |
|
Adjusted Gross Margin1 |
$ |
11.5 |
|
$ |
8.4 |
|
$ |
9.5 |
|
$ |
7.5 |
|
-21 |
% |
|
Adjusted Gross Margin %1 |
|
33 |
% |
|
33 |
% |
|
34 |
% |
|
34 |
% |
-3 |
% |
|
SG&A2 |
$ |
9.3 |
|
$ |
6.8 |
|
$ |
9.3 |
|
$ |
7.3 |
|
— |
|
|
Net income (loss) |
$ |
(0.1 |
) |
$ |
(0.1 |
) |
$ |
1.3 |
|
$ |
1.0 |
|
N/A |
|
|
Adjusted EBITDA3 |
$ |
5.3 |
|
$ |
3.9 |
|
$ |
2.7 |
|
$ |
2.1 |
|
+95 |
% |
|
Adjusted EBITDA Margin4 |
|
16 |
% |
|
16 |
% |
|
10 |
% |
|
10 |
% |
+60 |
% |
1 Adjusted gross
margin for Q1 2022 excludes C$2.6 million (US$2.1 million) positive
inventory adjustment from the revaluation of inventory to fair
value. Adjusted gross margin is not a recognized earnings measure
and does not have a standard meaning prescribed in by GAAP.2
SG&A for Q1 2023 includes share-based compensation of C$260,000
compared with C$464,000 for Q1 2022.3 Adjusted EBITDA is not a
recognized earnings measure and does not have a standard meaning
prescribed in by GAAP.
Canadian Cannabis’ Percent of Sales by
Channel
|
(in millions except % metrics) |
Three months ended March 31, |
Change of C$ |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
C$ |
US$ |
C$ |
US$ |
|
|
Retail Branded Sales |
$ |
46.7 |
|
$ |
34.5 |
|
$ |
31.5 |
|
$ |
24.9 |
|
+48 |
% |
|
International Sales |
$ |
2.3 |
|
$ |
1.7 |
|
$ |
0.2 |
|
$ |
0.2 |
|
+1050 |
% |
|
Non-Branded Sales |
$ |
3.1 |
|
$ |
2.3 |
|
$ |
6.2 |
|
$ |
4.9 |
|
-50 |
% |
|
Other |
$ |
0.5 |
|
$ |
0.4 |
|
$ |
1.0 |
|
$ |
.8 |
|
-50 |
% |
|
Less: Excise Taxes |
$ |
(18.6 |
) |
$ |
(13.8 |
) |
$ |
(11.4 |
) |
$ |
(9.0 |
) |
+63 |
% |
|
Net Sales |
$ |
34.0 |
|
$ |
25.1 |
|
$ |
27.5 |
|
$ |
21.8 |
|
+24 |
% |
Presentation of Financial Results
The Company’s financial statements for the three
months ended March 31, 2023, as well as the comparative period for
2022, have been prepared and presented under United States
Generally Accepted Accounting Principals (“GAAP”).
RESULTS OF OPERATIONS (In thousands of U.S.
dollars, except per share amounts, and unless otherwise noted)
Consolidated Financial Performance
|
|
|
Three Months Ended March 31, |
|
|
|
|
2023 |
|
|
2022 |
|
|
Sales |
|
$ |
64,656 |
|
|
$ |
70,156 |
|
| Cost of
sales |
|
|
(52,356 |
) |
|
|
(60,252 |
) |
| Gross
margin |
|
|
12,300 |
|
|
|
9,904 |
|
| Selling,
general and administrative expenses |
|
|
(17,405 |
) |
|
|
(17,935 |
) |
| Interest
expense |
|
|
(1,133 |
) |
|
|
(683 |
) |
| Interest
income |
|
|
196 |
|
|
|
110 |
|
| Foreign
exchange (loss) gain |
|
|
(69 |
) |
|
|
319 |
|
| Other
expense, net |
|
|
30 |
|
|
|
(8 |
) |
|
Operating loss before income tax |
|
|
(6,081 |
) |
|
|
(8,293 |
) |
|
(Provision for) recovery of income taxes |
|
|
(634 |
) |
|
|
1,666 |
|
| Loss
from consolidated entities |
|
|
(6,715 |
) |
|
|
(6,627 |
) |
| Less:
net loss attributable to non-controlling interests, net of tax |
|
|
79 |
|
|
|
162 |
|
| Loss
from equity method investments |
|
|
— |
|
|
|
(52 |
) |
| Net loss
attributable to Village Farms International Inc. |
|
$ |
(6,636 |
) |
|
$ |
(6,517 |
) |
| Adjusted
EBITDA1 |
|
$ |
519 |
|
|
$ |
(6,111 |
) |
| Basic
loss per share |
|
$ |
(0.06 |
) |
|
$ |
(0.07 |
) |
| Diluted
loss income per share |
|
$ |
(0.06 |
) |
|
$ |
(0.07 |
) |
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.
