roth capital partners presentation march...
TRANSCRIPT
Roth Capital Partners Presentation
March 2016
2
Forward Looking Statements
This presentation contains certain "forward looking statements". These statements relate to future
events or future performance and reflect the Company's expectations regarding its growth, results of
operations, performance, business prospects, opportunities or industry performance and trends.
These forward looking statements reflect the Company's current internal projections, expectations or
beliefs and are based on information currently available to the Company. In some 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
other comparable terminology. A number of factors could cause actual events or results to differ
materially from the results discussed in the forward looking statements. In evaluating these
statements, you should specifically consider various factors, including, but not limited to, such risks
and uncertainties as availability of resource, competitive pressures and changes in market activity,
risks associated with U.S. and Canadian sales and foreign exchange, regulatory requirements and
all of the other "Risk Factors" set out in the Company's current annual information form and
management's discussion and analysis for the year ended December 31, 2014, which is available
electronically at www.sedar.com. Actual results may differ materially from any forward looking
statement. Although the Company believes that the forward looking statements contained in this
presentation are based upon reasonable assumptions, you cannot be assured that actual results will
be consistent with these forward looking statements. These forward looking statements are made as
of the date of this presentation, and other than as specifically required by applicable law, the
Company assumes no obligation to update or revise them to reflect new events or circumstances.
3
Company Overview
A leading greenhouse grower & marketer of branded,
high-quality produce
CPG company growing and selling fresh produce
Vertically integrated year-round direct supplier to leading retail grocers
Oldest greenhouse operation and brand in the U.S.
Largest greenhouse operator in North America
Strong reputation as industry leader in quality and food safety
Exclusive rights to produce certain varieties
Highly Sustainable
Hydroponically grown
Responsible growing practices
Highly productive compared to field farming - 30x
“Local” source produce supplier
Operating and marketing in Canada, US and Mexico
Greenhouse acres owned – 240 acres
Exclusive marketing arrangements with US, MX and CA growers
Representing approx. – 140 acres
Stock Data on March 8, 2016
Current Market Capitalization: US$26M
Current Shares Outstanding: 38.8M
Current Shares Diluted: 40.7 M
52 Week Hi/Lo: C$1.07 / $0.70
Approx. Institutional Ownership: 28%
Approx. Insider Ownership: 50%
4
Investor Considerations
Controlled Agriculture – is
the Future
Diverse Base of National
Marquee Customers
Largest Hydroponic Greenhouse Producer in
North America
Highly Experienced
Management and Production TeamHigh
Barriers of Entry into
Greenhouse Market
Year Round Producer tied to
Advanced Technologies
Strong Consumer Demand for Local,
Sustainable Products
Strong Track Record for Food Safety
5
Greenhouse Produce – A Premium Product Retail consumers pay a premium for Greenhouse produce
Offers more consistent quality, taste, appearance and food safety than field grown produce
Vine-Ripened Tomatoes
Flavor fully develops/better taste
Consistent quality
Year-round production
Multiple varieties
Peppers
Vibrant colors, firm skin
Stems; green and fresh
Sweet taste
English Cucumbers
Mini and Long
Thin dark green skin
Unwaxed/not coated
Seedless
6
Exclusive Varietal Innovation & DevelopmentExclusive Varieties
0.5
18
28
44
62
0
10
20
30
40
50
60
70
2012 2013 2014 2015 2016
Mini San Marzano Acres
7
Exclusive Varietal Innovation & DevelopmentExclusive Varieties
0.25
2.7
13
0
5
10
15
2014 2015 2016
Cherry no. 9 Acres
0.1
3.3
8.3
0
2
4
6
8
10
2014 2015 2016
Cabernet Acres
8
Exclusive Varietal Innovation & DevelopmentExclusive Varieties
Launching in 2016 with approximately 10+ acres
Additional testing of other varieties
Marquee Customers
10
Size of Retail Produce Markets
Top 22 US Produce Category Contribution to Department for 52 weeks Ending 12/31/15
Data Source : Perishables Group FreshFacts® Powered by Nielsen
Rank Product Dollars VolumeDollar Contribution to
Department Dollars YAGO Volume YAGODollar Contribution to
Department YAGODollars % Change vs
