Village Farms International (VFF) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw consolidated sales grow 20% year-over-year to $83.4 million, driven by Canadian cannabis, fresh produce, and 111% growth in international medicinal cannabis sales.

• Both Canadian cannabis and fresh produce segments delivered positive adjusted EBITDA and net income contributions.

• Canadian cannabis achieved number one market share in Quebec and Ontario, and remains number two overall in Canada, with the fastest market share growth among LPs.

• Leli Holland subsidiary in the Netherlands began cultivation in October, marking entry into the first international recreational market, with first sales expected in Q1 2025.

• U.S. cannabis business showed early signs of stabilization but faced market share challenges from unregulated hemp-derived products.

Financial highlights

• Net loss narrowed to $800,000 from $1.3 million last year, with both Canadian cannabis and fresh produce posting positive net income.

• Adjusted EBITDA rose 65% to $5.3 million, with positive contributions from both main segments.

• Fresh produce sales increased 20% to $42.8 million, with gross margin up 400 basis points year-over-year to 8%.

• Canadian cannabis net sales grew 27% year-over-year to $36.5 million, with retail branded sales up 20% to CAD 37.2 million.

• U.S. cannabis sales were $3.9 million with a 63% gross margin, but net sales declined from $5.0 million last year.

• Cash flow from operations was $4.2 million, with cash of $28.7 million and working capital of $65.4 million at quarter end.

Outlook and guidance

• Focus remains on profitability, higher-margin sales, and prudent capital allocation, especially in light of high Canadian excise taxes.

• No immediate plans to expand Canadian capacity; resources are being prioritized for European growth, particularly in the Netherlands.

• Netherlands business expected to contribute to profitability and cash flow in 2025 due to favorable pricing and taxes.

• Expectation of normalized inventory levels in Canada by early Q1 2025.

• Continued international expansion anticipated, with new markets and customer wins targeted for 2025.