Benson Hill(US:BHIL)2023-08-08 16:00Part I - Financial Information Item 1. Condensed Consolidated Financial Statements The company presents its unaudited condensed consolidated financial statements for the period ended June 30, 2023, showing a decrease in total assets and stockholders' equity, and an increased net loss from continuing operations, with the former Fresh segment reclassified to discontinued operations following its divestiture Condensed Consolidated Balance Sheet Highlights (Unaudited, In Thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $206,689 | $300,728 | | Total Assets | $392,301 | $500,920 | | Total Current Liabilities | $54,143 | $92,517 | | Total Liabilities | $255,698 | $307,018 | | Total Stockholders' Equity | $136,603 | $193,902 | Condensed Consolidated Statement of Operations Highlights (Unaudited, In Thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $109,038 | $93,631 | $243,681 | $159,757 | | Gross Profit (Loss) | $2,968 | $5,742 | $12,491 | $(3,193) | | Loss from Operations | $(37,422) | $(26,545) | $(56,708) | $(68,030) | | Net Loss from Continuing Operations | $(49,115) | $(25,098) | $(53,960) | $(42,522) | | Impairment of Goodwill | $19,226 | $— | $19,226 | $— | Condensed Consolidated Statement of Cash Flows Highlights (Unaudited, In Thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(44,281) | $(58,732) | | Net cash provided by (used in) investing activities | $46,102 | $(75,542) | | Net cash (used in)/provided by financing activities | $(7,768) | $102,128 | | Net decrease in cash and cash equivalents | $(5,947) | $(32,191) | Notes to the Condensed Consolidated Financial Statements The notes detail significant accounting policies and events, including substantial doubt about the Company's going concern ability, the divestiture of the Fresh business segment, a goodwill impairment charge of $19.2 million, and amendments to debt facilities - There is substantial doubt about the Company's ability to continue as a going concern due to significant losses, negative cash flows, and upcoming debt repayments starting in Q3 20242756 - The company completed the sale of its Fresh segment (J&J Produce, Inc.) on June 30, 2023. The results of this segment have been reclassified and are presented as discontinued operations for all periods shown547199 - A quantitative assessment as of June 30, 2023, resulted in a goodwill impairment charge of $19,226 thousand, representing the entire goodwill balance prior to the charge92 - In March 2023, the Company amended its Convertible Loan and Security Agreement, extending the interest-only period by six months through Q2 2024 and allowing restricted cash to be counted towards the minimum liquidity covenant28126 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial performance, highlighting a 53% revenue increase for the first six months of 2023 YoY, despite a widened net loss from continuing operations and a $19.2 million goodwill impairment charge, while emphasizing a Liquidity Improvement Plan to enhance cash flow by $65-$75 million by the end of 2024, though substantial doubt about going concern remains Results of Operations For the six months ended June 30, 2023, revenues increased 53% to $243.7 million from $159.8 million in the prior year, driven by improved operational performance, favorable commodity pricing, and increased shipments of proprietary products, resulting in a positive gross profit of $12.5 million compared to a loss of $3.2 million in 2022, despite a 7% increase in operating expenses primarily due to a $19.2 million goodwill impairment charge, while Selling, General & Administrative expenses decreased by 33% mainly from lower stock-based compensation Revenue by Product Category (Six Months Ended June 30, In Thousands) | Category | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Proprietary | $43,924 | $26,262 | $17,662 | 67% | | Non-Proprietary | $199,757 | $133,495 | $66,262 | 50% | | Total Revenues | $243,681 | $159,757 | $83,924 | 53% | - Gross profit for the first six months of 2023 was $12.5 million, a significant improvement from a gross loss of $3.2 million in the same period of 2022, driven by operational efficiency gains and favorable hedging activities215 - A goodwill impairment charge of $19.2 million was recorded in Q2 2023, representing the entire goodwill balance217233 - Selling, general and administrative expenses decreased by $13.5 million (33%) for the six-month period, primarily due to lower non-cash stock-based compensation expense, including a $6.2 million reversal related to the former CEO's separation216 Liquidity and Capital Resources As of June 30, 2023, the company's liquidity consisted of $94.4 million in cash and marketable securities and $19.8 million in restricted cash, with substantial doubt about its going concern ability due to recurring losses and upcoming debt obligations, prompting a Liquidity Improvement Plan aiming to improve liquidity by $65-$75 million by the end of 2024 through cost reductions, restructuring, and exploring strategic options for its Seymour facility, alongside intentions to refinance high-cost debt - The company's financial condition raises substantial doubt about its ability to continue as a going concern, given recurring losses, negative cash flows, and debt obligations245332 - A Liquidity Improvement Plan was initiated to improve liquidity by an estimated $65 million to $75 million by the end of 2024224 - As of June 30, 2023, the company had $107.4 million in term debt and notes payable outstanding, with principal payments on convertible notes beginning in Q3 2024245268 - The company's plans to address liquidity issues include improving operating efficiencies, exploring strategic options for its Seymour facility, potentially selling additional stock, and refinancing its current high-cost debt270 Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its quantitative and qualitative disclosures about market risk from those described in its Annual Report on Form 10-K for the year ended December 31, 2022 - There were no material changes in the company's market risk disclosures during the six months ended June 30, 2023278 Controls and Procedures Management, including the Interim CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2023, with a previously disclosed material weakness in internal control over financial reporting specific to the historical Fresh segment remediated following its complete divestiture - Management concluded that disclosure controls and procedures were effective as of June 30, 2023258 - A material weakness related to the historical Fresh segment was remediated as of June 30, 2023, as a result of the segment's divestiture260302 Part II - Other Information Legal Proceedings The company reports that it is not a party to any material litigation or other material legal proceedings - The company is not currently involved in any material legal proceedings303 Risk Factors This section updates and emphasizes key risks, primarily the substantial doubt about the company's ability to continue as a going concern due to recurring net losses and significant upcoming debt payments, alongside the potential insufficiency of the Liquidity Improvement Plan, inability to refinance existing high-cost debt, and the possibility of future material impairment charges following the $19.2 million goodwill impairment recorded in Q2 2023 - A primary risk factor is the substantial doubt about the company's ability to continue as a going concern, which could affect its share price and ability to raise capital286308332 - The company's Liquidity Improvement Plan may not be sufficient to achieve its financial objectives and could have unintended negative consequences on the business304305 - There is a risk that the company may be unable to retire its existing high-cost debt and replace it with a lower-cost facility, which could adversely affect its financial condition261285326 - Following a $19.2 million goodwill impairment charge in Q2 2023, the company warns that it could be required to record additional material impairment charges in the future if key assumptions in valuation models are not realized287289290 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None312 Other Information This section discloses two key events: a subsidiary's credit agreement amendment on June 29, 2023, to extend term loan maturity dates, and the Board of Directors' approval on August 8, 2023, of amendments to the company's bylaws to align with new SEC rules (Rule 14a-19) regarding director nominations and updated Delaware law concerning stockholder meetings - On June 29, 2023, a subsidiary amended its credit facility, extending certain term loan maturity dates and allowing for repayment of up to $2.7 million of subordinated debt292 - On August 8, 2023, the company amended its bylaws to update procedural requirements for director nominations by stockholders, in line with the SEC's Rule 14a-19293316 Exhibits This section provides a list of all exhibits filed with the Form 10-Q, including amended bylaws, various employment and separation agreements, an amendment to a credit agreement, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - The report includes a list of filed exhibits, such as amended bylaws, executive agreements, and required SEC certifications334