Management believes that Adjusted EBITDA is a useful supplemental
measure in evaluating the performance of the Company because it
excludes non-recuring and other items that do not reflect our
business performance. Adjusted EBITDA includes the Company’s 70%
interest in Rose LifeScience since acquisition.
We caution that our results of operations for
the three months ended March 31, 2023 and 2022 may not be
indicative of our future performance, particularly in light of
global inflation and lingering supply-chain shortages due to the
Ukrainian conflict.
SEGMENTED RESULTS OF OPERATIONS
(In thousands of U.S. dollars, except per share
amounts, and unless otherwise noted)
|
|
For The Three Months Ended March 31,
2023 |
|
|
|
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
34,567 |
|
|
$ |
25,112 |
|
|
$ |
4,977 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
64,656 |
|
| Cost of
sales |
|
(33,952 |
) |
|
|
(16,658 |
) |
|
|
(1,739 |
) |
|
|
(7 |
) |
|
|
— |
|
|
|
(52,356 |
) |
| Selling,
general and administrative expenses |
|
(2,916 |
) |
|
|
(6,848 |
) |
|
|
(3,617 |
) |
|
|
(29 |
) |
|
|
(3,995 |
) |
|
|
(17,405 |
) |
| Other
(expense) income, net |
|
(544 |
) |
|
|
(604 |
) |
|
|
3 |
|
|
|
— |
|
|
|
169 |
|
|
|
(976 |
) |
|
Operating (loss) income |
|
(2,845 |
) |
|
|
1,002 |
|
|
|
(376 |
) |
|
|
(36 |
) |
|
|
(3,826 |
) |
|
|
(6,081 |
) |
| Recovery
of (provision for) income taxes |
|
226 |
|
|
|
(1,138 |
) |
|
|
— |
|
|
|
— |
|
|
|
278 |
|
|
|
(634 |
) |
| Loss
from consolidated entities |
|
(2,619 |
) |
|
|
(136 |
) |
|
|
(376 |
) |
|
|
(36 |
) |
|
|
(3,548 |
) |
|
|
(6,715 |
) |
| Less:
net loss attributable to non-controlling interests, net of tax |
|
— |
|
|
|
31 |
|
|
|
— |
|
|
|
— |
|
|
|
48 |
|
|
|
79 |
|
| Net
loss |
$ |
(2,619 |
) |
|
$ |
(105 |
) |
|
$ |
(376 |
) |
|
$ |
(36 |
) |
|
$ |
(3,500 |
) |
|
$ |
(6,636 |
) |
| Adjusted
EBITDA (1) |
$ |
(995 |
) |
|
$ |
3,910 |
|
|
$ |
(151 |
) |
|
$ |
(36 |
) |
|
$ |
(2,209 |
) |
|
$ |
519 |
|
| Basic
loss per share |
$ |
(0.03 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
| Diluted
loss per share |
$ |
(0.03 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
|
For The Three Months Ended March 31,
2022 |
|
|
|
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
41,349 |
|
|
$ |
21,769 |
|
|
$ |
7,043 |
|
|
$ |
(5 |
) |
|
$ |
— |
|
|
$ |
70,156 |
|
| Cost of sales |
|
(45,520 |
) |
|
|
(12,259 |
) |
|
|
(2,331 |
) |
|
|
(142 |
) |
|
|
— |
|
|
|
(60,252 |
) |
| Selling, general and
administrative expenses |
|
(3,140 |
) |
|
|
(7,300 |
) |
|
|
(4,391 |
) |
|
|
(32 |
) |
|
|
(3,072 |
) |
|
|
(17,935 |
) |
| Other (expense) income,
net |
|
(30 |
) |
|
|
(746 |
) |
|
|
— |
|
|
|
(6 |
) |
|
|
520 |
|
|
|
(262 |
) |
| Operating (loss) income |
|
(7,341 |
) |
|
|
1,464 |
|
|
|
321 |
|
|
|
(185 |
) |
|
|
(2,552 |
) |
|
|
(8,293 |
) |
| Recovery of (provision for)
income taxes |
|
1,715 |
|
|
|
(639 |
) |
|
|
— |
|
|
|
— |
|
|
|
590 |
|
|
|
1,666 |
|
| (Loss) income from
consolidated entities |
|
(5,626 |
) |
|
|
825 |
|
|
|
321 |
|
|
|
(185 |
) |
|
|
(1,962 |
) |
|
|
(6,627 |
) |
| Less: net loss attributable to
non-controlling interests, net of tax |
|
— |
|
|
|
162 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
162 |
|
| Loss from equity method
investments |
|
— |
|
|
|
— |
|
|
|
(52 |
) |
|
|
|
|
|
|
|
|
|
|
(52 |
) |
| Net (loss) income |
$ |
(5,626 |
) |
|
$ |
987 |
|
|
$ |
269 |
|
|
