Good morning or good afternoon, all, and welcome to the Benson Hill Strategic Review Update. My name is Adam, and I'll be your operator for today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypads. I will now hand the floor over to Ruben Mella to begin. So Ruben, please go ahead when you are ready.
Thank you, Adam, and good morning. We're pleased to take this time to update you on our strategic review process. With me today are Deanie Elsner, our newly appointed Chief Executive Officer, and Dean Freeman, our Chief Financial Officer. Earlier this morning, we filed a press release, and an investor presentation we'll be referencing during the prepared remarks is 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 and industry outlook. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions and are not guarantees of performance. We caution you to consider the risk factors that can materially cause results to differ from those in the forward-looking statements. Such factors include those referenced in the cautionary note, including our Form 10-K, Form 10-Q, press release, and investor presentation, and other filings with the SEC. With that, I will turn the call over to Deanie.
Thanks, Ruben, and good morning, everyone. Thank you for joining us today for this update on our strategic review process. When we announced an assessment of our strategic alternatives at our last earnings call in August, we went into that process with the intention of identifying a sustainable path forward for the company. In the time since, we launched into a deep dive review of our business, we've spoken with a number of stakeholders, and we've made significant progress towards determining our next steps. While there's still work to be done to execute our plan, what we want to provide today is an update on the steps we're taking to strengthen the company's financial foundation and to position the business to generate the greatest value.
Let me start by noting that this process reinforced the belief I have, and I know our board and the rest of our management team have in the core strengths of this business. We have a highly talented team with extensive experience across multiple ag sectors. We've developed a technological advantage through our CropOS platform. Our Crop Accelerator facility is a unique and advantaged asset in developing new seeds and adding to our unrivaled proprietary data. We've proven our industry-leading portfolio of high-protein traits, and we've established what we believe is a competitive moat in an innovation pipeline to maintain, if not expand, that advantage. We've proven that we can sustainably deliver our ESG commitments, and we've also demonstrated that we can partner with players across the value chain.
At the same time, this process has also demonstrated that the factors we see impacting our business are persisting, including the supply imbalance impacting price mix, weaker market demand, the cost of grower acquisition, and the high net working capital tied to our closed-loop business model. We have proactively applied analytical rigor to assess our business, our growth opportunities, our challenges, and the options we have for value creation. In doing so, we leveraged industry experts and left no stone unturned in evaluating the size and durability of our target markets, our product fit with customers, and the long-term sustainability of our go-to-market models. It is clear that significant change is required to realize our vision. First, while the demand for protein remains very strong, the alt-protein human ingredients market that we originally launched within failed to realize its growth potential.
Today, Benson Hill could greatly accelerate value capture by expanding into the animal feed market, where we see substantial opportunity today and over the long term. Human food ingredients will remain part of our portfolio, but to penetrate the large animal feed protein segments, we must accelerate the move to an asset-light model, which has always been part of our plan. Second, our products already give us a right to win in very large and attractive soy protein markets, but partnerships and new routes to market are needed to achieve scale and, in doing so, manage parts of the value chain where Benson Hill is disadvantaged by lack of scale. Finally, with the current innovation pipeline already in place, we are positioned today to start the acre ramp-up necessary to supply the massive animal feed market.
We believe we have a tangible path forward through which we can achieve our goals to position Benson Hill for long-term value creation. We've already started taking decisive steps to strengthen our financial position and liquidity, deepen our focus around our core technology advantage, and transition our products towards larger target markets by accelerating our evolution to an asset-light go-to-market model. Today, you'll hear about our progress towards strengthening our balance sheet and lowering our cost structure. Extending our liquidity runway gives us more time to transition to an asset-light model that can increase profitability and sustainable growth going forward. To start, Dean will review our actions to extend our liquidity runway. Dean?
