Village Farms International (Nasdaq: VFF) reported a narrower loss in its third-quarter earnings, aided by robust growth in its North American cannabis operations and a turnaround in its fresh produce business, despite a slight decline in overall sales.
The Vancouver-based agriculture company, which specializes in controlled-environment farming, posted a net loss of $1.3 million, or 1 cent per share, improving from a loss of $12.3 million a year earlier. Consolidated sales fell 2% to $69.5 million, but the improved bottom line suggested gains from its strategic pivot to higher-margin cannabis and recovery in produce.
“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,” CEO Michael DeGiglio said in a statement.
DeGiglio expressed optimism for the fresh produce business’ trajectory, particularly in the company’s fight against the Brown Rugose virus, noting advancements in virus-tolerant crops and new technology investments.
In Canada, the company’s cannabis segment improved its net income to $2.9 million, despite a modest decline in net sales.
The smaller U.S. cannabis division, Balanced Health Botanicals, also reported improved profitability for the period. Adjusted EBITDA increased to $200,000 from $10,000, while net income improved to $79,000 from a net loss of $300,000 last year.
The recently launched CBDistillery line also aims to bolster the company’s market share, coupled with efforts to secure a medicinal cannabis license in Texas.
Village Farms’ legacy fresh produce segment, once its primary focus, showed a $22.5 million improvement in adjusted EBITDA year-over-year. The company plans to dedicate more resources to its Delta 2 facility to enhance produce cultivation in 2024.
The earnings barely missed analysts’ average expectations of $70.83 million. Shares wobbled a bit in morning trading on Wednesday, down nearly 2% as of press time.