Village Farms International — Q3 2026 Earnings Summary

Financial Performance:

• Consolidated net sales increased to $66.9 million for the quarter, with cannabis net sales reaching a record $55.0 million (up 3% year-over-year from $53.5 million).
• Net income attributable to shareholders was $9.97 million ($0.08 per share) for the quarter, compared to $10.22 million ($0.09 per share) in the prior year period.
• Adjusted EBITDA from continuing operations was $18.2 million (27% of sales), down from $20.7 million (31% of sales) in the prior year period.
• Gross margin for cannabis operations was 48% in Q3 2026, compared to 55% in Q3 2025, driven by a softer spot trim market in Canada.
• Operating cash flow for the quarter was $9.5 million, with cash flow from operations for cannabis operations specifically at $7.3 million.
• The company closed the quarter with $79.3 million in cash and cash equivalents and a net cash position of $41 million.
• For the nine months ended September 30, 2026, total net sales were $181.1 million (up 10% from $166.3 million), and net income was $20.0 million.

Guidance and Future Outlook:

• Management expects wholesale trim volumes and pricing in the Canadian channel to begin normalizing in Q4 2026 following trough levels reached in Q3.
• The Netherlands facility (Phase II) is fully planted and expected to contribute to stronger sales growth during Q4 2026 and throughout 2027.
• The Delta 2 expansion in British Columbia is on track to reach full production capacity of 40 metric tonnes by mid-2027, bringing total Delta campus capacity to approximately 160 metric tonnes annually.
• The company is mobilizing efforts to operationalize its 30-acre Monahans, Texas greenhouse for cannabis production, aiming for U.S. market entry commencement in Texas.
• Long-term organic sales growth is expected through calendar year 2028, supported by the Delta 2 expansion and entrance into multiple new European jurisdictions.
• Management remains focused on profitability and long-term strategic value creation, evaluating additional organic and acquisitive growth investments while maintaining prudence regarding valuation and regulatory frameworks.

Business Segments and Product Lines:

• Cannabis Operations:
  • International export sales grew 75% year-over-year to $20.8 million, matching the record set in Q2 2026.
  • The company maintains a top five market share position in Canada and expanded share in vapes and infused pre-rolls, holding a top 10 position in all major product categories nationally.
  • The "Super Toast" brand launched in Quebec, becoming the first nationally distributed brand for the company.
  • Canadian branded sales were $25.3 million, while non-branded sales were $3.3 million.
• Other Segments:
  • Produce sales were $11.3 million for the quarter.
  • Clean Energy sales were $0.6 million for the quarter.
• Strategic Initiatives:
  • The company exercised rights to convert 16 acres of the 60-acre Delta 1 greenhouse in British Columbia to cannabis production, with optionality to convert 25% of the facility during 2027.
  • Balanced Health Botanicals is pursuing pathways to participate in the U.S. Medicare CMMI pilot program for CBD products, awaiting regulatory clarity on the December 11, 2026 federal hemp ban.

Market and Competitive Landscape:

• The company remains one of the largest exporters of medical cannabis to Europe with a leading market share position in Germany.
• Resilient pricing was maintained in international export markets relative to non-GMP compliant areas of the supply chain.
• The company operates the world's largest EU-GMP certified cannabis facility at its Delta, British Columbia campus.
• In the Netherlands, the company is one of only ten licensed operators in the regulated cannabis program.

Risks and Challenges:

• Q3 margin performance was negatively impacted by a softer spot trim market in the Canadian wholesale sales channel compared to the prior year.
• The Balanced Health Botanicals subsidiary faces uncertainty regarding the legality and regulatory status of the hemp business, specifically pending the December 11, 2026 federal hemp ban.
• Forward-looking statements note risks related to regulatory compliance, potential difficulties in achieving profitability, variability of product pricing, and foreign exchange exposure.

Management Commentary and Tone:

• CEO Michael DeGiglio highlighted the delivery of the sixth consecutive quarter of positive net income and EPS, describing the company as a "sustainably profitable and expanding global cannabis enterprise."
• Management expressed confidence in the competitive advantage provided by the EU-GMP certified facility and the expected demand for compliant production capacity.
• The tone regarding the Texas asset was focused and proactive, with management stating they are "actively mobilizing plans" to operationalize the Monahans facility.
• Management noted that capex from the Netherlands and Delta 2 expansion projects is substantially complete, contributing to stronger sequential cash flow performance.

Other Key Points:

• Hamid Shekarchi was appointed Interim Chief Financial Officer on September 10, 2026, replacing Stephen Ruffini, who was appointed Head of Mergers & Acquisitions.
• Deepak Anand was appointed Vice President of Government Affairs on September 14, 2026, to lead global regulatory affairs and public policy strategies.
• The company issued $15.0 million in proceeds from the issuance of common shares during the nine-month period, offset by $6.8 million in share repurchases.
• The company holds an equity interest in Verdexa Holdings, a private venture pursuing strategic acquisitions for a branded food platform.
• The Clean Energy division transforms landfill gas into renewable natural gas and receives royalties on all revenues generated.