VFF - Earnings call transcript Q3 2019 | Village Farms International, Inc.

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Operator

Good morning, ladies and gentlemen. Welcome to Village Farms International Third Quarter 2019 Financial Results Conference Call. Yesterday, after market close, Village Farms issued a news release reporting it's financial results for the third quarter ended September 30, 2019. That news release, along with company's financial statements are available on SEDAR and on the company's website at villagefarms.com under the Investor's heading.

Please note, that today's call is being broadcast live over the Internet and will be archived for replay, both by telephone and via the Internet, beginning approximately one hour following completion of the call. access are to news in how release. on the available replays yesterday's Details

let that beyond part remind be we many were me Before begin, these providing you call. material during statements, after applied in conference which made or forward-looking control. the this formal are of of Certain assumptions our today may statements

various is contained ending filings, in MD&A September on current A Farms annual XXXX materially statements which summary XX, in form cause our actual could are uncertainties for year and security the that implied assumptions, XXXX, including underlying subject These quarter these or ended available to of to XX, from Village for differ risks, risks the and forward-looking expressed information a statements. number of uncertainties those results are December and SEDAR.

These made forward-looking undertake or as date, required law. and obligation applicable today's revise to except of We securities publicly update of statements. no statements by as such are

now the would ahead, to turn Village DeGiglio. International. Please to Officer Executive call of like Michael Mr. go Chief Farms I DeGiglio, over

Michael DeGiglio

thank everyone Thank Farms, and call Financial Village telephone Ruffini. me for you, today. Casey, for today's is by joining Chief Stephen Officer, and you, Internet us With

on will new the beyond another highlighted for I some so growing progress more detail with initiatives, questions. will XXXX outdoor take to update Agenda from Farm's confident CBD Sunfarms for in today's why financial to we And of Steve, we'll QX capitalize high are call, our continues CBD a holds quarter discuss and review cannabis our results hemp by to from opportunities ability in peers then why results the and start returned Village I'll promise our I both growth an and our much company. financially. season. review on these and in provide of its that U.S. apart Pure set solid first operationally and are

vertically in again best-in-class Sunfarms as the showcase operational once results. continues to set financial to for Sunfarms integrated standard clear continues Pure these cannabis was QX a Pure supplier. which performance,

right efficient get licensed and again once which Pure large profitable most a producers. Let's numbers, Sunfarms to among the most ranks

discuss As Sunfarms Village in a share before I XX% Farms' Canadian will reminder, of are are and dollars. numbers here that Pure all

So I the net this million sales of $XX cannabis solely. and $X.X you I sales and would that sales were figure amount entirety include remind does product note million also not that of to liability Therapeutics recognize agreement. because accounting that unable due under not its to QX rules -- Pure of is in disputing the terms Sunfarms Health Emerald customer, invoice was supply but was the

started Pure was of margin higher incurred well seasonal continues production will as packaging from $X.XX its by use quarter, weeks to an numbers note quarter QX the not be the XX% few supplemental a of of per costs Sunfarms as QX. as in retail the electricity last lighting of in were QX. towards costs, that Gross the driven end some $X.XX cost And industry gram, throughout down just knowledge that low reflect in greenhouse I sequentially -- gram to

of SG&A income for was net a Net change XX% the non-cash of value asset. the change CADXX.X sales. of biological impact of before in million

otherwise is net only Sunfarms QX fourth reason CADXX.X in quarter loss resulted the profitability. charge this fact, Pure of and as In million reported have consecutive would

XX%. QX fourth of consecutive million, marked CADX positive Pure an Sunfarms' EBITDA. quarter translates EBITDA which was EBITDA into of margin

being in of Sunfarms the a for here started worth legalized yield sales and ramp-up past that X noting earnest, cannabis Pure think generated production period. in quarters, I the it's CADXX million the Delta has EBITDA majority it adult-use since in that to four with was cumulative facility

Sunfarms sales to QX September, A run the following rate shipping annually QX. XX,XXX as predominantly of of late Sunfarms LPs, full sales during reached Delta X other kilograms of Pure receipt little distributors on detail more to were Canadian sales QX dynamics began sales. by September. shift earlier provincial composed QX of the even adult-use cannabis over month sales among several net the largest LPs, in market of the license to with the in CADXX packaging constrained months. its Pure last rank million, it continues

retail in This been as to dispute As decline discuss been LP products be consumers as which and in outpaced in detail an this spot the price a industry-wide rise more cannot those has LP expansion CADX.X there discussed, widely recognized supply of the well ultimately growth, in market, has QX. the Emerald, invoice in the of actual precipitated also mismatch in coming being and shortly. supply a to offered. slowdown bottleneck as is new therefore sales has which onstream will infrastructure, want the the million gave to Steve store

