Village Farms International, Inc. (“Village Farms” or the
“Company”) (NASDAQ: VFF) today announced its financial results for
the fourth quarter and year ended December 31, 2023. All figures
are in U.S. dollars unless otherwise indicated.
Management Commentary
“Our Canadian Cannabis business remains the
undisputed leader in that market, with record sales and another
quarter of positive adjusted EBITDA and cash flow in the fourth
quarter,” said Michael DeGiglio, President and Chief Executive
Officer. “We reclaimed the number two national market share rank
across all categories and are steadily closing the gap on the top
position. Record retail branded sales were complemented by another
especially strong quarter for non-branded wholesale sales. In our
non-branded wholesale channel, we took advantage of improved supply
conditions and pricing created by the shift of many of our peers to
asset light models, significantly reducing our non-brand-spec
inventory. While these close out sales are temporarily affecting
gross margin and adjusted EBITDA, they are generating additional
cash flow, and will support more efficient, higher cash conversion
inventory turnover this year and beyond.”
“We are encouraged by early signs of a more
favorable operating environment for our Canadian Cannabis segment.
Reduction in biomass oversupply, recent stabilization of retail
pricing, more aggressive actions to address ballooning delinquent
excise duties, and recommendations to change the excise duty to 10%
of sales will benefit the industry’s profit potential, and
especially our business as a profitable leader. Village Farms paid
C$78 million in excise duties in 2023 on sales of C$232 million –
an effective rate of nearly 34%.”
“On the international front, earlier this year
we started the build out of our first production facility in the
Netherlands, where we are proud to be the only North American
participant in the first legal recreational cannabis market in a
major European country. Production is targeted to begin
later this year. We expanded our export program for the European
medical market to the United Kingdom, with additional markets
expected to be added this year. Notably, recent positive progress
around German medical use regulation provides us with additional
opportunity going forward as the market grows.”
“In our U.S. Cannabis business, we generated
positive adjusted EBITDA and positive cash flow.”
“Within our Fresh Produce business, we achieved
our goal of positive adjusted EBITDA for the year, with another
quarter of significant year-over-year improvement. Our produce
business is stable, and we are working toward sustainable
profitability and cash flow. We are executing on our
plan with respect to customer profitability, continuous cost
improvement and operational efficiency. Our Fresh Produce expertise
and a portion of our Texas-based assets remain a transformational
opportunity to replicate our success in Canada in the next
iteration of US high-THC cannabis regulation.”
“The fourth quarter closed a year in which each
of our core businesses delivered positive adjusted EBITDA. Our
strong momentum through the back half of 2023 has accelerated in
2024, marking a great start to a year that we believe will see new
levels of performance across our businesses.”
Fourth Quarter 2023 Financial
Highlights(All comparable periods are for the
fourth quarter of 2022 unless otherwise
stated)Consolidated
- Consolidated sales increased 7%
year-over-year to $74.2 million from $69.5 million;
- Consolidated net loss improved to
($22.5 million), or ($0.20) per share, compared with ($49.3
million), or ($0.54) per share;
- Consolidated adjusted EBITDA (a
non-GAAP measure) improved to ($0.7 million) from ($11.8 million);
and,
- Consolidated cash used was $5.2
million compared with $1.5 million.
Canadian Cannabis (Pure Sunfarms and Rose
LifeScience)
- Net sales increased 15% to $32.0
million (C$43.6 million) from $27.9 million (C$38.2 million) (an
increase of 14% in Canadian dollars);
- Retail branded sales increased 5%,
international (export) sales decreased (66%) and non-branded
(wholesale) sales increased 339%;
- Gross margin was 23% compared with
1%. Gross margin for the fourth quarter of 2023 was reduced by
sales of non-brand-spec inventory in the non-branded channel as
strong demand drove improved supply dynamics;
- Net loss improved to ($1.0 million)
(C$1.3 million) from net loss of ($2.8 million) (C$3.8 million);
and,
- Adjusted EBITDA was $1.5 million
(C$2.1 million) compared with ($6.4 million) (C$8.7 million).
U.S. Cannabis (Balanced Health Botanicals)
- Net sales were $5.1 million
compared with $5.3 million;
- Gross margin was 66% compared
67%;
- Net loss improved to ($13.7
million) from a net loss of ($20.9 million), with net losses for
the fourth quarters of 2023 and 2022 being impacted by the write
down of intangible assets of ($14.0 million) and ($13.5 million),
respectively; and,
- Adjusted EBITDA increased to $0.4
million from $0.3 million.
Village Farms Fresh (Produce)
- Sales were $37.1 million compared
with $36.2 million;
- Net loss improved significantly to
($4.0 million) from ($20.7 million); and,
- Adjusted EBITDA improved to ($0.6
million) from negative ($3.0 million), with adjusted EBITDA for the
fourth quarter of 2023 impacted by a later than expected seasonal
increase in pricing,
Strategic Growth and Operational
Highlights
Canadian Cannabis
- Reclaimed the number two market
share position across all product categories for the fourth quarter
of 20231;
- Rose LifeScience maintained the
number two market share position in Quebec, expanding its share in
each successive quarter of the year1;
- In the non-branded channel, took
advantage of improved supply conditions and pricing created by
shift of many producers to asset light models by significantly
reducing non-brand-spec inventory, generating additional cash flow
and supporting more efficient, higher cash conversion inventory
turnover going forward;
- Pure Sunfarms brand launched a new
high-THC 1g vape offering, featuring formulations to maximize
flavour, potency and consumer experience;
- The Canadian Cannabis business’
premium Soar brand launched its first 1g Infused Blunts, which
feature fresh, hang dried cannabis flower infused with a premium
oil for consumers looking for an elevated cannabis experience;
and,
- Village Farms was named the Best
Canadian Cannabis Company at the Benzinga Cannabis Awards for the
second consecutive year.
International Cannabis
- The Company continues to leverage
its high-quality Canadian Cannabis products and portfolio for the
international export market, with a primary focus on Europe and
Australia. Nine of the Company’s best-selling strains in Canada are
now being sold across four international medical markets. The
Company has a strategy in place to accelerate international export
sales in current markets, while expecting to launch products in
additional European markets this year.
- Subsequent to quarter end, the
Canadian Cannabis business commenced exports to the United Kingdom,
launching some of Village Farms’ most popular strains under the
Pure Sunfarms, with strains under The Original Fraser Valley Weed
Co. (“Fraser Valley”) to come; and,
- Subsequent to quarter end, the
Company commenced the build-out of its first indoor cannabis
production facility in Drachten, Netherlands. Through its
majority-owned (85%) subsidiary, Leli Holland, Village Farms holds
one of 10 licenses permitting it to legally produce and distribute
recreational cannabis in the Netherlands under the Dutch Cannabis
Supply Chain Experiment. Production is targeted to start during the
fourth quarter of 2024 with initial sales in early 2025.
