Investor Presentation: March 2015

Transcription

1 Investor Presentation: March 2015

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 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. 2

3 Company Overview A leading grower & marketer of branded, high-quality hydroponic greenhouse grown produce in North America High value produce Oldest greenhouse operation and brand in the U.S. Listed on TSX (Toronto Stock Exchange) VFF Vertically integrated year-round direct supplier to leading retail grocers Largest greenhouse operator in North America Strong reputation as industry leader in quality and food safety Exclusive rights to grow and market varieties Highly Sustainable Local source produce supplier Small carbon and physical footprint Highly productive compared to field farming - 30x Operating and marketing in Canada, US and Mexico Greenhouse facilities owned BC (110 acres), TX(130 acres) Upgraded and refurbished 20 Acre greenhouse June 2014 Exclusive marketing arrangements with US, MX and CA growers Three exclusive tomato varieties Stock Data on March 23, 2015 Current Market Capitalization: C$39M Current Shares Outstanding: 38.7M Current Shares Diluted: 40.6 M 52 Week Hi/Lo: C$1.77 / $0.81 Approx. Institutional Ownership: 21% Approx. Insider Ownership: 31% 3

4 Investor Considerations Strong Track Record of Value Creation Largest Hydroponic Greenhouse Producer in North America Diverse Base of National Marquee Customers Strong Consumer Demand for Local, Sustainable Produces Proprietary Greenhouse Technology & Varieties Year Round Production Capabilities High Barriers of Entry into Greenhouse Market Highly Experienced Management and Production Team 4

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 Consistent quality Year round growing season Multiple varieties Flavor fully develops/better taste Cucumbers Long English and mini cucumbers Unwaxed/not coated Seedless Peppers Vibrant colors, firm skin Stems; green and fresh Sweet taste Others Eggplants 5

6 Exclusive Varietal Innovation & Development One of three exclusive varieties Mini San Marzano Acres

7 Key Customer Relationships Relationships with Marquee Customers 1

8 Build R&D GATES approximately $3 mm investment in R&D facility Company History and Developments October 18, 2006 Merger between Hot House Growers & Village Farms adds 136 acres in capacity November 2007 Fund sells its Abbotsford greenhouse facility for net proceeds of $3.2 million December 2009 Fund converts to Corporation. New name Village Farms International, Inc. May 2012 Catastrophic hail storm. Forcing closure of 82 operating acres August 2013 Final settlement with Insurance Carrier on hail storm claim Total amount $49m July 2014 Completed purchase of Maxim Power (BC) now VF Clean Energy Spike in tomato prices Texas Facilities built between May 2007 Fund sells its Pitt Meadows facility for net proceeds of $6.8 million December 2011 Begin planting new GATES facility December 2012 Completed repair of 40 acres of damaged 80 acres in Marfa, TX March 2013 New US - Mexico Suspension Agreement Concluded. New 5 year $58m debt facility with FCC completed April 2014 Completed rebuild of 20 acres in Marfa, TX 8

