NASDAQ:BHIL Benson Hill Q1 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-$1.05Consensus EPS -$6.65Beat/MissBeat by +$5.60One Year Ago EPSN/ABenson Hill Revenue ResultsActual Revenue$134.64 millionExpected Revenue$78.68 millionBeat/MissBeat by +$55.96 millionYoY Revenue GrowthN/ABenson Hill Announcement DetailsQuarterQ1 2023Date5/10/2023TimeN/AConference Call DateWednesday, May 10, 2023Conference Call Time8:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckQuarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Benson Hill Q1 2023 Earnings Call TranscriptProvided by QuartrMay 10, 2023 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good morning. Thank you for attending Benson Hills First Quarter 2023 Earnings Call. My name is Brika, and I will be your moderator. All lines are on mute for the presentation portion of the call I would now like to pass the conference over to your host, Ruben Mayer, Senior Director, Investor Relations with Benson Hill. Ruben, please go ahead. Speaker 100:00:33Thank you and good morning. We appreciate you joining us to review our Q1 2023 financial results and outlook. With me today are Matt Crisp, 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 as well as our investor presentation we will reference during the prepared remarks are available in the Investors section of the Benson Hill website. Speaker 100:00:58Comments today from management will contain forward looking statements, including Benson Hill's expectations of future financial and business performance, Industry outlook as well as our current guidance for 2023. 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 cause actual results to differ materially 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, as well as other filings with the SEC. Also during this presentation, we will be discussing certain non GAAP financial measures. Speaker 100:01:38A reconciliation to GAAP is available in our earnings release and presentation. I will now turn the call over to Matt. Speaker 200:01:45Thanks, Ruben, and good morning, everyone. We are off to a solid start in 2023 with financial results in line with expectations and indicative of a strong year ahead for Benson Hill. We are building on the momentum from last year and we are seeing demand for our proprietary soy ingredient products in line with our expectations for a 40% to 50% increase in proprietary revenues. We continue to experience market conditions that support our non proprietary meal, Ingredient and oil sales despite the current softness in underlying commodity crush margins. These market dynamics On deck is the 2023 planting season, which is now well underway. Speaker 200:02:34Our team has successfully secured final commitments from our farmer partners To grow a proprietary crop on approximately 50% more acres than last year, which we expect to produce a harvest this fall that enables more targeted growth from our ingredient product portfolio with a focus on profitability as we discussed last quarter. We had the opportunity in March engage with some of you at our headquarters in St. Louis for Investor Day. The event provided the backdrop to more insights into our strategy And demonstrated our commitment to build a company that can set the pace of innovation in the agri food system of the future. I would like to reinforce some important takeaways from that event. Speaker 200:03:15The demand side for innovations remains intact. To meet nutrition security goals and global climate goals, we need innovation in the plant based food movement, which has been building for years. We believe the secular trends underlying this broad and diverse market opportunity are durable and it is continuing to grow and diversify. Innovation that leads to reduced processing, better flavor and more nutrition per acre can boost the adoption of plant based foods And those foods significantly reduce climate impact. That's why we've chosen to bring our innovations to markets in plant based proteins, Aquaculture and specialty oil with plans to start and expand into new markets through our product pipeline. Speaker 200:03:59What makes our approach to innovation impactful is the multiplier effect we create, which demonstrates the power of using genomics as a lever for change. Through genomic innovation, we can achieve elevated protein levels, enhanced nutrition, better functionality and other attributes, All of which then get leveraged across crops, across feed and food categories, across different geographies, Into multiple ingredient streams and into multiple food application areas. We plan to further scale the existing proprietary portfolio And introduce next generation products. Since we unveiled our product pipeline in early 2022, we have advanced several candidates in the As well as added new ones. We estimate that the serviceable obtainable market for our pipeline over the next 8 to 10 years is approximately $6,000,000,000 primarily in North America. Speaker 200:04:54Given the limited acreage footprint of this opportunity, particularly in contrast to the more than 90,000,000 acres of through a combination of our closed loop operations, partnerships and licensing arrangements. As we look over the next 2 years, Here is what you can expect from Benson Hill. From now until 2025, we plan to scale our highest margin ingredient products help achieve our stated objective to generate positive adjusted EBITDA and positive free cash flow. Given the current macroeconomic and capital markets environment, we believe prioritizing profitability is the right decision for our shareholders. We are introducing 2 new proprietary soy varieties for commercial planting this year with several more expected over the next 2 years. Speaker 200:05:50In fact, by 2025, we plan to more than double our proprietary soy varieties, including a significant expansion Our ultra high protein soy options for our farmer partners to grow. Enabled by our CropOS technology platform, these varieties have been to deliver improved agronomic attributes, including higher yields, which can provide benefits to our farmer network and help reduce the higher premiums We have had to offer under current market conditions. Furthermore, these new commercial varieties will increase our flexibility to plant in different geographies, which will further serve to diversify planting risk as well as reduce logistics costs. We plan to target a larger share capture In the European aqua market with our ultra high protein plus low oligosaccharide soy meal product, which is less processed, more sustainable and Responsibly sourced from U. S. Speaker 200:06:45Farmers. Aqua feed represents an exciting growth opportunity that has far exceeded our expectations and expands the market opportunity for our domestic farmer partners. And in the years to come, we expect to introduce our soy ingredient products across multiple categories in the European plant based food ingredient market. Between 20252028, We expect to begin scaling our 1st generation of ultra high protein yellow pea varieties, initially targeting the pet food market using our already established closed loop model in North Dakota. We also expect to begin accessing the broader animal feed market With new high protein soy varieties that are lower in anti nutrients and also include Corteva's Enlist E3 technology package. Speaker 200:07:34This innovation is expected to open an estimated 40,000,000 acre domestic opportunity for the poultry market And allow us to offer more choice for farmers, processors and meat producers to partner with Benson Hill and realize efficiencies and cost savings in their operations. It's notable that the value proposition for our improved soy varieties has already been validated by multiple of the top 5 poultry producers in North America. The unlock for Benson Hill and our partners to more broadly access this market will be the inclusion of herbicide tolerance, which we will have incorporated across numerous commercial soy varieties in the field starting in 2025. In the near to medium term, Our plans also include the introduction of the industry's 1st CRISPR enabled next generation soy varieties with higher protein and improved nutrition profiles. These introductions are anticipated to provide benefits beyond our current non GMO products as well as any GMO products currently available on the market. Speaker 200:08:37As we look beyond 2028, we are planning to bring to bear the full capabilities of CropOS and Crop Accelerator With several step level changes in innovation, first, we plan to introduce a dual premium plus soybean that couples our ultra high protein meal With a lower anti nutrient profile and our high oleic low linolenic oil, this is a complex challenge well suited for our CropOS platform. Our goal is to grow on 1 acre what it currently takes 2 acres to produce with our highest value added ingredient products for customers. 