$ |
(185 |
) |
|
$ |
(1,962 |
) |
|
$ |
(6,517 |
) |
| Adjusted EBITDA (1) |
$ |
(6,201 |
) |
|
$ |
2,104 |
|
|
$ |
580 |
|
|
$ |
(59 |
) |
|
$ |
(2,535 |
) |
|
$ |
(6,111 |
) |
| Basic (loss) income per
share |
$ |
(0.06 |
) |
|
$ |
0.01 |
|
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.07 |
) |
| Diluted (loss) income per
share |
$ |
(0.06 |
) |
|
$ |
0.01 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.07 |
) |
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.
Management believes that Adjusted EBITDA is a useful supplemental
measure in evaluating the performance of the Company because it
excludes non-recuring and other items that do not reflect our
business performance. Adjusted EBITDA includes the Company’s 70%
interest in Rose LifeScience.
A detailed discussion of our consolidated and
segment results can be found in the 10Q MD&A on the Village
Farms website under Financial Reports
(https://villagefarms.com/financial-reports/) within the Investors
section.
Reconciliation of Net Income to Adjusted
EBITDA
The following tables reflects a reconciliation
of net income to Adjusted EBITDA, as presented by the Company:
| |
For The Three Months Ended March 31,
2023 |
|
| (in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
|
Net loss |
$ |
(2,619 |
) |
|
$ |
(105 |
) |
|
$ |
(376 |
) |
|
$ |
(36 |
) |
|
$ |
(3,500 |
) |
|
$ |
(6,636 |
) |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
1,254 |
|
|
|
1,790 |
|
|
|
139 |
|
|
|
— |
|
|
|
61 |
|
|
|
3,244 |
|
|
Foreign currency exchange loss (gain) |
|
53 |
|
|
|
(13 |
) |
|
|
19 |
|
|
|
— |
|
|
|
(26 |
) |
|
|
33 |
|
|
Interest expense (income), net |
|
543 |
|
|
|
561 |
|
|
|
(24 |
) |
|
|
— |
|
|
|
(143 |
) |
|
|
937 |
|
|
(Recovery of) provision for income taxes |
|
(226 |
) |
|
|
1,138 |
|
|
|
— |
|
|
|
— |
|
|
|
(278 |
) |
|
|
634 |
|
|
Share-based compensation |
|
— |
|
|
|
144 |
|
|
|
90 |
|
|
|
— |
|
|
|
1,449 |
|
|
|
1,683 |
|
|
Amortization for JVs |
|
— |
|
|
|
332 |
|
|
|
— |
|
|
|
— |
|
|
|
228 |
|
|
|
560 |
|
|
Foreign currency exchange loss (gain) for JVs |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
- |
|
|
|
1 |
|
|
Share-based compensation for JV's |
|
— |
|
|
|
34 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34 |
|
|
Other expense, net for JV's |
|
— |
|
|
|
(6 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6 |
) |
|
Deferred financing fees |
|
— |
|
|
|
34 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34 |
|
|
Other expense, net |
|
— |
|
|
|
- |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
| Adjusted
EBITDA (2) |
$ |
(995 |
) |
|
$ |
3,910 |
|
|
$ |
(151 |
) |
|
$ |
(36 |
) |
|
$ |
(2,209 |
) |
|
$ |
519 |
|
| |
For The Three Months Ended March 31,
2022 |
|
| (in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
|
Net (loss) income |
$ |
(5,626 |
) |
|
$ |
987 |
|
|
$ |
269 |
|
|
$ |
(185 |
) |
|
$ |
(1,962 |
) |
|
$ |
(6,517 |
) |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
1,259 |
|
|
|
1,302 |
|
|
|
141 |
|
|
|
— |
|
|
|
— |
|
|
|
2,702 |
|
|
Foreign currency exchange loss (gain) |
|
— |
|
|
|
89 |
|
|
|
— |
|
|
|
2 |
|
|
|
(410 |
) |
|
|
(319 |
) |
|
Interest expense (income), net |
|
— |
|
|
|
581 |
|
|
|
— |
|
|
|
4 |
|
|
|
(12 |
) |
|
|
573 |
|
|
(Recovery of) provision for income taxes |
|
(1,715 |
) |
|
|
639 |
|
|
|
— |
|
|
|
— |
|
|
|
(590 |
) |
|
|
(1,666 |
) |
|
Share-based compensation |
|
— |
|
|
|
367 |
|
|
|
