Village Farms International Reports Fourth Quarter and Year End 2018 Financial Results - Cannabis Joint Venture, Pure Sunfarms, Generates Positive Net Income in First Full Quarter of Sales and for the Full Year

VANCOUVER , March 13, 2019 /CNW/ - Village Farms International, Inc. ("Village Farms" or the "Company") (VFF) (VFF) today announced its financial results for the fourth quarter and year ended December 31, 2018 .

Financial and Corporate Highlights for the Fourth Quarter Ended December 31, 2018
(All comparable figures are for the fourth quarter ended December 31, 2017 )

• Net income improved to positive US$0.3 million , or US$0.01 per share, and included the contribution of positive net income from Pure Sunfarms Corp. ("Pure Sunfarms") of US$2.8 million . This compares with a net loss of ( US$0.6 million ), or (US$0.02) per share;
• Sales, including the Company's proportionate share of Pure Sunfarms' sales, increased to US$40.6 million compared with US$36.9 million ;
• EBITDA, was US$1.5 million compared with US$2.6 million . EBITDA included $0.9 million from Pure Sunfarms;
• Completed a bought deal offering of 3,097,200 common shares at a price of $7.13 per share (for aggregate gross proceeds to the Company of $22,083,036 ; and,
• The Company's common shares commenced trading on the Nasdaq Capital Market under the symbol "VFF".

Financial Highlights for the Year Ended December 31, 2018
(All comparable figures are for the year ended December 31, 2017 )

• Net loss was ( US$5.1 million ), or (US$0.11) per share, and included the contribution of positive net income from Pure Sunfarms of US$2.4 million . This compares with prior year net income of US$3.8 million , or US$0.10 per share;
• Sales, including the Company's proportionate share of Pure Sunfarms' sales, were US$151.9 million compared with US$158.4 million ; and,
• EBITDA, was US$2.9 million compared with US$7.4 million . EBITDA included US$0.1 million from Pure Sunfarms.

Summary of Recent Highlights for Village Farms' Canadian Cannabis Joint Venture, Pure Sunfarms

• Generated positive net income of US$5.5 million for the fourth quarter 2018, the first full quarter of sales (Village Farms' proportional share is US$2.8 million );
• Received multiple amendments to its cultivation license from Health Canada, resulting in the successive expansion of its licensed production area to the entire growing area of 1.03 million square feet in March 2019 ;
• Selected by, and has entered into a supply agreement with, the Ontario Cannabis Retail Corporation ("OCRC"), operating as the Ontario Cannabis Store ("OCS"), to supply the OCS with Pure Sunfarms branded cannabis products for the non-medical market in the Province of Ontario ;
• Entered into a wholesale supply arrangement with one of the largest online platforms for medical cannabis users in Canada , through which a selected variety of Pure Sunfarms high-quality dried flower products will be available for purchase;
• Entered into a credit agreement with Bank of Montreal and Farm Credit Canada ("FCC") in respect of a CAD$20 million secured non-revolving term loan, with the available funds to be used to finance the final costs of converting its 1.1 million square foot greenhouse for cannabis production, as well as general corporate purposes.

 Highlights for Village Farms' U.S. Hemp/CBD Initiative

• Upon passage by U.S. Congress of the 2018 Farm Bill, which legalized hemp cultivation and hemp-derived products, the Company announced its intention to aggressively pursue opportunities to become a vertically integrated leader in the hemp-derived cannabidiol (CBD) market;
• Formed a joint venture (65%-owned by Village Farms) with a Jennings Group company, Nature Crisp, LLC, for the outdoor cultivation of high-cannabidiol (CBD) hemp and CBD extraction in multiple states throughout the United States . Jennings Group has extensive experience in field agriculture across a diverse range of food and other crops, including hemp.

"It is a remarkable achievement for Pure Sunfarms' to not only generate positive net income in just its first full quarter of sales but for Pure Sunfarms to be profitable for the entire year, during most of which the Pure Sunfarms greenhouse was in the process of being converted for cannabis production," said Michael DeGiglio , Chief Executive Officer, Village Farms.  "It is demonstrative of the value that Village Farms, with its 30-years of experience as a large-scale, low-cost developer and grower, brings to the Pure Sunfarms joint venture, as well as the advantage of pursuing the Canadian cannabis opportunity via an established, high-performance greenhouse operation with more than 750 years of combined grower experience, an experienced skilled labour force already in place, and the benefit of years of operating history across multiple crops in multiple regions around the world."

"Pure Sunfarms is positioned for earnings growth throughout 2019 and beyond as it ramps to full run rate annual production of 75,000 kilograms by mid-year, commences sales to the Ontario Cannabis Store upon receipt of its processing and packaging licenses, and redirects sales to the retail market following conclusion of its supply agreement with Emerald Health Therapeutics at the end of this year.  To this end, Pure Sunfarms is steadily advancing its product and brand strategies to realize its vision to be a premier vertically integrated supplier to the Canadian cannabis market, with a reputation for quality, consistency, safety and reliability."

"In the United States , with hemp cultivation and hemp products now federally legal, we are aggressively pursuing a vertically integrated hemp-derived CBD strategy to capitalize on this significant opportunity.  We have already taken a major step in this regard with the formation of a joint venture for outdoor hemp cultivation and CBD extraction, Village Fields Hemp, with an experienced partner, and expect to begin generating revenue later this year.  With 5.7 million square feet of existing technologically advanced greenhouse operations in Texas , we stand ready, subject to legalization in Texas , to address what we believe will be significant demand for controlled environment-grown hemp to meet the needs of specific customers.  As a vertically integrated produce supplier to North America's top grocery and "big box" retailers for decades, and with in-house expertise to navigate the evolving regulatory environment, Village Farms is very well positioned to become a leading supplier of branded and private label CBD products to these retailers."

Summary Statuary Results
(in thousands of U.S. Dollars unless otherwise indicated)

Summary Results Including Pure Sunfarms on a Proportionate Basis

The following results reflect the Company's proportionate share of the Pure Sunfarms joint venture operations, as this is the basis on which management bases its operating decisions and performance.  For a reconciliation to the results in accordance with International Financial Reporting Standards ("IFRS") refer to the "Reconciliation of IFRS to Proportionate Results" as presented below and in Management's Discussion & Analysis ("MD&A").

(in thousands of U.S. Dollars unless otherwise indicated)

Financial Highlights

(All amounts in U.S. Dollars unless otherwise indicated.)

Cannabis

Pure Sunfarms commenced sales in late September 2018 ; for the year ended December 31, 2018 the Company's 50% share of sales is $1,897 .

The Company's share of net income for the three months and year ended December 31, 2018 was $2,750 and $2,381 , respectively, Pure Sunfarms was able to achieve net income in its first full quarter of sales.

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