Q4 2023 Benson Hill Inc Earnings Call

Okay.

Okay.

Okay.

Okay.

Okay.

Okay.

Okay.

Thank you for your patience everyone.

unknown: The Benson Hill, Inc. Full Year and Fourth Quota, will be. During today's call, there will be, to us. Registered: Andres Martin, Jason Bull, Jason Bull, Jason Bull, Jason Bull, Andres Martin.

And Hell, Inc. Full year and fourth quarter of 2023 earnings call will begin shortly during today's call. There will be the opportunity to ask a question to register a question. Please press star followed by one on your kind of think he Pat Thank you.

Drew: Good morning, thank you for attending this fourth quarter. My name is Drew, and I'll be your moderator for today's webinar. All lines are on the screen to ask a question.

[music].

Okay.

[music].

Operator: Followed by Host, Ta-Na-assador. Thanks for coming out. Thank you, and good morning. We appreciate you joining us to review our fourth quarter and full year 2023 financial results and outlook. Joining me today are Deanie Elsner, Benson Hill's Chief Executive Officer, and Dean Freeman, our Chief Financial Officer. We also have Susan Keefe, our incoming Chief Financial Officer, listening in. Susan begins her role with Benson Hill on March 29.

Good morning, Thank you for attending Benson Health's fourth quarter and full year 'twenty through 'twenty three earnings call My.

My name is true and I'll be a modern Rachel all lines are on me for the presentation portion of the code with an opportunity for questions and answers at the end. If you want to ask a question. Please press star followed by one on your telephone keypad.

Want to pass the conference over to your host on the Murphy acting Investor Relations Lady with Benson Hill torn up. Please go ahead.

Unknown Executive: Earlier this morning, we filed our fourth quarter and full year 2023 earnings release. Our 10k will be filed after the market closes today. These documents and an investor presentation we will reference during the prepared remarks will be available in the investor section of the Benson Hill website. Comments today from management will contain forward-looking statements, including Benson Hill's expectations of future financial and business performance, industry commentary, and a high-level outlook for 2024. Forward-looking statements are inherently subject to risk, 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.

Thank you and good morning, we appreciate you joining us to review, our fourth quarter and full year 2023 financial results and outlook. Joining me today Ardine Elster, Vincent Hill, Chief Executive Officer, and Dean Freeman, Our Chief Financial Officer, We also have Susan Keith our incoming chief financial.

Officer listening in Susan begins her role with Benson Hill on March 29.

Earlier. This morning, we filed our fourth quarter and full year 2023 earnings release, our 10-K will be filed after the market closes today. These documents and an investor presentation. We will reference during the prepared remarks will be available in the Investor section of the Benson Hill website.

Comments today for management will contain forward looking statements, including Benson hills expectations of future financial and business performance industry commentary and our high level outlook for 2020 for forward looking statements are inherently subject to risks uncertainties and assumptions and are not guarantees.

Tana: Such factors include those referenced in the cautionary notes included in our Form 10-Ks, Form 10-Qs, press release, and investor presentation and other SEC filings. Also, during this presentation, we will discuss specific non-GAAP financial measures. A reconciliation to GAAP is available in our earnings release and investor presentation. I will now turn the call over to Jeanne. Thanks, Tana, and good morning, everyone.

He's a 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, Qs press release, and Investor presentation and other S.

Jeanne: Thank you for joining us to review our fourth quarter and full year 2023 results and to discuss the steps we're taking to transform our business. Let me start by introducing our incoming CFO, Susan Keefe. We're excited that Susan is joining the Benson Hill team.

E C filings also.

So during this presentation, we will discuss specific non-GAAP financial measures a reconciliation to GAAP is available in our earnings release and Investor presentation I.

I will now turn the call over to Jamie.

Jeanne: She brings a wealth of experience working with technology-focused companies, both startups and mature organizations in the public and private sectors. Her knowledge of biosciences and technology, strategic partnerships, innovation, pipeline development, and licensing will be a great asset in our work ahead. We've been working on a three-part plan to strengthen our balance sheet and position Benson Hill for the incredible opportunities before us. First, implementing our cost-cutting initiatives under the expanded liquidity improvement plan. Second, diversifying our portfolio to enter attractive soy segments, and third, delivering strategic partnerships to execute our asset light strategy. Today, I will walk you through the significant progress we've made on each of those fronts and explain why Benson Hill is well-positioned to lead the pace of innovation in soy protein.

Thanks, Tina and good morning, everyone. Thank you for joining us to review, our fourth quarter and full year 2023 results and to discuss the steps, we're taking to transform our business.

So let me start by introducing our incoming CFO Susan Keefe, we're excited the students joining the Benson Hill team. She brings a wealth of experience working with technology focused companies, both startups and mature organizations and the public and private sectors her knowledge of Biosciences and technology strategic partnerships.

