Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen. Welcome to Village Farms International's First Quarter 2023 Financial Results Conference Call. This morning, Village Farms issued a news release reporting its financial results for the first quarter ended March 31, 2023, that news release along with the company's financial statements are available on the company's website at villagefarms.com under the Investors 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 1 hour following completion of the call. Details of how to access the replays are available in today's news release.

me during that part or conference let be statements of begin, call. today made after we remind forward-looking you may this Before the formal which providing assumptions statements, applied material our in Certain many were of are beyond control. these number forward-looking to could results statements. materially These differ and expressed those actual risks a are uncertainties of statements or to from subject that cause implied in

March Canadian ended underlying in with law, XXXX of no such quarter obligation of which these as ended assumptions, including and today's the on available the various summary uncertainties date. or year statements. contained risks to XX-K, A And publicly is we and EDGAR. undertake Form update required be filings revise securities These XX, company's securities SEC except any statements the applicable the MD&A regulators, made its and XX-Q for XXXX, forward-looking are for XX, December as will by

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

Michael DeGiglio

and of Vice us and Cannabis, Good Ann Patti Steve Thank joining and you Control. Ruffini; for President Financial me Corporate today's Farms' Lefever; Farms' call. and President With Village of Head thank Corporate Bella. morning, are Dosanjh; Officer, Executive everyone, Mandesh Village you, Village Gillin on Farms' Chief Canadian Affairs, Smith, Vice

Steve questions. the usual I review highlights will format, our and then the and quarter, for As open call financial per results the operating up and for

begin. let's So

first X XXXX particularly with quarter noteworthy start was to The highlights. solid a

$X.X its QX of adjusted turnaround a for improvement, achieving from improvement last tracking this $X and goal EBITDA of significant breakeven million a EBITDA sequential sustainable QX million QX. just million. adjusted produce with third fresh First, quarter from business of is our That's $X loss a consecutive our year. year under EBITDA Fresh delivered approaching positive towards

the progress past much several meaningful by to and done, quarters. over encouraged be the While there's I'm work still steady

Second, difficult one operate, cannabis environment a adjusted which sales and country. this consistent quarter. very while significantly growth, to our which we the branded generate market outpaced be remains and of the Canadian most positive expanded to share in continuing continues EBITDA, market Retail in again once despite what did best to again business we performers

And rational. have of third, part our markets Canadian added is strong higher our where much channel, momentum strategy, margins we cannabis which this taxation to is are international and generating in export

in team which X which largest for X Canadian product One, areas product category flower Village market #X execution, on are we me the three, QX and propelled during we our Canadian quarters deliver: Let which nationally, points address with There the #X of normal up operating remains environment key in have be held position cannabis would dried to and which the big starting the these, in scoreboard, consistently Farms' cannabis first. keeps a contributor continues now, putting each our business position recognized. been last which two, which and the of important in year. market, a and the share basis acquisition maintained commercialization and accretive for to this to strategic formats; innovation, growth LifeScience, all in us our thus our which growth; Quebec their investment overall overall and has Rose into year of category

outpaced by gainer over XX X of we grew producers the are biggest second more that top the share just and the past X X:X. than year, we Notably, meaningfully of market

control. game with feels our strategic much It beyond behind like a variables in playing in to consecutive and in capabilities operating hand feet despite that structure Our our our against and model, Canadian sustainable in Yet positive adjusted cannabis execution year-over-year focused our on one the The built enabled quarter the XXth low-cost EBITDA, and both efficiency are growth control. in proven territory. advantages our generate gains keeps production team incremental into those continued our we tied us we is back. are

The bold, about iconic a beneficial availability regulated cannabis approaching and federal legalization designed healthy illicit of a courageous convert market new It in safe, bring the industry to move of progressive a mark. Canada revenue. product, an and the is X-year create tax competitive into was

consumer; we innovation the availability partnership The regulated and when other There the operators and and regulators between many benefit As at legalization, where about emerging a safe, discuss. rules model. many are means to we asked research speak, a least transparent product; positives: governments are exploring of to Canadian are the largely or a

and our is tax the does we of the tax alone, incurred context, property in CAD regulators, generating a other not XX producers sustainable the tax put more result, CAD economics in tax not the or provincial Yet expected. government tax payroll sales of noted XX% LPs as than income million our our conversations on in strangling this XX.X branded QX payroll the This or million excise tax. with sales in To dollars excise respectfully or we have tax, include as Canadian entire expense of licensing quarter. or and

