In the news release, Village Farms International Reports First Quarter 2022 Financial Results, issued
Village Farms International Reports First Quarter 2022 Financial Results
- Consolidated Revenue Increased 34% Year-Over-Year to
$70.2 Million ; Net Loss of$6.5 Million Primarily Due to Inflationary Pressures on Produce Business - Canadian Cannabis Business Contributes Record 14th Consecutive Quarter of Positive Adjusted EBITDA
- Pure Sunfarms Remains Top-Selling Dried
Flower Brand inOntario ,Alberta andBritish Columbia - Integrations of Balanced Health Botanicals and Rose Lifescience Proceeding Well with Each Contributing Positive Adjusted EBITDA
"The first quarter of 2022 once again demonstrated the strength and earnings power of both our Canadian and
"Our
"As our Cannabis operations continued to deliver strong growth and profitability, Village Farms Fresh (Produce) faced one of the most difficult macro environments in its history. Strong revenue growth was more than offset by the inflationary impact of freight, labor, fertilizer, packaging and other cost increases. An industry-wide supply imbalance limited the producer's ability to pass along pricing to customers. We are evaluating new initiatives, including marketing partnerships to build more scale, spread costs and diversify product offerings. However, even in the currently negative EBITDA environment, we maintain the highest conviction that our
- Consolidated sales increased 34% year-over-year to
$70.2 million from$52.4 million ; - Consolidated net loss was (
$6.5 million ), or ($0.07 ) per share, compared with ($7.4 million ), or ($0.10 ) per share; and, - Consolidated adjusted EBITDA was negative (
$6.1 million ) compared with positive adjusted EBITDA of$0.4 million .
- Total Cannabis segment net sales increased 65% year-over-year to
$28.8 million , representing 41% of totalVillage Farms sales; and, - Total Cannabis segment adjusted EBITDA increased 9% year-over-year to
$2.7 million .
Canadian Cannabis (Pure Sunfarms and Rose LifeScience) Financial Summary for the Three Months Ended
- Canadian Cannabis net sales increased 25% year-over-growth with a gross margin of 34% (within the Company's stated target range) and adjusted EBITDA of
$2.1 million (C$2.7 million ).
(millions except % metrics) | Three Months Ended | ||||
2022 | 2021 | Change of C$ | |||
C$ | US$ | C$ | US$ | ||
Total Gross Sales | +32% | ||||
Total | +25% | ||||
Total Cost of Sales 1 | +15% | ||||
Gross Margin 1 | +50% | ||||
Gross Margin % 1 | 34% | 34% | 29% | 29% | +17% |
SG&A | -75% | ||||
Share-based compensation | +67% | ||||
Net income (loss) | ( | ( | +135% | ||
Adjusted EBITDA 2 | -15% | ||||
Adjusted EBITDA Margin 2 | 10% | 10% | 14% | 14% | -29% |
|
Three months ended | ||
Channel | 2022 | 2021 |
Retail, Flower | 67% | 71% |
Retail, Derivatives | 8% | 13% |
Wholesale, Flower and Trim | 25% | 16% |
1. Excludes Rose LifeScience commission-based revenue. |
U.S. Cannabis net sales were$7.0 million , with a gross margin of 67% and adjusted EBITDA of$0.6 million . There are no year-over-year comparisons since Balanced Health Botanicals was acquired byVillage Farms onAugust 16, 2021 .
- Sales increased 19% to
$41.4 million ; and adjusted EBITDA was negative ($6.2 million ).
- Pure Sunfarms received
EU GMP certification for its 1.1 million square foot Delta 3 cannabis production facility, permitting Pure Sunfarms to exportEU GMP-certified medical cannabis to importers and distributors in international markets that requireEU GMP certification; - Pure Sunfarms launched 29 new SKUs across four product categories and remained the top-selling brand of dried flower products in key markets of
Ontario ,Alberta andBritish Columbia *; - Based on third-party data, it is estimated Rose LifeScience is a top-three Licensed Producer in
Quebec ; and, - The integrations of Balanced Health Botanicals (acquired in the third quarter of 2021) and Rose LifeScience (acquired in the fourth quarter of 2021) are proceeding well. Each company expanded its product offerings in the first quarter of 2022:
Balanced Health's brand, CBDistillery, launched its hemp extract in more than 1,000 Pet Smart stores in theU.S. through its partnership with leading pet supplement brand, Zesty Paws; and,- Rose launched 14 new cannabis SKUs and shipments of own brands increased 85% compared to the fourth quarter of 2021.
