NASDAQ:BHIL Benson Hill Q3 2023 Earnings Report $0.17 -0.25 (-59.14%) Closing price 03/26/2025Extended Trading$0.17 0.00 (0.00%) As of 03/26/2025 07:59 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Benson Hill EPS ResultsActual EPS-$3.50Consensus EPS -$6.65Beat/MissBeat by +$3.15One Year Ago EPSN/ABenson Hill Revenue ResultsActual Revenue$113.07 millionExpected Revenue$87.00 millionBeat/MissBeat by +$26.07 millionYoY Revenue GrowthN/ABenson Hill Announcement DetailsQuarterQ3 2023Date11/9/2023TimeN/AConference Call DateThursday, November 9, 2023Conference Call Time8:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Benson Hill Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 9, 2023 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good morning. Thank you for attending Benson Hill's Third Quarter 2023 Earnings Call. My name is Lauren, and I will be your moderator. All lines are on mute for the presentation portion of the call, with an opportunity for questions and answers at the end. I want to pass the conference to your host, Reuben Mayer, Senior Director of Investor Relations with Benson Hill. Operator00:00:24Reuben, please go ahead. Speaker 100:00:28Thank you, Lauren and good morning. We appreciate you joining us to review our Q3 financial results and outlook. With me today are Deanie Elsner, Benson Hill's Chief Executive Officer and Dean Freeman, our Chief Financial Officer. Earlier this morning, we filed our earnings release and Form 8 ks. These documents and an investor presentation we will reference during the prepared remarks are available in the Investors section of the Benson Hill website. Speaker 100:00:54Comments today from management will contain forward looking statements, including Benson Hill's expectation of future financial and business performance And industry outlook and current guidance for 2023 and preliminary directional outlook for 2024. Forward looking statements are inherently subject to risks, Uncertainties and assumptions and are not guarantees of performance. We caution you to consider the risk factors that could materially cause results to differ from those in the forward looking Statements. Such factors include those referenced in the cautionary notes included in our Form 10 ks, Form 10 Q, Press release and investor presentation and other filings with the SEC. Also during this presentation, we will discuss specific non GAAP financial measures. Speaker 100:01:37A reconciliation to GAAP is available in our earnings release and presentation. I will now turn the call over to Deanie. Speaker 200:01:44Thanks, Ruben, and good morning, everyone. The past few months have been an intense and pivotal time in the evolution of Benson Hill. On October 31, we shared a plan to realize our vision as a leading food and feed technology company across multiple protein end markets. The need for protein and nutrition security continues to grow and unlocking the natural genetic diversity in plants is a way to address it. That's the power of genomics to change the food system. Speaker 200:02:13Our innovations have a multiplier effect across various end use applications. We plan to direct the value added attributes of our ultra high protein low oligosaccharide or UHPLO Seed varieties as we successfully launch for the aquaculture market into serve the established and growing poultry and swine markets. To establish this, Benson Hill is divesting its processing assets and evolving to an asset light model with robust Partnership and licensing agreements to access a 28,000,000 acre addressable market and supply Our novel soy meal to customers at scale. What excites us about this opportunity is our first mover advantage. We have confirmed through multiple feeding trials that UHPLO is a game changer for animal producers. Speaker 200:03:05Our innovation available today meets the nutritional quality trait specifications they desire, higher protein, low glycosaccharides And enhanced amino acids. Additional innovations in our product pipeline with further increased protein, Enhanced amino acids and herbicide tolerance will be launched in 2027. Competitors have announced partnerships in this space that underscore The exciting opportunities in these markets and Benson Hill's 1st mover position. By the end of the decade, others intend to launch 1st generation Seed varieties with defined specifications that are UHP Aloe varieties meet or exceed today. By the end of the decade, Benson Hill plans to launch our Gen 3 seed varieties into this attractive market. Speaker 200:03:56That's the Benson Hill advantage. Our proprietary high protein germplasm represents decades of breeding to optimize nutritional traits. Our strategic data layers represent extensive mapping and understanding of nutritional genetic markers And our CropOS Innovation Engine and Crop Accelerator provide an industry leading AI driven seed innovation platform To execute our quality trait breeding program, our CropOS technology platform is distinct And highly complementary to the capabilities of other seed companies. The ultimate advantage is an accelerated speed to market In a business that involves biology and implementation across millions of acres, time is priceless. We have defined a clear path forward focusing on our core strengths. Speaker 200:04:49Here is what you should expect from us in the coming months. First, we're executing the divestitures of our processing assets. Specifically, we completed the sale of the soy crush assets The Preston and Dakota Facilities. 