Yeah, thanks, Deanie. Good morning, everybody. With the current market dynamics in the food ingredient end markets and the need to improve our liquidity runway, maintaining an asset-intensive business requiring significant operational cost and working capital burden is really no longer an option. So as a result, we're taking action in the areas we can control by expanding our liquidity improvement plan, announced in March, to reshape the business for the asset-light model. We've already identified approximately $33 million on a run rate basis reduction for operating expenses that will be realized in 2024, representing about a third reduction in our cash operating expense versus the end of 2022. We've identified an additional OpEx run rate savings of approximately $5 million-$10 million. We have plans to reduce our annual CapEx spend by $10 million-$15 million, so well on our way.
We've initiated a process to divest our processing assets to enable the asset-light model and build liquidity, significantly reduce our working capital intensity of the business. We've signed an agreement to sell the soy crush facility in Seymour, Indiana, for approximately $36 million. I think a press release went out this morning that you can read for a little bit more color on that. All subject to working capital and other adjustments. As we've communicated with you in the past, our objective is to retire our current senior-term loan facility early. The divestiture and other actions we're taking are expected to generate about $170 million-$200 million of cash to pay off that debt and leave us with approximately $50 million-$80 million of cash to extend our liquidity runway for at least 12 months from now.
All this is subject, obviously, to the timing of divestitures and other factors, but it's a good start. With a balance sheet that is significantly delevered, we'll have more optionality to identify non-dilutive sources of capital, as well as possible equity. We continue to evaluate multiple strategic alternatives through discussions with interested parties to best execute that strategy under public or even private operating models. And with that, I'll turn the call back over to Deanie.
Thanks, Dean. As you heard, we continue to take immediate action to strengthen our balance sheet. Our next priority was to conduct extensive diligence on market demand, customer fit of our products, and the strength of our pipeline. The findings from multiple sources were very positive. While the human food ingredient market was our first opportunity, we concluded that now is the time to accelerate our move into animal feed. Animal livestock feed represents a big acre opportunity for soy that has always been part of our pipeline. It is also a market that is not reliant on our current asset footprint, enabling our transition into a less capital-intensive business. One of our most critical assets is the value of the high-protein soy germplasm that we acquired in 2019.
Unlike most soy germplasm bred exclusively for yield, our germplasm represents decades of breeding selection aimed at protein and other nutritional properties. High-quality germplasm serves as the building blocks of a successful breeding program. That acquisition was strategically very significant because it provided us with an industry-leading quality trait breeding program, years ahead of any other. The next key component is data. As you can imagine, germplasm that has been bred for decades to optimize nutritional traits is also a goldmine of genetic data markers. CropOS has built layer upon layer of strategic data to guide and accelerate our quality trait breeding program. You've probably all heard Jason Bull talk about this before.
It will take years for other seed companies to try to replicate this genetic map using germplasm and data they have today, which is why our technology platform is distinct from and highly complementary to the platforms of other seed companies. The ultimate advantage the Benson Hill system offers is an accelerated speed-to-market timeline. In any business, time to market is king. In businesses that involve biology and require implementation across millions of acres, time is priceless. The hard work done by our R&D team over the years is paying off. We've developed five innovation platforms designed to drive growth across multiple market segments. Ultra-high protein soybean and Yellow Pea are the flagship technologies from which we can add other quality traits and next-generation improvements. We are selling UHP today in various CPG categories with soy flake, flour, and texturized flour.
Our Ultra-High Protein, Low Oligosaccharide soybean offers low anti-nutritional benefits, ideally suited for the animal feed market. External testing confirms that our Ultra-High Protein, Low Oligosaccharide or UHP-LO, has an improved amino acid profile that is highly desirable for animal producers. Our technology advantage also extends into heart-healthy oil offerings and tackling the complex task of combining these value-added traits into a single bean, where we derive the benefits of the meal and oil on the same acre and in one crush process. But there's much more to come. We have a robust pipeline of improvements planned over the next six years. This innovation includes next-generation traits and higher protein content and improved antinutritional benefits.
