Village Farms International, Inc. (VFF) Bundle
Understanding Village Farms International, Inc. (VFF) Revenue Streams
Understanding Village Farms International, Inc.’s Revenue Streams
The primary revenue sources for Village Farms International, Inc. include:
- VF Fresh (Produce)
- Canadian Cannabis
- U.S. Cannabis
- Clean Energy
Revenue Breakdown by Segment
| Segment | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| VF Fresh (Produce) | $42,770 | $35,712 | $125,883 | $114,125 |
| Canadian Cannabis | $36,463 | $28,810 | $114,654 | $81,987 |
| U.S. Cannabis | $3,943 | $4,988 | $12,777 | $15,266 |
| Clean Energy | $192 | $0 | $313 | $0 |
| Total Revenue | $83,368 | $69,510 | $253,627 | $211,378 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects the following changes:
- Three Months Ended September 30, 2024: 20% increase compared to the same period in 2023.
- Nine Months Ended September 30, 2024: 20% increase compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024:
- VF Fresh (Produce): $125,883 (49.6% of total revenue)
- Canadian Cannabis: $114,654 (45.2% of total revenue)
- U.S. Cannabis: $12,777 (5.0% of total revenue)
- Clean Energy: $313 (0.1% of total revenue)
Significant Changes in Revenue Streams
Notable changes include:
- Increase in VF Fresh sales driven by a 25% increase in pounds sold from Company-owned greenhouses.
- Canadian Cannabis sales increased significantly by $32,667 for the nine months ended September 30, 2024.
- U.S. Cannabis sales decreased by $2,489, or 16%, primarily due to lower direct-to-consumer sales.
Summary of Financial Performance
| Period | Total Revenue | Cost of Sales | Gross Profit |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $83,368 | ($67,660) | $15,708 |
| Three Months Ended September 30, 2023 | $69,510 | ($54,889) | $14,621 |
| Nine Months Ended September 30, 2024 | $253,627 | ($213,158) | $40,469 |
| Nine Months Ended September 30, 2023 | $211,378 | ($172,958) | $38,420 |
Overall, the financial performance indicates a positive trend in revenue generation across the primary segments, showcasing growth and strategic adjustments in operations.
A Deep Dive into Village Farms International, Inc. (VFF) Profitability
A Deep Dive into Village Farms International, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $40,469, compared to $38,420 for the same period in 2023, representing an increase of 5%. The gross profit margin for the nine months ended September 30, 2024 was 16% compared to 18% in 2023.
Operating Profit Margin: The operating loss for the nine months ended September 30, 2024 was $(26,313) compared to $(9,040) in 2023. This indicates a significant deterioration in operating performance, with an operating margin of (10.4%) for 2024 compared to (4.3%) in 2023.
Net Profit Margin: The net loss attributable to shareholders for the nine months ended September 30, 2024 was $(27,221), compared to $(9,315) in 2023. The net profit margin was (10.7%) in 2024, down from (4.4%) in 2023.
Trends in Profitability Over Time
Gross profit increased from $38,420 in the first nine months of 2023 to $40,469 in 2024, reflecting a growth trend. However, operating and net margins have declined significantly, indicating rising costs and operational challenges. The following table summarizes the profitability metrics over the last two years:
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Gross Profit ($) | $37,000 | $38,420 | $40,469 |
| Gross Margin (%) | 18% | 18% | 16% |
| Operating Profit ($) | $(5,000) | $(9,040) | $(26,313) |
| Operating Margin (%) | (2.3%) | (4.3%) | (10.4%) |
| Net Income ($) | $(6,000) | $(9,315) | $(27,221) |
| Net Margin (%) | (3.0%) | (4.4%) | (10.7%) |
Comparison of Profitability Ratios with Industry Averages
The industry average gross profit margin for similar companies in the cannabis sector is approximately 30%. Village Farms' gross margin of 16% indicates a significant underperformance relative to industry peers. The operating margin average in the industry is around (5%), while Village Farms reports a margin of (10.4%).
Analysis of Operational Efficiency
Cost management remains a critical issue, as operating expenses for the nine months ended September 30, 2024, rose to $52,593 (21% of sales), compared to $49,980 (24% of sales) for 2023. This indicates improved efficiency relative to sales growth, despite overall losses. The cost of sales increased to $213,158 in 2024 from $172,958 in 2023, reflecting a 23% increase.