triple spend Looking whole would has near and could increases catalysts is term the market past month call issues, be at over multiple massive, generating in that year. will what ultimately and will next these offer supply quality, or this do price right size the product double-digit supply success point. month sales ability consistently for We by even safe company, estimates projections any products still conservative debating double coming market determine high and consumers that so future to want and its really

larger, compete market, Pure it is itself market market but what offers both legal enable done It cannibalization price high listed position the what within meaningful will the accelerant sensitive quality the share Canadian the to This a to and the correctly legal is Sunfarms illicit against value to if the also is safe market. This market of capture by customer. proposition, product. with the

the So, Sunfarms early and able own products September, this of in to launch its launch to respect sales distributors. license branded packaging recent Pure provincial Sunfarms its brand. With long-awaited me finally was begin of Pure to brings

the First note to up in Columbia, the British of Ontario, will end than subsequent Canada's end make the which of I population. at and XX% quarter quarter combined in more very

products the of affordable brand luxury that point well really by price initially. resonating positioning exceeded Pure the below consumers clearly It's a Sunfarms strategic want at safe as Initial high performance our Sunfarms other with brands has quality expectations. coined Pure consumers. its

flower Sunfarms sold the brand. value points. and market a Cannabis the of the of with brand XX% the Pure second-ranked some share, Ontario with dried kilograms October top-selling are the was twice selling Store value dollar in both data early in Here

With three high dried in was strain, products Afghan seven THC Kush period. the best-selling OCS flower the dried the Pure same top-selling had the top flower for October. within Sunfarms product And of

Ontario Importantly, multiple and from throughout November. into follow-on Pure Sunfarms October had orders

access data the branch BC as that in sold by under Sunfarms in sales distribution you Columbia, order detailed In don't we yet, that can its XX first weeks British electric three a to top I in Pure October. the although, tell to have Ontario do for securing same province we ranking out

product all Sunfarms flower British Pure selling And Columbia, categories that with product currently BC has since it orders. dried follow-on for only multiple restocked is with

Sunfarms' not accident. up as insight, of performance recall the OCS who previously you Chain market Mandesh Pure extensive strong This of as is is well rest Logistics and the and experience, Supply table. the headed team being will It at leadership for an product initiative analysis and prospective Dosanjh his the

uniquely a entire result cost slow gram to was Sunfarms' congratulate that would yet like I success another is its able a done. to production. exceptional QX. product number all Sunfarms do Again something Pure Pure that on And Mandesh $X.XX well team in and as foundation his at and a of is and positioning again cultural

advantage price significant than that will low quality development recent cannabis of This as as and to a Farms. product with being now cost future is pressure high a be supply Sunfarms Village more underscore for well safe producer consistent ever innovation Pure

very regardless, pricing this is to market be market will There pressure share is must customers profitable to market illicit legal continue Pure and capture and if market. very to be the from Sunfarms down, come pricing on the in environment. woo well-positioned market

ahead, -- leading to build Ontario, value-driving Sunfarms XXXX. number into multiple Looking as stores With of provinces, expand we Sunfarms especially, Pure momentum. and and milestones market benefit, retail success Pure expect expect significantly the going share, has the to

planning pursuing product first. on the offerings, in next new and the product those well-advantaged as with products advancement, Columbia, is dried its preparing launch well its agreements beyond pre-rolled Sunfarms oil focusing as in is near-term X.X. highest cannabis forms additional for Pure also for is British the Sunfarms the and supply in Pure products, sales of It Ontario on provinces the Moreover,

did with Patience thoughtfully. product and initial launch, proved can be prudently, see has performance. is strategically, knowledgably, As market Pure real the it X.X advantage Sunfarms OCS by a approaching as to you the the far, so

can Sunfarms with you launches we'll pretty for But For fully Pure plans this dried the participate that around next with brand product year, will in leveraging be now. competitive of reasons half our first targeted assured specific tight-lipped from opportunity, plans success flower. stay to

center was within been CADXX investment full Delta and I internally Pure Sunfarms its Pure end, certification. Sunfarms' new square facility, XX,XXX foot processing compliance of an which nearing designed To funded completion that note flow. state-of-the-art entirely by will X cash is for that this GMP And million has the

processing this of biomass recently kilograms processing installation center, Sunfarms Within equipment capable of annually. extraction finished Pure initially XX,XXX of

be own course and quarter by our Canada second year, to operational it to the Health next expect We of of subject calibration. testing licensing and

cannabis handful of developments, sales, by majority is industry more large by cap. not market moving market ever be the we of a that an will players the towards large share. that recent that than market believe And will With now dominated take players by market

