Benson Hill, Inc. (BHIL) is an ag-tech company on a mission to lead the pace of innovation in soy protein through differentiated and advantaged genetics. The company has made significant strides in transitioning its business model to an asset-light approach, positioning it to capitalize on the growing demand for its high-protein, low-oligosaccharide soybean varieties in the animal feed market.
Financials
In 2023, Benson Hill reported annual revenue of $473.3 million, a decrease of 57% from the prior year. This decline was primarily driven by the company's strategic decision to divest its soybean processing assets, including the sale of its facilities in Seymour, Indiana and Creston, Iowa. The divestiture of these assets was a key component of Benson Hill's expanded Liquidity Improvement Plan, which aimed to strengthen the company's balance sheet and position it for long-term success.
Despite the revenue decline, Benson Hill's gross profit for the year increased to $23.0 million, more than tripling the prior year's performance. This improvement was driven by a shift towards higher-margin proprietary grain sales and the sale of non-core technology licenses. However, the company's net loss for the year widened to $115.3 million, as it incurred significant one-time charges related to the asset divestitures and business transformation efforts.
Business Overview
Benson Hill's transition to an asset-light model has been a key focus in 2023 and 2024. The company has successfully divested its soybean processing facilities, enabling it to fully retire its high-cost debt and reduce its operating and working capital costs. This strategic move has allowed Benson Hill to shift its focus entirely towards its core competencies in seed innovation and technology licensing.
The company's proprietary soybean varieties, particularly its Ultra High Protein Low Oligosaccharides (UHP-LO) line, have garnered significant interest from the animal feed industry. These soybeans offer a 20% higher protein content than commodity meal, with competitive yield performance, enabling better feed conversion and improved gut health for livestock. Benson Hill estimates that its breeding efforts over the past three years have tripled the value creation of its UHP-LO varieties, making them a game-changer for the animal feed market.
To capitalize on this opportunity, Benson Hill is pursuing a multi-pronged strategy. First, the company is rapidly expanding its seed portfolio, aiming to increase the number of varieties from 22 to 35 by 2025. This includes the integration of an herbicide-tolerance trait, which will enable broader acreage adoption of its UHP-LO soybeans.
Secondly, Benson Hill is actively securing strategic partnerships and licensing agreements across the value chain. The company has already doubled the size of its seed licensing and distribution network in the past 12 months, and it is working to establish offtake agreements with animal producers to demonstrate the value proposition of its soybeans. These partnerships will be crucial in scaling Benson Hill's product innovations and driving revenue growth in the coming years.
Recent Performance
In terms of financial performance, Benson Hill reported a net loss from continuing operations of $26.3 million in the first quarter of 2024, compared to a net loss of $6.8 million in the same period of the prior year. This increase in net loss was primarily driven by higher interest expenses and changes in the fair value of the company's warrant and conversion option liabilities.
However, Benson Hill's Adjusted EBITDA, a non-GAAP metric that excludes certain non-recurring items, improved significantly in the first quarter of 2024, with a loss of $7.1 million compared to a loss of $14.5 million in the same period of 2023. This improvement was driven by the company's cost-cutting initiatives and the transition to its asset-light business model.
Outlook
Looking ahead, Benson Hill expects 2024 to be a year of significant transition. The company's reported revenues will include the runoff of its previous business model, including the sale of grain and other products associated with its legacy ingredients business. As a result, Benson Hill anticipates much lower revenue in 2024 compared to the prior year.
Despite the expected revenue decline, the company is confident in its ability to substantially improve the quality of its earnings over time as it builds out its partnership model. Coupled with further reductions in operating expenses, Benson Hill expects to see a significant reduction in losses from continuing operations and further improvements in Adjusted EBITDA.
Liquidity
The company's liquidity position has also been strengthened by the divestiture of its soybean processing assets and the retirement of its high-cost debt. As of March 31, 2024, Benson Hill had $30.5 million in cash and marketable securities, providing it with the financial flexibility to execute its strategic initiatives.
Conclusion
Benson Hill's transition to an asset-light business model is a critical step in its evolution. By focusing on its core competencies in seed innovation and technology licensing, the company is well-positioned to capitalize on the growing demand for its high-protein, low-oligosaccharide soybean varieties in the animal feed market. The successful execution of its strategic partnerships and the continued advancement of its technology pipeline will be key drivers of Benson Hill's future success.
Overall, Benson Hill's transformation represents a significant opportunity for the company to create long-term value for its shareholders. The company's strong technological capabilities, coupled with its asset-light approach and strategic partnerships, position it as a leader in the rapidly evolving agricultural technology landscape.