Village Farms International, Inc. (“Village Farms” or the
“Company”) (NASDAQ: VFF) today announced its financial results for
the third quarter ended September 30, 2023. All figures are in U.S.
dollars unless otherwise indicated.
Management Commentary
“We delivered continued strong improvement in
our financial results in the third quarter, building on the first
half of the year,” said Michael DeGiglio, President and Chief
Executive Officer, Village Farms. “Solid, profitable performance
from each of our Canadian and U.S. Cannabis businesses, together
with another quarter of significant year-over-year improvement in
our Fresh Produce operations, is proving out our strategic decision
to build upon our unmatched expertise in controlled environmental
agriculture to deliver positive cash flow and profitability as we
pursue growth in each of our businesses. The combined performances
of our businesses in the third quarter were reflected in positive
consolidated adjusted EBITDA, as well as consolidated cash
generation, with positive contributions from each of our operating
segments.”
“Our leadership in the Canadian Cannabis
industry is undisputed as we delivered another quarter of positive
cash flow and adjusted EBITDA, while continuing to rank among the
largest Licensed Producers nationally1,” continued Mr. DeGiglio.
“Notably, year-to-date Canadian dollar adjusted EBITDA has
increased 37%, driven by our focus on operational excellence. Our
competitive advantage in cultivation is enabling innovative
investment in other critical functions, such as commercialization,
to generate sustainable, profitable market share expansion. We are
seeing encouraging results as we evolve and improve “newness” at
the shelf and continuously focus on quality, which is resonating
with consumers and resulted in a return to the number two market
share position nationally in October1 from number four in
July1.”
“Our stabilized U.S. Cannabis business generated
positive net income, adjusted EBITDA and cash flow,” added Mr.
DeGiglio. “Building on the strength of our product launches in the
Synergy+ line of products, we recently launched a new visual brand
for CBDistillery, including a revamped web site, focused on the
wellness attributes of our products.”
“Our Fresh Produce business is progressing
towards our goal of a return to profitability. We delivered another
quarter of positive adjusted EBITDA and a $22.5 million
year-over-year improvement year-to-date to positive $1.1 million.
We also generated positive cash flow and remain firmly on track
toward our goal of achieving positive adjusted EBITDA for this
year. With the continued progress we have made in managing the
Brown Rugose virus, including the implementation of virus-tolerant,
and, increasingly, virus resistant strains, as well as investments
in new technology, the Fresh Produce business is positioned for
continued improvement next year.”
1. Based on estimated retail sales from HiFyre, other third
parties and provincial boards.
Third Quarter Financial
Highlights(All comparable periods are for the
third quarter of 2022 unless otherwise
stated)Consolidated
- Consolidated sales decreased (2%) year-over-year to $69.5
million from $71.1 million;
- Operating loss before tax and loss from equity method
investments improved to ($2.9 million) from an operating loss
before tax of ($12.3 million);
- Consolidated net loss improved to ($1.3 million), or ($0.01)
per share, compared with ($8.7 million), or ($0.10) per share;
- Consolidated adjusted EBITDA (a non-GAAP measure)1 improved to
$3.2 million from negative ($2.2 million); and,
- Consolidated cash flow improved to $8.8 million compared with
cash used of ($9.8 million).
1. For a reconciliation of Adjusted EBITDA to
net (loss) income, see “Presentation of Financial
Results—Reconciliation of Net Income to Adjusted EBITDA” below.
Canadian Cannabis (Pure Sunfarms and Rose
LifeScience)
- Net sales decreased (5%) to $28.8
million (C$38.7 million) from $30.4 million (C$39.8 million) (a
decrease of (3%) in Canadian dollars);
- Retail branded sales decreased (3%)
(in Canadian dollars);
- International (export) sales
decreased (15%) (in Canadian dollars);
- Gross margin was 35% compared with
27%; (in Canadian dollars);
- Net income increased to $2.9
million (C$3.8 million) from net income of $0.2 million (C$0.2
million);
- Adjusted EBITDA was $4.6 million
(C$6.2 million) compared with $5.4 million (C$6.7 million);
and,
- Cash flow improved to $3.8 million
(C$5.1 million) compared with $0.4 million (C$1.3 million).
U.S. Cannabis (Balanced Health Botanicals)
- Net sales were $5.0 million
compared with $5.1 million;
- Gross margin was 64% compared with
69%;
- Net income improved to $79,000 from
a net loss of ($0.3 million);
- Adjusted EBITDA increased to $0.2
million from $10,000; and,
- Cash flow was $0.4 million compared
with $0.1 million.
Village Farms Fresh (Produce)
- Sales were $35.7 million compared
with $35.5 million;
- Net loss improved significantly to
($1.0 million) from ($4.6 million);
- Adjusted EBITDA improved
significantly to $0.8 million from negative ($4.9 million);
and,
- Cash flow improved to $4.6 million
compared with cash used of ($10.7 million).
Strategic Growth and Operational
Highlights
Canadian Cannabis
- Maintained market share leadership,
with recently launched brands and geographies increasingly
contributing:
- A top-three Licensed Producer
nationally for 2023 year to date1, returning to the number two
position in October1 and, in Quebec, the number two Licensed
Producer and fastest growing Licensed Producer for the third
quarter of 20231, with market share expanding from the second
quarter of 20231;
- A top-two ranked Licensed Producer
in the dried flower category nationally in the third quarter of
2023 (held number one position prior to acquisition of market share
by a competitor) 1;
- Pure Sunfarms was the top-selling
brand of dried flower in the core price category nationally for the
year to date1;
- The Original Fraser Valley Weed Co.
was the fastest growing dried flower brand in the value category in
Canada’s largest provincial market, Ontario, for the third quarter
of 20231;
- Shortly after
its launch, the Soar brand rapidly became a top three premium dried
flower cannabis brand in Canada1. Much of the brand's success to
date can be credited to Pineapple God, one of Soar’s exclusive
cultivars. In the third quarter of 2023, this cultivar was one of
the best-selling premium dried flower products, nationally;
- Launched new
form factors to address the evolving preferences of Canadian
consumers, including:
- The Super Toast brand, which is a
line of ready to smoke products intended for consumers who are
looking for easy ways to select and experience fresh and potent
cannabis; and,
- An entirely new product line, the
High THC, 1g Vape offering, featuring new hardware and formulations
to maximize flavour, potency and consumer experience. The new 1g
cartridges are optimized to deliver flavour and balanced
vaporization, allowing consumers to enjoy their vape from start to
finish; and,
- In September, Village Farms was
named the Best Canadian Cannabis Company for the second consecutive
year at the 2023 Benzinga Cannabis Awards.