9 Rank Product Dollars Volume Size of Produce Markets Dollar Contribution to Department Dollars YAGO Volume YAGO Dollar Contribution to Department YAGO Dollar Contribution to Dollars % Change Volume % Change Department vs YAGO vs YAGO Change vs YAGO Produce $45,888,230,306 31,135,098, % $43,910,212,662 30,598,256, % 4.5% 1.8% 0.0% 1 Berries $3,782,629,253 1,263,161, % $3,569,049,648 1,211,806, % 6.0% 4.2% 0.1% 2 Packaged Salad $3,343,774,453 1,224,017, % $3,065,065,495 1,151,622, % 9.1% 6.3% 0.3% 3 Apples $2,889,204,323 1,837,519, % $2,857,410,551 1,781,156, % 1.1% 3.2% -0.2% 4 Citrus $2,632,569,574 2,082,160, % $2,482,277,985 2,112,899, % 6.1% -1.5% 0.1% 5 Grapes $2,610,348,992 1,155,384, % $2,502,088,895 1,183,966, % 4.3% -2.4% -0.0% 6 Bananas $2,560,431,508 4,481,232, % $2,561,271,744 4,468,935, % -0.0% 0.3% -0.3% 7 Tomatoes $2,437,207,660 1,095,996, % $2,366,494,700 1,084,254, % 3.0% 1.1% -0.1% 8 Potatoes $2,410,134,702 3,493,829, % $2,337,358,236 3,554,085, % 3.1% -1.7% -0.1% 9 Value-Added Fruit $2,009,971, ,533, % $1,818,462, ,116, % 10.5% 4.9% 0.2% 10 Cooking Vegetables $1,699,476,273 1,032,101, % $1,622,192, ,091, % 4.8% 4.7% 0.0% 11 Value-Added Vegetables $1,481,431, ,604, % $1,320,312, ,994, % 12.2% 12.0% 0.2% 12 Onions $1,472,178,290 1,485,018, % $1,454,183,600 1,472,007, % 1.2% 0.9% -0.1% 13 Peppers $1,328,989, ,648, % $1,257,504, ,619, % 5.7% 3.6% 0.0% 14 Lettuce $1,203,381, ,807, % $1,233,545, ,910, % -2.4% 0.1% -0.2% 15 Melons $1,144,283,507 2,057,795, % $1,091,019,122 1,886,251, % 4.9% 9.1% 0.0% 16 Nuts & Seeds $1,131,820, ,561, % $1,149,596, ,653, % -1.5% -6.3% -0.2% 17 Avocados $1,126,206,913 1,007,909, % $995,755, ,186, % 13.1% 3.9% 0.2% 18 Beverages $1,094,356, ,432, % $975,578, ,747, % 12.2% 13.6% 0.2% 19 Stone Fruits $928,885, ,101, % $896,958, ,883, % 3.6% -8.6% -0.0% 20 Carrots $852,770, ,219, % $849,513, ,218, % 0.4% -0.6% -0.1% 23 Cucumbers $700,615, ,205, % $663,615, ,615, % 5.6% 3.3% 0.0% Top 20 US Produce Category Contribution to Department for 52 weeks Ending 12/31/14 9

10 U.S. Retail Tomato Market Undefined Total $353,537,625 14% Undefined Total 119,278,989 11% Field Total $828,079,899 34% Greenhouse Total $1,255,590,136 52% Field Total 536,838,037 49% Greenhouse Total 439,869,760 40% Retail Tomato Dollars Retail Tomato Volume (lbs) Note information above excludes Costco and BJs which are 100% Greenhouse retailers. 10

11 Strategically Located Operations VFF has the logistics and distribution capabilities to ensure fresh high quality produce that meets consumer demands. Greenhouses Partnerships British Columbia Canada 3 greenhouses in Delta, BC 441,168 square metres 110 acres Production: Tomatoes-on-the-vine Beefsteak tomatoes Cocktail tomatoes Specialties Texas 20 total acres 2 facilities 9 acres Bell peppers 11 acres English cucumbers Production March November USA 10 total acres 1 facility Tomatoes-on-the-vine Campari Production February November 2 greenhouses in Marfa & Ft. Davis, TX 100 acres Production: All varieties of tomatoes 4 Greenhouses Partners Mexico 45 total acres 3 facilities All tomato types Mini -cucumbers Production year round 1 greenhouse in Monahans, TX 30 acres Production: Tomatoes-on-the-vine Cucumbers Distribution Centers Corporate Offices 11

12 Key Trends Driving Greenhouse Development Forecasted Water Scarcity, 2050 Population Density, 2025 Carbon Dioxide Emissions, Today Water and Land Scarcity Greenhouses have higher production volumes per acre of land Water can be precisely measured and applied to plants 70% of fresh water is used in agriculture Safer, Locally Grown Food Greenhouses can be located to serve densely populated regions Controlled environment reduces chance of disease Reduced GHG s Combined heat and power systems on greenhouses are over 40% more efficient 47% reduction in CO 2 converting CO 2 to Oxygen 99% reduction in SO 2 93% reduction in NO x 12

13 Company Growth Initiatives Upgraded and Refurbished Damaged Acreage in Marfa, Texas Completed 20 acre rebuild April 2014 Rebuild remaining 20 acres 2016 Enhance Existing Production Capacity Cogen opportunities Siloxane filtration Enhance electricity sales Install lights at certain existing facilities Completed 5 acres at PB facility 2014 Working on additional lighting 5-10 acres Higher yields year round (lowering costs per pound) More flexibility on crop selection Expand acreage at existing West Texas facilities Improve Product Mix Differentiation of Product Mix higher % of Specialties Expand relationships & increase penetration Expand into additional products i.e. berries and organic Expand Third Party Grower Contracts 13

