- Total Sales Grew 20% Year-over-Year: 29% Canadian Cannabis Net Sales Growth; 20% Fresh Produce Sales Growth; 111% International Medicinal Cannabis Sales Growth
- Canadian Cannabis Remained #2 by Market Share and was Fastest Growing LP over Last Year; 22% Year-over-Year Retail Branded Sales Growth
- Commenced Cultivation in Netherlands; Company's First International Recreational Market
- Canadian Cannabis Delivered Positive Adjusted EBITDA, Operating Cash Flow and Net Income
- Fresh Produce Delivered Positive Adjusted EBITDA and Net Income
Management Commentary
"Strong performance in our Fresh Produce business, continued growth in Canadian Cannabis and a doubling of International Medicinal Cannabis Sales drove 20% year-over-year growth in consolidated sales, with both positive Adjusted EBITDA and cash flow from operations during the third quarter,” said Michael DeGiglio, President and Chief Executive Officer, Village Farms International.
"Our Canadian Cannabis business continues to deliver strong growth with leading market share as we realized revenue growth in all sales channels and positive EBITDA and operating cash flow. We were once again the fastest growing producer in Canada over the last year in terms of market share and, for the first time ever, were number one in Quebec, making us the top producer in Canada's two most populus provinces. Out-of-stocks in some cultivars after a strong first half impacted sales growth in the quarter, and non-brand-spec sales that converted inventory to cash impacted gross margin. Gross margin, excluding non-brand-spec sales returned to our target range of 30 to 40%.”
"We are also increasingly benefitting from our international cannabis focus. Exports from Canada increased 111% from the third quarter last year, with continued increases in sales to our German, Australian, and UK partners. Our EU-GMP certification was also recently renewed, and we are optimistic heading into next year about our opportunities to expand our international business with additional markets and customer wins. In the Netherlands, we received final approval to commence cultivation, are in production now, and remain on target to begin sales to participating jurisdictions in the first quarter of 2025.”
"Fresh Produce delivered positive adjusted EBITDA on solid sales growth, demonstrating our expected recovery from the softer pricing we experienced during the second quarter. We are continuing to drive this business toward sustained profitability as we benefit from ongoing yield and cost improvement initiatives.”
"As we close out fiscal year 2024, we are focused on driving more profitable sales in Canadian Cannabis, prioritizing profitable growth as we manage inventory levels with evolving supply dynamics and increasing international demand. We are looking forward to more exciting catalysts for our business in fiscal year 2025, with continued international expansion and contributions from sales in the Netherlands. We believe our Netherlands business has the potential to become a strong contributor of profitability and cash flow generation, driven by more favorable pricing and taxes in the Dutch market compared to Canada.”
Third Quarter Financial Highlights
(All comparable periods are for the third quarter of 2023 unless otherwise stated)
Consolidated
- Consolidated sales increased 20% to $83.4 million from $69.5 million;
- Consolidated net loss was ($0.8 million), or ($0.01) per share, compared with ($1.3 million), or ($0.01) per share;
- Consolidated adjusted EBITDA (a non-GAAP measure) increased 63% to $5.3 million from $3.2 million; and,
- Consolidated cash flow from operations was $4.3 million compared with $12.1 million.
- Net sales increased 27% to $36.5 million (C$49.8 million) from $28.8 million (C$38.7 million);
- Retail branded sales increased 22%, international medicinal sales increased 111%, non-branded (wholesale) sales increased 68% (in Canadian dollars);
- Gross margin was 26% compared with 35%; (in Canadian dollars). This quarter's gross margin was reduced by sales of non-branded spec inventory in the non-branded channel. Excluding the non-branded spec inventory sales, gross margin was 31% (in Canadian dollars);
- Net income was $1.2 million (C$1.6 million) compared with $2.9 million (C$3.8 million);
- Adjusted EBITDA was $4.8 million (C$6.5 million) compared with $4.6 million (C$6.2 million); and,
- Cash flow from operations was $4.5 million (C$6.1 million) compared with $4.8 million (C$6.8 million).