*Based on OCS market data for the quarter ended
The Company's financial statements for the three months ended
(In thousands of
For the three months ended March 31, | ||||||||
2022 (3) | 2021 (3) | |||||||
Sales | $ | 70,156 | $ | 52,396 | ||||
Cost of sales | (60,252) | (50,089) | ||||||
Gross margin | 9,904 | 2,307 | ||||||
Selling, general and administrative expenses | (16,971) | (8,092) | ||||||
Share-based compensation | (964) | (1,998) | ||||||
Interest expense | (683) | (741) | ||||||
Interest income | 110 | 3 | ||||||
Foreign exchange gain (loss) | 319 | (504) | ||||||
Other expense, net | (8) | (69) | ||||||
Gain on disposal of assets | — | — | ||||||
Recovery of income taxes | 1,666 | 1,839 | ||||||
Loss from consolidated entities | (6,627) | (7,255) | ||||||
Less: net loss attributable to non-controlling interests, net of tax | 162 | — | ||||||
Loss from equity method investments | (52) | (127) | ||||||
Net loss attributable to | $ | (6,517) | $ | (7,382) | ||||
Adjusted EBITDA (4) | $ | (6,111) | $ | 404 | ||||
Basic loss per share | $ | (0.07) | $ | (0.10) | ||||
Diluted loss per share | $ | (0.07) | $ | (0.10) |
3. For the three months ended 4. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the Company's 70% interest in Rose LifeScience since acquisition and 65% interest in VFH. |
We caution that our results of operations for the three months ended
(In thousands of
For the Three Months Ended | |||||||||||||||||||||||
VF Fresh | Cannabis- | Cannabis- | Clean | Corporate | Total | ||||||||||||||||||
Sales | $ | 41,349 | $ | 21,769 | $ | 7,043 | $ | (5) | $ | — | $ | 70,156 | |||||||||||
Cost of sales | (45,520) | (12,259) | (2,331) | (142) | — | (60,252) | |||||||||||||||||
Selling, general and administrative expenses | (3,140) | (6,933) | (4,296) | (32) | (2,570) | (16,971) | |||||||||||||||||
Share-based compensation | — | (367) | (95) | — | (502) | (964) | |||||||||||||||||
Other (expense) income, net | (30) | (746) | — | (6) | 520 | (262) | |||||||||||||||||
Recovery of (provision for) income taxes | 1,715 | (639) | — | — | 590 | 1,666 | |||||||||||||||||
(Loss) income from consolidated entities | (5,626) | 825 | 321 | (185) | (1,962) | (6,627) | |||||||||||||||||
Less: net loss attributable to non-controlling interests, net of tax | — | 162 | — | — | — | 162 | |||||||||||||||||
Loss from equity method investments | — | — | (52) | — | — | (52) | |||||||||||||||||
Net (loss) income | (5,626) | 987 | 269 | (185) | (1,962) | (6,517) | |||||||||||||||||
Adjusted EBITDA (6) | $ | (6,201) | $ | 2,104 | $ | 580 | $ | (59) | $ | (2,535) | $ | (6,111) | |||||||||||
Basic (loss) income per share | $ | (0.06) | $ | 0.01 | $ | 0.00 | $ | (0.00) | $ | (0.02) | $ | (0.07) | |||||||||||
Diluted (loss) income per share | $ | (0.06) | $ | 0.01 | $ | 0.00 | $ | (0.00) | $ | (0.02) | $ | (0.07) |
For the Three Months Ended | |||||||||||||||||||||||
VF Fresh | Cannabis- | Cannabis- | Clean | Corporate | Total | ||||||||||||||||||
Sales | $ | 34,867 | $ | 17,460 | $ | — | $ | 69 | $ | — | $ | 52,396 | |||||||||||
Cost of sales | (34,150) | (15,248) | — | (691) | — | (50,089) | |||||||||||||||||
Selling, general and administrative expenses | (2,551) | (3,966) | — | (32) | (1,543) | (8,092) | |||||||||||||||||
Share-based compensation | — | (1,094) | — | — | (904) | (1,998) | |||||||||||||||||
Other expense, net | (256) | (630) | — | (12) | (413) | (1,311) | |||||||||||||||||
Recovery of income taxes | 505 | 644 | — | — | 690 | 1,839 | |||||||||||||||||
Loss from consolidated entities | (1,585) | (2,834) | — | (666) | (2,170) | (7,255) | |||||||||||||||||
Less: net loss attributable to non-controlling interests, net of tax | — | — | — | — | — | — | |||||||||||||||||
