– Pure Sunfarms Remains Top Dried
Cannabis Brand with the Ontario Cannabis Store and Continues to
Lead in Low-Cost Greenhouse Production as it Prepares for Imminent
Launch of Cannabis 2.0 Products –
VANCOUVER, BC, Aug. 12, 2020 /CNW/ - Village Farms
International, Inc. ("Village Farms" or the "Company") (NASDAQ:
VFF) (TSX: VFF) today announced its financial results for the
second quarter ended June 30,
2020. All figures are in US dollars unless otherwise
indicated. On June 30, 2020,
Village Farms had a majority (non-controlling) interest of 58.7% of
Pure Sunfarms Corp. ("Pure Sunfarms").
The Company's financial statements for the three and six months
ended June 30, 2020, as well as the
comparative period for 2019, have been prepared and presented under
United States Generally Accepted Accounting Principals
("GAAP").
Village Farms' Financial Summary and Corporate Highlights for
the Three and Six months Ended June 30,
2020
($US millions except
per share metric)
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
2019
|
Change
|
|
2020
|
2019
|
Change
|
Produce
Sales
|
$47.6
|
$41.3
|
+15%
|
|
$79.7
|
$73.2
|
+9%
|
Net
Income1
|
($0.1)
|
$3.72
|
-103%
|
|
$4.1
|
$10.2
|
-60%
|
Income Per
Share1
|
($0.00)
|
$0.082
|
-100%
|
|
$0.07
|
$0.21
|
-67%
|
Adjusted
EBITDA4
|
$2.3
|
$4.6
|
-50%
|
|
$3.4
|
$6.0
|
-43%
|
1.
|
Net income includes
the net income contribution from Pure Sunfarms of US$0.5 million
and US$8.1 million (Village Farms' proportionate share) for the
three-month periods ended June 30, 2020 and 2019, respectively and
US$4.0 million and US$10.7 million (Village Farms' proportionate
share) for the six-month periods ended June 30, 2020 and 2019,
respectively.
|
2.
|
Net income for the
six months ended June 30, 2019 includes a one-time gain on the sale
of Delta 2 greenhouse facility of $13.6 million.
|
3.
|
Net income for the
six months ended June 30, 2020 includes a $4.7 million gain on
receipt of Pure Sunfarms shares from Emerald Health Therapeutics as
per the Settlement Agreement.
|
4.
|
Adjusted EBITDA
includes the positive EBITDA contribution from Pure Sunfarms of
US$1.1 million and US$9.4 million (Village Farms' proportionate
share) for the three-month periods ended June 30, 2020 and 2019,
respectively and US$3.9 million and US$12.7 million (Village Farms'
proportionate share) for the six-month periods ended June 30, 2020
and 2019, respectively. Adjusted EBITDA includes the
Company's majority non-controlling interest in Pure Sunfarms and
65% interest in VFH. Adjusted EBITDA is not a recognized earnings
measure and does not have a standard meaning prescribed in by GAAP.
See "Non-GAAP Measures" below.
|
- Executed a binding agreement to acquire 6.6% of Australia-based Altum International Pty Ltd,
one of the Asia-Pacific's leading
cannabinoid platforms, with the option to increase its ownership at
a future date on similar terms;
- Acquired 16% of DutchCanGrow, a Netherlands-based cannabis enterprise pursuing
the opportunity to become one of a limited number of licensed
cannabis growers (up to a maximum of 10) when the Dutch government
permits the first legal recreational cannabis market in
Europe under its 10-city
Experiment to Investigate Closed Cannabis Supply Chains;
- Increased its ownership of Pure Sunfarms to 58.7% as of
April 2, 2020; and
- Extended its non-revolving term loan with Farm Credit Canada
(US$29.8 million outstanding at
June 30, 2020) to a maturity date of
April 1, 2025 from May 1, 2021, at a lower interest rate and monthly
principal payments.
Pure Sunfarms' Financial Summary for the Three and Six Months
Ended June 30, 2020 (Before Village
Farms' Proportionate Share)
(millions except cost
per gram and % metrics)
|
Three Months Ended
June 30,
|
|
|
2020
|
2019
|
Change of
C$
|
|
C$
|
US$
|
C$
|
US$
|
|
Total Gross
Sales
|
$19.3
|
$14.0
|
$32.4
|
$24.2
|
-40%
|
Total Net
Sales
|
$12.9
|
$9.4
|
$32.4
|
$24.2
|
-60%
|
Retail Branded Sales
(net)
|
$8.6
|
$6.3
|
-
|
-
|
N/A
|
Wholesale
Sales
|
$4.3
|
$3.1
|
$32.4
|
$24.2
|
-87%
|
"All-in" Cost per
Gram (incl. depreciation)
|
$0.84
|
$0.61
|
$0.65
|
$0.49
|
-29%
|
Gross
Margin
|
33%
|
33%
|
84%
|
84%
|
-61%
|
SG&A
|
$2.6
|
$1.9
|
$2.4
|
$1.8
|
+8%
|
Net income
|
$1.1
|
$0.8
|
$17.4
|
$13.0
|
-94%
|
EBITDA
|
$2.5
|
$1.8
|
$25.2
|
$18.9
|
-90%
|
EBITDA
Margin
|
19%
|
19%
|
78%
|
78%
|
-76%
|
(millions except cost
per gram and % metrics)
|
Six Months Ended
June 30,
|
|
|
2020
|
2019
|
Change of
C$
|
|
C$
|
US$
|
C$
|
US$
|
|
Total Gross
Sales
|
$40.8
|
$29.8
|
$46.7
|
$35.0
|
-13%
|
Total Net
Sales
|
$30.9
|
$22.5
|
$46.7
|
$35.0
|
-34%
|
Retail Branded Sales
(net)
|
$17.1
|
$12.4
|
-
|
-
|
N/A
|
Wholesale
Sales
|
$13.8
|
$10.1
|
$46.7
|
$35.0
|
-70%
|
"All-in" Cost per
Gram (incl. depreciation)
|
$0.83
|
$0.61
|
$0.82
|
$0.62
|
-1%
|
Gross
Margin
|
44%
|
44%
|
78%
|
78%
|
-56%
|
SG&A
|
$5.8
|
$4.3
|
$3.7
|
$2.8
|
+57%
|
Net
income5
|
$9.6
|
$7.0
|
$23.2
|
$17.4
|
-59%
|
EBITDA
|
$9.2
|
$6.7
|
$33.8
|
$25.3
|
-73%
|
EBITDA
Margin
|
30%
|
30%
|
72%
|
72%
|
-58%
|
5.