2nd, we expect to introduce future generations of seed innovation with even higher protein content and higher oil content that offer additional benefits to customers and provide us with more access to markets such as biodiesel. Finally, We expect to continue the progress made to date to tackle one of the most complex technical challenges, improving flavor profiles in yellowpea and soybean. If we are successful, this has the potential to further expand our opportunities for yellowpea in the human food market and establish a proprietary Soy and yellow pea platform capable of providing expanded novel ingredient options to our customers. Speaker 200:09:55We believe what differentiates us That our focus in these areas is driven by the conversations we are having with customers to see around the corner to what's possible with CropOS. I will conclude by saying how excited we are about the outlook for this year. 2023 is the year of the customer And our operations and commercial teams have a relentless focus on pulling forward our innovations to attack multiple end markets. Across every segment, our diverse portfolio assures that we are hitting many of the key trends that impact consumers. That's how we are winning With great technology, best in class operations and strong business execution led by an experienced team of leaders, And it's how we're setting the pace of innovation in food with ingredients that are better from the beginning for people and for our planet. Speaker 200:10:46I will now turn the call over to Dean for his perspective on our Q1 results and outlook. Speaker 300:10:52Thanks, Matt, and good morning, everyone. As you saw in our release, in the slide you see now, performance in the Q1 excluding the impact of open mark to market timing differences led to an 80% increase in revenues to $128,000,000 compared to the Q1 of 2022 and gross profit increased by approximately First, we had strong sales of our proprietary products, especially in the aquaculture market that led to an 80% revenue increase to $25,000,000 2nd, crush margins remain favorable and capacity utilization high, which helped to drive an approximate 100 year over year increase in nonproprietary sales. Over $20,000,000 of our revenues in the quarter came from onetime nonproprietary soybean sales that helped to optimize our logistics for our UHP soy meal shipments to the European aquaculture markets. 3rd, while operating costs were significantly better than the prior year, Ongoing inflationary pressures and supply chain challenges were a factor in our Q1 results. Operating expenses declined by 11% to $29,000,000 As a result of implementing a portion of the operating expense reduction expected through our liquidity improvement plan. Speaker 300:12:10As a result, We are reducing our 2023 operating expense to a range of $115,000,000 to $125,000,000 which is a $10,000,000 decline from our original guidance. From a cash OpEx perspective, we expect the range to be $80,000,000 to $87,000,000 compared to $95,000,000 in 2022. We are on track to complete the cost savings effort by the end of this year and to realize at least a $20,000,000 annual run rate reduction by the end of 2024. The revised guidance is expected to flow through to a reduction in our loss for adjusted EBITDA and free cash flow as you see in the presentation slides. The remaining elements of our liquidity plan and the status of our efforts remain the same as we discussed on the Q4 call and at our Investor Day event a few weeks ago. Speaker 300:12:58We expect the 2nd quarter to be another period of strong financial performance. As Matt mentioned, crush margins are down considerably. However, we have been able to mostly lock in crush margins in line with what we saw in the Q1. Our assessment earlier this year indicated a continuation of a favorable commodity market in 2023, which is reflected in our guidance. We continue to support this view, but we are closely monitoring the commodity markets. Speaker 300:13:23As Matt mentioned, we're off to a good start in 2023. We are leveraging the operating and commercial infrastructure we established last year to scale our proprietary ingredients portfolio. We're adapting to the changing macro environment with a prudent plan to enhance our cost structure, improve liquidity and execute our strategic objectives. That concludes the prepared remarks. We'll now move on to the Q and A session. Operator00:13:48Thank you. We will pause here briefly as questions are registered. We have the first question on the phone lines from Kristen Owen of Oppenheimer. Speaker 400:14:35Great. Thank you for taking the question and good morning everyone. Congratulations on the nice results in the quarter. I was wondering if you could talk a little bit about the cadence for the rest the year. It seems like you had some pretty good visibility on the proprietary revenue growth, had some one time items that I think you called out in the quarter. Speaker 400:14:54Just wondering if you can give us a sense of the inflection or trade off between the commodity environment and the proprietary environment and how you're managing that mix shift over the balance of the year? Thank you. Speaker 200:15:12Thanks, Kristen, for the question and your comment. I'll let Dean fill in the blanks as it relates to some of the one time Items, because as you point out, that affects Q1 non proprietary revenue in a meaningful way. But what I will offer is that in contrast to 2022, we expect a more consistent Quarter by quarter performance, hence the affirmation of the $100,000,000 to $110,000,000 proprietary Guidance for 2023 in light of what was a really nice first quarter kickoff That constituted nearly a pro rata view of that. So, yes, I think as it relates to the remainder of the year, we're seeing some maturation in the customer relationships that we began to talk about in the last call. And you really see 2023 being the year of the customer where we've landed into a lot of accounts With a large customer base across several markets and we're excited about expanding those relationships and continuing to build business Dean, you want to comment any more on the on some of the moving parts on the non proprietary? Speaker 500:16:32Yes. No, I would just say, as Matt pointed out, that on an adjusted basis, meaning excluding the effects Of the mark to market adjustments, the $128,000,000 does include about $23,000,000 of this one time shipment. And when you kind of strip that out, The proprietary revenue came in about where we expected. And when we look at our capacity utilization, Our process utilization was in line and in fact consistent with sort of exit run rates In 2022, so that was intact. We did have some maintenance that we had to perform at Seymour That created a little bit of headwind, but we were able to work through that. Speaker 500:17:18So aside from that, I'll call it the one time level loading bean shipment for the European markets. It was really the only items and so I think it's consistent with what we expected and notably the proprietary revenue is coming in right in on run rate where we expected. So No big surprises other than the one time item that we just talked about. Speaker 400:17:41That's