Village Farms International Announces Strong Results for the Six Months Ended
and Second Quarter Ended June 30, 2010
TRADING SYMBOL: The Toronto Stock Exchange:
Village Farms International, Inc. - VFF
VANCOUVER, Aug. 9 /CNW/ - Village Farms International, Inc. (the "Company") (TSX: VFF) announced today results for the six months ended and second quarter ended June 30, 2010.
Six months ended June 30, 2010 Operating Results Summary
- Revenues increased 21% to US$77.6 million compared to revenues of US
$64.2 million for the six months ended June 30, 2009;
- Earnings per share of US$0.14 versus US$0.01 per share for the six
months ended June 30, 2009;
- Net income after tax of US$5.5 million versus US$0.3 million for the
six months ended June 30, 2009;
- EBITDA of US$13.4 million versus US$3.7 million for the six months
ended June 30, 2009;
Michael A DeGiglio, the Chief Executive Officer said "We are pleased with the results of our second quarter. As we continue to operate in a soft economy the entire enterprise is focused on execution to deliver results. We remain resolute in exceeding our customer expectations, continuing our research and development, and implementing our growth strategy."
Operational Summary for the six months ended June 30, 2010
(in thousands of US dollars)
Revenue
Revenue for the six months ended June 30, 2010 increased $13,362, or 21%, to $77,578 from $64,216 for the six months ended June 30, 2009. The increase in revenue was primarily due to higher pricing during the first six months of 2010 versus the first six months of 2009 and increased production at the Company's facilities during the 2010 period. The comparable period pricing for the Company's tomato products was 30% higher in 2010 versus 2009, and production was 3% higher during the first six months 2010 versus the first six months 2009.
Gross Profit
Gross profit for the six months ended June 30, 2010 increased $10,065, or 157%, to $16,488 from $6,423 for the six months ended June 30, 2009. The increase in gross profit was directly due to higher pricing and higher production volume of the Company's own produce. Cost of sales for the Company's own facility production was 5% higher during the first six months of 2010 than in the 2009 period, mostly due to the increase in production.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the six months ended June 30, 2010 increased $357, or 6%, to $6,170 from $5,813 for the six months ended June 30, 2009. The increase was primarily due to increased personnel costs.
Interest Expense, net
Net interest expense, for the six months ended June 30, 2010, decreased $223 to $1,379 from $1,602 for the six months ended June 30, 2009. The decrease was due to the continued reduction in debt levels throughout 2010 and 2009.
Other (Costs) Income
Other costs net of other income for the six months ended June 30, 2010 increased $2,145 resulting in net other costs of $638 compared to net other income of $1,507 for the six months ended June 30, 2009. The increase in other costs was due to a loss on derivatives related to interest rate swaps of $419 during the first six months of 2010 versus a gain on derivatives related to interest rate swaps of $920 in 2009 plus a loss on foreign exchange of $145 in during the first six months 2010 versus a gain of $420 during the comparable period in 2009.
Net Earnings and Comprehensive Earnings
Net earnings and comprehensive earnings for the six months ended June 30, 2010 increased $5,259 to $5,526 from net earnings and comprehensive earnings of $267 for the six months ended June 30, 2009. The increase in net earnings and comprehensive earnings was due to higher gross profits resulting from increased pricing partially offset by increased other costs.
EBITDA
EBITDA for the six months ended June 30, 2010 increased to $13,450 from $3,646 for the six months ended June 30, 2009, primarily due to a higher gross profit as a result of higher product pricing. The Company's trailing twelve month EBITDA is $18,884 as of June 30, 2010.
Second Quarter 2010 Operating Results Summary:
- Revenues increased 8.7% to US $46.5 million compared to second
quarter 2009 revenue of US$ 42.8 million;
- Earnings per share of US$0.03 versus a loss of US($0.01) per share
during the second quarter of 2009;
- Net income after tax of US$1.3 million versus a net loss of US($0.4)
million in the second quarter of 2009; and
- EBITDA of US$4.6 million versus US$0.2 million in the second quarter
of 2009.
Operational Summary for the Quarter:
(in thousands of US dollars)
Revenue
Revenue for the quarter ended June 30, 2010 increased $3,703, or 9%, to $46,476 from $42,773 for the quarter ended June 30, 2009. The increase in revenue was due to a 22% increase in tomato pricing as compared to the same period in 2009. Revenues from the Company's production were up $2,926 from the comparable period in 2009 due to higher pricing during the second quarter 2010 versus the 2009 period.