|
Net income includes
C$6.0 million of debt forgiveness income as an outcome of the March
2, 2020 Settlement Agreement between Pure Sunfarms, Emerald Health
Therapeutics and the Company.
|
Pure Sunfarms' Recent Operating Highlights
- Retail branded sales volumes for the second quarter of 2020
increased 89% compared to the first quarter of 2020;
- Prepared for the imminent launch of cannabis oil products and
new product forms under Cannabis 2.0;
- Remained the top-selling brand of dried flower products with
the Ontario Cannabis Store ("OCS") (by kilograms sold for the
year-to-date ended July 31, 2020,
with a market share of 13.8% and had two of the top four selling
dried cannabis products (by kilograms sold)6;
- Achieved record sales (by kilograms, defined as sales of Pure
Sunfarms products by the provincial boards to retailers, as well as
sales by the provincial boards directly to consumers via their web
sites) in Ontario, Alberta and British
Columbia in aggregate for the month of July;
- Launched multiple new dried cannabis products, including
additional large-format (28-gram) packages, two new strains,
additional pre-rolls and seeds;
- Launched its dried cannabis products in its fourth and fifth
provincial markets (Saskatchewan
and Manitoba) such that Pure
Sunfarms' products are now available in five of Canada's six most populous provinces, which in
aggregate represent more than 70% of the total Canadian
population.
- Received from Health Canada its cannabis cultivation sales
licence based on an initial production area within its second 1.1
million square foot greenhouse facility in Delta, British Columbia (the "Delta 2 facility"), allowing it to expand
capacity as needed through successive license amendments; and,
- Expanded its credit facility (the "Credit Facility") with the
lending syndicate led by Bank of Montreal and including Farm Credit Canada
("FCC") and the addition of CIBC to its full $59 million capacity with the completion of the
Credit Facility's accordion feature.
6. Data cited
has been calculated by Pure Sunfarms from sales information
provided by OCS.
|
COVID-19 Update
All Village Farms' production facilities in Texas, British
Columbia, and Pure Sunfarms' facilities in Canada remain open and operational. The
Company has experienced a small number of COVID-19 illnesses at
some produce facilities, however, the Company's protocols were
followed and there has been no material disruption to operations.
Village Farms and Pure Sunfarms adhere to the highest health and
safety standards in their operations and each has put in place
heightened hygiene practices and safety protocols, including more
stringent cleaning and sanitization, and are taking appropriate
precautions throughout all operations as per the recommendations of
health authorities. The Company will continue to enhance and
evolve such practices and protocols as the situation warrants.
Management Commentary
"The second quarter continues to demonstrate the earnings
capacity of Pure Sunfarms as it delivered its sixth consecutive
quarter of net income and seventh consecutive quarter of positive
EBITDA," said Michael DeGiglio, CEO
Village Farms. "Although retail branded sales were level compared
to the first quarter on a dollar basis, retail sales volume
increased 89% as Pure Sunfarms' continued to have great success
with its large-format, value offerings, which have consistently
ranked among the best-selling dried cannabis products with the
Ontario Cannabis Store since launch. Importantly, even with
its aggressive pricing strategy a necessity in Canada to capture share from the illicit
market - Pure Sunfarms generated 33% gross margin for the quarter.
We look forward to a stronger back half of 2020 for Pure
Sunfarms, supported by the continued sales momentum we have seen
early in the third quarter, the addition of new provincial markets,
the steady increase in the number of retail stores throughout the
country, and the imminent launch of its first Cannabis 2.0 products
and bottled oils. We have also seen a marked uptick in activity in
the wholesale business recently."
"Pure Sunfarms remains the top selling brand of dried cannabis
with the Ontario Cannabis Store to date in 2020 with nearly 14%
market share as its focus on providing quality products that
consumers want at an attractive price continues to resonate well
with consumers. We expect this value proposition to translate
to the bottled oil and Cannabis 2.0 categories as these products
are introduced in the weeks and months to come. Pure
Sunfarms' industry leading all-in cost of production continues to
set it apart from other suppliers, enabling it to offer
high-quality products at attractive prices to drive sales and grow
market share in the legal market, as well as to capture share from
the illicit market, while consistently generating
profitability."
"As Pure Sunfarms continues to execute on plan, and remains well
positioned for strong growth as one of what we believe will be just
a few large industry suppliers, we are leveraging our cannabis
success in Canada, along with our
three decades of experience in vertically integrated, intensive
agriculture to pursue strategic, early-stage CBD and cannabis
opportunities internationally. We are excited to have taken
our first steps in this regard with our recently announced
strategic investments with Altum International for the Asia-Pacific region and DutchCanGrow for
the Netherlands, and look forward
to further expanding our international reach through prudent
capital allocation with outsized, long-term potential. And we
do so with the prospect of the Village Farms-owned 2.6 million
square foot Delta 1 greenhouse
facility being available to transition to higher value products for
export should Pure Sunfarms choose to not exercise its option on
that facility prior to its expiry just about a year from now."
"Our produce business had a strong second quarter, marked by
nearly $6 million year-over-year
improvement in adjusted EBITDA to positive $1.2 million. Our steady progress
transitioning capacity displaced by cannabis to partner growers, as
well as our continuing focus on cost management, combined with
higher pricing due to elevated consumer demand, to generate
positive adjusted EBITDA. Village Farms' extensive organizational
capabilities and experience that underly our produce position, as
well as one of the largest greenhouse footprints in North America, continue to position our
Company for the evolution of cannabis in the United States.
We remain optimistic about the FDA providing a clearer regulatory
framework around the use of CBD in products based on its recent
comments, as well as the prospects for federally legalized high-THC
recreational cannabis, with a head start on conversion of one of
Texas greenhouses, and the ability
to rapidly pursue each of these markets."
Summary Statutory Results
(in thousands of U.S.
