Village Farms International Reports $336.18 Million in Sales for 2024, Faces Net Loss and Operational Challenges

Village Farms International, Inc. (VFF) reported sales of $336.18 million for the year ended December 31, 2024, an 18% increase compared to $285.60 million in 2023. This increase was primarily driven by a $34.83 million rise in Canadian cannabis sales and a $17.94 million increase in produce sales, partially offset by a $2.94 million decrease in U.S. cannabis sales. The company's net loss attributable to VFF shareholders was $35.85 million in 2024, a slight 3% increase from the $34.80 million loss in 2023. Adjusted EBITDA decreased to $1.79 million in 2024 from $7.58 million in 2023, largely due to a non-cash inventory impairment of $10.44 million (C$15 million) in the Canadian cannabis segment.

Cost of sales increased by 22% to $288.78 million in 2024, reflecting increases in both the Canadian cannabis and produce segments. Selling, general, and administrative expenses rose by 8% to $71.05 million, primarily due to higher commercial and marketing expenses in the Canadian cannabis segment and increased share-based compensation. Goodwill and intangible asset impairments totaled $11.94 million in 2024, primarily impacting the U.S. cannabis segment due to underperformance relative to budget and new restrictions on CBD sales. The company's effective tax rate for 2024 was 4.5%, which included a change in valuation allowance against deferred tax assets.

Significant developments during the year included the completion of the acquisition of Leli Holland B.V. in the fourth quarter of 2024, giving VFF a license to cultivate and distribute cannabis in the Netherlands. The company also launched new cannabis products in Canada, including The Canna Czar and Super Toast All-In-One Vape. In the U.S. cannabis segment, Balanced Health Botanicals announced the in-house manufacturing of its hemp-derived gummies. In the produce segment, VFF reported cost reductions in Texas operations and is exploring a transformative change to enhance financial and operational performance, including an ongoing sale process for its Monahans greenhouse facility. The Delta RNG Project, a renewable natural gas facility, commenced operations in 2024 and contributed incremental cash flow and profitability.

The company's Canadian cannabis segment maintained a top-three producer position in Canada, expanding its market share in dried flower and holding the second-largest market share in pre-rolls for 2024. International medicinal cannabis sales increased to $10.9 million in 2024, with significant growth in shipment volumes. The company's application for a Texas medicinal marijuana license remained pending at the time of the filing. VFF noted material weaknesses in its internal controls over financial reporting, primarily related to information technology general controls and the review of journal entries. These weaknesses, while not resulting in misstatements, created a reasonable possibility of undetected material misstatements.

VFF's outlook remains subject to several risks, including the uncertain legal status of cannabis in the United States, potential future impairments, and the need for additional financing. The company's ability to regain profitability and achieve future growth depends on managing profit margins, attracting and retaining customers, and successfully managing its growth strategy. The company also faces risks related to competition, regulatory changes, and access to banking services. The company's common shares are subject to volatility and the risk of delisting from Nasdaq if the minimum bid price requirement is not met by April 16, 2025.