Village Farms International (VFF -3.15%), an established player in North America's greenhouse-grown produce business that recently entered the cannabis space, reported its fourth-quarter and full-year 2018 results after the market closed on Wednesday.

The Canada-based company's revenue, including its share of sales from its Pure Sunfarms 50-50 cannabis joint venture with Emerald Health Therapeutics (EMHT.F), increased 10% year over year. Net income and earnings per share (EPS) flipped to positive, from negative in the year-ago period, thanks to Pure Sunfarms posting a profit.

Shares of Village Farms are up 7.1% on Thursday as of 11:08 a.m. EDT. The stock's performance today (and perhaps beyond) will likely depend upon what management says on the analyst conference call, slated for today at 11 a.m. EDT. In 2019, shares have gained a whopping 294% through Wednesday's regular trading session, versus the S&P 500's 12.6% return.

Here's how the fourth quarter worked out for Village Farms and its investors.

Check out the latest earnings call transcripts for the companies we cover.

A cannabis leaf positioned vertically with a hazy blue and orange background that resembles a sun setting below or rising above an ocean.

Image source: Getty Images.

Village Farms International results: The raw numbers


Q4 2018

Q4 2017

Change (YOY)


$38.8 million

$36.9 million


Revenue including contribution from Pure Sunfarms (a non-IFRS metric)

$40.6 million

$36.9 million


Net income




Earnings per share (EPS)




Data source: Village Farms International. YOY = year over year. IFRS = International Financial Reporting Standards (IFRS). Results based on IFRS except as noted.

Village Farms' share of Pure Sunfarms revenue was $1.8 million in the quarter, which was the joint venture's first full quarter of sales, as it began selling product in late September. Net income includes a contribution of $2.8 million from Pure Sunfarms. Granted, net income for Pure Sunfarms -- and hence for Village Farms -- is in the green thanks to a positive change in the value of biological assets (a line item that doesn't exist for U.S. companies that use generally accepted accounting principles, or GAAP), but the results are still solid given the newness of the cannabis operation. This line-item entry is $158,000 for Village Farms and $2.96 million for the company's portion of the Pure Sunfarms operation, or about $3.1 million total.

For full-year 2018, Village Farms' revenue as reported declined 5.3% year over year to $150 million. Including its share of Pure Sunfarms sales ($1.9 million), revenue edged down 4.1% year over year to $151.9 million. Investors shouldn't be concerned about the decline, which was driven by tomato production being negatively affected by the conversion of Village Farms' Delta 3 greenhouse in British Columbia into a cannabis-growing facility. (This conversion was recently fully completed.) Net loss in 2018 was $5.1 million, or $0.11 per share, including a contribution of $2.4 million in net income from Pure Sunfarms. In 2017, net income was $3.8 million, or $0.10 per share.

Cannabis plant on right side of image and the letters CBD with its chemical formula on left side.

Image source: Getty Images.

Recent key happenings (after the quarter ended)

  • In February, Village Farms announced that Pure Sunfarms entered a supply agreement with the province of Ontario to supply its stores with cannabis products for the recreational market. This is the company's first supply agreement with a provincial government distributor of cannabis.
  • In February, the company's stock uplisted from the over-the-counter (OTC) exchange to a major U.S. exchange, the Nasdaq.
  • In early March, Village Farms announced that it's partnering with Georgia-based hemp-farm operator Nature Crisp in the "outdoor cultivation of high-cannabidiol (CBD) hemp and CBD extraction in multiple states throughout the United States." (CBD is a chemical found in the cannabis plant -- both marijuana and hemp -- that's been linked to various medicinal benefits.) The Village Fields Hemp joint venture will be 65% owned by Village Farms and 35% owned by Nature Crisp, which is part of the privately held Jennings Group.

What management had to say

Here's part of what Village Farms CEO Michael DeGiglio had to say in the press release:

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.

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...

Looking ahead

Village Farms didn't provide guidance in its earnings release.

DeGiglio said in the earnings release that 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."

He also commented on the CBD opportunity in the U.S., which opened up upon passage of the U.S. Farm Bill, which became effective on Jan. 1:

[W]ith 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. [Emphasis mine.]