Dollars unless otherwise indicated)
|
For the three
months
ended June 30,
|
|
For the six
months
ended June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Produce
sales
|
$47,573
|
|
$41,329
|
|
$79,685
|
|
$73,219
|
Cost of
sales
|
(44,044)
|
|
(44,299)
|
|
(75,391)
|
|
(75,514)
|
Selling, general and
administrative expenses
|
(3,813)
|
|
(3,949)
|
|
(7,734)
|
|
(8,188)
|
Stock compensation
expense
|
(328)
|
|
(701)
|
|
(857)
|
|
(1,997)
|
Interest
expense
|
(437)
|
|
(669)
|
|
(974)
|
|
(1,363)
|
Interest
income
|
93
|
|
211
|
|
476
|
|
347
|
Foreign exchange gain
(loss)
|
530
|
|
243
|
|
(396)
|
|
521
|
Gain on
settlement
|
-
|
|
-
|
|
4,681
|
|
-
|
Other income
(expense), net
|
26
|
|
282
|
|
65
|
|
152
|
(Loss) gain on
disposal of assets
|
-
|
|
-
|
|
(6)
|
|
13,564
|
Loss on write-off of
investment
|
-
|
|
-
|
|
-
|
|
-
|
(Provision for)
recovery of income taxes
|
(69)
|
|
3,284
|
|
943
|
|
(1,152)
|
Share of income from
joint ventures
|
350
|
|
7,985
|
|
3,579
|
|
10,593
|
Net income
|
($119)
|
|
$3,716
|
|
$4,071
|
|
$10,182
|
Adjusted EBITDA
(1)
|
$2,268
|
|
$4,644
|
|
$3,364
|
|
$5,990
|
Earnings per share –
basic
|
($0.00)
|
|
$0.08
|
|
$0.07
|
|
$0.21
|
Earnings per share –
diluted
|
($0.00)
|
|
$0.07
|
|
$0.07
|
|
$0.20
|
Summary Results Including Joint Ventures, on a Proportionate
Basis
The following results reflect the Company's proportionate share
of the Pure Sunfarms joint venture operations, as this is the basis
on which management bases its operating decisions and
performance. For a reconciliation to the results in
accordance with GAAP refer to the "Reconciliation of GAAP to
Proportionate Results" as presented below.
(in thousands of U.S. Dollars unless otherwise
indicated)
|
For the three
months
ended June 30,
|
|
For the six
months
ended June 30,
|
|
2020
(2)
|
|
2019 (2)
|
|
2020
|
|
2019
|
Consolidated
sales
|
$53,082
|
|
$56,395
|
|
$92,734
|
|
$95,013
|
Cost of
sales
|
(47,722)
|
|
(46,773)
|
|
(82,746)
|
|
(80,439)
|
Gross
margin
|
5,360
|
|
9,622
|
|
9,988
|
|
14,574
|
Selling, general and
administrative expenses
|
(5,069)
|
|
(5,184)
|
|
(10,455)
|
|
(10,034)
|
Share-based
compensation
|
(328)
|
|
(701)
|
|
(857)
|
|
(1,997)
|
Interest
expense
|
(540)
|
|
(900)
|
|
(1,370)
|
|
(1,544)
|
Interest
income
|
93
|
|
211
|
|
476
|
|
347
|
Foreign exchange
(loss) gain
|
547
|
|
228
|
|
(481)
|
|
535
|
Gain on
settlement
|
-
|
|
-
|
|
4,681
|
|
-
|
Forgiveness of debt
income
|
(9)
|
|
-
|
|
2,496
|
|
-
|
Other income
(expense)
|
118
|
|
334
|
|
132
|
|
159
|
(Loss) gain on
disposal of assets
|
-
|
|
-
|
|
9
|
|
13,564
|
(Loss) income before
taxes
|
173
|
|
3,610
|
|
4,619
|
|
15,598
|
Recovery of
(provision for) income taxes
|
(291)
|
|
106
|
|
(548)
|
|
(5,416)
|
Net
income
|
($119)
|
|
$3,716
|
|
$4,071
|
|
$10,182
|
Adjusted
EBITDA(1)
|
$2,268
|
|
$4,644
|
|
$3,364
|
|
$5,990
|
Earning (loss) per
share – basic
|
($0.00)
|
|
$0.08
|
|
$0.07
|
|
$0.21
|
Earning (loss) per
share – diluted
|
($0.00)
|
|
$0.07
|
|
$0.07
|
|
$0.20
|
Notes:
|
|
(1)
|
Adjusted EBITDA is
not a recognized earnings measure and does not have a standardized
meaning prescribed by GAAP. Therefore, Adjusted EBITDA may
not be comparable to similar measures presented by other
issuers. See "Non-GAAP Measures". Management believes
that Adjusted EBITDA is a useful supplemental measure in evaluating
the performance of the Company. Consolidated Adjusted EBITDA
includes the Company's majority non-controlling Pure Sunfarms and
65% interest in VFH.
|
(2)
|
The adjusted
consolidated financial results have been adjusted to include the
Company's share of revenues and expenses from its Pure Sunfarms and
Hemp joint ventures on a proportionate accounting basis, on which
management bases its operating decisions and performance
evaluation. GAAP does not allow for the inclusion of the
Joint Venture on a proportionate basis. These results include
additional non-GAAP measures such as EBITDA.
|
|
The adjusted results
are not generally accepted measures of financial performance under
GAAP. The Company's method of calculating these financial
performance measures may differ from other companies and
accordingly, they may not be comparable to measures used by other
companies. See "Non-GAAP measures" below for a reconciliation
of these non-GAAP measures and adjusted results.
|
Financial Highlights
(All amounts in U.S. Dollars unless otherwise
indicated.)
