Good day, and welcome to the iAccess Alpha Virtual Best Ideas Fall Investment Conference 2026. Our next presenting company is Village Farms International, Inc. If you would like to ask a question during the webcast, you may do so at any point during the presentation by clicking on the Ask Question button on the left side of your screen. Type your question into the box and click Send. I would now like to turn the floor over to today's host, Sam Gibbons, Senior Vice President of Corporate Affairs and Investor Relations at Village Farms International, Inc. Please go ahead. Thank you, Matt. Glad to be here today. I think it is a timely time to revisit the space for potentially some generalist small-cap investors who do not traditionally look at our industry. So happy to be here today and take you all through the Village Farms story in a little more detail. Village Farms today is a top 10 global cannabis operator by market capitalization. It is about a $350 million market cap. We are profitable. We are one of the most profitable cannabis companies in the world. About $290 million in trailing 12-month sales in a really attractive organic growth platform that we think is positioned for success regardless of any regulatory outcomes in the U.S. Before we get into the guts of the presentation, I will just spend a few minutes talking about our history and how we have built the company and our asset portfolio today. We have actually been public since 2006. Founded in 1989, almost a four-decade track record of execution in large-scale agriculture, controlled environment agriculture. We are, today, the result of the combination of the two largest greenhouse operators in the U.S. and Canada, which occurred back in 2006. Our roots really began building and developing greenhouses up and down the Eastern Seaboard in the U.S. And over time, sort of transitioned from developing these greenhouses to operating these greenhouses. And eventually, we realized that in order to be successful, you really need to be large scale, low cost. And that is the footprint that we have today is one of the largest scaled platforms in global cannabis. And through our 37-year history, we have kind of been crop agnostic. We started in cut flowers, stem flowers, roses, transitioned to produce. When the Canadian government legalized cannabis back in 2017, began to convert our Canadian assets to cannabis cultivation. So just a little background on the company. Move to the next slide here. And just a brief summary of some of the key investment highlights which we will run through today, which are sort of core to the thesis and why we think we are an attractive global player in this industry. As I mentioned, one of the world's largest-scale platforms to capitalize on increasing demand for regulated cannabis. We executed a transaction last year to privatize our legacy produce business, which created a global cannabis pure-play with industry-leading profitability. We will get into some of the details of that transaction a little bit later. And our Canadian asset, which is 4.8 million sq ft of production capacity in Delta, B.C., is the world's largest EU GMP-certified cannabis production facility in the world. EU GMP standards is the gold standard in getting product into Europe, compliant product into Europe. We have a rapidly expanding international business today. We are one of the lowest-cost producers of cannabis in the world. Combined, these strengths, we think, give us durable long-term competitive advantages. We also have attractive near and long-term opportunities for continued revenue growth and value creation, which we will get into as well. Balance sheet is in a great position today. Like I said, we are profitable, sustainably profitable, with a lot of incremental growth opportunities and investment opportunities on the horizon. We will shift to the next slide here, which provides a little bit of a high-level overview of our asset portfolio today. It is 7.2 million sq ft of advanced greenhouse and indoor cultivation assets across the world. The bulk of those two facilities is spread across our assets in Delta, B.C. and West Texas. We also operate two indoor facilities in Quebec. Initially, when the Canadian market started, you needed to operate in Quebec to sell product into that market. That is no longer the case today. We also recently completed construction of our European headquarters effectively, which is in the Netherlands market. This is the bulk of the asset portfolio today. We believe these mega-scale greenhouse assets will allow us to scale cost-effectively over time with continued increases in demand. Our track record in controlled environment agriculture, plant-based consumer goods, and really operating global supply chain through our legacy history in produce, has helped us execute in these expanding international markets. On the previous slide, actually, we will go back and highlight. We are only cultivating cannabis in about 30% of our asset portfolio today. The assets in West Texas, a large portion of them have been leased back to the produce partner with the transaction we executed last year. Our Delta, B.C. platform is only growing cannabis in about 2.2 million sq ft of that 4.8-million square-foot footprint. So a lot of incremental runway to continue to grow into this footprint over time. Slide six is just an overview of how we have scaled this cannabis platform over the last several years. As I mentioned, we were predominantly a produce company until the Canadian government legalized cannabis. But that transaction we executed in May of last year has created a global cannabis pure-play. Almost the entire business is cannabis sales today. We do have about CAD 20 million to CAD 25 million in revenue from our Delta-1 greenhouse in Canada that is growing produce for our private equity partner. I think some other keys on this slide are a methodical expansion into this capacity over time. We have scaled it prudently. The Canadian cannabis business has been profitable in perpetuity. We were very early in getting into the international export markets. It has become a very hot topic today, I think, in our industry. But we have been there for a long time, saw the opportunity, made the investments in doing things the right way, in building a compliant supply chain with our EU GMP certification. We started working on back in probably 