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TRANSCRIPT
September 2017
Investor PresentationMay 2018
Forward Looking Statements
This presentation contains certain "forward looking statements". These statements relate to future events or futureperformance and reflect the Company's expectations regarding its growth, results of operations, performance, businessprospects, opportunities or industry performance and trends. These forward looking statements reflect the Company'scurrent internal projections, expectations or beliefs and are based on information currently available to the Company. Insome cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect","plan", "anticipate", "believe", "estimate", "predict" , "potential", "continue" or the negative of these terms or othercomparable terminology. A number of factors could cause actual events or results to differ materially from the resultsdiscussed in the forward looking statements. In evaluating these statements, you should specifically consider variousfactors, including, but not limited to, such risks and uncertainties as availability of resource, competitive pressures andchanges in market activity, risks associated with U.S. and Canadian sales and foreign exchange, regulatory requirementsand all of the other "Risk Factors" set out in the Company's current annual information form for the year endedDecember 31, 2017 and the most recent management's discussion and analysis for the quarter ended March 31, 2018,which is available electronically at www.sedar.com. Actual results may differ materially from any forward lookingstatement. Although the Company believes that the forward looking statements contained in this presentation arebased upon reasonable assumptions, you cannot be assured that actual results will be consistent with these forwardlooking statements. These forward looking statements are made as of the date of this presentation, and other than asspecifically required by applicable law, the Company assumes no obligation to update or revise them to reflect newevents or circumstances.
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Market Facts
PRICE
TSX:VFF
OTCQX:VFFIF
C$5.96
MARKETCAPITALIZATION
~ C $265 M(basic)
SHARESOUTSTANDING
44.5 M
(basic)
46.5 M
(diluted)
52-WEEK HIGH/LOW
C $9.80
C $1.74
MANAGEMENT& BOARD
OWNERSHIP
~25%
3
LISTINGSYMBOL
(As of May 25, 2018)
~ C $277 M(diluted)
Listed on the TSX since 2006
Industry Leader in Large-Scale, High Tech, Low-Cost Greenhouse Growing
10.5 M(240 ACRES) OF
GREENHOUSE CAPACITY
TECHNOLOGICALLYADVANCED
GREENHOUSE FACILITIES
IN PRODUCT QUALITY & SAFETY
750 YEARSOF EXPERIENCE
sq. ft.
30 YEARSIN OPERATION
2017 REVENUE1
2017 EBITDA1
C$206 M
C$9.6 M
4
1. Converted to Canadian dollars at $0.77.
MASTER GROWER TEAM WITH
INDUSTRY LEADER
OWN
Vertically-integrated provider of premium produce to grocers across North America
Greenhouse growing produces a more consistent, higher quality product that customers demand and that commands a premium price
Exclusive varieties address consumer demand in the specialty growth segment
Strategically located greenhouses and logistics and distribution chain ensure the freshest, highest quality produce
Marquee customers across the U.S. and Canada
Premium Produce Grown In the Most Sustainable, Resource-Efficient Manner 5
Strategically Located Operations and Distribution Network
3 facilities / 110 acres
(4.8 M sq. ft.)
British Columbia
VF Owned
4 facilities / 130 acres
(5.7 M sq. ft.)
Texas
VF Owned
Ontario
Our logistics and distribution chain ensures the freshest, highest-quality produce reaches consumers across Canada and the U.S.