Innovation pipeline development and licensing will be a great asset in our work ahead.

We've been working a three part plan to strengthen our balance sheet and position Benson Hill for the incredible opportunities before us.

First implementing our cost cutting initiatives under the expanded liquidity improvement plan second diversifying our portfolio to enter attractive soy segments and third delivering strategic partnerships to execute our asset light strategy.

Jeanne: Let me start with an update on the Expanded Liquidity Improvement Plan. As you may recall, last October, we identified key milestones designed to strengthen our balance sheet and improve our cash position. I'm very pleased to report that these significant milestones have been achieved. We've divested our soy processing assets, including the sale of our Seymour facility for $36 million and the sale of our Creston facility for $72 million. We've restructured our organization, enabling us to deliver significant cost savings. Our team has now reduced recurring OPEX and CAPEX by more than 33% in line with previously communicated targets. These actions enabled us to fully retire our senior term loan representing approximately $120 million in debt plus interest and fees. We ended the year with approximately $49 million in cash, in line with our expectations.

Today I will walk you through the significant progress we've made on each of those fronts and explain why Benson Hill is well positioned to lead the pace of innovation and soy protein.

Let's start with an update on the expanded liquidity improvement plan.

As you May recall last October we identified key milestones designed to strengthen our balance sheet and to improve our cash position.

I'm very pleased to report that these significant milestones have been achieved.

We've divested our soy processing assets, including the sale of our Seymour facility for $36 million and the sale of our Creston facility for $72 million.

We've restructured our organization, enabling us to deliver significant cost savings. Our team has now reduced recurring opex and capex by more than 33% in line with previously communicated targets.

These actions enabled us to fully retire our senior term loan representing approximately $120 million in debt plus interest and fees. We ended the year with approximately $49 million in cash in line with our expectations.

Dean P. Freeman: Dean will further address our 2023 results and outlook for 2024 in his section. In the coming months, we expect to continue driving efficiencies, reducing operating costs, and looking for ways to optimize our capital structure. With our senior term loan now retired, our team is entirely focused on the opportunities ahead of us. The second pillar of our plan was to diversify our portfolio and enter attractive new soy market segments. Here, we've made enormous progress.

<unk> will further address our 2023 results and outlook for 2024 in his section.

In the coming months, we expect to continue driving efficiencies, reducing operating costs and looking for ways to optimize our capital structure.

With our senior term loan now retired our team is entirely focused on the opportunities ahead of us.

The second pillar of our plan was to diversify our portfolio and enter attractive new soy market segments here, we've made enormous progress.

Jeanne: Our advantage stems from the trifecta of our proven soy technology platform, our cropOS innovation engine, our crop accelerator speed breeding facility, and our proprietary soy germplasm portfolio. Our differentiated germplasm, along with layers of genomic data, secures our first mover advantage because it represents literally decades of soybean breeding for animal feed. Over the last six months, we conducted extensive diligence with end users and potential partners on every aspect of our strategy, including our innovation pipeline, our value creation, our shift to an asset-light business model, and our broadacre ramp up. We validated that Benson Hill is competitively advantaged and ready today to serve the largest soybean markets in the animal feed industry, and we are well positioned to expand into the growing biofuel markets in the future. Benson Hill has built the most advanced soy genetics toolbox in the industry to simultaneously improve both protein and yield.

The advantage stems from the Tri factor of our proven soy technology platform, our crapo S innovation engine, our crop accelerators speed breathing facility and our proprietary soy germ plasm portfolio.

Our differentiated germ plasm, along with layers of genomic data secures our first mover advantage because it represents literally decades of soybean breeding for animal feed.

Over the last six months, we conducted extensive diligence with end users and potential partners on every aspect of our strategy, including our innovation pipeline our value creation, our shift to an asset light business model and our broad acre ramp up.

We validated that Benson, who is competitively advantaged and ready today to serve the largest soybean markets in the animal feed industry.

And we are well positioned to expand into the growing biofuel markets in the future.

Benson Hill has built the most advanced soy genetics toolbox in the industry to simultaneously improve both protein and yield.

Jeanne: The gains we've achieved for the genetics we acquired in 2019 have surpassed our expectations and outpaced the industry. In January of this year, we announced advancements across our entire portfolio of ultra-high protein, low glycosaccharide, or UHPLO varieties, including the introgression of an herbicide tolerance trait to provide the seamless weed control farmers expect for large acre adoption. We are on track to significantly expand our seed portfolio from 22 to 35 varieties by 2025 with a pipeline that's in the final stages of lab and field testing, giving us a massive time advantage that can further deepen our competitive moat. But what is perhaps most exciting is the feedback we've heard from end users about the UHP-LO products that we have available today.