2nd, we're executing the transition of our business. We expect the divestitures, Cost realignment, working capital savings and efficient capital structure to enable an asset light model with a 12 month liquidity runway. Speaker 200:05:30Finally, we're focused on securing strategic partnerships and licensing agreements to expand into the poultry, Swine and Pet Food Markets, while also positioning Benson Hill for gross margin expansion and higher returns on capital. The 2023 harvest is nearly complete for both our commercial and pre commercial soybean varieties. Our field teams report protein levels in our proprietary soybean portfolio consistent with what we've seen historically with some varieties delivering a slight year over year increase. Notably, one of our new UHPLO soybeans showcased protein levels that outperformed our widely planted variety currently In use in aquaculture. Similarly, protein levels in ultra high protein varieties destined for human food applications Showed a modest year over year improvement. Speaker 200:06:25Approximately 10% of the harvested bushels have already been delivered to our processing Facilities and partners and we're establishing tolling agreements to process grains. The 2022 class Products within our UHP and UHPLO categories continue to show stronger yield performance surpassing the current portfolio. Looking ahead, we anticipate a 5 percentage point year over year improvement in the yield performance of our 2024 commercial portfolio. We remain firmly on track to transition our first UHP Herbicide Tolerance Varieties to seed production for the upcoming 2024 crop year. We plan to share an update with you And what will advance through the R and D pipeline by the end of the Q1. Speaker 200:07:15We will continue to support our existing engagements with farmers, Current customers and partnerships as we convert our business model to enter animal feed. In our view, the long term opportunities for food, Aquaculture and specialty oils remain positive. These markets will be challenged in the near term, but they will return to growth And we have proven our ability to scale our innovation to meet the needs of those end markets. The hard work is underway to realize the evolution of Benson Hill. Next year will be different as we begin the shift towards 100% proprietary products through an asset light model. Speaker 200:07:55Accessing the animal feed markets requires an acre acquisition strategy. As our acre acquisition targets grow in the coming years Towards an estimated 6,500,000 acres by 2,030, we expect broad acre licensing of our germplasm to be the catalyst to get us there. Other sources of future revenues and margins will include direct seed sales And technology access fees from soy ingredient processors and customers. We expect to share the estimated $100 to 2 $30 per acre of value creation from our genetics with those partners. One of the benefits of this approach Is that we can monetize our innovation at least 2 years sooner than under the current closed loop model. Speaker 200:08:43By securing value further upstream, we can generate more sustainable earnings at a much higher gross margins. I want to quickly shift to how the transition plan will affect 2024. Fiscal 2024 is a transition year for us As we move to the asset light proprietary only revenue model, several factors will impact our results for 2024, Depending on the timing of our execution, specifically, a disposition of manufacturing assets We'll reduce our non proprietary revenue and operating costs versus 2023. Our gross profit is still expected to be positive in 2024 And we will deliver our operating run rate reductions as promised, but we will continue to experience net operating losses for the year. As we've announced, we intend to pay off our high cost debt by March 1, 2024. Speaker 200:09:39We expect our operating cash burn to be significantly lower than 2023 levels. We will update you on 2024 expectations In regular cadence of our year end earnings call, we have a lot to look forward to as we execute this plan and realize the Tremendous opportunity for Benson Hill by leveraging our enduring competitive advantages. We will keep you apprised of our progress. I will now turn the call over to Dean to discuss Q3 results and outlook for the Q4. Dean? Speaker 300:10:11Thanks, Deanie, and good morning, everybody. You've seen our press release and earnings slides, so I won't read through all the numbers, but I want to focus on a couple of key takeaways here. First, we've mentioned on several occasions the market factors affecting supply and demand unit economics, which are negatively impacting Price and margin performance of our proprietary soy ingredients, meal and high oleic oil products. This is an industry wide issue and it is Part of a persistent broader challenges in the entire food value chain driven by broader inflationary and economic uncertainty, All of which is further eroding consumer demand. Market demand headwinds impacted gross profit In the Q3, by $2,000,000 as we managed higher inventory supply by selling proprietary soybeans In the open commodity market at unfavorable pricing. Speaker 300:11:05However, this did contribute to the approximately 20% increase in proprietary revenues The $33,000,000 in the quarter. The second takeaway is that the unfavorable comparisons to last year's crush margins, which were at peak levels last year, This led to a 17% decline in comparable non proprietary revenues. 