Village Farms Posts Strong Q3 Results Driven By 12th Consecutive Quarter of Pure Sunfarms' Positive Adjusted EBITDA

Village Farms International, Inc. VFF VFF released its third-quarter financial results Tuesday, reporting net income of $5.3 million, compared to $2.0 million in the same period of the prior year.

Third Quarter Financial Summary

• Total net sales reached $27.5 million, versus $17 million in the same quarter of 2020;
• Gross margin was 44%, compared to 34% in the same period of the previous year;
• Adjusted EBITDA was a gain of $8.6 million, which compared to $4.3 million in the corresponding quarter of 2020;
• Adjusted EBITDA margin was 31%, versus 25% in the prior year period;
• Share-based compensation amounted to $0.2 per share, compared to $0.0 in the same period of 2020.

Management Commentary

"Our strong third quarter results were driven by another record performance from our Canadian cannabis business, Pure Sunfarms, as well as a partial quarter's contribution from the acquisition of Balanced Health Botanicals, and improved results in our Village Farms Fresh Produce business," Michael DeGiglio, CEO of Village Farms stated. "Pure Sunfarms achieved record net sales and adjusted EBITDA since launching its retail branded products two years ago, with a healthy 44% gross margin, driven by our focus on profitable market share, leading cost of production and leadership in premium quality flower.

DeGiglio added that the purchase of Balanced Health Botanicals during the quarter, resulted in combined Canadian and U.S. sales of $31.2 million, making up for 43% of the company’s total sales.

“Balanced Health not only provides a growing and profitable platform with exceptional cannabis experience for the U.S. CBD market opportunity but also the potential for expansion across all cannabinoid products, including high-THC products, as permissible under currently evolving legislation,” DeGiglio pointed out.

Pure Sunfarms Third Quarter and Other Recent Highlights

• Pure Sunfarms achieved record revenue, gross margin and adjusted EBITDA since the launch of its retail branded products in late 2019:
• 53% year-over-year growth and 13% sequential growth in total net sales to C$34.5 million (US$27.4 million);
• 44% gross margin, above the Company's stated target range of 30 to 40%;
• 93% year-over-year and 20% sequential growth in Adjusted EBITDA to C$10.9 million (US$8.6 million), the 12th consecutive quarter of positive Adjusted EBITDA;
• Maintained leading market share positions in several key markets in Canada;
• Completed its first export shipment of cannabis, supplying a variety of high-quality, high-THC dried flower products to Village Farms' minority interest investee, Australia-based Altum International Pty Ltd. for the Australian medicinal cannabis market.

Price Action

Village Farms’ shares were trading 5.76% higher at $8.82 per share during Tuesday’s pre-market session.

Photo: Courtesy of Esteban Lopez on Unsplash