YAGOVolume % Change vs
YAGO
Dollar Contribution to Department Change vs
YAGO
Produce $46,914,271,041 31,617,311,495 100.0% $45,116,367,557 30,717,461,861 100.0% 4.0% 2.9% 0.0%
1 Berries $3,969,115,364 1,321,528,906 8.5% $3,721,607,157 1,244,140,476 8.2% 6.7% 6.2% 0.2%
2 Packaged Salad $3,621,253,544 1,286,555,881 7.7% $3,296,784,207 1,207,565,076 7.3% 9.8% 6.5% 0.4%
3 Citrus $2,817,309,553 2,242,187,296 6.0% $2,588,215,739 2,047,822,823 5.7% 8.9% 9.5% 0.3%
4 Apples $2,765,234,531 1,776,972,128 5.9% $2,854,440,287 1,808,268,359 6.3% -3.1% -1.7% -0.4%
5 Grapes $2,690,429,944 1,229,674,499 5.7% $2,570,445,665 1,137,811,000 5.7% 4.7% 8.1% 0.0%
6 Bananas $2,512,303,848 4,402,683,636 5.4% $2,524,305,672 4,414,294,954 5.6% -0.5% -0.3% -0.2%
7 Tomatoes $2,490,073,093 1,091,927,510 5.3% $2,394,637,501 1,074,350,893 5.3% 4.0% 1.6% 0.0%
8 Potatoes $2,354,876,716 3,380,024,855 5.0% $2,374,686,115 3,442,939,745 5.3% -0.8% -1.8% -0.2%
9 Value-Added Fruit $2,149,742,338 671,408,460 4.6% $1,982,641,741 658,118,720 4.4% 8.4% 2.0% 0.2%
10 Cooking Vegetables $1,719,015,541 1,000,274,711 3.7% $1,653,170,884 1,004,275,152 3.7% 4.0% -0.4% -0.0%
11 Value-Added Vegetables $1,638,345,659 526,349,777 3.5% $1,499,082,897 495,431,018 3.3% 9.3% 6.2% 0.2%
12 Onions $1,428,598,502 1,425,865,691 3.0% $1,448,704,484 1,456,441,311 3.2% -1.4% -2.1% -0.2%
13 Peppers $1,373,762,507 613,864,930 2.9% $1,300,827,816 587,648,438 2.9% 5.6% 4.5% 0.0%
14 Beverages $1,286,442,404 388,049,429 2.7% $1,135,330,497 349,785,495 2.5% 13.3% 10.9% 0.2%
15 Avocados $1,258,090,593 1,214,470,719 2.7% $1,106,776,586 1,006,114,715 2.5% 13.7% 20.7% 0.2%
16 Lettuce $1,225,405,510 661,839,696 2.6% $1,180,239,685 656,949,883 2.6% 3.8% 0.7% -0.0%
17 Melons $1,148,664,783 2,185,577,541 2.4% $1,126,643,911 2,028,599,464 2.5% 2.0% 7.7% -0.0%
18 Nuts & Seeds $1,023,332,778 157,807,918 2.2% $1,069,661,362 170,633,287 2.4% -4.3% -7.5% -0.2%
19 Herbs, Spices and Seasonings $885,137,884 667,480,279 1.9% $813,524,429 636,786,447 1.8% 8.8% 4.8% 0.1%
20 Stone Fruits $875,978,357 473,446,175 1.9% $913,656,843 477,690,890 2.0% -4.1% -0.9% -0.2%
23 Cucumbers $715,888,728 719,581,316 1.5% $685,011,778 688,931,066 1.5% 4.5% 4.4% 0.0%
11
U.S. Tomato Retail Market Segmentation
Retail Tomato Dollars Retail Tomato Volume (lbs)
Note – information above excludes Costco and BJs which are 100% Greenhouse retailers.
Source: Perishables Group FreshFacts® Powered by Nielsen
Greenhouse Total$300,451,500
54%
Field Total$191,771,738
35%
Undefined Total$61,697,970
11%
Greenhouse Total103,660,343
43%Field Total118,276,276
49%
Undefined Total19,756,219
8%
12
Strategically Located Operations
Ontario & British Columbia
1 facility in Ontario
65 acres
Production:
All tomato types
2 facilities in BC
25 acres
Production:
Peppers & LE cucumbers
VF Greenhouses Partner Growers
Mexico
3 facilities in Queretaro
50 acres
Production:
All varieties of tomatoes
Mini-cucumbers
British Columbia
3 facilities in Delta, BC
110 acres
Production:
All tomato types
Greenhouses
Partners
Distribution
Centers
Corporate
Offices
VFF has the logistics and distribution capabilities to ensure fresh high quality produce
that meets consumer demands.
4
Texas
3 facilities in Marfa & Ft. Davis
100 acres
Production:
All varieties of tomatoes
1 facility in Monahans
30 acres
Production:
Tomatoes-on-the-vine
Long English cucumbers
13
Experienced Management Team
Mike DeGiglio – Chief Executive Officer and Director
Co-Founder; Served as Chief Executive Officer since inception
30 years intensive agricultural experience in controlled environmental growing – former CEO of two other
industry related companies in greenhouse and agriculture biotechnology
Served on active duty in the United States Navy as an officer and jet aviator (1976 – 1983), and the Naval Air
Reserves (1983 – 2001), retiring at the rank of Captain
Stephen Ruffini – Chief Financial Officer and Director
Joined Village Farms in 2009
Previously at HIT Entertainment PLC where he served as Chief Financial Officer
25 years of extensive financial, operations, investor relations and mergers and acquisitions experience with
leading international companies
Doug Kling – Chief Marketing Officer
Joined Village Farms in 2008
Previously at Johanna Foods where he served as VP – Sales and Marketing / Mgmt. Board
30 years of extensive management experience in sales, marketing and acquisitions with global CPG companies
including Cadbury Schweppes and Nabisco Brands
Bret Wiley – Senior Vice President of Sales
Joined Village Farms in 1998
Previously at Dole Fresh and Gargiulo Inc.