really helpful. Thank you both. And then if I could maybe double click on some of those customer comments that you made, Matt. Can you just give us an update on the co branding strategy that You launched this quarter with ADM, understanding that it's still very early days, but any commentary on the initial reception, anything you can share there would be helpful. Thank you. Speaker 200:18:04Sure. So we haven't released the co branded line with ADM, but we continue to anticipate that, that will occur in the Q2. The work stream as it relates to some of the pre commercialization This has done quite well. I can't comment in detail, but I will just say at a high level that the feedback on the products has been positive, Consistent with some of the validations that we've seen from applications work conducted by some of our early adopter customers in 20 22. And so we're really bullish on the product lines that are there, the Speaker 400:18:52Thank you. I'll pass it on. Operator00:18:57Your next question comes from Cody Ross of UBS. Speaker 600:19:03Good morning, everyone. Thank you for taking our questions. You're off to a solid start this year. Sales came in much better than expected. You noted a one time benefit of $23,000,000 Was that initially planned in your original sales outlook of $390,000,000 to 430,000,000 Speaker 200:19:25No, it was not planned. Yes, sorry. Go ahead, Dean. Speaker 500:19:31Yes. No, sorry. Short answer was not planned. Speaker 600:19:35Okay. Right. So that helps. Sorry, go for it. Sorry to cut you off. Speaker 200:19:42No, go ahead, Cody. Speaker 600:19:45I was going to say that wasn't planned. So that's a benefit that was unexpected. You held your sales guidance. I'm just kind of curious, the rest of the year, it looks like you expect sales to decline 5% to 18% Based on your guidance range, I'm wondering why that would be? Speaker 500:20:06Well, it's just it's within the guidance range. I mean, it wasn't a significant We've got a long year yet. We're pleased with how obviously Q1 played out, but it's I think still a little bit early days on the top line to sort of expand on a $20,000,000 item. Obviously, things play out the way we expect on the Within the range, it will be a benefit. But right now, it's I would say it's included in the range, all things being equal. Speaker 600:20:37Okay. And then I just want to talk about the belly of the P and L because gross profit Came in slightly ahead of expectation, albeit on the sales beat a little lighter. How much gross profit was attached to that? And then can you just give any color on some of the OpEx improvements that you've made and how we should think about that for the remainder of the year? Thank you. Speaker 500:21:01Yes, great question. So there was virtually 0. There was, I would call it, the minimis amount of contribution margin Related to the one time bean sales, really the entire strategy was to optimize the shipment and the cost per bushel rate optimization to The Aqua Markets. So in and of itself that one time had no margin contribution, no significant margin contribution, maybe a couple of 100,000. In terms of the operating expense, I would say this, it's broad based, but focused on execution of the value creation Strategies and commitments that we've made. Speaker 500:21:37So we're not sort of communicating the elements of the cost reduction that we've achieved so far. It has been a part of the overall optimization of our operating expense that we've been executing and then some incremental actions in Q1 and we'll take incremental actions as we go Throughout the year and executing the liquidity improvement plan. And so while it's broad based, it is focused on making sure that we retain the value creation Our capabilities and we continue to support the strategies that we've committed to. Speaker 600:22:10Great. Thanks. I'll pass it on. Okay. Operator00:22:15We now have Ben Heurer of Barclays. Speaker 700:22:21Yes, good morning and thanks for taking my question. Congrats on the very strong results. One question actually, most likely technical for Dean. So if we look into The adjusted EBITDA you have for the quarter, I mean, obviously, there was this roughly $5,000,000 impact from open mark to market timing differences. Now as it relates to the guidance for the year, it's a very narrow range of just about $5,000,000 which is just that difference. Speaker 700:22:47So wanted to understand Is it related to your guidance? Is that excluding open mark to market timing differences? Or is it including what you had on the benefit in the Q1? That would be my first question, very Technical, I Speaker 300:23:00know. Speaker 500:23:01Yes, it's very technical, but let me answer it in a non technical way. We don't as you know, Ben, we don't guide on the mark to market adjustments. And if we could do that, We'd be great, but we don't provide guidance as it relates to expected impacts on the mark to market adjustments moving forward. So The short answer is that that does not include mark to market adjustments. Speaker 700:23:26Okay, perfect. And then if we think about just The longer term and as you introduce and kind of work through what you currently have in Portfolio, what's in your innovation pipeline and go forward, how should we think about like the need to allocate Spend as it relates to research, as it relates to CapEx, what are like kind of like the medium term Needs for you guys to spend and how does that sit within some of the cost savings we've been seeing. So just wanted to understand if we're Not overdoing here on the savings side just because of the liquidity position and compromising a little bit on the opportunities You guys would have just from the technical capabilities in order to achieve your goals further down the decade? Thank you. Speaker 500:24:21Yes, great question, Ben. And I'll go ahead, Matt. Speaker 200:24:25Well, let me give the I'll give a qualitative view of it at a high level because from a strategic One of the core tenants of the liquidity improvement plan was to maintain the both operational excellence, but also the innovation That we've invested in very heavily over the past many years. And so as we've evaluated our cost structure, a lot of the focus Starts with G and A and you're sort of building out from that. And so think there first then. The other element is, as you've seen reported in the neighborhood of a $40,000,000 line item for R and D. And over time, a larger proportion of that has been on the D than the R. Speaker 200:25:09In other words, As we've seen our pipeline mature in the last 3 to 5 years, a larger proportion of that operating budget It's geared towards pre commercial activities and really bringing to market a portfolio of products that have largely been derisked. And that has also been a core priority for us to retain all those capabilities. And in fact, I would say, in some respects, Reinvest in those capabilities, expand those capabilities given that numerous product opportunities that we've described in the next 2 to 5 years are coming online for which we've largely already derisked. In other words, they've demonstrated the phenotypic output or the characteristics the spec as it may be for an ingredient product and now we're really in the final stages of bulking up inventory and bringing those opportunities to our partnering customer base. So those are the areas that we've really prioritized and put a ring fence around as it relates to maintenance. Speaker 200:26:10And then as it relates to some of the other areas, like I said, G and A has been an area of focus Some of the very longer term components, but none where we've sacrificed a core capability or Technological platform that we've built over the last few years. So I just want to give you the sort of strategic thought pattern there and then Dean can articulate some more detail. Speaker 500:26:39Okay. Matt, I think you covered it well. I think just to reiterate what Matt said, I think we're focused. I think we're being surgical. And I think we're acting in a way that's