U.S. Cannabis
- Launched a new visual brand for
CBDistillery, including a revamped web site, focused on the
wellness attributes of its products;
- Continued to advance the
internalization of gummy production, ensuring consistency of supply
while supporting higher gross margins;
- Ended the year with its highest
ever highest product rating;
- Expanded the proportion of
subscription-based sales to 69% in 2023 from 56% in 2022; and,
- John Harloe, J.D., Ph.D., General
Counsel at BHB, was appointed to the governing board of Colorado’s
Institute of Cannabis Research (ICR).
VF Fresh (Produce)
- Commenced the re-purposing of half
of the Delta 2 facility back to producing tomatoes for the 2024
calendar year, with the additional production expected to
contribute incremental cash flow and profitability to this
division;
- Capital expenditure investments in
infrastructure and technology made in the fourth quarter of 2023
are contributing to improved operating efficiencies in 2024;
and,
- The Company has an ongoing sale
process for its Monahans (Permian Basin, Texas) greenhouse
facility. It is also evaluating other uses for the site and
facility, some of which are outside its historical produce
business.
Village Farms Clean Energy
- The Delta, British Columbia
Renewable Natural Gas (RNG) Project is in the process of being
operationalized. When operational, the Delta RNG
Project is expected to immediately contribute incremental cash flow
and profitability.
Other
- Village Farms’ President and Chief
Executive Officer, Michael DeGiglio, was named a 2023 Notable
Leader in Cannabis by Green Market Report, an aggregator of
financial news and analytics for the cannabis industry.
1. Based on estimated retail sales from HiFyre, other third
parties and provincial boards.
Change to Adjusted EBITDA
Calculation
Based on feedback and guidance from the U.S.
Securities and Exchange Commission, Village Farms has changed its
method for calculating adjusted EBITDA such that it no longer
excludes inventory write-downs from adjusted EBITDA. Previously
reported adjusted EBITDA figures for the fourth quarter and full
year 2022 have been adjusted to reflect this change. Specifically,
for the fourth quarter and year ended December 31, 2022, the
Company previously included adjustments of $11.0 million from loss
on inventory write-downs in the Canadian Cannabis business. There
were no inventory write-downs in the any of the Company’s
businesses in the fourth quarter or the full year 2023.
Canadian Cannabis Performance
Summary
(millions except %
metrics) |
Three Months Ended December 31, |
|
|
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
CAD $ |
|
|
USD $ |
|
|
CAD $ |
|
|
USD $ |
|
|
Change of C $ |
|
Total Net Sales |
$ |
43.6 |
|
|
|
$ |
32.0 |
|
|
|
$ |
38.2 |
|
|
|
$ |
27.9 |
|
|
|
14% |
|
Total Cost of Sales |
$ |
33.7 |
|
|
|
$ |
25.2 |
|
|
|
$ |
37.8 |
|
|
|
$ |
27.8 |
|
|
|
-11% |
|
Gross Margin |
$ |
9.9 |
|
|
|
$ |
6.8 |
|
|
|
$ |
0.2 |
|
|
|
$ |
0.1 |
|
|
|
4850% |
|
Gross Margin % |
23 |
% |
|
|
21 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
|
4237% |
|
SG&A |
$ |
10.2 |
|
|
|
$ |
7.0 |
|
|
|
$ |
10.5 |
|
|
|
$ |
7.8 |
|
|
|
-3% |
|
Net income (loss) |
$ |
(1.3 |
) |
|
|
$ |
(1.0 |
) |
|
|
$ |
(3.8 |
) |
|
|
$ |
(2.8 |
) |
|
|
N/A% |
|
Adjusted EBITDA (1) |
$ |
2.1 |
|
|
|
$ |
1.5 |
|
|
|
$ |
(8.7 |
) |
|
|
$ |
(6.4 |
) |
|
|
N/A% |
|
Adjusted EBITDA Margin (1) |
5 |
% |
|
|
5 |
% |
|
|
-23 |
% |
|
|
-23 |
% |
|
|
N/A% |
|
Cash Flow |
$ |
0.4 |
|
|
|
$ |
0.6 |
|
|
|
$ |
(1.8 |
) |
|
|
$ |
(1.2 |
) |
|
|
-122% |
|
(millions except %
metrics) |
Year Ended December 31, |
|
|
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
CAD $ |
|
|
USD $ |
|
|
CAD $ |
|
|
USD $ |
|
|
Change of C $ |
|
Total Net Sales |
$ |
154.0 |
|
|
|
$ |
114.0 |
|
|
|
$ |
143.5 |
|
|
|
$ |
109.9 |
|
|
|
7% |
|
Total Cost of Sales |
$ |
104.8 |
|
|
|
$ |
78.1 |
|
|
|
$ |
104.7 |
|
|
|
$ |
80.5 |
|
|
|
0% |
|
Gross Margin |
$ |
49.2 |
|
|
|
$ |
35.9 |
|
|
|
$ |
38.3 |
|
|
|
$ |
29.4 |
|
|
|
28% |
|
Gross Margin % |
32 |
% |
|
|
31 |
% |
|
|
27 |
% |
|
|
27 |
% |
|
|
20% |
|
SG&A |
$ |
40.2 |
|
|
|
$ |
29.3 |
|
|
|
$ |
41.1 |
|
|
|
$ |
31.6 |
|
|
|
-2% |
|
Net income (loss) |
$ |
4.0 |
|
|
|
$ |
2.9 |
|
|
|
$ |
0.2 |
|
|
|
$ |
0.1 |
|
|
|
1900% |
|
Adjusted EBITDA (1) |
$ |
20.0 |
|
|
|
$ |
14.8 |
|
|
|
$ |
2.1 |
|
|
|
$ |
2.0 |
|
|
|
852% |
|
Adjusted EBITDA Margin (1) |
13 |
% |
|
|
13 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
|
787% |
|
Cash Flow |
$ |
|
7.3 |
|
|
|
$ |
5.6 |
|
|
|
$ |
(2.5 |
) |
|
|
$ |
|
(2.4 |
) |
|
|
-392% |
|
|
1 Adjusted EBITDA is not a recognized earnings
measure and does not have a standard meaning prescribed in 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.