If nearly we X CAD in under tax were be just an neighborhood the alcohol in million. excise would CAD XX tobacco million of company, that

in is ample room the the why the tobacco and that then, less provided have surprising solely is been XX ludicrous. suspect illicit we It's industry safe a market, say CAD well the company, the this supply me reason to not noted, remains major underprice for that If We million the market of and illicit trade that by the documented experts This these are allow most the strong alone. economics were Let have profitable in most paid the it. markets has entity again: do we'd has others legal, we tax government taxes. the not profitable. industry. quarter illicit paying majority not LPs alcohol Canadian underground likely the believe as cannabis chain, It It's an roughly

it cannabis still illicit industry convert in legal excise tax or challenges of under inconsistent industry's the that able This regime. if the with efforts. sales, will local be all is XX% remain challenges then enforcement It profitability. to questionable is clearly desired that It's product to Canadian contribution so

the lack of contributions, businesses ancillary of at local on the losses thousands tax and impacts and look the income communities. corporate Just job

it Fraser And I Weed of the absurd per continued investment. capital out Innovation another flat filtered in be another the this challenges contents the surpass level Company. of that More of industry. injection. cannot rapid takes can segment the the is Valley feel tax our own market, to value future trade structure, expansion including area gram of the tax illicit [indiscernible]

opportunities we one is this to in of markets. All reason are international the attracted

Leveraging momentum. attractive their for international opportunities, a our Canada profile with core are is and for of highlight QX. strategy, experience seeing our second good cannabis in we very profit The part

last were quarter, our date, more growth market testing nearly Earlier has Therapeutics. launch our brands now successfully Year-over-year the to launch Canadian medicinal a Israel. of from announced market including protocols up contribute export [indiscernible]. Most to than and And partner, year, Sunfarms come our team to Pure X% we week, second in cannabis this our segment and tenfold completing first sales IUVO the export of this sales. export export the local added after in we all testament and with German market,

with and its launches both build I'm to we both our pleased thrilled business local have lead follow-on some to orders we that delays, are received had market the partners. up countries, While for

takeaway Farms. significant is business. for in is strategic my Village business finally, QX then And a our third turnaround an Fresh produce important fresh for

getting very step We for growth are committed control have under to encouraging strategy. profitability was has QX it is de-risking inflation. adjustments of in our to another The returning environment direction. long-term and it macro we as made oversupply and part improved, that

to protocols work to you docs, customers our of know, manage aspects best-in-class been the operating few continue from on all greenhouse years. plant across viruses, We to including that's difficult our improvements last receiving operations as

in Our support and quarter fresh our are improvement, financial the business the to belief Fresh Each value reinforce for business. the and other's performance and confidence rooted of year synergistic. our benefits assets first deep this produce continue cannabis experience. this from improved sustainable results expertise, for in our

have eyed Canada these in the on States. synergies United We have and capitalized long

As include for expanded be license of cannabis have formally the greatly lead such, use pain. to where applied medicinal a in we chronic medicinal Texas, may

potential of plans unknown, we will our investment encouraged potential the in a are by to of are agriculture decades our to the by licenses. state when state a decision timing contribute award number and make any Texas and the While future deep of of to cannabis additional licenses expertise of routes Texas

to own towards very With States, operate. respect to that exchanges Should Balance we hold to in the the difficult we ownership which structure us in in Health business to market. our in would with will an stock market current its work license, CBD acceptable United continue another receive participate the Botanicals a enable

We line from year. products success continue of to last Synergy+ benefit of its the and

is on business So more far this plan. focus And near adjusted EBITDA. costs operating supporting on breakeven or with this less the year, continued

under Regulation the the drug the business review potential standards, the CBD and business, the production customers our highest changer Farm eagerly meaningful are of would when be the mass expand opportunity open. game wait meantime, for ready year. in outcome The a operating we XXXX this Bill retails of team the and current from this of as food is as both the to category, well

the Steve? with call a Steve I'll more for review financials. over of turn So to that, detailed

