Focus on strategic developments, operational enhancements

Village Farms announced its results for the quarter ended March 31, 2015.

Michael DeGiglio, Chief Executive Officer, stated "While the first quarter of 2015 continued the quarter on quarter trend of improved market conditions over previous corresponding year's quarterly period, we also experienced historically low light levels throughout the entire first quarter and into the second quarter at our Texas locations. The lower light levels were the lowest since the inception of our west Texas operations in 1996. Over the first 16 weeks of the year our average light levels were 21% lower than the historical average with some weeks 45% lower. If not for the lower light levels our 2015 first quarter results would have exceeded our expectations."

"The low light levels continued until the end of April and will negatively impact our second quarter results. The produce normally harvested in the first quarter was delayed and is now being harvested, in the second quarter, when ample supply exists in the marketplace. This can be seen on our income statement with a substantially lower change in bio asset, as April 2015 pricing was lower than April 2014 pricing. As such, our second quarter performance is off to a very slow start."

"We are pleased that a US retailer has recently taken one of our new exclusive varieties national under the retailer's private label. Other retailers are in the process of launching this same variety as well as additional exclusive products in the coming months. We were also pleased with our first supplemental lighting investment at our Permian Basin facility, which provided substantially more cucumbers throughout the winter, versus the prior year, and allowed us to avoid the negative production impact caused by lower light levels that we experienced on our tomato crop."

Mr. DeGiglio continued "We remain focused on strategic developments and operational enhancements to positively impact our 2015 performance over 2014 and to put us in a position to increase our market share with national retailers in both the U.S. and Canada."

First Quarter 2015 Operating Results Summary:
(Note amounts in U.S. Dollars)

Net sales increased 16% to $27.7 million for the first quarter of 2015 compared to $24.0 million for the first quarter of 2014;
EBITDA increased 96% or $1.0 million to $2.0 million in the first quarter of 2015 compared to $1.0 million in the first quarter of 2014.
(Loss) per share of ($0.02) for the first quarter of 2015 versus ($0.01) for the first quarter of 2014;
Net (loss) increased ($0.6) million to ($0.9) million in the first quarter of 2015 compared to ($0.3) million in the first quarter of 2014.

Net Sales

Net sales for the three month period ended March 31, 2015 increased by $3,743, or 16% to $27,747 from $24,004 for the three month period ended March 31, 2014. The increase in net sales is primarily due to an increased average selling price for tomatoes of 15%, an increase in pepper selling price of 7% and a 44% increase in cucumber pieces sold, over the same period in 2014. The increase in cucumber pieces is due to an increase in production from the Permian Basin facility due to the addition of supplemental lighting in November 2014.

The tomato price increase for the three months ended March 31, 2015 was as a result of an increase in the tomato-on-the-vine price of 18% and an increased mix of specialty tomatoes grown by the Company. For the three months ended March 31, 2015, total tomato pounds sold increased 3% from the comparable period in 2014. Tomatoes grown by the Company increased 11% and supply partner tomato volume decreased (4%). The increase in Company grown tomatoes, over the prior year first quarter is due to the completion of a 20-acre rebuilt greenhouse block in June 2014. The increase in Company tomatoes pounds would have been higher if not for lower sun light levels in 2015 versus historical normal levels.

Cost of Sales

Cost of sales for the three months ended March 31, 2015 increased by $3,214, or 15% to $24,931 from $21,717 for the three months ended March 31, 2014. The increase is mostly due to the increase of pounds produced from the Company's facilities. The increase of pounds from the Company's facilities is due to the rebuilt 20 acres in Marfa, TX, as well as the increased production at the Permian Basin mostly from the increase in cucumbers due to addition of supplemental lighting.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three month period ended March 31, 2015 decreased $183, to $2,944 from $3,127 for the three month period ended March 31, 2014. The decrease is due to various cost reductions in most departments.

Change in Biological Asset

The net change in fair value of biological asset for the three months ended March 31, 2015 decreased by ($1,929) to ($816) from $1,113 for the three months ended March 31, 2014. The decrease is due to lower selling prices in April 2015 versus April 2014, as well as an increase in cost per pound related to the additional exclusive tomatoes. The exclusive tomatoes have a higher cost per pound than the big round tomatoes like beef and tomatoes-on-vine. The fair value of the biological asset at March 31, 2015 is $6,964 and was $7,481 at March 31, 2014.

Income (Loss) from Operations

Income from operations for the three months ended March 31, 2015 decreased by ($1,217) to a loss of ($944) from $273 for the three months ended March 31, 2014. The decrease was primarily the result of the decrease in change in biological asset of ($1,929).

Interest Expense, net

Interest expense, net, for the three month period ended March 31, 2015 decreased by ($127), to $561 from $688 for the three month period ended March 31, 2014. The decrease is due to a decrease in the Company's borrowing rate and a lower principal balance.

Income Taxes

Income tax expense/(recovery) for the three month period ended March 31, 2015 was a recovery of ($675) compared a recovery of ($138) for the three month period ended March 31, 2014. The income tax recovery in 2015 as compared to the (recovery) in the same period in 2014 is related to the lower biological asset value.

Net (Loss)

Net (loss) for the three months ended March 31, 2015 increased by ($604) to a loss of ($928) from a net loss of ($324) for the three months ended March 31, 2014. The increased loss was the result of a decrease in income from operations of ($1,217), offset by a decrease in interest expense of $127 and an increase in the income tax recovery of $537.