Canadian Cannabis’ Percent of Sales by
Channel
(millions except %
metrics) |
Three Months Ended December 31, |
|
|
|
|
2023 |
|
2022 |
|
|
|
|
CAD $ |
|
|
USD $ |
|
|
CAD $ |
|
|
USD $ |
|
|
Change of C $ |
|
Retail Branded Sales |
$ |
56.1 |
|
|
$ |
41.2 |
|
|
$ |
53.5 |
|
|
$ |
39.3 |
|
|
5% |
|
International Sales |
$ |
1.1 |
|
|
$ |
0.8 |
|
|
$ |
3.2 |
|
|
$ |
2.3 |
|
|
-66% |
|
Non-Branded Sales |
$ |
7.9 |
|
|
$ |
5.7 |
|
|
$ |
1.8 |
|
|
$ |
1.3 |
|
|
339% |
|
Other |
$ |
0.7 |
|
|
$ |
0.6 |
|
|
$ |
0.5 |
|
|
$ |
0.3 |
|
|
40% |
|
Less: Excise Taxes |
$ |
(22.2 |
) |
|
$ |
(16.3 |
) |
|
$ |
(20.8 |
) |
|
$ |
(15.3 |
) |
|
7% |
|
Net Sales |
$ |
43.6 |
|
|
$ |
32.0 |
|
|
$ |
38.2 |
|
|
$ |
27.9 |
|
|
14% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions except %
metrics) |
Year Ended December 31, |
|
|
|
|
2023 |
|
2022 |
|
|
|
|
CAD $ |
|
|
USD $ |
|
|
CAD $ |
|
|
USD $ |
|
|
Change of C $ |
|
Retail Branded Sales |
$ |
202.4 |
|
|
$ |
149.9 |
|
|
$ |
177.2 |
|
|
$ |
135.6 |
|
|
14% |
|
International Sales |
$ |
6.2 |
|
|
$ |
4.6 |
|
|
$ |
5.2 |
|
|
$ |
3.9 |
|
|
19% |
|
Non-Branded Sales |
$ |
21.0 |
|
|
$ |
15.5 |
|
|
$ |
23.3 |
|
|
$ |
17.9 |
|
|
-10% |
|
Other |
$ |
2.7 |
|
|
$ |
2.0 |
|
|
$ |
3.4 |
|
|
$ |
2.6 |
|
|
-21% |
|
Less: Excise Taxes |
$ |
(78.3 |
) |
|
$ |
(58.0 |
) |
|
$ |
(65.6 |
) |
|
$ |
(50.1 |
) |
|
19% |
|
Net Sales |
$ |
154.0 |
|
|
$ |
114.0 |
|
|
$ |
143.5 |
|
|
$ |
109.9 |
|
|
7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Presentation of Financial Results
The Company’s financial statements for the three
and twelve months ended December 31, 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 December 31, |
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Sales |
|
$ |
74,225 |
|
|
|
$ |
69,457 |
|
|
$ |
285,603 |
|
|
$ |
293,572 |
|
Cost of sales |
|
|
(63,219 |
) |
|
|
|
(66,561 |
) |
|
|
(236,177 |
) |
|
|
(266,075 |
) |
Gross margin |
|
|
11,006 |
|
|
|
|
2,896 |
|
|
|
49,426 |
|
|
|
27,497 |
|
Selling, general and
administrative expenses |
|
|
(15,521 |
) |
|
|
|
(18,020 |
) |
|
|
(65,501 |
) |
|
|
(72,265 |
) |
Interest expense |
|
|
(977 |
) |
|
|
|
(914 |
) |
|
|
(4,509 |
) |
|
|
(3,244 |
) |
Interest income |
|
|
277 |
|
|
|
|
78 |
|
|
|
1,018 |
|
|
|
207 |
|
Foreign exchange gain (loss) |
|
|
904 |
|
|
|
|
(84 |
) |
|
|
602 |
|
|
|
(2,255 |
) |
Other income (expense), net |
|
|
3 |
|
|
|
|
(109 |
) |
|
|
5,616 |
|
|
|
(115 |
) |
Write-off of joint venture
loan |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
(592 |
) |
Impairments |
|
|
(14,020 |
) |
|
|
|
(13,500 |
) |
|
|
(14,020 |
) |
|
|
(43,299 |
) |
Loss before taxes and loss from
equity method investments |
|
|
(18,328 |
) |
|
|
|
(29,653 |
) |
|
|
(27,368 |
) |
|
|
(94,066 |
) |
Provision for income taxes |
|
|
(4,182 |
) |
|
|
|
(19,244 |
) |
|
|
(4,451 |
) |
|
|
(4,681 |
) |
Loss including non-controlling
interest and before equity losses |
|
|
(22,510 |
) |
|
|
|
(48,897 |
) |
|
|
(31,819 |
) |
|
|
(98,747 |
) |
Less: net loss (income)
attributable to non-controlling interests, net of tax |
|
|
27 |
|
|
|
|
(432 |
) |
|
|
21 |
|
|
|
269 |
|
Loss from equity method
investments |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
(2,668 |
) |
Net loss attributable to Village
Farms International, Inc. shareholders |
|
$ |
(22,483 |
) |
|
|
$ |
(49,329 |
) |
|
$ |
(31,798 |
) |
|
$ |
(101,146 |
) |
Adjusted EBITDA (1) |
|
$ |
(658 |
) |
|
|
$ |
(11,796 |
) |
|
$ |
7,585 |
|
|
$ |
(34,633 |
) |
Basic loss per share |
|
$ |
(0.20 |
) |
|
|
$ |
(0.54 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.13 |
) |
Diluted loss per share |
|
$ |
(0.20 |
) |
|
|
$ |
(0.54 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and 85% interest in
Leli.
We caution that our results of operations for
the three and twelve months ended December 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
world conflicts.