Stephen Ruffini

constant X% by basis, first X.X%. $XX.X and a Thanks, were of business declined QX from dollar million, were last Canadian sales reported with our Farms Mike. sales. produce quarter our a by decrease U.S. sales year-over-year On offset to the with XX% decrease U.S. constant X%, currency reducing On dollar consolidated which Consolidated the sales Village for cannabis, sales. U.S. sales due a number our all cannabis fresh from of of partially cannabis a basis, lower for of were year, stronger currency

a for are million loss we year. $X.XX the income in loss the million our our tax U.S. compared started $X.X million, for net quarter same last $X.X of improved being a for period $X.XX operating slight share increase improvement in XXXX. our was $X.X QX of booking net valuation we a share net mainly of million in loss losses, expense of of allowance Consolidated higher per to The year-on-year loss offset per which or tax to was due by $X.X or as

from fresh VF for tax a is result last for significant last businesses earlier, QX a XX% result improved in before mainly produce higher year. as compensation. of Canadian improvement costs to which excluding million million Mike discussed Fresh. EBITDA a Consolidated decrease our was Improvement operating from and the turnaround for negative the from performance loss year-over-year Operating This XX% EBITDA mainly stock $XXX,XXX. from million, EBITDA was corporate is well the $X.X $X.X adjusted year-over-year improved $X.X year, QX as of QX QX

they quarter, were as which in Canadian of overall in growing larger we Mike exchange are our QX discuss Canadian Turning to And once export results, will of with are increased retail our fluctuations. year. to with increase sales international a sales for XX more Net cannabis Canadian business provide our margin. to of margins, period-to-period CAD becoming Beginning sales Canadian cannabis XX%, a mix. an over as year-over-year a again sales out gauge outpacing XX% branded without QX growth is dollars International last performance a market was discussed, more XXX% by wide $X.X I which sales accurate million, breaking favorable focus million, our us. for this part grew

last wholesale $X.X year. for QX QX in sales with million $X.X were or Non-branded compared million

oversupplied liquidations. market As an already inventory eroded low prices spot further by were in large

opportunistic we the current expectation with of As around have aligned us, our times, more many market been participation we improved the is is [indiscernible]. wholesale for have pricing selective the environment, market the in discussed supply with when and

purchase half in Gross for segment of adjusted a our it in was Canadian margins launched to in to sales adjustment XX%, margin the that The was XXXX, in gross in of success QX price our by mix market, value back XXXX, sales until offset higher margin reported margin in excluded slight higher for the part, have which as and a related higher decrease portion cannabis of XX% lower-margin period. the with we primarily of Valley that essentially line inventory with not being, in continues the the was international sales. brand on Fraser most the QX

of is were sales from that or in an basis sequential X.X and a X.X a QX costs percentage on SG&A net of dollar-on-dollar $X.X typically XX% organizational-wide down in million as cannabis general QX a note will a seasonally for expenses were XXXX. basis, unchanged QX sales focus. down QX from XX% sales. Canadian of year, lower CAD I but as from last million on basis, SG&A efficiency due unchanged elevated QX percentage sales. million percent and administrative Selling, CAD in a of remain cost sales, for On to

consecutive EBITDA the Our X.X of from adjusted Canadian of million, XXth XX% positive up X.X quarter cannabis operations was delivered QX their of million which last CAD CAD for year.

in continue solid tough EBITDA positive a generate We and to pricing uber-competitive market.

at EBITDA breakeven for in we U.S. we primarily XXXX CBD new $X Health to U.S. negative our majority the XX% introductions, our generating Based compared last generated the sales was margin I with cannabis information for to year. This gross including revert are XX%. industry-wide line in which for to of with of QX adjusted U.S. believe now year. to to cannabis margin decrease hemp-derived Moving million, back Balanced sales that just Adjusted last positive which THC dollars. gross a of $XXX,XXX for was Synergy+ business, a on have, our cannabis have a of were The the sales under by products. $XXX,XXX QX will U.S. $X entirely of we of operations, EBITDA peers. million QX due outperforming CBD-focused we and product compares continue challenges, mitigated

