Village Farms International, Inc. (NASDAQ:VFF) Q3 2023 Earnings Call Transcript

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Mike Regan: And then as a quick follow-up, we’ve written about how Ontario has changed the pricing structure for the licensed producers and the retailers there, the benefit of licensed producers and the retailers, and it’s still been early. But is there any commentary on how you’re seeing those pricing changes and volume changes in — or any volume changes in Ontario at this point?

Steve Ruffini: As you point out, the mark up changed at the end of September, so really no impact on Q3 at all. We have great transparency with the pricing structure in Ontario and some of the other provinces to date, so it’s been a whole month. We have benefited from the change. We’ve decided as a company to keep our pricing the same at retail. So we effectively, the way it works, we’ll realize a 100% of the margin decreased by OCS. So we’ll see a 3% to 5% increase in our margins in OCS. What other LPs are doing or not doing, we think most will follow us. But it remains to be seen whether people will chase prices down or we have decided to keep the margin to ourselves.

Operator: [Operator Instructions] Our next question will come from the line of Eric Livshits with ATB Capital Markets.

Eric Livshits: So given the positive cash flow generation this quarter, I am just wondering, do you see this as somewhat of a turning point in cash flow generation for the company, or should we expect cash flows to kind of just be more bumpy in the quarters ahead? Thank you.

Michael DeGiglio: Well, I think they may be somewhat lumpy in the quarters ahead, but on the positive side, that’s how focus is positive cash generation. If our market share slips, it’s because we don’t deem it profitable market share. We are just not gonna chase it. Those days, I think, are over, and we could see what that’s done to a number of companies just chasing unprofitable market share. So with our very parochial focus on profitable market share, I think we are going to stay positive, we are driving our costs down. Now it may not be steady every single quarter but probably won’t be. But I think, overall, on an annual basis, we can say we are going to be to the positive side.

Operator: I would now like to turn the call back to Ann for another question.

Ann Gillin Lefever: Thanks, Liz. Before we conclude, we wanted to highlight a question that came in via email, related to the Canadian distribution model and the purchasing policies of large provincial buyers. It’s a great multi part question from a clearly engaged shareholder that we appreciated getting. What the question boils down to is, whether we and other LPs are missing out on sales due to ordering practices of the provincial buyers?

Michael DeGiglio: Thanks, Ann. And the question to that, the short answer is no. We have excellent relationships with all the provinces and territories we supply. We know all boards are working hard to ensure market demand is met with their supply and we are working closely with them to provide much more accurate forecasting and trying to maximize product penetration to meet their demand. So I think it is a synergistic opportunity for us. And it’s still a nascent industry. So we are not always getting it right, but we are working together and getting better together to the benefit of us but ultimately to the benefit of the consumer. So hope that suffices. So thank you, Liz, and thanks everyone for joining us today. We look forward to speaking to you on our next call going forward for year-end and fourth quarter. Thank you all.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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