BHIL - Earnings call 3 2023 | Benson Hill, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. Thank you for attending Benson's Hill Third Quarter 2023 Earnings Call. My name is Lauren, and I will be your moderator.[Operator Instructions] I want to pass the conference to your host, Ruben Mella, Senior Director of Investor Relations with Benson Hill. Ruben, please go ahead.

Ruben Mella

Thank you, Lauren, and good morning. us our joining results quarter you outlook. and appreciate to third review financial We are Benson Adrienne Officer; today me With Elsner, Freeman, Chief and Hill's our Financial Officer. Dean Executive Chief and we our morning, this Earlier earnings release Form filed X-K. documents during prepared reference Investors of remarks we website. Hill the the the in and Benson an available These presentation section will investor are guidance preliminary performance Comments of future expectation outlook today Benson and outlook including industry Hill's from and management statements, will for and XXXX. for current and directional contain business XXXX forward-looking financial

is Form statements financial XX-Q, Form filings and in those discuss are those the from the cause performance. turn SEC. in presentation referenced release you inherently and we I Forward-looking materially to subject will to notes A include differ consider are during We investor measures. the in specific the uncertainties release reconciliation in cautionary with now risks, the to call Adrienne. risk and will assumptions could XX-K, our to over presentation, of factors GAAP our this earnings available forward-looking that not statements. Also and non-GAAP included presentation. guarantees results and factors other caution press to Such

Adrienne Elsner

the genetic genomics to way in end change a markets. power and plants realize been technology morning, vision multiple protein for past That's feed everyone. to Ruben, the natural food and system. Thanks, good to as and and and address few an security months a food company need diversity pivotal it. of Hill. our The of shared to On plan we a the have grow across Benson intense leading evolution in time protein nutrition unlocking October the XX, The continues is

is launched various markets. and Our protein, successfully our innovations the To varieties have the this, licensing attributes Hill novel divesting to serve the growing scale. and What ligosacaride value-added its first-mover at opportunity and million multiplier evolving to our partnership asset-light poultry aquaculture soy swine assets to of and and to a agreements market direct established processing as $XX advantage. into low us or an this robust ultra-high we across is about our customers addressable for Benson C access market end-use supply applications. UHPLO meal model with plan excites effect We establish acre a

have a game for animal We that is feeding producers. multiple confirmed through UHPLO trials changer

ligosacarides innovation meets Our available nutritional and amino-acid. desire, quality today specifications low higher trait the they protein, enhanced

announced with be product to in of decade, enhanced in the XXXX.Competitors into increased plans mover this the attractive today. and varieties the pipeline have intend this market. Hill's Additional of to first in space That's specifications that the or that these the acids underscore Gen launch seed end others launched further innovations defined meet partnerships protein, Benson tolerance By markets varieties Benson our launch end exceed position. seed Hill UHPLO advantage. amino By herbicide Hill Benson with opportunities decade, in X our first-generation the will our and exciting varieties

traits, our quality AI-driven nutritional data genetic Crop mapping seed engine Our Accelerator nutritional understanding proprietary and strategic to crop and of innovation industry-leading execute our optimize innovation breeding of and breeding represent decades high-protein platform layers represents OS to our program. providing germplasm extensive markers trait

speed business a The to OS and is accelerated other the to technology in market millions priceless. across that capabilities implementation complementary highly time companies. is an ultimate advantage of distinct acres, biology and involves is Crop Our of platform seed

our forward, focusing path clear a on defined have core We strengths.

us should you expect what Here's the coming months. in from

First, we're divestitures executing the assets. processing of our

business. we're adjustments, to Creston executing divest for approximately opportunities Dakota at our assets we're and the to million, $XX the our we capital working the of Seymour exploring of sale and Specifically, facilities.Second, completed subject soy currently the facility transition crush

divestitures, expect XX-month capital to liquidity realignment, and runway. enable with model We working a capital savings an efficient the asset-light structure cost

expand gross swine nearly capital. agreements XXXX we're higher partnerships licensing and expansion the complete into returns varieties. Benson strategic our poultry, for and margin Hill is securing and The focused and while for harvest pet on commercial on pre-commercial Finally, to both also food positioning soybean markets