3rd, There was negative impact of approximately $1,000,000 in higher than planned manufacturing and logistics costs, which were largely non recurring, But negatively impacted our quarterly gross profit result. And finally, operating expenses in the quarter Included approximately $2,500,000 in non recurring costs related to our business transformation and other associated costs. Non cash items for depreciation and stock compensation were $4,700,000 in the quarter. Speaker 300:11:56Excluding the non recurring And non cash items, cash OpEx declined by $1,200,000 to $21,400,000 in the 3rd quarter. As we discussed last week, our plan is to deliver significant cost and working capital improvements to minimize cash burn in 2024, While enabling the execution of our strategic growth objectives and as a result, we've announced $33,000,000 in run rate operating expense reduction in 2024. We're also in the process of identifying an additional run rate reductions of about $5,000,000 to $10,000,000 So as we close-up the year, we expect market headwinds to persist in the Q4 and likely into 2024. However, we expect improved proprietary and non proprietary product gross profit performance in the 4th quarter. And this is driven by high volume short term supply agreements to supply White Flake products and the sale of certain non core gene editing intellectual property. Speaker 300:12:57So for the full year, we're updating our revenue guidance to $440,000,000 to $450,000,000 We're maintaining our gross profit guidance as the favorability and improved performance we expect in the 4th quarter Should offset the market headwinds and cost pressures we saw in the Q3. We expect to see further reductions in operating expenses and so as a result, We anticipate a reduction in the loss from continuing operations, adjusted EBITDA and free cash flow. With the sale of the C More facility and the sale of non core technology IP, we will utilize these proceeds and the restricted cash on hand To pay down approximately 50% of the senior loan by the end of the month, we plan to completely retire the debt facility by March 1. We're focused on positioning Benson Hill for future sustained profitable growth. The market dynamics the industry is facing today Reinforce the strategy we are implementing to move to an asset light, capital efficient operating model and to further diversify our portfolio into higher value, Larger and more established animal feed markets where we have a leading competitive advantage and a compelling value proposition. Speaker 300:14:14We believe our plan gives us the best opportunity to substantially improve shareholder value creation. And with that, let's move to Q and A. Operator00:14:52Our first question comes from Kristen Owen from Oppenheimer. Kristen, Please go ahead. Speaker 400:14:59Great. Good morning and thank you for taking the questions team. Short term question just to start off with. Can we talk a little bit about the proprietary volume being sold into the conventional channel? I'm assuming that was primarily a function Managing your working capital, but just any additional commentary that you could provide there would be helpful to start. Speaker 400:15:19Thank you. Speaker 300:15:22No, that's exactly it, Kristen. We manage, as you can imagine, a very tight working capital cycle. It's not unusual to have some off take into the commodity markets. But in this instance, we had a meaningful amount such that it impacted our gross profit to the extent that it did. It is very seasonal in terms of how it plays out quarter to quarter given the inventory levels, the harvest performance and the like. Speaker 300:15:48In this instance, it was a combination of a strong harvest, higher inventories and a lower demand profile. So in order to manage that working capital, get the inventory off the books, we push it into the commodity channels. Speaker 400:16:06Okay. That's helpful. So then as we think about the improved outlook for 4th quarter, How much of that then is a function of we were just seeing better crush margins versus what you're seeing on the contracting side and In particular, any visibility that you have on getting that proprietary ingredient into the hands that will pay Speaker 200:16:28you well for that IP? Speaker 300:16:31Yes, it's going to be a mix and as I talked about in my comments, Right now modeling effectively the same volume of shipments going into volumes of Same value of proprietary product going into the commodity channels in the Q4. So I'm holding that basically flat, Maybe conservatively, but we do have the upside higher margin White Flake orders that are coming through in the 4th quarter that will offset that. The combination of that coupled with the gene editing IP technology that we recently sold, That'll more than cover the trailing headwinds that we think will persist into the Q4 and possibly even into 2024. Speaker 400:17:23All right. If I may, just one more. And I do understand that Things are in flux and Deanie appreciate you giving some of those factors to think about for 2024. Just continuing our thread here, How we should think about modeling the wind down of commodity volumes In 2024, just any sort of directionality or first half versus second half, just any commentary that can help us dial our models in would be helpful. Speaker 300:17:58Yes. I think, look, we've provided some sort of directional view of The timing of the dispositioning of the assets, right? So we're kind of targeting early part of next year. Later part of this year, we've already started as you've seen. The best sort of Range I can give you is sort of a ramp up into the a ramp down into the first half of the year and then a modest ramp up into the second half of twenty twenty four It's as best a view as I can give you. Speaker 300:18:30Obviously, there's a number of dependencies in terms of the timing of the ramp down, the TSA And contract obligations is a number of factors, but I would expect a slow ramp down in the first half of the year With a modest and pickup in the second half of twenty twenty four. Speaker 400:18:51Great. Thank you so much. I'll pass it on. Operator00:19:00Our next question comes from Brian Wright from Roth MKM. Brian, please go ahead. Speaker 500:19:06Thanks. Good morning. A couple of things. I guess I wanted to start off with and I apologize if I missed this, but Have you all finalized the towing agreement for the Seymour facility? Speaker 300:19:25That agreement is still underway, but we will have a tolling agreement completed. Speaker 500:19:33Okay. And by is there an expected timing or just negotiation by negotiations and you'll go back to Speaker 300:19:40Negotiations are underway. Obviously, we'll