1. Based on estimated retail sales from HiFyre, other third
parties and provincial boards.
U.S. Cannabis
- Balanced Health Botanical’s
CBDistillery recently unveiled a new visual brand featuring the
same great ingredients and benefits. Products can now be found in
five different categories, each with their own wellness benefit;
and,
- The Company filed an application
for a Texas Medicinal license in late April 2023. The Company is
hopeful that its application will be awarded the highest or one of
the highest marks, putting it in a good position, should the State
of Texas award additional medicinal cannabis licenses. If awarded,
the Company plans to work with its listing authority to structure
an acceptable ownership structure.
VF Fresh (Produce)
- A regulatory change, improvements
in the Company’s cannabis yields and the Company’s focus on
supply-demand dynamics in all businesses support the decision to
dedicate the unused half of the Delta 2 facility to produce for the
2024 calendar year. The Company expects this to contribute
incremental cash flow and profitability to its VF Fresh
business.
Canadian Cannabis Performance
Summary
(millions except % metrics) |
Three Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
Change of C$ |
|
C$ |
US$ |
C$ |
US$ |
|
Total Net Sales |
$38.7 |
|
$28.8 |
|
$39.8 |
|
$30.4 |
|
-3 |
% |
Total Cost of Sales |
$25.3 |
|
$18.9 |
|
$29.0 |
|
$22.2 |
|
-13 |
% |
Gross Margin |
$13.4 |
|
$9.9 |
|
$10.7 |
|
$8.2 |
|
+25 |
% |
Gross Margin % |
|
35 |
% |
|
35 |
% |
|
27 |
% |
|
27 |
% |
+28 |
% |
SG&A1 |
$10.2 |
|
$7.6 |
|
$10.5 |
|
$7.9 |
|
-3 |
% |
Net income |
$3.8 |
|
$2.9 |
|
$0.2 |
|
$0.2 |
|
+1800 |
% |
Adjusted EBITDA2 |
$6.2 |
|
$4.6 |
|
$6.7 |
|
$5.4 |
|
-7 |
% |
Adjusted EBITDA Margin2 |
|
16 |
% |
|
16 |
% |
|
17 |
% |
|
18 |
% |
-5 |
% |
Cash Flow |
$5.1 |
|
$3.8 |
|
$1.3 |
|
$0.4 |
|
292 |
% |
(millions except % metrics) |
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
Change of C$ |
|
C$ |
US$ |
C$ |
US$ |
|
Total Net Sales |
$110.4 |
|
$82.0 |
|
$105.4 |
|
$82.0 |
|
+5 |
% |
Total Cost of Sales |
$71.1 |
|
$52.9 |
|
$67.9 |
|
$52.7 |
|
+5 |
% |
Gross Margin |
$39.2 |
|
$29.1 |
|
$37.5 |
|
$29.3 |
|
+5 |
% |
Gross Margin % |
|
36 |
% |
|
36 |
% |
|
36 |
% |
|
36 |
% |
0 |
% |
SG&A1 |
$30.0 |
|
$22.3 |
|
$31.0 |
|
$23.8 |
|
-3 |
% |
Net income |
$5.3 |
|
$3.9 |
|
$4.3 |
|
$3.0 |
|
+23 |
% |
Adjusted EBITDA2 |
$17.9 |
|
$13.3 |
|
$13.1 |
|
$10.6 |
|
+37 |
% |
Adjusted EBITDA Margin2 |
|
16 |
% |
|
16 |
% |
|
12 |
% |
|
13 |
% |
+33 |
% |
Cash Flow |
$16.0 |
|
$11.9 |
|
$10.4 |
|
$8.1 |
|
54 |
% |
1 SG&A for the
three and nine months ended September 30, 2023 includes share-based
compensation of C$290 (US$216) and C$790 (US$586), respectively,
compared with C$409 (US$313) and C$1,212 (US$946), respectively,
for the three and nine months ended September 30, 2022.2 Adjusted
EBITDA and Adjusted EBITDA margin are not a recognized earnings
measure and does not have a standard meaning prescribed in by GAAP.
Therefore, Adjusted EBITDA and Adjusted EBITDA Margin may not be
comparable to similar measures presented by other issuers.
Management believes that Adjusted EBITDA is a useful supplemental
measure in evaluating the performance of the Company because it
excludes non-recurring and other items that do not reflect our
business performance. Adjusted EBITDA includes the Company’s 70%
interest in Rose LifeScience. Adjusted EBITDA Margin is calculated
as Adjusted EBITDA divided by Total Net Sales.
