Three Months Ended March 31,

2022

2021

Change of C$

C$

US$

C$

US$

Total Gross Sales

$40.7

$32.1

$30.8

$24.3

+32%

Total Net Sales

$27.6

$21.8

$22.1

$17.5

+25%

Total Cost of Sales

¹

$18.1

$14.3

$15.8

$12.5

+15%

Gross Margin

¹

$9.5

$7.5

$6.3

$5.0

+50%

Gross Margin %

¹

34%

34%

29%

29%

+17%

SG&A

$8.8

$6.9

$5.0

$4.0

-75%

Share-based compensation

$0.5

$0.4

$1.4

$1.1

+67%

Net income (loss)

$1.3

$1.0

($3.6)

($2.8)

+135%

Adjusted EBITDA

²

$2.7

$2.1

$3.1

$2.5

-15%

Adjusted EBITDA Margin

²

10%

10%

14%

14%

-29%

1. 
   _{Total cost of sales and gross margin for Q1 2022 excludes the (C$2,594) US$2,050 positive inventory adjustment and Q1 2021 excludes the C$3,493 (US$2,778) inventory adjustment charge from the revaluation of inventory to fair value at the acquisition date of November 2, 2020.}
   
2. 
   _{Adjusted EBITDA is not a recognized earnings measure and does not have a standard meaning prescribed in by GAAP. See “Non-GAAP Measures” below.}
   

Three months ended

March 31,

Channel

2022

2021

Retail, Flower

67%

71%

Retail, Derivatives

8%

13%

Wholesale, Flower and Trim

25%

16%

For the three months ended March


31,

2022

⁽³⁾

2021

⁽³⁾

Sales

$

70,156

$

52,396

Cost of sales

(60,252)

(50,089)

Gross margin

9,904

2,307

Selling, general and administrative expenses

(16,971)

(8,092)

Share-based compensation

(964)

(1,998)

Interest expense

(683)

(741)

Interest income

110

3

Foreign exchange gain (loss)

319

(504)

Other expense, net

(8)

(69)

Gain on disposal of assets

—

—

Recovery of income taxes

1,666

1,839

Loss from consolidated entities

(6,627)

(7,255)

Less: net loss attributable to non-controlling interests, net of tax

162

—

Loss from equity method investments

(52)

(127)

Net loss attributable to Village Farms International Inc.

$

(6,517)

$

(7,382)

Adjusted EBITDA

⁽⁴⁾

$

(6,111)

$

404

Basic loss per share

$

(0.07)

$

(0.10)

Diluted loss per share

$

(0.07)

$

(0.10)

_{3. For the three months ended March 31, 2022, Balanced Health’s financial results are fully consolidated in the financial results of the Company. For the three months ended March 31, 2022, Village Farms’ share of Rose LifeScience’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net loss attributable to non-controlling interests, net of tax.}

_{4. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the Company’s 70% interest in Rose LifeScience since acquisition and 65% interest in VFH.}

For the Three Months Ended March 31, 2022

VF Fresh

(Produce)

Cannabis-

Canada



⁽⁵⁾

Cannabis-

U.S.



⁽⁵⁾

Clean

Energy

Corporate

Total

Sales

$

41,349

$

21,769

$

7,043

$

(5)

$

—

$

70,156

Cost of sales

(45,520)

(12,259)

(2,331)

(142)

—

(60,252)

Selling, general and administrative expenses

(3,140)

(6,933)

(4,296)

(32)

(2,570)

(16,971)

Share-based compensation

—

(367)

(95)

—

(502)

(964)

Other (expense) income, net

(30)

(746)

—

(6)

520

(262)

Recovery of (provision for) income taxes

1,715

(639)

—

—

590

1,666

(Loss) income from consolidated entities

(5,626)

825

321

(185)

(1,962)

(6,627)

Less: net loss attributable to non-controlling interests, net of tax

—

162

—

—

—

162

Loss from equity method investments

—

—

(52)

—

—

(52)

Net (loss) income

(5,626)

987

269

(185)

(1,962)

(6,517)

Adjusted EBITDA

⁽⁶⁾

$

(6,201)

$

2,104

$

580

$

(59)

$

(2,535)

$

(6,111)

Basic (loss) income per share

$

(0.06)

$

0.01

$

0.00

$

(0.00)

$

(0.02)

$

(0.07)

Diluted (loss) income per share

$

(0.06)

$

0.01

$

0.00

$

(0.00)

$

(0.02)

$

(0.07)

For the Three Months Ended March 31, 2021

VF Fresh

(Produce)

Cannabis-

Canada



⁽⁵⁾

Cannabis-

U.S.