have to be sooner than later. Speaker 500:19:46Okay. Okay. Thanks. Speaker 200:19:48And then what I was just Trying to get a little bit Speaker 500:19:52better understanding of is on the end market value creation per acre. On that value, I guess, that's on Slide 11, but some of the traits, right, are on Slide 6. Is there a way to like rank like the traits as far as the drivers You know of that market value creation or how to think about which traits are the more valuable than others? Speaker 200:20:27Absolutely, Brian. What we've done as we looked at the animal feed markets is we literally looked species by species and then within each species, Subspecies to understand the end user needs. Across the board, animal feed is a very formulaic Approach to pricing, as you know, it's very, very high volume and lower margin. But the formulate the way you calculate The price point on that formulation is very formulaic. And so really by far the biggest driver of formula costs Is protein. Speaker 200:21:01So our protein on average is about 20% higher than commodity. So we get A gold star for protein delivery. What protein does is it enables our Producers to use more of our protein and replace higher cost ingredient streams in their formula cost. So it's a cost advantage to them. In addition, the low oligosaccharide trait is an anti nutrient trait. Speaker 200:21:31What that means is, It helps the animals digest the soy. As a result of that, producers can actually use More of our soy in replacement of higher cost ingredient streams. Amino acids are also a valuable set of traits depending by animal Species and amino acids today are supplemented with high cost additives because the soy meal tends not to Have the right combination or the right levels of amino acids. So you can imagine how UHPLO with 20% higher protein, The low oligosaccharide trait and enhanced amino acids actually really speaks very positively to this market and in a very advantaged way. We have cost estimated every one of those formulas and then we've brought in external experts From the animal nutrition industry to validate and shadow price our estimates. Speaker 200:22:30And so we feel pretty good about The value creation we're bringing forward by species across those different acres and that's what our plan is as we go out in the market. Speaker 500:22:43Thank you. That's super helpful. The other thing I just wanted to kind of understand kind of How we're thinking about it from a commercialization standpoint is, so massive increase on the protein content, But even on the HT, it's a little bit of a drag on the yield, but the protein content massively overwhelms that. Like how do we think about like how that goes into the market as far as will it be direct like contracting with farmers because It's going to be driven more by the end market kind of poll demand versus just typical, okay, I'm a farmer and this is the best high Yielding seed and just kind of how we think about like how that works From the commercialization standpoint? Speaker 200:23:35Yes, it's a great question. So as I mentioned, the accessible market For animal feed, there's about 28,000,000 acres for domestic consumption. So you can imagine the potential in these acres. As we launch these acres into market, ultimately what we're trying to get to is a value add for our farmers and Our producers and end user producers, as that comes to fruition, that's where the value ultimately is going to be, overall. Brian, I think I lost your question. Speaker 200:24:08Can you repeat it one more time? I was on under training. I think I lost your question. Speaker 500:24:13No, no, no. I think that was super helpful. What I think and I just want to make sure I'm interpreting what he said. So basically, It's the animal feed companies that are going to drive the farmer to take up this you know, To take up the seed and plant the seed and contract with it because of the benefits that they get and they're going to share Some of that with the farmer. Is that kind of just Speaker 200:24:41That's exactly right. That's exactly right. So 28 Speaker 500:24:44Okay. Speaker 200:24:45Yes, 28,000,000 acres. If we move to a pull model where the end users pulling that through the farmer because there's a value benefit to them, that's where the value is going to be created. And across the board, we are delivering that value across all the players in the value chain. And so we're creating a model where there is I'll lean in on this product across the board. Speaker 500:25:10Great. Thank you so much. Operator00:25:17Thank you. We currently have no further questions. I'll now hand back over to Deanie Oustner for closing remarks. Speaker 200:25:25Thanks, Lauren. We appreciate your time and attention this morning. We're confident in the path forward for Benson Hill. By leveraging our competitive strengths, we expect to diversify our market reach, While at the same time creating an enduring business model centered on our core technology company. Please get in touch with Ruben if you have any questions. Speaker 200:25:45Thank you very much. Operator00:25:50That concludes the Benson Hill conference call. You may now disconnect your line and exit the webcast.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBenson Hill Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Benson Hill Earnings HeadlinesBenson Hill Inc (BHILQ)March 29, 2025 | investing.comIowa farmers caught in Benson Hill bankruptcy can get help through grain indemnity fundMarch 28, 2025 | msn.comTrump to unlock 15-figure fortune for America (May 3rd) ?We were shown this map by former Presidential Advisor, Jim Rickards, one of the most politically connected men in America. Rickards has spent his fifty-year career in the innermost circles of the U.S. government and banking. And he believes Trump could soon release this frozen asset to the public. April 18, 2025 | Paradigm Press (Ad)Benson Hill Receives Court Approval of First-Day Motions to Support Ongoing Operations During Chapter 11 ProcessMarch 25, 2025 | businesswire.comBenson Hill files for bankruptcy reorganization as it works to sell itselfMarch 21, 2025 | bizjournals.comBenson Hill Files Voluntary Chapter 11 PetitionsMarch 20, 2025 | finance.yahoo.comSee More Benson Hill Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Benson Hill? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Benson Hill and other key companies, straight to your email. Email Address About Benson HillBenson Hill (NASDAQ:BHIL), together with its subsidiaries, operates as a food technology company that unlocks natural genetic diversity of plants. It operates in two segments, Ingredients and Fresh. The company offers CropOS, a technology platform, which uses artificial intelligence, data, and various advanced breeding techniques that combine data, plant, and food sciences to deliver crops optimized for food, ingredient, and feed products. The company's technology is applied in soybeans and yellow peas. It focuses on growing, packing, and selling fresh produce products to retail and food service customers. The company was formerly known as Benson Hill Biosystems, Inc. Benson Hill, Inc. was incorporated in 2012 and is headquartered in Saint Louis, Missouri.View Benson Hill ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 6 speakers on the call. Operator00:00:00Good morning. Thank you for attending Benson Hill's Third Quarter 2023 Earnings Call. My name is Lauren, and I will be your moderator. All lines are on mute for the presentation portion of the call, with an opportunity for questions and answers at the end. I want to pass the conference to your host, Reuben Mayer, Senior Director of Investor Relations with Benson Hill. Operator00:00:24Reuben, please go ahead. Speaker 100:00:28Thank you, Lauren and good morning. We appreciate you joining us to review our Q3 financial results and outlook. With me today are Deanie Elsner, Benson Hill's Chief Executive Officer and Dean Freeman, our Chief Financial Officer. Earlier this morning, we filed our earnings release and Form 8 ks. These documents and an investor presentation we will reference during the prepared remarks are available in the Investors section of the Benson Hill website. Speaker 100:00:54Comments today from management will contain forward looking statements, including Benson Hill's expectation of future financial and business performance And industry outlook and current guidance for 2023 and preliminary directional outlook for 2024. Forward looking statements are inherently subject to risks, Uncertainties and assumptions and are not guarantees of performance. We caution you to consider the risk factors that could materially cause results to differ from those in the forward looking Statements. Such factors include those referenced in the cautionary notes included in our Form 10 ks, Form 10 Q, Press release and investor presentation and other filings with the SEC. Also during this presentation, we will discuss specific non GAAP financial measures. Speaker 100:01:37A reconciliation to GAAP is available in our earnings release and presentation. I will now turn the call over to Deanie. Speaker 200:01:44Thanks, Ruben, and good morning, everyone. The past few months have been an intense and pivotal time in the evolution of Benson Hill. On October 31, we shared a plan to realize our vision as a leading food and feed technology company across multiple protein end markets. The need for protein and nutrition security continues to grow and unlocking the natural genetic diversity in plants is a way to address it. That's the power of genomics to change the food system. Speaker 200:02:13Our innovations have a multiplier effect across various end use applications. We plan to direct the value added attributes of our ultra high protein low oligosaccharide or UHPLO Seed varieties as we successfully launch for the aquaculture market into serve the established and growing poultry and swine markets. To establish this, Benson Hill is divesting its processing assets and evolving to an asset light model with robust Partnership and licensing agreements to access a 28,000,000 acre addressable market and supply Our novel soy meal to customers at scale. What excites us about this opportunity is our first mover advantage. We have confirmed through multiple feeding trials that UHPLO is a game changer for animal producers. Speaker 200:03:05Our innovation available today meets the nutritional quality trait specifications they desire, higher protein, low glycosaccharides And enhanced amino acids. Additional innovations in our product pipeline with further increased protein, Enhanced amino acids and herbicide tolerance will be launched in 2027. Competitors have announced partnerships in this space that underscore The exciting opportunities in these markets and Benson Hill's 1st mover position. By the end of the decade, others intend to launch 1st generation Seed varieties with defined specifications that are UHP Aloe varieties meet or exceed today. By the end of the decade, Benson Hill plans to launch our Gen 3 seed varieties into this attractive market. Speaker 200:03:56That's the Benson Hill advantage. Our proprietary high protein germplasm represents decades of breeding to optimize nutritional traits. Our strategic data layers represent extensive mapping and understanding of nutritional genetic markers And our CropOS Innovation Engine and Crop Accelerator provide an industry leading AI driven seed innovation platform To execute our quality trait breeding program, our CropOS technology platform is distinct And highly complementary to the capabilities of other seed companies. The ultimate advantage is an accelerated speed to market In a business that involves biology and implementation across millions of acres, time is priceless. We have defined a clear path forward focusing on our core strengths. Speaker 200:04:49Here is what you should expect from us in the coming months. First, we're executing the divestitures of our processing assets. Specifically, we completed the sale of the soy crush assets The Preston and Dakota Facilities. 