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Village Farms reports Earnings

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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 /CNW/ - 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. 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(R) 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 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. 


   -- 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. 

Canadian Cannabis (Pure Sunfarms and Rose LifeScience) Financial Summary for the Three and Six Months Ended June 30, 2022 and June 30, 2021

   -- Canadian Cannabis net sales increased 25% year-over-year to a record 
      $29.8 million (C$38.0 million), with a gross margin of 33% (within the 
      Company's stated target range) and adjusted EBITDA of $2.7 million (C$3.3 

Canadian Cannabis Performance Summary

(millions except % metrics)   Three Months Ended June 30, 
                              2022              2021             Change of C$ 
                              C$       US$      C$       US$ 
Total Gross Sales               $53.8    $42.1    $41.7   $34.0         +29 % 
Total Net Sales                 $38.0    $29.8    $30.4   $24.7         +25 % 
Total Cost of Sales (1)         $25.6    $20.1    $18.2   $14.8         +41 % 
Gross Margin (1)                $12.4     $9.7    $12.2    $9.9          +2 % 
Gross Margin % (1)               33 %     33 %     40 %    40 %         -19 % 
SG&A                            $10.9     $8.4     $5.4    $4.4        -103 % 
Share-based compensation         $0.3     $0.2     $0.2    $0.2         -45 % 
Net income                       $2.5     $1.8     $4.0    $3.2         -36 % 
Adjusted EBITDA (2)              $3.3     $2.7     $9.1    $7.4         -63 % 
Adjusted EBITDA Margin (2)        9 %      9 %     30 %    30 %         -70 % 
(millions except % metrics)   Six Months Ended June 30, 
                              2022             2021            Change of C$ 
                              C$       US$     C$      US$ 
Total Gross Sales               $94.5   $74.2   $72.5   $58.3         +30 % 
Total Net Sales                 $65.6   $51.6   $52.5   $42.2         +25 % 
Total Cost of Sales (1)         $43.7   $34.4   $33.8   $27.1         +29 % 
Gross Margin (1)                $21.9   $17.2   $18.7   $15.1         +17 % 
Gross Margin % (1)               33 %    33 %    36 %    36 %          -7 % 
SG&A                            $19.7   $15.3   $10.4    $8.3         -89 % 
Share-based compensation         $0.8    $0.6    $1.6    $1.3         +51 % 
Net income                       $4.1    $2.8    $0.4    $0.4        +935 % 
Adjusted EBITDA (2)              $6.0    $4.8   $12.2    $9.9         -49 % 
Adjusted EBITDA Margin (2)        9 %     9 %    23 %    23 %         -59 % 
1.  Total cost of sales and gross margin for the three and six months ended 
    June 30, 2022 excludes the C$2,245 (US$1,766) and C$4,839 (US$3,815), 
    respectively, positive inventory adjustment and for the three and six 
    months ended June 30, 2021 excludes the C$145 (US$133) and C$3,824 
    (US$3,058), respectively, inventory adjustment charge from the revaluation 
    of inventory to fair value at the acquisition date of November 2, 2020. 
2.  Adjusted EBITDA is a non-GAAP measure, is not a recognized earnings 
    measure and does not have a standard meaning prescribed in by GAAP. See 
    "Non-GAAP Measures" below. 

Canadian Cannabis' Percent of Sales by Product Group


                             Three months ended    Six months ended 
                              June 30,              June 30, 
Channel                      2022       2021       2022      2021 
Retail, Flower                    67 %       65 %      67 %      68 % 
Retail, Derivatives                4 %        8 %       6 %      10 % 
Wholesale, Flower and Trim        29 %       27 %      27 %      22 % 
1.  Excludes Rose LifeScience commission-based revenue. 

U.S. Cannabis (Balanced Health Botanicals and VF Hemp)

   -- U.S. Cannabis net sales were $5.8 million, with a gross margin of 66% and 
      adjusted EBITDA of negative ($0.6 million). There are no year-over-year 
      comparisons because Balanced Health Botanicals was acquired by Village 
      Farms during the third quarter of 2021 (August 16, 2021). 

Village Farms Fresh (Produce)

   -- Sales increased 4% to $47.2 million and adjusted EBITDA was negative 
      ($10.3 million), compared with ($4.0 million), with the magnitude of the 
      adjusted EBITDA loss being due primarily to the impact of inflation on 

D. H. Taylor
Noble Member Admin
Joined: 2 years ago
Posts: 1053

The impairments killed them this quarter.  But, the revenue increase was solid.  


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