VFF

Image source: The Motley Fool. Monday, Aug. 10, 2026 at 8:30 a.m. ET 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 Operator: Good morning, ladies and gentlemen. Welcome to Village Farms International's second quarter 2026 financial results conference call. This morning, Village Farms issued a news release reporting its financial results for the second quarter ended June 30, 2026. That news release, along with the company's financial statements, are available on the company's website at villagefarms.com under the Investors heading. Please note that today's call is being broadcast live over the Internet and will be archived for replay both by telephone and by the Internet, beginning approximately 1 hour following completion of the call. Details of how to access the replays are available in today's news release. Before we begin, let me remind you that forward-looking statements may be made today, during or after the formal part of this conference call. Certain material assumptions were applied in providing these statements, many of which are beyond our control. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements. A summary of these underlying assumptions, risks, and uncertainties is contained in the company's various securities filings with the SEC and Canadian regulators, including its Form 10-K MD&A for the year ended December 31, 2025, and 10-Q for the quarter ended June 30, 2026, which will be available on EDGAR and SEDAR+. These forward-looking statements are made as of today's date and, except as required by applicable securities law, we undertake no obligation to publicly update or revise any statements. I would now like to turn the call over to Michael DeGiglio, Chief Executive Officer of Village Farms International. Please go ahead, Mr. DeGiglio. Mike DeGiglio: Thank you, [ Liz ]. And good morning, everyone. And thank you for joining us for our second quarter results. With me today are Steve Ruffini, our Chief Financial Officer, and Ann Gillin Lefever, our Chief Operating Officer, and [ Sam Gibbons ], our Senior Vice President, Corporate Affairs and Investor Relations. I will begin with my customary review of our highlights from the quarter, then Steve will review the segments and financials in more detail before I make some last closing comments. Our second quarter results continue to demonstrate the strength of our expanding global cannabis platform, driven by record cannabis revenues as we continue growing in target markets and product categories in the countries we currently operate in. We delivered our fifth consecutive quarter of positive net income and earnings per share since we privatized our legacy produce business last year. And as we noted in this morning's press release, we're having a record year of production in our Delta, British Columbia facilities, which has contributed to stronger margin performance. Consolidated net sales growth was strong, and we achieved record cannabis harvest yields from our Delta facilities through the first half of 2026, with that including the first harvest from our Delta 2 expansion. Record yields combined with greater operating efficiencies have resulted in lower cost of production and favorable sales mix also helped drive nearly 10 percentage points of year-over-year gross margin expansion, which translated to strong operating leverage as adjusted EBITDA and net income meaningfully outpaced total sales growth. I will also note that when excluding a one-time $4.3 million vendor settlement, which was tied to our legacy produce business, our EBITDA received in the second quarter of last year as a comparison, consolidated adjusted EBITDA increased meaningfully year-over-year to $15.4 million with a record Q2 cannabis segment performance. Moving on, in Canada, we've gained traction on our efforts to grow market share in convenience product categories. And for the first time, our brands have achieved top 10 market share in all major categories with continued growth in vapes and infused pre-rolls. We've discussed our focus on strengthening our position in convenience product categories for several quarters, and we're encouraged by this progress, which has been entirely organic and builds in-house capabilities, which we'll apply to non-Canadian markets as well in the future. It was also another record quarter of international export sales, which grew 74% year-over-year and 43% sequentially, as we continue to benefit from our competitive advantage with the world's largest EU GMP certified cannabis facility. We discussed on last quarter's call that we believe EU GMP certified product is a competitive advantage which drives strong growth and profitability, and we're pleased to prove it with today's results. This is an underappreciated Village Farms strength, strategically built over the past 5 years into the supply chain for our international customers. Without giving complete details for competitive reasons, our own sales mix of GACP to EU GMP certified product has improved significantly since we completed the facility upgrades we discussed last quarter. As we stated, these upgrades made our Delta campus the world's largest EU GMP certified facility by total compliant product volume, and our higher sales mix of EU GMP certified product improved our margins during the second quarter. Some of our peers have discussed these challenges on their earnings call publicly for the first time over the last couple weeks, and we've been saying demand for EU GMP compliant product is continuing to increase. Importantly, the German market continues to grow, and so has our share of the total market thus far in 2026. We most recently held 4 of the top 10 market share strains, and based on our own internal research, we believe we have the widest pharmacy distribution of any cultivator with product in Germany today. We have a strong growing share of Europe's total addressable cannabis market, and we remain very excited about the opportunities we see in the U.K. and Australia. And we continue to expect that we will enter new European jurisdictions in the second half of this year. For a quick reminder of our Delta 2 expansion project, the Delta 2 expansion is the conversion of the second half of the 1.1 million square foot Delta 2 greenhouse. As previously stated, we are completing the conversion in phases, one half of the expansion at a time. The first is completed and in production and the second half conversion will commence on September 1st. We continue to expect that we will harvest an incremental 15 metric tons of production from this D2 expansion this year, with an additional 25 tons harvested from the expansion in 2027. We will be on a full 40 metric ton run rate starting with the third quarter of '27 and with the full 40 tons of incremental capacity available beginning fiscal 2028. Once completed, the D2 expansion will bring our total annualized production in Delta to approximately 160 metric tons of dried, trimmed flower annually. All of this will drive further economies of scale, cost efficiencies, and improve flexibility to meet demand from our customers, consumers, and patients in Canada and around the world where we operate. As a reminder, any future conversion of our [ Delta 1 ] greenhouse would more than double our annualized production capacity. Turning now to our recreational cannabis business in the Netherlands. We are continuing to maintain strong distribution with participating coffee shops and have been focused on expanding our product assortment to create more value for coffee shop owners who are looking to differentiate their menus. We remain incredibly excited about the Netherlands market and feedback from participating municipalities and coffee shop owners about the pilot program has been overwhelmingly positive thus far. The government is expected to issue a report with an internal review of the program later this summer, and we're quite optimistic that this will also reflect positively on the program. As we discussed on last quarter's call, we experienced a slight delay with final approvals of our Phase 2 facility. But we did begin cultivating in the Groningen facility in Q2. Groningen is expected to ramp up to its full production capacity over the course of the next few quarters, positioning us for another step function of growth next year. We're committed to being a strong community partner and employer and believe there is tremendous long-term upside potential for Village Farms in the program if it is ultimately expanded, which could increase the total addressable market in the Netherlands for our products by nearly tenfold compared to where we are today. In summary, we are pleased with our second quarter results, which continue to reflect our disciplined execution. We closed the second quarter in a strong position with $73 million in cash after completing the previously disclosed equity placement with U.S. institutional investors. We believe increasing institutional ownership alongside the support of retail shareholders will be critical for the global cannabis industry to succeed. And we believe both will benefit long-term from their investment in Village Farms. With capital expenditures from our Canadian and Netherlands expansions nearly complete, we are in an excellent position to deliver stronger free cash flow and continuing growing of our cash balance during the second half of this year. This concludes my introductory remarks, and now I'll turn the call over to Steve. Steve? Steve Ruffini: Thanks, Mike. I'll start with a review of our consolidated Q2 results. All figures referenced reflect U.S. dollars unless otherwise noted. Consolidated net sales increased 27% sequentially and 7% year-over-year to $64 million, driven by continued international growth. Consolidated net income from continuing operations was $7.2 million, or $0.06 per share. The unfavorable variance compared to last year was the result of a one-time vendor settlement of $4.3 million received in the second quarter of last year. Excluding this impact, net income from continuing operations would have increased significantly as a result of our record Q2 performance. Consolidated adjusted EBITDA from continuing operations was $15.4 million, or 24% of sales, compared to $17.1 million, or 28.5% of sales in Q2 of last year, with the unfavorable variance similarly driven by last year's