Canadian Cannabis’ Percent of Sales by
Channel
(millions except % metrics) |
Three Months Ended September 30, |
|
|
2023 |
2022 |
Change of C$ |
|
C$ |
US$ |
C$ |
US$ |
|
Retail Branded Sales |
$50.3 |
|
$37.4 |
|
$51.9 |
|
$40.0 |
|
-3 |
% |
International Sales |
$0.9 |
|
$0.7 |
|
$1.1 |
|
$0.9 |
|
-15 |
% |
Non-Branded Sales |
$6.0 |
|
$4.5 |
|
$4.9 |
|
$3.6 |
|
+22 |
% |
Other |
$0.8 |
|
$0.6 |
|
$1.0 |
|
$0.7 |
|
-16 |
% |
Less: Excise Taxes |
$(19.3 |
) |
$(14.4 |
) |
$(19.2 |
) |
$(14.8 |
) |
+1 |
% |
Net Sales |
$38.7 |
|
$28.8 |
|
$39.8 |
|
$30.4 |
|
-3 |
% |
(millions except % metrics) |
Nine Months Ended September 30, |
|
|
2023 |
2022 |
Change of C$ |
|
C$ |
US$ |
C$ |
US$ |
|
Retail Branded Sales |
$146.3 |
|
$108.7 |
|
$123.7 |
|
$96.4 |
|
+18 |
% |
International Sales |
$5.1 |
|
$3.8 |
|
$1.9 |
|
$1.5 |
|
+162 |
% |
Non-Branded Sales |
$13.1 |
|
$9.7 |
|
$21.5 |
|
$16.7 |
|
-39 |
% |
Other |
$2.0 |
|
$1.5 |
|
$3.0 |
|
$2.3 |
|
-32 |
% |
Less: Excise Taxes |
$(56.1 |
) |
$(41.7 |
) |
$(44.8 |
) |
$(34.9 |
) |
+25 |
% |
Net Sales |
$110.4 |
|
$82.0 |
|
$105.4 |
|
$82.0 |
|
+5 |
% |
Presentation of Financial Results
The Company’s financial statements for the three
and nine months ended September 30, 2023, as well as the
comparative periods 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 September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Sales |
|
$ |
69,510 |
|
|
$ |
71,056 |
|
|
$ |
211,378 |
|
|
$ |
224,115 |
|
Cost of sales |
|
|
(54,889 |
) |
|
|
(62,682 |
) |
|
|
(172,958 |
) |
|
|
(199,514 |
) |
Gross margin |
|
|
14,621 |
|
|
|
8,374 |
|
|
|
38,420 |
|
|
|
24,601 |
|
Selling, general and
administrative expenses |
|
|
(15,822 |
) |
|
|
(17,794 |
) |
|
|
(49,980 |
) |
|
|
(54,245 |
) |
Interest expense |
|
|
(988 |
) |
|
|
(982 |
) |
|
|
(3,532 |
) |
|
|
(2,330 |
) |
Interest income |
|
|
262 |
|
|
|
60 |
|
|
|
741 |
|
|
|
129 |
|
Foreign exchange loss |
|
|
(971 |
) |
|
|
(1,963 |
) |
|
|
(302 |
) |
|
|
(2,171 |
) |
Other (expense) income, net |
|
|
(19 |
) |
|
|
(10 |
) |
|
|
5,613 |
|
|
|
(7 |
) |
Write-off of joint venture
loan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(592 |
) |
Impairments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(29,799 |
) |
Loss before taxes and loss from
equity method investments |
|
|
(2,917 |
) |
|
|
(12,315 |
) |
|
|
(9,040 |
) |
|
|
(64,414 |
) |
Recovery of (provision for)
income taxes |
|
|
1,664 |
|
|
|
3,183 |
|
|
|
(269 |
) |
|
|
14,563 |
|
Loss including non-controlling
interests and before equity losses |
|
|
(1,253 |
) |
|
|
(9,132 |
) |
|
|
(9,309 |
) |
|
|
(49,851 |
) |
Less: net (income) loss
attributable to non-controlling interests, net of tax |
|
|
(46 |
) |
|
|
387 |
|
|
|
(6 |
) |
|
|
701 |
|
Loss from equity method
investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,667 |
) |
Net loss attributable to Village
Farms International Inc. |
|
$ |
(1,299 |
) |
|
$ |
(8,745 |
) |
|
$ |
(9,315 |
) |
|
$ |
(51,817 |
) |
Adjusted EBITDA(1) |
|
$ |
3,248 |
|
|
$ |
(2,233 |
) |
|
$ |
8,243 |
|
|
$ |
(20,642 |
) |
Basic loss per share |
|
$ |
(0.01 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.59 |
) |
Diluted loss per share |
|
$ |
(0.01 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.59 |
) |
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. For the nine months ended September
30, 2022, we previously included an adjustment for $2,284 of
obsolete inventory associated with winding down of the Village
Fields Hemp (“VFH”) joint venture (the “JV exit”) that is now being
excluded in response to comments from and discussions with the
Staff of the U.S. Securities and Exchange Commission.
We caution that our results of operations for
the three and nine months ended September 30, 2023 and 2022 may not
be indicative of our future performance, particularly in light of
the ongoing global Tomato brown rugose fruit
virus (ToBRFV), the potential impact of
inflation and/or the potential impact of supply-chain shortages due
to conflicts abroad.
SEGMENTED RESULTS OF OPERATIONS(In thousands of
U.S. dollars, except per share amounts, and unless otherwise
noted)
|
For The Three Months Ended September 30,
2023 |
|
|
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
35,712 |
|
|
$ |
28,810 |
|
|
$ |
4,988 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
69,510 |
|
Cost of sales |
|
(34,220 |
) |
|
|
(18,866 |
) |
|
|
(1,803 |
) |
|
|
— |
|
|
|
— |
|
|
|
(54,889 |
) |
Selling, general and
administrative expenses |
|
(2,066 |
) |
|
|
(7,598 |
) |
|
|
(3,095 |
) |
|
|
— |
|
|
|
(3,063 |
) |
|
|
(15,822 |
) |
Other expense, net |
|
(598 |
) |
|
|
(428 |
) |
|
|
(11 |
) |
|
|
(58 |
) |
|
|
(621 |
) |
|
|
(1,716 |
) |
Operating (loss) income |
|
(1,172 |
) |
|
|
1,918 |
|
|
|
79 |
|
|
|
(58 |
) |
|
|
(3,684 |
) |
|
|
(2,917 |
) |
Recovery of income taxes |
|
221 |
|
|
|
1,034 |
|
|
|
— |
|
|
|
— |
|
|
|
409 |
|
|
|
1,664 |
|
(Loss) income from consolidated
entities |
|
(951 |
) |
|
|
2,952 |
|
|
|
79 |
|
|
|
(58 |
) |
