Village Farms International reports 118% EBITDA growth on cannabis pivot
The company maintained its top market share position in Canadian flower sales while navigating a temporary cash flow dip driven by tax payments, with expansion plans set for the Netherlands.
Village Farms International, Inc. has reported its Q1 2026 earnings, underscoring a strategic pivot to a unified cannabis business segment following the divestiture of its legacy produce operations. The company achieved record international medical export sales of $15 million, a figure driven by increased market share in Germany, where it currently holds three of the top five leading cultivars. Consolidated adjusted EBITDA grew by 118%, a performance management attributed to the high-margin nature of its international business and operational efficiencies across its global greenhouse platform.
Despite the strong top-line growth, the company reported negative cash flow from operations of $16.8 million. This shortfall was primarily due to a $12.1 million Canadian corporate income tax payment, which signals the exhaustion of carryover tax losses. Management expects a return to positive consolidated cash flow from operations in Q2 2026, following these one-time tax payments and working capital investments made in the first quarter.
In the domestic market, Village Farms maintained its number one market share position in the Canadian flower category for a 15th consecutive month. This achievement came despite seasonal capacity constraints and a regulatory cost burden, with Canadian excise taxes on retail branded sales reaching nearly 40% of gross sales. The company noted that price stability is specifically tied to high-quality EU GMP certified products, contrasting with price compression seen in non-compliant or 'greenwashed' supply chains.
Looking ahead, management plans to launch an advanced Phase 2 facility in Groningen, Netherlands, by the end of Q2 2026, pending final regulatory documentation expected in May. The company anticipates initial sales contributions from the Delta 2 greenhouse expansion in late Q2 or early Q3 2026, targeting 40 metric tons of annual capacity by mid-2027. Management maintains a patient stance on U.S. market entry, awaiting regulatory clarity on rescheduling and DEA export rules before committing significant capital.
On the capital allocation front, Village Farms completed a Board-approved $10 million share repurchase program during the second quarter. The company also amended and extended its loan agreement with Farm Credit Canada, improving interest rates and pushing maturity to February 2031. CEO Mike DeGiglio emphasized a disciplined approach, stating the company will avoid 'shiny objects' and focus on financially attractive deals while exploring non-flower form factors for export in new international jurisdictions.