95 |
|
|
|
— |
|
|
|
502 |
|
|
|
964 |
|
|
Interest expense for JV's |
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
Amortization for JVs |
|
— |
|
|
|
94 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
94 |
|
|
Foreign currency exchange loss for JVs |
|
— |
|
|
|
29 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
29 |
|
|
Deferred financing fees |
|
— |
|
|
|
66 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
66 |
|
|
Purchase price adjustment 1 |
|
— |
|
|
|
(2,050 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,050 |
) |
|
Other expense, net |
|
(119 |
) |
|
|
— |
|
|
|
62 |
|
|
|
120 |
|
|
|
(63 |
) |
|
|
— |
|
| Adjusted
EBITDA 2 |
$ |
(6,201 |
) |
|
$ |
2,104 |
|
|
$ |
580 |
|
|
$ |
(59 |
) |
|
$ |
(2,535 |
) |
|
$ |
(6,111 |
) |
1 The purchase price adjustment
reflects the (C$2,594) US$2,050 positive inventory adjustment from
the revaluation of inventory to fair value at the acquisition date
of November 2, 2020.
2 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.
Management believes that Adjusted EBITDA is a useful supplemental
measure in evaluating the performance of the Company because it
excludes non-recurring and other items that do not reflect our
business performance. Adjusted EBITDA includes the 70% interest in
Rose LifeScience since acquisition and 65% interest in VFH.
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 months ended March 31, 2023 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 to discuss its first quarter financial results
today, Wednesday May 10, 2023, at 8:30 a.m. ET.
Participants can access the conference call via a webcast at
Village Farms First Quarter 2023 Conference Call Webcast or on the
Company website at Village Farms - Events. Participants wanting to
access the conference call by telephone must register in advance at
Village Farms First Quarter 2023 Conference Call to receive
telephone dial-in information.
The live question and answer session will be
limited to analysts, however others are invited to submit their
questions ahead of the conference call via email at
investorrelations@villagefarms.com. Management will address
questions received via email as part of the conference call
question and answer session as time permits.
Conference Call Archive Access Information
For those unable to participate in the
conference call at the scheduled time, it will be archived for
replay beginning approximately one hour following completion of the
call on Village Farms’ web site at
http://villagefarms.com/investor-relations/investor-calls.
About Village Farms International
Village Farms leverages decades of experience as
a large-scale, Controlled Environment Agriculture-based, vertically
integrated supplier for high-value, high-growth plant-based
Consumer Packaged Goods opportunities, with a strong foundation as
a leading fresh produce supplier to grocery and large-format
retailers throughout the US and Canada, and new high-growth
opportunities in the cannabis and CBD categories in North America
and selected markets internationally.
In Canada, the Company's wholly-owned Canadian
subsidiary, Pure Sunfarms, is one of the single largest cannabis
operations in the world, the lowest-cost greenhouse producer and
one of Canada’s best-selling brands. The Company also owns 70% of
Québec-based Rose LifeScience, a leading third-party cannabis
products commercialization expert in the Province of Québec.
