Village Farms International Announces Full Year and Fourth Quarter 2009
Results
TRADING SYMBOL: The Toronto Stock Exchange:
Village Farms International, Inc. - VFF
VANCOUVER, March 10 /CNW/ - Village Farms International, Inc. (the "Company") (TSX: VFF) announced today results for the year ended and quarter ended December 31, 2009.
Full Year 2009 Operating Results Summary
- Revenues of US$130.5 million versus 2008 revenues of
US$133.1 million;
- Earnings per share of US$0.17 per share versus US$0.12 per share in
2008;
- Net income after tax of US$6.7 million versus US$4.5 million in 2008;
- EBITDA of US$9.1 million versus US$21.2 million in 2008;
- On December 31, 2009, the Company completed the conversion from an
income trust structure to a corporation.
Michael DeGiglio, Chief Executive Officer of the Company, stated, "While the recession year of 2009 proved to be a challenging year for pricing, we saw improved pricing over 2008 levels throughout the fourth quarter of 2009. We have also experienced a return to normal first quarter pricing through the first two months of 2010, which is well above 2009 pricing and we believe that the market challenge of decreased consumer consumption of fresh produce is behind us. While the poor weather in Florida has helped tomato pricing, we predominately sell to retailers who prefer hydroponic produce. As such, we believe the primary driver of improved pricing is increased consumption rather than poor weather conditions for field growers."
DeGiglio added, "We expect the 2010 financial performance to be stronger than 2009 as a result of improved production from our Texas facilities during the first quarter of 2010 and better overall pricing for most of our products. Additionally, we are experiencing increased interest in our new greenhouse technology (GATES) and are working towards announcing some new business developments in this growth area later in 2010."
Operational Summary for the Year:
(in thousands of US dollars)
Revenue
Revenue for the year ended December 31, 2009, decreased $2,575, or 1.9%, to $130,524 from $133,099 for the year ended December 31, 2008. The decrease in revenue is primarily due to lower pricing throughout most of 2009 versus 2008. The comparable period pricing for the Company's tomato products was 7.5% lower in 2009 versus 2008.
Gross Profit
Gross profit for the year ended December 31, 2009, decreased $11,995, or 45%, to $14,765 from $26,760 for the year ended December 31, 2008. The decrease in gross profit is directly due to lower pricing and higher volume of supply partner produce, which generates a lower margin than Company-grown produce. Cost of goods for the Company's own facility production was 2% lower than the Company's 2008 production cost of goods, mostly due to lower transportation costs.
Selling, General and Administrative
Selling, general and administrative expenses for the year ended December 31, 2009, decreased $2,241, or 15.6% to $12,093 from $14,334 for the year ended December 31, 2008. The decrease is primarily due to lower personnel and share-based compensation costs, partially offset by costs of our conversion from an income trust during 2009.
Interest, Net
Net Interest expense, for the year ended December 31, 2009, decreased $458 to $3,159 from $3,617 for the year ended December 31, 2008. The decrease is due to the continued reduction in debt levels throughout 2009.
Other Income (Costs)
Other income for the year ended December 31, 2009, increased $2,751 to $876 from other costs of ($1,875) for the year ended December 31, 2008. The increase was due to a gain on derivatives of $709 in 2009 versus a loss on derivatives of ($2,801) in 2008 plus lower 2009 amortization of intangible assets of $1,070 due to the expiry of certain energy contracts in the fourth quarter of 2008, which were offset by insurance settlement gain income in 2009 of $2,189.
Net Income
Net income for the year ended December 31, 2009, increased $2,128 to $6,669 from net income of $4,541 for the year ended December 31, 2008. Our increased net income was solely due to the recognition of a Canadian tax asset that previously could not be realized under our prior Canadian income trust structure. In 2009, we recognized a net tax recovery of $6,280 versus an income tax expense of ($2,393) for the full year ended 2008. Our net income before taxes decreased by ($6,545) in 2009 to $389 from $6,934 in 2008 primarily due to lower pricing in 2009 versus 2008.
EBITDA
EDITDA for the year ended December 31, 2009, decreased to $9,122 from $21,247 for the year ended December 31, 2008, primarily due to a lower gross profit as a result of lower product pricing and internal production issues during the first quarter of 2009.
Fourth Quarter 2009 Operating Results Summary:
- Revenues of US $33.6 million versus fourth quarter 2008 revenue of
US$ 30.4 million;
- EBITDA of US$5.7 million versus US$6.1 million in the fourth quarter
2008;
- Net income of US$9.2 million versus a net loss of US($1.1) million in
the fourth quarter 2008.
