Village Farms International Q4 Earnings Call Highlights

by · The Markets Daily

Village Farms International (NASDAQ:VFF) executives told investors the company delivered record profitability and cash generation in fiscal 2025, citing sharp growth in global cannabis sales, accelerating international exports, and early contributions from its Netherlands recreational cannabis business. Management also said near-term supply constraints and shipment timing created quarterly variability, but demand continues to outpace current production capacity.

Full-year 2025 results show “step function” improvement

Chief Executive Officer Michael DeGiglio said 2025 reflected years of long-term planning and investment, resulting in what he described as a “step function transformation” in profitability and cash flow. For the full year, the company reported:

  • Global cannabis sales growth of 70% year-over-year, with only a partial year of contributions from the Netherlands business.
  • International export sales increasing more than six-fold, which DeGiglio attributed to the company’s position as one of the world’s largest EU GMP-certified cannabis operators.
  • Net income from continuing operations of $21 million, or $0.19 per share, described as a $49 million improvement versus the prior year.
  • Adjusted EBITDA from continuing operations of $50 million, an improvement of $48 million.
  • Cash flow from continuing operations of $58 million, an improvement of $44 million compared to 2024.

DeGiglio also highlighted strategic milestones during the year, including the May transaction to privatize the company’s legacy produce business, which management said was structured to allow Village Farms to retain long-term optionality tied to its greenhouse assets in Canada and Texas.

Fourth quarter: profitability and cash flow extend positive streak

Management said the fourth quarter marked the third consecutive quarter of positive consolidated net income from continuing operations, adjusted EBITDA, and operating cash flow. DeGiglio reported fourth quarter net sales growth of 9% year-over-year to just under $50 million, along with net income from continuing operations of $2.3 million, adjusted EBITDA of $8.6 million, and operating cash flow of $11.4 million.

Chief Financial Officer Steve Ruffini noted that results were presented with the legacy produce assets classified as discontinued operations following the May 30 privatization, and that prior-period comparables were adjusted accordingly. Ruffini also reminded investors that fourth-quarter 2024 included a $10.5 million non-cash impairment charge tied to non-flower inventory purchased primarily from third parties that did not meet quality standards.

Ruffini said consolidated net sales rose 9% to $49.6 million, driven by growth in the Canadian cannabis segment and a third full quarter of Netherlands recreational cannabis sales. Net income from continuing operations improved to $2.3 million, or $0.02 per share, compared with a net loss of $5.7 million, or $0.04 per share, in the year-ago quarter. Adjusted EBITDA from continuing operations was $8.6 million versus negative $2.9 million a year earlier, producing an adjusted EBITDA margin of 17.3% compared with negative 6.4% in the prior-year quarter.

Canadian cannabis: exports drive growth; excise taxes remain a major cost

DeGiglio said Canadian cannabis performance “once again led the way,” and that the company maintained a top-five overall market share position in Canada while holding the number one position in dried flower as of the end of the prior month. He said fourth-quarter Canadian sales grew 10% year-over-year, driven by a nearly 400% increase in international export sales, while retail branded sales were flat year-over-year but posted improved gross margins due to a shift toward higher-margin products.

Ruffini provided additional segment details in Canadian dollars, including total Canadian cannabis net sales of $52.7 million, up 10% year-over-year. He said the improvement was driven by international medicinal exports, which increased 384% over the year-ago quarter. For the full year, Canadian cannabis net sales rose 12% to a record $228 million.

Canadian cannabis gross margin was 43% in the fourth quarter, up from 3% a year ago, with the prior-year quarter affected by the inventory impairment. Ruffini said the quarter’s margin reflected a higher proportion of higher-margin international exports and a focus on higher-margin SKUs in the Canadian retail branded channel. For the full year, he reported a Canadian cannabis gross margin of 44%, with both the fourth quarter and full year above the company’s stated 30% to 40% target range.

Ruffini also emphasized the impact of Canadian excise taxes, saying the company paid $21.5 million in excise taxes during the fourth quarter, which he said was nearly 40% of retail-branded sales and almost double the company’s SG&A costs for the segment. He added that the company accrued $16 million of Canadian income taxes in 2025, which was paid on February 28, and noted that prior-year tax losses have now been fully utilized.

Constraints and variability: BC strike and delayed international shipments

While management said demand remains strong, DeGiglio told investors that near-term supply constraints temporarily limited performance relative to what customers wanted in the fourth quarter. He said a labor strike affecting the flow of cannabis in British Columbia reduced fourth-quarter sales by an estimated $2.5 million.

DeGiglio also described seasonality in the Canadian growing climate that can create sequential declines in fourth-quarter production and revenue unless new capacity comes online, and said the timing, size, and profitability of international shipments can add variability. He said some expected shipments to Germany that were anticipated for late in the fourth quarter were delayed into the first quarter.

In the Q&A, COO Ann Gillin Lefever addressed Germany demand, saying official statistics showed German imports fell 4% and Canadian imports were down 11%, which she attributed to regulatory uncertainty that led pharmacies, distributors, and importers to lower inventories. She said those concerns have since eased and the company expects to return to growth in the first quarter. Lefever also reiterated that delayed fourth-quarter orders pushed into the first quarter affected reported performance and cautioned investors that export markets can be variable quarter to quarter.

Expansion projects: Delta 2 ramp in Canada and Phase II in the Netherlands

DeGiglio said Village Farms is addressing biomass constraints through capacity expansion projects in Canada and the Netherlands. He said the Delta 2 expansion remains on track and on budget, with the first half planted on March 2 and expected to contribute in late Q2. Management expects an incremental 15 metric tons of production from the expansion during the remainder of the year. DeGiglio said the project is expected to provide an incremental 40 metric tons of annual production by mid-2027 versus fiscal 2025, representing an increase of approximately 33%.

In the Netherlands, DeGiglio said the Phase I facility in Drachten is operating at full capacity with “healthy” gross margins even at limited scale and that the company continues to sell everything it produces. He said the company recently launched 10 new product offerings across multiple formats unique to that market. He also said fourth-quarter profitability in the Netherlands was affected by increased operating expenses due to headcount additions ahead of Phase II.

Ruffini reported Netherlands fourth-quarter sales of $3.3 million and adjusted EBITDA of $700,000, reflecting the staffing ramp to support Phase II. DeGiglio said the Phase II facility in Groningen is nearing completion and remains on time and on budget, with the first grow rooms expected to be planted toward the end of the month and full capacity completion expected in Q2 as post-harvest and processing capabilities are finalized. He said the Groningen facility is expected to ramp through the remainder of the year, bringing total Netherlands annual production capacity to approximately 10 metric tons; for comparison, he said the company harvested just under two tons from Drachten in fiscal 2025.

On capital allocation, management said it ended the year with approximately $86 million in cash after completing a $3 million share repurchase during the fourth quarter. Ruffini added that the company drew CAD 5 million on an incremental CAD 15 million delayed draw term loan and said total debt at year-end was $34 million. He also said the company repurchased roughly 1.1 million additional shares in the first quarter of 2026 for $3.7 million, following the purchase of just under 813,000 shares in the fourth quarter for $3 million.

About Village Farms International (NASDAQ:VFF)

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.

See Also