Q3 2022 Village Farms International Inc Earnings Call
Okay.
Good morning, ladies and gentlemen, welcome to village farms International's third quarter 2022 financial results Conference call.
This morning village farms issued a news release reporting its financial results for the third quarter ended September 32022.
That news release, along with the company's financial statements are available on the company's website at village farms Dot com under the investors heading.
Please note that today's call is being broadcast live over the Internet and will be archived for replay both by telephone and via the Internet beginning approximately one hour following completion of the call.
Details on how to access replays are available in today's news release.
Before we begin.
Let me remind you that forward looking statements may be made today.
<unk> or after the formal part of this conference call.
Certain material assumptions were applied in providing these statements many of which are beyond our control. These.
These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward looking statements.
A summary of these underlying assumptions risks and uncertainties is contained in the company's various securities files with the SEC and Canadian regulatory including its Form 10-K MD&A for the year ended December 31, 2021, and Form 10-Q MD&A.
For the quarter ended September 32022, which are available on Edgar.
These forward looking statements are made as of today's date and except as required by applicable Securities law, we undertake no obligation to publicly update or revise any such statements.
I would now like to turn the call over to Michael <unk>.
Chief Executive Officer of village Farms International. Please go ahead Sir.
Thanks, Michele good morning, and thank you for joining us with today's call with me.
Today is village Farms', Chief Financial Officer, Steve Ruffini.
I'll, let Sean as head of Canadian cannabis Mandy Soc Gen village farms executive Vice President of corporate Fas and Galen with fever.
As usual.
We will go through the same format that we have previously Steve and I will review the operating highlights and financial results for the quarter, then we will be available for questions.
So with that the headlines go out third quarter results are very strong growth in Canadian cannabis retail branded sales faster than the underlying industry growth, which resulted in market share gains a small loss in our fresh produce business, although macro macro challenges remain and continued.
Solid performance in our U S cannabis business despite.
And consumer spending.
So expanding on the Canadian cannabis business as I discussed in our last call in the second half of last year with the benefit of several years of retail experience behind us.
And our team's unique ability to discern consumer trends and market segmentation, we refined our strategy.
We also made the decision to invest strategically with the goal to drive both sales and market share growth in 2022.
The third quarter was clear evidence of the success of this strategy both in terms of sales growth and market share gains, particularly in retail branded sales that is branded sales to provincial distributors grew 46% year over year and 26% sequentially.
Sure.
And for the first time in October village farms became the top selling cannabis producer in Canada across all product categories, not just dried flower.
In fact October marked our fourth consecutive month of market share expansion.
I wanted to take a moment here to comment on our market share sources. The best sources of data in the Canadian market continues to evolve and as a management team. We have evolved the sources. We are now using high fly all provinces, except Quebec for which we use we call. This <unk>.
The data we use to run our business and therefore, we believe the right data to share.
Importantly.
Continues to be multiple contributors to our sales growth and market share gains.
The U S on farms brand expanded.
It is already number one market share.
In the dry flower category as Pink Kush and Jetblue July about continue their strong performance and.
And we will further complemented by the launch of <unk>.
A new strains research and protected by a commitment to continuous innovation.
Sandbox has been the best selling dried flower brand for six consecutive quarters now.
Rose Lifesciences and Quebec continued to steadily expand its market share with a number of product launches in the quarter.
Specifically target.
Consumers in October Rose became the number two licensed producer in Quebec, and we are very proud of this achievement less than one year since our majority acquisition.
And we ramped up the rollout of our new value oriented brand. The original appraised of Valley week company into two provinces, British Columbia, and Alberta with the value segment is crumbling.
In British Columbia, we have had a full quarter's worth of sales data and we're ready and we're already the top selling LP. The launch of Fraser Valley contributed to an increase in our market share from six 5% in Q2.
285% in Q3.
That number increased further to nine 4% for the month of October .
And I will note that we achieved this despite regulus sellouts in a province, where we already top.
Are the top selling LP.
In Alberta.
Second Province, we launched in later in the quarter Fraser Valley has returned us to market share growth.
Success is the result of about precisely defined brand strategy.
Value oriented brands with individual and unique strains that like all of our products is now 100% hanging dry.
We feel confident in our ability to maintain maintain growth without continued innovation and growth of the Fraser Valley brand.
In mid October we launched the first raised the valley Skus in Ontario, and we are seeing similar positive results. Although it's still early days, we're quite impressed that the team delivered a strong start to the Fraser Valley launch.
At the same time, continuing to support the rollout of promenade and other brands and while continuing to grow in market share about first brand pure some farms. This is a hallmark of great execution.
We have also continued to execute on the cost side of the Canadian business.
Gross margin remains within our stated target range and SG&A was down meaningfully compared to the second quarter of this year, both in absolute dollars and as a proportion of net sales as the bulk of our investment spend and multiple major brand launches this year.
Which is now driving market share gains as well as our major innovation that I will discuss later is behind US all of this contributed to our 16th consecutive quarter of positive adjusted EBITDA for our Canadian cannabis business. That's every quarter since Q4 of 2018 with adjusted EBITDA, which is 100% general.
<unk> buy cannabis sales only.
Increasing with each in the last few quarters, we have successfully enhanced profitability, while gaining market share.
This is yet another hallmark of great execution.
To summarize our Canadian cannabis business is growing sales increasing market share and adding new customers. All while we are lowering our costs benefited from the increased efficiencies of scaling up our cultivation operations and gaining even more experience every day.
This will further enhance profitability to invest for future growth.
Now turning to our U S cannabis business balance held tackles continues to perform well.
And more importantly, we remain profitable.
Restrained consumer spending.
Last quarter I discussed the broad slowdown in consumer purchasing that was being exaggerated by the lack of clarity of the CBD category its ability to access traditional retail selling channels.
We have been proactive here pursuing new sales opportunities and implementing a number of initiatives aimed and.
And customer attraction and retention as.
We are seeing some positive results.
During the quarter, we grew our subscription program by more than 5% to over 19000 active subscribers balance also recently launched its second product and its synergy plus line.
Sleep synergy plus which is positioned to help customers fall asleep and stay asleep using plant based ingredients.
Our continued success in Canada that makes me even more excited about and confident in our other international opportunities. We continue to make steady progress on our international strategy.
During the third quarter as we pursued emerging legal cannabis markets in which we are confident that we can win as discussed in our last call through a leather leather subsidiary lately Holland.
One of just 10 licenses to cultivate and distribute cannabis and is that supply chain program, which is expected to be the first major legal recreational market for Canada and Europe .
