Village Farms International NASDAQ: VFF reported higher first-quarter sales and a return to profitability, with management pointing to growth in international medical cannabis exports, continued Canadian market share and expanding production capacity as key drivers.
Chief Executive Officer Michael DeGiglio said the quarter marked “a strong start” to fiscal 2026, following the company’s completion of its produce transaction last year and its shift to what he described as a “pure-play cannabis company.” Village Farms has realigned its reporting into a single Cannabis Segment, with remaining operations classified as other.
Consolidated net sales rose 27% year over year to $50.2 million for the quarter ended March 31, according to Chief Financial Officer Steve Ruffini. Net income from continuing operations was $2.7 million, or $0.03 per share, compared with a net loss of $2.1 million, or a loss of $0.02 per share, in the prior-year quarter. Adjusted EBITDA from continuing operations increased 118% to $9.9 million from $4.5 million a year earlier, lifting adjusted EBITDA margin to 20% from 11.4%.
DeGiglio said the company delivered its fourth consecutive quarter of positive net income, which he said demonstrated the “sustainable profitability” of its global cannabis business.
International Exports Drive Growth
Management emphasized the company’s international medical cannabis business as a major contributor to first-quarter results. DeGiglio said international export sales increased 171% year over year and 60% sequentially to a record of nearly $15 million.
Germany remained a central market. DeGiglio said Village Farms has three of the top five leading cultivars in Germany and four of the top 10 through its distribution partners. He said the company returned to sequential growth in Germany during the quarter after a temporary decline in the fourth quarter.
DeGiglio said pricing for the company’s EU GMP-compliant flower has remained steady, even as other parts of the supply chain face price compression. He attributed Village Farms’ position to its ability to deliver compliant product at industrial scale and said management has “good visibility and confidence” that pricing in Germany will remain relatively stable for the foreseeable future.
During the question-and-answer session, DeGiglio declined to provide specific margin details for international exports, but said the company has not seen meaningful margin compression for its EU GMP-certified product. He contrasted that with pressure on products that he characterized as relying on GACP or other non-EU GMP approaches.
DeGiglio said Village Farms recently completed facility upgrades at its British Columbia production campus, expanding capacity for EU GMP-compliant cannabis. He said the company now believes it operates the world’s largest EU GMP-certified cannabis facility.
Canada Remains Core Market
In Canada, DeGiglio said branded sales increased about 5% year over year, with sequential performance in line with management’s expectations due to seasonality and capacity constraints. He said Village Farms remains committed to the Canadian branded sales channel, even as some competitors shift their focus elsewhere.
The company said it continues to hold a top-five overall share position in Canada’s adult-use market and the No. 1 share position in dry flower. DeGiglio said the Pure Sunfarms brand achieved its 15th consecutive month of market share gains in the flower category in April, while the Fraser Valley brand and recent vape and infused pre-roll launches also contributed to progress.
Village Farms began planting the first half of additional capacity at its Delta 2 greenhouse in March. DeGiglio said the first harvest was expected the week of May 18, with initial sales contributions expected in late second quarter or early third quarter. The Delta 2 expansion is expected to ramp to 40 metric tons of annual capacity by mid-next year, representing a 33% increase in British Columbia cannabis production compared with fiscal 2025. The company expects 15 incremental metric tons from the expansion this year.
Netherlands Facility Awaiting Final Approval
Village Farms also discussed its recreational cannabis business in the Netherlands. DeGiglio said a minor sequential sales decline from the company’s Drachten facility reflected typical Dutch consumer behavior and seasonality after the holiday period.
The company recently held a ribbon-cutting ceremony for its phase II facility in Groningen, which DeGiglio described as an advanced precision agriculture facility with significant environmental, HVAC and odor-control systems. However, the facility is still awaiting final certification and regulatory approval to begin full operations.
DeGiglio said Village Farms has received written and verbal communication indicating that formal approval documentation is expected in May, and management expects full operations in Groningen to begin before the end of the second quarter. He said the delay is not expected to affect the company’s full-year sales outlook.
In response to analyst questions, Chief Operating Officer Ann Gillin Lefever said supply in the Netherlands has improved as competitors are now fully operating, creating “some pricing softness across the category.” She said the softness was anticipated in the company’s market modeling.
Cash Flow, Taxes and Buybacks
Ruffini said the Cannabis Segment generated $49.9 million in net sales, up 27% from the prior-year quarter. Cannabis gross margin improved to 43% from 39%, reflecting higher international export sales, a larger Netherlands contribution and a strategic shift toward higher-margin Canadian products. Adjusted EBITDA for the Cannabis Segment increased 48% to $10.2 million, representing 20.5% of sales.
Cash flow from cannabis operations was negative $11.8 million, compared with positive $2.9 million a year earlier. Ruffini said the figure was affected by Canadian corporate income tax payments. Excluding those tax payments, cannabis cash flow from operations would have been $4.1 million.
Ruffini said Village Farms ended the quarter with approximately $56 million in cash, including $5 million of restricted cash, and a net cash position of $20 million. Total debt was $36 million. During the quarter, the company amended and extended its loan agreement with Farm Credit Canada, securing an improved interest rate and extending maturity to February 2031.
The company also repurchased more than 2 million shares during the quarter at an aggregate cost of $6.4 million. Ruffini said Village Farms completed its board-approved $10 million repurchase authorization during the second quarter.
U.S. Rescheduling and M&A Outlook
DeGiglio said the recent U.S. cannabis rescheduling process was more favorable than management had expected and gives the company a reason to reevaluate its U.S. strategy. However, he emphasized that the company will remain patient because federal rules and conditions in Texas remain uncertain.
DeGiglio said Village Farms is seeing interest as a potential partner or acquirer in global cannabis, including in the United States, but stressed that management will not pursue acquisitions simply for the sake of dealmaking. He said the company will consider only opportunities that are strategically compelling, financially attractive and supportive of long-term shareholder value.
Village Farms said Ruffini, who has served as CFO for more than 17 years, will lead the company’s M&A efforts after delaying his retirement.
About Village Farms International NASDAQ: VFF
Village Farms International, Inc is a North American agricultural company specializing in greenhouse cultivation of fresh produce and cannabis. Through its wholly owned operations, the company grows a variety of high-quality vegetables, including tomatoes, cucumbers and sweet peppers, using controlled-environment agriculture techniques designed to maximize yield and sustainability. Village Farms leverages advanced climate and hydroponic systems to deliver consistent year-round supply to major grocery retailers across the United States and Canada.
In its produce segment, Village Farms operates large-scale greenhouse facilities in Texas and Canada.
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