More importantly, we expect to release our first seed varieties in 2025 with herbicide tolerance, a key stage gate for us on UHP, that sets the stage for HT into our UHP-LO for animal feed going forward. Finally, I want to remind you that these products in the pipeline are largely de-risked, giving us confidence in the commercialization of these innovations over time. Stepping back to assess the total soy protein market in terms of market attractiveness and product fit demonstrates the opportunity for Benson Hill to expand our portfolio into animal feed as an immediate strategic priority. Animal feed markets are some of the largest and least differentiated markets in soy protein globally. Our ability to differentiate our products in animal feed provides a significant value creation today and in the future, with massive addressable acres to access.
Let me provide you with an example of how Benson Hill will penetrate the animal feed market with UHP-LO. UHP-LO is a game changer for animal producers, and it is ready now. We engaged multiple animal feed companies and industry experts to assess our pipeline. This analysis confirmed that our UHP-LO varieties meet the nutritional quality trait specifications animal producers desire, with higher protein, lower oligosaccharides, and improved amino acids. We have proven the benefits of these value-added attributes through both academic and commercial poultry and nursery swine feeding trials we've conducted over the last 10 years, and we're not the only ones who see this opportunity. Competitive partnerships have been announced to pursue opportunities in this space, communicating their intent to launch their first-generation seed varieties at the end of the decade, with defined specifications that our UHP-LO varieties meet or exceed today.
We will continue to advance our UHP- LO varieties with increased protein, improved amino acids, and herbicide tolerance, which will provide weed control that enables broad acre adoption in 2027. By the end of the decade, Benson Hill will be launching our Gen 3 seed varieties into this attractive market. Our closed-loop business model was launched to break through farm gate with competitive innovation from seed to fork, and we've consistently delivered our results. However, macroeconomic headwinds and operating challenges will negatively impact our margin structure in 2024 and beyond due to the cost of grower acquisition, high CapEx and working capital requirements with underwhelming returns and supply-demand imbalance impacting price mix. So we must adapt to the changing market conditions while focusing on scaling challenges required for broad acre access to enter animal feed.
Moving to an asset-light model enables us to focus our R&D competitive advantage while participating across the value chain with more robust partnerships that are more efficient to scale acreage, require less operating expense, and are more capital efficient. Importantly, this model will continue to enable us to solve end-user challenges with seed innovation. As mentioned earlier, seed companies see this repositioning of the commodity system coming. Some have launched their own quality trait breeding programs. Some are determining how they can start. All of them are behind where Benson Hill sits today. As we analyze the asset-light model across the value chain, there are three opportunities to monetize Benson Hill's technology. First, licensing our germplasm to seed companies. Second, direct seed sales to farmers. And third, through technology access fees from seed companies, processors, and end users.
We believe our pipeline can deliver market value creation of $100-$230 an acre, depending on the end market. This value creation was validated by industry experts and within market pricing models across different end segments. Developing mutually beneficial partnerships across the value chain moves Benson Hill into a well-established ag industry operating model. We are in discussions with several potential partners across the value chain to leverage our technology and innovation pipeline to optimize shareholder value. We plan to update you as we begin to gain more traction as a partner of choice in this space. Our future P&L will be tied to the acre adoption outlook for Benson Hill genetics across all domestic soy categories.
As I mentioned earlier, food will remain part of our portfolio, but broader animal feed applications will play a much bigger role and will become the primary source of our revenues, profitability, and returns. Direct sale will exist for select applications, but broad acre licensing partnerships and animal feed will be the unlock that enables steep growth and significantly improved margins. The interest we're hearing from ongoing discussion gives us confidence in this opportunity. Though 2027 marks the inflection point for more rapid growth, a series of milestones over the next couple of years will prepare the company and help us avoid uncertainties that could impact our growth trajectory. We believe there is an achievable path to accessing approximately 6.5 million acres across all of our markets. This is only a fraction of the nearly 28 million acre addressable market for U.S. consumption.
If we successfully achieve this penetration with the end market value of $100-$230 an acre, we expect our innovations will generate between $700 million and $1.5 billion of economic value long term. That is out into the future, but we believe significant value creation exists. This is not projected revenue. We expect to capture a portion of that value to drive our revenue and profit generation, but with extremely attractive margins. And this value creation only reflects what we have in our pipeline today, not what could continue to be developed through CropOS. I also want to touch on sustainability as improving the environmental footprint of agriculture matters to us and to all of the stakeholders we've engaged across the value chain. This slide illustrates the resource efficiency of our more nutrient-dense, higher protein soybeans.