|
|
(3,275 |
) |
|
|
(1,253 |
) |
Less: net (income) loss
attributable to non-controlling interests, net of tax |
|
— |
|
|
|
(89 |
) |
|
|
— |
|
|
|
— |
|
|
|
43 |
|
|
|
(46 |
) |
Net (loss) income |
$ |
(951 |
) |
|
$ |
2,863 |
|
|
$ |
79 |
|
|
$ |
(58 |
) |
|
$ |
(3,232 |
) |
|
$ |
(1,299 |
) |
Adjusted EBITDA(1) |
$ |
774 |
|
|
$ |
4,585 |
|
|
$ |
221 |
|
|
$ |
(57 |
) |
|
$ |
(2,275 |
) |
|
$ |
3,248 |
|
Basic (loss) income per
share |
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
Diluted (loss) income per
share |
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.01 |
) |
|
For The Three Months Ended September 30,
2022 |
|
|
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
35,527 |
|
|
$ |
30,394 |
|
|
$ |
5,135 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
71,056 |
|
Cost of sales |
|
(38,830 |
) |
|
|
(22,196 |
) |
|
|
(1,612 |
) |
|
|
(44 |
) |
|
|
— |
|
|
|
(62,682 |
) |
Selling, general and
administrative expenses |
|
(2,777 |
) |
|
|
(7,885 |
) |
|
|
(3,720 |
) |
|
|
(14 |
) |
|
|
(3,398 |
) |
|
|
(17,794 |
) |
Other expense, net |
|
(344 |
) |
|
|
(513 |
) |
|
|
(142 |
) |
|
|
— |
|
|
|
(1,896 |
) |
|
|
(2,895 |
) |
Operating loss |
|
(6,424 |
) |
|
|
(200 |
) |
|
|
(339 |
) |
|
|
(58 |
) |
|
|
(5,294 |
) |
|
|
(12,315 |
) |
Recovery of (provision for)
income taxes |
|
1,780 |
|
|
|
(38 |
) |
|
|
— |
|
|
|
— |
|
|
|
1,441 |
|
|
|
3,183 |
|
Loss from consolidated
entities |
|
(4,644 |
) |
|
|
(238 |
) |
|
|
(339 |
) |
|
|
(58 |
) |
|
|
(3,853 |
) |
|
|
(9,132 |
) |
Less: net loss attributable to
non-controlling interests, net of tax |
|
— |
|
|
|
387 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
387 |
|
Net (loss) income |
$ |
(4,644 |
) |
|
$ |
149 |
|
|
$ |
(339 |
) |
|
$ |
(58 |
) |
|
$ |
(3,853 |
) |
|
$ |
(8,745 |
) |
Adjusted EBITDA(1) |
$ |
(4,879 |
) |
|
$ |
5,417 |
|
|
$ |
10 |
|
|
$ |
(58 |
) |
|
$ |
(2,723 |
) |
|
$ |
(2,233 |
) |
Basic (loss) income per
share |
$ |
(0.05 |
) |
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.10 |
) |
Diluted (loss) income per
share |
$ |
(0.05 |
) |
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.10 |
) |
|
For The Nine Months Ended September 30,
2023 |
|
|
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
114,125 |
|
|
$ |
81,987 |
|
|
$ |
15,266 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
211,378 |
|
Cost of sales |
|
(114,779 |
) |
|
|
(52,873 |
) |
|
|
(5,285 |
) |
|
|
(21 |
) |
|
|
— |
|
|
|
(172,958 |
) |
Selling, general and
administrative expenses |
|
(7,836 |
) |
|
|
(22,273 |
) |
|
|
(10,098 |
) |
|
|
(30 |
) |
|
|
(9,743 |
) |
|
|
(49,980 |
) |
Other income (expense), net |
|
3,993 |
|
|
|
(1,838 |
) |
|
|
(8 |
) |
|
|
(77 |
) |
|
|
450 |
|
|
|
2,520 |
|
Operating (loss) income |
|
(4,497 |
) |
|
|
5,003 |
|
|
|
(125 |
) |
|
|
(128 |
) |
|
|
(9,293 |
) |
|
|
(9,040 |
) |
Recovery of (provision for)
income taxes |
|
229 |
|
|
|
(922 |
) |
|
|
— |
|
|
|
— |
|
|
|
424 |
|
|
|
(269 |
) |
(Loss) income from consolidated
entities |
|
(4,268 |
) |
|
|
4,081 |
|
|
|
(125 |
) |
|
|
(128 |
) |
|
|
(8,869 |
) |
|
|
(9,309 |
) |
Less: net (income) loss
attributable to non-controlling interests, net of tax |
|
— |
|
|
|
(149 |
) |
|
|
— |
|
|
|
— |
|
|
|
143 |
|
|
|
(6 |
) |
Net (loss) income |
$ |
(4,268 |
) |
|
$ |
3,932 |
|
|
$ |
(125 |
) |
|
$ |
(128 |
) |
|
$ |
(8,726 |
) |
|
$ |
(9,315 |
) |
Adjusted EBITDA(1) |
$ |
1,110 |
|
|
$ |
13,273 |
|
|
$ |
424 |
|
|
$ |
(128 |
) |
|
$ |
(6,436 |
) |
|
$ |
8,243 |
|
Basic (loss) income per
share |
$ |
(0.04 |
) |
|
$ |
0.04 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.09 |
) |
Diluted (loss) income per
share |
$ |
(0.04 |
) |
|
$ |
0.04 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.09 |
) |
|
For The Nine Months Ended September 30,
2022 |
|
|
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate(2) |
|
|
Total |
|
Sales |
$ |
124,052 |
|
|
$ |
81,956 |
|
|
$ |
17,971 |
|
|
$ |
136 |
|
|
$ |
— |
|
|
$ |
224,115 |
|
Cost of sales |
|
(140,612 |
) |
|
|
(52,740 |
) |
|
|
(5,899 |
) |
|
|
(263 |
) |
|
|
— |
|
|
|
(199,514 |
) |
Selling, general and
administrative expenses |
|
(8,725 |
) |
|
|
(23,801 |
) |
|
|
(12,480 |
) |
|
|
(53 |
) |
|
|
(9,186 |
) |
|
|
(54,245 |
) |
Other expense, net |
|
(776 |
) |
|
|
(1,490 |
) |
|
|
(154 |
) |
|
|
(6 |
) |
|
|
(1,953 |
) |
|
|
(4,379 |
) |
Write-off of joint venture
loan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(592 |
) |
|
|
(592 |
) |
Impairments |
|
— |
|
|
|
— |
|
|
|
(29,799 |
) |
|
|
— |
|
|
|
— |
|
|
|
(29,799 |
) |
Operating (loss) income |
|
(26,061 |
) |
|
|
3,925 |
|
|
|
(30,361 |
) |
|
|
(186 |
) |
|
|
(11,731 |
) |
|
|
(64,414 |
) |
Recovery of (provision for)
income taxes |
|
6,322 |
|
|
|
(1,668 |
) |
|
|
7,025 |
|
|
|
— |
|
|
|
2,884 |
|
|
|
14,563 |
|
(Loss) income from consolidated
entities |
|
(19,739 |
) |
|
|
2,257 |
|
|
|
(23,336 |
) |
|
|
(186 |
) |
|
|
(8,847 |
) |
|
|
(49,851 |
) |
Less: net loss attributable to
non-controlling interests, net of tax |
|
— |
|