SEGMENTED RESULTS OF OPERATIONS(In thousands of
U.S. dollars, except per share amounts, and unless otherwise
noted)
|
For the Three Months Ended December 31, 2023 |
|
|
|
|
|
VF Fresh (Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
Clean Energy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
37,118 |
|
|
$ |
32,043 |
|
|
$ |
5,064 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
74,225 |
|
Cost of sales |
|
(36,285 |
) |
|
|
(25,217 |
) |
|
|
(1,717 |
) |
|
|
— |
|
|
|
— |
|
|
|
(63,219 |
) |
Selling, general and
administrative expenses |
|
(2,789 |
) |
|
|
(7,002 |
) |
|
|
(3,020 |
) |
|
|
(2 |
) |
|
|
(2,708 |
) |
|
|
(15,521 |
) |
Other (expense) income, net |
|
(498 |
) |
|
|
(298 |
) |
|
|
(10 |
) |
|
|
(56 |
) |
|
|
1,069 |
|
|
|
207 |
|
Impairments |
|
— |
|
|
|
— |
|
|
|
(14,020 |
) |
|
|
— |
|
|
|
— |
|
|
|
(14,020 |
) |
Operating loss |
|
(2,454 |
) |
|
|
(474 |
) |
|
|
(13,703 |
) |
|
|
(58 |
) |
|
|
(1,639 |
) |
|
|
(18,328 |
) |
Recovery of (provision for)
income taxes |
|
(1,513 |
) |
|
|
(509 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,160 |
) |
|
|
(4,182 |
) |
Loss from consolidated
entities |
|
(3,967 |
) |
|
|
(983 |
) |
|
|
(13,703 |
) |
|
|
(58 |
) |
|
|
(3,799 |
) |
|
|
(22,510 |
) |
Less: net (income) loss
attributable to non-controlling interests, net of tax |
|
— |
|
|
|
(13 |
) |
|
|
— |
|
|
|
— |
|
|
|
40 |
|
|
|
27 |
|
Net loss |
$ |
(3,967 |
) |
|
$ |
(996 |
) |
|
$ |
(13,703 |
) |
|
$ |
(58 |
) |
|
$ |
(3,759 |
) |
|
$ |
(22,483 |
) |
Adjusted EBITDA (1) |
$ |
(604 |
) |
|
$ |
1,491 |
|
|
$ |
437 |
|
|
$ |
(58 |
) |
|
$ |
(1,924 |
) |
|
$ |
(658 |
) |
Basic loss per share |
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.20 |
) |
Diluted loss per share |
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.20 |
) |
|
For the Three Months Ended December 31, 2022 |
|
|
|
|
|
VF Fresh (Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
Clean Energy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
36,200 |
|
|
$ |
27,926 |
|
|
$ |
5,331 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
69,457 |
|
Cost of sales |
|
(37,021 |
) |
|
|
(27,755 |
) |
|
|
(1,744 |
) |
|
|
(41 |
) |
|
|
— |
|
|
|
(66,561 |
) |
Selling, general and
administrative expenses |
|
(3,279 |
) |
|
|
(7,807 |
) |
|
|
(3,825 |
) |
|
|
(5 |
) |
|
|
(3,104 |
) |
|
|
(18,020 |
) |
Other (expense) income, net |
|
(411 |
) |
|
|
(533 |
) |
|
|
(94 |
) |
|
|
(37 |
) |
|
|
46 |
|
|
|
(1,029 |
) |
Impairments |
|
— |
|
|
|
— |
|
|
|
(13,500 |
) |
|
|
— |
|
|
|
— |
|
|
|
(13,500 |
) |
Operating loss |
|
(4,511 |
) |
|
|
(8,169 |
) |
|
|
(13,832 |
) |
|
|
(83 |
) |
|
|
(3,058 |
) |
|
|
(29,653 |
) |
(Provision for) recovery of
income taxes |
|
(16,236 |
) |
|
|
5,759 |
|
|
|
(7,025 |
) |
|
|
— |
|
|
|
(1,742 |
) |
|
|
(19,244 |
) |
Loss from consolidated
entities |
|
(20,747 |
) |
|
|
(2,410 |
) |
|
|
(20,857 |
) |
|
|
(83 |
) |
|
|
(4,800 |
) |
|
|
(48,897 |
) |
Less: net income attributable to
non-controlling interests, net of tax |
|
— |
|
|
|
(432 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(432 |
) |
Net loss |
|
(20,747 |
) |
|
|
(2,842 |
) |
|
|
(20,857 |
) |
|
|
(83 |
) |
|
|
(4,800 |
) |
|
|
(49,329 |
) |
Adjusted EBITDA (1) |
$ |
(3,007 |
) |
|
$ |
(6,316 |
) |
|
$ |
266 |
|
|
$ |
(83 |
) |
|
$ |
(2,656 |
) |
|
$ |
(11,796 |
) |
Basic loss per share |
$ |
(0.23 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.54 |
) |
Diluted loss per share |
$ |
(0.23 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.54 |
) |
|
For the Year Ended December 31, 2023 |
|
|
|
|
|
VF Fresh (Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
Clean Energy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
151,243 |
|
|
$ |
114,030 |
|
|
$ |
20,330 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
285,603 |
|
Cost of sales |
|
(151,064 |
) |
|
|
(78,090 |
) |
|
|
(7,002 |
) |
|
|
(21 |
) |
|
|
— |
|
|
|
(236,177 |
) |
Selling, general and
administrative expenses |
|
(10,625 |
) |
|
|
(29,275 |
) |
|
|
(13,118 |
) |
|
|
(32 |
) |
|
|
(12,451 |
) |
|
|
(65,501 |
) |
Other income (expense), net |
|
3,495 |
|
|
|
(2,136 |
) |
|
|
(18 |
) |
|
|
(133 |
) |
|
|
1,519 |
|
|
|
2,727 |
|
Impairments |
|
— |
|
|
|
— |
|
|
|
(14,020 |
) |
|
|
— |
|
|
|
— |
|
|
|
(14,020 |
) |
Operating (loss) income |
|
(6,951 |
) |
|
|
4,529 |
|
|
|
(13,828 |
) |
|
|
(186 |
) |
|
|
(10,932 |
) |
|
|
(27,368 |
) |
Recovery of (provision for)
income taxes |
|
(1,284 |
) |
|
|
(1,431 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,736 |
) |
|
|
(4,451 |
) |
(Loss) income from consolidated
entities |
|
(8,235 |
) |
|
|
3,098 |
|
|
|
(13,828 |
) |
|
|
(186 |
) |
|
|
(12,668 |
) |
|
|
(31,819 |
) |
Less: net (income) loss
attributable to non-controlling interests, net of tax |
|
— |
|
|
|
(162 |
) |
|
|
— |
|
|
|
— |
|
|
|
183 |
|
|
|
21 |
|
Net (loss) income |
$ |
(8,235 |
) |
|
$ |
2,936 |
|
|
$ |
(13,828 |
) |
|
$ |
(186 |
) |
|
$ |
(12,485 |
) |
|
$ |
(31,798 |
) |
Adjusted EBITDA (1) |
$ |
506 |
|
|
$ |
14,764 |
|
|
$ |
861 |
|
|
$ |
(186 |
) |
|
$ |
(8,360 |
) |
|
$ |
7,585 |
|
Basic (loss) income per
share |
$ |
(0.07 |
) |
|
$ |
0.03 |
|
|
$ |
(0.13 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.29 |
) |
Diluted (loss) income per
share |
$ |
(0.07 |
) |
|
$ |
0.03 |
|
|
$ |