The gains we have achieved for the genetics, we acquired in 2019 have surpassed our expectations and outpaced the industry.

In January of this year, we announced advancements across our entire portfolio of ultra high protein low in like a sack right are you H P. L O varieties, including introgression of and herbicide tolerance traits to provide the seamless weed control farmers expect for large acre adoption.

We are on track to significantly expand our seed portfolio from 22 to 35 varieties by 2025 with a pipeline. That's in the final stages of lab and field testing, giving us a massive time advantage that can further deepen our competitive moat.

But what is perhaps most exciting is the feedback we've heard from end users about the UHT allo products that we have available today.

Jeanne: Animal feed industry experts have confirmed that the soybeans we harvested in 2023 will be a game changer for animal diets. In fact, they said that if they could design their Holy Grail product, this would be it, first with 20% higher protein than commodity meal with competitive yield performance, enabling better feed conversion, less soybean meal required, and more room for other ingredients. Second, 92% fewer hard-to-digest oligosaccharide carbohydrates, enabling better gut health, better digestibility, and 27% more available energy to be used by the animal.

Animal feed industry experts have confirmed the soybeans, we harvested in 2023 will be a game changer for animal diets. In fact, they've said that they could design their holy Grail products this would be it.

First with 20% higher protein than commodity meal with competitive yield performance, enabling better feed conversion less soybean meal required and more room for other ingredients second 92% fewer hard to digest oligosaccharide carbohydrates, enabling better gut health.

Better digestibility, and 27% more available energy to be used by the animal.

Jeanne: And going forward, an improved amino acid profile leading to less reliance on synthetic amino acids. In the feed industry, every bit of margin matters because feed is the primary cost in animal production.

And going forward and improved immuno acid profile, leading to less reliance on synthetic amino acids.

And the feed industry every bit of margin matters feed is the primary cost in animal production to reduce cost and improve sustainability benefits of the Benson he'll soy products can unlock impressive savings for animal producers. This is true value creation through innovation.

Jeanne: The reduced cost and improved sustainability benefits of Benson Hill soy products can unlock impressive savings for animal producers. This is true value creation through innovation. Shadow pricing estimates indicate that our breeding efforts over the last three years have tripled the value creation of our UHP LO soy varieties. We are now repeating feeding studies initially conducted in 2020 to validate these improvements, and initial results give us confidence that the value proposition can be achieved. Looking beyond our UH PLO varieties, we will increase focus on other products in our portfolio that optimize the protein oil complex. Our co-bile varieties combine heart-healthy high oleic oil for the food market with high-protein, low-oligosaccharide meal for the feed market.

Seattle pricing estimates indicate that our breeding efforts over the last three years have tripled the value creation of our UHT L. O soy varieties. We are now repeating feeding studies initially conducted in 2020 to validate these improvements and initial results give us confidence that the value proposition.

Can be achieved.

Looking beyond our UHT yellow varieties, we will increase focus on other products in our portfolio that optimize the protein oil complex.

Our cobalt varieties combined heart healthy high oleic oil for the food market with high protein low sugar sack right meal for the feed market.

Jeanne: Varieties further out in our pipeline combine high-volume commodity oil for the emerging biofuel market with low-oligosaccharide meal, which represents substantial additional growth and profit potential. The last pillar of our plan is to secure strategic partners to execute our strategy. Here, too, we've made exciting progress. Across the value chain, we're finding that organizations recognize the shift underway. The current commodity soy system is not designed to provide choice for end users

Friday's further out in our pipeline combined high volume commodity oil for the emerging biofuel market with low oligosaccharides meal. This represents substantial additional growth and profit potential.

The last pillar of our plan is to secure strategic partners to execute our strategy here too we've made exciting progress across the value chain. We're finding the organizations recognize the shift underway. The current commodities soy system is not designed to provide choice for end users.

Jeanne: Benson Hill has designed a system to provide both choice and a voice to the end user. This changes the dynamic; seed decisions can be driven not simply by what input traits the farmer prefers but by what output traits the end user demands. This unlocks a new dimension of growth for those who are positioned to be part of it. We have validated that by focusing on the needs of the end user first, we can create compelling value to incentivize all players from the seed company to the farmer to the customer. Our new asset-light business model encompasses strategic partnerships to leverage the scale and maturity of the existing value chain; licensing technology is well established in the agriculture industry. In fact, Benson Hill and, before that, Schillinger have been licensing high-protein, non-GMO varieties for specific food markets like tofu for years.

Benson Hill has designed a system to provide both choice and a voice to the end user which changes the dynamic.

See decisions can be driven not simply by what input traits the farmer prefers but by what output traits. The end user demands. This unlocks a new dimension of growth for those who are positioned to be part of it.

