– Second Quarter Marks Fourth Consecutive Quarter of Sequential Growth in Retail Branded Sales at 22% and 11th Consecutive Quarter of Positive EBITDA for Pure Sunfarms –
— Pure Sunfarms Becomes Top-Selling Licensed Producer of Dried Flower in Ontario, Remains Top-Selling Dried Flower Brand in Ontario and is Top-Selling Dried Flower Brand in Alberta and British Columbia –
VANCOUVER, BC, Aug. 9, 2021 /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, 2021. All figures are in U.S. dollars unless otherwise indicated. For Consolidated Results see below.
Management Commentary
“We are so proud to report another record quarter for Pure Sunfarms’ retail branded sales, which grew 22% sequentially – the fourth consecutive quarter of 20%-plus growth – which contributed to total net sales growth of 38% sequentially, once again outpacing the broader retail cannabis market as we continue to gain national market share,” said Michael DeGiglio, CEO, Village Farms. “Importantly, we are also reporting a 192% sequential increase in adjusted EBITDA for Pure Sunfarms this quarter to C$9.1 million, a record since our Retail Branded Sales launch, and further evidence of the importance of our large-scale, low-cost cultivation capabilities combined with an exceptional management team and the right brand and product strategy.”
“Pure Sunfarms remains well positioned to be the long-term market leader in the Canadian cannabis market as many industry participants continue to shift their strategies or combine businesses in an attempt to compete successfully. Our continued market share, leadership and growth, including our first ever quarter as the top-selling* Licensed Producer in Ontario, gives us even more confidence that we will achieve our stated goal of 20% market share in dried flower in Canada.”
“The continued strong momentum in Retail Branded Sales further underscores the value of our initial focus on the dried flower category. The dried flower market, including pre-rolled products, still comprises more than 70%* of total retail sales, with second quarter dollar-value growth five-times that of the three largest 2.0 categories. With expected continued sales momentum going forward, and in view of potential growth opportunities, we have expanded our capacity by 50% and plan to begin cultivation in the completed half of Delta 2, our second, and now fully licensed, 1.1 million square-foot greenhouse facility next month. We continue to look forward to adding the second half of Delta 2 to our capacity next year, and have an additional 2.4 million square feet of production area on the same site at our Delta 1 facility that can be rapidly converted to cannabis production as the Canadian legal cannabis market continues to grow.”
“In the United States, we are encouraged by the federal cannabis bill recently brought forward by Senate leadership and view it as an integral step in the process of regulatory change that would allow Village Farms to participate in the high-THC cannabis market in the U.S. We have identified multiple potential pathways to participate in the U.S. high-THC cannabis market and continue to refine multiple strategies that will enable us to move swiftly and aggressively to leverage our tremendous cannabis success in Canada for the largest cannabis market in the world, including strategies that could see us enter the U.S. market in advance of converting our Texas operations. We are optimistic that we will continue to see substantive progress in the months to come and are planning accordingly. With the benefit of having now operated our Canadian cannabis business for several years, we expect our Texas greenhouse operations can represent at least a $1 billion sales opportunity in cannabis to Village Farms.”
“Finally, we expect our Produce business to normalize toward the end of this year with indications that prices are trending back to historical levels, as production volumes have improved throughout 2021. Our Texas produce greenhouse operations, with a replacement value in excess of $300 million, and located in one of the best growing environments for cannabis in the continental United States, represent one of our potential pathways to participate in the U.S. high-THC cannabis market. We continue to operate and manage these facilities for this optionality.”
Pure Sunfarms’ Second Quarter and Other Recent Highlights
(Dollar Amounts are Before Village Farms’ Proportionate Share)
Achieved 135% year-over-growth and 22% sequential growth in Retail Branded Sales, marking the fourth consecutive quarter of sequential growth in Retail Branded Sales;
Achieved 70% year-over-year growth and 38% sequential growth in total net sales;
Achieved 40% gross margin as the Delta 3 greenhouse facility operated at full capacity during the quarter;
Achieved 192% sequential growth and 264% year-over-year growth in Adjusted EBITDA to C$9.1 million (US$7.4 million), a record since the launch of its retail branded products in late 2019 and the 11th consecutive quarter of positive Adjusted EBITDA;
Was the top-selling brand* of dried flower products with the Ontario Cannabis Store (“OCS”) (by kilograms sold and dollars sold) for the quarter ended June 30, 2021 and remained the top-selling brand of dried flower products with the OCS (by kilograms sold and dollars sold) for the 21-month period since its retail branded sales launch in October 2019;
Was the top-selling Licensed Producer** of dried flower products with the OCS (by kilograms sold and dollars sold) for the quarter ended June 30, 2021;
Was the top-selling brand of dried flower products*** in Alberta for the quarter ended June 30, 2021 and monthly since October 2020 (by dollars sold);
Was the top selling brand of dried flower products*** in British Columbia for the quarter ended June 30, 2021 and monthly since October 2020 (by dollars sold); and,
Received from Health Canada an amendment to the cultivation license for its second greenhouse facility, the 1.1 million square foot Delta 2 facility, (adjacent to the Delta 3 facility), permitting Pure Sunfarms to begin cultivating cannabis in the currently completed half of the Delta 2 facility, which it expects to do in September, with harvests expected to begin in November of this year.
*Based on OCS market data for the quarter ended June 30, 2021.
**Market share performance and data cited has been calculated by Pure Sunfarms from sales information provided by OCS as of June 30, 2021.
***Market share performance data cited has been calculated by Pure Sunfarms from sales information provided by Buddi retail store data from over 300 retailers across Alberta and British Columbia as of June 30, 2021.
Pure Sunfarms’ Financial Summary for the Three and Six Months Ended June 30, 2021 and June 30, 2020 (Before Village Farms’ Proportionate Share)