6
Partner Greenhouses
Ontario:70 acres
British Columbia:35 acres
Mexico:70 acres
Mexico
Financial Profile 7
(All figures in Canadian dollars unless otherwise stated)
At March 31, 2018
Cash: C$5.0 M (US$3.9 M)
Long-Term Debt: C$49.7 M (US$35.9 M)
FY 2017
Revenue: C$206 M (US$158 M)
EBITDA: C$9.6 M (US$7.4 M) Margin: 5%
EBITDA (C$ MILLIONS)
$13.8
$10.1
$14.1 $12.6
$9.6
$0
$5
$10
$15
2013 2014 2015 2016 2017
REVENUE (C$ MILLIONS)
$147.2$158.9
$196.9 $209.1 $205.7
$0
$50
$100
$150
$200
$250
2013 2014 2015 2016 2017
2017 Net Income of C$5.0 M and EPS of C$0.13
VILLAGE FARMS’ CANNABIS JOINT VENTURE:A TRANSFORMATIONAL OPPORTUNITY
Low Cost, Industry-Leading Scale with Speed To Market
Projected shortfall of supply based on current capacity and
market demand
Apply low-cost, high tech greenhouse growing expertise
4.8 M sq. ft. of existing
greenhouse capacity
(potential yield of 300,000 kg)
1. “Legalized Cannabis: Fiscal Considerations” – Office of the Parliamentary Budget Officer, Government of Canada (2016)
Market NeedTransformational
Opportunity
Canadian Cannabis demand estimated to grow to
~734,000 kg by 20211
Potential to address substantial portion of the market
9Ability to Capitalize on Market Opportunity
Complementary Partners
Initial Contribution:
1.1 M sq. ft. (25 acre)greenhouse (leased to
Pure Sunfarms)
50% Ownership
Initial Contribution:
C$20 M cash
High-tech, low-cost greenhouse growing &
agricultural product safety expertise
Cannabis industry compliance and licensing expertise
A vertically integrated large-scale, low-cost
supplier of high-quality cannabis
50% Ownership
Options for an additional 3.7 M sq. ft. (85 acres) of growing capacity
10
Cannabis IP, including portfolio of high-quality genetics
Leaders in High-Tech, Low-Cost Greenhouse Growing
750 years of combined master
grower experience from around the world
Cannabis is an agricultural product like any other
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30-year proven track record of
operating mega-scale greenhouses
Decades as an industry leading,
fully integrated produce distributor
Extensive experience developing, launching and
ramping up new crop operations (with record yields)
The Pure Sunfarms Advantage
Long-established, experienced workforce of ~600 at BC facilities
Proven operating systems and decades of experience managing the local climate
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Use of existing, state-of-the-art greenhouses
lowers costs and provides speed to market
Agricultural product safety expertise/North
America leader in pesticide registrations
Access to low-cost electricity and no requirement to build
co-generation
Pure Sunfarms greenhouses will be operated by veteran Village Farms personnel
Significantly de-risked production ramp up and ongoing operations
Ingrained culture of high-quality, low-cost production built over decades
Greenhouse growing provides significant capital and operating cost efficiencies
• Lower energy needs
• Greater economies of scale
• Allows for greater scale
GOAL: Be the Low-Cost, High-Quality Cannabis Producer in Canada
Conversion of existing state-of-the-art greenhouses with significant scale minimize capital costs
conservative target of
<$1.00/gram1
vs. industry avg. of
$2.00/gram1
Village Farms is one of the lowest-cost greenhouse growers of tomatoes & cucumbers in Canada/U.S.
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1. Four largest LPs – ACB, APH, LEAF, WEED. Source: Public company filings and independent analyst.
Phase 1: Delta 3 Greenhouse
>50%
1.1 M sq. ft. of greenhouse capacity
75,000 kg annually
projected EBITDA margins of
vs. mid-single digits for produce in Canada
potential to generate revenue of
10-15x that of produce
Significantly more profitable use of existing greenhouse assets
14
(25 acres)
conservative projected yield of
Critical Path and Key Milestones 15
2018: Additional focus on product development and development of marketing strategy
June 2017
File Cultivation
License Application
September 2017
March2018
Initiate Cultivation
License Process
Commence Conversion
of Delta 3 to Cannabis Licensing Standards
October2017
✓✓ ✓
Obtain Cultivation
License
Complete Conversion
of Full 250,000 ft2
(Quadrant 1) of Delta 3
April 2018
Commence Commercial-
Scale Production
✓ ✓
Obtain SellingLicense
✓
May2018
Summer2018
Delta 3 Greenhouse: Quadrant 1 Conversion
Configured for continuous weekly harvesting year round
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Meticulous attention to the growing environment and systems, processing areas and production ramp up
Growing system with automation proven in different crops to provide optimal efficiencies
Industry-leading HVAC systems based on extensive climate management experience, with technically advanced data systems
High-tech light deprivation/supplementation systems with individual control of 17 grow rooms
Phased Conversion Expedites Cash Flow Generation: Accelerated Plan 17
Conversion Commercial Production
Sept OctJuly 1May
2017 2018 2019 2020Target Prod’n
Feb Oct.
Estimated Demand
by 2021:
Quadrant 4
Quadrant 3
Quadrant 2
Quadrant 1
~250,000 sq. ft. 18,750 kg/yr
~250,000 sq. ft. 18,750 kg/yr
~250,000 sq. ft. 18,750 kg/yr
~250,000 sq. ft. 18,750 kg/yr
Installation of lighting
Target 7,000 - 8,000 kg (6 mos. post July 1) 75,000 kg46,000 – 52,000 kg
Sept
Expect entire 1.1 M sq. ft. of Delta 3 facility to be in production in Q4 2018
Significant Expansion Opportunity
Pure Sunfarms has options for Delta 1 and Delta 2
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Estimated Demand
by 2021:Estimated
Existing Industry Capacity:
~310,000 kg
Estimated Demand by 2021:
~734,000 kg1
1. “Legalized Cannabis: Fiscal Considerations” – Office of the Parliamentary Budget Officer, Government of Canada (2016).