The decline in gross margin from 18% in 2023 to 16% in 2024 is attributed to an unfavorable sales mix and higher costs associated with non-branded products. The following table provides a detailed breakdown of key operational efficiency metrics:
| Metric | 2023 | 2024 |
|---|---|---|
| Cost of Sales ($) | $172,958 | $213,158 |
| SG&A Expenses ($) | $49,980 | $52,593 |
| SG&A as % of Sales | 24% | 21% |
| Operating Income ($) | $(9,040) | $(26,313) |
Debt vs. Equity: How Village Farms International, Inc. (VFF) Finances Its Growth
Debt vs. Equity: How Village Farms International, Inc. Finances Its Growth
As of September 30, 2024, the company reported total liabilities of $132,890,000. This includes both long-term and short-term debt. Specifically, the long-term debt was $34,604,000, while the current portion of lease liabilities was $2,489,000.
Debt Levels
The company has a significant amount of debt, with total current liabilities amounting to $62,625,000 and total long-term liabilities of $70,265,000. The aggregate annual principal maturities of long-term debt for the remainder of 2024 and thereafter are as follows:
| Year | Principal Maturity |
|---|---|
| Remainder of 2024 | $1,440,000 |
| 2025 | $5,759,000 |
| 2026 | $16,856,000 |
| 2027 | $17,348,000 |
| 2028 | $462,000 |
| Thereafter | $1,388,000 |
| Total | $43,253,000 |
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical measure of financial leverage. As of September 30, 2024, the total shareholders' equity was $274,350,000. The debt-to-equity ratio can be calculated as follows:
Debt-to-Equity Ratio = Total Liabilities / Total Shareholders' Equity
Debt-to-Equity Ratio = $132,890,000 / $274,350,000 = 0.484
This ratio indicates that the company maintains a relatively balanced approach towards debt and equity financing compared to industry standards, where the average debt-to-equity ratio typically hovers around 0.5 to 1.0 for similar companies in the agriculture and cannabis sectors.
Recent Debt Issuances and Refinancing Activity
In the nine months ended September 30, 2024, interest expense was $2,606,000, a decrease of 26% compared to $3,532,000 in the previous year. This reduction in interest expense indicates a decrease in the average outstanding debt balance under credit facilities, reflecting effective debt management strategies.
Balancing Debt and Equity Funding
The company has been proactive in balancing its debt financing with equity funding. In 2024, the company issued shares and raised approximately $24,772,000. The increase in equity has helped strengthen the balance sheet and support ongoing operations and growth initiatives.
As of September 30, 2024, the company had 112,337,049 shares issued and outstanding. This equity base provides a cushion against potential financial challenges and allows for flexibility in funding future projects.
Assessing Village Farms International, Inc. (VFF) Liquidity
Assessing Village Farms International, Inc.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio of Village Farms International, Inc. was calculated at 1.78, indicating a robust liquidity position. The quick ratio, which excludes inventory, stood at 1.52, suggesting that the company is well-positioned to meet its short-term obligations without relying heavily on inventory sales.
Analysis of Working Capital Trends
At September 30, 2024, working capital was reported at $65,441,000, a decrease from $79,612,000 as of December 31, 2023. This decline is primarily attributed to a decrease in cash and cash equivalents, which were $28,696,000 compared to $35,291,000 at the end of 2023.
| Date | Cash and Cash Equivalents | Working Capital | Current Ratio | Quick Ratio |
|---|---|---|---|---|
| September 30, 2024 | $28,696,000 | $65,441,000 | 1.78 | 1.52 |
| December 31, 2023 | $35,291,000 | $79,612,000 | N/A | N/A |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flows from operating activities were $9,936,000, a significant increase compared to $6,805,000 for the same period in 2023. Cash flows used in investing activities were ($8,227,000), while cash flows used in financing activities totaled ($8,718,000).
Cash Flow Breakdown
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $9,936 | $6,805 |
| Investing Activities | ($8,227) | ($3,523) |
| Financing Activities | ($8,718) | ($7,858) |
Potential Liquidity Concerns or Strengths
The decrease in working capital and cash reserves indicates a potential liquidity concern, particularly in light of the company's reliance on cash flows from operations. However, the increase in operating cash flow suggests an improving operational efficiency which may mitigate liquidity risks moving forward.
As of September 30, 2024, the company's total outstanding debt was comprised of:
| Loan Type | Maximum Availability | Outstanding Amount |
|---|---|---|
| Operating Loan | $8,556,000 | $4,000,000 |
| FCC Term Loan | $21,312,000 | $21,312,000 |
| Pure Sunfarms Loans | C$29,656,000 | $21,940,000 |
| Pure Sunfarms Revolving Line of Credit | C$15,000,000 | $0 |
Is Village Farms International, Inc. (VFF) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is – as the company reported a net loss attributable to shareholders of ($27,221,000) for the nine months ended September 30, 2024, compared to a net loss of ($9,315,000) for the same period in 2023.
Price-to-Book (P/B) Ratio
The P/B ratio is – as the book value of equity is impacted by a net loss and accumulated deficits. As of September 30, 2024, total shareholders' equity was $321,101,000.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is –, given that the Adjusted EBITDA for the nine months ended September 30, 2024 was $5,334,000.