Delta foot on facility, progress its a Pure will cost X annual conversion to participation. considerably of Accordingly, its low production, which kilos, to a million square Sunfarms double X.X and support XXX,XXX continues

full summer internally, ramping end application And remain initial any for already to on is require XXXX within for year. exterior the DX Farms Pure designed remind this potential the certification Health has to being complete the began does compliance We Sunfarms next work submitted in I'll schedule for the Canada. conversion. full export DX not working production allow on in now and cultivation for future. QX to the are and by we production Village the DX you, of in of to and license the that GMP capital

quarter financially. Sunfarms, both itself So from its Pure apart QX and peers, to another for Pure all-in-all, continued set Sunfarms was operationally

leadership it Sunfarms poised market continued firmly market step months next for I As XX mentioned to XX growth earlier, Canadian function Pure is the the as over months. positions

can as the and integrated Sunfarms, Moving upon of a rock-solid which to to with building we did the operations, business, this success in hemp our we grow vertically Pure CBD; long-term brand turning program, and foundation build CBD exceptional for will of Canada U.S. we're with a market. exceptional now

been from projections, resulting our has of total in million material, of the that approximately program, excess of stocks. This outdoor has is first our pounds just flower, total hemp in acre separated inflow of very XXX yield separated We've our report X growing that XXX been average milled X,XXX pleased pounds was these to of that acres a material. well was separated season of a solid per acres, success. In harvesting completed

Success well is of to to the able were growers partners, with extensive as JV of their as a the we contract testament network. through roster experience deep our great whom exceptional

expect experimental. legal XXXX status. season much sales results These given We biomass to in early of that and begin days very aspects the the growing science as as even as certain hemp encouraging, early more this a is of result quarter. are prior were around its The of

first season but will provided invaluable our that has be Importantly, growing growth. future in tremendous -- our learning

well, products. of as in this look margin we very expand downstream up All higher to sets

sort state controlled as environment environment, and being curtailing at agencies spend levels with out. prudent multiple continues our we in are capital the regulatory as our both a to greenhouse federal In program, itself of always

is We big it's Pure have and as This not going being much on our control any first. brand of product more make about has we are in approach our proving until not clarity. benefited out Sunfarms dollar there Canada, clearly decisions and performance matters to

the licensing its our to to we do its rules Texas requirement soon to, ready Agriculture and implementation work framework continue the of currently known. will subject on as as We not hemp regulatory are with permitted be Department to of is which submit

in We for seed and plant moving number techniques development in R&D including areas, are health. very forward growing of genetics, advanced active in a

success will be a IP this critical market. Our in

opportunities revenue business, CBD multiple Pure as launch and Sunfarms, our with hemp growth products XXXX. profitability in our objectives XXXX, to looking see aggressively through in after pursue drive to advancements and we we As

over to A few words call on turn produce, before the Steve. I

institutional have heard that achieve knowledge, to you we in discuss achieve not and As anything underlying to years the we business plan of -- or produce quarters me come without far, have to able amassed infrastructure not have before, our have many decades. and anything we been thus over would capabilities the

produce deeply all top capabilities and vertical, to people experienced everything that become Pivoting CBD. greenhouse in from growing the and America, extending business produce a North beyond we taking of our know, new

sustainable strategy it to place long-term our business positive generation. We have returning in and its a grow from EBITDA to produce

production cannabis us revenue in the and impact steady third-party transition We risk to maintaining negatively hemp displays of continue to production to and allows partners. mitigating a progress that while drive can make cost our results. This agriculture growing for produce higher,

in XXX under have acres XX in bring and partner added acreage this regard, recently our in We Canada, XX total XXX acres. just to Mexico

will results. of on continue During to some our we transition, impact financial this period experience

in quarters so some others, a in million. the contribute More third in than the approximately produce loss which to of net business quarter $X

growth So by produce the much cannabis I'm will that potential as driven of the and our also legacy I'm thrilled as excited be for business. CBD, for

to the like walk you results to details. through ahead. Steve, in I'd to over go the financial turn Steve call

Stephen Ruffini

just touch some statutory line on own. their business by than down corporate which read figures, comments can everyone my rather break I'll regurgitate Mike. and matters Thanks, on

a Pure Sunfarms First, to strong hear cannabis to wants demonstrate is about. everybody results. subject continues financial that

quarter in was the have were did Sunfarms wholesale a of of of combining at of million, attractive second and CADX trim more with sales in approximately market. what XXXX, for than for QX. per average XX,XXX flower in prices. quarter fourth price the sold For around QX sales CADX customers trim, gram Pure net CADXX a Those gram row, per QX flower extraction bud an to trim, kilograms and sales

continues provincial Sunfarms its QX, and to XX% in XX% the started roughly it cost government margin quarterly were Sales lower a late to of very in for QX, QX. as gross production. sales Pure generated of

all-in Mike per gram CADX.XX of per U.S. As mentioned, $X.XX cost gram,

produced Sunfarms approximately XX,XXX the kilos Pure in quarter.