The premise is quite simple and quite straightforward. Benson Hill soybeans provide more protein per acre, which results in less pressure on the land, less pressure on water, and lower carbon intensity per unit of protein. UHP-LO already demonstrates improved resource use efficiency over commodity beans, and that delta will increase as our pipeline matures. In addition, improving feed digestibility has the potential to reduce waste and morbidity in animal production, an area that we're investigating further. I will now turn the call over to Dean to provide an overview of our transition roadmap and the progress of our balance sheet actions to date.
Accelerating our strategic playbook requires a multi-year plan. As shown in this slide, I want to draw your attention to a couple of areas. First, we expect 2024 to be a transition period, which depends on the timing of the negotiations that are currently underway. The expanded liquidity runway we expect to create with the asset divestitures and other cost-saving measures, are designed to enable the formation of an asset-light business model with partnership and licensing agreements. Second, we believe the asset-light model will significantly lower costs, expand gross margins, and improve returns on capital. And finally, the execution of the strategy is aligned with the expected commercialization of our product pipeline. Keep in mind that the ag cycle is measured in years.
It does take time to bulk up seed inventory, expand farmer adoption to achieve the scale needed for the uptake customers require, especially in the animal feed space. Look, I've shared with you our persistent focus on cost management and capital discipline. I believe our teams have done really a terrific job of managing a really dynamic market environment. We're answering the call again to rethink how we manage what's in our direct control and expect by the end of 2024 to achieve significant cost and working capital improvements to minimize the cash burn while enabling execution of our strategic growth objectives. With that, I'll turn it back over to Deanie for closing remarks.
Thanks, Dean. The past few months have been a bit rocky, as has the market, but our path forward is quite clear. First, we're taking action to strengthen our balance sheet and create the liquidity runway to accelerate the transition to an asset-light model. Our closed loop model served its purpose, but is no longer necessary or appropriate. Delivering the operating expense savings, divesting our manufacturing assets, and retiring debt will best position Benson Hill to diversify our portfolio into new end markets. Next, we have a compelling value proposition in animal feed today. The level of diligence, the scale of the opportunity, the diversity of interested potential partners, and the milestones planned to penetrate the market are beyond what we've done in the past. Executing this plan aligns with the operating expense and the CapEx savings we need.
Finally, we will continue drawing on our core differentiators, our people and our technology. Agility is a core strength of this team. The speed with which our team rallied to learn from the past and plan for the future was critical and inspiring. Every day, we're talking with potential partners and experts in the industry, and the feedback I hear is incredibly exciting. Benson Hill is a young company, but our technology and product portfolio represent decades of R&D and some of the most cutting-edge science available. I am personally committed to guiding this company going forward, and will share our progress identifying the right partners to take our innovations to the next level as they develop. Now, let me pause to open the line for any questions.
As a reminder, if you'd like to ask a question today, please press star followed by one on your telephone keypad now to enter the queue. The first question today comes from Kristen Ow en from Oppenheimer. Kristen, your line is open. Please go ahead.
Hi, good morning, and thank you for all of the updates today. I have a couple of questions here. I guess first starting with the technology platform and the shift from human ingredients to animal ingredients. I'm just wondering if you can help us understand, from a technology perspective, how quickly you can start to turn the wheels in CropOS for aligning to the animal protein opportunity versus the human protein opportunity? And I'll start there.
Hi, Kristen, it's Deanie. It's a great question. Here's the beauty of what Benson Hill has built. We always anticipated an opportunity to move into all segments across soy protein, and so our pipeline represented platforms that enabled that move. So as I mentioned, the UHP-LO today, which is unique and advantaged as a standalone item in animal feed, that product exists today and actually is in the market, not in vast scales that we would need them to penetrate animal feed, but it is there today.