Turning fresh produce. now to

growers pressures, lower our in this considerable XXXX. in in improvement. we The performance sales produce with volumes, transition our sales we to Although year-on-year which offset inflationary during improvement accounts, be in higher direct business, continues own VF an early sales XXXX, higher financial going year-over-year resulted other due sales suppliers XXXX sales of well our early by our higher of by quarter as which our partner price pricing a our pay offset volumes retail to consecutive a by were of early XX% primary third impacted due a sequential of to increase increase XX% price percentage down EBITDA. improved lower were generally Produce one our is lower achieved from generally having market being than in the as versus facilities who is from year-on-year our a success wholesale price in both accounts, our wins the plan. as higher The to Fresh operational driver year-over-year in

step XXXX. year, and yields substantially from and Adjusted in the the closer EBITDA of a with for environment loss fresh improving our this another well was continues business QX the loss as profitability $X.X million work improvement QX produce A for of to substantial of of breakeven which $XXX,XXX, million support took on over last XXXX. $X as of continued confidence a negative to customer stabilization macro our performance in improved in financial loss

our $XX of to had quarter close to million, million, loan sheet. as recurring XXXX. Total balance million and the quarter. of the prior $XX.X the QX from million capital, was at which from is $XX.X million million per $XX.X of of end now the and $X.X the of we fourth $XX.X quarter QX, of down debt At the cash the working the end substantial $XX.X at slightly amortization are of and cash respectively, end Turning at end increases million

the as the is financial and regulatory credit from lenders extension of our tolerance, which I'm indicator environment risk very lower In financial the pleased now report strong we also Canadian health institutions, interest our XXXX the challenges Pure revolving to higher in under February operations. in focus business the our credit, terms, extended XXXX non-revolving current as same cannabis February facilities, conditions of our peers, of expire by tighter well of many cannabis the covenants. rates, and on Sunfarms a

the turn back to I'll now Mike. call And

Michael DeGiglio

Steve. you, Thank

to our matters. up focus we core with and growth return-enhancing This some opportunities reiterate closing, are capabilities. line pursuing I points. expertise that in want One, So

America stages there to out. We the and are still of wrinkles early are cannabis the markets in many in still in very North around be markets and world, ironed these

Canadian cannabis, is Two, also of regulated decisions the safe, challenges many industry. a long decade in Governments we appreciate applaud revise I what our entrenched strategic finally, in the also. to listening This making provide accountable product. is sector. our for are on this And partnership their are DNA rationale reflections bold and holding stigmas the ourselves in to control. to core we about our to I cannabis appreciate

Village all industry, for these work the the to continue Farms of benefit balance of the to will to with the Farms for right achieve get regulators its benefit and for Village the goals of consumers and all benefit stakeholders.

for We'll calls turn over ready. we're Operator, point. this Bella, at

Operator

Capital from with comes question first our Gomes And ATB Frederico of Instructions]. [Operator line Markets. the

Frederico Gomes

you on it quarters? in Can much your improvements the X drove maybe First segment produce over is on is the those the remainder question next the And How under that you color do some improvements exactly margin of year? control think for performing provide produce? to see driving side. maybe the you how of what continue more

Michael DeGiglio

we what's and Well, are control mean, as I very I on focused said, in our margins.

obviously, being So by, that's that been produce, there are market XX% offset that on And Misunderstood sold. each XX% There innovation. I'm driven there's out sorry. going that. price of see to the quarter, be compression SKUs new about process we entering of by -- are continues

So the systems. heavily on produce, we investing one autonomous intelligence of growing artificial are and in is examples

facilities As we're and to we've in expanding we our all from an Texas Early lower helping ago, of results And efficiency, to are drive one now yield, more that in and had great starting put years X.X positive it. in our example, results Canadian increased XXXX. produce facilities cost.

automated that expenditures with of to efficiency greater be that the in new million equipment capital close operational Texas. will heavily labor. $X fall crops drive the investing there, will out in in We're Significant

customers to profitable continue customers we're what for to manage the and which positive rightsize up that flow. at as down, and of has evaluate managing is we do drive may regardless and Steve EBITDA going revenue And business to most retail for positive that our our cash eventually said, So to level. our facility

drive more think the So all will to and factors margins. contribution of higher continue I those

is mind, driving business with Mexico, and gross derived in commoditized is a there from are especially margins, it keep a on higher competing limitation But and we price.