⁽⁵⁾

Clean

Energy

Corporate

Total

Sales

$

34,867

$

17,460

$

—

$

69

$

—

$

52,396

Cost of sales

(34,150)

(15,248)

—

(691)

—

(50,089)

Selling, general and administrative expenses

(2,551)

(3,966)

—

(32)

(1,543)

(8,092)

Share-based compensation

—

(1,094)

—

—

(904)

(1,998)

Other expense, net

(256)

(630)

—

(12)

(413)

(1,311)

Recovery of income taxes

505

644

—

—

690

1,839

Loss from consolidated entities

(1,585)

(2,834)

—

(666)

(2,170)

(7,255)

Less: net loss attributable to non-controlling interests, net of tax

—

—

—

—

—

—

Loss from equity method investments

—

—

(127)

—

—

(127)

Net loss

(1,585)

(2,834)

(127)

(666)

(2,170)

(7,382)

Adjusted EBITDA

⁽⁶⁾

$

(492)

$

2,534

$

(79)

$

(16)

$

(1,543)

$

404

Basic loss per share

$

(0.02)

$

(0.04)

$

(0.00)

$

(0.01)

$

(0.03)

$

(0.10)

Diluted loss per share

$

(0.02)

$

(0.04)

$

(0.00)

$

(0.01)

$

(0.03)

$

(0.10)

_{5. For the three months ended March 31, 2022, Balanced Health’s financial results are fully consolidated in the financial results of the Company. For the three months ended March 31, 2022, Village Farms’ share of Rose LifeScience’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net loss attributable to non-controlling interests, net of tax.}

_{6. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the Company’s 70% interest in Rose LifeScience since acquisition and 65% interest in VFH.}

For the three months ended March


31,

(in thousands of U.S. dollars)

2022

⁽⁹⁾

2021

⁽⁹⁾

Net loss

$

(6,517)

$

(7,382)

Add:

Amortization

2,702

3,412

Foreign currency exchange (gain) loss

(319)

504

Interest expense, net

573

738

Recovery of income taxes

(1,666)

(1,839)

Share-based compensation

964

1,998

Interest expense for JVs

13

14

Amortization for JVs

94

34

Foreign currency exchange loss for JVs

29

—

Purchase price adjustment

⁽¹⁰⁾

(2,050)

2,925

Amortization of deferred financing

66

—

Adjusted EBITDA

⁽¹¹⁾

$

(6,111)

$

404

Adjusted EBITDA for JVs

⁽¹²⁾

$

(25)

$

(79)

Adjusted EBITDA excluding JVs

$

(6,086)

$

483

_{9. For the three months ended March 31, 2022 and March 31, 2021, Pure Sunfarms is fully consolidated in the financial results of the Company. For the period January 1, 2022 to March 31, 2022, Balanced Health is fully consolidated in the financial results of the Company. For the period January 1, 2022 to March 31, 2022, Village Farms’ share of Rose LifeScience’s financial results are fully consolidated in the financial results of the Company.}

_{10. The purchase price adjustment reflects the non-cash accounting charge to cost of sales resulting from the revaluation of Pure Sunfarms’ inventory to fair value at the acquisition date.}

_{11. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the 70% interest in Rose LifeScience since acquisition and 65% interest in VFH.}

_{12. The Adjusted EBITDA for JVs consists of the VF Hemp Adjusted EBITDA for the three months ended March 31, 2022 and 2021.}

Village Farms International, Inc.Consolidated Statements of Financial Position

(In thousands of United States dollars)

(Unaudited)