We have validated that by focusing on the needs of the end user first we can create compelling value to incentivize all players from the seed company to the farmer to the customer.

Our new asset light business model encompasses strategic partnerships to leverage the scale and maturity of the existing value chain.

Licensing technology is well established in the agriculture industry in fact, Benson Hill and before that Shillinger has been licensing high protein non GMO varieties for specific food markets like tofu for years.

Jeanne: We have long-standing relationships with multiple seed distributors that represent significant share licensing of the best performing non-GMO soybean variety on the market. What's different going forward is the scale of the end market we intend to serve and the magnitude of value we can create by leveraging our existing infrastructure. Scaling for the animal feed markets is actually quite straightforward.

We have long standing relationships with multiple see distributors that represent significant share licensing the best performing non GMO soybean variety on the market.

What's different going forward is the scale of the end market, we intend to serve and the magnitude of value we can create by leveraging our existing infrastructure.

Scaling for the animal feed markets is actually quite straightforward the market is large but not highly fragmented every potential partner, whether an animal producer or a seed company represents millions of acres. Given the response, we've received from the animal industry and the nature of the offtake discussions.

Jeanne: The market is large, but not highly fragmented. Every potential partner, whether an animal producer or a seed company, represents millions of acres. Given the response we've received from the animal industry, and the nature of the offtake discussions underway, we anticipate that demand will outstrip supply of our UHP LO parent seed, which will be our rate-limiting factor over the next two years. During that time, we expect to establish strategic partnerships and offtake agreements with animal producers to further demonstrate the value proposition of our soybeans. In addition, we expect to expand licensing agreements with seed companies to expand our go-to-market reach. A number of initiatives have already been advanced to lay the groundwork for these partnerships. For example, we've doubled the size of our seed licensing and distribution network in the past 12 months. Most of these seed companies will be testing our latest varieties in the field this year. And we're validating the agronomic characteristics of our varieties through an extensive network of universities and independent testing centers.

Underway, we anticipate that the demand will outstrip the supply of our USP L O parent seed, which will be a rate limiting factor over the next two years.

During that time, we expect to establish strategic partnerships and off take agreements with animal producers to further demonstrate the value proposition of our soybeans in.

In addition, we expect to expand licensing agreements with seed companies to expand our go to market reach.

Number of initiatives have already been advance to lay the groundwork for these partnerships.

For example, we've doubled the size of our seed licensing and distribution network in the past 12 months. Most of these seed companies, we'll be testing our latest varieties in the field. This year and we're validating the agronomic characteristics of our varieties through an extensive network of universities and independent testing centers.

Jeanne: Over the next two years, we will also conduct additional animal feed studies for multiple market segments within swine, poultry, and aquaculture. As I reflect on the scope and complexity of what the team has achieved in just a few short months, I'm confident and excited about what we expect to accomplish going forward. We have revalidated our technology pipeline, built a new business model, reshaped the organization, divested two processing assets, retired debt, reduced costs, and laid the groundwork with future partners. The energy and focus of the team is now entirely dedicated to operating the business, securing capital, and landing strategic partnerships. Benson Hill is now at an inflection point in 2024 as we evolve the company to drive shareholder value. As I close, I'd like to take this opportunity to thank Dean Freeman for his contributions and guidance as CFO of Benson Hill. Dean has been a wonderful partner, and we wish him the best in his next chapter. I'll turn it over to him now to cover the 2023 financial results and things you can watch for in 2024. Dean?

Over the next two years, we will also conduct additional animal feed studies for multiple market segments within swine poultry and Aqua.

As I reflect on the scope and complexity of what the team has achieved in just a few short months I'm confident and excited about what we expect to accomplish going forward. We have re validate our technology pipeline built a new business model reshape the organization divested two processing assets written.

Higher debt reduce costs and laid the groundwork with future partners the.

The energy and focus of the team is now entirely dedicated to operating the business securing capital and land in strategic partnerships. Benson Hill is now at an inflection point in 2024, as we evolve the company to drive shareholder value.

As I close I'd like to take this opportunity to thank Dean Freeman for his contributions and guidance as CFO of Benson Hill, Dana has been a wonderful partner and we wish him the best in his next chapter.

I'll turn it over to him now to cover the 2023 financial results and things you can watch for in 2020 for Dean.

Dean P. Freeman: Thanks, Dini. And good morning, everybody. And thank you for your support and good wishes after the announcement of my transition. It's really been an honor and a great pleasure to be with Benson Hill on this part of the journey, proud of the work we've done in the last two years to position the company for future success. I really enjoyed working with Susan over the last few weeks, and I believe she's an excellent choice as a CFO for Benson Hill's next phase.