vendor settlement. Excluding this impact, consolidated adjusted EBITDA would have increased approximately 20%. Turning now to our cannabis segment. Total net sales was $53.5 million for a 5% increase versus Q2 of last year. The year-on-year improvement was driven by the strong performance in our international medical exports, which increased 74% over Q2 of last year and 43% sequentially, predominantly from Village Farms taking a larger share of the German market. As we discussed last quarter, we experienced a slight delay in the commencement of operations at our Phase II facility in the Netherlands. But Q2 sales increased 35% year-over-year to $3.3 million. Groningen is now operational and will begin contributing to stronger growth. As Mike mentioned, we expect Groningen to ramp to full production capacity by the end of Q1, positioning for continued growth through 2027. Cannabis gross margin was 51%, up 900 basis points from 42% in Q2 of last year, reflecting a favorable product mix, increased operating efficiencies, and a lower cost of production at our Delta production campus. Total SG&A as a percentage of sales was 28% compared to 23% in Q2 of last year, reflecting an update to the company's transfer pricing policies as well as higher commercial and marketing expenses. The update to our transfer pricing policy is directly attributable to the sale of our produce business a year ago. So a higher percentage of our corporate expenses are now directly allocated to our cannabis business versus prior years. Q2 adjusted EBITDA from continuing operations for cannabis improved 16% to a record of $15.3 million, up from $13.1 million in Q2 of last year, resulting in an adjusted EBITDA margin of 29%. Q2 cash flow from cannabis operations was a positive $8.9 million compared to a positive $19.2 million in Q2 of last year. The variance driven by Canadian income tax payments which did not occur during the prior year, as well as changes in non-cash working capital items as terms on export sales are generally longer than in the Canadian market and as we expand our production footprint in Delta 2. We believe we are the first and only major Canadian public cannabis LP in the position of paying corporate income taxes, which remains a testament to the strength of our operating capabilities and a sign of a sustainable, long-term, profitable platform. As we do each quarter, I will point out that in Q2 we also paid Canadian excise taxes on our retail branded sales of $15 million, nearly 40% of gross retail branded sales. Turning to the balance sheet, where I'll note that we no longer carry a restricted cash balance after the completion of the 1-year escrow period as part of our produce transaction last May. We ended the first half of the year with cash of approximately $73 million. For the first 6 months we generated close to [ $21 million ] from continuing operations before working capital adjustments. Working capital adjustments were significant in the first 6 months of this year, in particular due to the payment of essentially a full year and a half of Canadian income taxes, totaling $17 million, and that's in U.S. dollars. During the first 6 months, we also spent $15 million in CapEx, paid $51 million (sic) [ $31 million ] in excise taxes, as well as $7 million in share buybacks, and completed a $15 million equity placement with two key U.S. institutional investors. We remain very comfortable with our long-term debt level, which was approximately $40 million at a blended interest rate of 5.6% as of June 30, 2026. During the quarter, we drew down an incremental CAD 8.3 million on our Pure Sunfarms credit facility to support our Delta facility upgrades and technology enhancements. We're in a net cash position of $33 million, and as Mike mentioned, we expect to grow our cash balance for the remainder of the year with stronger free cash flow during the second half. Our board and management will continue to evaluate capital allocation decisions on a quarterly basis, and we expect to maintain a balanced approach to capital allocation to drive returns to shareholders. I will now turn the call back to Mike for some closing comments. Mike DeGiglio: Thanks, Steve. Before we open the call to questions, I'd like to recognize the continued execution of our team members around the world. Our team have undertaken significant development projects this year while continuing to deliver outstanding results. I personally thank all our folks who continue to lead us forward. In closing, we feel we've had an excellent first half of 2026, and we're proud to continue demonstrating the strength and durability of our global operating model. With industry-leading profitability and a global cannabis business that is approaching 50% of revenues from growing international markets, we're positioned for continued profitable growth regardless of our entry point or timing into the U.S. market. We remain encouraged by what we see in the U.S. regulatory landscape, and we're pleased to see that the U.S. Congress provided an extension for full-spectrum CBD products into December, which will give them time to potentially find a workable permanent solution. As you know, we've never engaged in the production of synthetic cannabinoids or related products. Our BHB CBD facility has always operated to the higher standards. We're incredibly proud of that team and still see a lot of opportunity for BHB depending on how things settle out. But we're looking forward to the rules of engagement being finalized so we can start planning accordingly. I will reiterate something I mentioned last quarter. We are pleased that we've become a partner of choice and are recognized as a strong leader in the global cannabis industry. But we will only pursue opportunities that are strategically compelling and supportive of long-term shareholder value creation. We have a considerable upside potential in our Netherlands business, Canadian and U.S. assets, and ownership interest in [ Vindextra ], and we believe Village Farms remains one of the most attractive cannabis growth platforms and investment opportunities in the world. We will now take time to answer some questions. Operator: [Operator Instructions] Our first question comes from Aaron Grey with Alliance Global Partners. Aaron Grey: Congrats on the strong quarter. I want to talk a little bit more about international and the medium-term opportunity. Maybe give some color in terms of some of the demand supply bottlenecks you might have near-term and how those get alleviated as 1H and 2H expansion for Delta 2 are completed. And this maybe just talk about long-term, your confidence to remain with a competitive advantage, even with potential for U.S. exports. Mike DeGiglio: Okay, good morning, Aaron. A few questions in there. Yes, we remain confident that we'll continue to expand. As I said in my call, we still have Delta 1 availability behind the expansion of Delta 2, and that's a 33% increase with expansion, bringing us to the 40 incremental metric tons going forward. So we don't talk much about Delta 1, but that is always a possibility for us, and it's even a possibility for export to the U.S. market, depending on how things shape out in the future. So we think we can continue to meet our EU GMP growth as well going forward, and we feel confident about Germany continuing to grow going forward. As far as pricing, we haven't seen a decline in our pricing. There has been a decline in the non-compliance, so to speak, products that are flowing into Germany from multiple parts of the world, but you really need to be an EU GMP compliant partner. And I could say this, as far as your question for the U.S., I'm not saying U.S. single-state, multi-state operators won't be there. But I can tell you from our experience in the last 6 years, it is not easy. It's just not a matter of getting a DEA export license, not just qualifying for EU GMP, but not just getting there on your initial certification, but maintaining it is even more difficult. So, you know, I wish everybody luck, and as far as I'm concerned, we may be a U.S. exporter of EU GMP in the future as well. So I think we have a great position right now that we can continue to build on. And I think we're in a strong position going forward over really anybody who wants to focus on EU GMP for the European market. Aaron Grey: Second question for me, just talking about the EBITDA margin profile, I've seen some nice expansion in the past two quarters. How best to think about the long-term EBITDA margin aspirations as we think about all the puts and takes of your sales growth opportunities and potential broader sales pressure with the pricing pressure within cannabis. Steve Ruffini: Our continued long-term focus is the 30% to 40% for our gross margin, our EBITDA margin. Certainly in the mid-20s, it's possible. You know, we continue to be very focused on managing our costs. Obviously, the EBITDA margin and gross margin are also somewhat dependent on demand and supply. And, you know, as more people enter the market, there could be some price pressure, but now we're, as Mike mentioned, we're continuing to see very strong pricing for EU GMP, and we'll continue to get some economies of scale as we expand our Delta facility platform over the ensuing years. Mike DeGiglio: Yes, and if I could add to that just with the increase show the efficiency of our operation because complying with EU GMP significantly increases your cost of production. So when you're looking at others who may start to index on EU GMP out of the U.S., they should plan for much greater costs of production and overall costs to get there. So that's, well, you know, that's not really identified in our numbers. It just shows the power of large-scale, efficient operations. And the bigger we get, the lower we believe our costs will be going forward. So we see that as a great advantage. You really need a large-scale footprint to index. Operator: Our next question comes from Doug Cooper with Beacon Securities. Doug Cooper: Terrific work in the quarter. A couple of things. First of all, in Germany, you're up 70-odd percent year-over-year, up 43% sequentially. What did the market grow and therefore, what kind of market share did you gain, do you think? Mike DeGiglio: Hi, Doug. Good morning. It's really hard to know. There was some indication of that being tracked