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TRANSCRIPT
September 2017
Investor PresentationMarch 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, 2016 and the most recent management's discussion and analysis for the quarter ended September 30,2017, 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
OTCBB:VFFIF
C$7.78
MARKETCAPITALIZATION
~ C $327 M(basic)
SHARESOUTSTANDING
42.0 M
(basic)
45.0 M
(diluted)
52-WEEK HIGH/LOW
C $9.80
C $1.58
MANAGEMENT& BOARD
OWNERSHIP
~27%
3
LISTINGSYMBOL
(As of March 5, 2018)
~ C $350 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
2016 REVENUE1
2016 EBITDA1
C$209 M
C$12.6 M
4
1. Converted to Canadian dollars at $0.75.
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:25 acres
Mexico:50 acres
Mexico
Financial Profile 7
(All figures in Canadian dollars unless otherwise stated)
At September 30, 2017
Cash: C$5.5 M (US$4.3 M)
Long-Term Debt: C$55.0 M (US$43 M)
FY 2016
Revenue: C$209 M (US$156 M)
EBITDA: C$12.6 M (US$9.4 M) Margin: 6%
EBITDA (C$ MILLIONS)
$13.8
$10.1
$14.1 $12.6
$11.3
$0
$5
$10
$15
2013 2014 2015 2016 LTM Q3/17
REVENUE (C$ MILLIONS)
$147.2$158.9
$196.9 $209.1 $211.8
$0
$50
$100
$150
$200
$250
2013 2014 2015 2016 LTM Q3/17
LTM Net Income of C$6.4 M and LTM EPS of C$0.16
LICENSED 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
Large-scale,
high-quality, low-cost
cannabis production
50% Ownership
Options for an additional 3.7 M sq. ft. (85 acres) of growing capacity
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Cannabis IP, including portfolio of high-quality genetics
Will sell dried cannabis and develop
and sell its own extraction-based
products
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 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
$2.10/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
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(25 acres)
conservative projected yield of
Critical Path and Key Milestones
June 2017
File Cultivation
License Application
September 2017
March2018
Initiate Cultivation
License Process
Expect to begin commercial production
prior to July 1, 2018
Target: 75,000 kg of production in 2020
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Commence Conversion
of Delta 3 to Cannabis Licensing Standards
October2017
Obtain Cultivation
License
Complete Conversion
of Full 250,000 ft2
of Quadrant 1 of Delta 3
Target: March 2018
Obtain SellingLicense
Generate First
Cannabis Revenue
Phased Conversion Expedites Cash Flow Generation 16
Estimated Demand
by 2021:Sept.
Quadrant 4
OctJuly 1March 1
Quadrant 3
Quadrant 2
Quadrant 1
2017 2018 2019 2020
~250,000 sq. ft. 18,750 kg/yr
Conversion Commercial Production
7- 8,000 kg (6 mos. post July 1) 35 – 40,000 kgTarget Sales
~250,000 sq. ft. 18,750 kg/yr
~250,000 sq. ft. 18,750 kg/yr
~250,000 sq. ft. 18,750 kg/yr
75,000 kg
March Oct.
Installation of lighting
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:
~198,000 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
300,000 276,000229,000
150,000 147,000 122,00082,000
52,000 44,000 41,000 38,000
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 March 5/18. 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 $7,445 $2,656 $842 $2,255 $5,877 $605 $879 $459 $734 $265Capacity Growth 6x 7x 42x 9x 7x 5x 2x 44x 8x 29x
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
~$350 M
~$9.30~$18.85average
~$2,200 Maverage
~116,600 kgaverage
1. Fully diluted. At March 5, 2018. 2. WEED, APH, THCX, LEAF, ACB, OGI, TRST, ABCN, FIRE, WMD.
Planned Production
Market Cap1
Market Cap/Gram of
Planned Production
Top 10 LPs (planned
2020 produciton2)
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150,000 kg50% of production at all
three facilities
~$350 M
~$2.30
Illustrative Financial Impact
Significantly more profitable use of existing greenhouse assets
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Targeted Output in 2020: 75,000 kgPrice $8.00/gram $6.00/gram $4.00/gram $2.00/gram
Pure Sunfarms Revenue $600.0 M $450.0 M $300.0 M $150.0 M
Pure Sunfarms EBITDA (Target production cost: $1.00/gram)
$525.0 M $375.0 M $225.0 M $75.0 M
Village Farms’ Share of EBITDA (50%) $262.5 M $187.5 M $112.5 M $37.5 M
Multiple of Village Farms’ 2016 EBITDA 21x 15x 9x 3x
Price $8.00/gram $6.00/gram $4.00/gram $2.00/gram
Pure Sunfarms Revenue $2,400.0 M $1,800.0 M $1,200.0 M $600.0 M
Pure Sunfarms EBITDA (Target production cost: $1.00/gram)
$2,100.0 M $1,500.0 M $900.0 M $300.0 M
Village Farms’ Share of EBITDA (50%) $1,050.0 M $750.0 M $450.0 M $150.0 M
Multiple of Village Farms’ 2016 EBITDA 84x 60x 36x 12x
Total Potential Output: 300,000 kg
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 PresentationMarch 2018