|
|
701 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
701 |
|
Loss from equity method
investments |
|
— |
|
|
|
— |
|
|
|
(383 |
) |
|
|
— |
|
|
|
(2,284 |
) |
|
|
(2,667 |
) |
Net (loss) income |
$ |
(19,739 |
) |
|
$ |
2,958 |
|
|
$ |
(23,719 |
) |
|
$ |
(186 |
) |
|
$ |
(11,131 |
) |
|
$ |
(51,817 |
) |
Adjusted EBITDA(1) |
$ |
(21,362 |
) |
|
$ |
10,558 |
|
|
$ |
(43 |
) |
|
$ |
(180 |
) |
|
$ |
(9,615 |
) |
|
$ |
(20,642 |
) |
Basic (loss) income per
share |
$ |
(0.22 |
) |
|
$ |
0.03 |
|
|
$ |
(0.26 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.59 |
) |
Diluted (loss) income per
share |
$ |
(0.22 |
) |
|
$ |
0.03 |
|
|
$ |
(0.26 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.59 |
) |
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.2 For the nine months ended
September 30, 2022, we previously included an adjustment for $2,284
of obsolete inventory associated with the JV exit that is now being
excluded in response to comments from and discussions with the
Staff of the U.S. Securities and Exchange Commission.
A detailed discussion of our consolidated and
segment results can be found in the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2023 (the "Third
Quarter 10-Q”), which will be filed on EDGAR at www.sec.gov, on
SEDAR at www.sedarplus.com and can also be found 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 September 30,
2023 |
|
(in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Net (loss) income |
$ |
(951 |
) |
|
$ |
2,863 |
|
|
$ |
79 |
|
|
$ |
(58 |
) |
|
$ |
(3,232 |
) |
|
$ |
(1,299 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
1,283 |
|
|
|
1,795 |
|
|
|
53 |
|
|
|
— |
|
|
|
64 |
|
|
|
3,195 |
|
Foreign currency exchange
gain |
|
66 |
|
|
|
28 |
|
|
|
— |
|
|
|
1 |
|
|
|
834 |
|
|
|
929 |
|
Interest expense (income),
net |
|
597 |
|
|
|
326 |
|
|
|
— |
|
|
|
— |
|
|
|
(215 |
) |
|
|
708 |
|
Provision for income taxes |
|
(221 |
) |
|
|
(1,034 |
) |
|
|
— |
|
|
|
— |
|
|
|
(409 |
) |
|
|
(1,664 |
) |
Share-based compensation |
|
— |
|
|
|
160 |
|
|
|
78 |
|
|
|
— |
|
|
|
452 |
|
|
|
690 |
|
Interest expense for JV’s |
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
Amortization for JVs |
|
— |
|
|
|
372 |
|
|
|
— |
|
|
|
— |
|
|
|
231 |
|
|
|
603 |
|
Foreign currency exchange loss
for JVs |
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
Share-based compensation for
JV’s |
|
— |
|
|
|
39 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
39 |
|
Other expenses for JV’s |
|
— |
|
|
|
(14 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14 |
) |
Deferred financing fees |
|
— |
|
|
|
34 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34 |
|
Other expense |
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
Adjusted EBITDA(4) |
$ |
774 |
|
|
$ |
4,585 |
|
|
$ |
221 |
|
|
$ |
(57 |
) |
|
$ |
(2,275 |
) |
|
$ |
3,248 |
|
|
For The Nine Months Ended September 30,
2023 |
|
(in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Net (loss) income |
$ |
(4,268 |
) |
|
$ |
3,932 |
|
|
$ |
(125 |
) |
|
$ |
(128 |
) |
|
$ |
(8,726 |
) |
|
$ |
(9,315 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
3,839 |
|
|
|
5,078 |
|
|
|
279 |
|
|
|
— |
|
|
|
188 |
|
|
|
9,384 |
|
Foreign currency exchange loss
(gain) |
|
40 |
|
|
|
(8 |
) |
|
|
19 |
|
|
|
— |
|
|
|
145 |
|
|
|
196 |
|
Interest expense (income),
net |
|
1,728 |
|
|
|
1,615 |
|
|
|
(24 |
) |
|
|
— |
|
|
|
(595 |
) |
|
|
2,724 |
|
(Recovery of) provision for
income taxes |
|
(229 |
) |
|
|
922 |
|
|
|
— |
|
|
|
— |
|
|
|
(424 |
) |
|
|
269 |
|
Share-based compensation |
|
— |
|
|
|
424 |
|
|
|
263 |
|
|
|
— |
|
|
|
2,286 |
|
|
|
2,973 |
|
Interest expense for JV’s |
|
— |
|
|
|
47 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
47 |
|
Amortization for JVs |
|
— |
|
|
|
1,072 |
|
|
|
— |
|
|
|
— |
|
|
|
690 |
|
|
|
1,762 |
|
Foreign currency exchange loss
for JVs |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5 |
|
Share-based compensation for
JV’s |
|
— |
|
|
|
113 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
113 |
|
Other expense for JV’s |
|
— |
|
|
|
(29 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(29 |
) |
Deferred financing fees |
|
— |
|
|
|
102 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
102 |
|
Other expense, net |
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
Adjusted EBITDA(4) |
$ |
1,110 |
|
|
$ |
13,273 |
|
|
$ |
424 |
|
|
$ |
(128 |
) |
|
$ |
(6,436 |
) |
|
$ |
8,243 |
|
|
For The Three Months Ended September 30,
2022 |
|
(in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Net (loss) income |
$ |
(4,644 |
) |
|
$ |
149 |
|
|
$ |
(339 |
) |
|
$ |
(58 |
) |
|
$ |
(3,853 |
) |
|
$ |
(8,745 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
1,251 |
|
|
|
1,613 |
|
|
|
143 |
|
|
|
— |
|
|
|
— |
|
|
|
3,007 |
|
Foreign currency exchange
loss |
|
(236 |
) |
|
|
(37 |
) |
|
|
7 |
|
|
|
— |
|
|
|
2,200 |
|
|
|
1,934 |
|
Interest expense (income),
net |
|
543 |
|
|
|
579 |
|
|
|
— |
|
|
|
— |
|
|
|
(200 |
) |
|
|
922 |
|