In the US, wholly-owned Balanced Health
Botanicals is one of the leading CBD brands and e-commerce
platforms in the country. Subject to compliance with all applicable
US federal and state laws and stock exchange rules, Village Farms
plans to enter the US high-THC cannabis market via multiple
strategies, leveraging one of the largest greenhouse operations in
the country (more than 5.5 million square feet in West Texas), as
well as the operational and product expertise gained through Pure
Sunfarms' cannabis success in Canada.
Internationally, Village Farms is targeting
selected, nascent, legal cannabis and CBD opportunities with
significant medium- and long-term potential, with an initial focus
on the Asia-Pacific region and Europe.
Cautionary Statement Regarding
Forward-Looking Information
As used in this Press Release, the terms
“Village Farms”, “Village Farms International”, the “Company”,
“we”, “us”, “our” and similar references refer to Village Farms
International, Inc. and our consolidated subsidiaries, and the term
“Common Shares” refers to our common shares, no par value. Our
financial information is presented in U.S. dollars and all
references in this Press Release to “$” means U.S. dollars and all
references to “C$” means Canadian dollars.
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 U.S.
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
laws. 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 or produce industry and the
cannabis industry and market are forward-looking statements. In
some cases, forward-looking information can be identified by such
terms as "can", "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 in the cannabis and cannabinoids industry,
including that of Pure Sunfarms, Inc. (“Pure Sunfarms”), Rose
LifeScience Inc. (“Rose” or “Rose LifeScience”) and Balanced Health
Botanicals, LLC (“Balanced Health”); the legal status of the
cannabis business of Pure Sunfarms and Rose and the hemp business
of Balanced Health; risks relating to the integration of Balanced
Health and Rose into our consolidated business; risks relating to
obtaining additional financing on acceptable terms, including our
dependence upon credit facilities and dilutive transactions;
potential difficulties in achieving and/or maintaining
profitability; variability of product pricing; risks inherent in
the cannabis, hemp, CBD, cannabinoids, and agricultural businesses;
our market position and competitive position; our ability to
leverage current business relationships for future business
involving hemp and cannabinoids; the ability of Pure Sunfarms and
Rose to cultivate and distribute cannabis in Canada; existing and
new governmental regulations, including risks related to regulatory
compliance and regarding obtaining and maintaining licenses
required under the Cannabis Act (Canada), the Criminal Code and
other Acts, S.C. 2018, C. 16 (Canada) for its Canadian operational
facilities, and changes in our regulatory requirements; legal and
operational risks relating to expected conversion of our
greenhouses to cannabis production in Canada and in the United
States; 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, cannabidiol-based products commercialization; 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; inflationary effects on costs of cultivation and
transportation; recessionary effects on demand of our products;
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; rising interest rates; 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,
which 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.
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.
Contact Information
