Cannabis company Village Farms International, Inc. (NASDAQ: VFF) is making noteworthy strides, securing the #2 position in the recreational cannabis market in Canada.
Rising Exports And Financial Resilience
Ranked as Canada's fourth-largest cannabis exporter, VFF trails behind Tilray (NASDAQ: TLRY), Aurora Cannabis (NYSE: ACB) and Canopy Growth Corporation (NASDAQ: CGC).
According to senior analyst Pablo Zuanic, VFF's effective cost management and low production costs have bolstered its domestic market share and enhanced non-branded sales, contributing to a robust growth trajectory.
This achievement reflects the company's comprehensive improvements, resulting in a significant shift from a financial loss of $61 million in 2021 and $34 million in 2022 to nearly achieving a break-even point. Furthermore, maintaining a low debt level of $17 million underscores the company's strong financial stability.
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Divisional Insights: Cannabis And CBD Growth
The company's cannabis division reports an 11% sequential increase in net sales, reaching $32 million, with branded sales constituting 78% of this figure.
Zuanic says this growth is attributed to VFF's aggressive market share acquisition, closing in on the industry leader.
The B2B segment, representing 18% of total sales saw a 29% sequential growth, indicating a strong demand for VFF's low-cost production capabilities.
Conversely, the U.S. CBD business has seen a fourfold increase in EBITDA to $0.9 million, despite a 13% dip in sales. This division's profitability is expected to climb as production moves in-house, demonstrating VFF's capacity to adapt and optimize its operations effectively.
Valuation
According toZuanic, VFF's management is optimistic about continued market share gains and improved gross margins in the cannabis sector.
The company's strategic emphasis on cash flow and profitability, combined with its aspiration to cost-effectively expand its international presence, could potentially position VFF for sustained growth.
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