(Recovery of) provision for
income taxes |
|
(1,780 |
) |
|
|
38 |
|
|
|
— |
|
|
|
— |
|
|
|
(1,441 |
) |
|
|
(3,183 |
) |
Share-based compensation |
|
— |
|
|
|
312 |
|
|
|
66 |
|
|
|
— |
|
|
|
548 |
|
|
|
926 |
|
Amortization for JVs |
|
— |
|
|
|
1,197 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,197 |
|
Foreign currency exchange gain
for JVs |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Deferred financing fees |
|
— |
|
|
|
44 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
44 |
|
Purchase price adjustment(3) |
|
— |
|
|
|
1,683 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,683 |
|
Other expense, net |
|
(13 |
) |
|
|
(162 |
) |
|
|
133 |
|
|
|
— |
|
|
|
23 |
|
|
|
(19 |
) |
Adjusted EBITDA(4) |
$ |
(4,879 |
) |
|
$ |
5,417 |
|
|
$ |
10 |
|
|
$ |
(58 |
) |
|
$ |
(2,723 |
) |
|
$ |
(2,233 |
) |
|
For The Nine Months Ended September 30,
2022 |
|
(in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Net (loss) income |
$ |
(19,739 |
) |
|
$ |
2,958 |
|
|
$ |
(23,719 |
) |
|
$ |
(186 |
) |
|
$ |
(11,131 |
) |
|
$ |
(51,817 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
3,752 |
|
|
|
4,302 |
|
|
|
425 |
|
|
|
— |
|
|
|
— |
|
|
|
8,479 |
|
Foreign currency exchange loss |
|
— |
|
|
|
77 |
|
|
|
21 |
|
|
|
2 |
|
|
|
2,082 |
|
|
|
2,182 |
|
Interest expense (income), net |
|
971 |
|
|
|
1,356 |
|
|
|
— |
|
|
|
4 |
|
|
|
(130 |
) |
|
|
2,201 |
|
(Recovery of) provision for income taxes |
|
(6,322 |
) |
|
|
1,668 |
|
|
|
(7,025 |
) |
|
|
— |
|
|
|
(2,884 |
) |
|
|
(14,563 |
) |
Share-based compensation |
|
— |
|
|
|
898 |
|
|
|
268 |
|
|
|
— |
|
|
|
1,838 |
|
|
|
3,004 |
|
Interest expense for JV’s |
|
— |
|
|
|
— |
|
|
|
39 |
|
|
|
— |
|
|
|
— |
|
|
|
39 |
|
Amortization for JVs |
|
— |
|
|
|
1,288 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,288 |
|
Foreign currency exchange loss for JVs |
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Deferred financing fees |
|
— |
|
|
|
171 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
171 |
|
Impairments(1) |
|
— |
|
|
|
— |
|
|
|
29,799 |
|
|
|
— |
|
|
|
— |
|
|
|
29,799 |
|
JV exit-related costs(2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
592 |
|
|
|
592 |
|
Purchase price adjustment(3) |
|
— |
|
|
|
(2,132 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,132 |
) |
Other expense, net |
|
(24 |
) |
|
|
(30 |
) |
|
|
149 |
|
|
|
— |
|
|
|
18 |
|
|
|
113 |
|
Adjusted EBITDA(4) |
$ |
(21,362 |
) |
|
$ |
10,558 |
|
|
$ |
(43 |
) |
|
$ |
(180 |
) |
|
$ |
(9,615 |
) |
|
$ |
(20,642 |
) |
(1) Represents impairments to
goodwill of ($25,159) and intangible assets of ($4,630) that were
triggered by inflationary effects on consumer spending, decreases
in market capitalization of CBD companies and the continued federal
regulation lack of clarity with respect to CBD.(2) Represents
exit related costs incurred due to the winding down of the VFH
joint venture. For the nine months ended September 30, 2022, we
previously included an adjustment for $2,284 of obsolete inventory
associated with the JV exit that is now being excluded in response
to comments from and discussions with the Staff of the U.S.
Securities and Exchange Commission.(3) The purchase price
adjustment primarily reflects the non-cash accounting charge
resulting from the revaluation of Pure Sunfarms’ inventory to fair
value at the acquisition date on November 2, 2020, Pure Sunfarms'
intangible amortization and Rose intangible amortization resulting
from the September 30, 2022 finalization of the Rose purchase price
accounting.(4) Adjusted EBITDA is not a recognized earnings
measure and does not have a standardized meaning prescribed by
GAAP. Therefore, Adjusted EBITDA presented for these segments may
not be comparable to similar measures presented for comparable
segments by other issuers. Management believes that Adjusted EBITDA
is a useful supplemental measure in evaluating the performance of
the Company’s segments because it excludes non-recurring and other
items that do not reflect the business performance of our segments.
Adjusted EBITDA for Canadian Cannabis includes the 70% interest in
Rose LifeScience and Adjusted EBITDA for “Corporate” and “Total”
includes our 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 and nine months ended September 30, 2023
in the Third Quarter 10-Q, which will be filed on
(www.sec.gov/edgar.shtml) and SEDAR (www.sedarplus.com) and will be
available at www.villagefarms.com.
Conference Call
Village Farms’ management team will host a
conference call to discuss third quarter financial results today,
Wednesday, November 8, 2023, at 8:30 a.m. ET. Participants can
access the conference call via a webcast at Village Farms Third
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 Third Quarter Conference Call Registration 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 News 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
News Release to “$” means U.S. dollars and all references to “C$”
means Canadian dollars.