2021 and first received in 2022, recertified in 2024. In May of this year, after some incremental investments we made in that facility, Delta production facility is now the world's largest single-site EU GMP certified facility. As I have mentioned a couple of times, last year we completed a transaction to privatize the legacy produce business. That brought in about CAD 40 million in cash, and we still own 37.9% of the equity in that new platform, which is called Verdexa Holdings. Since that transaction closed, Village has been one of the most profitable cannabis companies in the world, and I am talking about on a net profit margin basis. The combination of the transaction, plus the rapid growth in the international markets and continued operational excellence and efficiency gains in our platform have created a really attractive possible cannabis operator with continued runway for strong organic growth. Slide eight is just a quick summary of the brands. The top three brands you see, Pure Sunfarms, Super Toast, and Fraser Valley, are really the core of the portfolio in Canada's adult use market today. We are perennially a market share leader in dried flower. I think that is something that typically gets overlooked, just with the size of our portfolio. You are not successful if you are not producing quality product. The Pure Sunfarms brand, Super Toast brand, Fraser Valley brand, have all developed strong preference with consumers. We consistently are delivering strains in the mid to high 20s and even low 30s percent THC across the platform. I will also note the CBDistillery brand in the bottom left is our U.S. platform that is direct-to-e-commerce CBD business. There is a pending hemp ban that has been delayed in the U.S. We are waiting for some clarity there. That business has been looking at ways to participate in the new CMMI pilot, which Trump announced back in April. It has been a little slow to get off the ground, but there is still attractive long-term opportunity for that business depending on how the regulations ultimately fall. The brands on the bottom part of the slide are some of our more Quebec-leaning brands. But proud of the portfolio we have developed. We will move on to the next part of the presentation here with an aerial overview of the Delta production campus. As I mentioned, this is the world's largest EU GMP certified production facility. We initially converted the Delta 3 greenhouse to cannabis production back in 2018 after Canada legalized. The orange bubbles here are placed in the middle of each of these facilities, D1, D2, and D3. The first half of that D2 greenhouse has been in cannabis production for several years, but we are nearing the completion of the expansion of the second half to cannabis. So those two facilities, D2 and D3, will produce approximately 160 tons of dried, trimmed cannabis flower annually. I will note that does not include trim. That is, I think, an important differentiator for folks to understand. But I think the key on this slide is we are doing pretty substantial revenue, over CAD 200 million in trailing 12-month sales from the D3 and half of the D2 facility, with plenty of runway to continue to grow into the D1 greenhouse over time with increasing demand. We are contracted to grow produce for Verdexa Holdings in the D1 greenhouse. We have the option of converting that on a 25% conversion rate every year for the next four or five years if we elect to do so. So feel really good about the way we are positioned to continue to scale with increasing global demand. Slide 10 is just going to provide a quick overview of our rapidly expanding international business. I'll focus a little bit on Europe because Europe is It seems like Europe is several years behind the domino effect that occurred in the U.S. cannabis markets, which have been converting from medical to adult use over the course of the last eight years or so. Europe's kind of having that domino effect now, and we export from Canada to international medical markets. We have a leading market share in Germany's medical market. That's well over a CAD 1 billion medical market, continuing to grow really nicely. We think that market will continue to grow for the foreseeable future. We export to the U.K. We also export to Australia and New Zealand, and we've said that we expect to enter multiple new export markets later this year. The color-coding on this is really designed to just highlight which markets are kind of open and accessible in orange, and the blue ones are countries that are kind of in the early days of getting more attractive programs off the ground and running. A lot of these countries are places where we see great long-term opportunities. I'll just highlight the revenue trajectory, which our international sales now approaching CAD 100 million run rate, including the Netherlands business, which we'll get into in a little more detail here. This is a growing business that we see potential for continued strong organic growth for the foreseeable future. I also think we've talked on some of our recent public calls about the fact that our EU GMP certification is a competitive advantage that we think is going to enable us to be more insulated from price compression as these international markets continue to mature. There is scarcity of EU GMP-compliant product. Customers are interested and willing to pay a premium for the ease of doing business it creates in their supply chain. The German government has started to crack down on non-compliant aspects of the supply chain, which really positioned us well as a market leader. Our Netherlands business, we are one of 10 license holders in the adult use market over there. This is not a medical market, so we do not export to this market. We actually have assets and boots on the ground here. It's a highly attractive long-term market for us. Of course, everybody knows the culture in the Netherlands is synonymous with cannabis in Amsterdam. It's a highly attractive market from a pricing standpoint. Pricing per gram in coffee shops is in many cases north of EUR 10 compared to in Canada, it's one of the most competitive markets in the world. It's a small fraction of that pricing. We are incredibly proud of the phase II facility we've built, completed earlier this year, serves as our European headquarters. That facility will be ramping to full production through Q1 