Loss from equity method investments | — | — | (127) | — | — | (127) | |||||||||||||||||
Net loss | (1,585) | (2,834) | (127) | (666) | (2,170) | (7,382) | |||||||||||||||||
Adjusted EBITDA (6) | $ | (492) | $ | 2,534 | $ | (79) | $ | (16) | $ | (1,543) | $ | 404 | |||||||||||
Basic loss per share | $ | (0.02) | $ | (0.04) | $ | (0.00) | $ | (0.01) | $ | (0.03) | $ | (0.10) | |||||||||||
Diluted loss per share | $ | (0.02) | $ | (0.04) | $ | (0.00) | $ | (0.01) | $ | (0.03) | $ | (0.10) |
5. For the three months ended 6. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the Company's 70% interest in Rose LifeScience since acquisition and 65% interest in VFH. |
A detailed discussion of our consolidated and segment results can be found in the 10Q MD&A on the
The following table reflects a reconciliation of net income to Adjusted EBITDA, as presented by the Company:
For the three months ended March 31, | ||||||||
(in thousands of | 2022 (9) | 2021 (9) | ||||||
Net loss | $ | (6,517) | $ | (7,382) | ||||
Add: | ||||||||
Amortization | 2,702 | 3,412 | ||||||
Foreign currency exchange (gain) loss | (319) | 504 | ||||||
Interest expense, net | 573 | 738 | ||||||
Recovery of income taxes | (1,666) | (1,839) | ||||||
Share-based compensation | 964 | 1,998 | ||||||
Interest expense for JVs | 13 | 14 | ||||||
Amortization for JVs | 94 | 34 | ||||||
Foreign currency exchange loss for JVs | 29 | — | ||||||
Purchase price adjustment (10) | (2,050) | 2,925 | ||||||
Amortization of deferred financing | 66 | — | ||||||
Adjusted EBITDA (11) | $ | (6,111) | $ | 404 | ||||
Adjusted EBITDA for JVs (12) | $ | (25) | $ | (79) | ||||
Adjusted EBITDA excluding JVs | $ | (6,086) | $ | 483 |
9. For the three months ended 10. The purchase price adjustment reflects the non-cash accounting charge to cost of sales resulting from the revaluation of Pure Sunfarms' inventory to fair value at the acquisition date. 11. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the 70% interest in Rose LifeScience since acquisition and 65% interest in VFH. 12. The Adjusted EBITDA for JVs consists of the VF Hemp Adjusted EBITDA for the three months ended
|
(In thousands of (Unaudited) | |||||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | $ | 34,623 | $ | 53,417 | |
Restricted cash | 6,810 | 5,250 | |||
Trade receivables | 35,857 | 34,360 | |||
Inventories | 79,611 | 68,677 | |||
Note receivable - joint venture | 3,207 | - | |||
Other receivables | 582 | 616 | |||
Income tax receivable | 3,631 | 2,430 | |||
Prepaid expenses and deposits | 10,662 | 10,209 | |||
Total current assets | 174,983 | 174,959 | |||
Non-current assets | |||||
Property, plant and equipment | 220,616 | 215,704 | |||
Note receivable - joint venture | - | 3,256 | |||
Investment in in minority interests | 2,109 | 2,109 | |||
119,597 | 117,533 | ||||
Intangibles | 26,512 | 26,394 | |||
Deferred tax asset | 18,682 | 16,766 | |||
Right-of-use assets | 7,195 | 7,609 | |||
Other assets | 6,088 | 2,581 | |||
Total assets | $ | 575,782 | $ | 566,911 | |
LIABILITIES | |||||
Current liabilities | |||||
Line of credit | $ | 9,880 | $ | 7,760 | |
Trade payables | 23,998 | 22,597 | |||
Current maturities of long-term debt | 10,585 | 11,416 | |||
Accrued liabilities | 15,659 | 14,168 | |||
Accrued sales taxes | 9,235 | 3,899 | |||
Accrued loyalty program | 1,728 | 2,098 | |||
Lease liabilities - current | 872 | 962 | |||
Other current liabilities | 1,549 | 1,413 | |||
Total current liabilities | 73,506 | 64,313 | |||
Non-current liabilities | |||||
Long-term debt | 49,749 | 50,419 | |||
Deferred tax liability | 21,257 | 18,657 | |||
Lease liabilities - non-current | 6,366 | 6,711 | |||
Other liabilities | 2,076 | 1,973 | |||