We are currently harvesting our Gen2 UHP-LO out of test plots, and we will analyze those before the end of the year to ensure that we are on the right path. But we're confident we can crack into this market very quickly. We'll be launching Gen2 expansion on UHP-LO next year, and then we'll be looking to integrate herbicide tolerance so that we can put it in a position to succeed into broader acre access. And so that pipeline exists. We're leaning into it as we speak, and it's ready now for the animal feed market.
Well, that's great and sort of sets up the next question that I had, which is really as relates to the line of sight on licensing for animal protein. And I appreciate this is early stages, but just thinking about w ho are the right partners in that space? Is it seed? Is it feed? And you know, your line of sight towards sort of the build-up that you've provided here, from that licensing agreement revenue.
Yeah, that's a great question because that's where all of our focus is going today. So just taking a step back, what the closed-loop business model demonstrated to us was the value of us going beyond farm gate, specifically to talk directly to the CPG customers. Because when we talked to those customers, we got a much different perspective in terms of the problems they were trying to solve from an ingredient stream standpoint. So as we're looking at animal feed, we're doing the exact same thing. We're talking to end users in poultry and in swine to get their feedback on the things they're trying to solve in the equation. Now, animal feed operates a little bit differently than human ingredients in that there's a very formulaic approach to how you price those products in the marketplace.
So we work with industry experts to get the value price set, so we understood what the value was that we were bringing to the marketplace. What we have found is that our product lines today are highly desirable to the end user, and our pipeline, in terms of what we're going to solve from a trait standpoint going forward, even accelerates that advantage going forward. And so we will continue to look for ways to partner with our end user. We can't miss the fact that Benson Hill is a small company, so if we're gonna crack into this market, we're gonna have to partner strategically with seed players, because those are the players who have the broad acre access.
And so that's our plan, is to talk to seed players, to talk to end users, and to figure out how we ultimately craft the right partnership model that enables us to succeed. The last point I want to make, Kristen, is that we've been partnering and studying animal feed over the last 10 years. The Schillinger germplasm that we purchased in 2019 had been studied for over 10 years in academic studies around animal feed. We know we have a competitive advantage. Our work in CropOS has expanded that competitive advantage. And so the time is right for us to make this shift, both from an innovation pipeline availability, end user insight, and the potential to partner with seed companies going forward. And those are all the discussions we're in the process of having as we speak.
Fantastic. And then, I 'll throw one to Dean here. Twelve months of runway with the changes that you've made, retiring half the debt. Just maybe, I missed it or, you mentioned it, and I failed t o capture it, but the FNBO term loan replacement, what needs to happen from a debt capital standpoint today? And is that still an option that's on the table now that the strategic review has been completed?
Yeah, Kristen, thank you. Great question. I always appreciate you saving one for me. Yeah, look, you've sort of laid it out exactly, in the order of operation. Sort of first is, asset disposition, generate the liquidity, you know, optimize the balance sheet in terms of the leverage and getting that behind us and generating the liquidity runway we need. FNBO continues to be, exceptionally supportive. I'm not gonna say that the term loan arrangement is the same that it was the last time we talked. Obviously, things have changed. We've generated more liquidity. Their support is intact. The senior note needs to be retired, and after that, it really opens up the optionality of other non-dilutive sources of capital we can go pursue, including FNBO support.
I'll have some follow-up questions there, but I'll take those offline. Thank you so much.
Okay.
Thank you.
The next question comes from Brian Wright from Roth MKM. Brian, your line is open. Please go ahead.
Thanks. I guess I wanted to start out with, you know, if you could just help us out. So, the additional sources of cash that you've mentioned on the deck, is that primarily the, you know, the $170 million-$200 million? Is that the Creston facility? Is there additional sources that are going into that? So just to understand what makes up those sources of cash.
Yeah, Brian. So for obvious reasons, we're not gonna sort of parse out the pieces, but I think as we said in the prepared remarks, these are largely processing assets we're talking about.
Okay. All right.
But, Brian, I think it's important to note that it's our processing assets, it's our year-end cash position, in addition to OpEx and CapEx. And so in totality, that's how we're getting to that number, with the intent of retiring the debt, and then operating going forward.