Frederico Gomes

Thanks, Okay. for that Mike, color.

actually then application sales. there about see, license, for your of about Texas. also potential on only opportunity of not maybe moving on time start a we maybe license little the of Just can sort more a cannabis expect medical and terms talk potential you bit in the in you line Can decision but a what

Michael DeGiglio

Sure.

So as at always on that other we've operating for looking was the undertaken one will internationally or way we're though And and U.S. you getting know, market in we've countries, we reported expanding exports both and even us a into another. that enter U.S. the market priority.

of a on. that And different number working entry have We we're is one. points Texas

of you ago, doctor script cannabis, Texas write incredibly only as X of were was restrictive. epilepsy. can Now The one of issued least different at state the forms know, which years XX that X licensed medicinal for form

really no have why currently there, X So nothing. holders traction really had that's license X of done and the

years Texas, any terms current licenses legislative was Two ago, restrictions. nothing they years nor last meet in the session, of to done in every in the X improvement additional

what's do now XXX,XXX -- the the April. many, additional end is The sorry, there was applicants. date However, cutoff we agreed simultaneously this happened were -- XXX date has both of I'm know session we -- for How licenses. Public But issue Department know. Texas cutoff to XXX about don't of Safety applicants,

Texas, uncertain. approved round he be to the second date. cutoff a the up many approved are And a Abbott, that be how that's many that will of issues. by decide will to is governor, So How there's ones

that's thing. So one

already of comes end passed legislation incredibly simultaneously, positive, conclusion that bill session thing the has a the happened May. a which that's the to Second and house is is at

about working actual there's So left. XX days

revised this issues, which pass And in. the chronic bill, Senate already includes pain. when chronic health mental it is the should will PTSD is you big include have takeaway pain, And

a different So mainstream number write it to therapies really a medicinal Texas issues. to doctors of, a And scripts chronic drives of and state. be, that will for sort opportunity give pain great

passes. excited that very if we're So

optionality. mid-fall. does -- session be in end advancement is goes, early why sometime And This what very far So will as I as that's would as that Texas far if passing, will about And know Texas. should as know month, the one, great expect legislative licenses say, well, talked fall, the the the as timing we've ending we'll issued. step imagine get and that soon by we in the [indiscernible] Texas of a as a lot by bill the we far early this of bill. we to and

we're by So for standing that.

Frederico Gomes

Maybe last question Okay. a just for me.

picture pressures form see big value pricing and What on a cannabis Just government something most is, mentioned, going of very market far very looking the so maybe you that's fragmented, of business. as competitive, the from taxes. Canadian more your to the in we

change of of sort should this be overall catalysts some Village, what for those conditions? some -- or investors waiting that or So regarding of events that the year industry, could

Michael DeGiglio

the over the a power cannabis profound that would in for this talked and what was article day that age, There plant product cannabis Well, if all invented first miracle York I a was as a weekend the like in unbelievable. New is time. mean, was it of the article statement was And could be current of time you Times cannabis. imagine about

a world, type at it always cannabis my a we're -- to But in that the We some portfolio fighting investment always across will off because be investor I talk It it's long take global that's long-term look unfortunately, It's the and is be if of this And do I where think this pay your term point. coming. okay percent investors, be for kids, would incredibly investor. too. for may some at long the should is a large but that's an part industry of I what going invest time. it way: and of issue. these stigmas And

are So down. we reported, we've as for hunkering us,

all are watching costs. our We

will we what a enter. consumer and our are I and well, to we it And if the other and markets everything That's currently patient, that be product and just I some how over get that we want that as potential know think And see X do we taxes, the We these don't it's to innovation will on increase it. we are come, in position we've be changes #X have to there I but not things trying years. the relief cannabis -- in it's think of other I next be proven, come. regulations, has market when share in

Operator

next [Operator the from your with Aaron comes Instructions]. Global line of question And Partners. Grey Alliance

Aaron Grey

one Canadian First pricing terms there be in for seems me, some some data, in the the the signs stability just marketplace. third-party of particularly It in of early from might of flower category.