Cannabis
Summary of Total
Pure Sunfarms for the three months ending June 30,:
|
|
|
2020
|
|
2019
|
|
|
C$
|
|
US$
|
|
C$
|
|
US$
|
Sales, Net
|
|
$12,902
|
|
$9,386
|
|
$32,356
|
|
$24,244
|
Cost of
Goods
|
|
8,594
|
|
6,266
|
|
5,293
|
|
3,956
|
Gross
Profit
|
|
4,308
|
|
3,120
|
|
27,063
|
|
20,288
|
Selling, general and
administrative expenses
|
|
2,574
|
|
1,850
|
|
2,384
|
|
1,786
|
Net Income
|
|
$1,079
|
|
$789
|
|
$17,388
|
|
$13,019
|
EBITDA
|
|
$2,509
|
|
$1,833
|
|
$25,200
|
|
$18,893
|
|
|
|
|
|
|
|
|
|
Summary of Pure
Sunfarms, Village Farms Proportionate Share for the three
months ending June 30,:
|
|
|
2020
|
|
2019
|
|
|
C$
|
|
US$
|
|
C$
|
|
US$
|
Sales, Net
|
|
$7,006
|
|
$5,509
|
|
$20,111
|
|
$15,066
|
Cost of
Goods
|
|
5,046
|
|
3,678
|
|
3,312
|
|
2,474
|
Gross
Profit
|
|
1,959
|
|
1,832
|
|
16,799
|
|
12,594
|
Selling, general and
administrative expenses
|
|
1,511
|
|
1,086
|
|
1,488
|
|
1,115
|
Net Income
|
|
$634
|
|
$463
|
|
$10,826
|
|
$8,105
|
EBITDA
|
|
$1,473
|
|
$1,076
|
|
$15,868
|
|
$9,449
|
Summary of Total
Pure Sunfarms for the six months ending June 30,:
|
|
|
|
2020
|
|
2019
|
|
|
C$
|
|
US$
|
|
C$
|
|
US$
|
Sales, Net
|
|
$30,906
|
|
$22,523
|
|
$46,715
|
|
$35,045
|
Cost of
Goods
|
|
17,201
|
|
12,524
|
|
10,369
|
|
7,774
|
Gross
Profit
|
|
13,705
|
|
9,999
|
|
36,346
|
|
27,271
|
Selling, general and
administrative expenses
|
|
5,829
|
|
4,284
|
|
3,712
|
|
2,785
|
Net Income
|
|
$9,632
|
|
$6,954
|
|
$23,241
|
|
$17,422
|
EBITDA
|
|
$9,235
|
|
$6,702
|
|
$33,776
|
|
$25,344
|
|
|
|
|
|
|
|
|
|
Summary of Pure
Sunfarms, Village Farms Proportionate Share for the six
months ending June 30,:
|
|
|
2020
|
|
2019
|
|
|
C$
|
|
US$
|
|
C$
|
|
US$
|
Sales, Net
|
|
$17,209
|
|
$12,951
|
|
$29,056
|
|
$21,794
|
Cost of
Goods
|
|
9,940
|
|
7,235
|
|
6,571
|
|
4,925
|
Gross
Profit
|
|
7,270
|
|
5,716
|
|
22,485
|
|
16,869
|
Selling, general and
administrative expenses
|
|
3,316
|
|
2,434
|
|
2,264
|
|
1,698
|
Net Income
|
|
$5,533
|
|
$3,994
|
|
$14,337
|
|
$10,747
|
EBITDA
|
|
$5,125
|
|
$3,854
|
|
$16,888
|
|
$12,675
|
For the three months ended June 30,
2020 compared to the three months ended June 30, 2019.
Sales
Net sales for the three months ended June
30, 2020 and 2019 were $9,386
and $24,244, respectively, a decrease
of (61%). The decrease was a result of lower 2020 average selling
price for the three months ended June 30,
2020 versus the three months ended June 30, 2019 at which time all of Pure Sunfarms'
sales were solely through the wholesale channel during a period of
elevated market pricing.
Kilograms sold to provincial boards for the three months ended
June 30, 2020 increased 89% over
sales to provincial boards in the first quarter of 2020. Wholesale
kilograms sold decreased (39%) in the second quarter of 2020 versus
the first quarter of 2020. Total kilograms sold for the
second quarter of 2020 were essentially unchanged from the first
quarter of 2020. The net average selling price for the three months
ended June 30, 2020 was lower than
the net average selling price for the three months ended
March 31, 2020 by
(29%).
Net sales for three months ended June 30,
2020 was impacted by sales adjustments on small format and
pre-roll SKUs in order to continue Pure Sunfarms market leading
value priced SKUs, in part due to the success of the Pure Sunfarms
large format SKUs. Additionally, an increase in the provision
for returns was taken on certain strains with a single provincial
board that Pure Sunfarms has agreed to accept, and which Pure
Sunfarms will utilize in some of its future cannabis 2.0
products.
During the three months ended June 30,
2020, 57% of kilograms sold (flower) were to provincial
boards, with the remaining 43% of kilograms sold (flower and trim)
being through the wholesale channel, including nonmonetary
transactions with extraction licensed producers in which Pure
Sunfarms sold extraction grade dried flower and trim and purchased
various forms of distillate from the same counterparties, which
will be ultilized Pure Sunfarms in future cannabis 2.0 product
launches.
Cost of Goods
Cost of goods sold for the three months ended June 30, 2020 and 2019 was $6,266 and $3,956,
or $0.61 per kgs (CA$0.84), versus
$0.49 per kgs (CA$0.62) in the second
quarter of 2019. The higher cost in 2020 was primarily driven by
additional packaging and logistics costs incurred for retail sales
versus all sales were made to the wholesale channel in 2019.The
cost per gram sold for the three months ended June 30, 2020 was lower than the cost per gram in
the first quarter of 2020, by 5%, even with the significant
increase in retail sales quarter on quarter, which is a reflection
of the increase in large format SKUs in the product mix and a lower
cost of cultivation.
Gross Margin
Gross margin for the three months ended June 30, 2020 was 33% versus 84% for the three
months ended June 30, 2019. The
reduction is due to the lower price environment in 2020 versus 2019
and the change in mix to retail sales in 2020 versus all wholesale
sales in the second quarter of 2019. Retail sales involve
incremental packaging and logistics costs over bulk wholesale
sales.
The gross margin of 33% in the second quarter is lower than the
52% in the first quarter of 2020 due to a lower pricing environment
in the second quarter of 2020 in both the retail and wholesale
channels, as well as the price adjustments and an increase in the
return provision in the second quarter of 2020.
Selling, General and Administrative Expense
Selling, general and administrative expenses for the three
months ended June 30, 2020 and 2019
was $1,850 and $1,786, respectively, an increase of 3.6%. The
increase is primarily due to regulatory fees for Health Canada and
staffing. The second quarter 2020 selling, general and
administrative expenses decreased by (24%) versus the first quarter
of 2020 due to a reduction in branding and marketing costs as a
result of decreased retail marketing activity as a result of
COVID-19 as well as a one-off wage subsidy that was recognized in
the second quarter as a result of a federal COVID-19 program.
Net Income
Net income for the three months ended June 30, 2020 and 2019 was $789 and $13,019,
respectively, a decrease of (93.9%). The decrease was primarily due
to the decrease in sales driven by lower market pricing year on
year.
Adjusted EBITDA
Adjusted earnings before interest expense, income taxes,
depreciation and amortization ("EBITDA") for the three months ended
June 30, 2020 and 2019 was
$1,833 and $18,893, respectively. The decrease is primarily
due to lower selling prices for the three months ended June 30, 2020 compared to the same prior year
period.
Produce
For the three months ended June 30,
2020 compared to the three months ended June 30, 2019.
Sales for the three months ended June 30,
2020 increased $6,244, or
15.1%, to $47,573 compared to
$41,329 for the three months ended
June 30, 2019. The increase in
sales is primarily due to an increase in supply partner revenues,
partially offset by a decrease in our own production
revenues. The decrease in our own production revenues is
primarily due to a decrease of (26%) in our product volume and an
increase in average selling price of 35%. The decrease in our
own production volume is primarily due to the closure of the
Delta 2 facility that was
contributed to Pure Sunfarms as well as ongoing plant disease
pressure at our Texas
facilities.