Okay. So that does include the cash position at year-end as well? Okay.
Yeah.
Okay, no, that's helpful. And then, can you help us understand maybe, you know, not exactly, but what are we talking about as far as, like, revenue profile for 2024 that generates that operating cash burn level?
Yeah. So, and I'll let Deanie chime in here as well. You know, we're obviously focused on ensuring that we've got, you know, the pipeline intact, our long-range planning intact, working through the development of our partnership and licensing strategies. We said 2024 is going to be a transition year, so I'd be loath to kind of provide a framework of what revenue looks like at this stage. But we'll provide more color as we move forward, as Deanie pointed out.
Okay. And then, just, is that like a fourth quarter timing, kind of, just, you know, when to kind of expect that kind of level of detail?
Yeah, Brian, I would expect to. Oh, sorry, Dean. Go ahead.
No, I think, look, we'll provide more color, Brian, as we move forward. But again, I just want to point out that 2024 will be a transition year. You know, guidance for 2024 and beyond will change fairly dramatically, as we talked about. And we'll try to provide more update as we get towards the end of the year.
Okay. No, thank you. And then I just wanted to also understand the value creation, like what to make of that in terms of just putting things in perspective, just because like, you know, those numbers per acre are meaningfully, you know, higher than just selling seed than if you have a royalty model. So I'm just trying to understand kind of what you're, you know, what that means and what you're trying to capture there.
Yeah. So Brian, in the asset-light model, there's really three ways that we're gonna monetize revenue. First, you're right, it's a licensing model, so there's gonna be a chunk of that, applied to licensing and royalty stream, which is great. Second, we will be selling seed to farmers, and so that has always been part of the Schillinger portfolio. It is something that we will expand, and we have tremendous interest in both from a distributor standpoint as well as a farming standpoint. And then third, the tech access fee.
When you think about CropOS, our ability to take our germplasm and our tech infrastructure and our Crop Accelerator, and partner with other players in terms of co-development or license our germplasm out, we have an opportunity to utilize and our third revenue stream around tech access fees. So all three of those have been built into our model. We've put a lot of diligence around getting that right and then vetting that on the outside. It's important that we get the external interrogation. We talk a lot internally about we'll get a first chance at a second chance one time.
And so we're gonna make sure every single step we take has been validated by outside experts, that we've brought people in and objectively interrogated our assumptions so that we're making the steps into this model with eyes wide open. And those are the three ways we'll monetize and how we'll build that model. I know it sounds a little opaque at this point because we're not actually sharing the numbers with you. And to Dean's point, we really can't yet. We're in the process of having a number of conversations to figure out ultimately what the value share will be. But we're really encouraged this model is going to be very attractive from a bottom-line standpoint as well as a top-line standpoint.
It really moves us 100% into the proprietary revenue space, where today, if you look at our P&L, about 1/4 of our revenues are coming through on proprietary, and about 3/4 are coming through in something we call empty calories. You know, more just commodity crush. And so, it's moving us more into our key competitive advantage in R&D and proprietary innovation.
Okay, thank you. And then if I could sneak in, one more, I just want to make sure I understand this, correctly. On slide 22 with the cash, OpEx and CapEx and net working capital. So does that mean $55 million in cash burn in 2020, $55 million-$60 million in 2024, and but it's reduced because the net working capital is reduced from $60 million-$65 million to $35 million -$40 million ? Is that the way to read that?
So those are those values, just to make sure I understand the question. Those values are in fact the quantum of spend for both OpEx and CapEx. And net working capital is, again, the quantum of total net working capital. So you see for 2024, fat math, but for OpEx and CapEx, about a 50% reduction, and in the same roughly for net working capital. So it's the difference that you would model as the reduction.
So, that improvement in working capital is embedded in that cash OpEx and CapEx number, that $55 million -$60 million ?
No, it's not. Cash OpEx is cash operating expense and capital expense. Net working capital is your inventory, receivables, payables, et cetera.
We can net out the $55 million -$60 million versus the reduction from $60 million -$65 million to $35 million -$40 million .