D3: 1.1 M ft2 (24 MW secured) D2: 1.1 M ft2 (24 MW secured) D1: 2.4 M ft2
Pure Sunfarms has options for Delta 1 and Delta 2 to potentially address ~1/2 of overall market
300,000354,000
174,000 174,000 157,000 142,000 115,000 102,000 86,000 79,00048,000
PureSunfarms
Positioned to be a Leading Producer in Canada
Pure Sunfarms will be a large-scale producer of cannabis
Existing and Announced Future Capacity of Top 10 Public LPs by Funded Future Capacity
At May 25/18. Market cap fully diluted. Source: Research analyst estimates/company filings based on last reported capacity and disclosed growth strategy.
Market Cap (C$M) n/a $8,645 $2,630 $1,179 $2,969 $4,828 $952 $968 $683 $1,683 $651Capacity Growth 3x 5x 48x 10x 6x 192x 4x 4x 15x 10x
Existing Capacity (kg) Future Capacity (kg)
Existing LPs will attempt to meet demand through greenfield development requiring
hundreds of millions of dollars
Pure Sunfarms can quickly become one of the largest
producers of cannabis in Canada
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(VFF JV)
Compelling Value Proposition
PLUS produce business
Comparative Value: 2020 Planned Production Capacity
37,500 kg50% of Delta 3
production
~$277 M
~$7.40~$16.70average
~$2,520 Maverage
~151,000 kgaverage
1. Fully diluted. At May 25, 2018. 2. WEED, APH, THCX, LEAF, ACB, CBW, TRST, OGI, CRON, FIRE.
Planned Production
Market Cap1
Market Cap/Gram of
Planned Production
Top 10 LPs (planned
2020 produciton2)
20
150,000 kg50% of production at all
three facilities
~$277 M
~$1.85
Illustrative Financial Impact
Significantly more profitable use of existing greenhouse assets
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Targeted Output in 2020: 75,000 kgPrice $6.00/gram $4.00/gram $2.00/gram
Pure Sunfarms Revenue $450.0 M $300.0 M $150.0 M
Pure Sunfarms EBITDA (Target production cost: $1.00/gram)
$375.0 M $225.0 M $75.0 M
Village Farms’ Share of EBITDA (50%) $187.5 M $112.5 M $37.5 M
Multiple of Village Farms’ 2016 EBITDA 15x 9x 3x
Price $6.00/gram $4.00/gram $2.00/gram
Pure Sunfarms Revenue $1,800.0 M $1,200.0 M $600.0 M
Pure Sunfarms EBITDA (Target production cost: $1.00/gram)
$1,500.0 M $900.0 M $300.0 M
Village Farms’ Share of EBITDA (50%) $750.0 M $450.0 M $150.0 M
Multiple of Village Farms’ 2016 EBITDA 60x 36x 12x
Total Potential Output: 300,000 kg
Positioned to Lead a Federally Legalized US Cannabis Industry 22
Potential US Cannabis Opportunity is a Free Option
Will only pursue if and when cannabis is federally legalized in US
4 facilities - 5.5M sq. ft. – Existing, state-of-the-art, mega-scale produce operations in best growing climate in US (5,000 ft. elev., most sunlight in US)
NOT PART of Canadian JV
20+ years of operating history (600 employees)
Can be rapidly converted to be largest US cannabis producer
Will benefit from cannabis experience in Canada
JV Provides Strengthened Ability to Execute on Produce Growth Strategy
Organic initiatives to expand capacity at U.S. operations
Well positioned to lead consolidation of a fragmented industry
• Only greenhouse grower in North America to have completed a major acquisition
Village Farms will continue to be one of the largest, highest-quality, lowest-cost greenhouse growers of produce serving national grocers in the U.S. and Canada
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Investment Proposition: A Significantly De-Risked Cannabis Opportunity
Positioned to be one of the largest producers in Canada with the goal and capability to be the low-cost producer
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Use of existing greenhouse facilities for cannabis production provides advantage of speed to market to address near-term supply shortfall
Growth opportunities in both existing produce and cannabis JV
Solid underlying produce business
Key JV Metrics
Annual Output:Delta 3 Facility: 75,000 kgAll Facilities: 300,000 kg
Production Cost:<$1.00/gram
EBITDA Margin:>50%
50% Ownership of Pure Sunfarms
30 –year track record of success as a large-scale, low-cost grower of high-value agricultural products
September 2017
Investor PresentationMay 2018