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CALL PARTICIPANTS
- Chief Executive Officer – Michael DeGiglio
- Chief Financial Officer – Steve Ruffini
- Chief Operating Officer – Ann Gillin Lefever
- Senior Vice President, Corporate Affairs and Investor Relations – Sam Gibbons
TAKEAWAYS
- Consolidated Net Sales — $64 million, representing 7% year-over-year growth driven primarily by international medical cannabis exports.
- Net Income — $7.2 million, or $0.06 per share, marking the fifth consecutive quarter of positive earnings since the company privatized its produce business.
- Adjusted EBITDA — $15.4 million, reflecting 24% of total sales compared to $17.1 million in the prior year period.
- International Export Sales — $20.9 million, growing 74% year over year and 43% sequentially due to increased market share in Germany.
- Cannabis Segment Sales — $53.5 million, an increase of 5% versus the second quarter of 2025.
- Cannabis Gross Margin — 51%, expanding from 42% last year due to a favorable product mix and lower production costs at the Delta campus.
- Netherlands Net Sales — $3.3 million, increasing 35% year over year as the company continues distribution in the coffee shop pilot program.
- Produce Net Sales — $10.2 million, increasing from $8.6 million in the prior year period due to strong production and favorable pricing.
- Delta 2 Production — 15 metric tons, representing the expected harvest from the greenhouse expansion in the second half of 2026.
- Total Capacity Target — 160 metric tons, the projected annual production of dried flower from the Delta campus upon completion of expansion projects.
- Cash and Cash Equivalents — $73 million, including proceeds from a $15 million equity placement with institutional investors.
- Total Debt — $40 million, carrying a blended interest rate of 5.6% as of June 30, 2026.
- Canadian Excise Taxes — $15 million, representing approximately 40% of gross retail branded sales in Canada.
- Capital Expenditures — $15 million, spent during the first six months of 2026 on expansion projects and technology enhancements.
- Income Tax Payments — $17 million, representing approximately 18 months of Canadian income taxes paid during the first half of the year.
- Share Buybacks — $7 million, executed during the first half of 2026 as part of capital allocation strategies.
- Groningen Capacity — 10 metric tons, the maximum annualized production capacity expected from the Phase II facility in the Netherlands.
- SG&A Expense — $18.8 million, increasing from $15.4 million last year due to updated transfer pricing policies and higher commercial costs.
- Clean Energy Revenue — $269,000, decreasing from $483,000 in the prior year period.
- Inventory — $46.7 million, compared to $41.5 million at the end of fiscal 2025.
- Trade Receivables — $32.4 million, increasing from $23.2 million at year end due to longer terms for international export sales.
- Pure Sunfarms Credit Facility Draw — 8.3 million Canadian dollars, utilized to support facility upgrades and technology enhancements in the Delta greenhouse.
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RISKS
- Mike DeGiglio warned, “There has been a decline in the non-compliance, so to speak, products that are flowing into Germany from multiple parts of the world,” which impacts market pricing for non-certified goods.
- Ann Gillin Lefever indicated that some domestic supply is returning to the Canadian market because of “international markets… testing requirements as well as some crackdown on greenwashing.”
SUMMARY
Management reported that Village Farms International, Inc. (VFF +3.36%) achieved its fifth consecutive quarter of positive net income following the privatization of its produce operations. Growth was primarily driven by international medical cannabis exports, particularly within the German market where the company has expanded its distribution network. The company is currently executing capacity expansions in its Delta facilities in British Columbia and its Phase II cultivation site in the Netherlands. Management indicated that these initiatives are designed to leverage economies of scale and utilize existing EU GMP certified infrastructure to meet rising global demand for pharmaceutical-grade cannabis products.
- CEO DeGiglio stated, “The German market continues to grow, and so has our share of the total market thus far in 2026.”
- Management reported holding four of the top 10 market share strains in Germany and stated that the company possesses the widest pharmacy distribution of any cultivator in that market.
- The company began cultivation at the Groningen facility in the Netherlands during the second quarter, with production expected to reach full capacity by the end of the first quarter of 2027.
- Management indicated that conversion of the second half of the Delta 2 greenhouse expansion is scheduled to commence on Sept. 1.
- CFO Ruffini noted that the company no longer maintains a restricted cash balance following the completion of the one-year escrow period related to the 2025 produce business transaction.
- CEO DeGiglio stated, “We’ve never engaged in the production of synthetic cannabinoids or related products,” noting that the company’s CBD facility operates to higher compliance standards.
INDUSTRY GLOSSARY
- EU GMP: European Union Good Manufacturing Practice, a pharmaceutical-grade quality standard for cannabis products.
- GACP: Good Agricultural and Collection Practices, a set of standards for the cultivation and primary processing of medicinal plants.
- Delta 2: The name of the company’s major greenhouse expansion project located in British Columbia.
- LP: Licensed Producer, a company authorized by Health Canada to produce and sell cannabis.
- Groningen facility: The company’s Phase II cultivation site located in the Netherlands.
- BHB: Balanced Health Botanicals, the company’s U.S.-based CBD platform.
