- Pure Sunfarms to pursue accelerated production ramp up plan for 1.1 million Ft 2 Delta 3 greenhouse following receipt of cultivation license.
- Produce business delivers seventh quarter of lower cost per pound at company facilities in last eight quarters
Village Farms International, Inc. (“Village Farms” or the “Company”) (TSX: VFF) (OTCQX:VFFIF) today announced its financial results for the fourth quarter and 12-month periods ended December 31, 2017.
Highlights for the year ended December 31, 2017 (All comparable figures are for the year ended December 31, 2016)
- Sales increased 2% to US$158.4 million from US$155.5 million;
- Net income was US$3.8 million, or US$0.10 per share, compared with a net loss of (US$2.0) million, or (US$0.05) per share;
- EBITDA decreased (22%) to US$7.4 million from US$9.4 million;
- The Company’s newest exclusive tomato variety, Lorabella BlossomTM, won a Produce Business Innovation Award at the New York Produce Show and was selected as one of three finalists for the Gateway Innovation Award at the Viva Fresh Expo in San Antonio; and,
- Successfully completed a "bought deal" short form prospectus offering of 2,500,000 common shares in the capital of the Company at an issue price of CA$5.40 per common share for aggregate gross proceeds of CA$13,500,000, a portion of the proceeds of which were used to repay a portion of the Company’s term loan with a Canadian creditor, which enabled the Company to remove its 1.1 million ft2 Delta 2 greenhouse facility as collateral against such term loan.
Cannabis joint venture (Pure Sunfarms) Update:
- Health Canada issued a cultivation license under Canada’s Access to Cannabis for Medical Purposes Regulations ("ACMPR") for Pure Sunfarms’ 1.1 million ft2 Delta 3 greenhouse operation located in Delta, BC, which is conservatively projected to produce 75,000 kg of quality cannabis annually at full production;
- Following receipt of the cultivation license for the Delta 3 greenhouse, Pure Sunfarms immediately transferred existing starter plants to the greenhouse and initiated the ACMPR sales license application process;
- Conversion of the first 250,000 ft2 section of the 1.1 million ft2 Delta 3 greenhouse to cannabis production is substantially complete and senior growing, financial, human resources and operational personnel, including the established team transferred from Village Farms, are in place for production ramp-up; and,
- Conversion of the remainder of the 1.1 million ft2 Delta 3 greenhouse is underway and on schedule, and Pure Sunfarms is pursuing a strategy to potentially accelerate the production ramp-up through the use of short-term, rental generation equipment to provide incremental electricity to power the supplemental lighting to increase production output during the 2018/2019 winter months when there is insufficient natural sunlight available and prior to the installation of the approved additional 24MW from the local utility. Successful execution of this plan is expected to increase Pure Sunfarms’ production target for 2019 by up to 30% over the current target of approximately 35,000 to 40,000 kg of dried cannabis.
“Since announcing our entry into the Canadian cannabis industry last June, the Pure Sunfarms joint venture has consistently executed on all facets of its plan, culminating with Health Canada’s issuance of the cultivation license for Pure Sunfarms’ 1.1 million ft2 Delta 3 greenhouse earlier this month,” said Michael DeGiglio, CEO, Village Farms. “Village Farms is always focused on maximizing the return from our assets and, with conversion of the first quadrant of the Delta 3 greenhouse nearing completion, Village Farms has modelled and proposed a strategy to significantly and accretively accelerate the production ramp-up plan for Delta 3, which Pure Sunfarms is now pursuing.”
Mr. DeGiglio added, “With the benefit of Village Farms’ 30-year track record as a proven large-scale, lowcost greenhouse operator, Pure Sunfarms is uniquely positioned to be a leading supplier of quality cannabis products to wholesalers, distributors and private and government retailers across Canada and internationally, with the goal to be the low-cost Canadian producer. Pure Sunfarms’ vision is to be a vertically integrated supplier and is additionally now focused on senior management hires and development of distribution and marketing strategies to this end.”
“I am immensely proud of the considerable contribution that many experienced personnel throughout Village Farms have to made to Pure Sunfarms, while continuing to drive the success of our incumbent produce business. Amidst continuing competition from low-priced, Mexican-grown commodity product, Village Farms remains a vertically integrated supplier of choice to the leading retailers in the U.S. and Canada, with exclusive, premium varieties, including our award-winning Lorabella BlossomTM tomato, and an outstanding reputation for quality and safety. We are actively expanding our supply relationships throughout North America to increase our market share and drive revenue growth. Importantly, our ingrained culture of low-cost production enabled us to lower our cost per pound at Village Farms’ facilities for the seventh quarter in the last eight quarters.