So you I given know might the able to in what seeing on appreciate stability. be color you're marketplace increases certain terms any you that price of I some provide in on Particularly SKUs. took

increases of are what flower in how been terms of receptive on marketplace? you those seeing price . So the in pricing and the have SKUs terms

Michael DeGiglio

that you question? don't why Mandy, Sure, take

Mandesh Dosanjh

Thanks Thanks, question, for the Mike. Aaron.

and a out pricing not of your it starting around on leveling out specifically kind to of and the in pretty stabilization, and So activities. accurate. intel and is see data price seeing market, We're lot yes, flower, flattening that major that

we're there, on seeing thing. spot the you're same So and

Second QX, point on mentioned started call March. the our the it in late across take to general in price that in as we I last started earnings country, increase

And good very And even commentary some really industry. we customers. good LP by behind our we're it, the I seeing that it. is that any any to very And from that. Boards that we And of backlash so I it, I think understood the supportive from mean our reception. And doing we're something momentum what competitive it in seeing warrantied get were not set needed and positive were of shows retailers think started and

positive viewed So all all, the move, for positive us, as industry such. in it's right being for and

Aaron Grey

great to That's okay. Okay, hear.

for question Second me.

business. that's can going about that efficiency, increased would Sir, talk are intelligence artificial well, and as help about helping as that for leverage lower produce costs, from to yields, would things all you well. also potentially cannabis talked cannabis helping imagine I the You help anything produce how higher drive

side? able artificial produce So in the it anything . terms might on leverage into and bring that of cannabis intelligence you be to the

Michael DeGiglio

absolutely. Yes,

of start year. will to there the wanted said, in with And we footprints move start forward and now, then is produce which So X new the produce as Texas. the country, in our in one largest facility, Delta into I

we we're cannabis bring as it then that, -- after the side. want into But can it we as and to learning from much

an are a autonomous system So a having day. It's these XX autonomous. copilot with growing is of that you hours sort

So our going cannabis think, or in there'll a synergies, U.S. tremendous -- in just or business, forward. Canada, in Quebec of be the amount not especially I

We've been it, years really at sort We're this looking the technology and doing for on for and of of excited. burner waiting front it. we're

So I remember, the of of have it one be always there. that we've very said, as on synergistic pillars side. excellence And think cultivation will we key is the

do prudent low is low-cost besides especially being innovative the things company, brands production: to and cost. the be Highest cannabis And building quality, successful thing products a all and in space, most you still the consumer need to we are and in agriculture

part improvement excited to at as and our continuous that process, next step. the look overall is of this So we're

Operator

And Des next line . Capital your Eric question the Group. Lauriers of from with comes Craig-Hallum

Eric Des Lauriers

and now me, that from wondering just international one First you out you're reported financials. breaking

sales could you're that expecting international? expected of perhaps timing comment just on pace for this year of you If or sales the

Michael DeGiglio

unbelievable, very mean, we're all, Australia -- procedures mean we I has really we as done consistent. really the and well I and Yes. for both well feel confident. It's countries. whole through long think It of really the as in us, protocols. first time domestically get other Canada, takes to very testing a

that's number one. So

for secondary so we're We're this and we've in it. already be news Israel, increase shipped year. about going want our looking like orders, XX% the a excited received we we January, But forward. where But is, a for good to Germany, little conservative

to increasing XX% year, then and I to this that think can rise -- going XX% forward.

on to we've out a put countries, working a now. new going accepted. sale, it's We not and We been actually country never are announce made which other until I'm

your question. answers that hope I So

Eric Des Lauriers

there. for just helpful. then for progress I I looking listed guys sale, appreciate No, already. you to greenhouse on Texas if me, to next there's that's the that. touched on apologize question any this you just comment if have update an And that But for

