Village Farms Cannabis Thrives As Produce Wilts

Village Farms International, Inc.  (NASDAQ: VFF) (TSX: VFF)  announced its financial results for the first quarter ended March 31, 2022, as revenue rose 32% to $32 million over last year’s $24 million for the same time period. the company also delivered a net income of $1 million versus last year’s net loss of $2.8 million.

Village Farms said on a consolidated basis sales increased 34% year-over-year to $70.2 million from $52.4 million and the consolidated net loss was ($6.5 million), or ($0.07) per share, compared with ($7.4 million), or ($0.10) per share. The revenues were in line with Yahoo Finance’s average analyst estimate for sales of $70.2 million.

“The first quarter of 2022 once again demonstrated the strength and earnings power of both our Canadian and U.S. Cannabis businesses,” said Michael DeGiglio, Chief Executive Officer, Village Farms International. “In what is a typically soft season for retail sales in Canada, both Pure Sunfarms and Rose gained share in their respective focus markets and delivered a 14th consecutive quarter of positive adjusted EBITDA for Canadian Cannabis. Pure Sunfarms’ products continue to resonate with consumers, as our continued focus on quality, innovation and new product launches strengthen what has become one of the most respected and trusted brands in the Canadian market. In Quebec, we estimate that Rose is now a top three Licensed Producer by sales following strong market share gains since retail launch early last year. Rose is well-positioned to continue this momentum throughout 2022, further benefitting from the many opportunities for collaboration with Pure Sunfarms. With our Canadian Cannabis business continuing to grow sales and market share domestically, we look forward to capitalizing on Pure Sunfarms’ recent EU GMP certification to commence exportation to international markets.”

Produce Wilts

Despite cannabis sales turning in a solid performance, Village Farms noted that the net loss was primarily due to inflationary pressures on the produce business. Sales increased 19% to $41.4 million but the adjusted EBITDA was negative.

“As our Cannabis operations continued to deliver strong growth and profitability, Village Farms Fresh (Produce) faced one of the most difficult macro environments in its history. Strong revenue growth was more than offset by the inflationary impact of freight, labor, fertilizer, packaging and other cost increases. An industry-wide supply imbalance limited the producer’s ability to pass along pricing to customers. We are evaluating new initiatives, including marketing partnerships to build more scale, spread costs and diversify product offerings. However, even in the currently negative EBITDA environment, we maintain the highest conviction that our U.S. cultivation footprint is a powerhouse opportunity for legal recreational cannabis when we can participate.”

Mr. DeGiglio concluded, “Consumer takeaway trends during the first quarter further validated our brand and cultivation strategies. We expect continued momentum throughout 2022 and beyond as each of our cannabis businesses continues to launch innovative new products that address evolving consumer demand. We remain focused on seizing opportunities to continue to deliver top-tier profitability and market share in the high-growth global cannabis market.”

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