30 years of extensive sales, retail and marketing experience
14
Financial Performance
Revenue (US$ millions) EBITDA (US$ millions)
Trend Improvement Hail Storm in May 2012 took out 3 TX facilities
Hail Storm Proceeds in 2012 & 2013
Improving Margins due to higher margin product mix
Addition of new third party distribution in 2016
Approx. $20-$25m of additional top line
$133.1 $130.5
$144.8
$164.4
$133.9 $137.6 $136.6 $133.6
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
2008 2009 2010 2011 2012 2013 2014 LTM
$19.0
$9.1
$15.1 $15.7
$1.6
$12.9
$8.7
$10.7
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
2008 2009 2010 2011 2012 2013 2014 LTM
Reported EBITDA Normalized EBITDA
15
Select Balance Sheet Info Expressed in Thousands USD (000’s)
As of Sept. 30
2015
As of Dec 31
2014
Assets
Cash $ 5,147 $ 6,337
Accounts Receivable $10,197 $ 9,168
Inventory (Including Bio Asset) $16,994 $19,122
Other $ 2,320 $2,832
Net Fixed Assets $ 96,172 $101,430
Total Assets $130,830 $138,889
Liabilities
Short Term Debt $4,392 $ 4,418
Accounts payable $8,551 $11,795
Other (Including Def. Tax) $11,929 $12,729
Long Term Debt $45,534 $48,947
Total Liabilities $70,406 $77,889
Shareholders' Equity $60,424 $61,000
16
Significant Insider Ownership
Shareholder Overview (fully diluted)
1 Includes options. Total company stock options outstanding 1,896,665 options.
2 Management estimate
3 Co-founder left Company in 2010 has sold 1.6m shares over last two years. He has no ongoing
relationship with the Company or management but is an “insider” as he owns > 10%.
Insiders hold an economic interest in Village Farms of approximately 50.4%
Number of
Shares % Ownership
Insiders
Michael DeGiglio(1) 10,304,149 25.3%
Other Insiders(1)
Albert Vanzeyst(3)
2,431,065
7,757,733
6.0%
19.1%
Insiders Total 20,492,947 50.4%
Institutions
Canagro Century Holdings (2) 3,847,187 9.5%
Other (2) 7,726,269 18.9%
Institutional Total 11,573,456 28.4%
Retail (2) 8,637,607 21.2%
Total (1) 40,704,010 100.0%
Valuation Comparison
($ in mill ions, except per share data)
Price Market Enterprise Dividend Price/
Produce Company 1-Mar-16 High Low Cap (M) Value (M) Yield Revenue EBITDA Revenue EBITDA Earnings
Village Farms 0.67$ 0.79$ 0.52$ 26$ 71$ 0.0% 147.3$ 10.7$ 0.5x 6.6x 13.4xCalavo Growers 53.53$ 62.13$ 43.08$ 931$ 971$ 1.5% 856.8$ 52.9$ 1.1x 18.4x 33.7x
Limoneria 14.12$ 24.22$ 11.30$ 200$ 292$ 1.4% 110.3$ 8.8$ 2.6x 33.2x 30.7x
Landec* 9.70$ 15.16$ 9.48$ 262$ 310$ 0.0% 549.0$ 25.7$ 0.6x 12.1x 6.1x
* Included due to ownership of 27% interest in Windset Growers, which is carrying the investment at $63m, resulting in a market cap value on Windset of approx. $233m.
Publicly Traded Agriculture Companies
52- WeekMarket Data Financial Results
LTM EV/LTM
Multiples
18
Investment Summary Highlights
Greenhouse
Produce Industry
Leader
Financial
Performance &
Valuation
Value-Add and
Sustainability
Story
Vertically integrated year-round direct supplier to leading retailers
Largest greenhouse producer in North America
Strong reputation as industry innovator in quality and safety and varieties
“Local source” produce supplier – market is short of US grown supply
Small carbon and physical footprint
Highly productive compared to field farming
Improving Financial Results in 2015
Returning to Normalized Returns in 2016
Undervalued as compared to other publicly traded agriculture companies
Strong Industry
Trends
Controlled Ag is the future
Growing more specialty products with superior quality, taste, appearance
Innovative greenhouse technologies improve efficiencies in energy and water use
Barriers to Entry
High Capital Costs – approx. $1.5m/acre
Need experienced growing team and climate knowledge
More stringent Food Safety Regulations and Retailer Audits