in Germany, which is not really happening, so we have to really rely on internal numbers. And those numbers have been anywhere from sort of 8% to 15% internally, but I can't really verify it, so probably won't go there right now. But I can tell you that we have 4 of the 10 top strains and with the percentage of growth, I think that outweighs others as far as the growth potential. Ann, do you want to put some color on it? Ann Gillin Lefever: Yes, I agree. It's hard to quantify. But there's also for us, we do monitor our distribution penetration and we have been growing in locations where we're distributing or where our cultivars are distributed. Doug Cooper: Okay, that's good color. I guess there's visibility. How do investors view the visibility of growth in Germany? Like, obviously, it's a big part of your growth and margin expansion story. So, you know, looking out into 2027 and beyond, you know, how do we get comfort that they're going to continue to grow as much as they have been? Mike DeGiglio: I think projections are pretty astronomical over the next 5 to 6 years towards 8,000 tons. So even if it was half of that, it would be a huge upside. And patient enrollments overall are still very low. It's probably in the single digits. Ann Gillin Lefever: Low single digits. Very low single [ digits ]. Mike DeGiglio: Yes, low single digits. So I think we're very confident that the growth will continue at least for the foreseeable future, at least 5 years maybe more. Doug Cooper: And do you foresee ultimately getting a footprint in Europe to feed that demand? Mike DeGiglio: Probably. Talk to you offline on that one. Doug Cooper: A couple quick ones. CapEx remaining for the second half of '26 and '27? Mike DeGiglio: We really don't have anything on the front burner right now for CapEx internally. We spent most of the CapEx now, even though we indicated that we're breaking ground on the second half of Delta 2 August 1st. I mean, we procured all the material we need. The Netherlands is fully built out, so there's really nothing right now that we're looking at. Doug Cooper: Okay, and final one, if I could, just on the produce side, I see, or produce and other, I guess, I see that gross margin expanded to 26% from 11% last year. What do you attribute the profitability? I know it's not a huge part of your business anymore, but just what do you attribute that improvement in profitability to? Steve Ruffini: Pricing was very strong in Q2, as well as we had strong production and we had strong pricing. So as we've said for years, Doug, it's a commodity-driven business. The demand was strong, in particular in April and May, and we had very good early production out of Delta 1, which I continue to believe is one of the most profitable, or if not the most profitable greenhouse in North America, but obviously everyone else is private. I can't prove that, but someday hopefully we can prove it with campus. Mike DeGiglio: Yes, and one of the catalysts, real quick, was under the U.S. Trump administration. There's been this suspension agreement with Mexico for 22 years. And that suspension was stopped, which increased the 17% tariff on Mexican imports of tomatoes. So as Steve said, price demand that helped drive that balance better in favor of pricing in the U.S. So that occurred about a year ago and seeing less capacity coming out of Mexico. Operator: Our next question comes from Frederico Gomes with ATB Cormark. Frederico Yokota Gomes: I want to go back to margins. Pretty impressive this quarter. You referenced, I guess, your long-term target of 30% to 40% again, but how sustainable do you think those, you know, high 40s margins are short-term especially as you increase the sales mix towards international, maybe reaching that 50% that you mentioned. So, you know, that's number one. And then secondly, obviously, I guess a portion that's not only sales mix, but cost of production. And you mentioned improvements there, but can you maybe just elaborate on that? I mean, what's driving that continued improvement and how can you be, you know, more efficient as you scale? Mike DeGiglio: Well, there's a number of drivers, but not just on pricing, which we see. For the foreseeable future, we see maintaining our margins in Germany. We feel very confident about that. But we've always mentioned for many years about continuous improvement and continuing to drive our costs down. I mean, that's number one and most prudent. You have to drive your costs down. And this was the first half of this year demonstrated that we are able to continue to drive our cost of production down. That's a factor of yield increases, more efficiency in how we operate. So that showed strongly this first half of the year. And in our long history of growing multiple crops, there's no end to increasing efficiency. So you have to take that into account. If you look at Canada, I think Canada's become somewhat of a mature market now, 10 years later. It's got single-digit growth. And at some point, the pricing more or less is plateauing, depending on convenience brands, pure flower, but it's not going to have great changes, I think, over the long term. So yes, we feel pretty comfortable. I mean, Steve said, we've always said our target margin is 30% to 40%, but that doesn't mean that we're not going to try to do better as we've demonstrated this quarter. And scale matters. It's just you can't get around it. The largest, you know, it's ultimately a fixed cost business. The variable component is very, very small, at least on the cultivation side. So the larger you can get, you can really hammer down your cost of production. Frederico Yokota Gomes: Thank you, Mike. I appreciate that. And then secondly, you mentioned that pricing is maybe plateauing in Canada. Can you comment on how the domestic prices have evolved recently? I know that we talked about how international is maybe benefiting domestic prices, but anything on the recent trend in terms of pricing domestically? Ann Gillin Lefever: Good morning, Frederico. A couple of things. We are seeing some more supply come back into the Canadian market. We think it's tied to the testing requirements that the international markets have, as well as some crackdown on greenwashing. And so within the flower category in particular and some of the close derivatives, we're seeing a little bit of a mix emerging towards the lowest value segment, which we think is, you know, again, folks using that outlet to raise cash on existing biomass. We're continuing to invest. We've, as Mike highlighted in the remarks, we've spent a lot of time building into our convenience categories, and so, we see those plus the dominant position we have as flower as a way for us to continue to drive the mix and price in the market. Operator: Our next question comes from Pablo Zuanic with Zuanic & Associates. Pablo Zuanic: Congratulations on the very strong export numbers. The first question, Mike, and I think we've talked about this before. You know, if you can give more color about your route to market in Europe, or is it pretty much an FOB model in which you sell to distributors and they take care of the distribution and sell into pharmacies? Or color in terms of how your company is involved in that selling effort. That would help. And by the same token, you know, whether at some point you see opportunities to sell branded product there. Now the second part of the question is, as you expand your scale and your capacity, does that model hold, or do you need to invest in downstream assets to gain more control over your distribution in Europe. Mike DeGiglio: On that branded question, I would say absolutely. As I said, we know our strengths, we have 4 of the top 10. So our brand is in work, that is part of the future. So absolutely there. As far as downstream, yes. You know, we sat back and watched what others have done. If you really look at, say, Germany as an example, going back 8 to 10 years, the evolution is pretty incredible from Malta to Portugal to others building small assets in Germany. We don't think they've ever made money. So we've watched all this capital over many years being spent with really no return. And now, of course, the GACP magic wand approach is not really working. As Ann mentioned, that's why we see more capacity in the Canadian market, because this is a pharmaceutical-grade cannabis product, and the regulators are coming down on those who can't meet that uniform criteria as EU GMP and that we've never strayed away from that. So, to answer your question, as we sat back and looked at the landscape, who's developing, we've looked at valuations, for example, in some cases. We puked when we saw some of these ridiculous valuations. We're taking our time, but I would say yes, we see ourselves being much more vertically integrated in the European theater going forward for sure. Yes, and as far as your first question, what was your first question? I'm sorry. Ann Gillin Lefever: I'll jump in. Mike DeGiglio: No, no, go ahead. Go ahead, Ann. Ann Gillin Lefever: Pablo, you asked about our route to market specifics. And I just want to roll back a little bit and say right now the playbook in international is not unlike how we set up in Canada. We were initially very much B2B oriented. And then as we got the, essentially the cost of goods sold right, the COGS line, we started to invest in the SG&A. So I think you should expect us to do that. We have great distributor partners around the world, frankly. And we've stayed focused on getting the best quality product into the market as our first step. Pablo Zuanic: Yes, no, no, that's great color. Thank you. And I'm sure you're hearing the Curaleaf conference call. They mentioned you're a key supplier of theirs. I don't think that's already happening or it's in the future, but congrats for that. Look, on the same topic, when I try to think of your $21 million number for the quarter. I mean, in very simplistic terms, I would call that an FOB number. And what some of your peers, larger Canadian peers report, it's pretty much landed almost to pharmacy number, right? So the numbers are not comparable. I mean, I don't know if we have a way to calculate this, but are you really the largest Canadian exporter by volume? Or am I exaggerating there? Ann Gillin Lefever: We think we are the largest Canadian exporter by volume. Pablo Zuanic: Okay, thank you. Look, and the last question, moving on to Texas, with the 12 licenses already issued, provisional licenses, is that door pretty much shut? Is that window for Village Farms to win a license through the process, is that window shut? And the only option for you to enter Texas is by buying one of those drug licenses? Mike DeGiglio: I would say no. I mean, first of all, as you pointed out, these are conditional licenses. They're not licenses yet. And there's a lot of noise out there of what people are doing. And we know Texas well, so one, to answer your question, I don't necessarily think that it's 100% sure we won't get a license. If you, we've spent a lot of time and done a lot of homework on who received them. And I think it's still yet to be determined what the final number of those licenses will be. But I can't say one way or another we plan to be in Texas and just kind of leave it at that at this point. Pablo Zuanic: Thank you. Mike DeGiglio: Thank you, Pablo. Operator: That concludes today's question-and-answer session. I'd like to turn the call back to Mr. DeGiglio for closing remarks. Mike DeGiglio: Thank you everyone for participating in today's second quarter call and we very much look forward to reporting come November for our third quarter. Have a great week. Bye. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. 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Download the Complete Report Here Key Takeaways: LOCL’s 2Q results reinforce the transition from facility build-out toward yield, customer mix, SKU expansion, and operating leverage. Revenue increased 14% y/y to $13.9 million from $12.1 million and rose ~4% sequentially from $13.3 million, driven by higher production and sales from Georgia, Texas, and Washington. 1H26 revenue reached $27.2 million, up ~15% from $23.7 million in 1H25, extending the growth trend as LOCL converts higher output from its installed asset base into retail sales. Adjusted EBITDA loss narrowed 17% y/y to $5.8 million from $7.1 million and was broadly stable versus $5.7 million in 1Q26. The y/y improvement indicates that higher revenue and tighter cost discipline are beginning to translate into operating leverage despite temporary gross-margin pressure during the quarter. With the three Stack & Flow-enabled facilities already at full harvestable capacity, incremental growth is increasingly coming from better asset productivity, although further gross-margin improvement is needed to accelerate progress toward positive adjusted EBITDA. Food safety and traceability emerged as an important strategic theme this quarter, increasing retailer focus on the attributes that differentiate LOCL’s controlled-environment model. Retail sourcing conversations that historically centered on cost and availability are increasingly incorporating water sourcing, environmental control, traceability, and food-safety monitoring. This shift is visible more broadly, with FMI’s 2026 research indicating that 31% of responding retailers plan to add food-traceability technology capabilities this year, while recent produce-safety events have highlighted the commercial impact of supply-chain exposure, with U.S. fresh-lettuce unit sales falling 9% w/w during July’s Cyclospora outbreak, per NielsenIQ data. Against this backdrop, LOCL’s seed-to-package controlled environment and closed-loop water management reduce exposure to several variables associated with open-field agriculture, including runoff, wildlife, and changing outdoor conditions. With approximately 13,000 retail doors already serviced, this strengthens LOCL’s positioning with retailers seeking more traceable, controlled, and resilient fresh-produce supply and could support deeper commercial relationships over time. Commercial momentum continued to build as previously announced wins converted into active placements and new accounts broadened distribution entering 2H26. The six-SKU Harris Teeter rollout across more than 250 stores and a separate large regional retailer covering approximately 160 stores are now fully launched and tracking in line with expectations. The account base expanded further after quarter-end, with a new Mid-South retailer launching five SKUs across approximately 66 stores in July and a Rocky Mountain partner beginning shipments of four SKUs across approximately 110 stores in early August. LOCL also received bid awards during 1H26 extending supply arrangements with multiple national retail accounts across baby leaf lettuce and organic butter lettuce through 1Q27. The progression from account wins to multi-SKU launches and longer supply commitments provides greater demand visibility and should support more efficient crop planning and facility utilization as retail programs scale. The single-serve salad-kit relaunch adds a potentially meaningful value-added growth vector, while Romano Caesar and arugula continue to broaden LOCL’s opportunity within existing retail relationships. Following discussions with a major retailer, LOCL agreed to relaunch its single-serve salad-kit line through a Mid-Atlantic pilot covering approximately 400 stores this fall. The initiative builds on encouraging performance from the family-sized Romano Caesar Salad Kit, which recorded a 75% increase in baseline velocity in 4Q25; an additional distribution center launched in May 2026 and has since reached velocities comparable with the existing network. Arugula also remains an active growth opportunity following successful 2025 launches from Washington and Texas, particularly where conventional supply has struggled to consistently meet retailer demand. Together with baby leaf and organic butter lettuce program extensions through 1Q27, these initiatives give LOCL additional ways to deepen shelf presence and expand revenue per retail relationship without requiring a proportionate increase in physical capacity. Yield remains the primary operating growth lever, with Georgia, Texas, and Washington sustaining the approximately 10% higher run-rate capacity benefit from tower upgrades completed in 4Q25. The three Stack & Flow-enabled facilities continue to operate at the highest yield levels in company history, with tower upgrades completed in 4Q25 supporting approximately 10% higher run-rate yield capacity. Revenue increased 14% y/y in 2Q26, driven by increased production and sales from Georgia, Texas, and Washington, providing evidence that higher facility productivity is translating into incremental volume. These gains allow LOCL to increase production from the existing facility base and support continued revenue growth without adding comparable new capacity. California is beginning to provide a second proof point for the yield-led strategy, while network-wide cost initiatives broaden the path to improved unit economics. Selective investments at the California facilities remain targeted to generate as much as a 20% improvement in yields, with initial work at one location already driving an approximately 10% increase in total production versus the prior-year period. At the same time, more efficient seeding practices reduced seed costs approximately 20% y/y, while additional savings are being pursued across procurement, maintenance, labor efficiency, and freight management. These initiatives complement the ~10% yield-capacity improvement across Georgia, Texas, and Washington and reinforce the broader strategy of extracting more output at lower unit costs from the existing network. The benefits were partly obscured in 2Q26 by temporary Georgia packing inefficiencies, making gross-margin recovery an important 2H26 indicator of whether these operating gains are translating into reported profitability. Strategic partnership discussions are gaining relevance as retailer interest in controlled supply increases, while LOCL continues to keep future capacity tied to committed demand. Food-safety concerns are increasing the urgency of strategic retailer discussions, while LOCL reaffirmed its existing demand-backed approach to future capacity. Additional Stack & Flow-enabled capacity, including potential Midwest expansion, remains under review, with timing and configuration being evaluated alongside retailer discussions and product-specific requirements. This approach allows LOCL to prioritize growth from higher yields and deeper retail penetration before committing capital to additional capacity. A demand-backed expansion model could help LOCL scale distribution while limiting the capital intensity associated with its earlier build-out phase. This becomes increasingly relevant as retailers place greater emphasis on traceability, food safety, and regional supply reliability. Adjusted gross margin temporarily moderated to 27% as Georgia’s channel diversification introduced packing inefficiencies, while underlying yield and cost trends remained constructive. Adjusted gross profit was $3.7 million, essentially unchanged from 2Q25, while adjusted gross margin declined approximately 300 bps y/y from 30% and approximately 200 bps sequentially from 29%. The moderation reflected packing inefficiencies created as LOCL diversified Georgia’s channel mix; those processes have since been refined and implemented. In our view, the decline did not reflect deterioration in facility yields, which remained at record levels, but it highlights the near-term complexity that can accompany broader retail mix and package formats. A return toward the 29%-30% adjusted gross-margin range alongside continued revenue growth would provide a stronger indication that LOCL’s retail mix and cost initiatives are converting into better unit economics. Operating leverage continued to improve as LOCL shifted spending toward commercial expansion while reducing development and corporate overhead. Sales and marketing expense increased approximately 20% y/y to $2.9 million in 2Q26 and 14% to $5.1 million in 1H26, broadly in line with revenue growth of approximately 15%, suggesting the recent rollout cadence has not required disproportionate commercial spending. Retailer wins, SKU breadth, program duration, and product velocity remain the more relevant commercial indicators, with recent launches across 250+ Harris Teeter stores, a 160-store regional account, new Mid-South and Rocky Mountain programs across 66 and 110 stores, respectively, and the planned 400-store salad-kit pilot indicating