Operational Summary for the Quarter:
(in thousands of US dollars)
Revenue
Revenue for the quarter ended December 31, 2009 increased $3,175, or 10.4%, to $33,597 from $30,422 for the quarter ended December 31, 2008. The increase in revenue is due to an increase in supply partner produce of $2,986 over the same period in 2008. Revenues from our own production were up $189 for the comparable period in 2008 due to higher pricing in 2009 versus 2008, offset by a decrease in production of 4% from 2008.
Gross Profit
Gross profit for the quarter ended December 31, 2009 increased $546, or 8%, to $7,406 from $6,860 for the quarter ended December 31, 2008. The increase in gross profit is directly due to higher volumes of third party produce and higher pricing. Cost of goods for the Company's production was 2% lower than the Company's 2008 production cost of goods.
Selling, General and Administrative
Selling, general and administrative expenses for the quarter ended December 31, 2009, decreased $145, or 3.9%, to $3,604 from $3,749 for the quarter ended December 31, 2008. The decrease is primarily due to lower personnel costs in the fourth quarter of 2009 as compared to the same period in 2008, which were offset by costs of our conversion from an income trust during the fourth quarter of 2009 of approximately $500.
Interest, Net
Net Interest expense, for the quarter ended December 31, 2009, decreased $105 to $740 from $845 for the quarter ended December 31, 2008. The decrease is due to the continued reduction in debt levels throughout 2009 and 2008.
Other Income (Costs)
Other income for the quarter ended December 31, 2009, increased $2,768 to $657 from other costs of ($2,109) for the quarter ended December 31, 2008. The increase was due to a gain on derivatives of $274 as compared to a loss on derivatives of ($3,228) for the fourth quarter of 2008, which was partially offset by realizing a smaller gain on sale of assets in 2009 of $65 versus other income of $1,428 mostly related to a vendor settlement in the fourth quarter of 2008.
Net Income
Net income for the quarter ended December 31, 2009, increased $10,269 to $9,179 from a net loss of ($1,090) for the quarter ended December 31, 2008. The increase was due to higher operating income of $691, higher other income of $2,767 and the recording of the Canadian tax asset in the fourth quarter due to the successful completion of our conversion from an income trust.
EBITDA
EDITDA for the quarter ended December 31, 2009 increased $746, or 15%, to $5,723 from an adjusted figure of $4,977 for the quarter ended December 31, 2008, as a result of higher product pricing and lower administrative costs. EBITDA for the fourth quarter ended December 31, 2008 was reported as $6,077, but included a one-time legal settlement of approximately $1,100, excluding this settlement from the fourth quarter 2008 results in an adjusted EBITDA of $4,977.
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 year ended December 31, 2009, 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 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(R) brand primarily to retail grocers and dedicated fresh food distributors throughout the United States, Canada and Japan. 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 three main goals; environmental health, economic profitability, and social & 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, 2009, which will be 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.
(formerly Village Farms Income Fund)
Consolidated Balance Sheets
(In thousands of United States dollars)
December 31, December 31,
2009 2008
------------ ------------
(audited) (audited)
Assets
Current assets:
Cash and cash equivalents $2,611 $4,101
Accounts receivable 9,594 9,357
Other receivables 592 567
Inventories 11,948 11,438
Assets held for sale - 344
Prepaids and deposits 909 544
------------ ------------
25,654 26,351
Property, plant and equipment 66,599 70,489
Deferred tax assets 4,549 -
Intangible assets 1,404 1,508
Other assets 877 821
------------ ------------
Total assets $99,083 $99,169
------------ ------------
------------ ------------
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities $9,564 $9,388
Distributions payable - 317
Current maturities of long-term debt 3,260 3,227
Current obligations under capital leases 283 227
------------ ------------
Total current liabilities 13,107 13,159
Long-term debt 51,472 54,732
Derivatives 2,092 2,801
Obligations under capital leases 262 472
Future income taxes 3,589 4,881
------------ ------------
Total liabilities 70,522 76,045
------------ ------------
Shareholders' equity:
Share capital 24,850 -
Trust units - 24,850
Retained earnings 3,656 (1,781)
Accumulated other comprehensive income 55 55
------------ ------------
Total shareholders' equity 28,561 23,124
------------ ------------
Total liabilities and shareholders' equity $99,083 $99,169
------------ ------------
------------ ------------
Village Farms International, Inc.