Gross Profit
Gross profit for the quarter ended June 30, 2010 increased $4,699, or 303%, to $6,252 from $1,553 for the quarter ended June 30, 2009. The increase in gross profit was directly due to higher pricing. Cost of sales for the Company's production was 2% lower than the Company's cost of sales during the second quarter of 2009.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter ended June 30, 2010 increased $349, or 12%, to $3,192 from $2,843 for the quarter ended June 30, 2009. The increase was primarily due to higher personnel costs.
Interest expense, net
Net interest expense, for the quarter ended June 30, 2010, decreased $116 to $670 from $786 for the quarter ended June 30, 2009. The decrease was due to the continued reduction in debt levels throughout 2010 and 2009.
Other (Costs) Income
Other costs net of other income for the quarter ended June 30, 2010 increased $1,328 resulting in net other costs of $68 as compared to net other income of $1,260 for the quarter ended June 30, 2009. The increase in other costs was due to a loss on derivatives related to interest rate swaps of $102 as compared to a gain on derivatives related to interest rate swaps of $837 for the second quarter of 2009, plus a loss on foreign exchange of $58 during the second quarter of 2010 versus a gain of $552 during the second quarter of 2009.
Net Earnings (Loss) and Comprehensive Earnings (Loss)
Net earnings and comprehensive earnings for the quarter ended June 30, 2010, increased $1,701 to $1,327 from a net (loss) and comprehensive (loss) of ($374) for the quarter ended June 30, 2009. The net income increase was due to an increase in gross profit as a result of higher prices.
EBITDA
EBITDA for the quarter ended June 30, 2010 increased $4,368 to $4,596 from $228 for the quarter ended June 30, 2009, as a result of higher product pricing.
Non-GAAP Measures
EBITDA is not a recognized measure and does not have standardized meaning under Canadian generally accepted accounting principles. Accordingly, this measure may not be comparable to similar measures presented by other issuers. Please refer to the Company's Management's Discussion and Analysis for the three and six months ended June 30, 2010, which will be available at www.sedar.com, for additional information concerning EBITDA and a reconciliation of EBITDA to net earnings and operating cash flows, for the periods presented.
About The Company
The Company is one of the largest producers, marketers and distributors of premium-quality, greenhouse-grown tomatoes, bell peppers and cucumbers in North America. This premium product as well as premium product produced under exclusive arrangements with other greenhouse producers is grown in sophisticated, highly efficient and intensive agricultural greenhouse facilities. Product is marketed and distributed under the Village Farms(R) brand primarily to retail grocers and dedicated fresh food distributors throughout the United States and Canada. The Company owns greenhouses located in Texas and British Columbia and operates distribution centres located in key markets in the United States and Canada. Since its inception, the Company has been guided by sustainable agricultural principles which integrate three main goals; environmental health, economic profitability, and social and economic equality.
Forward-Looking Statements
This press release contains certain "forward-looking-statements". These statements relate to future events or future performance and reflect the Company's expectations regarding its growth, results of operations, performance, business prospects, opportunities or industry performance and trends. These forward looking statements reflect the Company's current internal projections, expectations or beliefs and are based on information currently available to the Company. In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. In evaluating these statements, you should specifically consider various factors, including, but not limited to, such risks and uncertainties as availability of resource, competitive pressures and changes in market activity, risks associated with U.S. and international sales and foreign exchange, regulatory requirements and all of the other "Risk Factors" set out in the Company's current annual information form and management's discussion and analysis for the three and six months ended June 30, 2010, which will be available electronically at www.sedar.com. Actual results may differ materially from any forward looking statement. Although the Company believes that the forward-looking-statements contained in this press release are based upon reasonable assumptions, you cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this press release, and other than as specifically required by applicable law, the Company assumes no obligation to update or revise them to reflect new events or circumstances.
Village Farms International, Inc.
(formerly Village Farms Income Fund)
Consolidated Balance Sheets
(In thousands of United States dollars)
June 30, December 31,
2010 2009
------------- ------------
Assets (unaudited)
Current assets:
Cash and cash equivalents $9,691 $2,611
Accounts receivable 12,839 9,594
Other receivables 638 592
Inventories 10,451 11,948
Prepaids and deposits 1,125 909
Assets held for sale 407 -
------------- ------------
Total current assets 35,151 25,654
Property, plant and equipment 64,403 66,599
Future income tax asset 3,749 4,549
Intangible assets 1,353 1,404
Other assets 938 877
------------- ------------
Total assets $105,594 $99,083
------------- ------------
------------- ------------
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities $12,236 $9,564
Current maturities of long-term debt 3,260 3,260
Current portion of obligations under
capital leases 291 283
------------- ------------
Total current liabilities 15,787 13,107
Long-term debt 49,838 51,472
Derivatives 2,512 2,092
Obligations under capital leases 112 262
Future income taxes 3,239 3,589
------------- ------------
Total liabilities 71,488 70,522
------------- ------------
Shareholders' equity
Share capital 24,850 24,850
Contributed surplus 19 -
Retained earnings 9,182 3,656
Accumulated other comprehensive income 55 55
------------- ------------
Total shareholders' equity 34,106 28,561
------------- ------------
Total liabilities and shareholders' equity $105,594 $99,083
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Village Farms International, Inc.