2nd, we're executing the transition of our business. We expect the divestitures, Cost realignment, working capital savings and efficient capital structure to enable an asset light model with a 12 month liquidity runway. Speaker 200:05:30Finally, we're focused on securing strategic partnerships and licensing agreements to expand into the poultry, Swine and Pet Food Markets, while also positioning Benson Hill for gross margin expansion and higher returns on capital. The 2023 harvest is nearly complete for both our commercial and pre commercial soybean varieties. Our field teams report protein levels in our proprietary soybean portfolio consistent with what we've seen historically with some varieties delivering a slight year over year increase. Notably, one of our new UHPLO soybeans showcased protein levels that outperformed our widely planted variety currently In use in aquaculture. Similarly, protein levels in ultra high protein varieties destined for human food applications Showed a modest year over year improvement. Speaker 200:06:25Approximately 10% of the harvested bushels have already been delivered to our processing Facilities and partners and we're establishing tolling agreements to process grains. The 2022 class Products within our UHP and UHPLO categories continue to show stronger yield performance surpassing the current portfolio. Looking ahead, we anticipate a 5 percentage point year over year improvement in the yield performance of our 2024 commercial portfolio. We remain firmly on track to transition our first UHP Herbicide Tolerance Varieties to seed production for the upcoming 2024 crop year. We plan to share an update with you And what will advance through the R and D pipeline by the end of the Q1. Speaker 200:07:15We will continue to support our existing engagements with farmers, Current customers and partnerships as we convert our business model to enter animal feed. In our view, the long term opportunities for food, Aquaculture and specialty oils remain positive. These markets will be challenged in the near term, but they will return to growth And we have proven our ability to scale our innovation to meet the needs of those end markets. The hard work is underway to realize the evolution of Benson Hill. Next year will be different as we begin the shift towards 100% proprietary products through an asset light model. Speaker 200:07:55Accessing the animal feed markets requires an acre acquisition strategy. As our acre acquisition targets grow in the coming years Towards an estimated 6,500,000 acres by 2,030, we expect broad acre licensing of our germplasm to be the catalyst to get us there. Other sources of future revenues and margins will include direct seed sales And technology access fees from soy ingredient processors and customers. We expect to share the estimated $100 to 2 $30 per acre of value creation from our genetics with those partners. One of the benefits of this approach Is that we can monetize our innovation at least 2 years sooner than under the current closed loop model. Speaker 200:08:43By securing value further upstream, we can generate more sustainable earnings at a much higher gross margins. I want to quickly shift to how the transition plan will affect 2024. Fiscal 2024 is a transition year for us As we move to the asset light proprietary only revenue model, several factors will impact our results for 2024, Depending on the timing of our execution, specifically, a disposition of manufacturing assets We'll reduce our non proprietary revenue and operating costs versus 2023. Our gross profit is still expected to be positive in 2024 And we will deliver our operating run rate reductions as promised, but we will continue to experience net operating losses for the year. As we've announced, we intend to pay off our high cost debt by March 1, 2024. Speaker 200:09:39We expect our operating cash burn to be significantly lower than 2023 levels. We will update you on 2024 expectations In regular cadence of our year end earnings call, we have a lot to look forward to as we execute this plan and realize the Tremendous opportunity for Benson Hill by leveraging our enduring competitive advantages. We will keep you apprised of our progress. I will now turn the call over to Dean to discuss Q3 results and outlook for the Q4. Dean? Speaker 300:10:11Thanks, Deanie, and good morning, everybody. You've seen our press release and earnings slides, so I won't read through all the numbers, but I want to focus on a couple of key takeaways here. First, we've mentioned on several occasions the market factors affecting supply and demand unit economics, which are negatively impacting Price and margin performance of our proprietary soy ingredients, meal and high oleic oil products. This is an industry wide issue and it is Part of a persistent broader challenges in the entire food value chain driven by broader inflationary and economic uncertainty, All of which is further eroding consumer demand. Market demand headwinds impacted gross profit In the Q3, by $2,000,000 as we managed higher inventory supply by selling proprietary soybeans In the open commodity market at unfavorable pricing. Speaker 300:11:05However, this did contribute to the approximately 20% increase in proprietary revenues The $33,000,000 in the quarter. The second takeaway is that the unfavorable comparisons to last year's crush margins, which were at peak levels last year, This led to a 17% decline in comparable non proprietary revenues. 