consistent and prudent with Ensuring that we retain the value creation capabilities of the company. Speaker 700:27:00Okay, perfect. Thank you very much, Matt. It's been congrats again. Speaker 200:27:05Thank you, Ben. Operator00:27:07Thank you. Your next question comes from Brian Wright with Roth MKM. Speaker 200:27:15Thanks. Good morning. Thanks for the question. Just wanted to thanks for the additional detail on the pipeline. I thought that was really helpful. Speaker 200:27:23Taking a little deeper on that, just to understand the scope maybe a little bit better as far as kind of Is everything in the pipeline focused on soybean and yellow pea? Or are there any other potential crops That are in that pipeline, anything kind of like in the cover crop area or anything you want to talk about that to give us a scope of What could be in that? Not right now. There is a real focus in soy and yellow pea, given the quantum of market opportunity that's there and every time we speak to new So, Murs, we're learning more and more about other opportunities, even to enhance beyond what we've currently contemplated in the current pipeline. However, it is something that we're not blind to as we've built out a really, really robust intellectual property portfolio It's how the innovations that we've discovered or the inventions that That come from our R and D efforts can be translated to other crops, namely legume and whole crops that drive a lot of the Nutrition demand in the global markets. Speaker 200:28:39So in time, I think we'll be better positioned to talk about Some investments that we may make. But right now, we really, as reflected in this liquidity improvement plan and other efforts, We've really tried to streamline our operations, be lean, focus on the largest nearest term, Highest margin value creation opportunities and drive towards successful commercialization of our closed loop. So that's really the focal point is around soy and yellowpea for the foreseeable future. Makes sense. Thank you. Operator00:29:19We now have Ben Cleave of Lake Street Capital Markets. Speaker 500:29:25Hi. Thanks for taking my questions. I have Speaker 800:29:27a couple on the opportunity now on hand with the Enlist herbicide package. First question is, not that this is still young, only, I don't know, 6 weeks in, but can you kind of provide a bit more detail On the activities that you are undertaking now to introduce those traits into And your genetics and kind of what your expectations are over the next 18 months for in this process? Speaker 200:29:59Sure, sure. Thanks for the question. What I would say is that the introgression or the incorporation of The E3 in force technology, as you know, is a really meaningful potential unlock in some larger acre broader markets. But it's not something that we just commenced even though we just announced it a few weeks ago, it's something that's been ongoing for some time, Which is actually what enables us to hit the market starting with plantings initially in 2025 because that work has been underway for The opportunity set and how we're kind of thinking about the next 2 to 4 years as we roll out numerous commercial That incorporates that technology. It's focused not just on the large acre Market opportunities, we've talked briefly about 40,000,000 acres soy opportunity in the poultry market. Speaker 200:30:56I mentioned in my prepared remarks today That this is not a concept for advancement in a pipeline that we hope might work one day. This is indeed something that's been validated in very meaningful feeding studies already. There's no product opportunity that's here today. The unlock truly is reducing the cost of the closed loop with an herbicide tolerance package that will Enable us to identity preserve at a larger degree of scale with our partners feed inputs for some of those markets. But it's not just those, as I mentioned. Speaker 200:31:38There's also a healthy GM market domestically and elsewhere in some of these higher value But you can imagine In 20,6, 7, 8, that technology layering into all of the other stacks That we've begun to discuss, including on the long term, even the dual premium theme, which is an extraordinarily exciting opportunity that, As I mentioned, it creates multiple premium value streams from the same acre, from the same bean, Further enabled by the herbicide tolerance package. So hopefully that provides a little bit more context. Speaker 800:32:32Yes. That was really helpful, Matt. And that kind of leads into my follow-up question on this. Given The dynamic that a typical novel GMO bean will have or seed in general will have A pretty high scale commercial launch versus the kind of the traditional cadence that you guys see with kind of Well on steady ramp in the early years given the kind of complexity of your consumer focused products. Can you characterize kind of the magnitude Of the commercial ramp from that you expect from Enlist Varieties in its 1st few years versus Your traditional non GMO varieties, is it going to be materially greater in scale or you think it's going to track in line with what you've seen historically? Speaker 200:33:26Yes, great question. It's more the latter. I see it tracking in line with what we've seen. And to be frank, this is really rate limited by Feed availability. So one point you're sort of getting at here is that there's a distinct contrast Between how we go to market with a new genetic variety, than a seed company. Speaker 200:33:48Seed company might bulk this in Really massive way and then they're selling seed at the end of the day. So they're scaling its employees to unilaterally push a product To a farmer. Whereas we're saying with the farmer partner, where there's more of a bilateral relationship here that We're giving you early access to what might not be 100 of 1000 of acres worth of seed, maybe it's only tens of 1000 of acres in 1st year. But that provides an adequate opportunity for us to move product in a targeted way to preferred customers in the initial launch year. And so that rate limiter of seat availability is essentially how we think about making the product available. Speaker 200:34:37And we'd rather not hold back innovations from the market. Our mission is to set the pace of innovation and food. And while that might not initially result in 100 1,000 and millions of acres worth of penetration, there's a meaningful amount of value to be created by moving products to market as soon as we feasibly can. And I think in the non GMO portfolio, we've demonstrated some real acuity to do that. So I expect it will be very similar when we launch Speaker 800:35:06Got it. Got it. Very good. Very helpful. Thanks a lot for taking Speaker 500:35:10my questions. I'll get back in line. Speaker 200:35:13Thank you. Operator00:35:17Thank you. I can confirm we have no further questions. So I'd like to hand it back to the management team. Speaker 200:35:45Thank you, Briko. And thanks everybody for your time and attention this morning. We've demonstrated since the founding of the company An ability to be nimble and a will to win. And we continue to believe we have the right technology, products, Pipeline, talent, culture and strategy to set the pace of innovation in food, which really isn't a slogan, but a mission That is very much the core of what we at Benson Hill do. Today, we're at the forefront of a unique and powerful synergy So data, plant and food science and combined with the go to market capabilities that we have, we expect to continue to gain momentum this year and in the years to come. Speaker 200:36:28We're excited about our future because it's defined by our innovations being brought to bear across broad market categories today. And we believe that the best is really yet to come as we scale our proprietary products and we launch the next generations of our products.