(0.13 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.29 |
) |
|
For the Year Ended December 31, 2022 |
|
|
|
|
|
VF Fresh (Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
Clean Energy |
|
|
Corporate |
|
|
Total |
|
Sales |
$ |
160,252 |
|
|
$ |
109,882 |
|
|
$ |
23,302 |
|
|
$ |
136 |
|
|
$ |
— |
|
|
$ |
293,572 |
|
Cost of sales |
|
(177,634 |
) |
|
|
(80,494 |
) |
|
|
(7,643 |
) |
|
|
(304 |
) |
|
|
— |
|
|
|
(266,075 |
) |
Selling, general and
administrative expenses |
|
(12,004 |
) |
|
|
(31,608 |
) |
|
|
(16,305 |
) |
|
|
(58 |
) |
|
|
(12,290 |
) |
|
|
(72,265 |
) |
Other expense, net |
|
(1,187 |
) |
|
|
(2,023 |
) |
|
|
(247 |
) |
|
|
(43 |
) |
|
|
(1,907 |
) |
|
|
(5,407 |
) |
Write-off of joint venture
loan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(592 |
) |
|
|
(592 |
) |
Impairments |
|
— |
|
|
|
— |
|
|
|
(43,299 |
) |
|
|
— |
|
|
|
— |
|
|
|
(43,299 |
) |
Operating loss |
|
(30,573 |
) |
|
|
(4,243 |
) |
|
|
(44,192 |
) |
|
|
(269 |
) |
|
|
(14,789 |
) |
|
|
(94,066 |
) |
(Provision for) recovery of
income taxes |
|
(9,914 |
) |
|
|
4,091 |
|
|
|
— |
|
|
|
— |
|
|
|
1,142 |
|
|
|
(4,681 |
) |
Loss from consolidated
entities |
|
(40,487 |
) |
|
|
(152 |
) |
|
|
(44,192 |
) |
|
|
(269 |
) |
|
|
(13,647 |
) |
|
|
(98,747 |
) |
Less: net loss attributable to
non-controlling interests, net of tax |
|
— |
|
|
|
269 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
269 |
|
Loss from equity method
investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,668 |
) |
|
|
(2,668 |
) |
Net (loss) income |
$ |
(40,487 |
) |
|
$ |
117 |
|
|
$ |
(44,192 |
) |
|
$ |
(269 |
) |
|
$ |
(16,315 |
) |
|
$ |
(101,146 |
) |
Adjusted EBITDA (1) |
$ |
(24,369 |
) |
|
$ |
2,047 |
|
|
$ |
223 |
|
|
$ |
(263 |
) |
|
$ |
(12,271 |
) |
|
$ |
(34,633 |
) |
Basic (loss) income per
share |
$ |
(0.45 |
) |
|
$ |
0.00 |
|
|
$ |
(0.52 |
) |
|
$ |
0.00 |
|
|
$ |
(0.16 |
) |
|
$ |
(1.13 |
) |
Diluted (loss) income per
share |
$ |
(0.45 |
) |
|
$ |
0.00 |
|
|
$ |
(0.52 |
) |
|
$ |
0.00 |
|
|
$ |
(0.16 |
) |
|
$ |
(1.13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 our Annual Report on Form 10-K for
the twelve months ended December 31, 2023 (the “Annual Report”),
which will be filed with the Securities and Exchange Commission and
will be available at www.sec.gov, and will also be filed in Canada
on SEDAR (www.sedar.com). In addition, the Annual Report can 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 December 31, 2023 |
|
(in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Net (loss) income |
$ |
(3,967 |
) |
|
$ |
(996 |
) |
|
$ |
(13,703 |
) |
|
$ |
(58 |
) |
|
$ |
(3,759 |
) |
|
$ |
(22,483 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
1,297 |
|
|
|
2,028 |
|
|
|
56 |
|
|
|
— |
|
|
|
63 |
|
|
|
3,444 |
|
Foreign currency exchange (gain) loss |
|
(42 |
) |
|
|
(66 |
) |
|
|
— |
|
|
|
— |
|
|
|
(838 |
) |
|
|
(946 |
) |
Interest expense (income), net |
|
595 |
|
|
|
267 |
|
|
|
— |
|
|
|
— |
|
|
|
(233 |
) |
|
|
629 |
|
Provision for income taxes |
|
1,513 |
|
|
|
508 |
|
|
|
— |
|
|
|
— |
|
|
|
2,161 |
|
|
|
4,182 |
|
(Provision for) recovery of income taxes attributable to
non-controlling interest |
|
— |
|
|
|
(104 |
) |
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
(98 |
) |
Share-based compensation |
|
— |
|
|
|
(576 |
) |
|
|
54 |
|
|
|
— |
|
|
|
447 |
|
|
|
(75 |
) |
Interest expense for JV's |
|
— |
|
|
|
50 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50 |
|
Amortization for JVs |
|
— |
|
|
|
340 |
|
|
|
— |
|
|
|
— |
|
|
|
229 |
|
|
|
569 |
|
Foreign currency exchange loss for JVs |
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Share-based compensation for JV's |
|
— |
|
|
|
38 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38 |
|
Other expenses for JV's |
|
— |
|
|
|
(34 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(34 |
) |
Deferred financing fees |
|
— |
|
|
|
34 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34 |
|
Impairments |
|
— |
|
|
|
— |
|
|
|
14,020 |
|
|
|
— |
|
|
|
— |
|
|
|
14,020 |
|
Other expense |
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
Adjusted EBITDA (2) |
$ |
(604 |
) |
|
$ |
1,491 |
|
|
$ |
437 |
|
|
$ |
(58 |
) |
|
$ |
(1,924 |
) |
|
$ |
(658 |
) |
|
For the Three Months Ended December 31, 2022 |
|
(in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Net (loss) income |
$ |
(20,747 |
) |
|
$ |
(2,842 |
) |
|
$ |
(20,857 |
) |
|
$ |
(83 |
) |
|
$ |
(4,800 |
) |
|
$ |
(49,329 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
1,292 |
|
|
|
992 |
|
|
|
140 |
|
|
|
— |
|
|
|
— |
|
|
|
2,424 |
|
Foreign currency exchange
loss |
|
— |
|
|
|
38 |
|
|
|
26 |
|
|
|
— |
|
|
|
22 |
|
|
|
86 |
|
Interest expense (income),
net |
|
500 |
|
|
|
402 |
|
|
|
— |
|
|
|
— |
|
|
|
(65 |
) |
|
|
837 |
|
Provision for (recovery of)
income taxes |
|
16,236 |
|
|
|
(5,759 |
) |
|
|
7,025 |
|
|
|
— |
|
|
|
1,742 |
|
|
|
19,244 |
|
(Provision for) recovery of
income taxes attributable to non-controlling interest |
|
— |
|
|
|
630 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
630 |
|
Share-based compensation |
|
— |
|
|
|
362 |
|
|
|
39 |
|
|
|
— |
|
|
|
471 |
|
|
|
872 |
|
Amortization for JVs |
|
— |
|
|
|
241 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
241 |
|
Share-based compensation for JV's |
|
— |
|
|
|