Michael DeGiglio

is for at sale, officially it this that's we point. Well, know all and

long We have cost XXX it to bit package it. August, the It want we report hopefully, of the on list But we'll receiving production on we in drag us not is a have and by some good news little very it, is a full possible production. move folks a apparently, time so quick. on of because we're in in

Operator

question with Your line comes from Freeman next James. Michael the of Raymond

Michael Freeman

cost on the terrific segment. Congratulations VF That to effort about some fantastic. and Fresh Wanted turnaround market a is of about talk VF in Fresh year-over-year. sales quite reductions

think this if understand. greenhouse I like you color they costs, looked you could partner some wonder touch quarter. I that. But $X.X on significant which reduced could on You've in . supply if It I share million seen I reduction costs. wonder

Stephen Ruffini

The partner Steve. is is the to supply directly reduced related cost This volume. in reduction

So volume, the party. so -- third just payments, less obviously, less

produce take our brands So our labels Farms our top and of them percentage they we take supply possession remit to partner. work, the a generally Village sell to retail essentially our we accounts the balance produce the under labels, and various and off

payments. volume, less less . So

Michael Freeman

sense. makes ton a That of you. Got

been made guess, year-over-year Pure expansion? . Now margin the this have been have for the, there's question, you been what EBITDA driving describe next if and improvements Wondering expansion. the Sunfarms, year-over-year big that factors I a could massive

Michael DeGiglio

Mandy, do take that call? to want you

Mandesh Dosanjh

or set up Yes, always it about about Mike earlier compete for can Steve, at calling start and you to can looking Mike sure costs, out anything, thanks alluded success. I chime and your off yourself you some want for to you out. there's Michael, if it's pointing can long-term that and things making in. add, that

operating we it's a always at how we're continue our of last And about be to cost We look talked our seen costs. around that know our going sales. percentage fall year, we as to going So when environment. structure, yield, you've to a SG&A we improve how things competitive looking it at be

And to so margin can our line products. performance of yield looking cost margin our out we're where performance maintain continue EBITDA continually performance. our we across at to ability items overall then rationalizing drive through and assortment, getting SKUs, better our all our of better looking efficiency on drive And to

end tail is QX in it of earlier component touched have the pricing The that I that. large on a didn't because impact at

just So out. did that call to I want

structure not sure continually at success that So to we else again, a how I'm continue looking that there's at Steve. XXXX. going Mike, costs, ourselves to in sure setting we're improve knowing up anything be our operating add, to for tough make can assortments, you if time want it's understanding and and overall looking

Michael DeGiglio

Mandy. I think that's No, good,

Operator

your the line And next of Stifel question comes from Klimber Ben GMP. with

Unidentified Analyst

[Indiscernible] for Andrew.

to guys, bit flow. cash operating So flipping over I'm a

you lower Wondering You quarters would burn guys million quarter as seasonally operating to provide second you next expect had can the $X.X operating an year. of to this given cash is period, for and wondering quarter. a cash if few be where flow the some color full margin that for

Stephen Ruffini

This is Steve.

So is flow first us. quarter generally, a for quarter tougher cash the

facility Delta North the greenhouse generates That in mentioned, quarter X for the of the Canada America. one largest, in is zero largest, it's farming. cash not Mike in As first the if and us obviously

significant a it's outflow So us. for cash

And for with next doesn't the -- we're facility, [indiscernible] have in see generally, branded, international. X facility cash our will higher business, quarters. flow sales higher cannabis positive expecting year, particularly respect we and with in to generate That this sales round reduce that

cash will flow. I operating our operating improve flow as the cash this So quarters think year's progress

Operator

[Operator Instructions].

We turn Mr. has over the looks have withdrawn a he queue. further to DeGiglio. from call don't Ben like in Klimber have Stifel. It questions I the will question. from the follow-up We Yes. question back now

Michael DeGiglio

at you, everyone great in August. announcement QX today, joining to you we you. and thank Thank right. our to conference Have call Bella, a operator. us time for Thanks, All forward day. the look speaking to Thank certainly of and and you

Operator

you This concludes today's conference participation. your for call. Thank

now may disconnect. You

Village Farms International (VFF) 10 May 232023 Q1 Earnings call transcript