Pure Sunfarms Archives - Green Market Report

Debra BorchardtMarch 16, 2021
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Village Farms International, Inc.  (NASDAQ: VFF) announced its financial results for the three months and year ended December 31, 2020. Sales increased 43% to $47.4 million for the quarter versus last year’s $33.1 million for the same time period. The net income rose 197% from ($7.2) million to $7.0 million in the quarter. Village Farms delivered earnings per share were $0.12, which beat expectations by ten cents. Investors though seemed unimpressed and the stock was sold off by over 9% in early trading to lately trade at $15.82.

For the full year, sales grew 18% to $170.1 million over 2019’s sales of $144.6 million. Net income rose 404% to $11.6 million in 2020 versus 2019’s net income of $2.3 million. The earnings per share for the year were $0.20. The company noted that “on December 31, 2020, Village Farms owned 100% of Pure Sunfarms Corp., as the full acquisition of the remaining interest in Pure Sunfarms occurred November 2, 2020. Accordingly, for the 60-day period from November 2 to December 31, 2020, Pure Sunfarms’ financial results are consolidated with Village Farms results for both the fourth quarter and year ended December 31, 2020.”

“The fourth quarter was a solid finish to a year of significant achievement for Village Farms and our wholly-owned Canadian cannabis subsidiary, Pure Sunfarms, which saw great success as it transitioned its focus to retail branded sales from nearly all sales in 2019 being non-branded, mainly to other producers,” said Michael DeGiglio, CEO, Village Farms. “Following a 40% sequential increase from the second to the third quarter of 2020, Pure Sunfarms sales of branded retail products to provincial distributors increased another 28% sequentially from the third to the fourth quarter, as our branded dried flower products continued to be the top seller with the Ontario Cannabis Store, and our first Cannabis 2.0 products were well received by consumers. This contributed to our ninth consecutive quarter of profitability, even as we invested during the quarter to support our future growth.”

“Finally, alongside the momentum at Pure Sunfarms, our produce business had a strong 2020, driven by higher pricing amidst elevated demand across our national and regional grocer and “big box” customers for much of the year. Our significant progress over the last two years in transitioning capacity designated for cannabis to growing partners enabled us to take full advantage of these market dynamics, coupled with year on year improvements at our Texas green house facilities, drove a $16.5 million year over-year improvement in Adjusted EBITDA to support our longer-term growth opportunities in cannabis.”

In January Village Farms entered into definitive agreements with certain institutional investors for the purchase and sale of an aggregate of 10,887,097 common shares in a registered direct offering, for expected gross proceeds of approximately $135 million (approximately CAD$171 million ). The company sold the shares at $12.40 (approximately CAD$15.70 ).

 


Debra BorchardtAugust 13, 2020
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Emerald Health Therapeutics, Inc. (OTCQX: EMHTF) reported preliminary, unaudited financial results for the second quarter of 2020 for its 41.3%-owned joint venture, Pure Sunfarms. Gross sales fell from C$32 million ($24 million) in the second quarter of 2019 to C$19 million ($14 million)  in the second quarter of 2020. The company attributed the 40% decrease to a lower average selling price per gram of dried flower.

The net average selling price per gram of dried flower was 29% lower in the three months ended June 30, 2020, compared to the three months ended March 31, 2020.

While prices fell the cost of sales increased. The company blamed this on additional packaging and logistics costs associated with increased retail sales compared to the bulk wholesale model in 2019. The cost per gram sold for the second quarter was lower than the cost per gram in the first quarter of 2020, by 5%, even with the significant increase in retail sales quarter on quarter, which is a reflection of the increase in large format SKUs in the product mix and a lower cost of cultivation.

The breakdown in sales was 57% to provincial boards (flower) and 43% to the wholesale channel (flower and trim). This included nonmonetary transactions with extraction licensed producers in which Pure Sunfarms sold extraction grade dried flower and trim and purchased various forms of distillate from the same counterparties, which will be used in Pure Sunfarms’ future Cannabis 2.0 products.