45 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
45 |
|
Other expense for JV's |
|
— |
|
|
|
45 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
45 |
|
Deferred financing fees |
|
— |
|
|
|
43 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
43 |
|
Impairments |
|
— |
|
|
|
— |
|
|
|
13,500 |
|
|
|
— |
|
|
|
— |
|
|
|
13,500 |
|
Other expense, net |
|
(288 |
) |
|
|
218 |
|
|
|
393 |
|
|
|
— |
|
|
|
(26 |
) |
|
|
297 |
|
Purchase price adjustment
(1) |
|
— |
|
|
|
(731 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(731 |
) |
Adjusted EBITDA (2) |
|
(3,007 |
) |
|
|
(6,316 |
) |
|
|
266 |
|
|
|
(83 |
) |
|
|
(2,656 |
) |
|
|
(11,796 |
) |
|
For the Year Ended December 31, 2023 |
|
(in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Net (loss) income |
$ |
(8,235 |
) |
|
$ |
2,936 |
|
|
$ |
(13,828 |
) |
|
$ |
(186 |
) |
|
$ |
(12,485 |
) |
|
$ |
(31,798 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
5,136 |
|
|
|
7,106 |
|
|
|
335 |
|
|
|
— |
|
|
|
251 |
|
|
|
12,828 |
|
Foreign currency exchange (gain) loss |
|
(2 |
) |
|
|
(74 |
) |
|
|
19 |
|
|
|
— |
|
|
|
(693 |
) |
|
|
(750 |
) |
Interest expense (income), net |
|
2,323 |
|
|
|
1,882 |
|
|
|
(24 |
) |
|
|
— |
|
|
|
(828 |
) |
|
|
3,353 |
|
Provision for income taxes |
|
1,284 |
|
|
|
1,430 |
|
|
|
— |
|
|
|
— |
|
|
|
1,737 |
|
|
|
4,451 |
|
(Provision for) recovery of income taxes attributable to
non-controlling interest |
|
— |
|
|
|
(104 |
) |
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
(98 |
) |
Share-based compensation |
|
— |
|
|
|
(152 |
) |
|
|
317 |
|
|
|
— |
|
|
|
2,733 |
|
|
|
2,898 |
|
Interest expense for JV's |
|
— |
|
|
|
97 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
97 |
|
Amortization for JV's |
|
— |
|
|
|
1,412 |
|
|
|
— |
|
|
|
— |
|
|
|
919 |
|
|
|
2,331 |
|
Foreign currency exchange loss for JV's |
|
— |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
Share-based compensation for JV's |
|
— |
|
|
|
151 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
151 |
|
Other expenses for JV's |
|
— |
|
|
|
(63 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(63 |
) |
Deferred financing fees |
|
— |
|
|
|
136 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
136 |
|
Impairments |
|
— |
|
|
|
— |
|
|
|
14,020 |
|
|
|
— |
|
|
|
— |
|
|
|
14,020 |
|
Other expense |
|
— |
|
|
|
— |
|
|
|
22 |
|
|
|
— |
|
|
|
— |
|
|
|
22 |
|
Adjusted EBITDA (2) |
$ |
506 |
|
|
$ |
14,764 |
|
|
$ |
861 |
|
|
$ |
(186 |
) |
|
$ |
(8,360 |
) |
|
$ |
7,585 |
|
|
For the Year Ended December 31, 2022 |
|
(in thousands of U.S.
dollars) |
VF Fresh(Produce) |
|
|
Cannabis Canada |
|
|
Cannabis U.S. |
|
|
CleanEnergy |
|
|
Corporate |
|
|
Total |
|
Net (loss) income |
$ |
(40,487 |
) |
|
$ |
117 |
|
|
$ |
(44,192 |
) |
|
$ |
(269 |
) |
|
$ |
(16,315 |
) |
|
$ |
(101,146 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
5,044 |
|
|
|
4,652 |
|
|
|
564 |
|
|
|
— |
|
|
|
— |
|
|
|
10,260 |
|
Foreign currency exchange loss |
|
— |
|
|
|
115 |
|
|
|
47 |
|
|
|
2 |
|
|
|
2,104 |
|
|
|
2,268 |
|
Interest expense (income), net |
|
1,471 |
|
|
|
1,758 |
|
|
|
— |
|
|
|
4 |
|
|
|
(195 |
) |
|
|
3,038 |
|
Provision for (recovery of) income taxes |
|
9,914 |
|
|
|
(4,091 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,142 |
) |
|
|
4,681 |
|
(Provision for) recovery of income taxes attributable to
non-controlling interest |
|
— |
|
|
|
737 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
737 |
|
Share-based compensation |
|
— |
|
|
|
1,194 |
|
|
|
305 |
|
|
|
— |
|
|
|
2,309 |
|
|
|
3,808 |
|
Interest expense for JV's |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38 |
|
|
|
38 |
|
Amortization for JV's |
|
— |
|
|
|
1,554 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,554 |
|
Foreign currency exchange loss for JV's |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Share-based compensation for JV's |
|
— |
|
|
|
124 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
124 |
|
Other expense for JV's |
|
— |
|
|
|
(26 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
Deferred financing fees |
|
— |
|
|
|
214 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
214 |
|
Impairments |
|
— |
|
|
|
— |
|
|
|
43,299 |
|
|
|
— |
|
|
|
— |
|
|
|
43,299 |
|
Gain on disposal of assets |
|
(7 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7 |
) |
Other expense, net |
|
(304 |
) |
|
|
(34 |
) |
|
|
200 |
|
|
|
— |
|
|
|
338 |
|
|
|
200 |
|
JV exit-related costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
592 |
|
|
|
592 |
|
Purchase price adjustment (1) |
|
— |
|
|
|
(4,268 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,268 |
) |
Adjusted EBITDA (2) |
$ |
(24,369 |
) |
|
$ |
2,047 |
|
|
$ |
223 |
|
|
$ |
(263 |
) |
|
$ |
(12,271 |
) |
|
$ |
(34,633 |
) |
Adjusted EBITDA for JV's |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(327 |
) |
|
$ |
(327 |
) |
Adjusted EBITDA excluding JV's
(6) |
$ |
(24,369 |
) |
|
$ |
2,047 |
|
|
$ |
223 |
|
|
$ |
(263 |
) |
|
$ |
(11,944 |
) |
|
$ |
(34,306 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 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.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-recuring and other items that do not reflect our
business performance. Adjusted EBITDA includes the Company’s 70%
interest in Rose LifeScience.