Cost of sales for the three months ended June 30, 2020 decreased ($255) to $44,044
from $44,299 for the three months
ended June 30, 2019, due to a
decrease in pounds sold from the Texas facilities, the closure of the
Delta 2 facility and a decrease in
freight expense, mostly offset by an increase in the 2020 supply
partner costs. The decrease in freight and cost from
Texas facilities is due to a
decrease in our own production volume.
Adjusted produce EBITDA for the three months ended June 30, 2020 increased by $5,907 to $1,234
from ($4,673) for the three months
ended June 30, 2019. The increase is
primarily the result of an increase in the Company's gross profit,
due to an increase in the average selling price of the Company's
own and supply partner products of 29%.
Non-GAAP Measures
References in this news release to "Adjusted EBITDA" are to
earnings (including the equity in earnings of the Joint Ventures)
before interest, taxes, depreciation and amortization ("EBITDA"),
as further adjusted to exclude foreign currency exchange gains and
losses on translation of long-term debt, unrealized gains on the
changes in the value of derivative instruments, stock compensation,
and gains and losses on asset sales. Adjusted EBITDA is a
cash flow measure that is not recognized under GAAP and does not
have a standardized meaning prescribed by GAAP. Therefore, Adjusted
EBITDA may not be comparable to similar measures presented by other
issuers. Investors are cautioned that Adjusted EBITDA should not be
construed as an alternative to net income or loss determined in
accordance with GAAP as an indicator of the Company's performance
or to cash flows from operating, investing and financing activities
as measures of liquidity and cash flows. Management believes that
Adjusted EBITDA is an important measure in evaluating the
historical performance of the Company.
We also present Adjusted EBITDA, earnings per share and diluted
earnings per share on a proportionate segment basis. Each of the
components of Adjusted EBITDA, on a proportionate segment basis,
are presented in the table Reconciliation of GAAP to Proportionate
Results. We believe that the ability of investors to assess our
overall performance may be improved by the disclosure of
proportionate segment Adjusted EBITDA, earnings per share and
diluted earnings per share.
The following table reflects a reconciliation of net income to
Adjusted EBITDA, as presented by the Company:
(in thousands of
U.S. dollars)
|
For the three
months
ended June 30,
|
|
For the six
months
ended June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
(loss)
|
($119)
|
|
$3,716
|
|
$4,071
|
|
$10,182
|
Add:
|
|
|
|
|
|
|
|
Amortization
|
1,491
|
|
1,964
|
|
3,021
|
|
3,804
|
Foreign currency
exchange loss (gain)
|
(530)
|
|
(243)
|
|
396
|
|
(521)
|
Interest expense,
net
|
344
|
|
458
|
|
498
|
|
1,016
|
Income taxes
(recovery) / provision
|
69
|
|
(3,284)
|
|
(943)
|
|
1,152
|
Stock based
compensation
|
328
|
|
701
|
|
857
|
|
1,997
|
Interest expense for
JVs
|
103
|
|
230
|
|
396
|
|
230
|
Amortization for
JVs
|
377
|
|
415
|
|
678
|
|
711
|
Foreign currency
exchange loss (gain) for JVs
|
(17)
|
|
16
|
|
85
|
|
(13)
|
Income taxes
provision from JVs
|
222
|
|
3,178
|
|
1,491
|
|
4,264
|
Gain on disposal of
assets
|
-
|
|
-
|
|
(9)
|
|
(13,564)
|
Gain on
settlement
|
-
|
|
-
|
|
(4,681)
|
|
-
|
JV gain on
settlement
|
-
|
|
-
|
|
(2,496)
|
|
-
|
True economic benefit
Pure Sunfarms(3)
|
-
|
|
(2,507)
|
|
-
|
|
(3,268)
|
Adjusted
EBITDA
|
$2,268
|
|
$4,644
|
|
$3,364
|
|
$5,990
|
Adjusted EBITDA for
JVs (See table below)
|
$1,034
|
|
$9,317
|
|
$3,717
|
|
$12,520
|
Adjusted EBITDA
excluding JVs(produce)
|
$1,234
|
|
($4,673)
|
|
($353)
|
|
($6,530)
|
(3)
|
The GAAP treatment of
the Company's equity earnings of its Joint Venture ("Pure
Sunfarms") is different than treatment under IFRS. Under
GAAP, the Emerald shares held in escrow and not fully paid for by
Emerald are not considered issued pursuant to the GAAP concept of
'hypothetical liquidation'. As a result, under GAAP, the
Company's ownership percentage for the three months and six months
ended June 30, 2019 was higher than its economic interest of 50%.
Accordingly, for those periods with a higher deemed ownership
percentage, the Company received a higher allocation of profits and
losses during the periods in which there were outstanding escrow
shares not paid for by Emerald. The effective profit and loss
allocation on a weighted-average basis for the three months and six
months ended June 30, 2019 was 62.2% for both periods.