Total liabilities | 152,954 | 142,073 | |||
Commitments and contingencies | |||||
MEZZANINE EQUITY | |||||
Redeemable non-controlling interests | 16,271 | 16,433 | |||
SHAREHOLDERS' EQUITY | |||||
Common stock | 365,737 | 365,561 | |||
Additional paid in capital | 10,333 | 9,369 | |||
Accumulated other comprehensive loss | 10,225 | 6,696 | |||
Retained earnings | 20,262 | 26,779 | |||
Total shareholders' equity | 406,557 | 408,405 | |||
Total liabilities and shareholders' equity | $ | 575,782 | $ | 566,911 |
(In thousands of (Unaudited) | ||||||
Three Months Ended | ||||||
2022 | 2021 | |||||
Sales | $ | 70,156 | $ | 52,396 | ||
Cost of sales | (60,252) | (50,089) | ||||
Gross margin | 9,904 | 2,307 | ||||
Selling, general and administrative expenses | (16,971) | (8,092) | ||||
Share-based compensation | (964) | (1,998) | ||||
Interest expense | (683) | (741) | ||||
Interest income | 110 | 3 | ||||
Foreign exchange gain (loss) | 319 | (504) | ||||
Other expense | (8) | (69) | ||||
Loss before taxes and loss from equity method investments | (8,293) | (9,094) | ||||
Recovery of income taxes | 1,666 | 1,839 | ||||
Loss from equity method investments | (52) | (127) | ||||
Loss including non-controlling interests | (6,679) | (7,382) | ||||
Less: net loss attributable to non-controlling interests, net of tax | 162 | - | ||||
Net loss attributable to | $ | (6,517) | $ | (7,382) | ||
Basic loss per share attributable to | $ | (0.07) | $ | (0.10) | ||
Diluted loss per share attributable to | $ | (0.07) | $ | (0.10) | ||
Weighted average number of common shares used in the computation of net loss per share (in thousands): | ||||||
Basic | 88,376 | 76,022 | ||||
Diluted | 88,376 | 76,022 | ||||
Loss including non-controlling interests | $ | (6,679) | $ | (7,382) | ||
Less: net loss attributable to non-controlling interests, net of tax | 162 | - | ||||
Net loss attributable to | $ | (6,517) | $ | (7,382) | ||
Other comprehensive loss: | ||||||
Foreign currency translation adjustment | 461 | 1,711 | ||||
Comprehensive loss attributable to | $ | (6,056) | $ | (5,671) |
Consolidated Statements of Cash Flows (In thousands of (Unaudited) | |||||
Three Months Ended | |||||
2022 | 2021 | ||||
Cash flows used in operating activities: | |||||
Net (loss) income | $ | (6,517) | $ | (7,382) | |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||||
Depreciation and amortization | 3,128 | 3,225 | |||
Amortization of deferred charges | 66 | 78 | |||
Share of loss from joint ventures | 52 | 127 | |||
Interest expense | 683 | 741 | |||
Interest income | (110) | (3) | |||
Interest paid on long-term debt | (747) | (851) | |||
Unrealized foreign exchange gain/loss | 113 | - | |||
Non-cash lease expense | (116) | (128) | |||
Share-based compensation | 964 | 1,998 | |||
Deferred income taxes | (2,062) | (2,538) | |||
Changes in non-cash working capital items | (5,091) | (9,703) | |||
Net cash used in operating activities | (9,637) | (14,436) | |||
Cash flows used in investing activities: | |||||
Purchases of property, plant and equipment | (5,263) | (4,706) | |||
Note receivable | (3,442) | - | |||
Advances to joint ventures | - | (5) | |||
Investment in minority interests | - | (500) | |||
Net cash used in investing activities | (8,705) | (5,211) | |||
Cash flows provided by financing activities: | |||||
Proceeds from borrowings | 2,120 | 4,176 | |||
Repayments on borrowings | (983) | (4,223) | |||
Proceeds from issuance of common stock and warrants | - | 135,000 | |||
Issuance costs | - | (7,511) | |||
Proceeds from exercise of stock options | 176 | 125 | |||
Proceeds from exercise of warrants | - | 17,663 | |||
Payments on capital lease obligations | (301) | (155) | |||
Payment of note payable related to acquisition | - | (15,498) | |||
