Village Farms International (VFF) Q2 2024 earnings summary

Executive summary

• Achieved record consolidated sales of $92.1 million in Q2 2024, up 19% year-over-year, driven by Canadian cannabis and strong fresh produce performance.

• Canadian cannabis sales grew 45% year-over-year to $40.7 million (CAD 55.8 million), with branded retail sales up 38% and international sales up 11%.

• Canadian cannabis delivered positive adjusted EBITDA and operating cash flow, expanding its number two national market share.

• Fresh produce segment tied its second-highest quarterly sales in five years, up 7% year-over-year, despite pricing pressures.

• U.S. cannabis segment faced challenges, with net sales declining and a significant goodwill impairment.

Financial highlights

• Consolidated net loss was $23.5 million, or $0.21 per share, compared to a $1.4 million loss last year, impacted by a $11.9 million U.S. cannabis impairment.

• Adjusted EBITDA was -$3.6 million, compared to -$1.1 million last year, excluding a prior period legal settlement.

• Cash flow from operations improved to $5.7 million (CAD 5.7 million), a significant improvement from a $5.2 million outflow last year.

• Canadian cannabis gross margin was 26% in Q2, impacted by non-branded inventory sales.

• Ended Q2 with $29.7 million in cash and working capital of CAD 6.1 million.

Outlook and guidance

• Expect significantly improved performance for fresh produce in the second half of 2024 due to better pricing and supply dynamics.

• Canadian cannabis gross margin guidance remains at 30%-40%, with ongoing SKU and profitability optimization.

• Netherlands facility on track for first sales in Q1 2025, with strong anticipated demand and no excise tax.

• Canadian cannabis expected to sustain growth with gains across brands, form factors, and geographies, and benefit from near-term international opportunities.