- Net sales were $3.9 million compared with $5.0 million;
- Gross margin was 63% compared with 64%;
- Net loss was ($0.2 million) compared with net income of $0.1 million;
- Adjusted EBITDA was ($0.2 million) compared with $0.2 million.
- Sales increased 20% to $42.8 million from $35.7 million;
- Net income was $0.4 million compared with a net loss of ($1.0 million); and,
- Adjusted EBITDA was $2.3 million compared with $0.8 million.
Canadian Cannabis
- Was the fastest growing producer year-over year by market share1;
- Further expanded its number one national market share position in dried flower1;
- Continued to hold the number two producer position in Canada1;
- Continued to hold the number two national market share position in the pre-roll category1;
- Achieved the number one market share in Quebec2; maintained the number one market share in Ontario1;
- Super Toast remained the third fastest growing brand nationally in Q3 20241; and,
- Launched Neon Lambo cultivar to strong reception in Q4 2024; new category launches planned through the remainder of Q4 2024 and Q1 2025.
2. Based on estimated retail sales from HiFyre, other third parties and provincial boards.
International Cannabis
- Saw year-over-year increases in international medicinal sales to each of Australia, Germany and the United Kingdom for Q3 and year-to-date 2024 (reported within Canadian Cannabis)
- Currently hold the #1 and #3 cultivars in the German market through a supply agreement1
- Acquired the remaining equity ownership interest in Leli Holland, which holds one of 10 licenses to participate in the Netherlands recreational cannabis program, to increase its ownership to 100 percent from 85 percent.
- Completed build out of the Company's first indoor cultivation facility in Drachten, Netherlands. The Drachten facility has five flower rooms and additional space for drying, manufacturing, and packaging of finished goods.
- Began cultivating in the Drachten facility October 2024. The Company continues to expect sales to participating jurisdictions to begin during the first quarter of 2025.
U.S. Cannabis
- The Company was one of 25 participants, and the only operator, selected to participate in the Drug Enforcement Administration's (DEA) upcoming Administrative Law Judge (ALJ) hearing regarding the proposed rescheduling of marijuana in the United States from a Schedule I to a Schedule III drug under the Controlled Substances Act, which is currently expected to take place sometime in January or February 2025.
- The proliferation of unregulated hemp-derived products in the U.S. market, continues to challenge market share for the CBD industry and is causing certain states to impose significant restrictions on intoxicating hemp derived products; and,
- The Company's application for a Texas medicinal marijuana license remains pending review by the Department of Public Services. If awarded, the Company plans to work with its listing authority to structure an acceptable ownership structure.
- Continued to benefit from implementing new cultivation technologies, including artificial intelligence, to drive further operational improvements; and,
- The Company has an ongoing sale process for its Monahans (Permian Basin, Texas) greenhouse facility. It is also evaluating other uses for the site and facility, some of which are outside its historical produce business.
- In April 2024, the Delta, British Columbia Renewable Natural Gas Project began operations, which immediately began contributing incremental net income to the Company.
- During the third quarter of 2024, Village Farms Clean Energy produced net income of $0.3 million through royalty payments received from its clean energy partner.