“Pure Sunfarms’ leadership in low-cost production enables it to offer consumers high-quality cannabis products that are well-priced. This strong competitive positioning against both licensed and unlicensed producers has enabled it to achieve leading market share in Ontario and strong growth in other provinces,” said Riaz Bandali, President and Chief Executive Officer of Emerald. “With its broadening product mix, including forthcoming oils and Cannabis 2.0 products, we anticipate that Pure Sunfarms will continue to build on its competitiveness and accomplishments.”

Earlier this year Emerald Health entered into a settlement agreement Village Farms that settled their prior disputes over Pure Sunfarms. The result is that Village Farms will own 53.5% of Pure Sunfarms (PSF) and Emerald will own 46.5% of Pure Sunfarms. Originally this was a 50/50 joint venture, but then the two companies had a falling out.

Pure Sunfarms Sales For Village Farms

Village Farms (VFF) said its share of sales for Pure Sunfarms fell to $5.5 million for the most recent quarter from last year’s $15 million. It reported that the total Pure Sunfarm sales for the quarter were $14 million versus last year’s $24 million, a decline of 40%.

“The second quarter continues to demonstrate the earnings capacity of Pure Sunfarms as it delivered its sixth consecutive quarter of net income and seventh consecutive quarter of positive EBITDA,” said Michael DeGiglio , CEO Village Farms. “Although retail branded sales were level compared to the first quarter on a dollar basis, retail sales volume increased 89% as Pure Sunfarms’ continued to have great success with its large-format, value offerings, which have consistently ranked among the best-selling dried cannabis products with the Ontario Cannabis Store since launch.


Debra BorchardtMarch 31, 2020
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Emerald Health Therapeutics, Inc. (OTCQX:EMHTF) reported some of its results for the fourth quarter and year of 2019 for its British Columbia-based joint venture, Pure Sunfarms (PSF). The company release the net sales for the year and the fourth quarter of 2019 were $82.8 million and $12.1 million, respectively, compared to $4.9 million and $4.7 million.

The company said this consisted entirely of dried cannabis. PSF also recognized revenue of $8.1 million upon the completion of the Settlement Agreement with Emerald in Q4, but it wasn’t clear if this figure was included in the $12 million figure or if it was in addition to that.

The press release noted that it was providing audited results, yet the net losses or income were nowhere to be found. Neither Sedar or the company’s website gave much information beyond the basics. Expenses did increase with selling, general and administrative expenses for the year and fourth-quarter at $10.4 million and $3.0 million versus 2018’s $3.4 million and 2018’s fourth-quarter of $1.3 million.

“In the first full year of legal recreational cannabis sales in Canada, our Pure Sunfarms joint venture achieved stellar outcomes in operations, sales as well as financial performance,” said Riaz Bandali, President and CEO, Emerald Health Therapeutics. “PSF continues to set standards for cultivation efficiency and overall operating costs in the sector and has demonstrated an ability to deliver a compelling product and value proposition to consumers and other Licensed Producers.”

The company said that Pure Sunfarms sold approximately 26,000 kilograms of flower and trim in 2019 at an average price of approximately $2.90 per gram. Roughly 92% of 2019 sales were to the bulk wholesale channel and 8% to the branded retail channel. Fourth-quarter sales were over 1,100 kilograms averaging over C$3.59 per gram. During the fourth quarter, all cannabis sales were branded retail sales to provincial distribution boards and for the most part, represented replenishment orders during the quarter.

“We are proud of PSF’s success and pleased that we continue to be a significant partner in this tremendous company. We are also very pleased with the licensing and scale-up into production of our two wholly-owned cultivation facilities in Richmond, BC, and St. Eustache, Quebec, which now serve as our source of cannabis supply for our product development efforts as well as for our medical and recreational customers. These two facilities, along with our position in PSF, provide Emerald with three distinct operating assets producing differentiated and complementary products to serve the market.”

The company opted not to discuss its recent settlement with Village Farms and Pure Sunfarms. 

Village Farms had been expected to report its earnings on March 30 but had delayed releasing those figures.


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