Village Farms International, Inc. (NASDAQ: VFF) announced its financial results for the fourth quarter and year ending December 31, 2022. Village Farms delivered revenue fell 5% to $69.5 million from last year’s $72.8 million. It just barely missed the Yahoo Finance average analyst estimate for revenue of $70 million. The company blamed the drop on a stronger U.S. dollar compared to the Canadian dollar decreasing reported U.S. sales for our Canadian Cannabis operations by ($2.4 million).
The company also reported a net loss of ($49.3 million), or ($0.54) per share, compared with a net income of $2.1 million, or $0.03 per share. This also missed the Yahoo estimate for earnings of ($0.09). The company said that the net loss included an impairment of $13.5 million related to the acquisition of Balanced Health Botanicals, a write-down in the Canadian Cannabis business of $11.0 million (C$15.0 million) of lower potency flower inventory that was more than 12 months old, with the write-down partially attributable to lower pricing in the non-branded market, and provision for income taxes of $30.4 million. The decrease in net income was also attributed to reduced operating performance from VF Fresh and Canadian Cannabis, partially offset by higher operating profit from U.S. Cannabis for the three months ended September 30, 2022 as compared to September 30, 2021.
“The fourth quarter of 2022 once again demonstrated the momentum in our Canadian Cannabis business as investments in new brands and product innovations contributed to 25% year-over-year growth in retail branded sales and our 17th consecutive quarter of positive adjusted EBITDA,” said Michael DeGiglio, Chief Executive Officer, Village Farms. “We achieved a major milestone in 2022: Our Canadian Cannabis business became the number two top-selling cannabis company nationally1, growing market share sequentially every quarter during 2022. We have maintained this number two position in the first two months of 2023 despite distressed sales of biomass and ongoing promotional activity in certain parts of the Canadian market. Our strong brand recognition, innovation, and low-cost, consistent cultivation are a powerful combination in a market expected to grow steadily over the next three to five years.”
DeGiglio added, “During 2023, we expect strong commercial execution, continuous innovation and sales to export markets will deliver another year of market-leading results in our Canadian Cannabis business. At the same time, we are focused on continued gains in production efficiencies and expense improvements. In our U.S. Cannabis business, Balanced Health Botanicals continues to perform well in a challenging consumer market for CBD, based on its leading CBDistillery® brand and innovative product introductions, including the strong performance of its hemp-derived THC Synergy+ line of products. This, combined with prudent cost management, drove positive EBITDA for our U.S. Cannabis business for the fourth quarter.”
Switching over to produce, Village Farms reported sales of $36.2 million compared with $38.4, primarily due to a smaller growing area in Texas in the fourth quarter of 2022, lower production from its Canadian tomato greenhouse due to the Brown Rugose virus in the fourth quarter of 2022 and lower third-party supplier volume in the fourth quarter of 2022 due to loss of some contracts in late 2022 that have been replaced in 2023 with new growers.