(formerly Village Farms Income Fund)
Consolidated Statements of Earnings and Comprehensive Earnings
For the Three Months and Six Months Ended
(In thousands of United States dollars, except for shares and
units outstanding and per share/unit amounts, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $46,476 $42,773 $77,578 $64,216
Cost of sales 40,224 41,220 61,090 57,793
----------- ----------- ----------- -----------
Gross profit 6,252 1,553 16,488 6,423
Selling, general and
administrative
expenses 3,192 2,843 6,170 5,813
----------- ----------- ----------- -----------
Income (loss) from
operations 3,060 (1,290) 10,318 610
Interest expense, net 670 786 1,379 1,602
Foreign exchange loss
(gain) 58 (552) 145 (420)
Amortization of
intangible assets 26 26 52 52
Loss (gain) on
derivatives 102 (837) 419 (920)
Other (income), net (119) (16) (308) (182)
Loss (gain) on sale
of assets 1 119 330 (37)
----------- ----------- ----------- -----------
Earnings before income
taxes 2,322 (816) 8,301 515
Provision for (recovery
of) income taxes 995 (442) 2,775 248
----------- ----------- ----------- -----------
Net earnings (loss) and
comprehensive earnings
(loss) 1,327 (374) 5,526 267
----------- ----------- ----------- -----------
Net income (loss) per
share/unit - basic $0.03 ($0.01) $0.14 $0.01
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average
number of
shares/units
outstanding - basic 38,707,345 38,707,345 38,707,345 38,707,345
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income (loss) per
share/unit - diluted $0.03 ($0.01) $0.14 $0.01
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average
number of
shares/units
outstanding - diluted 39,057,344 38,707,345 39,057,344 38,707,345
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Village Farms International, Inc.
(formerly Village Farms Income Fund)
Consolidated Statements of Cash Flows
For the Three Months and Six Months Ended
(In thousands of United States dollars, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flows from
operating activities:
Net earnings $1,327 ($374) $5,526 $267
Adjustments to
reconcile net
earnings to net
cash provided by
operating activities:
Depreciation and
amortization 1,433 1,533 2,857 2,911
Loss (gain) on sale
of assets 1 114 330 (42)
Loss (gain) on
derivatives 102 (837) 419 (920)
Foreign exchange
loss (gain) 58 (33) 145 (33)
Share based
compensation 10 - 19 -
Future income taxes 929 99 450 444
Changes in non-cash
working capital 2,939 1,583 575 (4,564)
----------- ----------- ----------- -----------
Net cash provided
by operating
activities 6,799 2,085 10,321 (1,937)
----------- ----------- ----------- -----------
Cash flows from
investing activities:
Purchases of property,
plant and equipment (975) (410) (1,347) (1,182)
Proceeds from sale of
assets 82 32 88 82
---------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities (893) (378) (1,259) (1,100)
----------- ----------- ----------- -----------
Cash flows from financing
activities:
Proceeds from operating
line of credit - 1,297 - 5,556
Payments on long-term
debt (816) (807) (1,634) (1,614)
Payments on obligations
under capital leases (91) (39) (142) (84)
Dividend payments to
Unitholders and PPS
holders - (563) - (1,550)
Other (6) 89 (61) 15
----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities (913) (23) (1,837) 2,323
----------- ----------- ----------- -----------
Foreign exchange loss
(gain) (58) 33 (145) 33
----------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents 4,935 1,717 7,080 (681)
Cash and cash
equivalents
beginning of period 4,756 1,703 2,611 4,101
----------- ----------- ----------- -----------
Cash and cash
equivalents
end of period $9,691 $3,420 $9,691 $3,420
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Supplemental cash flow
information:
Interest paid $710 $790 $1,404 $1,638
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Income taxes paid $340 $23 $348 $23
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
For further information: Stephen C. Ruffini, Senior Vice President and Chief Financial Officer, Village Farms International, Inc., (732) 676-3008
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