to increase. portfolio aquaculture. in field new varieties Our destined in protein that outperformed of widely for varieties partners, UHPLO our levels human food categories Similarly, proprietary process delivered bushels current planted class levels applications Approximately we're stronger have The UHP a in continue protein report and our teams seen slight our performance with some protein grades. delivering showcased levels soybeans a tolling showed historically modest already facilities our variety use new harvested to show UHPLO currently soybean XXXX establishing the in to products what portfolio. surpassing year-over-year and yield we've consistent XX% been with and the one ultra-high-protein our processing within of improvement. year-over-year agreements Notably,

remain in portfolio.We crop yield the to the on on advance will end to the through Looking XXXX you our We pipeline plan varieties of ahead, for XXXX production UHP first a quarter. tolerance improvement upcoming X commercial share what the year-over-year transition to with our performance percentage update we herbicide firmly seed the first of year. track R&D by anticipate point an

food, to but is our scale continue evolution as we term, current to near have opportunities markets. model to hard view, be our meet our return will Hill. partnerships realize of of proven will convert the the growth, ability In they farmers, customers the end innovation will and and to long-term oils These needs those enter to business Benson our work in underway we challenged The animal feed. to and existing the markets remain aquaculture positive. for support specialty We our with engagements

be towards year XXX% accessing markets strategy. will model, acquisition as proprietary begin shift animal acre different the through asset-light an requires we an products Next feed the

to of seed and sales be the technology will us acquisition an in XXXX, revenues germplasm processors our get catalyst from acre include towards soy X.X Other our coming acres access direct estimated the by sources broad and As we ACRE of margins years customers. million targets fees grow there. ingredient expect licensing to and future

with of creation from to value our expect We per the $XXX share genetics those to estimated partners. acre $XXX

Several quickly move transition this of to benefits on than is revenue for will current plan XXXX us want further asset-light generate One the transition proprietary-only the how to execution. our approach of depending our can model. sustainable at innovation at as sooner a securing monetize affect the to shift results year upstream, least closed-loop is XXXX. Fiscal we for model. will XXXX, impact earnings our we a under factors that the timing higher value margins.I more the can X By we years gross much of

will operating and XXXX. versus manufacturing disposition assets reduce our a Specifically, revenue non-proprietary of costs

is promised, will Our gross to in still we run profit operating reductions operating positive as XXXX, expected net experience and losses our continue the will rate but for year. to we be deliver

XXXX. debt As our March we've announced, X, pay we high-cost by off intend to

significantly We to be than our burn operating levels. cash expect lower XXXX

on will update expectations We earnings regular and cadence you XXXX of year-end our call.

lot a execute look realize Hill have and for as to plan the Benson enduring opportunity to this we by tremendous forward competitive our We advantages. leveraging

the keep third will for you fourth Dean outlook now turn results to call quarter apprised to Dean? We over the of and progress. quarter. discuss our I will

Dean Freeman

morning, everybody. good Thanks, Adrienne, and

here. but through seen all numbers, press read slides, You've on our focus I and release a want won't to I key the earnings couple so takeaways of

chain, food price demand headwinds supply entire in driven broader by ingredients, a broader economics, the unit occasions, products. all margin unfavorable inflationary uncertainty, mentioned on our challenges which Market at market as in market of several soybeans second and gross persistent demand impacted issue profit impacting performance and affecting proprietary an and in inventory $X and million is high-oleic the further selling This the factors -- proprietary supply we've and part quarter open negatively is in oil which pricing. value by the is higher meal demand. the managed are First, of economic third consumer we soy eroding commodity industry-wide of by

However, contribute million the did XX% proprietary the quarter. in to this approximately revenues $XX increase in to

crush comparisons comparable that XX% takeaway year, at nonproprietary the which this unfavorable peak led levels in were to decline is last a revenues. year's margins, second to The last

negative profit stock business approximately included And operating in costs depreciation were compensation nonrecurring related costs, in expenses and was manufacturing logistics $X.X largely approximately quarter items negatively million the associated other nonrecurring, and in there higher-than-planned but the transformation $X in of result. to our Third, which were million finally, impacted gross $X.X quarterly for impact a million and our costs.Noncash quarter.

