Village Farms International is Sowing Solid Cannabis Growth

Village Farms International, Inc. (TSX:VFF), one of the Canadian marijuana stocks, has momentum following better-than-expected Q1 results

SmallCapPower | May 15, 2019: Village Farms International, Inc. (TSX:VFF) (NASDAQ:VFF), one of the Canadian cannabis stocks, after Thursday’s closing bell reported strong first-quarter results, with both its top line and bottom line witnessing solid growth, aided primarily by a notable performance from its 50%-owned Pure Sunfarms joint venture. Consolidated revenues jumped 26% to US$37.3 million for the quarter with Pure Sunfarms contributing US$5.4 million. Consolidated EBITDA for the first quarter came in at US$1.3 million compared to US$1.8 million in the prior-year quarter. Net income improved substantially in the first quarter to US$7.6 million, from a loss of US$1.1 million in the year-ago quarter, due primarily to its US$4.3 million share of income from the JV as well as US$13.6 million from a gain on the disposal of assets.

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Both revenue and earnings results surpassed the analyst consensus estimate. Following the announcement, shares of Village Farms jumped nearly 15% to close at $16.94 on the TSX Friday.

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Village Farms International Chief Executive Officer Michael DeGiglio said, “We are thrilled to report that our Canadian cannabis joint venture, Pure Sunfarms, delivered its second consecutive quarter of profitability, with net income of US$8.6 million on sales of US$10.8 million as production at the 1.1 million square foot Delta 3 facility continued to ramp up on plan. The success of the Delta 3 facility, with quality, yield and cost continuing to meet expectations, and the resulting ability to rapidly achieve profitability, is further evidence of the considerable advantage of building a premier, large scale, vertically integrated grower on the foundation of the people, capabilities and know-how of Village Farms – a foundation that can only be achieved through decades of operational experience.”

Excluding the Pure Sunfarms contribution, revenue rose 8%. With the vegetable business under pressure due to imports from Mexico, Village Farms future growth would come primarily from its renewed focus on cannabis through its Pure Sunfarms JV, which is expected to further expand its production in the coming quarters. With the recent completion of the 1.1 million square foot Delta 3 greenhouse operation in Delta, BC, the JV is on track to achieve full run rate annual production of 75,000 kilograms at the facility by mid-2019.

In addition to the Pure Sunfarms JV in Canada, Village Farms also has a 65%-owned JV, Village Fields Hemp, in the U.S. for outdoor cultivation of CBD hemp and CBD extraction. Planting has already commenced in more than 800 acres in three U.S. states with first harvest expected by July 2019. The Company expects to sell CBD oil on a wholesale basis early next year, followed by white-labeled and branded products.

Village Farms International is one of the largest vertically-integrated greenhouse growers in North America, operating more than nine million square feet of greenhouses in British Columbia and Texas. Leveraging this experience in greenhouse growing, the Company has ventured into the rapidly-growing cannabis market thorough its Pure Sunfarms JV in Canada and the Village Fields Hemp JV in the U.S.

Village Farms International stock currently trades at a market capitalization of $827 million on the TSX.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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