that higher selling investment is translating into distribution growth. At the same time, operating expenses declined approximately 11% y/y to $15.0 million, with R&D down 29% to $4.6 million and adjusted G&A down 17% to $4.1 million. The shift is consistent with LOCL moving from heavier technology and facility-ramp spending toward scaled commercial execution, while keeping overhead growth below revenue growth. Adjusted EBITDA loss improved 17% y/y, advancing LOCL toward management’s goal of positive adjusted EBITDA. Net loss narrowed to $19.8 million from $21.6 million in 2Q25, supported by lower operating expenses and a modest reduction in net interest expense. Sequentially, the increase in GAAP net loss from 1Q26 was largely attributable to a roughly $6.6 million swing in warrant fair value accounting. More importantly, adjusted EBITDA loss improved to $5.8 million from $7.1 million y/y, while the 1H26 loss narrowed approximately 24% to $11.5 million from $15.3 million. The continued improvement, alongside higher revenue and tighter cost discipline, supports management’s view that the business is steadily narrowing the gap to positive adjusted EBITDA. Cash consumption improved as the business moved beyond the heavier facility build-out phase, although liquidity remained modest at quarter-end ahead of the subsequent financing. Net cash used in operating activities improved approximately 26% to $13.4 million in 1H26 from $18.3 million in 1H25, while investing cash use declined approximately 80% to $2.2 million from $10.9 million as construction spending normalized. Cash, cash equivalents, and restricted cash declined to $10.1 million at June 30 from $18.8 million at the end of 1Q26, with working capital narrowing to approximately $1.5 million. Inventory remained relatively stable at $7.6 million versus $7.4 million at year-end despite new retail programs ramping, indicating that the liquidity draw was driven primarily by continued operating cash consumption rather than inventory build. The lower capital-spending burden is constructive, but further revenue growth, margin recovery, and EBITDA improvement remain necessary to support stronger internal cash generation and reduce reliance on external capital. Leverage remains elevated, keeping balance-sheet discipline central to the broader profitability and cash-generation story. LOCL had approximately $302.8 million of principal outstanding under the Cargill Senior Facility and $328.3 million of total long-term debt principal at June 30. Reported long-term debt was approximately $489.3 million, primarily reflecting the debt premium recorded in connection with the 2025 restructuring. While the restructuring reduced prior obligations and the business is now operating with a lower capital-spending burden, the absolute debt load remains significant relative to LOCL’s current revenue base and cash generation, making sustained EBITDA improvement and lower cash consumption critical to improving financial flexibility. The subsequent $12.5 million strategic investment and related Cargill amendments materially improve near-term liquidity and financial flexibility. U.S. Bounti’s additional investment brings total strategic capital committed in 2026 to $27.5 million and was structured through a 7.0% convertible note maturing in August 2031, initially convertible at $1.37 per share, together with a 1.0 million-share warrant at $0.125. PIK interest reduces near-term cash requirements, while conversion of the initial principal alone could add approximately 9.1 million shares. In connection with the financing, Cargill waived a minimum-liquidity covenant default, reset required liquidity to $3.5 million through March 2027 and $2.0 million thereafter, and permitted certain 2027 interest to be paid in kind, subject to conditions. These measures extend LOCL’s liquidity runway, but continued improvement in adjusted EBITDA and operating cash flow remains necessary to address the company’s leverage and reduce reliance on external capital. 2H26 setup remains constructive, with new retail programs, sustained yield gains, and continued cost actions providing multiple levers for sequential improvement. Management expects revenue and the adjusted EBITDA loss rate to continue improving through 2026, with revenue growth and cost discipline remaining the primary drivers toward breakeven. Entering 3Q, LOCL is carrying forward $13.9 million of quarterly revenue, new launches across approximately 66 Mid-South and 110 Rocky Mountain stores, sustained ~10% higher run-rate yield capacity across Georgia, Texas, and Washington, and early production benefits from the California optimization program. The ~400-store single-serve salad-kit pilot expected this fall adds another potential growth driver. The key 2H26 proof points are continued sequential revenue growth, recovery in adjusted gross margin from 27%, and further narrowing of the $5.8 million adjusted EBITDA loss as LOCL progresses toward positive adjusted EBITDA. Disclaimer: Exec Edge does not publish proprietary estimates, ratings, price targets, or investment recommendations. The valuation discussion below is illustrative only and is based on company filings, management commentary, and third-party data and estimates. It does not constitute a recommendation, price target, rating, or prediction of future pricing. LOCL trades near the lower end of its historical valuation range despite recent operating improvement. LOCL currently trades at 0.51x LTM sales versus a three-year high multiple of 1.92x and a three-year mean of 0.83x. Applying the historical high multiple to LTM sales of $51.8 million implies an illustrative market capitalization of $99.5 million, or $4.25 per share. Importantly, this framework does not require aggressive forward revenue assumptions; rather, it reflects potential multiple recovery if investors gain confidence that LOCL’s recent execution improvements, including higher revenue, record facility yields, lower adjusted G&A, normalization of temporary gross-margin pressure, and narrowing adjusted EBITDA losses, are sustainable. Relative valuation remains nuanced across the CEA-linked peer set, while traditional fresh-produce peers provide a useful valuation anchor. LOCL trades at 0.51x LTM sales, below Village Farms at 1.22x and GrowGeneration at 0.66x, while remaining above Hydrofarm at 0.07x and below the headline CEA-linked peer average of 1.21x, which is elevated by CEA Industries at 3.57x. Against traditional fresh-produce companies, which average 0.53x LTM sales, LOCL now trades at a modest discount despite its patented Stack & Flow platform, approximately 13,000-door retail footprint, recent double-digit revenue growth, and improving adjusted EBITDA trajectory. In our view, sustained execution could support a valuation premium to conventional produce peers if investors increasingly recognize LOCL as a technology-enabled CEA platform rather than a traditional produce supplier. The key re-rating triggers remain execution-led rather than purely multiple-led. Continued sequential revenue growth, recovery in adjusted gross margin toward prior levels, further narrowing of the adjusted EBITDA loss, and conversion of recent retail wins into repeatable volume would provide the clearest support for valuation recovery. Strategic investor backing also strengthens the setup, with U.S. Bounti committing an additional $12.5 million following its $15.0 million March investment, bringing total strategic capital committed in 2026 to $27.5 million and strengthening near-term financial flexibility. At the same time, leverage and prospective dilution remain important constraints, meaning a sustained re-rating will ultimately depend on LOCL converting higher facility productivity and broader distribution into stronger margins, lower cash consumption, and improved per-share economics. Read Exec Edge’s Initiation on Local Bounti Corporation Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected] The post Local Bounti’s Network Yields at Record Levels, Retail Momentum Broadened – Quarterly Update Report appeared first on ExecEdge.

Interested in Village Farms International, Inc.? Here are five stocks we like better. Second-quarter performance improved: Consolidated sales rose 7% year over year to $64 million, while net income reached $7.2 million. The cannabis segment delivered record adjusted EBITDA of $15.3 million, up 16%, with gross margin expanding to 51%. International medical cannabis drove growth: Exports increased 74% year over year, led by stronger German market share and rising demand for EU GMP-certified products. Village Farms expects to enter additional European markets, including potential opportunities in the U.K. and Australia. Capacity expansion supports the outlook: The Delta 2 project is expected to add 40 metric tons of annual production capacity by 2027, while Dutch facilities are ramping up. Management expects capital spending to moderate and cash generation to improve during the second half of the year. Village Farms International (NASDAQ: VFF) Stock is a Unique Cannabis ESG Play Village Farms International (NASDAQ:VFF) reported higher second-quarter sales and record cannabis segment adjusted EBITDA, supported by international medical cannabis exports, improved production yields and a more favorable sales mix. President and CEO Michael DeGiglio said the company recorded its fifth consecutive quarter of positive net income and earnings per share since it privatized its legacy produce business last year. He said record production at the company’s Delta, British Columbia, facilities contributed to stronger margins, while operating efficiencies and lower production costs supported earnings growth that outpaced revenue growth. → MarketBeat Week in Review – 08/03 - 08/07 “Our second quarter results continue to demonstrate the strength of our expanding global cannabis platform, driven by record cannabis revenues,” DeGiglio said. Chief Financial Officer Stephen Ruffini said consolidated net sales rose 27% sequentially and 7% from a year earlier to $64 million. Net income from continuing operations was $7.2 million, or $0.06 per share. → Quantum Earnings Week: Winners and Losers Are Finally Emerging Consolidated adjusted EBITDA from continuing operations totaled $15.4 million, equal to 24% of sales, compared with $17.1 million, or 