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBenson Hill Q1 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckQuarterly 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.comMusk’s AI Masterplan – Our #1 AI Stock to Buy NowDid Elon Musk just set the stage for the next AI stock explosion? One 30-year Wall Street veteran thinks so. Musk has been quietly creating one of the most ambitious AI ventures in history.April 18, 2025 | Behind the Markets (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? Why Analysts Boosted United Airlines Stock Ahead of EarningsLamb Weston Stock Rises, Earnings Provide Calm Amidst ChaosIntuitive Machines Gains After Earnings Beat, NASA Missions Ahead Upcoming Earnings Tesla (4/22/2025)Intuitive Surgical (4/22/2025)Verizon Communications (4/22/2025)Canadian National Railway (4/22/2025)Novartis (4/22/2025)RTX (4/22/2025)3M (4/22/2025)Capital One Financial (4/22/2025)General Electric (4/22/2025)Danaher (4/22/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 9 speakers on the call. Operator00:00:00Good morning. Thank you for attending Benson Hills First Quarter 2023 Earnings Call. My name is Brika, and I will be your moderator. All lines are on mute for the presentation portion of the call I would now like to pass the conference over to your host, Ruben Mayer, Senior Director, Investor Relations with Benson Hill. Ruben, please go ahead. Speaker 100:00:33Thank you and good morning. We appreciate you joining us to review our Q1 2023 financial results and outlook. With me today are Matt Crisp, 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 as well as our investor presentation we will reference during the prepared remarks are available in the Investors section of the Benson Hill website. Speaker 100:00:58Comments today from management will contain forward looking statements, including Benson Hill's expectations of future financial and business performance, Industry outlook as well as our current guidance for 2023. 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 cause actual results to differ materially 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, as well as other filings with the SEC. Also during this presentation, we will be discussing certain non GAAP financial measures. Speaker 100:01:38A reconciliation to GAAP is available in our earnings release and presentation. I will now turn the call over to Matt. Speaker 200:01:45Thanks, Ruben, and good morning, everyone. We are off to a solid start in 2023 with financial results in line with expectations and indicative of a strong year ahead for Benson Hill. We are building on the momentum from last year and we are seeing demand for our proprietary soy ingredient products in line with our expectations for a 40% to 50% increase in proprietary revenues. We continue to experience market conditions that support our non proprietary meal, Ingredient and oil sales despite the current softness in underlying commodity crush margins. These market dynamics On deck is the 2023 planting season, which is now well underway. Speaker 200:02:34Our team has successfully secured final commitments from our farmer partners To grow a proprietary crop on approximately 50% more acres than last year, which we expect to produce a harvest this fall that enables more targeted growth from our ingredient product portfolio with a focus on profitability as we discussed last quarter. We had the opportunity in March engage with some of you at our headquarters in St. Louis for Investor Day. The event provided the backdrop to more insights into our strategy And demonstrated our commitment to build a company that can set the pace of innovation in the agri food system of the future. I would like to reinforce some important takeaways from that event. Speaker 200:03:15The demand side for innovations remains intact. To meet nutrition security goals and global climate goals, we need innovation in the plant based food movement, which has been building for years. We believe the secular trends underlying this broad and diverse market opportunity are durable and it is continuing to grow and diversify. Innovation that leads to reduced processing, better flavor and more nutrition per acre can boost the adoption of plant based foods And those foods significantly reduce climate impact. That's why we've chosen to bring our innovations to markets in plant based proteins, Aquaculture and specialty oil with plans to start and expand into new markets through our product pipeline. Speaker 200:03:59What makes our approach to innovation impactful is the multiplier effect we create, which demonstrates the power of using genomics as a lever for change. Through genomic innovation, we can achieve elevated protein levels, enhanced nutrition, better functionality and other attributes, All of which then get leveraged across crops, across feed and food categories, across different geographies, Into multiple ingredient streams and into multiple food application areas. We plan to further scale the existing proprietary portfolio And introduce next generation products. Since we unveiled our product pipeline in early 2022, we have advanced several candidates in the As well as added new ones. We estimate that the serviceable obtainable market for our pipeline over the next 8 to 10 years is approximately $6,000,000,000 primarily in North America. Speaker 200:04:54Given the limited acreage footprint of this opportunity, particularly in contrast to the more than 90,000,000 acres of through a combination of our closed loop operations, partnerships and licensing arrangements. As we look over the next 2 years, Here is what you can expect from Benson Hill. From now until 2025, we plan to scale our highest margin ingredient products help achieve our stated objective to generate positive adjusted EBITDA and positive free cash flow. Given the current macroeconomic and capital markets environment, we believe prioritizing profitability is the right decision for our shareholders. We are introducing 2 new proprietary soy varieties for commercial planting this year with several more expected over the next 2 years. Speaker 200:05:50In fact, by 2025, we plan to more than double our proprietary soy varieties, including a significant expansion Our ultra high protein soy options for our farmer partners to grow. Enabled by our CropOS technology platform, these varieties have been to deliver improved agronomic attributes, including higher yields, which can provide benefits to our farmer network and help reduce the higher premiums We have had to offer under current market conditions. Furthermore, these new commercial varieties will increase our flexibility to plant in different geographies, which will further serve to diversify planting risk as well as reduce logistics costs. We plan to target a larger share capture In the European aqua market with our ultra high protein plus low oligosaccharide soy meal product, which is less processed, more sustainable and Responsibly sourced from U. S. Speaker 200:06:45Farmers. Aqua feed represents an exciting growth opportunity that has far exceeded our expectations and expands the market opportunity for our domestic farmer partners. And in the years to come, we expect to introduce our soy ingredient products across multiple categories in the European plant based food ingredient market. Between 20252028, We expect to begin scaling our 1st generation of ultra high protein yellow pea varieties, initially targeting the pet food market using our already established closed loop model in North Dakota. We also expect to begin accessing the broader animal feed market With new high protein soy varieties that are lower in anti nutrients and also include Corteva's Enlist E3 technology package. Speaker 200:07:34This innovation is expected to open an estimated 40,000,000 acre domestic opportunity for the poultry market And allow us to offer more choice for farmers, processors and meat producers to partner with Benson Hill and realize efficiencies and cost savings in their operations. It's notable that the value proposition for our improved soy varieties has already been validated by multiple of the top 5 poultry producers in North America. The unlock for Benson Hill and our partners to more broadly access this market will be the inclusion of herbicide tolerance, which we will have incorporated across numerous commercial soy varieties in the field starting in 2025. In the near to medium term, Our plans also include the introduction of the industry's 1st CRISPR enabled next generation soy varieties with higher protein and improved nutrition profiles. These introductions are anticipated to provide benefits beyond our current non GMO products as well as any GMO products currently available on the market. Speaker 200:08:37As we look beyond 2028, we are planning to bring to bear the full capabilities of CropOS and Crop Accelerator With several step level changes in innovation, first, we plan to introduce a dual premium plus soybean that couples our ultra high protein meal With a lower anti nutrient profile and our high oleic low linolenic oil, this is a complex challenge well suited for our CropOS platform. Our goal is to grow on 1 acre what it currently takes 2 acres to produce with our highest value added ingredient products for customers. 