Thanks, Danny and good morning, everybody and thank you for your support and good wishes. After the announcement of my transition, it's really been an honor and a great pleasure to be with Penton Hill on this part of the journey.

Out of the work we've done in the last two years to position the company and future success of <unk>.

Really enjoyed working with Susan over the last few weeks and I believe she is an excellent choice as the CFO for Benson Hills next phase.

Dean P. Freeman: Okay, let's talk results. Notably, we met or exceeded almost all of our key guidance metrics for 2023, despite an increasingly challenging market environment. It was a busy year.

Okay, let's talk results.

Notably, we met or exceeded almost all of our key guidance metrics for 2023, despite an increasingly challenging market environment.

It was a busy year.

Dean P. Freeman: We not only focused on developing high-value strategies for the asset light model, but the team was also laser focused on executing under our existing business model, aggressively implementing actions under our expanded liquidity improvement. This enabled us to increase revenue, substantially strengthen the balance sheet, and lower our cash burden. Looking at the filial results, we reported consolidated revenues of $473 million.

Not only focused on developing high value strategies for the asset light model, but the team was also laser focused on executing under our existing business model and aggressively implementing actions under our expanded liquidity improvement plan.

This enabled us to increase revenue substantially strengthen the balance sheet and lower our cash burn.

Looking at the full year results, we reported consolidated revenues of $473 million or 24% year over year improvement.

Dean P. Freeman: 24% year-over-year improvement, driven by 52% revenue growth in proprietary and 18% growth in non-proprietary grain products, respectively, for the year. Higher revenues at the end of the year were driven by higher volume proprietary grain sales and the sale of non-core technology licenses. Looking beyond revenues, we also met our targets for gross profit at $23 million, more than tripling the prior year's gross profit performance. Justin Iveda had a loss of $48 million, a more than 40% improvement year over year. Free cash use of $87 million was a $13 million improvement versus the prior year, but included one-time cash costs of approximately $16 million.

Driven by a 52% revenue growth and proprietary and 18% growth in non proprietary green products, respectively for the year.

Higher revenues at the end of the year were driven by higher volume proprietary green sales and the sale of noncore technology licenses.

Looking beyond revenues, we also met our targets for gross profit of $23 million more than tripling the prior year's gross profit performance.

<unk> EBITDA was a loss of $48 million more than 40% improvement year over year.

Free cash use of $87 million.

Was a $13 million improvement versus the prior year, but included onetime cash costs of approximately $16 million that sets us up for further improvement going forward and exceeded our cash use targets of $102 million to $107 million.

Dean P. Freeman: That sets us up for further improvement going forward and exceeded our cash use targets of $102 million to $107 million. We ended the year with approximately $49 million in cash and marketable security. Our year-over-year improvements were largely driven by higher-volume proprietary revenues, cost, and cash-efficiency actions. Let's look at our operating expenses in a bit more detail. For the year, total operating expenses were $120 million.

We ended the year with approximately $49 million in cash and marketable securities.

Our year over year improvements were largely driven by higher volume proprietary revenues.

<unk> the cash efficiency actions.

Let's look at our operating expenses and a bit more detail.

For the year total operating expenses were $128 million. It's important to note. Those included approximately $19 million goodwill impairment that we previously disclosed in the second quarter.

Dean P. Freeman: It's important to note that those included approximately $19 million in goodwill impairment that we previously disclosed in the second quarter and approximately $13 million in net charges related to non-recurring severance and other related costs associated with the asset divestitures, business transformation, and cost reduction actions for the execution of our expanded liquidity improvement plan. Turning to 2024. It will truly be a year of transition. Keep in mind that our reported revenues for 2023 largely came from soy processing assets that we've now divested. 2024 is going to look very different as we plan to gain momentum as a provider of seed innovations for the animal feed market. In 2024, the company's revenues will include the runoff of the previous business model, including the sale of grain and other products associated with our legacy ingredients business. We expect much lower revenue going forward as a result of these recent divestments.

And approximately $13 million in.

In net charges related to nonrecurring severance and other related costs associated with the asset divestitures business transformation and cost reduction actions for the execution of our expanded liquidity improvement plan.

Turning to 2024, it will truly be a year of transition keep in mind that our reported revenues for 2023 largely came from soy processing assets that we have now divested.

'twenty 'twenty four is going to look very different as we plan to gain momentum as a provider of seed innovations for the animal feed market.

In 2024, the company's revenues will include the run off of the previous business model, including the sale of grain and other products associated with our legacy ingredients business.

We expect much lower revenue going forward as a result of these recent divestitures.

Dean P. Freeman: While gross profit will decline proportionally with revenue during the balance of this transition, we expect to substantially improve the quality of our earnings over time as we build out the partnership model. Coupled with further reductions in operating expenses, we expect to see a significant reduction in losses from continuing operations and further improvements in adjusted EBITDA. High-cost debt coupled with the elimination of highly restricted covenants provides ample optionality for further financing opportunities.