| (millions except % metrics) | Three Months Ended September 30, | ||||||||
| 2024 | 2023 | ||||||||
| CAD $ | USD $ | CAD $ | USD $ | Change of C $ | |||||
| Total Net Sales | $49.8 | $36.5 | $38.7 | $28.8 | 29% | ||||
| Total Cost of Sales | $36.7 | $26.9 | $25.3 | $18.9 | 45% | ||||
| Gross Profit | $13.1 | $9.6 | $13.4 | $9.9 | -2% | ||||
| Gross Margin % | 26% | 26% | 35% | 35% | -24% | ||||
| SG&A | $10.9 | $8.0 | $10.2 | $7.6 | 7% | ||||
| Net income | $1.6 | $1.2 | $3.8 | $2.9 | -58% | ||||
| Adjusted EBITDA (1) | $6.5 | $4.8 | $6.2 | $4.6 | 5% | ||||
| Adjusted EBITDA Margin (1) | 13% | 13% | 16% | 16% | -19% | ||||
| Cash flow from Operations | $6.1 | $4.5 | $6.8 | $4.8 | -10% | ||||
| (millions except % metrics) | Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | ||||||||
| CAD $ | USD $ | CAD $ | USD $ | Change of C $ | |||||
| Total Net Sales | $156.0 | $114.7 | $110.4 | $82.0 | 41% | ||||
| Total Cost of Sales | $115.4 | $84.8 | $71.1 | $52.9 | 62% | ||||
| Gross Profit | $40.6 | $29.9 | $39.2 | $29.1 | 4% | ||||
| Gross Margin % | 26% | 26% | 36% | 36% | -27% | ||||
| SG&A | $33.3 | $24.4 | $30.0 | $22.3 | 11% | ||||
| Net income | $4.6 | $3.4 | $5.3 | $3.9 | -13% | ||||
| Adjusted EBITDA (1) | $18.6 | $13.6 | $17.9 | $13.3 | 4% | ||||
| Adjusted EBITDA Margin (1) | 12% | 12% | 16% | 16% | -26% | ||||
| Cash flow from Operations | $19.4 | $14.3 | $16.7 | $12.4 | 16% | ||||
Canadian Cannabis' Composition of Sales by Channel
| (millions except % metrics) | Three Months Ended September 30, | ||||||||||||
| 2024 | 2023 | ||||||||||||
| CAD $ | USD $ | CAD $ | USD $ | Change of C $ | |||||||||
| Retail Branded Sales | $61.3 | $44.9 | $50.3 | $37.4 | 22% | ||||||||
| Non-Branded Sales | $10.1 | $7.4 | $6.0 | $4.5 | 68% | ||||||||
| International Sales | $1.9 | $1.4 | $0.9 | $0.7 | 111% | ||||||||
| Other | $0.6 | $0.4 | $0.8 | $0.6 | -25% | ||||||||
| Less: Excise Taxes | ($24.1) | ($17.7) | ($19.3) | ($14.4) | 25% | ||||||||
| Net Sales | $49.8 | $36.5 | $38.7 | $28.8 | 29% | ||||||||
| (millions except % metrics) | Nine Months Ended September 30, | ||||||||||||
| 2024 | 2023 | ||||||||||||
| CAD $ | USD $ | CAD $ | USD $ | Change of C $ | |||||||||
| Retail Branded Sales | $195.9 | $144.0 | $146.3 | $108.7 | 34% | ||||||||
| Non-Branded Sales | $30.1 | $22.1 | $13.1 | $9.7 | 130% | ||||||||
| International Sales | $6.0 | $4.4 | $5.1 | $3.8 | 18% | ||||||||
| Other | $1.8 | $1.3 | $2.0 | $1.5 | -10% | ||||||||
| Less: Excise Taxes | ($77.7) | ($57.1) | ($56.1) | ($41.7) | 39% | ||||||||
| Net Sales | $156.0 | $114.7 | $110.4 | $82.0 | 41% | ||||||||
The Company's financial statements for the three and nine months ended September 30, 2024, as well as the comparative periods for 2023, have been prepared and presented under United States Generally Accepted Accounting Principals ("GAAP”).
RESULTS OF OPERATIONS
(In thousands of U.S. dollars, except per share amounts, and unless otherwise noted)
Consolidated Financial Performance
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Sales | $ | 83,368 | $ | 69,510 | $ | 253,627 | $ | 211,378 | ||||||||
| Cost of sales | (67,660 | ) | (54,889 | ) | (213,158 | ) | (172,958 | ) | ||||||||
| Gross profit | 15,708 | 14,621 | 40,469 | 38,420 | ||||||||||||
| Selling, general and administrative expenses | (16,540 | ) | (15,822 | ) | (52,593 | ) | (49,980 | ) | ||||||||
| Interest expense | (784 | ) | (988 | ) | (2,606 | ) | (3,532 | ) | ||||||||
| Interest income | 229 | 262 | 757 | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
| ||||||||||||