Village Farms International Announces First Quarter 2011 Results

TRADING SYMBOL:   The Toronto Stock Exchange:  
                                    Village Farms International, Inc. - VFF

VANCOUVER, May 18 /CNW/ - Village Farms International, Inc. (the "Company") (TSX: VFF) announced today results for the quarter ended March 31, 2011.

First Quarter 2011 Operating Results Summary:
(Note amounts in U.S. dollars) 

  • Revenues increased 4% to $32.3 million for the first quarter of 2011 compared to $31.1 million for the first quarter of 2010;
  • Earnings per share of $0.12 for the first quarter of 2011 versus $0.12 for the first quarter of 2010;
  • Net income decreased to $4.5 million in the first quarter of 2011 versus $4.8 million in the first quarter of 2010;
  • EBITDA decreased 45% to $4.9 million in the first quarter of 2011 compared to $8.9 million in the first quarter of 2010.

Michael DeGiglio, Chief Executive Officer, stated "After a sluggish start to the quarter, we saw improved pricing as the quarter progressed, although it must be remembered that pricing was exceptionally strong in January 2010 as a result of the devastating impact of a freeze on the Florida field crop.  Current pricing is in line with our forecast and prior year pricing.  We overcame the fourth quarter production set back at one of our Texas greenhouses, by delivering almost the exact amount of pounds in the first quarter of 2011, as we did in the first quarter of 2010, but our costs of goods was still negatively impacted, as this crop is still being harvested.  We are focused on improving our cost of goods as we plant the new Texas crops in the second and third quarter.  Our current Canadian crop is performing well."

DeGiglio added "We are concluding final details on one particular development project and are confident that we will have an announcement with the project details shortly."

Operational Summary for the Quarter:

(in thousands of US dollars)

Revenue

Revenue for the quarter ended March 31, 2011, increased $1,239, or 4%, to $32,341 from $31,102 for the quarter ended March 31, 2010.  The increase in revenue is primarily due to a 60% increase in supply partner production and a 2% increase in the Company's production, offset by a reduction of 14% in the average sale price of tomatoes as compared to 2010.

Cost of Sales

Cost of sales for the quarter ended March 31, 2011, increased $4,735, or 23%, to $25,601 from $20,866 for the quarter ended March 31, 2010.  The increase was a result of a 52% increase in supply partner payments due to the increased supply, 9% increase in our costs from our Texas operations primarily driven by the incremental costs incurred due to our production issue and an increase in freight costs of $820 over prior years due to higher supply partner production and higher fuel surcharges.

Change in fair value of biological asset, net

The net change in fair value of biological asset for the quarter ended March 31, 2011, increased $2,495 to $2,978 from $483 for the quarter ended March 31, 2010. The increase is due to a lower opening value at January 1, 2011 versus 2010. The fair value of the biological asset at March 31, 2011 is $10,508 and $10,130 at March 31, 2010 due to higher sales expectations in April 2011 versus April 2010 of the fruit on the vine at the respective reporting dates.

Selling, General and Administrative

Selling, general and administrative expenses for the quarter ended March 31, 2011, increased $523 to $3,508 from $2,985 for the quarter ended March 31, 2010.  The increase is primarily due to increased personnel costs in 2011 over 2010 and timing of some operational costs between the years.

Income from Operations

Income from Operations for the quarter ended March 31, 2011, decreased by $1,524, or 20%, to $6,210 from $7,734 for the quarter ended March 31, 2010.  The decrease was the result of lower average pricing in 2011 versus 2010, higher cost of sales and higher overhead costs.

Interest Expense

Interest expense, for the quarter ended March 31, 2011, increased $14 to $728 from $714 for the quarter ended March 31, 2010.  The increase is due to an increase in the Company's borrowing rate on its Canadian term loan offset by the continued reduction in debt levels throughout 2011 and 2010.

Other Income (Costs)

Other income (costs) for the quarter ended March 31, 2011, increased $1,092 to income of $527 from other costs of ($565) for the quarter ended March 31, 2010.  The increase was due to a gain on derivatives of $282 in 2011, versus a loss of ($317) on derivatives for the first quarter of 2010.  As well as a gain of $14 on sale of assets in 2011, as compared to a loss of ($329) on the disposal of assets during the first quarter of 2010.

Net Income

Net income for the quarter ended March 31, 2011, decreased ($239), or 5%, to $4,512 from $4,751 for the quarter ended March 31, 2010.  The decrease was due to lower product pricing, higher cost of sales and higher overhead costs in 2011 versus 2010 being almost totally offset by a higher gain from the change in fair value of biological asset and other income.

EBITDA

EBITDA for the quarter ended March 31, 2011, decreased $4,002, or 45%, to $4,852 from $8,854 for the quarter ended March 31, 2010, as a result of lower income from operations as a result of lower product sale pricing, higher cost of sales and overhead costs.  The Company's trailing twelve month EBITDA is $11,136, as of March 31, 2011.

Non-IFRS Measures

EBITDA is not a recognized measure and does not have standardized meaning under International Financial Reporting Standards. 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 quarter ended March 31, 2011, which will be available at www.sedar.com, for additional information concerning EBITDA and a reconciliation of EBITDA to net income and operating cash flows, for the periods presented.