| Lawrence ChamberlainInvestor
RelationsLodeRock Advisors(416)
519-4196lawrence.chamberlain@loderockadvisors.com |
|
Village Farms International, Inc. |
|
Condensed Consolidated Statements of Financial
Position |
|
(In thousands of United States dollars) |
|
(Unaudited) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
|
ASSETS |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
29,884 |
|
|
$ |
16,676 |
|
|
Restricted cash |
|
|
5,000 |
|
|
|
5,000 |
|
|
Trade receivables |
|
|
26,796 |
|
|
|
27,558 |
|
|
Inventories |
|
|
75,034 |
|
|
|
70,582 |
|
|
Other receivables |
|
|
265 |
|
|
|
309 |
|
|
Income tax receivable |
|
|
3,339 |
|
|
|
6,900 |
|
|
Prepaid expenses and deposits |
|
|
5,897 |
|
|
|
5,959 |
|
|
Total current assets |
|
|
146,215 |
|
|
|
132,984 |
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
|
205,848 |
|
|
|
207,701 |
|
|
Investment in in minority interests |
|
|
2,109 |
|
|
|
2,109 |
|
|
Goodwill |
|
|
66,285 |
|
|
|
66,225 |
|
|
Intangibles |
|
|
36,810 |
|
|
|
37,157 |
|
|
Deferred tax asset |
|
|
4,201 |
|
|
|
4,201 |
|
|
Right-of-use assets |
|
|
8,662 |
|
|
|
9,132 |
|
|
Other assets |
|
|
5,833 |
|
|
|
5,776 |
|
|
Total assets |
|
$ |
475,963 |
|
|
$ |
465,285 |
|
|
LIABILITIES |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Line of credit |
|
$ |
4,000 |
|
|
$ |
7,529 |
|
|
Trade payables |
|
|
18,459 |
|
|
|
24,894 |
|
|
Current maturities of long-term debt |
|
|
9,504 |
|
|
|
9,646 |
|
|
Accrued sales taxes |
|
|
13,746 |
|
|
|
11,594 |
|
|
Accrued loyalty program |
|
|
2,139 |
|
|
|
2,060 |
|
|
Accrued liabilities |
|
|
14,392 |
|
|
|
13,064 |
|
|
Lease liabilities - current |
|
|
1,966 |
|
|
|
1,970 |
|
|
Other current liabilities |
|
|
1,734 |
|
|
|
1,458 |
|
|
Total current liabilities |
|
|
65,940 |
|
|
|
72,215 |
|
|
Non-current liabilities |
|
|
|
|
|
Long-term debt |
|
|
42,526 |
|
|
|
43,821 |
|
|
Deferred tax liability |
|
|
19,062 |
|
|
|
19,756 |
|
|
Lease liabilities - non-current |
|
|
7,314 |
|
|
|
7,785 |
|
|
Other liabilities |
|
|
1,830 |
|
|
|
1,714 |
|
|
Total liabilities |
|
|
136,672 |
|
|
|
145,291 |
|
|
Commitments and contingencies |
|
|
|
|
|
MEZZANINE EQUITY |
|
|
|
|
|
Redeemable non-controlling interests |
|
|
16,134 |
|
|
|
16,164 |
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Common stock |
|
|
386,719 |
|
|
|
372,429 |
|
|
Additional paid in capital |
|
|
24,232 |
|
|
|
13,372 |
|
|
Accumulated other comprehensive loss |
|
|
(7,509 |
) |
|
|
(8,371 |
) |
|
Retained earnings |
|
|
(81,003 |
) |
|
|
(74,367 |
) |
|
Total Village Farm International Inc. shareholders' equity |
|
322,439 |
|
|
|
303,063 |
|
|
Non-controlling interest |
|
|
718 |
|
|
|
767 |
|
| Total shareholders’
equity |
|
|
323,157 |
|
|
|
303,830 |
|
| Total liabilities and
shareholders’ equity |
|
$ |
475,963 |
|
|
$ |
465,285 |
|
|
Village Farms International, Inc. |
|
Condensed Consolidated Statements of Operations and
Comprehensive Loss |
|
(In thousands of United States dollars, except per share
data) |
|
(Unaudited) |
| |
|
|
|
|
| |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
| |
|
|
|
|
|
Sales |
|
$ |
64,656 |
|
|
$ |
70,156 |
|
|
Cost of sales |
|
|
(52,356 |
) |
|
|
(60,252 |
) |
|
Gross margin |
|
|
12,300 |
|
|
|
9,904 |
|
|
Selling, general and administrative expenses |
|
|
(17,405 |
) |
|
|
(17,935 |
) |
|
Interest expense |
|
|
(1,133 |
) |
|
|
(683 |
) |
|
Interest income |
|
|
196 |
|
|
|
110 |
|
|
Foreign exchange loss |
|
|
(69 |
) |
|
|
319 |
|
|
Other income (expense), net |
|
|
30 |
|
|
|
(8 |
) |
|
Loss before taxes and loss from equity method investments |
|
|
(6,081 |
) |
|
|
(8,293 |
) |
|