Net cash provided by financing activities | 1,012 | 129,577 | |||
Effect of exchange rate changes on cash and cash equivalents | 96 | 178 | |||
Net increase in cash and cash equivalents | (17,234) | 110,108 | |||
Cash and cash equivalents, beginning of period | 58,667 | 25,679 | |||
Cash and cash equivalents, end of period | $ | 41,433 | $ | 135,787 |
This press release is intended to be read in conjunction with the Company's Consolidated Financial Statements ("Financial Statements") and Management's Discussion & Analysis ("MD&A") for the three months and year ended
In
As of
For those unable to participate in the conference call at the scheduled time, it will be archived for replay both by telephone and via the Internet beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial (416) 764-8677 or (888) 390-0541 and enter the passcode 334813 followed by the pound key. The telephone replay will be available until
In
In the US, wholly-owned Balanced Health Botanicals is one of the leading CBD brands and e-commerce platforms in the country. Subject to compliance with all applicable US federal and state laws and stock exchange rules,
Internationally,
This Press Release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is subject to the safe harbor created by those sections. This Press Release also contains "forward-looking information" within the meaning of applicable Canadian securities law. We refer to such forward-looking statements and forward-looking information collectively as "forward-looking statements". Forward-looking statements may relate to the Company's future outlook or financial position and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, expansion plans, litigation, projected production, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the Company. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the Company, the greenhouse vegetable industry or the cannabis industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms as "outlook", "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "try", "estimate", "predict", "potential", "continue", "likely", "schedule", "objectives", or the negative or grammatical variation thereof or other similar expressions concerning matters that are not historical facts. The forward-looking statements in this Press Release are subject to risks that may include, but are not limited to: our limited operating history, including that of
The Company has based these forward-looking statements on factors and assumptions about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. Although the forward-looking statements contained in this Press Release are based upon assumptions that management believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the Company's control, that may cause the Company's or the industry's actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the factors contained in the Company's filings with securities regulators, including this Press Release. In particular, we caution you that our forward-looking statements are subject to the ongoing and developing circumstances related to the COVID-19 pandemic, which may have a material adverse effect on our business, operations and future financial results.
When relying on forward-looking statements to make decisions, the Company cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future results, performance, achievements, prospects and opportunities. The forward-looking statements made in this Press Release relate only to events or information as of the date on which the statements are made in this Press Release. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
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