Village Farms(US:VFF)2025-03-13 15:00Financial Data and Key Metrics Changes - Total fourth quarter revenues reached $83 million, an increase of 11% year-over-year, while full year revenues increased by 18% to $336 million [8] - Net loss improved to $8.6 million or $0.08 per share from $22.5 million last year, with the current loss including a $10.5 million write-down [30] - Consolidated adjusted EBITDA was negative $3.5 million, but would have been $7 million excluding the inventory write-down, marking the best results in four years [30][35] Business Line Data and Key Metrics Changes - Canadian cannabis net sales grew by 10% year-over-year, driven by non-branded and international sales, with international medicinal exports up 127% year-over-year [34] - Fresh produce sales increased by 17% year-over-year to $43.3 million, with adjusted EBITDA positive at $4.1 million compared to negative $600,000 last year [32][33] - U.S. cannabis business saw a sequential revenue increase of 17% to $4.6 million, with a gross margin of 70% and adjusted EBITDA returning to positive territory at $300,000 [37] Market Data and Key Metrics Changes - The Canadian cannabis market remains competitive, with the company holding the 3 market share position overall and being the second fastest growing licensed producer organically during 2024 [12] - International cannabis sales for the year increased to CAD 8.4 million, with strong growth momentum continuing into 2025 [18] - The New Zealand medical cannabis market is forecasted to grow at a compounded annual growth rate of 58% over the next five years [17] Company Strategy and Development Direction - The company is prioritizing profitable sales growth over low-margin volume in Canada, focusing on maintaining a leadership position before expanding into other markets [10] - Plans to move extraction and vape manufacturing in-house are underway, aiming to capture profitable market share with new product offerings [14] - The company is optimistic about the Dutch market, having completed its first harvest and commenced sales, with plans for a Phase 2 cultivation facility to quadruple production capabilities [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum and ability to execute on growth opportunities, despite the inventory impairment in Q4 [15][23] - The company is well-positioned to deliver a successful year of profitable growth in 2025 and beyond, with a focus on international expansion [43] - Management acknowledged the challenges posed by potential tariffs but remains confident in their ability to adapt and manage costs effectively [25][27] Other Important Information - The company paid nearly CAD 100 million in excise taxes in 2024, which is more than double their SG&A expenses, highlighting the significant impact of these taxes on profitability [36] - The company ended Q4 with cash of $24.6 million and a working capital of $53.8 million, maintaining a comfortable net debt level of $15.9 million [40][41] Q&A Session Summary Question: Impact of inventory impairment on revenue - Management clarified that the impairment did not impact revenue as the decision was made to not sell suboptimal products [49][51] Question: Future market share and product allocation - Management indicated that while Canada remains a foundation, they are focusing on high-quality products and will meet domestic demand while also addressing international opportunities [58] Question: Status of licensed producers in the Netherlands - Management confirmed that only seven out of ten licensed producers are operational, with a firm deadline for coffee shops to buy exclusively from licensed producers by April 7 [64][66] Question: Growth expectations for international sales - Management expects to triple international medicinal export sales in 2025, with a focus on existing medical markets, separate from the recreational market in the Netherlands [75] Question: Risk of oversupply in the Canadian market - Management does not foresee a return to oversupply levels seen in previous years, citing limited biomass in the marketplace and steady demand for high-quality products [78][80]