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The Canadian cannabis arm of plant-based consumer packaged goods company Village Farms International saw rising sales in the second quarter ended June 30 on strong export growth.
Village’s Canadian cannabis segment saw gross sales rise to 56.5 million Canadian dollars ($42.1 million) in the quarter, up 8% over the same period last year, the company said Wednesday.
The Vancouver, British Columbia, company’s Canadian cannabis segment consists of wholly owned producer Pure Sunfarms, based in B.C.., and 70% owned Rose LifeScience, a licensed cannabis producer headquartered in the province of Quebec.
Net sales, however, declined 1% in the quarter when taxes are factored in.
Canadian cannabis was Village Farms’ most profitable unit, with net income of CA$1.7 million in the quarter, down slightly from CA$2.3 million last year.
The company’s produce unit reported a $698,000 net loss.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the Canadian cannabis unit nearly doubled to CA$6.7 million in the quarter.
“In our view, Canadian cannabis is performing well amid challenging industry conditions; the Company saw an 18% year-over-year increase in branded sales and posted positive adjusted EBITDA for the 19th consecutive quarter,” Toronto-based analyst Frederico Gomes of ATB Capital Markets wrote in a note to investors.
The analyst said the company’s international business showed strong growth.
Canadian cannabis exports surged 217% year-over-year to CA$1.9 million for the three months ended June 30.
In the United States, the company’s cannabis-related sales were $5.3 million in the second quarter, down from $5.8 million in last year’s quarter.
“In our U.S. Cannabis business, the success of our innovative new products and prudent cost management have stabilized this business,” Village Farms CEO Michael DeGiglio said in a statement.
“Sales for the second quarter increased sequentially, while each of net income, adjusted EBITDA and cash flow were all positive.”
In April 2023, Rose LifeScience reached a deal to provide supply-management and distribution services to rival cannabis producer Hexo Corp. in Quebec until the close of the acquisition of Hexo by Tilray.
“As this transaction closed on June 22, 2023, all of Tilray’s sales including the now acquired Hexo Quebec sales will continue to be managed, for a distribution fee, by Rose LifeScience,” the company stated.
Shares of Village Farms trade as VFF on the Nasdaq exchange.