Village Farms International Reports Q4 and 2023 Financials: Record Consolidated Sales for Q4

Fourth Quarter Highlights

• Canadian Cannabis Delivers 14% Year-Over-Year Sales Increase, Positive Adjusted EBITDA and Cash Flow
• Canadian Cannabis Reclaims #2 National Market Share Position¹
• U.S. Cannabis Delivers Positive Adjusted EBITDA and Cash Flow
• Fresh Produce Delivers Significant Year-over-Year Improvement, With Positive Adjusted EBITDA for the Year

Annual Highlights

• Consolidated Net Loss Per Share Narrows to ($0.29), Adjusted EBITDA Improves Significantly to $7.6 Million; Cash Flow from Operations Improves Significantly to $5.3 Million
• Canadian Cannabis Delivers 20-Fold Increase in Net Income and 10-Fold Increase in Adjusted EBITDA
• All Core Businesses Generate Positive Adjusted EBITDA

Village Farms International, Inc. announced its financial results for the fourth quarter and year ended December 31, 2023. All figures are in U.S. dollars unless otherwise indicated.

“Our Canadian Cannabis business remains the undisputed leader in that market, with record sales and another quarter of positive adjusted EBITDA and cash flow in the fourth quarter,” said Michael DeGiglio, President and Chief Executive Officer. “We reclaimed the number two national market share rank across all categories and are steadily closing the gap on the top position. Record retail branded sales were complemented by another especially strong quarter for non-branded wholesale sales. In our non-branded wholesale channel, we took advantage of improved supply conditions and pricing created by the shift of many of our peers to asset light models, significantly reducing our non-brand-spec inventory. While these close out sales are temporarily affecting gross margin and adjusted EBITDA, they are generating additional cash flow, and will support more efficient, higher cash conversion inventory turnover this year and beyond.”

Fourth Quarter 2023 Financial Highlights
(All comparable periods are for the fourth quarter of 2022 unless otherwise stated)
Consolidated

• Consolidated sales increased 7% year-over-year to $74.2 million from $69.5 million;
• Consolidated net loss improved to ($22.5 million), or ($0.20) per share, compared with ($49.3 million), or ($0.54) per share;
• Consolidated adjusted EBITDA (a non-GAAP measure) improved to ($0.7 million) from ($11.8 million); and,
• Consolidated cash used was $5.2 million compared with $1.5 million.

Canadian Cannabis (Pure Sunfarms and Rose LifeScience)

• Net sales increased 15% to $32.0 million (C$43.6 million) from $27.9 million (C$38.2 million) (an increase of 14% in Canadian dollars);
• Retail branded sales increased 5%, international (export) sales decreased (66%) and non-branded (wholesale) sales increased 339%;
• Gross margin was 23% compared with 1%. Gross margin for the fourth quarter of 2023 was reduced by sales of non-brand-spec inventory in the non-branded channel as strong demand drove improved supply dynamics;
• Net loss improved to ($1.0 million) (C$1.3 million) from net loss of ($2.8 million) (C$3.8 million); and,
• Adjusted EBITDA was $1.5 million (C$2.1 million) compared with ($6.4 million) (C$8.7 million).

Strategic Growth and Operational Highlights

Canadian Cannabis

• Reclaimed the number two market share position across all product categories for the fourth quarter of 2023¹;
• Rose LifeScience maintained the number two market share position in Quebec, expanding its share in each successive quarter of the year¹;
• In the non-branded channel, took advantage of improved supply conditions and pricing created by shift of many producers to asset light models by significantly reducing non-brand-spec inventory, generating additional cash flow and supporting more efficient, higher cash conversion inventory turnover going forward;
• Pure Sunfarms brand launched a new high-THC 1g vape offering, featuring formulations to maximize flavour, potency and consumer experience;
• The Canadian Cannabis business’ premium Soar brand launched its first 1g Infused Blunts, which feature fresh, hang dried cannabis flower infused with a premium oil for consumers looking for an elevated cannabis experience; and,
• Village Farms was named the Best Canadian Cannabis Company at the Benzinga Cannabis Awards for the second consecutive year.

International Cannabis

• The Company continues to leverage its high-quality Canadian Cannabis products and portfolio for the international export market, with a primary focus on Europe and Australia. Nine of the Company’s best-selling strains in Canada are now being sold across four international medical markets. The Company has a strategy in place to accelerate international export sales in current markets, while expecting to launch products in additional European markets this year.
• Subsequent to quarter end, the Canadian Cannabis business commenced exports to the United Kingdom, launching some of Village Farms’ most popular strains under the Pure Sunfarms, with strains under The Original Fraser Valley Weed Co. (“Fraser Valley”) to come; and,
• Subsequent to quarter end, the Company commenced the build-out of its first indoor cannabis production facility in Drachten, Netherlands. Through its majority-owned (85%) subsidiary, Leli Holland, Village Farms holds one of 10 licenses permitting it to legally produce and distribute recreational cannabis in the Netherlands under the Dutch Cannabis Supply Chain Experiment. Production is targeted to start during the fourth quarter of 2024 with initial sales in early 2025.

U.S. Cannabis

• Launched a new visual brand for CBDistillery, including a revamped web site, focused on the wellness attributes of its products;
• Continued to advance the internalization of gummy production, ensuring consistency of supply while supporting higher gross margins;
• Ended the year with its highest ever highest product rating;
• Expanded the proportion of subscription-based sales to 69% in 2023 from 56% in 2022; and,
• John Harloe, J.D., Ph.D., General Counsel at BHB, was appointed to the governing board of Colorado’s Institute of Cannabis Research (ICR).