Village Farms International 2025 Q1 Earnings Misses Targets, Net Loss Widens 165.6%

Village Farms International (VFF) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The company's performance missed expectations, with a notable widening of net loss. The firm also adjusted its guidance, anticipating significant growth in international cannabis exports. The earnings report highlighted a strategic shift with a focus on international cannabis expansion, capitalizing on new opportunities while maintaining a strong position in the Canadian market. This aligns with their recent strategic transaction involving the Fresh Produce segment.

Revenue
Village Farms International reported a 1.3% decline in total revenue for the first quarter of 2025, amounting to $77.07 million, compared to $78.08 million in the same quarter of the previous year. The produce segment generated $37.42 million, while the cannabis segment contributed $39.23 million. Within the cannabis segment, Canadian operations brought in $34.84 million, U.S. operations accounted for $3.90 million, and the Netherlands added $486,000. Additionally, the energy segment yielded $426,000 in revenue.

Earnings/Net Income
The company experienced a deepening loss, with earnings per share dropping to $0.06 in Q1 2025 from a loss of $0.03 per share in Q1 2024, marking a 100% wider loss. Concurrently, the net loss expanded to $7.12 million, a 165.6% increase from the previous year's $2.68 million loss. The wider EPS loss reflects ongoing challenges in profitability.

Price Action
The stock price of Village Farms International edged up by 1.93% during the latest trading day, climbed 2.27% over the past trading week, and surged 30.93% month-to-date.

Post-Earnings Price Action Review
The post-earnings strategy of purchasing VFF stock when revenues fall short and holding for 30 days has shown favorable results. This approach has led to a 25.8% gain, significantly outperforming the broader market's 14.4% gain. The strategy underscores the potential of rebounding stocks and highlights the importance of a patient, long-term investment perspective. By focusing on a systematic approach, investors can capitalize on short-term market inefficiencies and leverage the stock's recovery potential. This method not only demonstrates the effectiveness of a contrarian approach but also reaffirms the importance of strategic planning in capturing market opportunities.

CEO Commentary
Michael A. DeGiglio, President and CEO, emphasized a transformative change for Village Farms, noting that their ownership interest in Vanguard enhances potential in the legacy produce business while allowing the cannabis teams to focus on global growth. He highlighted the Q1 results as a reflection of successful efforts to drive profitable sales, with Canadian Cannabis achieving its strongest adjusted EBITDA performance in three years. DeGiglio pointed to a 285% increase in higher-margin medical exports, gross margin expansion to 36%, and sustained top market share in Canada despite reducing lower-margin branded sales.

Guidance
The company projects a tripling of international export sales in 2025, while maintaining robust cash flow and operational leverage as international revenues rise. Village Farms anticipates its Phase II facility in the Netherlands, expected to complete in Q1 2026, will quintuple annual production capacity and enhance profitable growth potential, particularly due to the favorable margin profile of recreational sales.

Additional News
Village Farms International has announced a definitive agreement to privatize certain assets of its Fresh Produce segment by forming a joint venture with Vanguard Food LP. The deal includes $40 million in cash proceeds and a 37.9% equity stake for Village Farms. The transaction involves the transfer of Texas-based greenhouse assets and distribution facilities to Vanguard, while Village Farms retains its Canadian cultivation assets and select Texas facilities for potential future cannabis operations. The deal is expected to close in Q2 2025, allowing Village Farms to focus on its international cannabis business while positioning its produce segment for independent growth under new strategic capital partners.