(formerly Village Farms Income Fund)
Consolidated Statements of Earnings
For the Years Ended and Three Months Ended
(In thousands of United States dollars, except for share/units
outstanding and per share/unit amounts)
Full Year Ended Three Months Ended
December 31, December 31,
2009 2008 2009 2008
------------ ------------ ------------ ------------
(audited) (audited) (unaudited) (unaudited)
Net sales $130,524 $133,099 $33,597 $30,422
Cost of sales 115,759 106,339 26,191 23,562
------------ ------------ ------------ ------------
Gross profit 14,765 26,760 7,406 6,860
Selling, general and
administrative expenses 12,093 14,334 3,604 3,749
------------ ------------ ------------ ------------
Operating Income 2,672 12,426 3,802 3,111
Interest expense, net 3,159 3,617 740 845
Foreign exchange loss
(gain) 62 388 (347) 183
Amortization of
intangible assets 103 1,173 25 126
Loss on derivatives (709) 2,801 (274) 3,228
Other (income), net (298) (2,487) (65) (1,428)
(Gain) on sale of asset (34) - 4 -
------------ ------------ ------------ ------------
Earnings before income
taxes 389 6,934 3,719 157
Provision for income
taxes (6,280) 2,393 (5,460) 1,247
------------ ------------ ------------ ------------
Net earnings (loss) 6,669 4,541 9,179 (1,090)
------------ ------------ ------------ ------------
Net income per
Unit/share-basic $0.17 $0.12 $0.24 ($0.03)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average number
of units/shares
outstanding-basic 38,707,345 36,368,633 38,707,345 36,368,633
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per
Unit/share-diluted $0.17 $0.12 $0.24 ($0.03)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average number
of units/shares
outstanding-diluted 38,707,345 38,707,345 38,707,345 38,707,345
------------ ------------ ------------ ------------
Village Farms International, Inc.
(formerly Village Farms Income Fund)
Consolidated Statements of Cash Flows
For the Years Ended and Three Months Ended
(In thousands of United States dollars)
Full Year Ended Three Months Ended
December 31, December 31,
2009 2008 2009 2008
------------ ------------ ------------ ------------
(audited) (audited) (unaudited) (unaudited)
Cash flows from
operating activities:
Net earnings (loss) $6,669 $4,541 $9,179 ($1,090)
Adjustments to
reconcile net
income to net cash
provided by
operating activities:
Depreciation and
amortization 5,770 6,456 1,437 1,426
(Gain) loss on
sale of property (34) - 7 -
(Gain) loss on
derivatives (709) 2,801 (273) 3,228
Foreign exchange
loss 79 35 2 35
Share based
compensation - 1,050 - 237
Future income taxes (5,841) 2,153 (6,146) 1,989
Changes in non-cash
working capital (734) 855 (1,356) (1,901)
------------ ------------ ------------ ------------
Net cash provided
by operating
activities 5,200 17,891 2,850 3,924
------------ ------------ ------------ ------------
Cash flows from investing
activities:
Purchases of property,
plant and equipment (1,890) (3,994) (467) (1,288)
Proceeds from sale of
property, plant and
equipment 266 50 44 -
------------ ------------ ------------ ------------
Net cash used in
investing
activities (1,624) (3,944) (423) (1,288)
------------ ------------ ------------ ------------
Cash flows from financing
activities:
Payments on operating
line of credit - (3,313) (1,691) -
Payments on long-term
debt (3,227) (3,152) (806) (794)
Payments on obligations
under capital leases (154) (427) (57) (166)
Dividend payments to
Unitholders and PPS
holders (1,550) (4,137) - (916)
Other (56) (402) 15 127
------------ ------------ ------------ ------------
Net cash used in
financing
activities (4,987) (11,431) (2,539) (1,749)
------------ ------------ ------------ ------------
Foreign exchange gain (79) (35) (2) (35)
------------ ------------ ------------ ------------
Net increase (decrease) in
cash and cash equivalents (1,490) 2,481 (114) 852
Cash and cash equivalents
beginning of period 4,101 1,620 2,725 3,249
------------ ------------ ------------ ------------
Cash and cash
equivalents end of
period $2,611 $4,101 $2,611 $4,101
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Supplemental cash flow
information:
Interest paid $3,159 $3,937 $797 $887
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income taxes paid $100 $1,929 $76 $0
------------ ------------ ------------ ------------
%SEDAR: 00020068E
For further information: Stephen C. Ruffini, Senior Vice President and Chief Financial Officer, Village Farms International, Inc., (732) 676-3008
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