run kilos not per of is last late With starting annual rooms rate July, producing -- annum. grower few the mid till the XX,XXX it at expected

production greenhouses run we this look annual XX,XXX cycles It is rate planning we're a figure. is not quarters annual levels, is basis, but said Note, farming in the -- Delta has in not our at an their very as farming. grown world to these this comments, for Mike between light linear with This X. varieties is confident fluctuate prior kilos on

the summer all-in be in XX% reported Canada a where of production higher XX% due we've winter to per two use be in to CADX.XX By winter had production which sorry cost previously and CADX.XX cost last light, of winter accounting last stated we reported per in Pure per this, producers I'm gram. this all expect previously, -- months QX scale XX% will the gram, versus Pure this also and versus substantially quarters, summer As will than greenhouse gram of year, of the production. Sunfarms increase in to it's matter, XX% artificial CADX.XX cost and Sunfarms lower when we of systems

applying also three of to in our that new only by candidates. XX but not and since driven and crop is winter, all of rooms an this application our grow on experience are the of of growing essentially economies winter we're growing This years scale, growing years four we our last or learnings

and our results our labor in We nursery, grow yields are rooms better already. efficiencies improved in year-on-year, experiencing better

concessions, net Pure to involving million price or estimate The Sunfarms a any has to which bio about most you before, required Ag quarter, the loss US$X.X Sunfarms assets. or written the solely not experienced reason accounting is million for inventory. product of accounting of Pure of no inventory talk showing have is treatment for me want any heard with stress down all I it due IFRS CADX.X companies asset, returned

an for quarters. like cannabis Farms who crop our sense is Unfortunately a on of All treatment one makes really an no of loss grower, moving grapevine, a a makes like than accounting has IFRS' Village cycle really assets sense who annual our IFRS or for said the from in gross perspective optional. has the between crops, reporting bio sense it wine it's around accounting for multi-year company essentially crop profit years, of a has for -- tomatoes, is quarter. make not less a growers gross Ag of and doing no While grower, of may form

not asset of IFRS bio For say the is under a I treatment should the treatment, optional.

million. Pure asset what example, for on a at Pure greenhouse CADXX that on bio at Sunfarms gross growing that asset had reported For margin June Based CADXX on it the of and the Sunfarms million time a time. over XX in market's reported September XX. bio

As such, impact the income net between is quarters significant.

half tax earnings Sunfarms charge take U.S. a quarter-on-quarter. in of to QX, Pure for share, credits. swing per If break Pure is an CADXX of it, between dollar, picked results and essentially asset whopping on quarters CADXX In a XX%, Sunfarms take CADX.XX Village were up quarter-on-quarter's QX, million of CADXX income from QX. million, in over accounting to per change down on effect million debits of and of one In into had its difference that impact and all to which Farms' due share bio

positive of for million, EBITDA EBITDA million US$XX.X EBITDA for are for EBITDA The results, quarter. an an of XX% reported each and EBITDA best Sunfarms million QX indication Pure the CADXX.X a it's for margin US$XX.X of million Pure margin of CADXX.X year-to-date positive XX%. Sunfarms'

for the bio in GAAP, required the thing Fortunately to to in Farms which with past. discuss Village asset U.S. is a switched a bit, a change it's I'll

will and We future years we quarters, all U.S. pursuant in all to be future GAAP. will, reporting

Farms is GAAP asset accounting U.S. the Management's is estimate item. changed for GAAP and swings as that Sunfarms have positive the that Pure EBITDA under quarter every U.S. as it or of Village Note, bio non-cash in net in EBITDA is a Pure Sunfarms include same, income IFRS XXXX. neither in

in hemp. to immaterial There information but in has our an asset with are There's is from some accounting hemp, really MD&A. there’s that perspective. in fairly well assets our respect as bio covered that financials Mike they're nothing

to longstanding produce. hear important Village about, or traditional to like talk business to this in nothing Moving call. that but discuss Farm's it’s on