We look forward to directly participating in what is expected to be the first major European market should limit large scale cannabis cultivation and distributions for recreational purposes.
In other international markets. We are very pleased with the pace of sales in the Australian medical market and export from our Canadian cannabis business sales to ultimate to National all invested partner have accelerated meaningful. This year. In addition to starting shipments to a new customer during the quarter in fact Q3.
Sales to Australia has more than tripled over the past two quarters.
And we continue to prepare for our first export Israel, Germany Canadian cannabis business.
Admittedly preparation has taken longer than expected as we navigate the evolving testing protocols and delays for each country to approve.
These protocols, but we are ready to go otherwise in that market intelligence continues to support that our product as it is in Canada will be consumer preferred it's a bit of a horse race as to which market will ship to first.
So now turning to our fresh produce business, we continue to be impacted by a number of significant precious most notably input cost inflation.
Which with that is now more or less a demand supply balance has limited our ability to pass price to our customers. Specifically in Q3, we continued to be impacted by the brand what goes virus, which is affecting grow as an iOS globally. Although it is confined solely to our Canadian operations, we did see somebody.
Inflationary pressures abate in Q3, and this is apparent in the improved financial results compared to the.
First and the second quarter of this year that Steve will discuss in a moment.
We expect these pressures to persist into next year, we do not think we do think the worst is behind us, which means we expect year over year comps to improve in 2023.
Last quarter I discussed the startup been intensive operational review of the pressure fresh produce business. The exercise is progressing well and I'm encouraged by the classes to date. We are currently involved in a deep review of the two separate independent consultant reports and that they consult consulting work is already start.
To help us assess because customer profitability and other aspects of our operation.
With last night's election result, we expect to have greater clarity on the future of cannabis regulation on both the federal and Texas fronts as well as any.
The potential for regulatory process has joined the so called lame duck session and I look forward to reporting on those outcomes of a review at the appropriate times.
I'll now turn over the call to Steve Ruffini.
Steve.
Yeah.
Thanks, Mike Let me begin with a quick reminder, on the timing of our balanced health and rose lifetime acquisitions last year and their impact on our third quarter 2022 results.
The contributions of each are consolidated in our financial results for the third quarter and first nine months of 2022, However, as we acquired balance health Botanicals on August 16th of last year.
Our 2021 comparative results reflect approximately half a quarter's contribution from that business.
As our 7% ownership of <unk> was acquired in Q4 2021, there is no contribution for the comparative period.
In 2021.
Turning to the results consolidated sales for all village farms that includes our Canadian and U S canvas operation and our village Farms' fresh produce operations for the third quarter was $71 1 million a slight decrease of 2%.
From the third quarter of last year due to a weaker Canadian dollar in 2022 versus 2021.
On a constant currency basis, our year on year sales were flat.
Higher sales from the Canadian canvas as well as the incremental contribution from a full quarter's result of balanced out.
All set by lower sales from fresh produce.
Consolidated net loss for the quarter was $8 7 million or <unk> 10 per share compared to net income of 700000 or one cent per share for the same period last year.
Net loss was driven predominantly in the fresh produce business that Mike discussed earlier.
Consolidated adjusted EBITDA for the third quarter of 2022 was negative $2 2 million.
Compared with positive adjusted EBITDA of $6 9 million in Q3 last year.
The EBITDA loss in Q3. This year was driven almost entirely by fresh produce corporate costs were $2 8 million compared with $3 5 million for the third quarter of last year.
Decreased due primarily to lower SG&A.
Looking at our individual business segments, starting with cannabis net sales from our combined Canadian and U S. Cannabis operations grew 14% year over year to $35 6 million from 31.2 million with the increase being driven by the growth in our Canadian cannabis business primarily.
Driven by the addition of Roes brands in Quebec.
And the increase in pure some promise brands.
With the contribution from a full quarter of balance health.
Total cannabis sales comprised 50% of village farms total consolidated sales.
In this quarter up from 43% in Q3 last year.
Total cannabis adjusted EBITDA was $5 4 million compared with $9 4 million for the third quarter of last year with the decrease due substantially.
Due to the lower margin on our Canadian non branded sales due to price compression in the wholesale market and incremental SG&A spend in 2022 versus 2021 due to investment in brand launches and innovation.
The addition of Roes as well as higher percentage of SG&A spend in our U S canvas business.
Within candidate our Canadian operations delivered another solid quarter.
A review of our Canadian canvas results in Canadian dollars, which provides a more accurate gauge of our period to period performance in the face of exchange rate fluctuations.
As well as providing the ability to more accurately compare.
To the local Canadian market growth rates on that subject I will I note that the reported results of our Canadian subsidiaries had been impacted by the strengthening U S dollar versus the Canadian dollar in 2022 as compared to 2021.
Which negatively impacts the results of the Canadian cannabis segment when translated to U S currency.
On a constant currency basis, our Canadian cannabis Q3 sales in U S dollars would have been three 4% higher.
Our Canadian cannabis operations once again saw healthy year over year growth with net sales for Q3 of this year, increasing 15% to the same period last year to $39 8 million Canadian another new quarterly record.
Canadian cannabis net sales were comprised of 82% retail branded sales, 16% non branded sales and 2% distribution fees and commissions.
Previously noted non branded sales.
May vary widely from quarter to quarter. Both Q2 of this year in Q3 of last year, we're stronger quarters for non branded sales Q3 was a weaker quarter for non branded sales in dollar terms.
Non branded sales are demonstrating more downward price sensitivity correlated to the general retail market pricing trends for this segment customers.
And we sold less.
<unk> bulk high quality flower in Q3 than in Q2, and more agent out of spec bar, which has a much lower price.
Branded sales category also includes their export sales to Australia.
Retail branded sales for Q3 increased 46% year over year, and 26% sequentially, continuing our expected trend of quarter on quarter improvement through 2022, which we are forecasting to continue growing in Q4.
Gross margin for Canadian candidates for Q3 was again comfortably within our stated target of 30% to 40% at 32%, which was down slightly from 33% in Q2.
Our gross margin continues to benefit from gains and cultivation of efficiency and operational improvement, which was offset somewhat by pricing pressure in the non branded market are pure some farms in rows branded gross margins remain above the range in both.
Both in the quarter and year to date.
With our increasing market share driven by new brands strains as well as our expansion in Quebec is resulting in achieving branded sales demand volumes that are essentially fully utilizing our expanded supply capacity in the D. Two facility.
We will monitor our expected demand.
