Village Farms International, Inc., (NASDAQ: VFF), reported financial results for its fourth quarter and the year ending December 31, 2024. Village Farms told investors that it took a $10.5 million (C$15.0 million) non-cash impairment charge related to non-flower inventory in Canadian Cannabis that management determined did not meet the company’s quality standards. The company stated that it purchased the product from third-parties.
Fourth quarter earnings
The sales increase was 11% from $74.2 millions to $82.6 Million. Yahoo Finance analysts had predicted sales of $79 Million. The net loss for the quarter improved 66% from $25.5 million to $8.6 millions, or $0.08 per share. Sales of fresh produce, which totaled $43 millions in revenue, were followed by sales of Canadian cannabis at $34million. U.S. marijuana contributed $4.6 millions.
Michael DeGiglio, President and CEO of Canadian Cannabis said: “The fourth quarter showed continued strong performance for Canadian Cannabis. However, the results were affected by a noncash impairment related to manufactured products that are not flower, purchased mostly from third parties. Canadian Cannabis’ gross margin, and its Adjusted EBITDA, were respectively 33%, and 12% in the fourth quarter, without this effect.
The full-year earning
The total sales increased from $285 to $336 millions. Net loss increased slightly from $34 to $35 Million. Earnings were $0.32 per share.
Canadian Cannabis’s non-flower inventory, for which management had determined that it did not comply with the company’s high quality standards, was responsible for a noncash impairment charge of $10.5 million ($15.0 million C$) in both the 2024 fourth quarter and year-end financial results. If this impact had not been taken into account, the fourth-quarter and full year consolidated Adjusted EBITDA amounts would have been $12.2 and $7.0, respectively.
DeGiglio said, “US Cannabis, Fresh Produce, and Fresh Produce all closed the year strongly, resulting in a cash flow generated from operations for the full-year of $10.3 millions.” We are confident that this performance combined with an improving balance sheet and a healthy inventory situation will allow us to start 2025 on a good footing in order to implement our profitable growth strategies.
International Business
According to the company, international sales grew 113% over the previous year in the fourth-quarter with increased shipment volumes going to Australia and Germany. Village Farms has said that it holds both the first and fourth cultivars of the German market via third-party suppliers.
DeGiglio stated that he was pleased with his pace of growth in international sales, which he attributed to the strength of German demand, increased volume in Australia and UK, among other factors. DeGiglio said, “With the recent addition to New Zealand we now ship to five markets internationally. We believe that our pipeline is full of opportunities and potential new clients which gives us confidence to triple our international sales of medicinal products in 2025.”
Look ahead
In 2025, the company expanded its medical cannabis distribution internationally to New Zealand by signing a supply contract with Medleaf Therapeutics. This established New Zealand-based company has a well-established distribution network. The company also announced that its full range of Balanced Health Botanicals’ CBDistilleryTM hemp-derived gummies are now manufactured in-house at its GMP-certified facility south of Denver, Colorado.
Village Farm is also a candidate for the Texas Medical Marijuana License, which has not yet been approved by Department of Public Services. The company stated that if it is awarded a license, they will work with their listing authority in order to create an acceptable ownership structure.
Our Phase II project in Groningen is a brand new, state-of-the art indoor facility that will be completed in Q4 of this year and quintuple our annual production capacity. We are also proud to announce we have begun construction on the second phase expansion for our Leli Holland branch in the Netherlands. The Phase II Project in Groningen will create a new indoor facility that is state of the art. We expect to complete this project by Q4 and quadruple production.