3rd, There was negative impact of approximately $1,000,000 in higher than planned manufacturing and logistics costs, which were largely non recurring, But negatively impacted our quarterly gross profit result. And finally, operating expenses in the quarter Included approximately $2,500,000 in non recurring costs related to our business transformation and other associated costs. Non cash items for depreciation and stock compensation were $4,700,000 in the quarter. Speaker 300:11:56Excluding the non recurring And non cash items, cash OpEx declined by $1,200,000 to $21,400,000 in the 3rd quarter. As we discussed last week, our plan is to deliver significant cost and working capital improvements to minimize cash burn in 2024, While enabling the execution of our strategic growth objectives and as a result, we've announced $33,000,000 in run rate operating expense reduction in 2024. We're also in the process of identifying an additional run rate reductions of about $5,000,000 to $10,000,000 So as we close-up the year, we expect market headwinds to persist in the Q4 and likely into 2024. However, we expect improved proprietary and non proprietary product gross profit performance in the 4th quarter. And this is driven by high volume short term supply agreements to supply White Flake products and the sale of certain non core gene editing intellectual property. Speaker 300:12:57So for the full year, we're updating our revenue guidance to $440,000,000 to $450,000,000 We're maintaining our gross profit guidance as the favorability and improved performance we expect in the 4th quarter Should offset the market headwinds and cost pressures we saw in the Q3. We expect to see further reductions in operating expenses and so as a result, We anticipate a reduction in the loss from continuing operations, adjusted EBITDA and free cash flow. With the sale of the C More facility and the sale of non core technology IP, we will utilize these proceeds and the restricted cash on hand To pay down approximately 50% of the senior loan by the end of the month, we plan to completely retire the debt facility by March 1. We're focused on positioning Benson Hill for future sustained profitable growth. The market dynamics the industry is facing today Reinforce the strategy we are implementing to move to an asset light, capital efficient operating model and to further diversify our portfolio into higher value, Larger and more established animal feed markets where we have a leading competitive advantage and a compelling value proposition. Speaker 300:14:14We believe our plan gives us the best opportunity to substantially improve shareholder value creation. And with that, let's move to Q and A. Operator00:14:52Our first question comes from Kristen Owen from Oppenheimer. Kristen, Please go ahead. Speaker 400:14:59Great. Good morning and thank you for taking the questions team. Short term question just to start off with. Can we talk a little bit about the proprietary volume being sold into the conventional channel? I'm assuming that was primarily a function Managing your working capital, but just any additional commentary that you could provide there would be helpful to start. Speaker 400:15:19Thank you. Speaker 300:15:22No, that's exactly it, Kristen. We manage, as you can imagine, a very tight working capital cycle. It's not unusual to have some off take into the commodity markets. But in this instance, we had a meaningful amount such that it impacted our gross profit to the extent that it did. It is very seasonal in terms of how it plays out quarter to quarter given the inventory levels, the harvest performance and the like. Speaker 300:15:48In this instance, it was a combination of a strong harvest, higher inventories and a lower demand profile. So in order to manage that working capital, get the inventory off the books, we push it into the commodity channels. Speaker 400:16:06Okay. That's helpful. So then as we think about the improved outlook for 4th quarter, How much of that then is a function of we were just seeing better crush margins versus what you're seeing on the contracting side and In particular, any visibility that you have on getting that proprietary ingredient into the hands that will pay Speaker 200:16:28you well for that IP? Speaker 300:16:31Yes, it's going to be a mix and as I talked about in my comments, Right now modeling effectively the same volume of shipments going into volumes of Same value of proprietary product going into the commodity channels in the Q4. So I'm holding that basically flat, Maybe conservatively, but we do have the upside higher margin White Flake orders that are coming through in the 4th quarter that will offset that. The combination of that coupled with the gene editing IP technology that we recently sold, That'll more than cover the trailing headwinds that we think will persist into the Q4 and possibly even into 2024. Speaker 400:17:23All right. If I may, just one more. And I do understand that Things are in flux and Deanie appreciate you giving some of those factors to think about for 2024. Just continuing our thread here, How we should think about modeling the wind down of commodity volumes In 2024, just any sort of directionality or first half versus second half, just any commentary that can help us dial our models in would be helpful. Speaker 300:17:58Yes. I think, look, we've provided some sort of directional view of The timing of the dispositioning of the assets, right? So we're kind of targeting early part of next year. Later part of this year, we've already started as you've seen. The best sort of Range I can give you is sort of a ramp up into the a ramp down into the first half of the year and then a modest ramp up into the second half of twenty twenty four It's as best a view as I can give you. Speaker 300:18:30Obviously, there's a number of dependencies in terms of the timing of the ramp down, the TSA And contract obligations is a number of factors, but I would expect a slow ramp down in the first half of the year With a modest and