Benson Hill, Inc. (BHIL) is a seed innovation company that is pioneering the use of advanced technologies to unlock the natural genetic diversity of plants. Founded in 2012 and headquartered in St. Louis, Missouri, the company has been at the forefront of developing innovative solutions to address the growing demand for better feed, food, and fuel.

Benson Hill's Journey From Vertical Integration to Asset-Light Transformation

Benson Hill's story is one of transformation and innovation. The company started with a focus on unlocking the natural genetic diversity in soy quality traits through a combination of proprietary genetics, its AI-driven CropOS technology platform, and its Crop Accelerator. In its early years, Benson Hill made significant investments to enhance its technological capabilities and commercialize its products, which led to substantial losses primarily due to the costs associated with early-stage commercialization efforts.

A significant milestone in Benson Hill's history came in 2021 when the company completed a business combination with a special purpose acquisition company and became publicly traded on the New York Stock Exchange. This transaction provided Benson Hill with additional capital to fund its continued growth and expansion.

However, the company faced headwinds in the food, aquaculture, and specialty oil markets, which were the primary focus of its collaboration efforts. In response, Benson Hill made a strategic decision in 2023 to reshape its business model and transition to an asset-light approach. This included the divestiture of its soybean processing facilities in Seymour, Indiana and Creston, Iowa, which allowed the company to strengthen its balance sheet and focus on its core seed innovation and technology capabilities.

The transition to an asset-light business model represented a significant shift in Benson Hill's operations. This strategic move was intended to enable the company to participate across the value chain through more efficient, capital-light partnerships, while maintaining its ability to solve end-user challenges with its seed innovation expertise.

The divestiture of the company's soybean processing facilities in Seymour, Indiana and Creston, Iowa was a significant milestone in Benson Hill's transformation. The sale of these assets, which generated total gross proceeds of $107.6 million, allowed the company to fully retire its high-cost debt and strengthen its balance sheet. Specifically, in October 2023, the company sold its Seymour facility for $35.4 million, and in February 2024, it sold the Creston facility for $72.2 million. This shift towards an asset-light approach has enabled Benson Hill to redirect its resources and focus on its core strengths, namely its proprietary genetics, AI-driven CropOS technology platform, and Crop Accelerator.

Unlocking the Natural Genetic Diversity in Soybeans

At the heart of Benson Hill's business is its mission to unlock the natural genetic diversity of plants, particularly soybeans. The company has developed a unique combination of proprietary genetics, AI-driven technology, and a state-of-the-art Crop Accelerator to drive innovation in the feed, food, and fuel markets.

Benson Hill's Ultra-High Protein, Low Oligosaccharide (UHP-LO) soybeans have been a game-changer in the animal feed industry. These proprietary soybean varieties offer significantly higher protein content and lower oligosaccharide levels compared to commodity soybeans, leading to improved nutritional efficiency and lower feed costs for poultry and livestock producers.

The company's recent collaboration with industry leader Tyson Foods and other major poultry integrators has demonstrated the value of Benson Hill's UHP-LO soybean meal in poultry diets. Feeding trials have shown that replacing commodity soybean meal with UHP-LO soybean meal can improve broiler weights by 5.4% and feed conversion ratios by 3.2%, translating to significant cost savings for poultry producers.

Expanding the Innovation Pipeline Herbicide-Tolerant Soybeans for Biofuels and Beyond

Benson Hill's innovation pipeline extends beyond its UHP-LO soybeans. The company is now developing herbicide-tolerant soybean varieties that are specifically tailored for the biofuels market. These advancements are expected to launch between 2028 and 2030, further diversifying Benson Hill's offerings and addressing the growing demand for sustainable energy solutions.

Moreover, Benson Hill is working on expanding its soy quality trait portfolio to serve additional end markets, such as soybean oil for food and industrial applications. The company's commitment to leveraging its core technologies to create value across the agribusiness supply chain is a testament to its strategic vision and adaptability.

Financials

Benson Hill's financial performance reflects its ongoing transition and the challenges of scaling its innovative technologies. In the most recent fiscal year (2023), the company reported annual revenue of $473.34 million, with a net loss of $115.31 million. The annual operating cash flow for 2023 was negative $73.13 million, while the free cash flow stood at negative $84.89 million.

For the first half of 2024, Benson Hill reported a free cash flow loss of $31.8 million, which was approximately 50% of the free cash flow loss in the same period of 2023. This significant improvement in cash flow is a testament to the company's successful execution of its Liquidity Improvement Plan and its ability to optimize costs.

In the most recent quarter (Q2 2024), Benson Hill reported revenue of $33.77 million, representing a 44% year-over-year growth compared to Q2 2023. This growth was primarily driven by higher grain sales of proprietary soybeans and increased revenue from partnerships and licensing agreements, partially offset by lower yellow pea revenue. However, the company still incurred a net loss of $17.98 million for the quarter.

As of June 30, 2024, Benson Hill had $29.5 million in cash and marketable securities, which the company expects will be sufficient to fund its operations through the end of 2024. However, the company acknowledges that it will require additional financing to continue its research and development activities and maintain compliance with its debt covenants.

