What surprises could VFF's Q2 report hold?

Village Farms International (VFF) is poised to report its Q2 2025 financial results, and the market is abuzz with anticipation. Here are some potential surprises that could unfold in the report: 1. **Continued Revenue Growth**: VFF has shown an 11% year-over-year increase in consolidated sales for Q4 2024, reaching $82.6 million. The Fresh Produce business saw a 17% increase in sales, and the Canadian Cannabis segment had a 31% growth in net sales for the full year 2024. Expectations for international sales are high, with exports to international medical markets up 113% year-over-year. The market might be curious about the sustainability of these growth trends in Q2. 2. **Impact of Inventory Challenges**: VFF faced a $10.5 million non-cash impairment charge related to non-flower inventory in Canadian Cannabis, which significantly impacted Q4 profitability. The company has indicated that this inventory did not meet quality standards and was purchased from third parties. Investors might be keen to know if similar inventory issues affected Q2 results. 3. **International Expansion Updates**: VFF has been expanding its international market presence, with plans to triple international medicinal export sales in 2025. The company has already expanded into five international markets, including Germany, Australia, the UK, and New Zealand. Expectations for further international expansion could be a focal point. 4. **Financial Performance Metrics**: The consensus estimate for Q2 2024 earnings per share (EPS) is not available. However, the company's Q4 EPS was $0.51, and the growth rate was -5.36%. The net income growth rate for Q4 was -66.6%, with a net loss of $8.66 million. Investors will be watching for any improvement in profitability metrics. 5. **Analyst Expectations and Price Target**: Currently, there are no available data on analyst expectations for Q2 2025 or a price target. However, recent analyst actions include upgrades and increased price targets by firms like Atb Cap Markets and Roth Capital, indicating a more positive outlook. These expectations could be a surprise if VFF's Q2 results exceed them. In conclusion, while VFF has shown growth potential, particularly in its international segments, the company's Q2 report is likely to be scrutinized for signs of continued growth, improvements in profitability, and any updates on inventory management and international expansion.