28.5% of sales, in the prior-year quarter. Ruffini said the year-over-year comparison was affected by a $4.3 million one-time vendor settlement received in the second quarter of 2025 that was tied to the company’s legacy produce business. Excluding that item, adjusted EBITDA would have increased approximately 20%, he said. The cannabis segment generated $53.5 million in net sales, up 5% year over year. Segment adjusted EBITDA increased 16% to a record $15.3 million, producing a 29% adjusted EBITDA margin. → Take-Two’s Q1 Results Leave GTA 6 Bulls Stuck in the Fog of War Cannabis gross margin expanded to 51% from 42% a year earlier. Ruffini attributed the 900-basis-point increase to favorable product mix, increased operating efficiencies and lower production costs at the Delta campus. Selling, general and administrative expenses represented 28% of cannabis sales, compared with 23% a year ago, partly reflecting a revision to transfer-pricing policies following the produce-business sale and higher commercial and marketing costs. Village Farms ended the first half with approximately $73 million in cash. The company generated nearly $21 million from continuing operations before working-capital adjustments during the first six months, Ruffini said. Those adjustments included $17 million in Canadian income-tax payments, $15 million in capital expenditures, $31 million in excise taxes and $7 million in share repurchases. The company also completed a $15 million equity placement with two U.S. institutional investors. Long-term debt stood at approximately C$40 million as of June 30, at a blended interest rate of 5.6%. During the quarter, the company drew an additional C$8.3 million on its Pure Sunfarms credit facility for Delta upgrades and technology enhancements. Ruffini said Village Farms was in a net cash position of C$33 million and expects to grow its cash balance through the remainder of the year as free cash flow improves in the second half. International medical cannabis exports increased 74% from the prior-year quarter and 43% sequentially, primarily because Village Farms captured a larger share of the German market, according to Ruffini. DeGiglio said the company’s Delta campus has become the world’s largest EU GMP-certified cannabis facility by compliant product volume following facility upgrades. DeGiglio said the company’s mix of EU GMP-certified product improved during the quarter and helped lift margins. He said demand for EU GMP-compliant cannabis is increasing, while pricing for the company’s products has not declined. He added that products not meeting those standards have faced pricing pressure in Germany. The company said it recently held four of the top 10 market-share strains in Germany and, based on its internal research, believes it has the broadest pharmacy distribution among cultivators currently selling products there. Village Farms also expects to enter additional European jurisdictions during the second half of 2026 and cited opportunities in the United Kingdom and Australia. During the question-and-answer session, DeGiglio said Germany’s market data remains difficult to independently verify, although he described Village Farms’ internal estimates of market share as ranging from roughly 8% to 15%. He said patient enrollment remains in the low single digits and that management expects German market growth to continue for at least the next five years. The first half of Village Farms’ Delta 2 expansion has been completed and is producing cannabis. Conversion of the second half is scheduled to begin Sept. 1. The company expects the project to provide an incremental 15 metric tons of production in 2026 and another 25 metric tons in 2027. It expects to reach a full incremental 40-metric-ton annual run rate beginning in the third quarter of 2027, with the capacity fully available in fiscal 2028. Once completed, the Delta 2 project is expected to bring annualized Delta production capacity to approximately 160 metric tons of dried trim flower. DeGiglio said a potential future conversion of the Delta 1 greenhouse could more than double annualized production capacity. In the Netherlands, cannabis sales rose 35% year over year to $3.3 million despite a delay in final approvals for the company’s Phase II facility. DeGiglio said cultivation began at the Groningen facility during the second quarter. Ruffini said Roteghem is now operational and is expected to reach full production capacity by the end of the first quarter, positioning the business for stronger growth through 2027. Management said it is expanding product assortment for participating coffee shops in the Netherlands and remains optimistic about the long-term potential of the country’s regulated cannabis pilot program. DeGiglio said an expansion of the program could increase the company’s addressable Netherlands market by nearly tenfold. Village Farms said capital expenditures related to its Canadian and Netherlands expansions are nearly complete. DeGiglio told analysts that the company has already procured materials needed for the remaining Delta 2 work and does not currently have other major internal capital projects on the “front burner.” Ruffini said management continues to target gross margins of 30% to 40% over the long term, while EBITDA margins in the mid-20% range are possible. DeGiglio said larger-scale production should create further cost efficiencies, though EU GMP compliance also raises production costs. DeGiglio said the company remains encouraged by the U.S. regulatory environment and noted Congress extended the period for addressing full-spectrum CBD products through December. He said Village Farms has not produced synthetic cannabinoids and is awaiting finalized rules before planning further around its Balanced Health Botanicals business. Village Farms International, Inc is a North American agricultural company specializing in greenhouse cultivation of fresh produce and cannabis. Through its wholly owned operations, the company grows a variety of high-quality vegetables, including tomatoes, cucumbers and sweet peppers, using controlled-environment agriculture techniques designed to maximize yield and sustainability. Village Farms leverages advanced climate and hydroponic systems to deliver consistent year-round supply to major grocery retailers across the United States and Canada. In its produce segment, Village Farms operates large-scale greenhouse facilities in Texas and Canada. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Village Farms International Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record cannabis harvest yields at Delta facilities through the first half of 2026, including the first harvest from the Delta 2 expansion phase. Realized nearly 10 percentage points of year-over-year gross margin expansion, attributed to record yields, greater operating efficiencies, and a favorable sales mix. Leveraged the world's largest EU GMP certified cannabis facility to drive a 74% year-over-year increase in international export sales. Gained top 10 market share in all major Canadian convenience product categories, including vapes and infused pre-rolls, through entirely organic growth. Maintained a competitive advantage in Germany by holding 4 of the top 10 market share strains and achieving the widest pharmacy distribution of any cultivator. Successfully transitioned the legacy produce business to a private model, resulting in the fifth consecutive quarter of positive net income and EPS. Optimized the cannabis supply chain by significantly improving the sales mix of higher-margin EU GMP certified products over GACP products. Commencing the second half of the Delta 2 expansion on September 1st, targeting an incremental 15 metric tons of production in 2026 and 25 tons in 2027. Projecting a full 40 metric ton incremental run rate by Q3 2027, bringing total annualized Delta production to approximately 160 metric tons by 2028. Expecting the Groningen facility in the Netherlands to ramp to full production capacity by the end of Q1 2027, positioning the segment for step-function growth. Anticipating entry into new European jurisdictions in the second half of 2026 while monitoring potential expansion of the Netherlands pilot program. Forecasting stronger free cash flow and a growing cash balance for the remainder of the year as capital expenditures for major expansions are nearly complete. Reported a one-time $4.3 million vendor settlement in the prior year's results, which impacted year-over-year EBITDA and net income comparisons. Updated transfer pricing policies following the produce business sale, resulting in a higher allocation of corporate expenses directly to the cannabis segment. Paid $17 million in Canadian income taxes during the first half of 2026, reflecting a full year and a half of obligations and a shift to sustainable profitability. Completed a $15 million equity placement with U.S. institutional investors to strengthen the balance sheet and increase institutional ownership. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management emphasized that maintaining EU GMP certification is significantly more difficult and costly than initial certification, serving as a high barrier to entry. Large-scale, efficient operations are required to offset the increased cost of production associated with pharmaceutical-grade compliance. The company remains open to using its Delta 1 facility for future U.S. exports depending on regulatory shifts. Targeting long-term gross margins of 30% to 40%, with EBITDA margins potentially reaching the mid-20s through economies of scale. Management noted that while Canadian pricing is plateauing, international EU GMP pricing remains strong and less susceptible to the pressures facing non-compliant products. Confirmed plans to become more vertically integrated in the European theater, moving beyond the current B2B/FOB model to include branded products. Management indicated they have avoided 'ridiculous valuations' for downstream assets in the past but see integration as a key future step as they scale. Management clarified that the 12 provisional licenses issued in Texas are not final, and the door is not shut for Village Farms to secure a license. Stated a firm intention to be in the Texas market but declined to provide specific details on the current pursuit of conditional licenses.