of next year, which will bring our maximum production capacity to about 10 tons. That'll help us really continue to drive strong revenue growth through next year, in addition to the Delta 2 expansion that we have nearing completion in Canada. I'll just note on slide 13 here some of the things that we are looking at and focused on executing from a growth standpoint and investment standpoint. The Canadian market, it's approaching a CAD 6 billion market today. It's growing mid-single digits. We expect to grow our Canadian business in line with that growth rate, and we'll continue to grow from increasing demand from our existing markets in Canada and our international markets, as well as expansion to new service, new customers, and new international markets, as I mentioned, as well as potential participation in the CBD pilot program. I talked about our growth investments in our phase II facility in the Netherlands and Delta 2 expansion. That Delta 2 expansion is adding about 40 metric tons over the course of the next, call it, six months or so. That's about a 33% increase in our Canadian production capacity compared to Fiscal Year 2025, with considerable runway to continue growing into that facility over time. We're also looking at expansion into new product and category introductions. Getting a little more indexed into vapes, manufactured products, convenience products is an important focus for us long term. We are also looking at strategic partnerships and M&A opportunities. We've recently announced that our long-time CFO, Steve Ruffini, who's been with us for 17 years, is transitioning to lead our M&A efforts. There is a pretty attractive opportunity set globally, we think, where there's opportunities for us to kind of hit singles to add incremental value to our portfolio and also opportunities in the United States., including in that opportunity set. Our Texas assets are kind of the very long-term play. We're on record saying we expect to be in Texas someday. We plan to be in Texas someday. That medical program is mired in some controversy right now on the issuance of new conditional licenses. We think it's going to take some time to play out, but we do expect to be there. There's also a number of other opportunities for us to get into the U.S. market, but we likely won't do anything until we have complete regulatory clarity with the U.S. market. Rescheduling of medical cannabis is kind of through the finish line here. The process to reschedule adult use is awaiting a final ALJ judge recommendation after concluding recent hearings to reschedule adult use. We're eagerly awaiting the outcome of that before we can make some decisions on activating our U.S. strategy. Regardless, the portfolio we've built, the execution we've built, our profitability, has positioned us as really a partner of choice and acquirer of choice in many cases. We will be extremely patient with respect to activating any of these opportunities with the focus on long-term value creation and strategic assets for how we see the future of regulated cannabis evolving over the course of the next several years, and frankly, decades. Slide 14, we've talked a little bit about our Texas footprint. We've got about 50 acres of advanced greenhouse assets that we still own in Texas after closing the produce transaction we completed last year. Those assets represent about a $400 million revenue opportunity for us if we were able to convert to cannabis someday. I'll also reiterate, our view has always been that we don't need to be a first mover to win in these markets. We've executed and proven our strategy and our operational capabilities with the Canadian assets. If and when we're able to scale into Texas, we'll be positioned for long-term success, especially if there's a future state where interstate commerce is allowed. We're on the record as saying that we do believe our Texas footprint would actually be lower cost of production than our Canadian footprint is today. Highly attractive long-term opportunity for us, and as I mentioned, our CBDistillery platform is direct to consumer CBD platform. There are a number of ways that business may be able to participate in future U.S. cannabis market, including that CMMI pilot I mentioned earlier. On slide 15, just a quick summary of key financial performance from Q2 and over the course of the trailing 12 months. Important to note that this trailing 12 months is really the four quarters since we closed the produce transaction in May of last year. So, phenomenal improvements in financial performance because of the catalysts we discussed with the produce transaction, increasing exposure to high margin international markets and continued operational efficiency gains. A couple other things I'll point out on the variances year-over-year in Q2. That's the quarter in which the produce transaction closed. We did have about a CAD 20 million gain on that sale in Q2 of last year, which drove the negative variance in net income for shareholders in Q2 of this year. On a trailing 12-month basis, still very strong profitability, EBITDA margins. As we've mentioned, we feel like we're sustainably profitable to continue to grow our cash balance in the future, which will provide us opportunities to make attractive growth investments. About CAD 73 million in cash on the balance sheet as of the end of Q2. It's a net cash position of about CAD 33 million. I'll note here, we've had these capacity expansion projects that we've been executing for the last year or so. Most of the CapEx on those is substantially complete at this point. We do expect to have much stronger free cash flow generation in the second half of this year. Through the first six months of this year, in addition to paying CAD 17 million in Canadian income taxes, CAD 31 million in excise taxes, and that CAD 15 million in CapEx on those development projects, along with CAD 7 million in share repurchases. We also completed a CAD 15 million equity placement with two U.S. institutional investors back in June. That's been highly publicized, though we think having stronger long-term institutional interest in our shareholder base is an important part of the equation for the industry. Proud to have some lead steer institutional investors behind us now. As I mentioned, we expect to grow our cash balance from positive cash flow from operations through year-end. Our insider