And other market dynamics within Canada and in the export market before we add incremental capacity by expanding into the remaining 600000 square feet in detail for which much of the hard costs have been incurred or.
Our inventory levels built up over the course of 2022 but as a result of our ever increasing market share. We are now in the process of using this inventory for our winter demand and.
We look to bring our inventory working capital down in Q4 and into Q1 of 'twenty 'twenty, three which is likely to impact the availability of biomass.
For our Canadian wholesale customers in 2023.
Selling general and administrative expenses for our Canadian cannabis operations for the third quarter were $10 5 million or 26% of net sales compared with $6 9 million or 20% of net sales in the same period last year.
The increase in absolute dollars was a result of the addition of the Roes operations in this year's quarter, which accounted for approximately 60% of the year over year increase as well.
Growth related.
Spend ensures that Pearson farms, notably SG&A for Q3, this year was down meaningfully from Q2.
This year in absolute dollars and for the second consecutive quarter decrease as a percentage of net sales to 26% down from 30% in Q2 and 32% in Q1.
We remain on track to bring SG&A.
The proportion of sales back into the lower.
20% range for the fourth quarter and into 2023.
Our Canadian cannabis operations delivered their 16th consecutive quarter of positive.
Adjusted EBITDA of $6 7 million compared with $11 1 million for Q3 of last year with adjusted EBITDA, having increased sequentially in each of the last two quarters.
I will now turn to our U S cannabis operation and in doing so revert to U S dollars.
U S Canada sales for the third quarter.
Generated entirely by balance helped botanicals.
$5 1 million, which generated a gross margin.
Of 68% adjust.
Adjusted EBITDA was essentially flat at $10000, but did include one off cash expenditures that will enhance future period EBITDA.
This compares with that with a half quarters contribution in Q3 last year of $3 9 million with a gross margin also a 6% to 8%.
And adjusted EBITDA of 700000.
Turning now to the fresh produce Q3's financial performance was impacted by not only the inflationary pressure on input costs, especially freight but also by the production challenges due to the brown well gross virus that has impacted tomato growers globally, which creates incremental cost, but more importantly has a significant impact on the production volume.
And as you may recall in prior presentations like most agriculturally based businesses a substantial portion of our costs are fixed so our volumes are down there is less revenue to cover those costs.
Sales were $35 5 million compared to 41 million for Q3 last year with the decrease due primarily due to lower tomato volumes and selling prices at both are.
At both our own greenhouses as well as those with our for our growing partners volumes were impacted.
Both by the Brown rugose virus at.
At our Delta greenhouse.
Greenhouse as well as the delay in the 2022 'twenty three crop cycle in Texas due to an operational change in our U S. H two a work program.
On the cost side freight spend in Q3 was approximately $1 $2 million higher compared to the same period last year due almost entirely to the increased cost of diesel and trucking rates on lower year on year volumes for the reasons stated effectively increasing our freight per pound cost by 30% over Q3 and 2000.
'twenty one.
<unk> virus had a significant impact on yields and thus revenues.
This resulted in a negative gross margin for fresh produce.
$3 3 million compared with positive gross margin of $2 1 million in Q3 last year.
But it wasn't meaningful improvement from the negative $8 9 million in Q2 of this year the negative gross margin drove negative adjusted EBITDA for fresh produce.
$4 6 million compared with positive of $1 3 million in Q3 of last year.
The negative $4 6 million in Q3. This year was also a significant improvement over the negative $10 4 million in Q2 of this year.
Turning now to cash flows and the balance sheet at September 30, we had approximately $22 million in cash.
We had approximately $45 2 million and working capital excluding cash during the quarter, we had operating cash outflows of $6 8 million net of working capital adjustments.
In August we announced an at the market offering of up to $50 million, which we believe given the continued state of the broader capital markets and more specifically with <unk>.
With respect to the cannabis sector is inefficient and collectible means by which to assess.
Assess additional capital should we choose to do so, especially in light of our fresh produce challenges and growth opportunities in cannabis.
During the third quarter, we generated proceeds of 800000 from the issuance of 292000 shares at an average price of $2.84.
In October we generated gross proceeds of $3 $9 million from the issuance of 1.862 million shares at an average price of $2 11.
Now I turn the call back to Mike.
Thanks, Steve before opening the call to questions I want to take the opportunity to touch on a couple of popular Canadian market discussion points that center around the theme that it is a difficult market for lp's investors and lenders.
One theme.
The decelerating total sales growth price compression is real although there are signs that may be stabilizing however from a volume perspective, the market continues to grow at twice the rate of 40% year to date.
We are well aware of the bear case on the Canadian market oversupply that has led to price compression.
Slowing growth.
We agree but you also see many reasons to remain committed to the Canadian market first the market is growing led largely by volume, which is growing at twice the rate of dollar sales price compression is help convert legacy consumers to the legal market, which is continuing.
Users are also attracted by the growth in the category options.
Second capacity is coming out of the Canadian market, while painful for operators and investors this will improve category dynamics.
Third with the right strategy, one can be profitable and drive strong growth as we have demonstrated for 16 straight quarters.
This ties directly to our global cannabis strategy, which is driven by three centers of excellence in 2018.
Since 2008, it cultivation ex execution at a cost advantage that yields consistent high quality product consumer led insights to build brands and innovation and strong commercial partnerships with our customers. So.
So why others abandon discontinued Canadian growth, we continue to take every opportunity to expand our leadership position in a market that is still forecasted to double from current levels to $8 billion.
In this consumer product industry.
Which is why this week, we are proud to have made two major announcements that we sold from our investments first we are the first licensed producer to a drop hang dry processes at scale.
Hang drying minute Minimises direct planning of the flower to preserve natural bud structure around this while delivering on our high therapy potential I am pleased to say these products are now broadly in the market.
<unk> met in years in the making with the combined contribution of engineer Sciences, cultivators and dollars invested across our entire organization second this morning, we announced the launch of a third DC grown brand sure sure complements and further expands our Canadian portfolio with a brand that is designed.
To deliver an elevated cannabis experience via limited quantity batches of select cultivars chosen for their exotic and unique genetics that our hand harvested and detail and of course hanging dry products will be available on our prior to starting this week, and then, Ontario, BC and weeks to come.
With that we'll now turn the call over to questions.
Operator.
Thank you Lee.
Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
You will hear a three pronged acknowledging your request and your questions will be pulled in the order they are received.
If you wish to decline from the polling process. Please press the star followed by the two.
We are using a speaker phone please lift the handset before pressing any keys.
One moment. Please for your first question.
The first question comes from Tami Chen.