2nd, we expect to introduce future generations of seed innovation with even higher protein content and higher oil content that offer additional benefits to customers and provide us with more access to markets such as biodiesel. Finally, We expect to continue the progress made to date to tackle one of the most complex technical challenges, improving flavor profiles in yellowpea and soybean. If we are successful, this has the potential to further expand our opportunities for yellowpea in the human food market and establish a proprietary Soy and yellow pea platform capable of providing expanded novel ingredient options to our customers. Speaker 200:09:55We believe what differentiates us That our focus in these areas is driven by the conversations we are having with customers to see around the corner to what's possible with CropOS. I will conclude by saying how excited we are about the outlook for this year. 2023 is the year of the customer And our operations and commercial teams have a relentless focus on pulling forward our innovations to attack multiple end markets. Across every segment, our diverse portfolio assures that we are hitting many of the key trends that impact consumers. That's how we are winning With great technology, best in class operations and strong business execution led by an experienced team of leaders, And it's how we're setting the pace of innovation in food with ingredients that are better from the beginning for people and for our planet. Speaker 200:10:46I will now turn the call over to Dean for his perspective on our Q1 results and outlook. Speaker 300:10:52Thanks, Matt, and good morning, everyone. As you saw in our release, in the slide you see now, performance in the Q1 excluding the impact of open mark to market timing differences led to an 80% increase in revenues to $128,000,000 compared to the Q1 of 2022 and gross profit increased by approximately First, we had strong sales of our proprietary products, especially in the aquaculture market that led to an 80% revenue increase to $25,000,000 2nd, crush margins remain favorable and capacity utilization high, which helped to drive an approximate 100 year over year increase in nonproprietary sales. Over $20,000,000 of our revenues in the quarter came from onetime nonproprietary soybean sales that helped to optimize our logistics for our UHP soy meal shipments to the European aquaculture markets. 3rd, while operating costs were significantly better than the prior year, Ongoing inflationary pressures and supply chain challenges were a factor in our Q1 results. Operating expenses declined by 11% to $29,000,000 As a result of implementing a portion of the operating expense reduction expected through our liquidity improvement plan. Speaker 300:12:10As a result, We are reducing our 2023 operating expense to a range of $115,000,000 to $125,000,000 which is a $10,000,000 decline from our original guidance. From a cash OpEx perspective, we expect the range to be $80,000,000 to $87,000,000 compared to $95,000,000 in 2022. We are on track to complete the cost savings effort by the end of this year and to realize at least a $20,000,000 annual run rate reduction by the end of 2024. The revised guidance is expected to flow through to a reduction in our loss for adjusted EBITDA and free cash flow as you see in the presentation slides. The remaining elements of our liquidity plan and the status of our efforts remain the same as we discussed on the Q4 call and at our Investor Day event a few weeks ago. Speaker 300:12:58We expect the 2nd quarter to be another period of strong financial performance. As Matt mentioned, crush margins are down considerably. However, we have been able to mostly lock in crush margins in line with what we saw in the Q1. Our assessment earlier this year indicated a continuation of a favorable commodity market in 2023, which is reflected in our guidance. We continue to support this view, but we are closely monitoring the commodity markets. Speaker 300:13:23As Matt mentioned, we're off to a good start in 2023. We are leveraging the operating and commercial infrastructure we established last year to scale our proprietary ingredients portfolio. We're adapting to the changing macro environment with a prudent plan to enhance our cost structure, improve liquidity and execute our strategic objectives. That concludes the prepared remarks. We'll now move on to the Q and A session. Operator00:13:48Thank you. We will pause here briefly as questions are registered. We have the first question on the phone lines from Kristen Owen of Oppenheimer. Speaker 400:14:35Great. Thank you for taking the question and good morning everyone. Congratulations on the nice results in the quarter. I was wondering if you could talk a little bit about the cadence for the rest the year. It seems like you had some pretty good visibility on the proprietary revenue growth, had some one time items that I think you called out in the quarter. Speaker 400:14:54Just wondering if you can give us a sense of the inflection or trade off between the commodity environment and the proprietary environment and how you're managing that mix shift over the balance of the year? Thank you. Speaker 200:15:12Thanks, Kristen, for the question and your comment. I'll let Dean fill in the blanks as it relates to some of the one time Items, because as you point out, that affects Q1 non proprietary revenue in a meaningful way. But what I will offer is that in contrast to 2022, we expect a more consistent Quarter by quarter performance, hence the affirmation of the $100,000,000 to $110,000,000 proprietary Guidance for 2023 in light of what was a really nice first quarter kickoff That constituted nearly a pro rata view of that. So, yes, I think as it relates to the remainder of the year, we're seeing some maturation in the customer relationships that we began to talk about in the last call. And you really see 2023 being the year of the customer where we've landed into a lot of accounts With a large customer base across several markets and we're excited about expanding those relationships and continuing to build business Dean, you want to comment any more on the on some of the moving parts on the non proprietary? Speaker 500:16:32Yes. No, I would just say, as Matt pointed out, that on an adjusted basis, meaning excluding the effects Of the mark to market adjustments, the $128,000,000 does include about $23,000,000 of this one time shipment. And when you kind of strip that out, The proprietary revenue came in about where we expected. And when we look at our capacity utilization, Our process utilization was in line and in fact consistent with sort of exit run rates In 2022, so that was intact. We did have some maintenance that we had to perform at Seymour That created a little bit of headwind, but we were able to work through that. Speaker 500:17:18So aside from that, I'll call it the one time level loading bean shipment for the European markets. It was really the only items and so I think it's consistent with what we expected