Village Farms Expands Cannabis Margins as Exports Climb
International export sales rose 74% to a record $20.9 million in the second quarter.
Village Farms International (VFF), the cannabis producer, expanded its cannabis gross margin nine percentage points to 51% as record yields, lower production costs and a favorable sales mix lifted profitability.
The improvement came despite modest cannabis-sales growth, reflecting a shift toward international markets. Cannabis gross profit increased 28% to $27.3 million, while cost of sales fell 11% to $26.2 million.
Consolidated net sales rose 7% from a year earlier and 27% sequentially to $64.0 million. Net income attributable to shareholders fell to $7.1 million, or $0.06 a share, from $26.5 million, or $0.24 a share, when discontinued operations contributed $16.3 million in the year-earlier period.
Cannabis sales reached a record $53.5 million, up 5% from $50.8 million a year earlier. International export revenue increased to $20.9 million from $12.0 million, while Canadian branded revenue declined to $23.0 million from $25.0 million and Canadian non-branded revenue fell to $3.0 million from $7.1 million. The company’s Canadian brands entered the top 10 nationally in every major product category for the first time, while maintaining a top-five overall market position.
Cannabis adjusted EBITDA from continuing operations rose 16% to a record second-quarter level of $15.3 million, with the margin widening to 28.5% from 25.8%. Consolidated adjusted EBITDA declined to $15.4 million from $17.1 million because the prior-year period included a one-time $4.3 million vendor settlement; adjusted EBITDA increased meaningfully after excluding that payment.
Cash increased to $73 million at quarter-end from $55 million three months earlier, helped by a registered direct offering of 7.5 million shares that generated about $15 million in gross proceeds. Quarterly operating cash flow declined 53% to $9.0 million, and first-half operating cash flow turned negative at $2.8 million from positive $22.1 million a year earlier.
Village Farms expects the Delta 2 expansion to produce about 15 metric tonnes in the second half of 2026 and reach its full annual run rate of 40 tonnes by mid-2027. Its Netherlands capacity is expected to reach about 10 metric tonnes annually and ramp to full production by the end of the first quarter of 2027 after the Phase II facility began cultivation during the quarter.