PMO capital markets. Please go ahead.
Thanks, Good morning, I wanted to start off with the flower category actually.
They have a follow up actually Mike to your closing comments there.
First I think a couple of quarters ago, you mentioned that there were a couple of slower moving skus in your flower portfolio. I was wondering if there was still some of that or you've kind of cleared through all of that and the second part is noticing from the high fire data recently that the 28 Grand Lodge.
<unk> Pak has really continued to grow for the industry, whereas the smaller pack sizes are really declining.
There's no concern that.
A signal of the category is just getting more and more focused on value and being commoditized. So just wanted to understand how what how you're viewing the flower category evolution at this point.
Yes, Tammy, Okay, I'm going to let <unk> take that question go ahead Manley.
Yeah, absolutely good question, Jamie So first on the on the SKU assortment I mean, we're always constantly evaluating them.
The categorization of our performance of our Skus kind of Triple a double a single a.
And so on and so forth very common and category management, we feel strong in our approach and our philosophy. There. So at this time, we don't really feel there is any kind of backup of any slow moving skus in our portfolio are sitting up the boards the <unk>.
The team has been doing an incredible job of making sure. We're cycling out kind of ramping down and I would have any skus that we might think are no longer kind of achieving the success. We want as we bring in innovation behind us on the flower side and I think you've seen that a lot with some of our different launches over the last quarter, we've been very active on innovation with new.
Flower skus milled offerings as well as approvals on the flower side.
Cycling that in and through so feel very confident that our our exposure risk there is minimal and we're doing a great job of executing.
On the format sizes, you're absolutely right.
We see the consumer preference between small and large format deviating people want to really get value.
We really nailed that with the launch of our Fraser Valley, We'd co, which is specifically and only in large format 28 grams, a very specific offering to drive efficiency at the SKU level.
We still like the three and a half gram format as well as the one for your son farms and then now with the launch of sore cannabis, which is gonna be seven Gram exclusive which we find is over index in the premium sector.
So we like how we're positioned across the different format sizes. Tammy. We think the team has done an incredible job with category management and nailing down assortment. So we're as efficient as possible on our on our SKU number of SKU count side.
And.
Large format is where we were we live in and can really dominate given our size of cultivation.
Our cost advantages in our in our brand awareness. So we're going to still be in both sides, a three and a half in 28. It really allows the consumer to trial.
And passed a new SKU, especially on the innovation side as a much lower price point. So we continue to observe the market trends and will act and react accordingly, but we still see a real healthy mix and we're positioned to kind of pivot.
Pivot as needed.
Got it Okay and my follow up is.
Wanted to get an update on how you're thinking about the rest of your.
Delta two expansion you sort of touched on it it sounded like you were saying.
Current demand you see it is fully utilizing the.
Online production capacity you currently have so I presume that means no change in your plan you are going to continue to.
Bring online the rest of that facility.
Well I can answer that Jimmy I mean, when we bought.
Physician a year.
About a year 18 months, we got it expanded the delta two and half a bit although as Steve has mentioned most of the costs have been spent to complete the other half of delta to.
We base that on the belief that we would continue our market share.
Then of course with the acquisition of Roes in Quebec, and their performance and supporting them as well on top of their production facility in Quebec, and the anticipation of our sales ramping up internationally, which they have so in Australia, now hopefully momentarily to Germany and Israel.
We felt it was prudent to get ahead of it with the expansion of the Delta two we're just about at full capacity now so as Steve mentioned.
Gonna look at that very carefully and then make a decision we haven't made it yet to move forward and completing the other half based on the confidence level. We have for continued market share penetration in international exports.
Got it okay. Thank you.
Thanks.
Thank you.
Our next question comes from Aaron Grey.
Alliance Global partners. Please go ahead.
Hi, good morning, and thank you for the questions and I see the.
Also on the retail side there.
So first thing what I touched on is the SG&A it down meaningfully it seems like you said the bulk of it on investment spend and brand as well as some innovation being behind you I just wanted to know in terms of it seems like that was an active effort on your side. So azure now kind of rolling out you know sore and then you're still going to have a fresher valley. You know now just being launched into Ontario, How do you think.
About the timing of kind of that SG&A, how much of it do you have to put before the brand and then have you know kind of as maintenance as you continue to have the branch selling through so that you're comfortable on your ability to you know maintain the share even continue those share gains despite the SG&A pullback. Thank you.
Yeah, and I think we're very comfortable with that I mean, we communicated last year that we were going to have increases in SG&A. It takes a lot to launch.
Three brands with promenade.
And the support to Quebec.
There are other brands and of course, the two brands, we just launched and plus the investment in hanging dry at scale, where 100%. There now so that you know that's a huge spend but we play in that spend we knew we'd have to up it and now.
Now, it's about like pure some farms maintaining more so.
That's what we demonstrated the SG&A coming down now and continuing to come down to a level that it wasn't a pass it mixes it's acceptable at that percentage should continue.
Maintaining our growth in the Canadian market. So we feel very confident that that will be at a.
Good level supporting what we need to do in Canada.
Fantastic that's great to hear.
And then second for me now you've had some time to in terms of these new brand Rollouts.
Kind of looking back you know with Frazier Fraser Valley.
And how you think about cannibalization was it as you had expected relative to pure some farms pumps still the number one brand so making that ended up surprising you'd know that it's been out for a couple more months and then how do you think about that cannibalization going forward with sort of being rolled out as well. Thank you.
It really didn't surprise us at all but I'm going to let Matt you just put some more color on that.
Mandy.
Yeah. Thanks, Mike.
Great question. So just to reiterate we've now seen a full quarter of freezer valley in British Columbia.
Launched in a little bit later than in the last quarter in Alberta, and we're seeing some one month of October and I know, we don't give forward looking statements, but we got really good healthy dataset.
And Mike's absolutely right there was nothing overly surprising if anything what we saw was that it's not cannibalizing at all I mean, we grew market share on the pure Sun firms brand and both of those provinces, British Columbia, and Alberta After relaunch Fridge Valley we'd go.
We also launched additional strains in person firms at that time, and there was no adverse impact when we came on the call a quarter ago. We talked to you guys. All about when we were launching Fraser valley that we really saw consumer segmentation.
Deviating into the value segment, we really saw kind of an area that we were only exposed to through our non branded wholesale sales and we knew it was the right time to go in with a new brand really attack that consumer and we were really confident that our data is showing us that the.
The person from consumers not really playing in that space. So we don't have a lot of risk and that was validated as we went to market and are seeing early results. So.
