Village Farms (TSX: VFF) (NASDAQ: VFF) this morning reported its third quarter financial results, revealing total consolidated revenues of US$43.0 million, a decrease of 9.5% on a quarter over quarter basis, along with a net income of $0.5 million. Notably, revenues from its Pure Sunfarms joint venture were not consolidated within the quarter, given that full ownership was not acquired until November 2020.
Given that the 58.7% interest held in Pure Sunfarms as of September 30 was not controlling, financials could not be provided on a consolidated basis. As a whole Pure Sunfarms generated US$17.0 million in gross sales over the three month period with SG&A amount to US$2.4 million, and net income as a whole coming in at US$2.5 million. Overall, it resulted in $1.3 million being attributable to Village Farms.
While numerous variants of financial statements were provided in Village’s press release to present things on a pro-forma, proportional, and actual basis, the actual financial statements were consulted for the following. As a result, it is largely based on the produce operation of the company, meaning that future results will not be directly comparable due to the future consolidation of Pure Sunfarms.
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Revenues for the period amounted to $43.0 million, a decrease from $47.6 million in the prior period. Gross margin for the quarter amounted to US$5.6 million, an increase from the $3.5 million exhibited in the previous quarter.
Expenses meanwhile amounted to $4.9 million, a significant increase from the $3.8 million in the second quarter. Share based compensation also came in higher, at $0.5 million, while interest expense amounted to $0.3 million and foreign exchange losses totaled out at $0.5 million, placing the company at a loss of $0.5 million before taxes and earnings from unconsolidated entities.
Following a provision of $0.3 million for income taxes, and a gain of $1.3 million in equity earnings from Pure Sunfarms, Village Farms managed to eek out a net income of $0.5 million in the third quarter, demonstrating that the true value here appears to be one of the few profitable Canadian cannabis operations.
Cash and cash equivalents saw a major boost within the period, climbing from $9.6 million to $54.7 million, thanks to a large raise conducted that resulted in net proceeds of $46.3 million. Trade receivables meanwhile fell from $13.9 million to $10.5 million, while inventories climbed from $13.1 million to $15.3 million. Overall, total current assets jumped from $49.8 million to $93.4 million, thanks to that large financing.
Trade payables came in relatively unchanged, dropping from $9.8 million to $9.7 million over the quarter, while the line of credit fell from $4.0 million to $3.0 million. Current maturities of long term debt also stayed relatively unchanged, falling from $2.4 million to $2.3 million. Total current liabilities overall fell from $25.0 million to $23.4 million over the course of the quarter.
In reference to Pure Sunfarms, it should be noted that on a quarterly basis net sales increased 75%, while gross profits climbed 81% to C$7.8 million. The subsidiary currently holes 15.2% market share in dired flower within Ontario, while remaining the top selling brand of dried flower products.
Village Farms last traded at $6.06 on the Nasdaq.
Information for this briefing was found via Sedar and Village Farms International. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
