Benson Hill(BHIL)2024-08-08 20:28Business Model and Strategic Focus - Benson Hill transitioned to an asset-light business model, focusing on broadacre animal feed markets and securing partnerships to scale product innovations[114] - The company exited the soybean processing business to strengthen its balance sheet and focus on commercializing core business and intellectual property assets through partnerships[125] - The company's CropOS® technology platform and AI-driven innovations aim to monetize through licensing, direct seed sales, and technology access fees[115] Asset Divestitures and Liquidity Improvement - The company divested its soy-crushing facilities in Seymour, Indiana for $35.4 million and Creston, Iowa for $72.2 million to improve liquidity and reduce operating costs[121][122] - Benson Hill repaid $58.4 million of its Convertible Loan and Security Agreement in November 2023 and fully repaid the remaining $59.0 million in February 2024[119][120] - The company's Liquidity Improvement Plan aims to improve liquidity by $65 million to $85 million by the end of 2024, including cost-cutting measures and asset sales[126] - Benson Hill incurred $12.7 million in costs related to its expanded Liquidity Improvement Plan, including $7.4 million from facility sales and $5.3 million in employee severance and benefits[127] - The company repaid $59.9 million in Convertible Notes Payable during the six months ended June 30, 2024, significantly impacting financing cash outflows[173] Product Development and Innovation - The company's Ultra High Protein Low Oligosaccharides soybean varieties showed a 2% protein gain and a yield gap of only 3-5 bushels per acre compared to commodity GMO soybeans[116] - Benson Hill plans to release herbicide-tolerant Ultra High Protein soybean varieties commercially in 2025, with further expansion expected in 2026[116] Financial Performance and Liquidity - Revenue for the three months ended June 30, 2024 increased by $10.3 million (44%) to $33.8 million compared to the same period in 2023, driven by higher grain sales of proprietary soybeans and licensing agreements[136][137] - Cost of sales for the three months ended June 30, 2024 increased by $12.4 million (56%) to $34.6 million compared to the same period in 2023, primarily due to higher input costs from increased grain sales[136][139] - Research and development expenses for the three months ended June 30, 2024 decreased by $2.9 million (28%) to $7.5 million compared to the same period in 2023, driven by reduced personnel-related costs[136][140] - Selling, general and administrative expenses for the three months ended June 30, 2024 increased by $3.6 million (56%) to $10.2 million compared to the same period in 2023, due to a non-recurring $6.2 million reversal to stock-based compensation expense in 2023[136][140] - Net loss from continuing operations for the three months ended June 30, 2024 improved by $18.5 million (51%) to $17.98 million compared to the same period in 2023[136] - Revenue for the six months ended June 30, 2024 decreased by $17.2 million (24%) to $54.9 million compared to the same period in 2023, primarily due to lower low-margin trading volumes[147][148] - Cost of sales for the six months ended June 30, 2024 decreased by $15.7 million (24%) to $50.5 million compared to the same period in 2023, driven by lower grain sales of proprietary soybeans and yellow peas[147][149] - Research and development expenses for the six months ended June 30, 2024 decreased by $8.6 million (37%) to $14.4 million compared to the same period in 2023, due to reduced personnel-related costs[147][150] - Selling, general and administrative expenses for the six months ended June 30, 2024 increased by $5.2 million (27%) to $25.0 million compared to the same period in 2023, primarily due to a non-recurring $6.2 million reversal to stock-based compensation expense in 2023[147][150] - Adjusted EBITDA for the six months ended June 30, 2024 improved to a loss of $19.5 million, a reduction of $10.2 million compared to the same period in 2023, driven by reduced operating expenses from the Liquidity Improvement Plan[159] - As of June 30, 2024, the company's liquidity consisted of cash and marketable securities totaling $29.5 million[160] - The company repaid $58.4 million of Convertible Notes Payable in November 2023 and an additional $59.0 million in February 2024, leaving $16.1 million in outstanding debt as of the report date[161] - The company incurred a net loss from continuing operations of $44.3 million and used $26.5 million in cash flows from operating activities for the six months ended June 30, 2024[162] - The company estimates its existing cash and cash equivalents of $29.5 million will last through December 31, 2024, but will not be sufficient to fund operations for the next 12 months[164] - The company faces substantial doubt about its ability to continue as a going concern due to insufficient forecasted cash flows to meet contractual commitments and obligations[165] - The company plans to improve liquidity through cost reductions, staff reductions, and exploring strategic alternatives, including equity or debt financing[166] - Net cash used in operating activities improved by $17.8 million year-over-year, from $44.3 million in 2023 to $26.5 million in 2024, driven by cost-cutting measures and reduced payments on accounts payable[171] - Net cash provided by investing activities increased by $26.0 million year-over-year, from $46.1 million in 2023 to $72.1 million in 2024, primarily due to $57.7 million from the sale of discontinued operations[172] - Net cash used in financing activities increased by $44.7 million year-over-year, from $7.8 million in 2023 to $52.5 million in 2024, mainly due to the repayment of $59.9 million in Convertible Notes Payable[173] - Cash, cash equivalents, and restricted cash decreased by $6.8 million year-over-year, from $37.4 million in 2023 to $9.3 million in 2024[170] - Net cash inflows from discontinued operations in investing activities surged to $57.6 million in 2024, compared to $1.3 million in 2023, due to the sale of discontinued operations[172] - Net cash flows from discontinued operations in operating activities decreased by $5.5 million year-over-year, from $10.3 million used in 2023 to $4.9 million provided in 2024[171] - The company's cash position at the end of the period was $9.3 million, down from $16.1 million at the beginning of the period[170] Impairment and Other Financial Items - The company recorded an impairment to the carrying value of goodwill of $9.3 million in continuing operations and $10.0 million in discontinued operations as of June 30, 2023[141][151] - Net interest expense for the six months ended June 30, 2024 decreased by $2.9 million to $10.3 million compared to the same period in 2023, driven by the full repayment of Convertible Notes Payable in February 2024[152] - Changes in fair value of warrants and conversion option decreased by $18.4 million to $0.3 million for the six months ended June 30, 2024, due to fluctuations in share price and equity volatility[153] - Total other income for the six months ended June 30, 2024 was $0.7 million, a decrease of $3.5 million compared to the same period in 2023, primarily due to a $2.1 million receipt from a corporate-owned life insurance policy[154] Corporate Actions and Accounting - The company's reverse stock split of 1-for-35 was effected on July 18, 2024, with all share and per share amounts retroactively adjusted in financial statements[117] - No material changes were reported in the company's critical accounting policies or market risk disclosures compared to the previous year[177][180] - The company did not enter into any off-balance sheet arrangements during the reporting period[176]