and notably the proprietary revenue is coming in right in on run rate where we expected. So No big surprises other than the one time item that we just talked about. Speaker 400:17:41That's really helpful. Thank you both. And then if I could maybe double click on some of those customer comments that you made, Matt. Can you just give us an update on the co branding strategy that You launched this quarter with ADM, understanding that it's still very early days, but any commentary on the initial reception, anything you can share there would be helpful. Thank you. Speaker 200:18:04Sure. So we haven't released the co branded line with ADM, but we continue to anticipate that, that will occur in the Q2. The work stream as it relates to some of the pre commercialization This has done quite well. I can't comment in detail, but I will just say at a high level that the feedback on the products has been positive, Consistent with some of the validations that we've seen from applications work conducted by some of our early adopter customers in 20 22. And so we're really bullish on the product lines that are there, the Speaker 400:18:52Thank you. I'll pass it on. Operator00:18:57Your next question comes from Cody Ross of UBS. Speaker 600:19:03Good morning, everyone. Thank you for taking our questions. You're off to a solid start this year. Sales came in much better than expected. You noted a one time benefit of $23,000,000 Was that initially planned in your original sales outlook of $390,000,000 to 430,000,000 Speaker 200:19:25No, it was not planned. Yes, sorry. Go ahead, Dean. Speaker 500:19:31Yes. No, sorry. Short answer was not planned. Speaker 600:19:35Okay. Right. So that helps. Sorry, go for it. Sorry to cut you off. Speaker 200:19:42No, go ahead, Cody. Speaker 600:19:45I was going to say that wasn't planned. So that's a benefit that was unexpected. You held your sales guidance. I'm just kind of curious, the rest of the year, it looks like you expect sales to decline 5% to 18% Based on your guidance range, I'm wondering why that would be? Speaker 500:20:06Well, it's just it's within the guidance range. I mean, it wasn't a significant We've got a long year yet. We're pleased with how obviously Q1 played out, but it's I think still a little bit early days on the top line to sort of expand on a $20,000,000 item. Obviously, things play out the way we expect on the Within the range, it will be a benefit. But right now, it's I would say it's included in the range, all things being equal. Speaker 600:20:37Okay. And then I just want to talk about the belly of the P and L because gross profit Came in slightly ahead of expectation, albeit on the sales beat a little lighter. How much gross profit was attached to that? And then can you just give any color on some of the OpEx improvements that you've made and how we should think about that for the remainder of the year? Thank you. Speaker 500:21:01Yes, great question. So there was virtually 0. There was, I would call it, the minimis amount of contribution margin Related to the one time bean sales, really the entire strategy was to optimize the shipment and the cost per bushel rate optimization to The Aqua Markets. So in and of itself that one time had no margin contribution, no significant margin contribution, maybe a couple of 100,000. In terms of the operating expense, I would say this, it's broad based, but focused on execution of the value creation Strategies and commitments that we've made. Speaker 500:21:37So we're not sort of communicating the elements of the cost reduction that we've achieved so far. It has been a part of the overall optimization of our operating expense that we've been executing and then some incremental actions in Q1 and we'll take incremental actions as we go Throughout the year and executing the liquidity improvement plan. And so while it's broad based, it is focused on making sure that we retain the value creation Our capabilities and we continue to support the strategies that we've committed to. Speaker 600:22:10Great. Thanks. I'll pass it on. Okay. Operator00:22:15We now have Ben Heurer of Barclays. Speaker 700:22:21Yes, good morning and thanks for taking my question. Congrats on the very strong results. One question actually, most likely technical for Dean. So if we look into The adjusted EBITDA you have for the quarter, I mean, obviously, there was this roughly $5,000,000 impact from open mark to market timing differences. Now as it relates to the guidance for the year, it's a very narrow range of just about $5,000,000 which is just that difference. Speaker 700:22:47So wanted to understand Is it related to your guidance? Is that excluding open mark to market timing differences? Or is it including what you had on the benefit in the Q1? That would be my first question, very Technical, I Speaker 300:23:00know. Speaker 500:23:01Yes, it's very technical, but let me answer it in a non technical way. We don't as you know, Ben, we don't guide on the mark to market adjustments. And if we could do that, We'd be great, but we don't provide guidance as it relates to expected impacts on the mark to market adjustments moving forward. So The short answer is that that does not include mark to market adjustments. Speaker 700:23:26Okay, perfect. And then if we think about just The longer term and as you introduce and kind of work through what you currently have in Portfolio, what's in your innovation pipeline and go forward, how should we think about like the need to allocate Spend as it relates to research, as it relates to CapEx, what are like kind of like the medium term Needs for you guys to spend and how does that sit within some of the cost savings we've been seeing. So just wanted to understand if we're Not overdoing here on the savings side just because of the liquidity position and compromising a little bit on the opportunities You guys would have just from the technical capabilities in order to achieve your goals further down the decade? Thank you. Speaker 500:24:21Yes, great question, Ben. And I'll go ahead, Matt. Speaker 200:24:25Well, let me give the I'll give a qualitative view of it at a high level because from a strategic One of the core tenants of the liquidity improvement plan was to maintain the both operational excellence, but also the innovation That we've invested in very heavily over the past many years. And so as we've evaluated our cost structure, a lot of the focus Starts with G and A and you're sort of building out from that. And so think there first then. The other element is, as you've seen reported in the neighborhood of a $40,000,000 line item for R and D. And over time, a larger proportion of that has been on the D than the R. Speaker 200:25:09In other words, As we've seen our pipeline mature in the last 3 to 5 years, a larger proportion of that operating budget It's geared towards pre commercial activities and really bringing to market a portfolio of products that have largely been derisked. And that has also been a core priority for us to retain all those capabilities. And in fact, I would say, in some respects, Reinvest in those capabilities, expand those capabilities given that numerous product opportunities that we've described in the next 2 to 5 years are coming online for which we've largely already derisked. In other words, they've demonstrated the phenotypic output or the characteristics the spec as it may be for an ingredient product and now we're really in the final stages of bulking up inventory and bringing those opportunities to our partnering customer base. So those are the areas that we've really prioritized and put a ring fence around as it relates to maintenance. Speaker 200:26:10And then as it relates to some of the other areas, like I said, G and A has been an area of focus Some of the very longer term components, but none where we've sacrificed a core capability or Technological platform that we've built over the last few years. So I just want to give you the sort of strategic thought pattern there and then Dean can articulate some more detail. Speaker 