|
The following tables are a reconciliation of the GAAP results to
the proportionate results (which include the Company's
proportionate share of the Pure Sunfarms operations):
|
For the three
months ended June 30, 2020
|
|
Produce
|
|
Pure
Sunfarms(4)
|
|
Hemp(4)
|
|
Total
|
Consolidated
sales
|
$47,573
|
|
$5,509
|
|
$-
|
|
$53,082
|
Cost of
sales
|
(44,044)
|
|
(3,678)
|
|
-
|
|
(47,722)
|
Gross
margin
|
3,529
|
|
1,831
|
|
-
|
|
5,360
|
Selling, general and
administrative expenses
|
(3,813)
|
|
(1,086)
|
|
(170)
|
|
(5,069)
|
Share-based
compensation
|
(328)
|
|
-
|
|
-
|
|
(328)
|
Interest
expense
|
(437)
|
|
(77)
|
|
(26)
|
|
(540)
|
Interest
income
|
93
|
|
-
|
|
-
|
|
93
|
Foreign exchange
loss
|
530
|
|
17
|
|
-
|
|
547
|
Gain on
settlement
|
-
|
|
-
|
|
-
|
|
-
|
JV gain on
settlement
|
-
|
|
(9)
|
|
-
|
|
(9)
|
Other income
(expense)
|
26
|
|
9
|
|
82
|
|
1184
|
(Loss) gain on
disposal of assets
|
-
|
|
-
|
|
-
|
|
-
|
(Loss) income before
taxes
|
(400)
|
|
686
|
|
(113)
|
|
(173)
|
Recovery of
(provision for) income taxes
|
(69)
|
|
(222)
|
|
-
|
|
(291)
|
Net income
(loss)
|
(469)
|
|
463
|
|
(113)
|
|
(119)
|
Adjusted
EBITDA
|
1,234
|
|
1,076
|
|
(42)
|
|
2,268
|
Earning (loss) per
share – basic
|
($0.01)
|
|
$0.01
|
|
$(0.00)
|
|
($0.00)
|
Earning (loss) per
share – diluted
|
($0.01)
|
|
$0.01
|
|
$(0.00)
|
|
($0.00)
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended June 30, 2019
|
|
|
Produce
|
|
Pure
Sunfarms(4)
|
|
Hemp(4)
|
|
Total
|
Sales
|
$41,329
|
|
$15,066
|
|
$-
|
|
$56,395
|
Cost of
sales
|
(44,299)
|
|
(2,474)
|
|
-
|
|
(46,773)
|
Gross
margin
|
(2,970)
|
|
12,592
|
|
-
|
|
9,622
|
Selling, general and
administrative expenses
|
(3,949)
|
|
(1,115)
|
|
(120)
|
|
(5,184)
|
Share-based
compensation
|
(701)
|
|
-
|
|
-
|
|
(701)
|
Interest
expense
|
(669)
|
|
(231)
|
|
-
|
|
(900)
|
Interest
income
|
211
|
|
-
|
|
-
|
|
211
|
Foreign exchange
gain
|
243
|
|
(15)
|
|
-
|
|
228
|
Gain on
settlement
|
-
|
|
-
|
|
-
|
|
-
|
JV gain on
settlement
|
-
|
|
-
|
|
-
|
|
-
|
Other income
(expense)
|
282
|
|
52
|
|
-
|
|
334
|
Gain on disposal of
assets
|
-
|
|
-
|
|
-
|
|
-
|
(Loss) income before
taxes
|
(7,553)
|
|
11,283
|
|
(120)
|
|
3,610
|
Recovery of
(provision for) income taxes
|
3,284
|
|
(3,178)
|
|
-
|
|
106
|
Net income
(loss)
|
($4,269)
|
|
$8,105
|
|
($120)
|
|
$3,716
|
Adjusted
EBITDA(5)
|
($4,673)
|
|
$9,449
|
|
($132)
|
|
$4,644
|
Earnings (loss) per
share – basic
|
($0.09)
|
|
$0.17
|
|
$(0.00)
|
|
$0.08
|
Earnings (loss) per
share – diluted
|
($0.09)
|
|
$0.16
|
|
$(0.00)
|
|
$0.07
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
(4)
|
The adjusted
consolidated financial results have been adjusted to include the
Company's share of revenues and expenses from its Pure Sunfarms and
Hemp joint ventures on a proportionate accounting basis, on which
management bases its operating decisions and performance
evaluation. GAAP does not allow for the inclusion of the
Joint Venture on a proportionate basis. These results include
additional non-GAAP measures such as EBITDA.
|
|
For the six months
ended June 30, 2020
|
|
|
Produce
|
|
Pure
Sunfarms(4)
|
|
Hemp(4)
|
|
Total
|
Consolidated
sales
|
$79,685
|
|
$12,951
|
|
$98
|
|
$92,734
|
Cost of
sales
|
(75,391)
|
|
(7,235)
|
|
(120)
|
|
(82,746)
|
Gross
margin
|
4,294
|
|
5,717
|
|
(22)
|
|
9,988
|
Selling, general and
administrative expenses
|
(7,734)
|
|
(2,434)
|
|
(287)
|
|
(10,455)
|
Share-based
compensation
|
(857)
|
|
-
|
|
-
|
|
(857)
|
Interest
expense
|
(974)
|
|
(198)
|
|
(198)
|
|
(1,370)
|
Interest
income
|
476
|
|
-
|
|
-
|
|
476
|
Foreign exchange
loss
|
(396)
|
|
(85)
|
|
-
|
|
(481)
|
Gain on
settlement
|
4,681
|
|
-
|
|
-
|
|
4,681
|
JV gain on
settlement
|
-
|
|
2,496
|
|
-
|
|
2,496
|
Other income
(expense)
|
65
|
|
(15)
|
|
82
|
|
132
|
(Loss) gain on
disposal of assets
|
(6)
|
|
5
|
|
10
|
|
9
|
(Loss) income before
taxes
|
(451)
|
|
5,485
|
|
(415)
|
|
4,619
|
Recovery of
(provision for) income taxes
|
943
|
|
(1,491)
|
|
-
|
|
(548)
|
Net income
(loss)
|
$492
|
|
3,994
|
|
(415)
|
|
4,071
|
Adjusted
EBITDA
|
($353)
|
|
3,854
|
|
(137)
|
|
3,364
|
Earning (loss) per
share – basic
|
$0.01
|
|
$0.07
|
|
($0.01)
|
|
$0.07
|
Earning (loss) per
share – diluted
|
$0.01
|
|
$0.07
|
|
($0.01)
|
|
$0.07
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended June 30, 2019
|
|
|
Produce
|
|
Pure
Sunfarms(4)
|
|
Hemp(4)
|
|
Total
|
Sales
|
$73,219
|
|
$21,794
|
|
$-
|
|
$95,013
|
Cost of
sales
|
(75,514)
|
|
(4,925)
|
|
-
|
|
(80,439)
|
Gross
margin
|
(2,295)
|
|
16,869
|
|
-
|
|
14,574
|
Selling, general and
administrative expenses
|
(8,188)
|
|
(1,698)
|
|
(154)
|
|
(10,040)
|
Share-based
compensation
|
(1,997)
|
|
-
|
|
-
|
|
(1,997)
|
Interest
expense
|
(1,363)
|
|
(181)
|
|
-
|
|
(1,544)
|
Interest
income
|
347
|
|
-
|
|
-
|
|
347
|
Foreign exchange
gain
|
521
|
|
14
|
|
-
|
|
535
|
Gain on
settlement
|
-
|
|
-
|
|
-
|
|
-
|
JV gain on
settlement
|
-
|
|
-
|
|
-
|
|
-
|
Other income
(expense)
|
152
|
|
7
|
|
-
|
|
159
|
Gain on disposal of
assets
|
13,564
|
|
-
|
|
-
|
|
13,564
|
Income (loss) before
taxes
|
741
|
|
15,011
|
|
(154)
|
|
15,555
|
Recovery of
(provision for) income taxes
|
(1,152)
|
|
(4,264)
|
|
-
|
|
(5,416)
|
Net income
(loss)
|
($411)
|
|
$10,747
|
|
($154)
|
|
$10,182
|
Adjusted
EBITDA(5)
|
($6,530)
|
|
$12,675
|
|
($155)
|
|
$5,990
|
Earnings (loss) per
share – basic
|
($0.01)
|
|
$0.22
|
|
($0.00)
|
|
$0.21
|
Earnings (loss) per
share – diluted
|
($0.01)
|
|
$0.21
|
|
($0.00)
|
|
$0.20
|
|
|
|
|
|
|
|
|
|
Breakout of JV's
Adjusted EBITDA
(in thousands of
U.S. dollars)
|
For the three
months
ended June 30,
|
|
For the six
months
ended June 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Pure Sunfarms
Adjusted EBITDA
|
$1,076
|
|
$9,449
|
|
$3,854
|
|
$12,675
|
VFH Adjusted
EBITDA
|
(42)
|
|
(132)
|
|
(137)
|
|
(155)
|
Total JV's Adjusted
EBITDA
|
$1,034
|
|
$9,417
|
|
$3,717
|
|
$12,520
|
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 and six month periods ended June 30, 2020 in the Company Form 10-Q, which
will be filed on (www.sec.gov/edgar.shtml) and SEDAR
(www.sedar.com) and will be available at www.villagefarms.com.