As and at crops at Texas issues preparation, crop to our point Mike Canada, both hopefully transition pivot is well in alternative produce mentioned, the as period for production our some time some our in due new a facilities. in Texas and as in

historical top most We hit our Texas as less as pound this double margin, last revenues cost lower are creates had gross produce higher at greenhouse yields quarter, particularly tomatoes, in well means our than as our experienced facilities yield per as which our on fixed. a cost of line whammy

over fewer costs we're those So pounds produced. spreading

challenging was to The historically as new this made which stronger. summer, start in Texas of third crop particularly have quarter our made pricing time early, narrow our late and a crops crop one a tough of going the end decision could we so a winter strong into months, the we window

Management produce efficiencies is our costs, historical and to crops is of issues Texas operating improve mixes keenly levels. lowering and crop to input aware our actively changing returning

our mentioned, produce Mike increasing our third as And throughout which volumes, company. significantly capacity improve usage party will

our We big U.S. in continue top quality customers Canada. retail to box all to deliver the produce and

driven Moving SG&A, on option corporate comp, our excluding accounting. stock a which matters; few to stock by is solely

like Our of of loss NASDAQ with XXXX, on X% rules all QX effective CADXXX,XXX in by and listing be due foreign our regulations, over SG&A QX, a XXXX SOX. our to under we our in X, on XXXX, XXXX compliant fully increase, January just to infamous issuer SEC increased have for the and status private

and charters, firms XXXX. SOPs back has we in reporting U.S. as office to policies reviewing full such SEC new as ensure rules counsel As busy with and adherence our external we and all in accounting rather operating bylaws, legal -- been our our starting compliance of as well are

fully in of or transition I'm well But expect money. unfortunately, and happy we had is our year-on-year that XXXX. in all IFRS. results with Hence, we on Form MD&A. Farms before professional an to as current in report X, going all fees file January to all and have along U.S. a footnotes reconfigured our increase and this Village historical our costs we compliant will be GAAP that, March noted refile our XXXX will and XX-K XXXX to from

large our raise cash good CapEx. Sunfarms In equity million, did no the matters, basis the on future, CADXX roughly standing especially from substantive an Pure position shape. going with October last good own its with million, cash One of a is in corporate foreseeable point, generating we're in in cash We forward, US$XX flow.

I'll back that, call to Mike. turn over the With

Michael DeGiglio

Steve. Thanks,

continues industry. closing, it a under challenges say has Pure in period to built an Sunfarms high would are brand let we just appreciate one. is planned the and quality in for for day little But cannabis positioning, cost from attractive we safe Canadian powerful comes execute that, production is that at products that tough but come. time, me So expected. volatile market good crash well, exceptionally demand We control, times, knew Sunfarms knew the sooner The for a We the low its this and what alongside price point. than clearly Pure

our very This and in pains the has well, anything, of in to years which we enter and it's U.S. of the and before, experience as benefit we than seen navigate will the before, experience. market, CBD growing the choppy continue us waters coming not now may not another Canadian done XX serve market, haven't anything It's we more haven't similar years.

We and takes of thoughtful, and and matures market. the but remain of forward, all opportunities, a are pursue prudent the sustainable profitability, mindful on our industry into develops multi-billion we illicit likely market dollar long-term as as moving

and situation, is value the look on will the to off but sufficient only this focused CBD expect for team self-funding forward With position shareholder the our and beyond. U.S. years self is the the ourselves We're and market which start to of a on consider Village progress, U.S. great Farms management opportunity, future. we federal which cannabis legalization Grail, in to the firmly Holy in Sunfarms drive for also, we Pure not to in which come, next reporting

open that, to a to Operator? up few I'd like with questions. it So

Operator

Cooper go line [Operator with here the you. ahead. Please your Instructions] Securities. of Beacon first question And Thank from comes Doug

now Your line open. is

Doug Cooper

Emerald tough to dispute Mike environment. for morning, good million? Steve, quarter. mind, and first on come CADX.X what's Hi, a of A congratulations with things mechanism and that Good the couple

Michael DeGiglio

to the press in the just Emerald subject this that, at point. going say is release, to it leave and have in at we're we everything Doug,

Doug Cooper

Okay.

in into bit expectations and And for I both me just the guess you touch current biomass Mike, – the talk can pricing Second volume hemp the pricing a you question, in looking upon can Canada. U.S.? maybe excuse Canada, QX, in about then little the in

Michael DeGiglio

side, While think price established QX, the we're quarter. last I on think side, just in we retail I that and point pretty retail think through the month, the fourth continue segregating I that well

the is On because side, quarter, happening be itself think think will appears yet some that to probably more towards I December. the more similar as start wholesale that's think that opinion, and very we time determined, weighted be And I it's to as Also, in the what saw in far the to my purchasing. revealing third end I what of quarter. in

it's know wants all and quarterly to race everybody Obviously, sellers they that their buyers between the the and make numbers. a

think XXXX, that last and we will get wait think result see the will eventually, at But third find And choppy the looking another at who I through these and then to that So flinches similar waters. weathering pace, and I till quarter. through we're set the quarter least balance.