14 VF Clean Energy Co-generation Purchased existing 7.0MW co-generation facility from Maxim Power in July 2014 Facility sits on VF greenhouse property Input source - City of Vancouver Landfill Gas (LFG) Power Purchase Agmt. BC Hydro thru 8/ 23 Electric revenues EBITDA > $1.0m/annum Enhanced ability to use LFG in greenhouse Long term goal get CO2 from LFG 14

15 Historical Financial Performance VFF revenue negatively impacted by Loss of Acreage Hail Storm in May 2012 took out 82 acres reducing production thus revenues 40 Acres up and operational late 2012 Another 20 acres up and operational in Summer 2014 VFF EBITDA impacted by $200.0 Low Pricing on TOV variety from Canada facilities most of 2014 Hail Storm Proceeds in 2012 & 2013 Poor Pricing in late 2011 through September 2012 Revenue (US$ millions) EBITDA (US$ millions) 1 $164.4 $30.0 $28.2 $160.0 $133.1 $130.5 $144.8 $133.9 $137.6 $136.6 $25.0 $21.2 $23.8 $120.0 $80.0 $20.0 $15.0 $10.0 $9.1 $15.1 $15.7 $8.7 $40.0 $5.0 $ $ See EBITDA Support Schedule 15

16 Select Balance Sheet Info Expressed in Thousands USD (000 s) As of Dec As of Dec Assets Cash $ 6,337 $18,668 Accounts Receivable $ 10,107 $ 7,434 Inventory (Including Bio Asset) $19,122 $14,362 Other $1,893 $2,732 Net Fixed Assets $101,430 $96,709 Total Assets $138,889 $139,905 Liabilities Short Term Debt $4,418 $4,168 Accounts payable $11,795 $7,063 Other (Including Def. Tax) $12,729 $16,882 Long Term Debt $48,947 $50,692 Total Liabilities $77,889 $78,805 Shareholders' Equity $61,000 $61,100 16

17 Significant Insider Ownership Insiders hold an economic interest in Village Farms of approximately 31.1% Shareholder Overview (fully diluted) Number of Shares % Ownership Insiders Michael DeGiglio (1) 10,304, % Other Insiders (1) 2,336, % Insiders Total 12,641, % Institutions Canagro Century Holdings (2) 3,847, % Other (2) 4,851, % Institutional Total 8,698, % Albert Vanzeyst (3) 9,377, % Retail (2) 9,905, % Total (1) 40,622, % 1 Includes outstanding1,914,999 options 2 Management estimate 3 Co-founder left Company in 2010 announced his intention to sell 4.2m shares in

18 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 ( ), and the Naval Air Reserves ( ), retiring at the rank of Captain Stephen Ruffini Chief Financial Officer and Director Joined Village Farms in January 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 18

19 Investment Summary Highlights Greenhouse Produce Industry Leader Vertically integrated year-round direct supplier to leading retail grocers Largest greenhouse producer in North America Strong reputation as industry innovator in quality and safety and varieties Strong Industry Trends Innovative greenhouse technologies improve efficiencies in energy and water use Growing more specialty products with superior quality, taste, appearance Improving safety systems ensure high quality and safety of products Successful Track Record of Value Creation Increased EBITDA since the acquisition of Hot House in 2006 Increased operating capacity and crop yield Significant alignment of interest Management holds 31% ownership Value-Add and Sustainability Story Local source produce supplier market is short of US grown supply Small carbon and physical footprint Highly productive compared to field farming Advanced Greenhouse Technology Track record of improvements in greenhouse production technology GATES technology / Extreme Growing (allows expanded local presence) Repairs at Marfa facility will utilize some enhancements learned from GATES 19

20

21 EBITDA Support Schedule (in thousands of U.S. dollars) Net Income* $ (107) $ 10,488 $ 7,902 Interest 2,494 3,672 4,328 Taxes (3,262) 5,477 4,311 Depreciation 7,885 7,314 7,552 Derivatives - (106) (1,180) Other non-cash 1,664 1, Reported EBITDA $ 8,674 $ 28,212 $ 23,837 Adjustments: Net Property Insurance** (1,031) (30,271) Asset Write-Offs 601 9,001 Adjusted EBITDA incl. net Bus. Interruption $ 27,782 $ 2,567 Business Interruption Proceeds (14,917) (960) Adjusted EBITDA with no Insurance $ 8,674 $ 12,865 $ 1,607 * Per IFRS - all Insurance Proceeds are included in net income ** Includes gross property insurance proceeds less costs but excludes Business Interruption Insurance 21