March 31, 2022

December 31, 2021

ASSETS

Current assets

Cash and cash equivalents

$

34,623

$

53,417

Restricted cash

6,810

5,250

Trade receivables

35,857

34,360

Inventories

79,611

68,677

Note receivable – joint venture

3,207

–

Other receivables

582

616

Income tax receivable

3,631

2,430

Prepaid expenses and deposits

10,662

10,209

Total current assets

174,983

174,959

Non-current assets

Property, plant and equipment

220,616

215,704

Note receivable – joint venture

–

3,256

Investment in in minority interests

2,109

2,109

Goodwill

119,597

117,533

Intangibles

26,512

26,394

Deferred tax asset

18,682

16,766

Right-of-use assets

7,195

7,609

Other assets

6,088

2,581

Total assets

$

575,782

$

566,911

LIABILITIES

Current liabilities

Line of credit

$

9,880

$

7,760

Trade payables

23,998

22,597

Current maturities of long-term debt

10,585

11,416

Accrued liabilities

15,659

14,168

Accrued sales taxes

9,235

3,899

Accrued loyalty program

1,728

2,098

Lease liabilities – current

872

962

Other current liabilities

1,549

1,413

Total current liabilities

73,506

64,313

Non-current liabilities

Long-term debt

49,749

50,419

Deferred tax liability

21,257

18,657

Lease liabilities – non-current

6,366

6,711

Other liabilities

2,076

1,973

Total liabilities

152,954

142,073

Commitments and contingencies

MEZZANINE EQUITY

Redeemable non-controlling interests

16,271

16,433

SHAREHOLDERS’ EQUITY

Common stock

365,737

365,561

Additional paid in capital

10,333

9,369

Accumulated other comprehensive loss

10,225

6,696

Retained earnings

20,262

26,779

Total shareholders’ equity

406,557

408,405

Total liabilities and shareholders’ equity

$

575,782

$

566,911

Village Farms International, Inc.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(In thousands of United States dollars, except per share data)

(Unaudited)

Three Months Ended March 31,

2022

2021

Sales

$

70,156

$

52,396

Cost of sales

(60,252)

(50,089)

Gross margin

9,904

2,307

Selling, general and administrative expenses

(16,971)

(8,092)

Share-based compensation

(964)

(1,998)

Interest expense

(683)

(741)

Interest income

110

3

Foreign exchange gain (loss)

319

(504)

Other expense

(8)

(69)

Loss before taxes and loss from equity method investments

(8,293)

(9,094)

Recovery of income taxes

1,666

1,839

Loss from equity method investments

(52)

(127)

Loss including non-controlling interests

(6,679)

(7,382)

Less: net loss attributable to non-controlling interests, net of tax

162

–

Net loss attributable to Village Farms International, Inc.

$

(6,517)

$

(7,382)

Basic loss per share attributable to Village Farms International, Inc. shareholders

$

(0.07)

$

(0.10)

Diluted loss per share attributable to Village Farms International, Inc. shareholders

$

(0.07)

$

(0.10)

Weighted average number of common shares used in the computation of net loss per share (in thousands):

Basic

88,376

76,022

Diluted

88,376

76,022

Loss including non-controlling interests

$

(6,679)

$

(7,382)

Less: net loss attributable to non-controlling interests, net of tax

162

–

Net loss attributable to Village Farms International, Inc.

$

(6,517)

$

(7,382)

Other comprehensive loss:

Foreign currency translation adjustment

461

1,711

Comprehensive loss attributable to Village Farms International, Inc. shareholders

$

(6,056)

$

(5,671)

Village Farms International, Inc.

Consolidated Statements of Cash Flows

(In thousands of United States dollars)

(Unaudited)

Three Months Ended March 31,

2022

2021

Cash flows used in operating activities:

Net (loss) income

$

(6,517)

$

(7,382)

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Depreciation and amortization

3,128

3,225

Amortization of deferred charges

66

78

Share of loss from joint ventures

52

127

Interest expense

683

741

Interest income

(110)

(3)

Interest paid on long-term debt

(747)

(851)

Unrealized foreign exchange gain/loss

113

–

Non-cash lease expense

(116)

(128)

Share-based compensation

964

1,998

Deferred income taxes

(2,062)

(2,538)

Changes in non-cash working capital items

(5,091)

(9,703)

Net cash used in operating activities

(9,637)

(14,436)

Cash flows used in investing activities:

Purchases of property, plant and equipment

(5,263)

(4,706)

Note receivable

(3,442)

–

Advances to joint ventures

–

(5)

Investment in minority interests

–

(500)

Net cash used in investing activities

(8,705)

(5,211)

Cash flows provided by financing activities:

Proceeds from borrowings

2,120

4,176

Repayments on borrowings

(983)

(4,223)

Proceeds from issuance of common stock and warrants

–

135,000

Issuance costs

–

(7,511)

Proceeds from exercise of stock options

176

125

Proceeds from exercise of warrants

–

17,663

Payments on capital lease obligations

(301)

(155)

Payment of note payable related to acquisition

–

(15,498)

Net cash provided by financing activities

1,012

129,577

Effect of exchange rate changes on cash and cash equivalents

96

178

Net increase in cash and cash equivalents

(17,234)

110,108

Cash and cash equivalents, beginning of period

58,667

25,679

Cash and cash equivalents, end of period

$

41,433

$

135,787