This press release is intended to be read in
conjunction with the Company’s Annual Report on Form 10-K for the
twelve months ended December 31, 2023 (the “Annual Report”), which
will be filed with the Securities and Exchange Commission and will
be available at www.sec.gov, and will also be filed in Canada on
SEDAR (www.sedar.com). In addition, the Annual Report can be found
on the Village Farms website under Financial Reports
(https://villagefarms.com/financial-reports/) within the Investors
section.
Conference Call
Village Farms’ management team will host a
conference call to discuss the fourth quarter and year end 2023
financial results today, Wednesday, March 13, 2024, at 8:30 a.m.
ET. Participants can access the conference call via a webcast at
Village Farms Fourth 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 Fourth Quarter 2023 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,
the Netherlands 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 or the
cannabis industry 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, including our
dependence upon credit facilities; potential difficulties in
achieving and/or maintaining profitability; variability of product
pricing; risks inherent in the cannabis, hemp, CBD, cannabinoids,
and agricultural businesses; market position; 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; 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 US federal
(Food and Drug Administration and United States Department of
Agriculture), state and municipal rules and regulations 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; the ongoing COVID-19
pandemic; and tax risks.
The Company has based these forward-looking
statements on factors and assumptions about future events and
financial trends that it believes may affect its financial
condition, results of operations, business strategy and financial
needs. Although the forward-looking statements contained in this
Press Release are based upon assumptions that management believes
are reasonable based on information currently available to
management, there can be no assurance that actual results will be
consistent with these forward-looking statements. Forward-looking
statements necessarily involve known and unknown risks and
uncertainties, many of which are beyond the Company's control,
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.
Consolidated Statements of Financial
Position (In thousands of United States dollars,
except share data) (Unaudited) |
|
|
|
|
|
|
|
December 31, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
30,291 |
|
|
$ |
16,676 |
|
Restricted cash |
|
|
5,000 |
|
|
|
5,000 |
|
Trade receivables |
|
|
30,561 |
|
|
|
27,558 |
|
Inventories |
|
|
78,472 |
|
|
|
70,582 |
|
Other receivables |
|
|
294 |
|
|
|
309 |
|
Income tax receivable, net |
|
|
— |
|
|
|
6,900 |
|
Prepaid expenses and deposits |
|
|
7,150 |
|
|
|
5,959 |
|
Total current assets |
|
|
151,768 |
|
|
|
132,984 |
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
|
|
205,613 |
|
|
|
207,701 |
|
Investments |
|
|
2,656 |
|
|
|
2,109 |
|
Goodwill |
|
|
55,918 |
|
|
|
66,225 |
|
Intangibles |
|
|
32,275 |
|
|
|
37,157 |
|
Deferred tax asset |
|
|
4,201 |
|
|
|
4,201 |
|
Right-of-use assets |
|
|
12,596 |
|
|
|
9,132 |
|
Other assets |
|
|
1,962 |
|
|
|
5,776 |
|
Total assets |
|
$ |
466,989 |
|
|
$ |
465,285 |
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Line of credit |
|
$ |
4,000 |
|
|
$ |
7,529 |
|
Trade payables |
|
|
21,753 |
|
|
|
24,894 |
|
Current maturities of long-term debt |
|
|
9,133 |
|
|
|
9,646 |
|
Accrued sales taxes |
|
|
15,941 |
|
|
|
11,594 |
|
Accrued loyalty program |
|
|
1,773 |
|
|
|
2,060 |
|
Accrued liabilities |
|
|
15,076 |
|
|
|
13,064 |
|
Lease liabilities - current |
|
|
2,112 |
|
|
|
1,970 |
|
Income tax payable |
|
|
28 |
|
|
|
— |
|
Other current liabilities |
|
|
2,340 |
|
|
|
1,458 |
|
Total current liabilities |
|
|
72,156 |
|
|
|
72,215 |
|
Non-current liabilities |
|
|
|
|
Long-term debt |
|
|
38,925 |
|
|
|
43,821 |
|
Deferred tax liability |
|
|
23,730 |
|
|
|
19,756 |
|
Lease liabilities - non-current |
|
|
11,335 |
|
|
|
7,785 |
|
Other liabilities |
|
|
1,902 |
|
|
|
1,714 |
|
Total liabilities |
|
|
148,048 |
|
|
|
145,291 |
|
Commitments and contingencies (note 11) |
|
|
|
|
MEZZANINE EQUITY |
|
|
|
|
Redeemable non-controlling interests |
|
|
15,667 |
|
|
|
16,164 |
|
SHAREHOLDERS’ EQUITY |
|
|
|
|
Common stock |
|
|
386,719 |
|
|
|
372,429 |
|
Additional paid in capital |
|
|
25,611 |
|
|
|
13,372 |
|
Accumulated other comprehensive loss |
|
|
(3,540 |
) |
|
|
(8,371 |
) |
Retained earnings |
|
|
(106,165 |
) |
|
|
(74,367 |
) |
Total Village Farms International, Inc. shareholders' equity |
|
|
302,625 |
|
|
|
303,063 |
|
Non-controlling interest |
|
|
649 |
|
|
|
767 |
|
Total shareholders' equity |
|
|
303,274 |
|
|
|
303,830 |
|
Total liabilities, mezzanine equity and shareholders’ equity |
|
$ |
466,989 |
|
|
$ |
465,285 |
|
|
|
|
|
|
|
|
|
|
Village
Farms International, Inc. Consolidated Statements
of Operations and Comprehensive
Income (Loss) (In thousands of United States
dollars, except per share data)
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Sales |
|
$ |
74,225 |
|
|
$ |
69,457 |
|
|
$ |
285,603 |
|
|
$ |
293,572 |
|
Cost of
sales |
|
|
(63,219 |
) |
|
|
(66,561 |
) |
|
|