pickup in the second half of twenty twenty four. Speaker 400:18:51Great. Thank you so much. I'll pass it on. Operator00:19:00Our next question comes from Brian Wright from Roth MKM. Brian, please go ahead. Speaker 500:19:06Thanks. Good morning. A couple of things. I guess I wanted to start off with and I apologize if I missed this, but Have you all finalized the towing agreement for the Seymour facility? Speaker 300:19:25That agreement is still underway, but we will have a tolling agreement completed. Speaker 500:19:33Okay. And by is there an expected timing or just negotiation by negotiations and you'll go back to Speaker 300:19:40Negotiations are underway. Obviously, we'll have to be sooner than later. Speaker 500:19:46Okay. Okay. Thanks. Speaker 200:19:48And then what I was just Trying to get a little bit Speaker 500:19:52better understanding of is on the end market value creation per acre. On that value, I guess, that's on Slide 11, but some of the traits, right, are on Slide 6. Is there a way to like rank like the traits as far as the drivers You know of that market value creation or how to think about which traits are the more valuable than others? Speaker 200:20:27Absolutely, Brian. What we've done as we looked at the animal feed markets is we literally looked species by species and then within each species, Subspecies to understand the end user needs. Across the board, animal feed is a very formulaic Approach to pricing, as you know, it's very, very high volume and lower margin. But the formulate the way you calculate The price point on that formulation is very formulaic. And so really by far the biggest driver of formula costs Is protein. Speaker 200:21:01So our protein on average is about 20% higher than commodity. So we get A gold star for protein delivery. What protein does is it enables our Producers to use more of our protein and replace higher cost ingredient streams in their formula cost. So it's a cost advantage to them. In addition, the low oligosaccharide trait is an anti nutrient trait. Speaker 200:21:31What that means is, It helps the animals digest the soy. As a result of that, producers can actually use More of our soy in replacement of higher cost ingredient streams. Amino acids are also a valuable set of traits depending by animal Species and amino acids today are supplemented with high cost additives because the soy meal tends not to Have the right combination or the right levels of amino acids. So you can imagine how UHPLO with 20% higher protein, The low oligosaccharide trait and enhanced amino acids actually really speaks very positively to this market and in a very advantaged way. We have cost estimated every one of those formulas and then we've brought in external experts From the animal nutrition industry to validate and shadow price our estimates. Speaker 200:22:30And so we feel pretty good about The value creation we're bringing forward by species across those different acres and that's what our plan is as we go out in the market. Speaker 500:22:43Thank you. That's super helpful. The other thing I just wanted to kind of understand kind of How we're thinking about it from a commercialization standpoint is, so massive increase on the protein content, But even on the HT, it's a little bit of a drag on the yield, but the protein content massively overwhelms that. Like how do we think about like how that goes into the market as far as will it be direct like contracting with farmers because It's going to be driven more by the end market kind of poll demand versus just typical, okay, I'm a farmer and this is the best high Yielding seed and just kind of how we think about like how that works From the commercialization standpoint? Speaker 200:23:35Yes, it's a great question. So as I mentioned, the accessible market For animal feed, there's about 28,000,000 acres for domestic consumption. So you can imagine the potential in these acres. As we launch these acres into market, ultimately what we're trying to get to is a value add for our farmers and Our producers and end user producers, as that comes to fruition, that's where the value ultimately is going to be, overall. Brian, I think I lost your question. Speaker 200:24:08Can you repeat it one more time? I was on under training. I think I lost your question. Speaker 500:24:13No, no, no. I think that was super helpful. What I think and I just want to make sure I'm interpreting what he said. So basically, It's the animal feed companies that are going to drive the farmer to take up this you know, To take up the seed and plant the seed and contract with it because of the benefits that they get and they're going to share Some of that with the farmer. Is that kind of just Speaker 200:24:41That's exactly right. That's exactly right. So 28 Speaker 500:24:44Okay. Speaker 200:24:45Yes, 28,000,000 acres. If we move to a pull model where the end users pulling that through the farmer because there's a value benefit to them, that's where the value is going to be created. And across the board, we are delivering that value across all the players in the value chain. And so we're creating a model where there is I'll lean in on this product across the board. Speaker 500:25:10Great. Thank you so much. Operator00:25:17Thank you. We currently have no further questions. I'll now hand back over to Deanie Oustner for closing remarks. Speaker 200:25:25Thanks, Lauren. We appreciate your time and attention this morning. We're confident in the path forward for Benson Hill. By leveraging our competitive strengths, we expect to diversify our market reach, While at the same time creating an enduring business model centered on our core technology company. Please get in touch with Ruben if you have any questions. Speaker 200:25:45Thank you very much. Operator00:25:50That concludes the Benson Hill conference call. You may now disconnect your line and exit the webcast.Read morePowered by