500:26:39Okay. Matt, I think you covered it well. I think just to reiterate what Matt said, I think we're focused. I think we're being surgical. And I think we're acting in a way that's consistent and prudent with Ensuring that we retain the value creation capabilities of the company. Speaker 700:27:00Okay, perfect. Thank you very much, Matt. It's been congrats again. Speaker 200:27:05Thank you, Ben. Operator00:27:07Thank you. Your next question comes from Brian Wright with Roth MKM. Speaker 200:27:15Thanks. Good morning. Thanks for the question. Just wanted to thanks for the additional detail on the pipeline. I thought that was really helpful. Speaker 200:27:23Taking a little deeper on that, just to understand the scope maybe a little bit better as far as kind of Is everything in the pipeline focused on soybean and yellow pea? Or are there any other potential crops That are in that pipeline, anything kind of like in the cover crop area or anything you want to talk about that to give us a scope of What could be in that? Not right now. There is a real focus in soy and yellow pea, given the quantum of market opportunity that's there and every time we speak to new So, Murs, we're learning more and more about other opportunities, even to enhance beyond what we've currently contemplated in the current pipeline. However, it is something that we're not blind to as we've built out a really, really robust intellectual property portfolio It's how the innovations that we've discovered or the inventions that That come from our R and D efforts can be translated to other crops, namely legume and whole crops that drive a lot of the Nutrition demand in the global markets. Speaker 200:28:39So in time, I think we'll be better positioned to talk about Some investments that we may make. But right now, we really, as reflected in this liquidity improvement plan and other efforts, We've really tried to streamline our operations, be lean, focus on the largest nearest term, Highest margin value creation opportunities and drive towards successful commercialization of our closed loop. So that's really the focal point is around soy and yellowpea for the foreseeable future. Makes sense. Thank you. Operator00:29:19We now have Ben Cleave of Lake Street Capital Markets. Speaker 500:29:25Hi. Thanks for taking my questions. I have Speaker 800:29:27a couple on the opportunity now on hand with the Enlist herbicide package. First question is, not that this is still young, only, I don't know, 6 weeks in, but can you kind of provide a bit more detail On the activities that you are undertaking now to introduce those traits into And your genetics and kind of what your expectations are over the next 18 months for in this process? Speaker 200:29:59Sure, sure. Thanks for the question. What I would say is that the introgression or the incorporation of The E3 in force technology, as you know, is a really meaningful potential unlock in some larger acre broader markets. But it's not something that we just commenced even though we just announced it a few weeks ago, it's something that's been ongoing for some time, Which is actually what enables us to hit the market starting with plantings initially in 2025 because that work has been underway for The opportunity set and how we're kind of thinking about the next 2 to 4 years as we roll out numerous commercial That incorporates that technology. It's focused not just on the large acre Market opportunities, we've talked briefly about 40,000,000 acres soy opportunity in the poultry market. Speaker 200:30:56I mentioned in my prepared remarks today That this is not a concept for advancement in a pipeline that we hope might work one day. This is indeed something that's been validated in very meaningful feeding studies already. There's no product opportunity that's here today. The unlock truly is reducing the cost of the closed loop with an herbicide tolerance package that will Enable us to identity preserve at a larger degree of scale with our partners feed inputs for some of those markets. But it's not just those, as I mentioned. Speaker 200:31:38There's also a healthy GM market domestically and elsewhere in some of these higher value But you can imagine In 20,6, 7, 8, that technology layering into all of the other stacks That we've begun to discuss, including on the long term, even the dual premium theme, which is an extraordinarily exciting opportunity that, As I mentioned, it creates multiple premium value streams from the same acre, from the same bean, Further enabled by the herbicide tolerance package. So hopefully that provides a little bit more context. Speaker 800:32:32Yes. That was really helpful, Matt. And that kind of leads into my follow-up question on this. Given The dynamic that a typical novel GMO bean will have or seed in general will have A pretty high scale commercial launch versus the kind of the traditional cadence that you guys see with kind of Well on steady ramp in the early years given the kind of complexity of your consumer focused products. Can you characterize kind of the magnitude Of the commercial ramp from that you expect from Enlist Varieties in its 1st few years versus Your traditional non GMO varieties, is it going to be materially greater in scale or you think it's going to track in line with what you've seen historically? Speaker 200:33:26Yes, great question. It's more the latter. I see it tracking in line with what we've seen. And to be frank, this is really rate limited by Feed availability. So one point you're sort of getting at here is that there's a distinct contrast Between how we go to market with a new genetic variety, than a seed company. Speaker 200:33:48Seed company might bulk this in Really massive way and then they're selling seed at the end of the day. So they're scaling its employees to unilaterally push a product To a farmer. Whereas we're saying with the farmer partner, where there's more of a bilateral relationship here that We're giving you early access to what might not be 100 of 1000 of acres worth of seed, maybe it's only tens of 1000 of acres in 1st year. But that provides an adequate opportunity for us to move product in a targeted way to preferred customers in the initial launch year. And so that rate limiter of seat availability is essentially how we think about making the product available. Speaker 200:34:37And we'd rather not hold back innovations from the market. Our mission is to set the pace of innovation and food. And while that might not initially result in 100 1,000 and millions of acres worth of penetration, there's a meaningful amount of value to be created by moving products to market as soon as we feasibly can. And I think in the non GMO portfolio, we've demonstrated some real acuity to do that. So I expect it will be very similar when we launch Speaker 800:35:06Got it. Got it. Very good. Very helpful. Thanks a lot for taking Speaker 500:35:10my questions. I'll get back in line. Speaker 200:35:13Thank you. Operator00:35:17Thank you. I can confirm we have no further questions. So I'd like to hand it back to the management team. Speaker 200:35:45Thank you, Briko. And thanks everybody for your time and attention this morning. We've demonstrated since the founding of the company An ability to be nimble and a will to win. And we continue to believe we have the right technology, products, Pipeline, talent, culture and strategy to set the pace of innovation in food, which really isn't a slogan, but a mission That is very much the core of what we at Benson Hill do. Today, we're at the forefront of a unique and powerful synergy So data, plant and food science and combined with the go to market capabilities that we have, we expect to continue to gain momentum this year and in the years to come. Speaker 200:36:28We're excited about our future because it's defined by our innovations being brought to bear across broad market categories today. And we believe that the best is really yet to come as we scale our proprietary products and we launch the next generations of our products.Read morePowered by