This article first appeared on GuruFocus. Consolidated Net Sales: $64 million, up 27% sequentially and 7% year-over-year. Consolidated Net Income: $7.2 million, or $0.06 per share, from continuing operations. Consolidated Adjusted EBITDA: $15.4 million, or 24% of sales, from continuing operations. Cannabis Segment Net Sales: $53.5 million, up 5% year-over-year. International Medical Export Sales: Increased 74% year-over-year and 43% sequentially. Netherlands Sales: $3.3 million, up 35% year-over-year. Cannabis Gross Margin: 51%, up 900 basis points from 42% in Q2 of last year. Cannabis Adjusted EBITDA: Record $15.3 million, up 16% year-over-year, with a margin of 29%. Cannabis Operating Cash Flow: Positive $8.9 million in Q2. Cash Position: Approximately $73 million at end of Q2. Long-Term Debt: Approximately $40 million at a blended interest rate of 5.6%. Net Cash Position: $33 million. Warning! GuruFocus has detected 3 Warning Sign with VFF. Is VFF fairly valued? Test your thesis with our free DCF calculator. Release Date: August 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record cannabis revenues and fifth consecutive quarter of positive net income and EPS, demonstrating strong execution and profitability. Cannabis gross margin expanded by 900 basis points year-over-year to 51%, driven by favorable product mix, operational efficiencies, and lower production costs. International export sales grew 74% year-over-year and 43% sequentially, with the company holding four of the top 10 market share strains in Germany. Delta II expansion is on track, with the first half in production and the second half commencing September 1, expected to add 40 metric tons of annualized capacity by 2028. Strong balance sheet with $73 million in cash, a net cash position of $33 million, and expectations of growing cash balances in the second half of 2026. Achieved top 10 market share in all major Canadian product categories, with continued growth in vapes and infused pre-rolls. Netherlands operations ramping up with Cronogen facility now in production, positioning for significant growth in 2027. Consolidated net income and adjusted EBITDA declined year-over-year due to a one-time $4.3 million vendor settlement received in Q2 2025, making comparisons unfavorable. SG&A as a percentage of sales increased to 28% from 23% year-over-year, reflecting higher transfer pricing allocations and increased commercial and marketing expenses. Cash flow from cannabis operations decreased to $8.9 million from $19.2 million in Q2 2025, impacted by Canadian income tax payments and changes in working capital. Working capital adjustments were significant in the first half of 2026, including a $17 million payment for Canadian income taxes, reducing available cash. Canadian market faces pricing pressure and a shift towards lower-value flower segments due to increased supply and regulatory crackdowns, potentially impacting domestic margins. The company paid $15 million in Canadian excise taxes in Q2, nearly 40% of gross retail branded sales, which is a significant cost burden. The Netherlands Phase 2 facility experienced a slight delay in final approvals, though cultivation has now begun. Q: Can you provide more color on the route to market in Europe, whether it's an FOB model with distributors, and if you see opportunities to sell branded products there? As you expand capacity, does that model hold, or do you need to invest in downstream assets for more control?A: Michael DeGiglio (CEO) confirmed that branded products are absolutely part of the future, noting the company holds four of the top 10 market share strains in Germany. He stated that while they have watched competitors spend capital on downstream assets in Europe with little return, Village Farms sees itself becoming much more vertically integrated in the European theater going forward. Ann (COO) added that the international playbook mirrors their Canadian strategy, starting B2B-focused and then investing in SG&A as the cost of goods sold line improves, while continuing to work with strong distributor partners initially. Q: What is the medium-term opportunity for international sales, and how will demand/supply bottlenecks be alleviated as the Delta II expansion phases are completed? How confident are you in maintaining a competitive advantage even with potential U.S. exports?A: Michael DeGiglio (CEO) stated confidence in continuing to expand, highlighting the availability of Delta One as a future option for growth or potential U.S. export. He noted that pricing for EU GMP compliant product remains strong, while declines are seen in non-compliant products. He emphasized that achieving and maintaining EU GMP certification is difficult, giving Village Farms a strong competitive position, and suggested they could become a U.S. exporter of EU GMP product in the future. Q: How should we think about the long-term EBITDA margin profile given the sales growth opportunities and potential pricing pressure within cannabis?A: Stephen Ruffini (CFO) reiterated the long-term focus on 30% to 40% gross margins and mid-20s EBITDA margins, while noting these are dependent on demand and supply. Michael DeGiglio (CEO) added that the margin expansion doesn't fully show operational efficiency because EU GMP compliance significantly increases production costs, and their large-scale footprint provides a cost advantage that will improve as they grow. Q: In Germany, sales were up over 70% year-over-year and 43% sequentially. What did the market grow, and what market share did you gain?A: Michael DeGiglio (CEO) said it's hard to verify exact market growth due to a lack of reliable tracking, but internal numbers suggest market share of 8% to 15%. He confirmed the company holds four of the top 10 strains in Germany and is growing distribution penetration in locations where their cultivars are distributed. Q: How do investors view the visibility of growth in Germany, and how do we get comfort that it will continue to grow as much as it has been?A: Michael DeGiglio (CEO) cited projections for the German market reaching 8,000 tons over the next five to six years, and even if it were half that, it would represent huge upside. He noted patient enrollments remain in the low single digits, providing confidence that growth will continue for at least the next five years. Q: How sustainable are the high-40s gross margins short-term, especially as the sales mix increases towards international? What's driving continued cost of production improvements?A: Michael DeGiglio (CEO) stated confidence in maintaining margins in Germany for the foreseeable future, driven by continuous improvement and driving down costs through yield increases and operational efficiency. He noted that Canada has become a mature market with single-digit growth and plateauing pricing, but scale matters in this fixed-cost business, allowing for lower production costs as the company grows. Q: Can you comment on how domestic Canadian prices have evolved recently?A: Ann (COO) noted that some supply is coming back into the Canadian market, tied to international testing requirements and a crackdown on greenwashing. Within the flower category, there's a mix emerging towards the lowest value segment, but Village Farms continues to invest in convenience categories and maintains a dominant flower position to drive mix and price. Q: Are you already the largest Canadian exporter by volume?A: Ann (COO) confirmed, "We think we are the largest Canadian exporter by volume." Q: With the 12 provisional licenses already issued in Texas, is that window shut for Village Farms to win a license, and is the only option to buy one of those licenses?A: Michael DeGiglio (CEO) said he doesn't think it's 100% sure they won't get a license, noting these are conditional licenses and the final number is yet to be determined. He stated the company plans to be in Texas but left the specifics at that point. Q: What is the remaining CapEx for the second half of 2026 and 2027?A: Michael DeGiglio (CEO) stated there's nothing on the front burner for CapEx internally, as most CapEx has been spent. Materials for the Delta II second-half conversion have been procured, and the Netherlands facility is fully built out. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Village Farms (VFF) came out with quarterly earnings of $0.06 per share, beating the Zacks Consensus Estimate of $0.02 per share. This compares to earnings of $0.1 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +200.00%. A quarter ago, it was expected that this greenhouse operator would post earnings of $0.02 per share when it actually produced earnings of $0.02, delivering no surprise. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Village Farms, which belongs to the Zacks Medical - Products industry, posted revenues of $63.98 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 13.99%. This compares to year-ago revenues of $59.9 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Village Farms shares have lost about 43% since the beginning of the year versus the S&P 500's gain of 13.3%. While Village Farms has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Village Farms was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.04 on $63.75 million in revenues for the coming quarter and $0.15 on $243.38 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Products is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Rockwell Medical (RMTI), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 13. This maker of products used in the treatment of kidney disease and anemia is expected to post quarterly loss of $0.17 per share in its upcoming report, which represents a year-over-year change of +66%. The consensus EPS estimate for the quarter has been revised 30% lower over the last 30 days to the current level. Rockwell Medical's revenues are expected to be $17.84 million, up 11% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Village Farms International, Inc. (VFF) : Free Stock Analysis Report Rockwell Medical, Inc. (RMTI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Aurora Cannabis Inc. (ACB) came out with quarterly earnings of $0.04 per share, beating the Zacks Consensus Estimate of a loss of $0.13 per share. This compares to a loss of $0.19 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +130.77%. A quarter ago, it was expected that this company would post a loss of $0.07 per share when it actually produced earnings of $0.07, delivering a surprise of +200%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Aurora Cannabis, which belongs to the Zacks Medical - Products industry, posted revenues of $51.11 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.89%. This compares to year-ago revenues of $75.49 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Aurora Cannabis shares have lost about 33.4% since the beginning of the year versus the S&P 500's gain of 13%. While Aurora Cannabis has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Aurora Cannabis was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.09 on $50.71 million in revenues for the coming quarter and -$0.30 on $209.8 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Products is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Village Farms (VFF), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This greenhouse operator is expected to post quarterly earnings of $0.02 per share in its upcoming report, which represents a year-over-year change of -80%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Village Farms' revenues are expected to be $56.13 million, down 6.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Aurora Cannabis Inc. (ACB) : Free Stock Analysis Report Village Farms International, Inc. (VFF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