the the declined million Excluding OpEx by and noncash cash $X.X nonrecurring $XX.X items, third to million quarter. in

improvements deliver cost about the XXXX. of $X significant process our million result, we capital XXXX, run in a reduction also working minimize in growth last rate production and to run announced of an rate the million. execution $XX discussed We're while $XX is cash as identifying enabling additional of And in objectives. our burn in operating million to we've As strategic plan to expense week,

year, in headwinds we market So to and quarter as we expect out close persist the into likely XXXX. fourth the

we the proprietary nonproprietary volume, noncore sale by the supply short-term agreements product flake this gross quarter. products profit expect supply in of However, to high fourth performance gene and and improved is property. driven And certain editing white intellectual

we quarter. maintaining $XXX the offset the million. expect market million full in performance guidance and favorability pressures should revenue profit We're guidance for year, the updating cost $XXX the headwinds our So improved the fourth our to as in third quarter to we're we gross and saw

further to expect reductions We operating expenses. see in

we anticipate a reduction adjusted the continuing EBITDA cash loss result, And operations, flow. in so a and as from free

plan to IP, dynamics asset-light, Seymour opportunity operating of growth. the X.We're animal With the industry We sale the pay further to portfolio sustained the facility these debt Q&A. substantially We an and feed improve into positioning established let's where by we to XX% reinforce month. short--- loan have competitive larger value, technology March with facility gives of markets to value of to market are utilize to senior advantage the profitable more on retire Hill diversify and we the of best hand believe move on is the the of future Benson The for facing noncore proposition. implementing by and proceeds approximately a sale completely and a to and higher end the us model our the And move that, restricted down the we our focused today compelling strategy creation. shareholder value the leading cash plan will capital-efficient

Operator

Kristen question Oppenheimer. comes first from Our Instructions] Owen [Operator from

Kristen Owen

managing off provide the to to question, but Can being a could bit talk of was there assuming commentary about a you conventional function helpful be that just that proprietary would primarily channel? we capital, Short-term I'm additional sold into volume the start start. working just any our little with.

Dean Freeman

such can some it off-take have not a In to commodity that and Kristen. it extent this instance, tight it very the capital higher It working in given manage, to But the unusual is of seasonal the exactly the that's It's inventory terms levels, combination this harvest gross a amount instance, and it that was our profile. into imagine, a like. very in you profit did. impacted No, it, how we as quarter-to-quarter out had plays a inventories the of meaningful demand We strong cycle. markets. harvest, lower performance the

order channels. the commodity the in So working to get push inventory books, capital, off the into that we manage it

Kristen Owen

Okay. That's helpful.

pay the what side you as hands then margins visibility on the any ingredient IP? you're about better think much contracting well of versus we're will particular, quarter, a improved the getting outlook have how that So into is then that in on that for proprietary that just for of fourth seeing function that seeing you and we crush

Dean Freeman

talked comments, of shipments same channels value to effectively right commodity in the It's the a going now, same Yes. of in into I the And about be proprietary modelling of into as fourth mix. quarter. volume going going volumes product my

and with technology gene sold, conservatively. even headwinds In So that. the we that that XXXX. will IP flat, think flake have will higher-margin trailing fourth we combination that in But cover editing basically that upside, into coming the possibly coupled I'm through will that quarter fourth that orders the that, are more do the into than recently persist the holding quarter maybe white we offset

Kristen Owen

do just you some appreciate may, Dean, are understand think and for I and If one I in flux XXXX. about more, right. those factors All that I things to of giving

the half? versus first modeling help models any Just continuing commodity us Just then about in volumes directionality second dial helpful. can sort down of XXXX? here, our think or of would thread how should commentary Just be half we that our any wind

Dean Freeman

Yes.

and is you The directional early best of assets, into as of up view We've the I view number give contract half but look, can I as a ramp there's as this think, of the sort dependencies ramp of half right? first ramp the I year. a down, sort half a Obviously, we've range the TSA some into second factors, half would timing of we're ramp is timing you've obligations. and sort modest of second best a of then of provided time the of in year, the can seen. started, number XXXX of expect part the XXXX. year down the of next the a latter So kind targeting of terms already I year down in of first with in the of give slow of part into the ramp-up pickup of There's a a disposition the of the the modest you.