About  Village Farms

Village Farms 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 located in British Columbia and Texas.  Product is marketed and distributed under the Village Farms® brand primarily to retail grocers and dedicated fresh food distributors throughout the United States and Canada.  Village Farms currently operates distribution centers located in key markets in the United States and Canada.  Since its inception, Village Farms has been guided by sustainable agricultural principles which integrate four 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 our expectations regarding our growth, results of operations, performance, business prospects, opportunities or industry performance and trends. These forward looking statements reflect our current internal projections, expectations or beliefs and are based on information currently available to us. 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 year ended December 31, 2010, which is available electronically at www.sedar.com.  Actual results may differ materially from any forward looking statement.  Although we believe 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, we assume no obligation to update or revise them to reflect new events or circumstances.

Village Farms International, Inc.
Consolidated Statement of Financial Position
(In thousands of United States dollars, unaudited)
                   
          March 31, 2011   December 31, 2010   January 1, 2010
ASSETS              
  Current assets              
    Cash and cash equivalents    $                4,688    $                       9,734    $                 2,611
    Trade receivable                    12,041                             8,131                       9,594
    Other receivables                         205                                510                          592
    Inventories                       11,838                           10,714                       9,753
    Assets held for sale    407   407                               -
    Income taxes receivable                         213                                775                               -
    Prepaids and deposits                         785                                801                          909
    Biological asset                    10,508                             5,223                       7,340
  Total current assets                    40,685                           36,295                     30,799
                   
  Non-current assets            
    Property, plant and equipment                    61,910                           62,972                     66,599
    Future income tax asset                      2,224                             2,967                       4,549
    Intangible assets                      1,275                             1,301                       1,404
    Other assets                        1,280                             1,125                          877
  Total assets    $            107,374    $                   104,660    $             104,228
                   
LIABILITIES              
  Current liabilities            
    Trade payable                      4,400                             6,280                       4,643
    Accrued liabilities                      4,102                             3,470                       4,906
    Income taxes payable                             8                                  24                            15
    Current maturities of long-term debt                      3,260                             3,260                       3,260
    Current portion of obligations under capital leases                         117                                264                          283
  Total current liabilities                    11,887                           13,298                     13,107
                   
  Non-current liabilities            
    Long-term debt                    47,393                           48,208                     51,472
    Derivatives                        2,058                             2,340                       2,092
    Obligations under capital leases                              -                                  14                          262
    Future income tax liability                      5,283                             4,569                       5,390
  Total liabilities                      66,621                           68,429                     72,323
                   
SHAREHOLDERS' EQUITY            
    Share capital                      24,850                           24,850                     24,850
    Contributed surplus                           85                                  75                             -  
    Retained earnings                    15,763                           11,251                       7,000
    Accumulated other comprehensive income                           55                                  55                            55
  Total shareholders' equity                    40,753                           36,231                     31,905
  Total liabilities and shareholders' equity    $            107,374    $                   104,660    $             104,228
               

 

Village Farms International, Inc.
Consolidated Statement of Income and Comprehensive Income
For the Three Months Ended
(In thousands of United States dollars, except per share data, unaudited)
       
  March 31, 2011   March 31, 2010
       
Net sales  $                     32,341    $                     31,102
Cost of sales                       (25,601)                         (20,866)
Change in biological asset                           2,978                                483
Selling, general and administrative expenses                         (3,508)                           (2,985)
Income from Operations                           6,210                             7,734
       
Interest expense                              728                                714
Interest income                              (12)                                  (5)
Foreign exchange loss (gain)                              (62)                                  87
Amortization of intangible assets                                              26                                  26
(Gain) loss on derivatives                            (282)                                317
Other income, net                             (183)                              (189)
(Gain) loss on disposal/sale of asset                               (14)                                329
Income before income taxes                           6,009                             6,455
       
Provision for income taxes                            1,497                             1,704
       
Net income and comprehensive income                           4,512                             4,751
       
Basic earnings per share   $                         0.12    $                         0.12
       
Diluted earnings per share  $                         0.12    $                         0.12
       

 

Village Farms International, Inc.
Consolidated Statement of Cash Flow
For the Three Months Ended 
(In thousands of United States dollars, unaudited)
         
         
    March 31, 2011   March 31, 2010
         
Cash flows from operating activities:        
   Net income   $4,512                           4,751
    Adjustments to reconcile net income to net cash provided by        
      operating activities:        
          Depreciation and amortization                           1,453                           1,424
          Loss (gain) on sale of asset                              (14)                              329
          Loss (gain) on derivatives                            (282)                              317
          Foreign exchange (gain) loss                               (62)                                87
          Share based compensation                                10                                16
          Future income taxes                           1,457                            (555)
          Change in biological asset                         (2,978)                            (483)
          Changes in non-cash working capital                         (7,722)                         (2,363)
            Net cash (used in) provided by operating activities   -3,626                           3,523
         
Cash flows from investing activities:        
    Purchases of property, plant and equipment                            (388)                            (372)
    Proceeds from sale of property, plant and equipment                                37                                  6
    Other                            (155)                              (56)
             Net cash used in investing activities                            (506)                            (422)
         
Cash flows from financing activities:        
    Payments on long-term debt                            (815)                            (818)
    Payments on obligations under capital leases                            (161)                              (51)
             Net cash used in by financing activities                             (976)                            (869)
         
    Effect of exchange rate changes on cash and cash equivalents                                62                              (87)
         
Net increase (decrease) in cash and cash equivalents                         (5,046)                           2,145
Cash and cash equivalents beginning of period                           9,734                           2,611
Cash and cash equivalents end of period   $4,688   $4,756
         
Supplemental cash flow information:        
   Interest paid   $676   $694
   Income taxes paid   $33   $8
         

 


 

SOURCE Village Farms International, Inc.

For further information:

Stephen C. Ruffini, Executive Vice President and Chief Financial Officer, Village Farms International, Inc., (732) 676-3008


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