We're growing share in some of our best streams and for some firms are doing better than ever and I think that's through a commitment of our commercial sales team and the efforts that we're seeing the relationships. We're building with the boards the presence of all of our brands and just the strong supply chain.
Credibility that we have with the board and the customers in stores all the way through so we're we're.
We're pleased we're going to continue to drive that home and we think that trend will continue through Ontario as well.
Okay, Great really helpful color, then I'm going to jump back to the queue.
Thanks Darren.
Okay.
Thank you. The next question comes from Frederico <unk> of <unk> capital markets. Please go ahead.
Yes. Thank you good morning, guys. Thanks for taking my questions first.
First question is on pre rolls, it's obviously a category that's growing and you are leaders in flower, but you are you know are under indexing through roles right. Now so could you comment on how you view that segment and what sort of efforts are you, making seems to increase your market share there potentially thank you.
Mainly wanted to take that.
Yes, great.
Great question and absolutely on the peripheral side I think it's one of the going to be one of the most.
Important categories for the industry as consumers have adopted whole flower.
<unk> really seen kind of the strains in the formats that they appreciate and then getting a more convenient offering and payroll.
And again, you know our strategy was always about devising a plan and approach on a winning where we can and winning over the consumer with great quality, great great cost and great brands and now that we've done that we want to make sure. We're equally indexed on the pre roll side of the business and it's always been our plan and strategy so multiple brands.
Knowing the assortment and.
And expanding our payroll offering and making sure we're being as efficient as possible with our skus. So anything Federico what youll see over the coming quarters as we continue our brand approach expansion in other provinces and go through the board listing process is an expansion of pre rolls, so increasing capability internally.
As has been the focus over the last several months multiple.
Multiple shifts increasing the capacity by about within the amount of approvals we can.
Produce as well as some additional co manufacturing.
Brought online and continue to look for in the industry and more is becoming available. So we're really.
Hi on that category on the payroll side, we think we're well positioned with our flower dominance the resonance of our brands and strange in market and we're excited by that and I think you'll start to see that in the coming quarters our increased growth.
That category.
Okay, yes, thanks for that.
And then my second question is on the wholesale side, obviously, you had a good increase in branded sales and and we're seeing that but could you provide maybe some color on how you see the wholesale market right now both in terms of demand and pricing. Thank you.
Ma'am. Please go ahead and answer that.
Absolutely Thanks, Mike.
So I think Steve alluded to it on the on the wholesale side.
Our our strategy first of all I'll talk about and something we've talked about on this call in past quarters has always been taken.
<unk> taken our destiny in our own hands, increasing and improving our market share through great brands and great products and I think you've started to see us do that in years past being kind of whether it's 50 or 60% index into our branded sales and now seeing a steadily increase that.
Part of that is making sure we're getting more market share driving more margin accretive sales and the trend in the wholesale space has been as a result of price compression.
Wholesale customers wanting and needing a lower price, which obviously erodes margin and so we're not immune to that on the wholesale side seeing a lot less pricing activity on that on the flower side still seeing great opportunity to take advantage of spot demand.
Where we can fill it and really on the extract side and some of the aged side for extraction purposes or wholesale.
Customers, who are looking to make concentrates where we're still seeing that a fairly active market. Our trim sales are strong.
Wherever we don't need the biomass, but absolutely Puerto Rico. The you know the wholesale the wholesale side of the business.
On the domestic side is extremely competitive and very very price conscious and very spotty and so as a result of going into multiple brands now we really you know.
Decrease our reliance on that side, and Steve and Mike and both the remarks commented on the you know expansion in approach on the international side, So really picking up good margins on the international side and making that more of our.
Wholesale side of the business and not really having to rely on flower sales in the non branded space.
Yeah.
I appreciate the color thanks, I'll hop back in queue.
Thank you. Thank you.
The next question comes from Eric Laurie.
Craig Hallum Capital Group. Please go ahead.
Great. Thank you for taking my questions and congrats on the nice cost management this quarter.
On the pure Sun farm side.
Consistent growth there, especially in market share is really.
It really been impressive.
Obviously these new brands are performing well you got some more.
On the sort of pipeline there that hanging dry coming in I mean, it certainly looks like.
Sort of Blue Sky, I mean, more share gains to come especially over sort of beyond the next year or so maybe just kind of taking some of these questions and flipping them on their head a bit what are some of the biggest challenges or headwinds that you see to continued share gains or maybe your longer term share goals in Canada. Thank you.
Well I think Theres twofold, one the industry wise I think what we're doing at pure sell farms were sort of executing as we mentioned are across the board and.
We remain steadfast on our execution and penetration innovation, we've really kicked it up as we've mentioned.
And that trend is going to continue long term.
We've always said, it's a continuous improvement process on the cost side, you just get better as you go but Luis mentioned our culture.
Cultivation is a ramp up business from the first time you convert the greenhouse you get better every year every crop.
And all of those things will start showing up in small increments, but cumulatively it'll have a huge impact going forward with the addition of Roes.
That's been a great I mean that company now less than a year and number two it's going strong.
We're now in the maritime provinces, so pretty much everywhere in Canada, and it's all tied to just execution consistently hitting singles going forward on the macro level I think the industry.
It's just we're starting to see companies.
Desperate for consolidation or.
Not making it and I think as we mentioned in the script portion.
And I said this at the <unk> conference in March that I think it's going to be some scorched earth. Unfortunately for many others going down the road.
Companies are looking at consolidation, that's really not in our wheelhouse right now in Canada.
We don't see any unnecessarily accretive opportunities so as that market starts to dwindle and consolidate I think it can only help us going forward, it's still a large market potential as you mentioned going to $8 million. So.
Let's just keep doing what we're doing.
We will spend the extra money.
Wanted to drive key innovations, but that's been proven now with this larger three brands and this year alone. So now it's a little hunkered down maintaining it and going for strong positive cash flows in the future.
On the.
Mainly if you want to add some color.
Canadian cannabis level on the operating side.
Absolutely Mike I think you did a really good job of framing it up it's sticking to our knitting, we've done a lot of expansion on the brands and in the markets and Eric I think it's just you know we got we got to keep executing I think we've spent a lot of time building out our processes our teams our commercial strategy our category.
Our product innovation and.
We're too early dialed in and just staying focused on that and I think we're I feel really confident in our ability to do that.
Mike commented you know now fourth street periods of sustained market share growth and you know people will come every what are you seeing that in the industry. So it's.
You're growing everybody is gonna be attacking and you've got to figure out. The next steps. So it's this constant song and dance and evolution of <unk>.