Our gross profit will decline proportionately with revenue during the balance of this transition we expect to substantially improve the quality of our earnings over time as we build out the partnership model coupled with further reductions in operating expenses, we expect to see a significant reduction in the losses from continuing operations and further improvements of adjusted.

EBITDA.

With the retirement of high cost debt, coupled with the elimination of highly restrictive covenants provides ample optionality for further financing opportunities.

Dean P. Freeman: In fact, we are in the process of exploring additional financing and strategic alternatives to expand our liquidity through the balance of 2024 and beyond. As we consider key performance factors in 2024, we will be guided by five key areas.

In fact, we are in the process of exploring additional financing and strategic alternatives to expand our liquidity through the balance of 2024 and beyond.

As we consider key performance factors in 2024, we will be guided by five key areas.

Dean P. Freeman: Second, continued improvement of our operating expenses and margin. Third, acquisition of Strategic Partnerships and Licensing Deals. Fourth, optimization of our capital structure, and finally, expansion of our intellectual property and advancement of our technology pipeline. Benson Hill has proven year after year that the team can perform, execute, and adapt.

One successful transition of our legacy business model.

Continued improvement of our operating expenses and margins.

<unk> acquisition of strategic partnership and licensing deals.

For optimization of our capital structure, and finally expansion of our intellectual property and advancement of our technology pipeline.

<unk> Hill is proven year after year that the team can perform execute and adapt we.

Dean P. Freeman: We are seeing substantial demand for innovations created with our core technologies to create a durable runway of growth. With that, we'd like to open up for Q&A. Thank you. If you want to ask me anything, just say... me.

We are seeing substantial demand for innovations created with our core technologies.

Durable runway of growth.

We'd like to open up for Q&A.

Thank you if you want to ask a question. Please press star followed by one on your telephone keypad is there any reason you would like Germany that question. Please press star followed by <unk>.

unknown: ........

Kristen E. Owen: Our first question today comes from, "The line is now open." Well, I didn't know that I was from New Jersey but from Oppenheimer, and thank you for taking the question. Well, here we go, guys. First, Dean, thank you also for your leadership, and Susan, welcome to the team. You know, I understand at this point in the transition of the business model, revenue clarity is really not necessarily there today to be able to provide some concrete guidance for 2024, but I'm wondering, you know, as we think about building the pipeline, some of the third-party validation that you're doing, the expansion of varieties, can you maybe just help us understand what the milestones are that we'll be looking for that ultimately contribute to future revenue potential? Just Yeah, hi, Kristen from New Jersey and Dean from St. Louis.

Our first question today comes from Kristen Owen from New Jersey. Your line is now open. Please go ahead.

Well I didn't know that I was from New Jersey.

Oppenheimer.

Thank you for taking my question.

Perfect. Thank you.

Thank you.

Well here, we go guys at first.

Thank you also for your leadership and Suzanne welcome to the team.

I understand at this point in time.

As a business model revenue clarity.

It's really not necessarily there today to be able to provide concrete guidance for 2024, but im wondering as we think about the.

The building of the pipeline some of the third party validation that youre doing the expansion of varieties can you maybe just help us understand what the milestones are that we will be looking forward that ultimately contribute to future revenue potential.

Help us understand.

The business maybe over the next.

12 to 18 months.

Yeah, Hi, Kristen from New Jersey.

Dean from St. Louis.

Dean P. Freeman: Look, I think the way the script reads, if you kind of parse through it, I think there are really two key factors. One is, I think we've got to get through this legacy business transition. And while we've divested assets and we've done a lot of fantastic work, you know, there's still a lift through the early part of 2024 that we'll have to work through. And that has the potential, depending on how things play out, that could bring a little bit of volatility into our revenue outlook for the year. But I think the key attributes are really the development and the securing of partnership and licensing transactions. And I think, as I pointed out in sort of my five step, you know, KPIs, key performance indicators for the year, that is a critical one.

Look I think the way to script reads, if you kind of parse through it I think there's really two key factors.

One is I think we've got a we've got to get through the legacy business transition and.

While we divested assets and we've done a lot of fantastic work there.

It's still a lift through the early part of 2024 that we will have to work through and that's going to that has the potential depending on how things play out that has the potential to bring a little bit of volatility into into our revenue outlook for the year, but I think the key the key attribute is really.

The development and the.

Securing a partnership and licensing transactions and I think as I pointed out in sort of my five step.

<unk> key performance indicators for the year that is a critical one to the extent that we announce of secure.