(Provision for) recovery of income taxes |
|
|
(634 |
) |
|
|
1,666 |
|
|
Loss from equity method investments |
|
|
- |
|
|
|
(52 |
) |
|
Loss including non-conrolling interests |
|
|
(6,715 |
) |
|
|
(6,679 |
) |
|
Less: net loss attributable to non-controlling interests, net of
tax |
|
|
79 |
|
|
|
162 |
|
|
Net loss attributable to Village Farms International Inc. |
|
$ |
(6,636 |
) |
|
$ |
(6,517 |
) |
|
Basic loss per share |
|
$ |
(0.06 |
) |
|
$ |
(0.07 |
) |
|
Diluted loss per share |
|
$ |
(0.06 |
) |
|
$ |
(0.07 |
) |
|
Weighted average number of common shares used in the computation of
net loss per share (in thousands): |
|
|
|
|
|
Basic |
|
|
104,097 |
|
|
|
88,376 |
|
|
Diluted |
|
|
104,097 |
|
|
|
88,376 |
|
|
Loss including non-controlling interests |
|
$ |
(6,715 |
) |
|
$ |
(6,679 |
) |
|
Other comprehensive income: |
|
|
|
|
|
Foreign currency translation adjustment |
|
|
862 |
|
|
|
461 |
|
|
Comprehensive loss including non-controlling interests |
|
|
(5,853 |
) |
|
|
(6,218 |
) |
|
Comprehensive (loss) income attributable to non-controlling
interests |
|
(42 |
) |
|
|
162 |
|
|
Comprehensive loss attributable to Village Farms International,
Inc. shareholders |
|
$ |
(5,895 |
) |
|
$ |
(6,056 |
) |
|
Village Farms International, Inc. |
|
Condensed Consolidated Statements of Cash
Flows |
|
(In thousands of United States dollars) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Cash flows used in operating activities: |
|
|
|
|
|
Net loss |
|
$ |
(6,636 |
) |
|
$ |
(6,517 |
) |
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
3,986 |
|
|
|
3,128 |
|
|
Amortization of deferred charges |
|
|
34 |
|
|
|
66 |
|
|
Share of loss from joint ventures |
|
|
- |
|
|
|
52 |
|
|
Net loss attributable to non-controlling interest |
|
|
(79 |
) |
|
|
(162 |
) |
|
Interest expense |
|
|
1,133 |
|
|
|
683 |
|
|
Interest income |
|
|
(196 |
) |
|
|
(110 |
) |
|
Interest paid on long-term debt |
|
|
(1,511 |
) |
|
|
(747 |
) |
|
Unrealized foreign exchange loss |
|
|
(13 |
) |
|
|
113 |
|
|
Loss on disposal of assets |
|
|
4 |
|
|
|
- |
|
|
Operating lease liabilities |
|
|
(4 |
) |
|
|
(116 |
) |
|
Share-based compensation |
|
|
1,732 |
|
|
|
964 |
|
|
Deferred income taxes |
|
|
(734 |
) |
|
|
(2,062 |
) |
|
Changes in non-cash working capital items |
|
|
(1,384 |
) |
|
|
(4,929 |
) |
|
Net cash used in operating activities |
|
|
(3,668 |
) |
|
|
(9,637 |
) |
|
Cash flows used in investing activities: |
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(1,076 |
) |
|
|
(5,263 |
) |
|
Notes receivable |
|
|
- |
|
|
|
(3,442 |
) |
|
Net cash used in investing activities |
|
|
(1,076 |
) |
|
|
(8,705 |
) |
|
Cash flows (used in) provided by financing
activities: |
|
|
|
|
|
Proceeds from borrowings |
|
|
- |
|
|
|
2,120 |
|
|
Repayments on borrowings |
|
|
(4,788 |
) |
|
|
(983 |
) |
|
Proceeds from issuance of common stock and warrants |
|
|
24,772 |
|
|
|
- |
|
|
Issuance costs |
|
|
(1,437 |
) |
|
|
- |
|
|
Proceeds from exercise of stock options |
|
|
83 |
|
|
|
176 |
|
|
Payments on capital lease obligations |
|
|
- |
|
|
|
(301 |
) |
|
Net cash (used in) provided by financing activities |
|
|
18,630 |
|
|
|
1,012 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(678 |
) |
|
|
96 |
|
|
Net (decrease) increase in cash and cash
equivalents |
|
|
13,208 |
|
|
|
(17,234 |
) |
|
Cash and cash equivalents, beginning of
period |
|
|
21,676 |
|
|
|
58,667 |
|
|
Cash and cash equivalents, end of period |
|
$ |
34,884 |
|
|
$ |
41,433 |
|
Village Farms (NASDAQ:VFF)
Historical Stock Chart
From Nov 2023 to Dec 2023
Village Farms (NASDAQ:VFF)
Historical Stock Chart
From Dec 2022 to Dec 2023