(236,177 |
) |
|
|
(266,075 |
) |
Gross
margin |
|
|
11,006 |
|
|
|
2,896 |
|
|
|
49,426 |
|
|
|
27,497 |
|
Selling,
general and administrative expenses |
|
|
(15,521 |
) |
|
|
(18,020 |
) |
|
|
(65,501 |
) |
|
|
(72,265 |
) |
Interest
expense |
|
|
(977 |
) |
|
|
(914 |
) |
|
|
(4,509 |
) |
|
|
(3,244 |
) |
Interest
income |
|
|
277 |
|
|
|
78 |
|
|
|
1,018 |
|
|
|
207 |
|
Foreign
exchange gain (loss) |
|
|
904 |
|
|
|
(84 |
) |
|
|
602 |
|
|
|
(2,255 |
) |
Other income
(expense), net |
|
|
3 |
|
|
|
(109 |
) |
|
|
5,616 |
|
|
|
(115 |
) |
Write-off of
joint venture loan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(592 |
) |
Impairments |
|
|
(14,020 |
) |
|
|
(13,500 |
) |
|
|
(14,020 |
) |
|
|
(43,299 |
) |
Loss before
taxes and loss from equity method investments |
|
|
(18,328 |
) |
|
|
(29,653 |
) |
|
|
(27,368 |
) |
|
|
(94,066 |
) |
Provision
for income taxes |
|
|
(4,182 |
) |
|
|
(19,244 |
) |
|
|
(4,451 |
) |
|
|
(4,681 |
) |
Loss
including non-controlling interest and before equity losses |
|
|
(22,510 |
) |
|
|
(48,897 |
) |
|
|
(31,819 |
) |
|
|
(98,747 |
) |
Less: net
loss (income) attributable to non-controlling interests, net of
tax |
|
|
27 |
|
|
|
(432 |
) |
|
|
21 |
|
|
|
269 |
|
Loss from
equity method investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,668 |
) |
Net loss
attributable to Village Farms International, Inc. shareholders |
|
$ |
(22,483 |
) |
|
$ |
(49,329 |
) |
|
$ |
(31,798 |
) |
|
$ |
(101,146 |
) |
Adjusted
EBITDA (1) |
|
$ |
(658 |
) |
|
$ |
(11,796 |
) |
|
$ |
7,585 |
|
|
$ |
(34,633 |
) |
Basic loss
per share |
|
$ |
(0.20 |
) |
|
$ |
(0.54 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.13 |
) |
Diluted loss
per share |
|
$ |
(0.20 |
) |
|
$ |
(0.54 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Village Farms International, Inc.
Consolidated Statements of Cash
Flows (In thousands of United States
dollars) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows provided by (used in) operating
activities: |
|
|
|
|
|
Net loss attributable to Village Farms International, Inc.
shareholders |
|
$ |
(31,798 |
) |
|
$ |
(101,146 |
) |
|
Adjustments to reconcile net loss attributable to Village Farms
International, Inc. shareholders to net cash provided by (used in)
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
15,926 |
|
|
|
13,054 |
|
|
Amortization of deferred charges |
|
|
136 |
|
|
|
214 |
|
|
Share of loss from joint venture |
|
|
— |
|
|
|
2,668 |
|
|
Net income (loss) attributable to non-controlling interest |
|
|
(21 |
) |
|
|
(269 |
) |
|
Interest expense |
|
|
4,509 |
|
|
|
3,244 |
|
|
Interest income |
|
|
— |
|
|
|
(207 |
) |
|
Interest paid on long-term debt |
|
|
(4,700 |
) |
|
|
(3,420 |
) |
|
Unrealized foreign exchange loss |
|
|
64 |
|
|
|
83 |
|
|
Impairments |
|
|
14,020 |
|
|
|
43,299 |
|
|
Inventory impairment |
|
|
— |
|
|
|
11,038 |
|
|
Write-off of joint venture loan |
|
|
— |
|
|
|
592 |
|
|
Loss (gain) on disposal of assets |
|
|
7 |
|
|
|
(7 |
) |
|
Non-cash lease expense |
|
|
2,103 |
|
|
|
(604 |
) |
|
Other |
|
|
— |
|
|
|
— |
|
|
Share-based compensation |
|
|
3,111 |
|
|
|
3,987 |
|
|
Deferred income taxes |
|
|
4,046 |
|
|
|
9,831 |
|
|
Changes in non-cash working capital items |
|
|
(2,088 |
) |
|
|
(2,246 |
) |
|
Net cash provided by (used in) operating activities |
|
|
5,315 |
|
|
|
(19,889 |
) |
Cash flows (used in) provided by investing
activities: |
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(6,518 |
) |
|
|
(14,292 |
) |
|
Advances to joint ventures |
|
|
— |
|
|
|
— |
|
|
Acquisitions, net |
|
|
— |
|
|
|
(5,873 |
) |
|
Equity investment |
|
|
(548 |
) |
|
|
— |
|
|
Issuance of note receivable |
|
|
— |
|
|
|
(734 |
) |
|
Repayment of note receivable |
|
|
835 |
|
|
|
— |
|
|
Net cash used in investing activities |
|
|
(6,231 |
) |
|
|
(20,899 |
) |
Cash flows provided by (used in) financing
activities: |
|
|
|
|
|
Proceeds from borrowings |
|
|
— |
|
|
|
7,321 |
|
|
Repayments on borrowings |
|
|
(9,281 |
) |
|
|
(9,709 |
) |
|
Proceeds from issuance of common stock and warrants |
|
|
24,772 |
|
|
|
6,898 |
|
|
Issuance costs |
|
|
(1,437 |
) |
|
|
(206 |
) |
|
Proceeds from exercise of stock options |
|
|
83 |
|
|
|
192 |
|
|
Proceeds from exercise of warrants |
|
|
— |
|
|
|
— |
|
|
Share re-purchases |
|
|
— |
|
|
|
— |
|
|
Payments on capital lease obligations |
|
|
— |
|
|
|
— |
|
|
Payment of note payable related to acquisition |
|
|
— |
|
|
|
— |
|
|
Net cash provided by financing activities |
|
|
14,137 |
|
|
|
4,496 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
394 |
|
|
|
(699 |
) |
Net increase (decrease) in cash, cash equivalents and
restricted cash |
|
|
13,615 |
|
|
|
(36,991 |
) |
Cash, cash equivalents and restricted cash, beginning of
period |
|
|
21,676 |
|
|
|
58,667 |
|
Cash, cash equivalents and restricted cash, end of
period |
|
$ |
35,291 |
|
|
$ |
21,676 |
|
Supplemental disclosure of non-cash
activities: |
|
|
|
|
Non-Cash - investing and financing activities |
|
|
|
|
|
Shares issued for acquisitions |
|
$ |
— |
|
|
$ |
— |
|
|
Operating lease right-of-use assets |
|
$ |
5,578 |
|
|
$ |
— |
|
|
Operating lease liabilities |
|
$ |
5,578 |
|
|
$ |
— |
|
Supplemental cash flow information: |
|
|
|
|
|
Income taxes paid |
|
$ |
— |
|
|
$ |
— |
|
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