I've executing innovating and kind of just.
Keeping focus on what you have in front of you so.
The market doesn't make it any interesting with all the different dynamics going on so that's why you know having an agile resilient team is really important and we feel like we're well positioned to.
To weather the ups and downs that will happen over the next 12 to 18 months.
Yeah, and the other thing Eric it's on the international.
National side, I mean, Australia has gone very well for us it's very frustrating when you are in the cannabis industry. It's a highly regulated industry and you're starting to do business internationally, there's always delays and we're very frustrated with the processes Israel change just the way.
There is there are regulations midstream early in the year, we had a we adapt to that and you lose time.
So we have to be patient, but where we've done very well in Canada. I think we can leverage that up internationally, we're seeing that trend in Australia, and I think we're going to see it and we're going to be a very strong strong competitor both in Israel in Germany, and that's eminent so that's just another.
Positive or pure some farms on the export side going forward.
I appreciate the color and I'm looking forward to continued execution. There last one from me just switching to the U S side of things.
So BHP you guys did a bit better than expected there.
Can you just remind us of some of the I guess key sales and marketing blocking and tackling initiatives you got over the next year or so.
What's your line of sight into potential growth from these sort of Q3 levels going forward is this something where you see you know a meaningful share opportunities or is this you know a bit of a just kind of hunker down and preserve profitability amid this you know tougher macro.
Environment. Thank you.
Thanks for the question, Eric we see the CBD businesses is in maintenance mode. We have launched the synergy plus skus, which are our best selling skus.
From a historical perspective.
They are full spectrum skus. So we're excited about that.
That being said CBD continues to be in jail, we have seen a drop off in consumer purchases of higher price point.
Items.
Going from for instance, tinctures too.
Gummies.
<unk>.
So that's something that we're continuing.
Continuing keep in step with but essentially we see sales for 2023 as being flat.
Until we get better visibility on the farm Bill obviously the farm Bill.
Well, we'll come up it has to.
So with respect to that we will see where congress is or how they try to force the hand of the FDA hopefully to get <unk>.
D and all the other cannabinoid out of the as I call. It the FDA jail.
We're all reside.
At this stage.
We would like to have.
Bigger impact of our sales almost all of our sales are on E. Commerce, we've done very well at that level, but obviously, we would like to get our products into.
Retail.
But.
Most retailers are not touching our our skus at this time.
Essentially they're they're they're digestible.
But at any rate, we continue to do what we can say.
Same thing we're doing I'm curious on farms looking at our cost our internal I would've probably gone enterprise gummies I'm doing it ourselves.
And picked up some some margin there and do what we can while we wait.
Wait to see what happens in 2023 with CBD.
I appreciate the color thanks, Steve.
Thank you. The next question comes from Scott Fortune of Roth.
<unk> capital partners. Please go ahead.
Yes, good morning couple of follow ups.
Real quick maybe in Med D. C. You know he's doing a great job, adding innovation getting new genetics and strained to the market, adding making trade technology and broadening your flower categories, you mentioned, a little bit on pre roll, but how should we look at that kind of a 2.0 product opportunities or specific categories.
Continues to kind of come off the focus that just kind of your thoughts for future for some firms moving into the different product categories there to.
We gained market share just kind of a longer term picture as you got to point out here.
Yep It Chad Thanks for the question Scott.
You're absolutely right. We've commented on two point O b.
Being important to us and we've not to be sound like.
A broken record, we really devised a plan to approach that was all about you know starting slow winning where we can and expanding it and that started with a flower for strategy, but we've always remained committed to.
The higher performing categories and in this case based upon the 2.0 side.
I think as we are one of our first priorities and lots of little bit has been ensuring we built out a broader a broader brand platform and really understood consumer segmentation and ensured we are managing SKU rationalization assortment and profitability as we did that expansion with the consumer in mind and so.
So on the Vape side, you know, we really have an opportunity to continue to focus on that and we've done a few launches with more of a product in the purion firms brand and we'll continue to innovate and be looking at different ways to expand that offering either through various different hardware through different formulations and now having multi.
People brands and the ability to kind of think about that consumer segmentation and rolling out more.
More specific products in the 2.0 side and I think one thing you know about US is we never try and we try and not let too much out of the trough.
So let the cat out of the bag too early.
But you'll you'll continue to see some really interesting things from us.
In the two pointed out space in the coming months and quarters, and really seeing us pick up share there, but yeah, two point of important specifically beeps infuse pre rolls.
Really really important segments to us because we think those will be part of the future and we want to win in those segments.
I appreciate that color and then real quick just kind of getting back he did a great job on the branded retail growth there congrats.
But just wanted to get a sense for the long term strategy on the wholesale wholesale opportunity.
It seems there's still a lot of capacity out there you know Mike mentioned, we're starting to see consolidation or more elimination right. We needed elimination of the oversupply. We are seeing pressure on a lot of these growers, but how are you seeing incoming calls starting to to look at as potential for a longer supply long term supply agreements.
This whole thing how are you looking at the kinds of wholesale.
As we look out kind of longer term here from that standpoint.
They might take that or you want me to jump out.
Yes, that's a great observation and the answer is yes.
But I think.
Just you know honestly a lot of companies are.
Retracting their position on cultivation both.
Hitting quality innovation at the right price so the phone keeps ringing off the hook, but as you can see.
With the success on a percentage of sales to retail.
That wholesale volume has shrunk incidentally, we didn't.
The international sales that are gearing up will add too.
We don't put that in our retail numbers, but it's going to layer over it so that percentage is.
Is very is decreasing in terms of the capacity available.
We do get those calls every day from more and more.
Companies that are looking to downscale or shut down operations, but want to continue sort of.
I have some branded company in some area, but they need they need quality product. So.
It's an interesting dynamic that's happening.
Great. Thanks for the color.
You bet.
Thank you. The next question comes from Doug Cooper Beacon Securities. Please go ahead.
Hi, Good morning, guys and nice momentum in the Canadian business as discussed.
Just quickly because I'm sure we're running out of time, but year over year Canadian growth revenue in Canada was up 15%.
That include Rose can you give us an idea of how much volume was up year over year.
Yeah.
Right.
Hum.
I mean, I mean I think.
Kilogram basis.
Whatever places you want to talk volume.
Well boy that's.
That's why I asked for.
For a quick clarity on the.
Two questions milligram kilograms.
I have the volume for now.
Non branded but I don't have the kilograms for Brandon So I can't I don't have enough information to answer that question right now Doug I can get back to you.