Conference Call
Village Farms' management team will host a conference call
tomorrow, Thursday, August 13,
2020, at 8:30 a.m. ET to discuss
its financial results. Participants can access the conference
call by telephone by dialing (647) 427-7450 or (888) 231-8191, or
via the Internet at: https://bit.ly/3i7Dvpu.
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) 849-0833 or (855) 859-2056 and enter the
passcode 4688349 followed by the pound key. The telephone replay
will be available until Thursday, August 20,
2020 at midnight (ET). The conference call will also
be archived on Village Farms' website at
http://villagefarms.com/investor-relations/investor-calls.
About Village Farms International, Inc.
Village Farms is one of the largest and longest-operating
vertically integrated greenhouse growers in North America.
Village Farms produces and distributes fresh, premium-quality
produce year-round to national grocers in the U.S.
and Canada from more than nine million square feet of
Controlled Environment Agriculture (CEA) greenhouses
in Canada and the U.S., as well as from its partner
greenhouses in Canada and Mexico. The Company is
leveraging its 30 years of experience as a large-scale, low-cost
vertically integrated grower for the rapidly emerging global
cannabis and CBD opportunities.
In Canada, British-Columbia-based Pure Sunfarms
(majority-owned by Village Farms) is one of the single largest
cannabis operations in the world and one of the best-selling brands
in the country. In the U.S., subject to compliance with all
applicable U.S. federal and state laws, the Company is pursuing a
strategy become a leading developer and supplier of branded and
white-labeled CBD products targeting "big box" and other
major retailers and consumer packaged goods companies, and with one
the largest greenhouse operations in country, is well positioned
for the potential federal legalization of high-THC cannabis.
Internationally, Village Farms is strategically targeting nascent,
legal cannabis and CBD opportunities with significant long-term
potential.
Cautionary Statement Regarding Forward-Looking
Information
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 our Pure Sunfarms Corp. joint
venture for the production of cannabis in Canada (our "Joint Venture") and our start-up
operations of growing hemp in the United
States; the legal status of our Joint Venture; risks
relating to obtaining additional financing, including our
dependence upon credit facilities; potential difficulties in
achieving and/or maintaining profitability; variability of product
pricing; risks inherent in the cannabis, hemp and agricultural
businesses; the ability of our Joint Venture to cultivate and
distribute cannabis in Canada;
existing and new governmental regulations, including risks related
to regulatory compliance and licenses (e.g., our Joint Venture's
ability to obtain licenses for its Delta 2 greenhouse facility as well as
additional licenses under the Canadian act respecting cannabis to
amend to the Controlled Drugs and Substances Act, the Criminal Code
and other Acts, S.C. 2018, c. 16 (Canada) for its Delta 3 greenhouse facility), and changes in
our regulatory requirements; risks relating to conversion of our
greenhouses to cannabis production for our Joint Venture; risks
related to rules and regulations at the U.S. federal (Food and Drug
Administration and United States Department of Agriculture),
state and municipal levels with respect to produce and hemp; retail
consolidation, technological advances and other forms of
competition; transportation disruptions; product liability and
other potential litigation; retention of key executives; labor
issues; uninsured and underinsured losses; vulnerability to rising
energy costs; environmental, health and safety risks, foreign
exchange exposure, risks associated with cross-border trade;
difficulties in managing our growth; restrictive covenants under
our credit facilities; natural catastrophes; the ongoing and
developing COVID-19 pandemic; and tax risks.
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.
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Financial
Position
|
(In thousands of
United States dollars, except share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
9,568
|
|
$
|
11,989
|
|
|
Trade
receivables
|
|
13,912
|
|
8,997
|
|
|
Inventories
|
|
13,123
|
|
15,918
|
|
|
Amounts due from
joint ventures
|
|
10,661
|
|
15,418
|
|
|
Other
receivables
|
|
589
|
|
342
|
|
|
Income tax
receivable
|
|
841
|
|
713
|
|
|
Prepaid expenses and
deposits
|
|
1,136
|
|
1,259
|
|
Total current
assets
|
|
49,830
|
|
54,636
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
60,498
|
|
63,158
|
|
|
Investment in joint
ventures
|
|
61,721
|
|
41,334
|
|
|
Notes receivable -
joint ventures
|
|
10,841
|
|
10,865
|
|
|
Deferred tax
asset
|
|
8,885
|
|
7,999
|
|
|
Right-of-use
assets
|
|
4,387
|
|
3,582
|
|
|
Other
assets
|
|
1,779
|
|
1,834
|
|
Total
assets
|
|
$
|
197,941
|
|
$
|
183,408
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Line of
credit
|
|
$
|
4,000
|
|
$
|
2,000
|
|
|
Trade
payables
|
|
9,849
|
|
12,653
|
|
|
Current maturities of
long-term debt
|
|
2,377
|
|
3,423
|
|
|
Accrued
liabilities
|
|
7,037
|
|
3,017
|
|
|
Operating lease
liabilities - current
|
|
1,741
|
|
875
|
|
|
Finance lease
liabilities - current
|
|
40
|
|
61
|
|
Total current
liabilities
|
|
25,044
|
|
22,029
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Long-term
debt
|
|
28,354
|
|
28,966
|
|
|
Deferred tax
liability
|
|
1,728
|
|
1,873
|
|
|
Operating lease
liabilities - non-current
|
|
2,746
|
|
2,690
|
|
|
Finance lease
liabilities - non-current
|
|
16
|
|
34
|
|
|
Other
liabilities
|
|
1,322
|
|
1,357
|
|
Total
liabilities
|
|
59,210
|
|
56,949
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Common stock, no par
value per share - unlimited shares authorized;
56,402,418 shares
issued and outstanding at June 30, 2020 and
52,656,669 shares
issued and outstanding at December 31, 2019.