This News 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 News 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, the cannabis
industry and market and our energy segment 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 News 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 limited operational
history of the Delta RNG Project in our energy segment; the legal
status of the cannabis business of Pure Sunfarms and Rose and the
hemp business of Balanced Health and uncertainty regarding the
legality and regulatory status of cannabis in the United States;
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 inability to remain
listed on the Nasdaq Capital Market (“Nasdaq”) if we do not regain
compliance with Nasdaq’s minimum bid price requirement by April 15,
2024; 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
News 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 News Release,
the Company’s Third Quarter 10-Q and the Company’s most recently
filed annual report on Form 10-K.
When relying on forward-looking statements to
make decisions, the Company cautions readers not to place undue
reliance on these statements, as forward-looking statements involve
significant risks and uncertainties and should not be read as
guarantees of future results, performance, achievements, prospects
and opportunities. The forward-looking statements made in this News
Release relate only to events or information as of the date on
which the statements are made in this News 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, except share
data)(Unaudited) |
|
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
35,483 |
|
|
$ |
16,676 |
|
Restricted cash |
|
|
5,000 |
|
|
|
5,000 |
|
Trade receivables |
|
|
28,541 |
|
|
|
27,558 |
|
Inventories |
|
|
77,059 |
|
|
|
70,582 |
|
Other receivables |
|
|
332 |
|
|
|
309 |
|
Income tax receivable, net |
|
|
2 |
|
|
|
6,900 |
|
Prepaid expenses and deposits |
|
|
6,747 |
|
|
|
5,959 |
|
Total current assets |
|
|
153,164 |
|
|
|
132,984 |
|
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
|
|
202,198 |
|
|
|
207,701 |
|
Investments |
|
|
2,109 |
|
|
|
2,109 |
|
Goodwill |
|
|
66,118 |
|
|
|
66,225 |
|
Intangibles |
|
|
34,955 |
|
|
|
37,157 |
|
Deferred tax asset |
|
|
4,201 |
|
|
|
4,201 |
|
Right-of-use assets |
|
|
13,069 |
|
|
|
9,132 |
|
Other assets |
|
|
1,888 |
|
|
|
5,776 |
|
Total assets |
|
$ |
477,702 |
|
|
$ |
465,285 |
|
LIABILITIES |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Line of credit |
|
$ |
4,000 |
|
|
$ |
7,529 |
|
Trade payables |
|
|
19,378 |
|
|
|
24,894 |
|
Current maturities of long-term debt |
|
|
9,284 |
|
|
|
9,646 |
|
Accrued sales taxes |
|
|
14,029 |
|
|
|
11,594 |
|
Accrued loyalty program |
|
|
1,817 |
|
|
|
2,060 |
|
Accrued liabilities |
|
|
15,895 |
|
|
|
13,064 |
|
Lease liabilities - current |
|
|
1,955 |
|
|
|
1,970 |
|
Other current liabilities |
|
|
2,529 |
|
|
|
1,458 |
|
Total current liabilities |
|
|
68,887 |
|
|
|
72,215 |
|
Non-current liabilities |
|
|
|
|
|
|
Long-term debt |
|
|
39,811 |
|
|
|
43,821 |
|
Deferred tax liability |
|
|
18,992 |
|
|
|
19,756 |
|
Lease liabilities - non-current |
|
|
11,804 |
|
|
|
7,785 |
|
Other liabilities |
|
|
1,869 |
|
|
|
1,714 |
|
Total liabilities |
|
|
141,363 |
|
|
|
145,291 |
|
Commitments and contingencies |
|
|
|
|
|
|
MEZZANINE
EQUITY |
|
|
|
|
|
|
Redeemable non-controlling interest |
|
|
15,238 |
|
|
|
15,096 |
|
SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
Common stock, no par value per share - unlimited shares
authorized;110,238,929 shares issued and outstanding at September
30, 2023 and 91,788,929 shares issued and outstanding at December
31, 2022. |
|
|
386,719 |
|
|
|
372,429 |
|
Additional paid in capital |
|
|
25,635 |
|
|
|
13,372 |
|
Accumulated other comprehensive loss |
|
|
(8,187 |
) |
|
|
(7,222 |
) |
Retained earnings |
|
|
(83,682 |
) |
|
|
(74,367 |
) |
Total Village Farms International, Inc. shareholders’ equity |
|
|
320,485 |
|
|
|
304,212 |
|
Non-controlling interest |
|
|
616 |
|
|
|
686 |
|
Total shareholders’ equity |
|
|
321,101 |
|
|
|
304,898 |
|
Total liabilities, mezzanine equity and shareholders’ equity |
|
$ |
477,702 |
|
|
$ |
465,285 |
|
|
Village Farms International, Inc.Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss)(In thousands of United States dollars,
except per share data)(Unaudited) |
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Sales |
|
$ |
69,510 |
|
|
$ |
71,056 |
|
|
$ |
211,378 |
|
|
$ |
224,115 |
|
Cost of sales |
|
|
(54,889 |
) |
|
|
(62,682 |
) |
|
|
(172,958 |
) |
|
|
(199,514 |
) |
Gross margin |
|
|
14,621 |
|
|
|
8,374 |
|
|
|
38,420 |
|
|
|
24,601 |
|
Selling, general and
administrative expenses |
|
|
(15,822 |
) |
|
|
(17,794 |
) |
|
|
(49,980 |
) |
|
|
(54,245 |
) |
Interest expense |
|
|
(988 |
) |
|
|
(982 |
) |
|
|
(3,532 |
) |
|
|
(2,330 |
) |
Interest income |
|
|
262 |
|
|
|
60 |
|
|
|
741 |
|
|
|
129 |
|
Foreign exchange loss, net |
|
|
(971 |
) |
|
|
(1,963 |
) |
|
|
(302 |
) |
|
|
(2,171 |
) |
Other (expense) income |
|
|
(19 |
) |
|
|
(10 |
) |
|
|
5,613 |
|
|
|
(7 |
) |
Write-off of joint venture