Okay, I'm, assuming that's outpaces revenue, though right.
So.
Just on Australia is that included in the $39 8 million revenue number.
I I misspoke, it's been that we included in our non branded.
That being said.
Some other territories, we are in discussions to launch.
Here some time in those territories. So we.
We may have some in the future and branded and non branded will have to break that out.
So it was 30 okay.
That's fine.
Mark.
Sorry go ahead go ahead.
Go ahead, I was just going to move onto market share just wanted to make sure I got these numbers were D. C. I think you said you were eight 5% in Q3.
Moving to nine 4% in October is that right.
Yes.
Okay.
Do you have similar kind of numbers for Alberta, and Ontario.
Uh huh.
Yeah.
We do you want us to do that on a call later with you.
Sure.
Okay.
Okay, and I guess, maybe just to continue on the wholesale conversation I was just curious.
The number was low which is great do you wanted to drive more of your business through the through the retail channel yourself.
But is this sort of just lack of people.
He has gone into the business and how are they paying for it and they'll just be less and less dollars to spend so.
There's that and then just a comment on that and just a final comment.
Couche tard doing the deal with firepower and G. G I.
Opening up co locations here in Ontario, I think just maybe a comment on how you think the retail market will evolve in Canada.
Convenient stores do you think we will be able to get in the business.
I will just leave it there thanks.
Yeah.
I'll, let <unk> answer that one.
Yeah.
So are you asking will convenient more convenient stores be able to get into cannabis is that what you're asking in Canada. Yeah. Just just licensing I mean is this a is this legal.
This work.
What would that mean for distribution of your of your products.
Yes, I think that like everything happening in the industry right now Doug it's.
I'm serious inflection points as you think about profitability.
Our business is trying to say float I mean were obviously as a producer we're looking at it from that angle, but we're seeing rationalization and consolidation on the retail front no doubt right, we're seeing CCA filings in acquisitions and takeovers on the retail front. So just as we talk about the dynamics on the producer front things need to evolve and take a different shape on the retail side.
Of the business and you're starting to see that we're starting to see.
Retailers reduce the amount of their square footage.
Thinking about rent control and cost controls and what's really driving their bottom line, reducing assortment being very specific on the amount of inventory that we're carrying I think when you think of those factors are.
It all leads to a smaller convenient footprint.
And ensuring kind of your you know your dollars per square foot on the retail side is as efficient as possible.
Those things kind of answer your question about do we see more convenience offerings I believe so.
I think it's not always going to be the same in every province, I mean, obviously, Quebec is government run stores.
No.
I think it's leaning that way so whoever the regulations will allow for that convenience formats, I mean, theres nothing that I see right now that's going to allow cannabis.
Cannabis to be co located within the convenience store I'm not sure I'd necessarily see that happening anytime soon but wherever somebody can get crafty within the regulations about putting a cannabis store on a footprint of an existing asset.
Leveraging real estate I think youre going to start to see more interesting things emerge.
On that side hopefully that answers your question.
Yes, we havent great. Thanks, Paul we haven't gotten a call from Tim.
That's what you inquired about.
Okay.
Okay. That's it.
Thanks very much.
Thank you.
The next question comes from Andrew <unk> of Stifel.
JMP. Please go ahead.
Hi, good morning, Thanks for taking my questions and congrats on the good branded sales growth here.
Thanks, Andrew.
Maybe touching on the hanging dry that that you guys are rolling out.
Could you comment on when you expect that to contribute to the P&L or is this more of a Q1 'twenty three stories.
And how is that going to influence your gross margin.
Could we expect higher or lower gross margin.
Versus what you posted today, which I think is around the low thirties.
Yeah, I think the hanging dry is just our quest to continue to drive our innovation quality better product across the board and I think it is an intangible to be able to say, how that's going to equate directly to the bottom line or market share, but I think it's part of a whole.
Package of how can we be best in class across the board.
And the.
The product is just a superior product and.
We'll see how the consumer resonate so it is a 100% complete and it is out out there now so if it starts to show anything material that we can talk about it they don't start now and once it gets some traction certainly going into the new year and as we mentioned its across the board. So it doesn't really matter at this but.
High end products like saw that we're launching now or hour.
You know more cost conscious products, it's all about having a high quality at every level.
I mean I can have mandates you wanted to get some color on it from your perspective.
Yeah, I'd love to thanks, Mike Thanks for the question Andrew.
So we.
Rolled out product from the hanging dry over the last several months and like all things, we do we're really cautious and before we make a press release. So we've been putting this product to market over the last several months and we've been getting great feedback and response from Bud tenders from you know legacy store operators are converted.
And we're just the reviews on Reddit consumer feedback on all of the new strains and innovation as well as some of.
A classic strange like pincushion jet fuel gelato or end market pretty hanging dry so that's pretty much readily available now and youre going to see that consumers have already been seeing that so that's a now story not a next year story, Andrew and just wanted to announce to the market so everybody knew.
That's what they're going to see and we've been getting great responses on it on the on the cost side of things, we've been able to control margins and stayed within that range, even by putting in this kind of craft process.
<unk> scale, and really thinking about operationalization and effectiveness of our cost. So we're really happy about that when it comes to thinking about margins moving forward and Stephen might have alluded as we're gonna keep staying in that 30 to 40 range and a big part of this was you know I think everybody you gotta be doing this you got to be thinking about the consumer and their preference.
And the desire for great bag appeal and you always have to be innovating. So for us. It was it wasn't a question of do we do it it was like we're going there and we're going to do it because the consumers demanding it and we figured out a way to do it at scale and still be efficient.
And it's allowed for us to start to play up and talk about things at a premium price and today, we announce or cannabis, which is you know a very specific tailored offering around specific cultivars.
Unique profiles characteristics improve chirping profiles.
And we'll start to see kind of that pick up in the higher margin categories.
So we're excited about it and I think it's going to allow us to maintain being in that range that we've given guidance of between 30% to 40% margin.
Thanks for the fulsome answer.
And maybe zooming out and thinking about consolidation.
Your consolidated financials, obviously produce plays a big part of this and thinking about produce here.
In the past I think you've alluded to Q4 being a better quarter on produce simply because of the supply demand dynamic.
Dynamic are you still thinking about a potential to reach a positive gross margin in Q4 on produce and if you could provide a little bit more color as we go into 2023 I'm not sure if I heard correctly, but I think you mentioned that the worst is behind us.
But you also mentioned that it's hard to pass on pricing. So just trying to understand what's resulting into a better outlook on produce in 2023.