ownership, about 10% of shares outstanding today. Also just note, as mentioned, after that recent equity placement with the U.S. institutional investors, we're about 25% institutionally held, which is actually well above average for our global cannabis competitive set. That pretty much takes us through the prepared remarks here. We've got some time for questions, so I'll open it up to questions if anyone would like to get into it. Okay, so first question. What is driving continued growth in international medical cannabis exports? I think it is regulatory change in many cases. It is access to these markets because of the way the EU rules work on import and export of medical cannabis and sort of the domino effect that we talked about earlier. Just looking through the question set here. What do you think investors most misunderstand about Village Farms today? I think people do not understand just the scale with which we operate and the fact that we have considerable runway to continue to grow into our asset portfolio. I think that is a key differentiator. I think there was a time when a lot of people were looking at this industry several years ago. There has been a lot of capital burned and people who have made poor investments. We are certainly not in that camp. We have a platform that is built to last, and hopefully as people come back to look at the space more, I think we are one that stands out as really a long-term winner. Next question. First report on the Netherlands experiment came out from the government. Repeated talks about potential overproduction from growers. Yes, just ups capacity to 10 tons. What are your thoughts? We are still growing everything we sell from our phase one facility, and as I mentioned, that phase two facility will be coming online. Not seeing any concerns on our ability to move our product today. I think our track record of executing and being in this industry for a long time is going to help us in this market. We are positioned with, we think, some of the highest quality product in the experiment with that facility we built over there. That is where we want to be in that market, kind of the premium end of the value chain. We are absolutely optimistic that this program is going to be expanded long term. If that does wind up happening when the pilot program is over, it will be about a 10x increase in the addressable market and be a really attractive home run for us. Next question is about D3 to cannabis. Do we require any other electrical upgrades when we are ready to convert D1? That will depend on how we look at what. I think there is a lot of optionality in how we could activate D1. It would certainly require some incremental investments in bringing in some incremental power and lighting. If in the future state, if we were interested in just having product for extraction in that facility, that is something we could look at cost-effectively with some of our genetics. I will just note that the conversion from the second half of that D2 facility, that is about a 12.5 acre expansion, and it cost about CAD 10 million for us to activate that. We are well able to fund that from cash flow from operations. So feel like those growth investments, if the demand is there, it is pretty easy for us to make those decisions. A couple other question here. How sustainable are the recent improvements in cannabis gross margin? We have consistently, for the last several quarters, been doing gross margins well above what we have historically talked about as our target range. For us, like a long-term target range where we need to be successful in our business, we've said it's sort of a 30%-40% gross margin. We've been well above that. That's driven by the more higher margin international markets and the growth over there, which we think will continue to grow. We've talked about the EU GMP capacity in our mind, helping insulate us from some price compression over there. Long term, we certainly expect these markets to mature. How quickly that will happen is hard to say. Regardless, with our cost leadership, we do feel like we're built to last and built to win and be successful sort of regardless of the timing of these events. We don't give formal financial guidance. It's something that we've discussed doing, but we really kind of wanted to wait to have our capacity expansions in Delta, in the Netherlands online and fully ramped before we revisit that. That's something we may look to do in the future. I'll just refresh here. Looks like we've got a couple more minutes. You still on track to announce four international markets this year? It's certainly the hope. We've said we expect to announce multiple new international markets this year. That is the plan. We've talked about the four. We haven't said which four we think we'll be into, but those four we do expect to enter. Looking forward to having that news out. Our process is to only announce once we have a first shipment to a market. We've got to deal with kind of getting onboarded with our permitting process and testing requirements to do those things, but still expect to enter multiple markets this year. Just some questions on pricing. The increase in demand for international flower has created some new dynamics in the Canadian market. I think the pricing is sort of stabilized in the adult use market from our standpoint. But there is a little more inventory available through the wholesale channel. I think there may have been a lot more operators who thought they were going to be able to get product into Europe who've had trouble with that, and so wholesale pricing has come down. We do break out our sales by channel and our results, and wholesale has been a lesser part of the business for the last little bit. But it's still an important market. There's still opportunities for us to be profitable in that channel. We're looking forward to having the incremental capacity coming online from D2 to help us drive growth both in Canada and in these international markets. I think that I'll just refresh one more time, and I think that will take us through the questions today. So appreciate you all attending. We will be available for one-on-one meetings with the iAccess platform tomorrow. So please reach out to them if you'd like to spend some more time one-on-one. Thanks for listening to the story. We'll look forward to talking to many of you tomorrow.