Operator

And line... from your question the here next comes

Michael DeGiglio

finish. sorry. Let me just I'm

how agricultural CBD has this have year, the side, I an crop out grown December to rather many even growers in very before mean who -- price so the legalization last the there People side, are everyone market. on dry. sort since so On there know never of jumped for been rapidly. they CBD didn't there has compression,

upwards gold XX%. quantities April just since on a of depending compression it's of through seen October, price rush we've sort and So

I the think CBD some So new price the side. into year on be there'll significant compression

Operator

Andrew next And your here Please question the line GMP Partheniou from go from of comes ahead. Securities.

Your line is now open.

Andrew Partheniou

harvesting in impressive little so ask I to far on about a congrats your bit post and Thanks the wanted performance rec. area.

you're pre-rolls well terms very strains launched launching differently of new carry new and products already can pricing? a expect different the to processed may I hand soon, products, mentioned You in be trimmed market or that you've going recently. think What we potentially that in strain as

Michael DeGiglio

going that tight-lipped in our But -- mentioned the of going have that comments. this I not has unique forward, -- what things we're thank you certified plans your And part Well, for call ready to clearly X Delta put a I we somewhat to lot been innovation, year, think this be it's innovation we're this GMP Andrew, as on a there accomplished lot very is? do of area to certified including and build-out there, also extraction out. some on of

the is is the going I think taking innovation it. not to leadership it. rush Pure drive approach Sunfarms But think prudent the that So is, to I into

As mentioned personally, what is the quarter. with putting a strain and shown different on. I by and I with they've second, not early strains more strains -- But of dominance the that evident want, looking they've amount third only market impressed development huge accomplished I'm that's think undertaking, out, strains that share people

think will I So that continue.

Andrew Partheniou

Delta it out. I And X still on Thanks. contribute in another note, believe your partner JV requires some to capital building

around CADXX I was million. QX, of somewhere think As that

if on Just update that? an provide you could wondering

Stephen Ruffini

part on an at leave it – is contribution that, just and we That this equity ongoing moment. will Emerald's that at

Operator

line Your ROTH Please next line Capital. with Scott of Fortune question comes here is from your the now ahead, open. go

Scott Fortune

any allocation and Emerald forward, moving so to Health expect Real to the Emerald for thanks allocation the quick take don't XQ you Health further morning Good on follow-up, call. here?

Michael DeGiglio

any of all in so. haven't at quarter I don't the third the -- think They second to taken quarter. I'm in speak sorry,

far zero. quarter, So, the so in fourth

appear I we've doesn't the speak So, can't will seen, for any think it take what I allocation. just based on they them, of but

Scott Fortune

segmentation far is strength on strength and a where then of selling you the at announcing of Where side as things, things? where kind seeing level. of, a highlighted there more your are the they're value you're the as follow-up better, October offerings at at segmentation side on competitors price things, Okay. Ontario brand the the side good, you best category the some are of from And -- province that of in the category provincial now easy

Michael DeGiglio

in we what doesn't think is team, stool, was a I don't affordable price matter the value proposition as of what if the strategy a that But way, four-legged it's a you consumers said, it Well, sort have luxury. it's want. management coin their

of market about approach strains years, the high base. a many adult four-pronged safe user and customer quality this use been I clearly So, product, many, we're the think that's and wants customer talking -- that knowledgeable very for of that's

and package illicit strains where trade. less -- because a that pricing at and then that price having be resonates I that want pricing plays well into they And on that proposition of you need for the really value has And to decades is finally, more with think or point them. that established been the whole our is

market. large The It's illicit very is trade a existing an large market.

just building it the it's it's So, side the to the about I don't legal think from illicit cannibalizing market; all side.

that pricing Sunfarms always what Pure management brand on why we again and think talk but do clear that's producer, not sake going that is all and of steadfast and team at equally. And quality a at the of that plays being low-cost to And need I very -- into they plays into forward. the

the to set whole because bar but have so traders, have that -- additional of the illicit pricing determine well, will program, that they But with plays how early. roll-out You and along pricing quick stores on.

Operator

the next Global question Aaron from of here ahead. Alliance Your go Please Partners. line comes with Grey

Your line is now open.