Stock Price Trends
The stock price has experienced volatility over the last 12 months, with a high of $4.50 and a low of $1.50. The current stock price is $2.75.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
The analyst consensus on stock valuation is mixed, with ratings of 1 Buy, 3 Holds, and 1 Sell.
| Metric | Value |
|---|---|
| P/E Ratio | – |
| P/B Ratio | – |
| EV/EBITDA Ratio | – |
| Current Stock Price | $2.75 |
| 12-Month High | $4.50 |
| 12-Month Low | $1.50 |
| Dividend Yield | 0% |
| Analyst Consensus | 1 Buy, 3 Holds, 1 Sell |
Key Risks Facing Village Farms International, Inc. (VFF)
Key Risks Facing Village Farms International, Inc.
Overview of Risks: Village Farms International, Inc. faces several internal and external risks that can impact its financial health. These include industry competition, regulatory changes, market conditions, and operational challenges.
Industry Competition
The cannabis and agricultural sectors are highly competitive. The company reported a decrease in U.S. Cannabis sales by $2,489 for the nine months ended September 30, 2024, indicating a challenging competitive landscape.
Regulatory Changes
Changes in regulations can significantly impact operations. The company has faced legal settlements, including a $5,584 legal settlement related to the Tomato Brown Rugose Fruit Virus (ToBRFV) in 2023.
Operational Risks
Operational risks include production challenges and supply chain disruptions. The company noted a 15% increase in cost of sales primarily due to higher volumes in Canadian Cannabis, which can strain operational efficiency.
Financial Risks
Financial risks are pronounced, particularly with high debt levels. As of September 30, 2024, the total outstanding debt was approximately $39,900 (including C$29.656 million in Pure Sunfarms Loans). Additionally, the net loss attributable to shareholders was ($27,221) for the nine months ended September 30, 2024, compared to ($9,315) in the previous year, highlighting increasing financial strain.
Strategic Risks
Strategic risks arise from market positioning and brand management. The impairment of goodwill and intangible assets in the U.S. Cannabis segment amounted to ($11,939) for the nine months ended September 30, 2024. This indicates potential misalignment in strategic direction or market expectations.
Mitigation Strategies
The company aims to enhance operational efficiencies and leverage market opportunities in the Canadian Cannabis sector, which saw sales increase by $32,667 during the same period. The focus on improving gross margins is also a strategic response to these risks.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | Decreased U.S. Cannabis sales | ($2,489) |
| Regulatory Changes | Legal settlements | $5,584 |
| Operational Risks | Increased cost of sales | 15% increase |
| Financial Risks | Total outstanding debt | $39,900 |
| Strategic Risks | Impairment of goodwill | ($11,939) |
Future Growth Prospects for Village Farms International, Inc. (VFF)
Future Growth Prospects for Village Farms International, Inc.
Analysis of Key Growth Drivers
Product innovations and market expansions are pivotal for the growth trajectory of the company. In particular, VF Fresh sales for the nine months ended September 30, 2024, reached $125,883, a 10% increase from $114,125 in the previous year . This growth was largely attributed to a 12% rise in pounds sold and an increase in supply partner average selling prices .
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is expected to continue, with a projected average revenue growth rate of 6% from 2025 to 2028, followed by a terminal growth rate of 2% . For the nine months ended September 30, 2024, the adjusted EBITDA was $5,334, compared to $8,243 in the same period of the previous year .
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is pursuing strategic partnerships that enhance its operational efficiency and market reach. For instance, the gross profit from VF Fresh for the nine months ended September 30, 2024, was $40,469, showing an increase from $38,420 in the same period of the previous year . This reflects improved operational synergies and cost management efforts.
Competitive Advantages That Position the Company for Growth
Competitive advantages include a diversified product line and established relationships with supply partners. The gross margin for VF Fresh improved to 2% for the nine months ended September 30, 2024, compared to a gross loss margin of (1%) in the prior year. Additionally, the company achieved a net income of $376 for the three months ended September 30, 2024, compared to a net loss of ($951) in the same quarter of the previous year .
Financial Overview Table
| Financial Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Sales | $83,368 | $69,510 | $253,627 | $211,378 |
| Cost of Sales | ($67,660) | ($54,889) | ($213,158) | ($172,958) |
| Gross Profit | $15,708 | $14,621 | $40,469 | $38,420 |
| Net Income (Loss) | ($820) | ($1,299) | ($27,221) | ($9,315) |
| Adjusted EBITDA | $5,302 | $3,248 | $5,334 | $8,243 |
Village Farms International, Inc. (VFF) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- Village Farms International, Inc. (VFF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Village Farms International, Inc. (VFF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Village Farms International, Inc. (VFF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.