Operator

from from MKM.Â comes ROTH Wright Brian Our next question

Brian Wright

for and -- you agreement A I if couple to Seymour things. facility. all missed wanted apologise have finalised But I with off I tolling guess of the the this. I start

Dean Freeman

underway, completed. That tolling agreement a is have agreement will still but we

Brian Wright

by negotiations expected an timing or or and... negotiations -- And is just there Okay.

Dean Freeman

Obviously, have later. Negotiations to sooner be are underway. than we'll

Brian Wright

far that's Okay. Slide trying value of just there But traits, acre. I get that on as about the creation like valuable I little than Or per traits way of a the guess, as XX, value, is on ring like market On which what on X. better a some think others? of more but And then creation? to to are in-market right, is to how the that Slide the was the understanding bit are value drivers traits

Adrienne Elsner

literally done looked board, feed user species end a by to feed is needs. very animal as then Absolutely, each and pricing. the the within species animal species, Brian. markets subspecies looked we've we approach the at What formulaic understand Across we is to

very high the and But it's As point formulation very you is that calculate the they volume formulate margin. you very, on lower know, formulaic. price way

the biggest protein. by of so really, cost far, formula is And driver

than XX% So our protein higher is about commodities. on average,

of star get replace streams our costs. producers we to for higher formula and So more a it delivery. enables ingredient What protein cost use their protein gold does is protein our in

cost a it's So advantage them. to

is trait. soy. oligosaccharides animals the it a trait the What helps addition, an low means In anti-nutrient is that digest

ingredient a result of amino right soy or cost As of additives high-cost replacement supplemented amino of acid. tends can that, soy because levels higher use streams. producers in also have with the by our species acids set acids and a actually the not traits meal more valuable animal the are Amino of of combination depending are today to right

market actually So very and oligosaccharides you imagine can speaks with UHPLO very XX% protein, higher to advantaged how the low trait in a enhanced this really way. amino positively and acids

price have every estimates. to experts in we've We and the formulas from shadow estimated then nutrition cost external one industry brought those and our validate animal of

what in different about And creation species as value so we that's forward the feel we're those is across good bringing go by acres, and market. out we our pretty plan the

Brian Wright

Â That's super helpful.

massive am yielding goes a into it's kind on to content the bit to do in, with just typical, farmer of seed is the a versus even the how kind just little how a so content. driven just of we be standpoint. will works at on about the pole other far okay, on the the this a commercialization as how the that it from increase kind directly like of farmers that of market as of it more is overwhelm I from end market I standpoint be understand about demand commercialization thing because by protein contracting think how thinking we're best But going think how and it's you drag But yield HT, like about massively protein we're like that. wanted The kind the

Adrienne Elsner

question. Yes, it's a great

market acres XX for the accessible million mentioned, for about consumption. I feed domestic is animal as So

the these So potential you acres. can imagine in

and into As we end market, is launch what producers these get to a acres to farmers value-add ultimately, we're trying and user our for producers. our

May lost you that lost the your to think fruition, under ultimately question. think I be I I question. Brian, over where train, is to your As that's time, comes I value it I going repeat was overall.

Brian Wright

no, No, no.

any sure helpful. interpreting to he I I'm I What -- want said. was just and think make that way super think I

So contract farmer. basically, because some with they're to plan with share benefits the get going the of up feed it's to to are the Is and the they that of that it that drive going take and and the seed just... companies animal former to of that kind seed

Adrienne Elsner

That's exactly right. That's exactly right.

to the So the user Yes, move the where we them, benefit that's the that farmer be a all mile players value chain. XX where million If a value And value board, acres. through that there's to to going we full across end pulling to the created. across is are value is in delivering the because

creating product there is a across where so the this model And on a lean we're in board.

Operator

no questions. further have currently We

over hand Elsner We will remarks. closing now to back Adrienne for

Adrienne Elsner

We're our appreciate forward this in morning. Lauren. the time your competitive Thanks, Hill attention Benson for and path We leveraging confident by strengths.

creating reach Please Thank diversify market if We with questions. at Ruben, to our company. you our get technology touch you same expect have the an in business model on while core centered much. enduring time very any

Operator

Benson That conference concludes Hill call. the

You the to may webcast. lines disconnect your now

Benson Hill (BHIL) 9 Nov 232023 Q3 Earnings call transcript