Latest Quarterly Results Round-up – Village Farms and The Green Organic Dutchman

With financial results for the latest Quarter flowing in, here we summarize the latest announcements from Village Farms and The Organic Green Dutchman:

Village Farms sees Net Sales Decline

Village Farms International, Inc. (NASDAQ: VFF) (TSX: VFF) announced its financial results for the second quarter ended June 30, 2020.

Village Farms is one of the largest and longest-operating vertically integrated greenhouse growers in North America. Village Farms produces and distributes fresh, premium-quality produce year-round to national grocers in the U.S. and Canada from more than nine million square feet of Controlled Environment Agriculture (CEA) greenhouses in Canada and the U.S., as well as from its partner greenhouses in Canada and Mexico.  The Company is leveraging its 30 years of experience as a large-scale, low-cost vertically integrated grower for the rapidly emerging global cannabis and CBD opportunities.

In Canada, British-Columbia-based Pure Sunfarms (majority-owned by Village Farms) is one of the single largest cannabis operations in the world and one of the best-selling brands in the country.

Net sales for the three months ended June 30, 2020 were down on 2019 figures at $9,386,000 and $24,244,000, respectively, a decrease of (61%). The decrease was a result of lower 2020 average selling price for the three months ended June 30, 2020 versus the three months ended June 30, 2019 at which time all of Pure Sunfarms’ sales were solely through the wholesale channel during a period of elevated market pricing.

Net income for the three months ended June 30, 2020 and 2019 was $789 and $13,019, respectively, a decrease of (93.9%). The decrease was primarily due to the decrease in sales driven by lower market pricing year on year.

Village Farms’ Financial Summary and Corporate Highlights for the Three and Six months Ended June 30, 2020

“The second quarter continues to demonstrate the earnings capacity of Pure Sunfarms as it delivered its sixth consecutive quarter of net income and seventh consecutive quarter of positive EBITDA,” said Michael DeGiglio, CEO Village Farms. “Although retail branded sales were level compared to the first quarter on a dollar basis, retail sales volume increased 89% as Pure Sunfarms’ continued to have great success with its large-format, value offerings, which have consistently ranked among the best-selling dried cannabis products with the Ontario Cannabis Store since launch.  Importantly, even with its aggressive pricing strategy a necessity in Canada to capture share from the illicit market – Pure Sunfarms generated 33% gross margin for the quarter.  We look forward to a stronger back half of 2020 for Pure Sunfarms, supported by the continued sales momentum we have seen early in the third quarter, the addition of new provincial markets, the steady increase in the number of retail stores throughout the country, and the imminent launch of its first Cannabis 2.0 products and bottled oils. We have also seen a marked uptick in activity in the wholesale business recently.”

The Green Organic Dutchman sees Total Revenue Increase by 58% over Q1-2020

The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US: TGODF), announced its financial results for the second quarter of 2020 ended June 30, 2020, with total revenue of $4.83 million, an increase of 58% over Q1-2020.

In Canada, TGOD sells dried flower and oil, and recently launched a series of next–generation cannabis products such as organic teas, dissolvables and vapes.  Through its European subsidiary, HemPoland, the Company also distributes premium hemp CBD oil and CBD-infused topicals in Europe.

Q2 Financial Highlights

• Quarterly revenue of $4.83 million consisting of sales from cannabis products in Canada of $2.72 million and hemp-derived product sales in Europe of $2.11 million.
• The 309% quarter over quarter increase in revenue from Canada can be attributed to expanded distribution due to processing capacity and launches of several new product lines, notably organic vapes, RIPPLE dissolvable THC powder, and the Highly Dutch mainstream organic brand into Quebec. While revenues to date in Canada are encouraging, we are a couple of months behind growth expectations due to ramp-up challenges and some supply constraints arising from provincial listing requirements and third-party contractor issues, which are being addressed by the Company to maintain continued revenue growth.
• Net loss of $9.8 million, a $63.7 million reduction in net loss compared to Q1-2020, which can be attributed to the $5.4 million lower loss from operations and no further impairment charges recognized during the quarter. It is also significantly lower than the Company’s operational loss for Q1-2020 which was $15.26 million.
• Cash used in operations of negative $8.2 million, compared to negative $13 million in Q1-2020, reflecting the contributions from increased sales and the significant reduction in general and administrative costs.
• Global general and administrative expenses decreased by $4.08 million or 42% to $5.7 million quarter over quarter, reflecting part of the Company’s progress towards becoming more agile and adaptive to dynamic market conditions. This decrease is primarily driven by the simplification of the Company’s organizational structure and reductions in personnel costs and external consultants. Management continues to right-size its G&A costs in line with Company’s operating plans.
• During the quarter, the Company secured additional financing, closing a transaction with gross proceeds of $23 million of new equity, $18 million of term debt, and a $17 million revolving operating facility.
• On May 25, 2020, the Company sold its interest in Epican Medicinals Limited, given its history of operating losses, recent economic developments in Jamaica restricting operations and the Company’s strategic decision to no longer pursue opportunities in Jamaica and focus on Canadian operations.

“Since the beginning of the global pandemic, our top priority has been the health and safety of our employees, customers, and patients.  Despite the additional layer of complexity, we continued bringing innovation to market, seeing sequential month-over-month growth during the quarter while cutting costs and reducing our cash burn rate.  While we are not where we had expected to be at this time, we are seeing strong momentum on our innovative products and will continue to right-size our business plans with a focus on getting our monthly run rate to a scale which delivers positive operating cash flow by the end of the year,” commented Brian Athaide, CEO of TGOD.

“Our products have now proven their appeal to consumers and shown consistency and efficacy backed by scientific research.  We look forward to expanding our portfolio with additional flower strains and variants of our 2.0 line-up and bringing them to more stores across the country.” added Athaide.