Village Farms(VFF) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Release Overview Village Farms reported strong Q2 2025 earnings, driven by cannabis growth and a strategic produce segment privatization Management Commentary and Key Highlights Village Farms achieved record Q2 2025 profitability from continuing operations, fueled by global cannabis growth and a strategic produce segment privatization Q2 2025 Key Performance Indicators | Metric | Value | | :--- | :--- | | Income from Continuing Operations | $9.9 million ($0.09/Share) | | Net Income | $26.5 million ($0.24/Share) | | Adj. EBITDA from Continuing Operations | $17.1 million (28.6% of Sales) | | Canadian Cannabis Adj. EBITDA YoY Growth | 146% | | YTD Operating Cash Flow from Continuing Ops | $22 million | | Cash Position at Quarter End | $65 million | - The company completed a transformative transaction on May 30, 2025, privatizing certain assets of its Produce segment, resulting in $40 million in cash and a 37.9% equity interest in Vanguard Food LP[3] - Management emphasized growth catalysts including Holland's adult-use market sales, a shift to higher-margin products, and expanding international cannabis markets, self-funding a 40 metric ton cultivation capacity expansion[4] Financial Performance Q2 2025 saw a significant financial turnaround, with consolidated net sales up 12% and a swing to $9.9 million net income from continuing operations Consolidated Financial Results Q2 2025 consolidated results show robust growth, with net sales up 12% to $59.9 million and a return to $9.9 million net income Consolidated Financial Highlights (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $59.9 | $53.6 | +12% | | Net Income from Continuing Ops | $9.9 | ($16.6) | N/A | | EPS from Continuing Ops | $0.09 | ($0.15) | N/A | | Net Income | $26.5 | ($23.5) | N/A | | EPS | $0.24 | ($0.21) | N/A | | Adj. EBITDA from Continuing Ops | $17.1 | $2.9 | +488% | - Year-to-date consolidated cash flow from continuing operations was $22.3 million, a significant improvement from a cash use of $3.7 million in the prior year period[10] Segment Financial Results Canadian Cannabis drove segment profitability with 146% Adjusted EBITDA growth, while Netherlands Cannabis contributed positively Canadian Cannabis Performance (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $44.5 | $40.7 | +9% | | Gross Margin | 39% | 26% | +1300 bps | | Net Income | $6.5 | $1.4 | +369% | | Adjusted EBITDA | $11.9 | $4.8 | +146% | - The Canadian Cannabis sales mix shifted dramatically, with international medical export sales increasing 690%, while retail branded sales decreased 20% due to a planned focus on higher-margin products[10][24] Other Segment Performance (Q2 2025, in millions, except where noted) | Segment | Net Sales | Net Income (Loss) | Adjusted EBITDA | | :--- | :--- | :--- | :--- | | U.S. Cannabis | $3.8 | ($0.2) | $45k | | Netherlands Cannabis | $2.5 | $0.8 | $1.2 | | Village Farms Produce (Continuing) | $8.6 | $4.3 | $6.4 | Financial Statements The balance sheet strengthened with increased cash, while the income statement showed a shift to net income and positive cash flow Condensed Balance Sheet Data (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $59,988 | $24,631 | | Total current assets | $137,573 | $116,019 | | Total assets | $403,744 | $389,306 | | Total current liabilities | $51,820 | $62,219 | | Total liabilities | $109,552 | $125,348 | | Total shareholders' equity | $284,337 | $254,005 | Condensed Statement of Operations Data (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Sales | $59,899 | $53,597 | | Gross profit | $22,342 | $13,637 | | Income (loss) from continuing ops | $9,945 | ($16,555) | | Net income (loss) | $26,497 | ($23,549) | Condensed Statement of Cash Flows Data (in thousands, YTD) | Account | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash from operating (continuing) | $22,265 | ($3,713) | | Net cash from investing (continuing) | ($5,289) | ($2,813) | | Net cash from discontinued operations | $27,892 | $7,219 | | Net increase (decrease) in cash | $40,357 | ($5,634) | Strategic and Operational Highlights Village Farms executed key strategic initiatives, including maintaining Canadian market share, surging international sales, and produce privatization Canadian & International Cannabis The company maintained top Canadian market share, saw international sales surge 690%, and is expanding cultivation capacity - Maintained a top-three overall market share position in Canada and the number one position in dried flower year-to-date[10] - International export sales increased 690% year-over-year in Q2, driven by new and existing customer relationships[12] - The Board approved an investment to expand cannabis cultivation capacity by an incremental 40 metric tons annually, to be funded with cash on hand[11] Netherlands Cannabis Leli Holland is successfully ramping up with 82.5% market penetration, and a Phase II facility will quintuple capacity - Leli Holland products are now represented in 66 of 80 participating coffeeshops, achieving 82.5% market penetration[12] - Construction of the Phase II facility in Groningen is on track to be operational in Q1 2026 and is expected to quintuple total annualized production capacity[12] U.S. Cannabis The company's Texas medicinal marijuana license application remains under review, continuing its U.S. THC market positioning - The Company's application for a Texas medicinal marijuana license remains pending review[12] Village Farms Produce The company privatized certain produce assets, receiving $40 million cash and a 37.9% equity stake in Vanguard Food LP - On May 30, 2025, the company closed the transaction to privatize certain assets and operations of its Produce segment, receiving $40 million and a 37.9% equity ownership interest in Vanguard Food LP[13] - The company entered into service and supply agreements with Vanguard for produce production in its Delta 1 and Delta 2 greenhouses, with Delta 2 converting to cannabis cultivation after the 2025 tomato crop[13] Corporate Updates Village Farms regained Nasdaq compliance and appointed Michael Carey as Corporate Treasurer subsequent to quarter end - The company regained compliance with the Nasdaq minimum closing bid price of US$1.00 per share listing requirement[13] - Subsequent to quarter end, the company appointed Michael Carey as Corporate Treasurer[13] Non-GAAP Financial Measures Reconciliation This section reconciles GAAP Net Income to Adjusted EBITDA from continuing operations, showing a significant increase to $17.1 million in Q2 2025 Reconciliation of Net Income to Adjusted EBITDA from Continuing Operations (Q2 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Net income from continuing operations | $10,203 | | Amortization and depreciation | $5,068 | | Foreign currency exchange gain | ($1,743) | | Interest expense, net | $705 | | Provision for income taxes | $2,503 | | Other adjustments | $387 | | Adjusted EBITDA from continuing operations | $17,111 | Reconciliation of Net Income to Adjusted EBITDA from Continuing Operations (Six Months 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Net income from continuing operations | $8,503 | | Amortization and depreciation | $8,410 | | Foreign currency exchange gain | ($1,761) | | Interest expense, net | $1,332 | | Provision for income taxes | $3,486 | | Other adjustments | $590 | | Adjusted EBITDA from continuing operations | $20,560 |