Produce and cannabis grower Village Farms International (Nasdaq: VFF) reported its financial outcomes for the fourth quarter and the fiscal year ending Dec. 31, 2023, showing a rise in consolidated sales alongside a net loss drop.
For the fourth quarter, Village Farms posted consolidated sales of $74.2 million, a 7% increase from $69.5 million during the same period in 2022. That beat Seeking Alpha’s analyst average by $3.27 million.
The company’s net loss improved to $22.5 million from a loss of $49.3 million in the fourth quarter of the previous year.
In the Canadian sector, the company noted a 15% climb in net sales to $32 million. That was attributed to a huge rise in non-branded wholesale sales, which jumped by 339%. The net loss in this segment improved to $1 million from $2.8 million year over year.
“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,” CEO and president Michael DeGiglio said in a statement.
“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.”
Village Farms’ U.S. subsidiary, Balanced Health Botanicals, saw a slight reduction in net sales to $5.1 million versus $5.3 million; but reported an improvement in net loss, which was down to a loss of $13.7 million from a net loss of $20.9 million, mostly due to a $13.5 million write down of intangible assets.
The company’s produce division saw an uptick in sales, reporting $37.1 million compared to $36.2 million in the previous year, and a notable reduction in net loss from $20.7 million to $4 million.
Village Farms said it is expanding its international market presence, particularly focusing on Europe and Australia. The company started exporting to the U.K. and began building production facility in the Netherlands in order to enter the legal recreational market in Europe.
Additionally, Village Farms is engaging in sustainable energy projects, such as the Renewable Natural Gas (RNG) Project in Delta, British Columbia, which is expected to contribute to the firm’s profitability and sustainability goals.
Hart added, “We are encouraged by early signs of a more favorable operating environment for our Canadian cannabis segment. Reduction in biomass oversupply, recent stabilization of retail pricing, more aggressive actions to address ballooning delinquent excise duties, and recommendations to change the excise duty to 10% of sales will benefit the industry’s profit potential, and especially our business as a profitable leader.”
The CEO said the company in 2023 paid C$78 million in excise duties on sales of C$232 million, which is an effective rate of almost 34%.
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