loan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(592 |
) |
Impairments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(29,799 |
) |
Loss before taxes and loss from
equity method investments |
|
|
(2,917 |
) |
|
|
(12,315 |
) |
|
|
(9,040 |
) |
|
|
(64,414 |
) |
Recovery of (provision for)
income taxes |
|
|
1,664 |
|
|
|
3,183 |
|
|
|
(269 |
) |
|
|
14,563 |
|
Loss from equity method
investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,667 |
) |
Loss including non-controlling
interests |
|
|
(1,253 |
) |
|
|
(9,132 |
) |
|
|
(9,309 |
) |
|
|
(52,518 |
) |
Less: net (income) loss
attributable to non-controlling interests, net of tax |
|
|
(46 |
) |
|
|
387 |
|
|
|
(6 |
) |
|
|
701 |
|
Net loss attributable to Village
Farms International, Inc. shareholders |
|
$ |
(1,299 |
) |
|
$ |
(8,745 |
) |
|
$ |
(9,315 |
) |
|
$ |
(51,817 |
) |
Basic loss per share attributable
to Village Farms International, Inc. shareholders |
|
$ |
(0.01 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.59 |
) |
Diluted loss per share
attributable to Village Farms International, Inc. shareholders |
|
$ |
(0.01 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.59 |
) |
Weighted average number of common
shares usedin the computation of net loss per share (in
thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
110,239 |
|
|
|
88,684 |
|
|
|
108,214 |
|
|
|
88,543 |
|
Diluted |
|
|
110,239 |
|
|
|
88,684 |
|
|
|
108,214 |
|
|
|
88,543 |
|
Loss including non-controlling
interests |
|
$ |
(1,253 |
) |
|
$ |
(9,132 |
) |
|
$ |
(9,309 |
) |
|
$ |
(52,518 |
) |
Other comprehensive income
(loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(5,986 |
) |
|
|
(14,780 |
) |
|
|
(899 |
) |
|
|
(17,911 |
) |
Comprehensive loss including
non-controlling interests |
|
|
(7,239 |
) |
|
|
(23,912 |
) |
|
|
(10,208 |
) |
|
|
(70,429 |
) |
Comprehensive (income) loss attributable to non-controlling
interests |
|
|
353 |
|
|
|
1,499 |
|
|
|
(50 |
) |
|
|
1,929 |
|
Comprehensive loss attributable
to Village Farms International, Inc. shareholders |
|
$ |
(6,886 |
) |
|
$ |
(22,413 |
) |
|
$ |
(10,258 |
) |
|
$ |
(68,500 |
) |
|
|
Village Farms International, Inc.Condensed
Consolidated Statements of Cash Flows(In thousands
of United States dollars)(Unaudited) |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
Cash flows provided by
(used in) operating activities: |
|
|
|
|
|
|
Net loss attributable to Village Farms International, Inc.
shareholders |
|
$ |
(9,315 |
) |
|
$ |
(51,817 |
) |
Adjustments to reconcile net loss attributable to Village Farms
International, Inc. shareholders to net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
11,726 |
|
|
|
11,061 |
|
Amortization of deferred charges |
|
|
102 |
|
|
|
171 |
|
Share of loss from joint ventures |
|
|
— |
|
|
|
2,667 |
|
Net loss attributable to non-controlling interest |
|
|
6 |
|
|
|
(701 |
) |
Interest expense |
|
|
3,532 |
|
|
|
2,330 |
|
Interest income |
|
|
(741 |
) |
|
|
(129 |
) |
Interest paid on long-term debt |
|
|
(3,645 |
) |
|
|
(2,989 |
) |
Unrealized foreign exchange loss |
|
|
92 |
|
|
|
77 |
|
Impairments |
|
|
— |
|
|
|
29,799 |
|
Write-off of joint venture loan |
|
|
— |
|
|
|
592 |
|
Loss (gain) on disposal of assets |
|
|
1 |
|
|
|
(7 |
) |
Non-cash lease expense |
|
|
1,615 |
|
|
|
775 |
|
Share-based compensation |
|
|
3,135 |
|
|
|
3,004 |
|
Deferred income taxes |
|
|
1,748 |
|
|
|
(19,670 |
) |
Changes in non-cash working capital items |
|
|
(1,451 |
) |
|
|
11,621 |
|
Net cash provided by (used in) operating activities |
|
|
6,805 |
|
|
|
(13,216 |
) |
Cash flows (used in)
provided by investing activities: |
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(4,358 |
) |
|
|
(12,869 |
) |
Acquisitions, net |
|
|
— |
|
|
|
(4,693 |
) |
Issuance of note receivable |
|
|
— |
|
|
|
(1,914 |
) |
Repayment of note receivable |
|
|
835 |
|
|
|
— |
|
Net cash used in investing activities |
|
|
(3,523 |
) |
|
|
(19,476 |
) |
Cash flows provided by
(used in) financing activities: |
|
|
|
|
|
|
Proceeds from borrowings |
|
|
— |
|
|
|
4,000 |
|
Repayments on borrowings |
|
|
(7,858 |
) |
|
|
(6,262 |
) |
Proceeds from issuance of common stock and warrants |
|
|
24,772 |
|
|
|
824 |
|
Issuance costs |
|
|
(1,437 |
) |
|
|
— |
|
Proceeds from exercise of stock options |
|
|
83 |
|
|
|
192 |
|
Payments on capital lease obligations |
|
|
— |
|
|
|
(782 |
) |
Net cash provided by (used in) financing activities |
|
|
15,560 |
|
|
|
(2,028 |
) |
Effect of exchange rate changes
on cash and cash equivalents |
|
|
(35 |
) |
|
|
(782 |
) |
Net increase (decrease)
in cash, cash equivalents and restricted cash |
|
|
18,807 |
|
|
|
(35,502 |
) |
Cash, cash equivalents
and restricted cash, beginning of period |
|
|
21,676 |
|
|
|
58,667 |
|
Cash, cash equivalents
and restricted cash, end of period |
|
$ |
40,483 |
|
|
$ |
23,165 |
|
Non-cash - investing
and financing activities: |
|
|
|
|
|
|
Operating lease
right-of-use assets |
|
$ |
5,578 |
|
|
$ |
— |
|
Operating lease
liabilities |
|
$ |
5,578 |
|
|
$ |
— |
|
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