AtriCure (ATRC) came out with quarterly earnings of $0.18 per share, beating the Zacks Consensus Estimate of $0.03 per share. This compares to a loss of $0.02 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +500.00%. A quarter ago, it was expected that this medical device maker would post a loss of $0.07 per share when it actually produced break-even earnings, delivering a surprise of +100%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. AtriCure, which belongs to the Zacks Medical - Products industry, posted revenues of $153.6 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.39%. This compares to year-ago revenues of $136.14 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. AtriCure shares have lost about 15.3% since the beginning of the year versus the S&P 500's gain of 9.6%. While AtriCure has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for AtriCure was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.03 on $150.98 million in revenues for the coming quarter and $0.13 on $604.74 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Products is currently in the bottom 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Village Farms (VFF), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This greenhouse operator is expected to post quarterly earnings of $0.02 per share in its upcoming report, which represents a year-over-year change of -80%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Village Farms' revenues are expected to be $56.13 million, down 6.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AtriCure, Inc. (ATRC) : Free Stock Analysis Report Village Farms International, Inc. (VFF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Management to Host Conference Call August 10 at 8:30 a.m. ET VANCOUVER, British Columbia, July 22, 2026 (GLOBE NEWSWIRE) -- Village Farms International, Inc. (“Village Farms” or the “Company”) (NASDAQ: VFF) today announced it will host a conference call to discuss its second quarter 2026 financial results on Monday, August 10, 2026, at 8:30 a.m. ET. Participants can access the conference call via a webcast at Village Farms Second Quarter 2026 Conference Call Webcast or on the Company website at Village Farms - Events. Participants wanting to access the conference call by telephone must register in advance at Village Farms Second Quarter 2026 Conference Call Registration to receive telephone dial-in information. The live question and answer session will be limited to analysts; however, others are invited to submit questions ahead of the conference call via email at [email protected]. Management will address questions received via email during the question and answer session as time permits. The Company expects to report its second quarter 2026 financial results via news release on Monday, August 10, 2026, at 7:00 a.m. ET. Conference Call Archive Access Information For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call on Village Farms’ web site at http://villagefarms.com/investor-relations/investor-calls. About Village Farms International Village Farms is a global leader in cannabis, plant-based consumer packaged goods, and sustainable innovation. With a legacy built on decades of Controlled Environment Agriculture expertise and Dutch farming practices, today the Company is one of the world’s largest and most profitable cannabis operators with an asset portfolio that spans over 7 million square feet of advanced greenhouse and indoor cultivation assets. In Canada, Village Farms operates the world’s largest EU-GMP certified cannabis facility at its production campus in Delta, British Columbia, and exports products to international medical markets. The Company is also a market share leader in dried flower formats and produces and distributes some of the country’s highest quality and best-selling strains, including its flagship Pure Sunfarms Pink Kush, one of the most widely consumed strains on the planet. Village Farms’ Canadian brand portfolio includes Pure Sunfarms, Fraser Valley Weed Co., Soar, Super Toast, Pure Laine, Tam Tams and Promenade. In the Netherlands, the Company is one of only ten licensed operators in the country’s regulated cannabis program, and in the United States its CBDistillery brand is one of the country’s premier cannabinoid wellness platforms, and it also holds equity interests in cannabis businesses in Australia and Germany. Beyond cannabis, the Company’s Clean Energy division transforms landfill gas into renewable natural gas, and it also holds an equity interest in Verdexa Holdings (formerly Vanguard Food LP), a private venture pursuing strategic acquisitions to build a premier branded food platform in North America. Contact Information

VANCOUVER, British Columbia, June 02, 2026 (GLOBE NEWSWIRE) -- Village Farms International, Inc. (“Village Farms” or the “Company”) (NASDAQ: VFF) today announced the voting results from its annual meeting of shareholders held earlier today (the "Meeting"). A total of 57,069,476 common shares of the Company, representing 49.93% of the issued and outstanding common shares of the Company, were voted in connection with the Meeting by shareholders and proxy holders. All of the matters put forward before the Company's shareholders for consideration and approval, as set out in the Company's proxy statement dated April 29, 2026 (the "Proxy Statement"), were approved by the requisite majority of votes cast at the Meeting. Directors were elected as follows: KPMG LLP was also re-appointed auditor of the Company to hold office until the next annual meeting of shareholders and the directors were authorized to fix the auditor's remuneration. Final voting results of all matters voted on at the Meeting will be filed with the Securities and Exchange Commission and will be available at www.sec.gov, and will also be filed in Canada on SEDAR (www.sedarplus.ca) later today. About Village Farms International, Inc. Village Farms is a global leader in cannabis, plant-based consumer packaged goods, and sustainable innovation. With a legacy built on decades of Controlled Environment Agriculture expertise and Dutch farming practices, today the Company is one of the world’s largest and most profitable cannabis operators with an asset portfolio that spans over 7 million square feet of advanced greenhouse and indoor cultivation assets. In Canada, Village Farms operates the world’s largest EU-GMP certified cannabis facility at its production campus in Delta, British Columbia, and exports products to international medical markets. The Company is also a market share leader in dried flower formats and produces and distributes some of the country’s highest quality and best-selling strains, including its flagship Pure Sunfarms Pink Kush, one of the most widely consumed strains on the planet. Village Farms’ Canadian brand portfolio includes Pure Sunfarms, Fraser Valley Weed Co., Soar, Super Toast, Pure Laine, Tam Tams and Promenade. In the Netherlands, the Company is one of only ten licensed operators in the country’s regulated cannabis program, and in the United States its CBDistillery brand is one of the country’s premier cannabinoid wellness platforms, and it also holds equity interests in cannabis businesses in Australia and Germany. Beyond cannabis, the Company’s Clean Energy division transforms landfill gas into renewable natural gas, and it also holds an equity interest in Verdexa Holdings (formerly Vanguard Food LP), a private venture pursuing strategic acquisitions to build a premier branded food platform in North America. Contact Information Sam GibbonsSenior Vice President, Corporate AffairsPhone: (407) 936-1190 ext. 328Email: [email protected] Danielle AlloreSenior Manager, CommunicationsEmail: [email protected]

This article first appeared on GuruFocus. Total Net Sales Growth: 27% year-over-year increase. Sequential Revenue Growth: 2% increase from Q4. Consolidated Adjusted EBITDA Growth: 118% year-over-year increase to $9.9 million. Net Income: $2.7 million, compared to a net loss of $2.1 million in Q1 of last year. International Export Sales: 171% year-over-year increase, 60% sequential increase, reaching nearly $15 million. Gross Margin: 43%, up from 39% in Q1 of last year. SG&A as a Percentage of Sales: 30%, level with Q1 of last year. Cash Flow from Operations: Negative $16.8 million, impacted by Canadian corporate income tax payments. Cash Position: Approximately $56 million, including $5 million in restricted cash. Total Debt: $36 million. Share Repurchase Program: Over 2 million shares repurchased at a cost of $6.4 million. Warning! GuruFocus has detected 5 Warning Sign with VFF. Is VFF fairly valued? Test your thesis with our free DCF calculator. Release Date: May 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Village Farms International Inc (NASDAQ:VFF) reported a 27% year-over-year increase in total net sales, driven by strong performance in international markets and continued leadership in Canada. The company achieved a 118% year-over-year growth in consolidated adjusted EBITDA, significantly outpacing sales growth. International export sales increased by 171% year-over-year, with the German market being a significant contributor. Village Farms International Inc (NASDAQ:VFF) maintained a top 5 overall share position in Canada's adult-use market and holds the #1 market share position in dried flower. The company completed facility upgrades in British Columbia, significantly expanding production capacity for EU GMP-compliant cannabis, positioning it as the world's largest EU GMP certified cannabis facility. The company experienced negative cash flow from operations of $16.8 million in Q1, impacted by large Canadian corporate income tax payments. There was a slight delay in the commencement of operations at the Phase 2 facility in the Netherlands, which could impact sales outlook. The Netherlands market experienced some pricing softness due to improved supply dynamics. Village Farms International Inc (NASDAQ:VFF) faces ongoing capacity constraints in Canada, affecting sequential performance. The company is cautious about making acquisitions due to regulatory uncertainties in the US and potential overvaluation of assets. Q: Can you provide details on the confidence in price stability for international markets, especially with the Delta two expansion? A: Mike DeGiglio, CEO, explained that the company has not seen margin compression for its EU GMP certified product, which meets all required attributes. The compression seen by others is tied to non-compliant products. Village Farms feels confident in maintaining stable pricing for its products. Q: How aggressive might Village Farms get in acquisitions given the potential changes in the US and international markets? A: Mike DeGiglio emphasized the importance of being prudent and patient, waiting for regulatory clarity before making capital decisions. He highlighted past lessons learned and the need to avoid overpaying for assets, suggesting a cautious approach to M&A. Q: How is Village Farms capturing market share in Germany while maintaining stable pricing? A: Mike DeGiglio attributed success to a six-year journey focusing on EU GMP compliance, avoiding shortcuts, and investing in a robust supply chain. Ann Gillin Lefever, COO, added that their investment in quality and consistency has been key to maintaining market share and stable pricing. Q: What are the supply-demand dynamics and pricing trends in the Netherlands? A: Ann Gillin Lefever noted that supply has improved with all competitors fully operational, leading to some pricing softness. However, this was anticipated and modeled into their market strategy. Q: Could there be changes to the Netherlands pilot program after the summer review, and what are the market conditions? A: Mike DeGiglio expects a positive review, with minimal infractions reported. The market is finite with 80 participating coffee shops, and expansion into new municipalities is not expected in the near future. Ann Gillin Lefever added that there is a growing demand for different product forms due to consumer sophistication. For the complete transcript of the earnings call, please refer to the full earnings call transcript.