Liquidity

Like many companies in the agricultural sector, Benson Hill has faced its share of challenges. In 2023, the company announced an expanded Liquidity Improvement Plan, which included the divestiture of its soybean processing assets and the repayment of its high-cost debt. This strategic move, combined with cost-cutting measures, has helped Benson Hill strengthen its financial position and reduce its cash burn.

As of June 30, 2024, Benson Hill's debt-to-equity ratio stood at 3.52, reflecting the company's leveraged position. The company had $9.27 million in cash and cash equivalents, with access to a $6 million revolving credit facility, although the actual availability may be less based on the borrowing base. The current ratio of 2.21 and quick ratio of 1.74 indicate that the company has sufficient short-term liquidity to meet its immediate obligations.

Recognizing the importance of Environmental, Social, and Governance (ESG) principles, Benson Hill has also been actively integrating these considerations into its business strategy. The company's third annual ESG report, released in 2024, showcased its commitment to sustainable practices and its efforts to address the environmental and social impact of its operations.

Unlocking the Future Partnerships, Licensing, and Collaborations

As Benson Hill transitions to an asset-light business model, the company is focusing on strategic partnerships, licensing agreements, and collaborations to scale its product offerings and technology platforms. This shift allows Benson Hill to leverage existing infrastructure and capitalize on its core competencies in seed innovation and technology, while minimizing the capital-intensive nature of owning and operating processing facilities.

The company has already established several notable partnerships, including its collaborations with Tyson Foods and other major poultry integrators to validate the benefits of its UHP-LO soybean meal in animal feed. Benson Hill is also exploring licensing opportunities with seed companies and direct seed sales to farmers, as well as technology access fees and value-based royalties from partners across the agribusiness supply chain.

These strategic initiatives are designed to diversify Benson Hill's revenue streams, reduce its capital requirements, and position the company for long-term growth and profitability. By leveraging its proprietary technologies and focusing on high-value applications, Benson Hill aims to create sustainable value for its shareholders and drive positive change in the agricultural industry.

Seeds Technology Segment

Benson Hill operates in one reportable segment - the Seeds Technology segment. This segment focuses on the company's core business of developing and commercializing innovative seed products and technologies. The company utilizes its proprietary genetics, AI-driven CropOS technology platform, and Crop Accelerator capabilities to unlock the genetic diversity in soybeans and develop enhanced soy quality traits.

Key products and technologies within the Seeds Technology segment include:

1. Proprietary High Protein, Low Oligosaccharide Soybean Varieties: Benson Hill has developed several generations of non-GMO soybean varieties with significantly increased protein content and reduced oligosaccharides compared to commodity soybeans. The latest field evaluations on their third generation of these Ultra High Protein Low Oligosaccharides soybeans showed protein gains of 2% over the previous generation, with a yield gap of only 3-5 bushels per acre versus GMO soybeans.

2. Herbicide-Tolerant High Protein Soybean Varieties: Benson Hill is on track to commercially release its herbicide-tolerant Ultra High Protein soybean varieties in 2025. This will provide farmers with improved weed control options while benefiting from the enhanced protein content of Benson Hill's proprietary soybean germplasm.

3. CropOS Technology Platform: Benson Hill's proprietary CropOS platform utilizes artificial intelligence and machine learning to accelerate plant breeding and trait development.

4. Crop Accelerator Capabilities: Benson Hill operates a state-of-the-art Crop Accelerator facility that allows for high-throughput phenotyping, rapid seed production, and field testing of new soybean varieties and other crop innovations.

For the three and six months ended June 30, 2024, Benson Hill reported revenues of $33.8 million and $54.9 million, respectively, from its Seeds Technology segment.

Industry Trends

The global soybean market is expected to grow at a compound annual growth rate (CAGR) of approximately 4-5% over the next 5 years. This growth is primarily driven by increasing demand for soy-based products in the food, feed, and biofuel industries. Benson Hill's focus on developing high-protein, low-oligosaccharide soybean varieties positions the company well to capitalize on this growing market demand.

Conclusion

Benson Hill's transformation from a vertically integrated soybean processor to an asset-light seed innovation company has been a testament to its adaptability and strategic vision. By divesting its processing assets and focusing on its core competencies in genetics, technology, and partnership-driven business models, Benson Hill has positioned itself for long-term success.

The company's proprietary soybean varieties, such as the UHP-LO soybeans, have already demonstrated their value in the animal feed market, and Benson Hill's innovation pipeline promises further advancements in biofuels and other high-value applications. As Benson Hill continues to navigate the challenges of the agricultural industry, its commitment to sustainability, cost optimization, and strategic partnerships will be critical in unlocking the full potential of its revolutionary technologies and driving growth in the years to come.

While the company still faces financial challenges, as evidenced by its ongoing losses and need for additional financing, the transition to an asset-light model and the expansion of its commercial seed portfolio offer promising avenues for future growth. The expected launch of herbicide-tolerant UHP-LO soybean varieties in 2025 and the company's focus on expanding licensing and collaboration opportunities could potentially accelerate Benson Hill's path to profitability and cement its position as a leader in agricultural innovation.