Those are two separate line items in the P&L and on the balance sheet. Both are accretive to cash. So as you reduce your operating expense and your CapEx, you improve your cash. But also, as you reduce your need for working capital, you also improve your cash, right? It's your earnings, your margin performance, your CapEx investment, and then the working capital demand on the to run the business, all of which are becoming more efficient, hence generating more positive cash.
All right, so in 2024, the net of both of those is like $20 million of a cash outflow?
For 2024, what you would model eventually is operating expense and CapEx cash burn of between $55 million and $60 million. Right?
Yep. Then you reduce your working capital by $25 million, right?
Correct. Versus the prior period.
Okay, so it's a 25. Yep. Okay, thank you. Sorry , yeah, be sticky on that.
No, no, no, not at all. Not at all, and happy to follow up with you if you got any more questions.
Thank you so much.
But Brian, if you think about it, this makes sense because we're divesting assets, so all of the resources and overhead that we had tied up in all the parts of the value chain are now able to be shifted, and we can focus on the most competitive part of our business, which is R&D.
Yeah, I mean, the revenue comes down, but my goodness, the cash burned in aggregate for 2024 is a massive improvement.
Absolutely right.
Yeah, that's exactly right.
Great. Thank you so much.
The next question comes from Ben Klieve, from Lake Street Capital Markets. Ben, your line is open. Please go ahead.
All right, thanks for taking my questions. I missed a minute or two of the prepared remarks, so, if this was covered, I apologize. But curious about the characterization of aquaculture feed as a secondary opportunity and wondering if you can kind of elaborate on what has changed over the past year or so. This is something, you know, you were pretty enthusiastic about not too long ago. So, you know, how would you characterize really the outlook for aquaculture feed and what has changed over the last year or so?
Yeah, Ben, it's a great question. So when we literally stepped back and took a look at the total soy protein market, we looked at market attractiveness in terms of what categories were growing, where the opportunity was for our products. Aquaculture remains a very big opportunity for us, and our product line, especially in UHP-LO, really fits well in that market.
And so everything we're doing on UHP-LO will be a direct application into aquaculture. The only challenge is the size of the market is not as big as animal feed. And so when you look at market attractiveness versus product fit, the biggest opportunities near in for us are animal feed, but we will not walk away from aquaculture. We think it's a very big, attractive market. We think we've got a competitive advantage there, and we will continue to pursue it. It's just in terms of size, it's not as big. So, secondary focus only in that , it is not as big, but, absolutely on our radar in terms of a priority.
Okay. So, and then I think maybe you might have just answered my follow-up question. I mean, the publicly known kind of commercial and research relationships within this space, it sounds like from that comment, Deanie, that you know, things are progressing as expected with those. Do you have any, y ou know, is there any material updates on the existing aquaculture relationships that you can highlight?
We're literally in discussions this week. I've got a team in discussions with the aquaculture end users, literally face to face this week. So I'll find out more as they get back. But no, I think we can continue to advance the studies. We can continue to offer a value advantage, just given our nutritional profile, and we see it as a really attractive market going forward. And so we will continue to do the studies and the research that validate our competitive advantage, whether it's aquaculture or animal feed, because it's just been the legacy and the heritage of this germplasm over time.
And so I think with the food ingredient market shifting and slowing in terms of growth trajectory, focusing in on those areas where you are competitively advantaged and have market access is the right next step, and, and it's for sure for us in animal feed and aquaculture. So we'll continue to focus very hard on studies that demonstrate our competitive advantage.
Okay, very good. Appreciate you taking my questions. I'll get back in line.
Absolutely. Thank you.
We have no further questions at this time, so I'll hand it back to the management team for any concluding remarks.
It's great. Guys, I know this is the strategic review and the feedback on the strategic review might come as a little bit of a surprise, but I can tell you the management team is very excited about what the future has and where the opportunity is for this company. We look forward to updating you as our partnership discussions evolve and look forward to hosting you in about a week and a half for our Q3 earnings call. So with that, thank you for taking the time, and hope to speak to you very soon.
This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.