Well through the fourth quarter, yes, we're looking at positive margins, so I can say that.
Just have to remember that when we talk about.
Fiscal year first quarter second quarter. This year from a crop cycle perspective that was the fourth third and fourth quarter of a crop cycle, which started actually in the third quarter of 2021.
So we had to take the hit we had last year in that crop with the brand would goose the virus.
In Texas, So the last two quarters of 'twenty, one that crop continue to June of this year. So we had to pay the Piper in the first and second quarter and that's why we had this tremendous loss in the second quarter. So even though we're now in a calendar fiscal year, we're in a new crop cycle.
That started in Texas in the third quarter and so.
So far.
We have a clean solid crop but.
And then last year this year that what made things worse as we never had the virus in Canada I remember, it's a worldwide virus and it did hit Canada, while it hit Texas, three or four or five years ago. We didn't have it. So this year, we suffered in Canada. So that added to the end of that crop cycle in Texas, starting again last.
Year and through the second quarter of this year.
So you have to kind of look at that so why the fourth quarter. Okay. We're tracking well in a positive March 4th quarter again, one of the things we separately U S. As we compete as they lap the company against Canada, and the United and Mexico, you have to understand Canada has a terrific foreign worker program bottom line as you know.
In America people don't even want to cut their lawn let alone work in agriculture. So we're very dependent on the foreign worker program in Mexico, Theres a bunch of this labor.
In Canada, the foreign work a program to a five year program.
And the United States is 10 months on two off so think of any business, where you have to let your employees go to 60 days a year and then restart it just it's crazy, but that's what our system is in the U S. So it's at a huge disadvantage and this year with these changes in the foreign work a program we delayed some of the.
Crop scheduling that normally would have happened earlier, so even with that the fourth quarter should improve and then going into next year hopefully with all the protocols. We have on a virus. It's working well I bought that said is if you compare AIDS in the 19 eighties. It was a death sentence today nobody dies.
But as you've learned of therapies are the protocols to deal with it now on a positive side the.
Gene has been found and is now being put into all of the new varieties of Tomatoes worldwide and we're actually testing. Some of these new varieties that are resistant to the virus now.
And.
I think by the end of 'twenty for the seed companies will have all their varieties resistant so looking at.
Sort of a little blue Sky, that's going to start happening in 2023, it should be solid by 2024.
In farming in these types of environments. These things happen in the cyclical form it's no different than Covid was the humans.
And we will get through it so and then the.
Inflationary issues.
Like we said diesel fuel has been up is that going to come back down. So we're feeling more confident going forward, but again.
It is a difficult business think of cannabis under NAFTA, where kind of they have to compete with Mexico and the U S. It's a dip.
Morels, but again, let's not lose sight that optionality for the U S and that's our home turf, we want to be very involved in the U S industry, we're waiting to see when we can again answer the market based on the NASDAQ, allowing us to and then move forward. So we want to continue to keep our optionality.
In the U S and in Texas.
That's my answer to that Andrew.
Thank you very much again for a fulsome answer.
Thank you.
Okay.
Thank you. Your next question comes from Michael Freeman at Raymond James. Please go ahead.
Hey, good morning, Mike Stephen I'd just add.
Thanks for taking our questions today.
So I want to focus on Quebec that seems to be an area of real outperformance for village farms through rose over.
Over the especially over the last six months, so I wonder how you would describe sort.
The changes any changes that have taken place in the rose business and how village farms has supported.
The growth of that business in Quebec.
Sure I mean look we yeah, we haven't done any acquisitions other than rose.
And can we you know we look at we look at them all the time, but rose was one very strategic for us to be in Quebec, Quebec.
One of the largest markets as you know.
It's a different approach in that the SKU D C. In Quebec owns all the retail stores, it's not independent.
Quebec is about.
Patriotic towards Quebec, So we had we had to be there in a different way.
Panic market Rose was the selection of <unk>.
Of course that is the Roes team, we really loved the Roes team there so.
Brilliant they've got great CPG the leadership there is very solid.
And in acquisitions, you know you have to have a lot of synergies.
And be on the same page and.
Thats been working rose has continued to be innovative on their own but working with pure some farms, we were able to help support them in the watch it at Promenade brand, which is the third Grand we've launched this year sort of as Canadian cannabis.
Which is doing very well.
And it's not even been a year it'll be a year of next month and I think you'll continue to see great market penetration by them and moving forward.
In the Quebec market and they all are also participating in some other provinces as well.
In conjunction with some of the programs with a pure Sun farms. The other thing that's very unique is.
One of their.
<unk> is based on all the craft reduces in Quebec, and Thats very important to the government of Quebec to support very small craft growers.
I think we have 11 or 12 that we consolidated market for under the Dell say brand and that's working extremely well not big numbers, but it's.
It just is another avenue of synergy across the board and we may roll that out in some other provinces going forward. So.
So that's where we are today.
It now is Canadian cannabis and the teams are all working pretty solid as well.
<unk> you want to add some color.
Yeah. Thanks, Mike Great question, Rahul look the the Roche team are experts at commercialization.
A quebec.
And there is many different facets that we are.
Really enamored with and partnering teaming up making the acquisition of Roes.
And we talked about that earlier in the year that it was going to take some time because every board has.
Has.
Call cycle, you just can't immediately implement products and the roasting so adept at understanding customer segmentation looking at pricing with yes, you do see needs and with the last call that was happening. This year I mean, we really knew that summer fall was going to be really important for the integration of <unk>.
Those firms Canadian cannabis to kick off in a very effective way and the roasting. After the park I mean rental listings we got.
<unk> is a brand fueled by person firms biomass. So I think now and you know this is probably the first full quarter, where youre really starting to see.
The integration of village farms Canadian cannabis taking shape.
And showing what we can perform and do and.
I'm pleased to hear that you're seeing it as well and we're really optimistic about it and continuing to work closely with the team to get more listings really think about you know continued domination and market presence in the province of Quebec.
We're excited.
Okay. Thank you very much for that answer if you look forward to following your growth moving forward.
Alright, thank you.
Thank you there are no further questions. Please proceed.
Want to thank everyone for joining us today, we're very excited about.
Our direction in cannabis not only in Canada, but extending out internationally.
And they are standing by to see what the legislation changes will be for the U S. As we gear up for the penetration in the U S market in the future. Thanks for joining us today, and we look forward to talking to you in the future. When we report our year end. Thank you. Thanks operator.
Ladies and gentlemen. This concludes your conference for today, we thank you for participating and ask that you. Please disconnect your lines.