Village Farms International NASDAQ: VFF reported record cannabis revenue in the third quarter of 2026 as international exports grew, while weaker Canadian wholesale trim sales weighed on margins. The company also outlined plans to prepare a Texas greenhouse for potential cannabis production as it expands capacity in Canada and the Netherlands.
Consolidated net sales were $66.9 million, up 5% from the second quarter and roughly level with a year earlier. Net income from continuing operations was $10 million, or $0.08 per share, compared with $10.8 million, or $0.09 per share, a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, were $18.2 million, up 18% sequentially but down from $20.7 million a year earlier.
Cannabis revenue rose 3% to a record $55 million. International exports increased 75% year over year to $20.8 million, matching the previous quarter’s record, as European demand continued to outpace available supply, executives said.
International Pricing Holds as Trim Market Weakens
President and CEO Michael DeGiglio said Village Farms had not lowered prices for its European Union Good Manufacturing Practice-compliant cannabis, despite reports of pricing pressure elsewhere in the European market. The company’s average net selling price for international exports fell 9% year over year because of a shift toward bulk flower, he said.
DeGiglio said some European pricing pressure has been concentrated in products grown outside EU GMP conditions and certified later in the supply chain. He said regulators in the U.K. and Germany are tightening requirements around those conversion pathways, potentially benefiting producers with compliant supply at the source.
“We have not lowered pricing for our EU GMP-compliant product, and our pricing outlook remains favorable,” DeGiglio said. Chief Operating Officer Ann Gillin Lefever added that demand for the company’s compliant product remains backed by a large backlog.
At home, a softer spot market for cannabis trim contributed to lower margins. DeGiglio said spot trim pricing was down about 75% year over year during the quarter, although the company expects conditions to begin normalizing in the fourth quarter based on October orders and new supply agreements at higher contracted prices.
Consolidated gross margin fell to 44% from 48% a year earlier. Cannabis gross margin declined to 48% from 55%, primarily because of weaker trim sales and, to a lesser extent, the shift toward bulk international flower, Interim Chief Financial Officer Hamid Shekarchi said.
Canadian and Dutch Expansions Progress
Canadian branded sales fell 6% year over year to $25.3 million on lower value-brand volumes, although the channel’s average net selling price rose 6%. Non-branded Canadian sales fell to $3.3 million from $7.3 million, primarily because of lower trim sales.
DeGiglio said the company has not met its goal of growing Canadian sales in line with the market at a mid-single-digit pace in recent quarters. Village Farms has allocated most of the initial harvest from its Delta 2 expansion to Canada while balancing domestic needs against international demand, he said.
The Delta 2 project is expected to be completed in the first quarter of 2027 and reach a 40-metric-ton annual production run rate by the middle of that year. The company also exercised a contractual right to convert 25% of its Delta 1 greenhouse to cannabis production during 2027, providing an option to add approximately 700,000 square feet. DeGiglio said no formal conversion decision has been made; if pursued, the additional area could yield approximately 50 metric tons annually.
In the Netherlands, third-quarter sales fell sequentially to $2.8 million as the company increased plant propagation to support its Groningen expansion. The facility is now fully planted, and management expects it to contribute to stronger revenue growth in the fourth quarter and throughout 2027.
Texas Plans Depend on Market Access
DeGiglio said Village Farms is mobilizing plans to prepare its 30-acre, 1.3-million-square-foot greenhouse in Monahans, Texas, for cannabis production. He said the facility could be brought online within 12 months and that conversion could occur in phases.
The company does not currently have a Texas cannabis license. DeGiglio said potential changes to the state’s medical cannabis program could create a path to market, including through additional licenses, and that Village Farms would pursue permissible alternatives. His assessment of potential legislative changes was an expectation, not an announcement that access had been secured.
The company’s U.S. Balanced Health Botanicals subsidiary is also pursuing potential participation in a federal pilot program for CBD cannabinoid products. DeGiglio said Village Farms is awaiting clarity on the outcome of a pending federal hemp ban before further assessing that opportunity.
Cash Position and Fourth-Quarter Cautions
Village Farms ended the quarter with approximately $80 million in cash, $39 million in long-term debt and an undrawn $10 million revolving facility. Operating cash flow was $9.5 million for the quarter. Year-to-date capital spending totaled $17.3 million, primarily for Delta 2 and Groningen, which Shekarchi said were substantially complete.
Shekarchi cautioned that produce sales from Delta 1 typically decline in the fourth quarter; they fell about 60% in the period last year. He also noted that European orders slowed over last year’s holiday period, causing a sequential decline in international revenue. The company had not observed material changes in international customer behavior in October, he said, but similar seasonality could recur.
About Village Farms International (NASDAQ:VFF)
Village Farms International, Inc NASDAQ: VFF is an agriculture company that grows, markets and distributes fresh produce and cannabis. Its produce business focuses on greenhouse-grown tomatoes, cucumbers and peppers, including conventional and organic offerings sold under the Village Farms brand and through retail and foodservice channels.
The company operates greenhouse and distribution facilities in the United States, Canada and Mexico, serving grocery retailers, wholesalers and foodservice customers across North America.
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