|
|
105,829
|
|
98,333
|
|
|
Additional paid in
capital
|
|
5,128
|
|
4,351
|
|
|
Accumulated other
comprehensive loss
|
|
(547)
|
|
(475)
|
|
|
Retained
earnings
|
|
28,321
|
|
24,250
|
|
Total shareholders'
equity
|
|
138,731
|
|
126,459
|
|
Total liabilities and
shareholders' equity
|
|
$
|
197,941
|
|
$
|
183,408
|
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Income (Loss) and Comprehensive
Income (Loss)
|
(In thousands of
United States dollars, except per share data, unless otherwise
noted)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
47,573
|
|
$
41,329
|
|
$
79,685
|
|
$
73,219
|
Cost of
sales
|
|
(44,044)
|
|
(44,299)
|
|
(75,391)
|
|
(75,514)
|
Gross
margin
|
|
3,529
|
|
(2,970)
|
|
4,294
|
|
(2,295)
|
Selling, general and
administrative expenses
|
|
(3,813)
|
|
(3,949)
|
|
(7,734)
|
|
(8,188)
|
Share-based
compensation
|
|
(328)
|
|
(701)
|
|
(857)
|
|
(1,997)
|
Interest
expense
|
|
(437)
|
|
(669)
|
|
(974)
|
|
(1,363)
|
Interest
income
|
|
93
|
|
211
|
|
476
|
|
347
|
Foreign exchange gain
(loss)
|
|
530
|
|
243
|
|
(396)
|
|
521
|
Gain on settlement
agreement
|
|
-
|
|
-
|
|
4,681
|
|
-
|
Other
income
|
|
26
|
|
282
|
|
65
|
|
152
|
(Loss) gain on
disposal of assets
|
|
-
|
|
-
|
|
(6)
|
|
13,564
|
(Loss) income before
taxes and earnings from unconsolidated entities
|
|
(400)
|
|
(7,553)
|
|
(451)
|
|
741
|
(Provision for)
recovery of income taxes
|
|
(69)
|
|
3,284
|
|
943
|
|
(1,152)
|
Loss (income) from
consolidated entities after income taxes
|
|
(469)
|
|
(4,269)
|
|
492
|
|
(411)
|
Equity earnings from
unconsolidated entities
|
|
350
|
|
7,985
|
|
3,579
|
|
10,593
|
Net (loss)
income
|
|
$
(119)
|
|
$
3,716
|
|
$
4,071
|
|
$
10,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income
per share
|
|
$
(0.00)
|
|
$
0.08
|
|
$
0.07
|
|
$
0.21
|
Diluted (loss) income
per share
|
|
$
(0.00)
|
|
$
0.07
|
|
$
0.07
|
|
$
0.20
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares used in the computation of net (loss)
income per share (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
56,339
|
|
48,825
|
|
54,636
|
|
48,322
|
Diluted
|
|
56,339
|
|
50,712
|
|
55,756
|
|
50,159
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
(119)
|
|
$
3,716
|
|
$
4,071
|
|
$
10,182
|
Other comprehensive
(loss) income:
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
55
|
|
36
|
|
(72)
|
|
80
|
Comprehensive (loss)
income
|
|
$
(64)
|
|
$
3,752
|
|
$
3,999
|
|
$
10,262
|
Village Farms
International, Inc.
|
Condensed
Consolidated Interim Statements of Cash Flows
|
(In thousands of
United States dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
|
|
2020
|
|
2019
|
|
Cash flows used in
operating activities:
|
|
|
|
|
|
Net
income
|
|
$
4,071
|
|
$
10,182
|
|
Adjustments to reconcile net income to net cash provided
by
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
3,021
|
|
3,766
|
|
Amortization of
deferred charges
|
|
38
|
|
38
|
|
Share of income from
joint ventures
|
|
(3,579)
|
|
(10,593)
|
|
Interest
expense
|
|
974
|
|
1,363
|
|
Interest
income
|
|
(476)
|
|
(347)
|
|
Interest paid on
long-term debt
|
|
(1,018)
|
|
(1,063)
|
|
Gain on settlement
agreement
|
|
(4,681)
|
|
-
|
|
Loss (gain) on
disposal of assets
|
|
6
|
|
(13,564)
|
|
Non-cash lease
expense
|
|
(627)
|
|
(513)
|
|
Interest paid on
finance leases
|
|
(2)
|
|
(4)
|
|
Share-based
compensation
|
|
857
|
|
1,997
|
|
Deferred income
taxes
|
|
(400)
|
|
1,144
|
|
Changes in non-cash
working capital items
|
|
3,961
|
|
(1,843)
|
|
Net cash provided by
(used) in operating activities
|
|
2,145
|
|
(9,437)
|
|
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
Purchases of property, plant and equipment, net of
rebate
|
|
(452)
|
|
(730)
|
|
Advances
to joint ventures
|
|
(125)
|
|
(5,806)
|
|
Proceeds
from sale of asset
|
|
-
|
|
60
|
|
Investment in joint ventures
|
|
(11,713)
|
|
(13)
|
|
Net cash used in
investing activities
|
|
(12,290)
|
|
(6,489)
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds
from borrowings
|
|
3,000
|
|
3,000
|
|
Repayments on borrowings
|
|
(2,652)
|
|
(1,709)
|
|
Proceeds
from issuance of common stock
|
|
7,957
|
|
13,928
|
|
Issuance
costs
|
|
(663)
|
|
-
|
|
Proceeds
from exercise of stock options
|
|
122
|
|
75
|
|
Payments
on capital lease obligations
|
|
(39)
|
|
(48)
|
|
Proceeds
from exercise of warrants
|
|
-
|
|
466
|
|
Net cash provided by
financing activities
|
|
7,725
|
|
15,712
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(1)
|
|
-
|
|
|
|
|
|
|
|
Net decrease in
cash and cash equivalents
|
|
(2,421)
|
|
(214)
|
|
Cash and cash
equivalents, beginning of period
|
|
11,989
|
|
11,920
|
|
Cash and cash
equivalents, end of period
|
|
$
9,568
|
|
$
11,706
|
|
View original
content:http://www.prnewswire.com/news-releases/village-farms-international-reports-second-quarter-2020-financial-results--pure-sunfarms-achieves-sixth-consecutive-profitable-quarter-on-89-sequential-increase-in-retail-branded-sales-volume--produce-business-generates-positiv-301111399.html
SOURCE Village Farms International, Inc.