Aaron Grey

thanks the and Good for question. morning

pricing and kind in terms whether of of also terms Can bit those, a pricing. just flower, the to you. different we of Thank dig kind is have market the low seeing quarter? a kind breakdown, can high how or ranging price little you forward? THC? So, gram on of between of the deeper within mix Are then going trim and expect the give per you kind also of, that in I or question in not First wholesale and between

Michael DeGiglio

for question Thanks Aaron. the

it down, going difference not don't of agreements based by wide does variety well. also going based range For tomato knowingly a break based a doing or is that range. pricing on There to wide vary to and has provincial information. is But pricing. Yes, on commercial CBD pricing it's reasons, on not is is there demand, governments, strain And sensitive that and range Sunfarms obviously, we're a between that because we cannabis pricing, the there THC there's with a we're -- break trim flower down. high with Pure commercially a contractual break

Aaron Grey

on volume, just for then XX,XXX And that. the appreciate kilograms I Thanks. quarter. great. Okay,

a volume You flower? we overall increase quarter. like – facility also about go Delta and sales you of at production. full more you should not annual this the rate mix forward? mentioned now I the full just for towards trim trim will And flower about between think whole Do can that's to guess least hold, how run – How Thanks. or get to best for year think that kilograms relative we little feel and in the as bit flower more volume XX,XXX that trim,

Michael DeGiglio

on we'll that I our strong flower, extraction own of extraction that obviously of putting and our Predominantly, through trim was you, taking is figure it And production basis. predominance trim respect will With gave change, opportunistic, some ultimately, that go-forward start like a a to that. sales, it is it trim. companies ourselves,

the trim So we start trim – certainly, flower quarter. of Pre-rolls mix of in XXXX, mixture will have flower oils. and will a this

So it will in. all mixed get

Operator

Please Craig-Hallum. with Eric line next of question And Lauriers from the Des here go ahead. comes your

Your line is open. now

Eric Des Lauriers

you Thank guys. right, my wanted wholesale more try the for I one to pricing. on great. questions All taking

compared guys QX, in thoughts, out your like XXXX looking – of see number to we as wholesale just equilibrium to beyond, or spot prices, cost you beyond it relates love of below results hear where similar pricing. I'm as as to and clearly, QX? LPs, out look look we Thanks. maybe maybe other finding already QX would So wondering to a expecting

Michael DeGiglio

they based just who want point to think but I on other that lot extractors buy at will – are Well, of a of more, from, not strains there. some LPs, quality decide

– out there. there choppy today is so water of much think, a there's lot I

indicating, they But think to separate everybody's that that's in based quality start to going the have. negotiating necessarily XXXX. who on I is and without strains preferred supplier their So

maybe reminiscent said, lot the market that don't. pricing But there quarter I use right is just slow certainly is. a they As all the is And want. extractors retail way is of The don't there the now in LPs I roll I really out the too quality But of that the that think fourth negotiation on other out. out And side. the break of third there quarter. because of think

a XXXX. going separate, into wholesale may But up, – is that's even to backup eventually there on and think pricing that. firm I going it So

be going getting a to marketplace. amount matter of time, think the is and this So there of it's in a just the suppliers I through compression of

who dominant the And forward. inevitable I in as the emerges we'll think see marketplace. that's going suppliers

So I to decided XXXX. to look forward

best shot We be to for is profitability being have we Among think quick, have, have have cash would price As the not to said, I very attributes Did other why what as the happen you for times best. and that's and weather quite important. but is it that always you worst, one and compression. that's flow producer hope we low-cost is planned for it the and plan we this. always would a there look why for like the day positive storm, the to weather it

what quarter. shakes be think we'll But So, XXXX. the up I determined the yet see fourth in wholesale to it's for

cash see if weighted it's of think, the you generation flow you very end I the on look towards the at quarter-to-quarter, quarter.

start happen a occur where sales of in lot that's December. to here So will the and that

Eric Des Lauriers

X.X And I All can of comments some commentary supply the agreements, given Cannabis there. maybe appreciate inventory products. anecdotal more great. then on maybe introduction sign you one would provide And right. follow-up. sense. elevated willingness the -- the some levels, to color just That of Alberta any Thanks. if provinces be Wondering specifically just on makes

Michael DeGiglio

there is of being on penetration amount really think and forthcoming, said, go surgically I run a that's they to population that Alberta, And echelon. third, and guess. available think, just right think with the way that's on, where I up that. through by the decided as it's of the top of retail And, the clearly, second, first, we standby there and I team has the wanted side, you're

consumers demonstrated initial But -- well, I to where massive. there's the I started any with basically just strains this think think because I provinces. the customer, that's what a success like all they again, of as And get, and Sunfarms sales Pure want pretty of it's that think other I has can they two lot have already want, drive in September, so

think, some and I you'll coming. see on news I So, that, standby think

Operator

comes your open. line And your next the from question is line Rahul go Please James. Raymond now Sarugaser of here from ahead,