Dean P. Freeman: And to the extent that we announce and then, obviously, execute on those partnerships and licensing. Those are the key aspects, I think, of the performance that you should expect that enables us to achieve the revenue performance that we expect in 2024 and beyond. Kristen, the only other thing I would add to that, just for perspective, if you go back to our 23 results, proprietary represented about 25% of our revenue stream. And so as we go forward and we transition out of no longer having soy processing assets, what we're primarily pushing through is the 2023 grain harvest. And so it just gives you kind of a benchmark for how to think about those numbers. We're no longer pushing, really, the commodity side of the business through, and we're transitioning out of directly handling and processing the proprietary side of the business. And then Dean's right.

And then obviously execute on those partnerships and licensing those are the key aspects I think of.

Of the performance that you should expect.

Allows us enables us to achieve the revenue performance that we expect in 2024 and beyond Chris and the only other thing I would add to that just for perspective, if you go back to our <unk> results.

Criteria, representing about 25% of our revenue stream and so as we go forward and we transition out with no longer having slight processing assets. What we're primarily pushing through is the 2023 grain harvest and so it just gives you a kind of a benchmark for how to think about those numbers are no longer pushing really the.

Commodity side of the business through.

We're transitioning out of of directly handling and processing the proprietary side of the business and then teens right at the same time, we're going to be doing a handoff.

Jeanne: At the same time, we're gonna be handing off to those strategic partnerships and beginning to build revenue through those strategic partnerships. And the strategic partnerships will be the milestones by which we will benchmark our revenue going forward, but they can be sizable. And I think that we'll be able to update you as we land those. Okay, and forgive me. I'm just looking for maybe a little bit of, forgive the expression, but how the sausage is made.

Two to those strategic partnerships and begin to build the revenue through those strategic partnerships.

Strategic partnerships will be the milestones by which we will benchmark our revenue going forward.

But they can be sizable and I think that that will be able to update you as we lend us.

Okay.

And forgive me I'm, just looking for maybe a little bit of.

Forgive the expression.

How the sausage is made.

Jeanne: When you sign a strategic partnership, is there an uptick? The Licensing Technology Fee that you recognize, and then there's a period of time over which, you know, there's some bulking up of fees. And just help me understand, like, what the cadence of that kind of agreement looks like.

When you sign a strategic partnership.

Is there an upfront.

Licensing technology fee.

Recognize and then there's a period of time over which there has been some bulking up seed.

Yes.

Just help me understand what the cadence of that client.

Agreement looks like.

Jeanne: Absolutely. So I'll give you a little bit of backup. The strategic partnerships span an array of profiles. In some cases, if they are exclusive in nature, they have had exclusivity or tech access fees tied to them.

Absolutely so I'll give you a little bit of backup.

The strategic partnerships.

An array of profiles in some cases, if they are exclusive in nature. They have had exclusivity or tech access fees tied to them if theyre more tolling in nature or more broad based in nature. They tend to be off take agreements. So it just depends on the strategic partnership we have a range we have.

Jeanne: If they're more tolling in nature or more broad-based in nature, they tend to be off-tech agreements. So it just depends on the strategic partnership we have arranged. We have managed historically both in terms of licensing our germplasm, the tolling, the seed distribution, and then, of course, the exclusivity that comes with typically some kind of exclusivity fee along with that. In terms of how the seed bulk-up happens and the off-take happens, as I mentioned in the upfront comments, our rate limiting factor on UHPLO is the speed and the breadth by which we can build these seeds out.

Manage historically both.

In terms of licensing our germplasm, the tolling to see distribution and then of course, the exclusivity that comes with with typically some kind of exclusivity fee along with that in terms of how the seed bulk up happens and the uptake happens.

You mentioned in the upfront comments, we are right load factor on Uhm Cielo is the speed and the and the breadth.

By which we can build the seeds out and so we are building. These seeds over the next two years as quickly as possible literally bulking them up as quickly as possible to get to as many acres as possible. We believe that the demand for those that grain is going to outpace our ability to produce those seats.

Jeanne: And so we are building these seeds over the next two years as quickly as possible, literally bulking them up as quickly as possible to get to as many acres as possible. We believe that the demand for those... That grain is going to outpace our ability to produce those seeds. So we believe we're going to be going at maximum speed to get these out. We have talked about historically that we are integrating the herbicide tolerance trade into UHPLO. That begins to go in the ground in 2026. The reason why that is because it provides weed control.

We believe we're going to be going at maximum speed to get these out.

We have talked about historically that we are integrating the herbicide tolerance trait into uhm PLO that begins to go on the ground in 2026. The reason why that's important is because that provides weed control and when you think about broad acre access are the acres needed to.

