Village Farms International Reports Second Quarter 2022 Financial Results
- Consolidated Revenue Increased 18% Year-Over-Year to $82.9 Million
- Canadian Cannabis Business Net Sales Increased 20% Year-Over-Year and 37% Sequentially to Quarterly New Record
- Pure Sunfarms Remains Best-Selling Dried Flower Brand in Canada*
- Rose LifeScience Became the Number Three Licensed Producer in Quebec**
VANCOUVER, BC, Aug. 9, 2022 /PRNewswire/ – Village Farms International, Inc. (“Village Farms” or the “Company”) (NASDAQ: VFF) (TSX: VFF) today announced its financial results for the second quarter ended June 30, 2022. All figures are in U.S. dollars unless otherwise indicated.
Management Commentary
“The continued successful execution of our differentiated Canadian Cannabis strategy drove strong year-over-year and sequential sales growth, achieving a new record high for the second quarter, as well as our 15th consecutive quarter of positive EBITDA for that business,” said Michael DeGiglio, Chief Executive Officer, Village Farms. “Our Pure Sunfarms brand maintained its number one market share position in dried flower in Canada*, while Rose LifeScience became a top-three licensed producer in Quebec, with an 8.5% market share**, in part driven by its Promenade brand in collaboration with Pure Sunfarms. Importantly, our planned investments in our commercial capabilities, including sales support and marketing, strain development and other innovation, new brands and geographical expansion over the past 18 months to drive both near- and long-term growth are beginning to yield their intended results. We are also seeing the benefits of the evolution of our strategy for non-branded, with larger, more regular sales to a smaller number of repeat customers, which has been complemented by steady growth in exports, having recently completed our sixth shipment to Australia.”
We continue to expect the second half of 2022 to trend favourably for our Canadian Cannabis business, as we launch new SKUs, including new strains, across our brands into a market that continues to exhibit robust growth. In addition, the roll out of the Original Fraser Valley Weed Co. brand will enable us to address a considerable portion of the Canadian market that we previously did not.
Michael DeGiglio, Chief Executive Officer, Village Farms
We also expect to increasingly benefit from integrating Pure Sunfarms and Rose to realize the significant synergistic opportunities that can take Village Farms’ Canadian Cannabis business to the next level.
“In our U.S. Cannabis business, Balanced Health Botanicals and CBDistillery® brand continues to perform well amidst a broader U.S. cannabinoid market that continues to be challenged by lack of regulatory clarity, resulting in confusion at the consumer level. Balanced Health is an integral part of our long-term US Cannabis strategy, as a well-established, profitable business, with top brand awareness, and an established e-commerce platform and retail channels that provides another potential pathway to participate in the high-THC cannabis market in the U.S. when we are able.”
“Internationally, we continue to progress steadily on multiple new opportunities in selected target markets. Having received EU GMP certification, our Canadian Cannabis operations are finalizing details with partners with shipments expected to commence in the coming months. Separately today, we announced our ownership of 85% of Leli Holland, which has been was awarded the tenth and final cultivation license granted under the Closed Cannabis Supply Chain Experiment in the Netherlands. As a result, we will directly participate in what will be the first major European market to permit large-scale cannabis cultivation and distribution for recreational purposes, while strongly positioning our Company for success in other European markets as they legalize.”
“In our Village Farms Fresh produce business, as anticipated we continued to be challenged by cost inflation across our operations, with significant year-over-year increases in most categories, including fertilizer and other inputs, packaging, freight and labor costs, which has been exacerbated by the continued impact of the Brown Rugose virus that has impacted the global tomato industry. To date, we have not been able to pass these cost increases on to customers due to the continued oversupply in each of the tomato, cucumber and pepper markets. With the goal of optimizing profitability for Village Farms Fresh, we have initiated an intensive operational review of our operations. We believe strongly in the potential of these operations, especially for their optionality and considerably greater value as part of our cannabis strategy in a national or Texas state legal cannabis market in which we can participate.”
Second Quarter 2022 Financial Highlights
(All comparable periods are for Second Quarter 2021)
Consolidated
- Consolidated sales increased 18% year-over-year to $82.9 million from $70.4 million;
- Consolidated net loss was ($36.6 million), or ($0.41) per share, which included $29.8 million of impairments to Balanced Health Botanicals’ goodwill and intangible assets, compared with ($4.5 million), or ($0.06) per share; and,
- Consolidated adjusted EBITDA was negative ($10.3 million) compared with positive adjusted EBITDA of $1.5 million.
Cannabis
- Total Cannabis segment net sales increased 44% year-over-year to $35.6 million, representing 43% of total Village Farms sales; and
- Total Cannabis segment adjusted EBITDA was $2.1 million, compared with $7.3 million.
