June 2017
Forward looking statements 2 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, 2016, 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.
Market Facts 3 (As of June 6, 2017) MANAGEMENT LISTING MARKET SHARES 52 WEEK PRICE & BOARD SYMBOL CAPITALIZATION OUTSTANDING HI/LOW OWNERSHIP TSX:VFF CDN$1.90 ~CDN$74M CDN$1.99 38.8M ~30% OTCBB:VFFIF (basic) CDN$1.18 41.0M (diluted)
Industry Leader in Large-Scale, High Tech, Low-Cost Greenhouse Growing 4 10.5 M MASTER GROWER TEAM WITH TECHNOLOGICALLY sq. ft. 750 YEARS ADVANCED (240 ACRES) OF GREENHOUSE FACILITIES GREENHOUSE CAPACITY OF EXPERIENCE 2016 REVENUE 1 C$206M INDUSTRY LEADER 30 YEARS 2016 EBITDA 1 IN PRODUCT C$12.5M QUALITY & SAFETY IN OPERATION 1. Converted to Canadian dollars at $0.75.
Premium Produce Grown In the Most Sustainable, Resource-Efficient Manner 5 Vertically-integrated provider of premium produce to grocers across North America Greenhouse growing produces a more Strategically located greenhouses and consistent, higher quality product that customers logistics and distribution chain ensure demand and that commands a premium price the freshest, highest quality produce Exclusive varieties address consumer demand Marquee customers across in the specialty growth segment the U.S. and Canada
Strategically Located Operations and Distribution Network 6 British Columbia VF Owned Ontario 3 facilities / 110 acres Partner (4.8M sq. ft.) Greenhouses Ontario: 65 acres Texas VF Owned British Columbia: 25 acres Mexico: 4 facilities / 50 acres 130 acres Mexico (5.7M sq. ft.) Our logistics and distribution chain ensures the freshest, highest-quality produce reaches consumers across Canada and the U.S.
Financial Profile 7 (All figures in Canadian dollars unless otherwise stated) FY 2016 At March 31, 2017 Revenue: $209 M (US$156 M) Cash: $5.2 M EBITDA: $12.6M (US$9.4) Long-Term Debt: $59 M EBITDA Margin: 6% REVENUE (C$ MILLIONS) EBITDA (C$ MILLIONS) $14.1 $13.8 $15 $12.6 $11.6 $250 $210.7 $209.1 $10.1 $196.9 $200 $10 $158.9 $147.2 $150 $100 $5 $50 $0 $0 2013 2014 2015 2016 LTM Q1/17 2013 2014 2015 2016 LTM Q1/17
CANNABIS JOINT VENTURE: A TRANSFORMATIONAL OPPORTUNITY Low Cost, Industry-Leading Scale with Speed To Market
Ability to Capitalize on Market Opportunity 9 Transformational Market Need Opportunity Canadian Cannabis demand Apply low-cost, high tech estimated to grow to greenhouse growin ing expertis ise ~600,000 kg by 2021 1 4.8M sq. ft. of existing greenhouse capacity Projected shortfall of supply (potential yield of 300,000 kg ) based on current capacity and market demand Potential to address substantial portion of the market 1. Medical and non-therapeutic adult use markets. Does not include export market Source: Deloitte Report: “Recreational Marijuana – Insights and Opportunities. .
Complementary Partners 10 50% Ownership 50% Ownership Joint Venture for large-scale, high quality, High-tech, low-cost low-cost Cannabis industry compliance and greenhouse growing & cannabis licensing expertise agricultural product safety expertise production Cannabis IP, including portfolio of high-quality genetics Initial Contribution: Initial Contribution: 1.1 M sq. ft. (25 acre ) $20M cash greenhouse (leased to JV) Options to lease additional 3.7 M sq. ft. (85 acres) of growing capacity
Emerald Health Therapeutics 11 (TSXV:EMH) Uniquely focused on application of cannabis to improve conventional pharmaceutical therapeutics Direct cannabis industry experience • Licensed producer under ACMPR – 8th licensed issued Proven management team with extensive experience in pharma and agri-business Well capitalized: $40M in treasury
Leaders in High-Tech, Low Cost Greenhouse Growing 12 Passionate about growing Deep Greenhouse Combined 750 years of master grower experience from multiple growing regions around the world Growing Have achieved record production yields for the industry Experience Experts in agricultural product safety • Pesticide registrations • Biological control Advanced Leader in agricultural research and foremost in North America for developing improvements Greenhouse in greenhouse production technology Technology Applied Research Division continually making advancements in Climate Engineering, Plant Biology & Pathology, Entomology, and Ecology Cannabis is an agricultural product like any other
GOAL: Be the Low-Cost Cannabis Producer in Canada 13 Ingrained culture of high-quality, low-cost production built over decades conservative target of <$1.00/gram Greenhouse growing provides significant capital and operating cost efficiencies vs. industry avg. of $2.25/gram 1 • Lower energy needs • Greater economies of scale • Allows for greater scale Existing state-of-the-art greenhouses with significant scale minimizes capital costs and provides faster time to market 1. Source: Public company filings and Office of the Parliamentary Budget Office - Legalized Cannabis: Fiscal Considerations. Village Farms is one of the lowest-cost greenhouse growers of tomatoes & cucumbers in Canada/U.S.
Phase 1: Delta 3 Greenhouse 14 1.1 M sq. ft. of greenhouse capacity (25 acres) conservative projected yield of 75,000 kg annually potential to generate revenue of 10-15x that of produce projected EBITDA margins of >50% vs. mid-single digits for produce in Canada Significantly more profitable use of existing greenhouse assets
Step-Function Future Growth Opportunity 15 4.8M sq. ft. Delta 3 Delta 2 Delta 1 1.1 M sq. ft. 2.6 M sq. ft. 1.1 M sq. ft. (25 acres) (60 acres) (25 acres) (110 acres) of total growing capacity conservative projected yield of 300,000 kg JV has options to lease Delta 1 and Delta 2 annually greenhouses
Critical Path and Key Milestones 16 JV Created Initiate Commence Obtain Completion Completion Obtain First Cultivation Conversion of Cultivation of Tomato of Selling Cannabis License Delta 3 License Crop Conversion License Revenue Process Greenhouse to Licensing Standards Expect to begin growing Target: June 6, 2017 Summer 2017 November 2017 June 2017 by late 2018 1 March 2018 1. Subject to receipt of cultivation and sales licenses. Use of existing greenhouse facilities provides JV with speed to market
Canadian Cannabis Market Fundamentals 17 + Medical Market Non-therapeutic Market Canadian industry for legalized medical Legislation tabled for the cannabis was born in the early 2000s legalization of non-therapeutic cannabis Currently regulated by the Access to Cannabis for Medical Purposes Regulation Estimated that >30% of Canadians would use cannabis Currently 45 registered LPs (owned by if it was legalized 1 37 companies) • Registered patient base has grown $5to $9B market opportunity 2 10% month-over-month and 200%+ annually since June 2014 • Average price across public LPs is ~$8.00/gram Poised to grow 10-fold to $1.3 B by 2024 1 1. Health Canada. 2. Deloitte Report: “Recreational Marijuana – Insights and Opportunities.
Projected Near-Term Shortfall of Supply in Canada 18 Estimated Existing Industry Production Capacity: ~80,000 kg Estimated Demand by 2021: 600,000 kg JV Has the Potential to address ~1/2 of the overall market
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