Jeanne: And when you think about broad acre access, or the acres needed to support supply for an animal feed segment, you know, literally 28 million acres in the US annually, you need to have HT integrated into your germplasm so that you can produce seeds that farmers can grow in large amounts. And so our focus in the next two years is to go as fast as we can land the strategic partnerships to literally tie up that demand. And we're confident we are in the process to do that and then hit HT and move to broad acre in 2027. And that's why we say our plan really is de-risked in terms of the innovation requirement, the creation, and creativity requirement, and really the focus is how fast can we execute and how broad can we go. And so it really becomes a de-risked plan focused on execution. That's extremely helpful. Thank you, sir, for that color.

Support supply for an animal feed segment literally 28 million acres in the U S annually, you need to have Ht into crest into your.

Into York germ Plasm, so that you can produce seeds that farmers can can grow in broad acre.

Amounts and so on.

Our focus in the next two years is to go as fast as we can land a strategic partnerships too.

Literally tie up that demand and we're confident we are in process to do that and then hit Ht and move to broad acre in 2027, and and that's why we say our plan really is de risked in terms of the innovation requirement that creation creativity requirement and really the focus is.

Fast can we execute and how broad can we go and so it really becomes a de risk plan focus on execution excellence.

That's extremely helpful. Thank you for that color. The last one from me is.

Kristen E. Owen: The last one for me is just thinking through the support the the op ex reduction that you've taken, how you're thinking about run rate operating expense to kind of bridge you through this timeline over the next year. Yeah, Kristen, I think, you know, when we talked about, Thank you for watching. Thank you. Thank you. OPEC.

Just thinking through this hub for the.

The opex reduction that you've taken.

How youre thinking about run rate operating expense kind of bridge you through this timeline over the next few years.

Yes, Chris I think when we talked about.

Okay.

Opex.

Dean P. Freeman: And we talked about CapEx. We've set a target of about, you know, between 55 and 60 million. We've achieved that target on a run rate basis, and we expect that, you know, obviously, and, you know, within the script, we talked a lot about continuing to assess the cost structure of the company and aligning it with the needs of the business. But you should expect that, you know, that the 55 to 60 million dollar run rate is sort of the run rate through 2024, as we communicated, with certainly room for improvement from there. Yeah.

And we talked about.

Capex, we set a target of about $255 and $60 million, we've achieved that target on a run rate basis.

And we expect that obviously.

In the script and we talked a lot about continuing to assess the cost structure of the company and aligning it with the needs of the business, but you.

You should expect that that 50.

<unk> $55 million to $60 million run rate is sort of the run rate through.

Through 2024, as we as we communicated with.

Certainly room for improvement from there.

Jeanne: And I think, you know, to Dean's point. He made some really important points in his script, and they were really around how the cash burn or the run rate is going to drop over time because we really would expect, depending on the financial structure, to see a substantial improvement in our quality of earnings over time as we build out this partnership model. So that, combined with further reductions in operating expenses, would result in, you know, less of a cash burn going forward.

<unk>.

To Dan's point he made some I think really important points in his script and it was really around.

How the cash burn or the run rate is going to.

Drop over time, because we really would expect depending on the financial structure to see a substantial improvement in our quality of earnings.

Over time as we build out this partnership model so that combined with further reductions in operating expenses.

Could result in a less of a cash burn going forward, we have a transition plan in place.

Jeanne: We have a transition plan in place, and to Dean's point, we'll continue to manage the OPEX and the expenses so that we can deliver against this strategy. Thank you so much for your time. I appreciate it. You bet, thank you. We have no further to thank you again for joining us this morning to take a look back at 2023 and hear more about where we're headed in 24 and beyond. Benson Hill has a true competitive advantage, a well-defined strategy, and a really strong management team, all poised to propel us forward. I'm extremely confident in our opportunities to create the additional runway we need to execute the robust value creation strategy we've outlined with you today. I am pleased to get in touch with Tana Murphy. If you have any different additional questions and really have a great day. Thank you so much. Please lead me to Benson Hill. Thank you for watching.

To <unk> point, we'll continue to manage the the opex and the expenses so that we can deliver against the strategy.

Thank you so much for the time I appreciate it.

You bet. Thank you.

We have no further questions in the queue. So I'll hand, David to Danielle Smith for closing remarks.

Thank you again for joining us this morning to take a look back at 2023 and hear more about where we're headed in 'twenty four and beyond.

Benson Hill has a true competitive advantage, a well defined strategy and a really strong management team all poised to propel us forward.

Extremely confident our opportunities to create the additional runway we need to execute the robust value creation strategy. We've outlined with you today I am pleased to get in touch with Panama Iffy. If you have any different additional questions and really have a great day. Thank you so much.

Okay.

That concludes the Benson Halo Conference call you May now disconnect your line and exit the webcast.

Yeah.

Okay.