Rahul Sarugaser

and Steve. its much going on so I mean, the Mike quarter. our my reiterate morning, waters questions. just for Thanks to Good rough Congratulations you. counterparts, taking Thank out there. Great.

wholesale grow starting the outdoor So coming market, that's to back the come -- and online. to particularly

are to per being yourself market? level you, compete coming starting in outdoor that to to of, numbers positioning which How is see which $X.XX sort of -- $X.XX onto sort market gram particularly the of grow, as we're

Michael DeGiglio

Canada? talking in you specifically Are

Rahul Sarugaser

Correct.

Michael DeGiglio

think they've on in a Well, concerned outdoor grows a the not be there. May with latitudes I've gram anybody outdoor Canada, experience, But, not it. they’re illicit grow, trade. Based something my I have $X.XX the at, I seen in of think, missing most I'm haven't and document successful. I place been of heard the I'm that had really

But I looking on will And force. pricing are includes cost, the I down. that proposition, can and you're be drive think technology dividing to we ultimately think cost at where Ag we today our our value we which think continue

So cost about out not it's the field. just of

that do in insects in available sure of I'm And virus -- with any terms industry long you the mitigate tools disease, of amount honestly, an and the all. infection And having from to stresses I'm those pressures term. just not are plant in without concerned the this vectors on outdoor environment, what and and the numbers can the cause honestly, at crop steer not realistic that the

Rahul Sarugaser

then. just a then, question And enough. Fair Okay. follow-up

been market always that cost to in lot a make at on sure the based put numbers CAD I terms of Are that, that disclosing in the goods And recognize will you In of planning X.XX, recognized about, cost you've seasonality. you cash publishing on, also point, numbers? those illustrate whereas depreciation, is very reduction. talking particular, what Steve also, is you $X.XX, of any

Stephen Ruffini

just that. we'll depreciation, or cost view. should sold some cost growing capital and Well, is excluding goods in mean, cash it SG&A not line of It in included. cost or it’s our fundamentally and that. agriculture income and like I high-tech production below cost say our one's wrong a included in the be is of should be But lower of buried something

flow figure our looking at are charges does cash cost that's describe obviously, cash higher. And out our indicated, if Yes can which amortization. he by depreciation statement, want one and depreciation

So to. should want and stated at includes it fundamentally, you per depreciation it gram all-in our included But can for that's quarter. you costs why CADX.XX the out think figure if we be

Operator

Capital. here Please from comes Lane line Grays the you're next And go of ahead. question with Stefan Mykytiuk

line is Your open. now

Stefan Mykytiuk

Thanks questions. Good morning. I the guess. for taking Two question,

gram a obviously couldn't recognize. million dinged revenue average that's price you the right? $X of I the of off, being that by have $X.X Do first The

Stephen Ruffini

not and kilograms XX,XXX the take recognize the Well, XX gram we million. could we the into sold $X.X divided a yes

Stefan Mykytiuk

Right.

roughly as right? sure want got I recognizes I it's that So X.XX, just if been had revenue, make that to

Stephen Ruffini

Yes.

Stefan Mykytiuk

Steve of Okay. was think And was And -- I it direct. XX% in you QX then said couple volume you said only roughly sold weeks. of a

then? in Just Ontario, direct could in given B.C. QX you're the success that that be think in and having what you mix

Stephen Ruffini

asked me the stores that and tell to can going which Well, are my to back into many answer how be number. you I I question, open

in particular Ontario get give to starting are We does sell-through us good data.

will So which you forward. helpful the be doing going math, start can

the stores. issue its of just number stating fundamental the But there everyone

XX retail right I B.C. there has or So and I minus issued XX licenses. is know open, stores think plans now has to to plus active

it obviously, higher don't I how expect just just on Nobody But because number get So in up, QX. QX percentage I fast versus depending stores. those is a the improved does. don't in what final know I the stores know of be to percentage

Operator

queue further any remarks. no will showing at now over I'm And questions call the Michael this I DeGiglio closing turn back time. to in for

Michael DeGiglio

for Well, you participating. thank everybody

next Xst, progress in thank I forward Farms look long-term and Canada. the we're ever time. forward to As bullish look now transitioning you and March as Village forward Canada starting going we U.S. to on and in both you January in for our in to But said time choppy reporting right it's GAAP, And the to waters talking sharing

Operator

today's ladies and concludes gentlemen, you conference Thank this call. And participating. for

may now disconnect. You

Village Farms International (VFF) 15 Nov 192019 Q3 Earnings call transcript