Good morning. My name is Ruben Mella, Senior Director of Investor Relations for Benson Hill. On behalf of the entire Benson Hill family, welcome to our Second Investor Day. We're gonna build from last year by going through more deeply our competitive advantages and capabilities to demonstrate why we believe we can be a leader in the quest for better foods. For those of you who made the trip to be here today, thank you. My colleagues have done a lot of effort to put together a really immersive and insightful day for you. For those of you who are joining us on the webcast, welcome. We wish you could be here so that you could personally see all the things we're doing to set the pace of innovation in food. I wanna take a minute to walk through our run of show for today.
I believe we had almost 20 people this morning take our early morning technology tour. Raise your hands if you did that. Awesome. I wanna thank our R&D team for waking up early and to do that. I wanna thank you guys for getting your technology workout in this morning. After our webcast event and live Q&A, this group audience will break up into groups, and we're gonna go through and you're gonna meet with the experts in a series of case studies. One of them will be how we're leveraging CropOS and our Crop Accelerator to bring multiple quality traits into a dual premium plus soybean that we believe is gonna be a real game changer for our customers. Another thing we're gonna do is get a deeper dive into the aquaculture market.
We believe our high protein, low oligosaccharide meal, plus a series of pipeline improvements for next generation products, ideally positions us in the trout and salmon market. It also is gonna give us an opening into the European market and Northern Europe and Scandinavia. You're also gonna get a chance to talk to two of our farmer partners who graciously agreed to join us today. You're also gonna learn about what we're doing in the yellow pea, our next crop, where in over the next two years, we're gonna launch high protein yellow pea varieties that are gonna target the pet food market. We're training our technology capabilities into solving the flavor issue with yellow pea that we believe can open up a much larger market opportunity.
We're also gonna showcase our food science capabilities, which we believe when you integrate plant science, food science, and data science, gives our CropOS platform a unique competitive advantage. You're gonna learn more about that. Finally, it would not be a visit to Benson Hill if we didn't showcase some of the foods that our food science team has put together using our ingredients. You'll get to talk to those experts personally on what we're doing with functionality testing, how are we using our ingredients to make sure it's meeting the needs of the customers as we launch products into the marketplace. We'll also finish the day with a talk about sustainability and the importance of sustainability in food. I think it's gonna be a really interesting dialogue at the end of the day.
For the management presentation, Matt's gonna come up here in a minute and kick us off with a strategic overview and set up the conversation for today. Jason's gonna take a deeper dive into the CropOS platform, so you really understand its capabilities, and then talk about some of the advancements we're making in our pipeline and some new additions to the pipeline that really sets the future for us in the years to come. Bruce will unpack what we're doing from a commercial and operational perspective to drive operational excellence in what we do to bring our current portfolio and future portfolio of products to market. Andres is gonna introduce our international strategy and how we're gonna replicate what we're doing in the U.S. into the broader globe, starting with Europe.
Dean is gonna provide more insights into the financial aspects of what we're doing and our plans to deliver positive EBITDA and positive free cash flow in 2025. I'll give you a minute to read that. We will be making forward-looking statements today about our financial and business performance and the markets that we serve. Forward-looking statements contain risks, assumptions, and uncertainties. Please refer to our cautionary note in our annual Form 10-K, which was filed on March 16th, for the risk factors that may impact Benson Hill. We'll also be talking about non-GAAP financial measures today. A reconciliation to GAAP is included in the presentation that's posted on our website. Now, let's experience the future of food.
At our Investor Day last year, Jason Bull, our Chief Technology Officer, showed us this slide, and he did that to explain why we win. It's taken us over 10 years and hundreds of millions of dollars of investment to build the capabilities and the underlying technology platform, CropOS. We believe today that we're really at an inflection point in our journey to harness the technical capabilities, our product innovations, and our go-to-market model and drive the advancement of the food system. Today is really all about unpacking these competitive advantages. When we conclude with the discussions today, this morning, with our case studies this afternoon. What I hope you see is why we're so confident and we're so excited about what the future holds for Benson Hill. To meet nutrition security goals and global climate goals, we have to have innovation.
The plant-based movement and the consumer-driven behavior for better food choices is very durable. It's been building for years. It's a secular trend that's playing a key role, but there's some more fundamental reasons why we believe that this trend will persist. We live in a finite planet with finite resources, and we cannot achieve this nutrition security goal and climate goals using the same technology and the same approaches with the same GHG emissions that we do today. In fact, the math just doesn't work. If in 10 or 20 years from now, we're using the same approach to make food to feed a 10 billion person planet, agriculture will have a GHG footprint that is four times the size of what will be required to meet the commitments made in the Paris Agreement.
Innovation that leads to less processing, to better flavor, to more functionality, to more nutrition density, will drive adoption of plant-based solutions. Those foods, as we know, have a significantly less environmental impact. Every year, our ability to leverage technology to help solve some of these global challenges is more and more important to be leveraged. You'll hear today throughout the case studies that'll be shared, how this is showing up not five years from now, not 10 years from now, but today in products we are able to deliver today at scale. We're applying advanced breeding technology with a design-driven approach to create ingredients that better meet the needs of these end markets, end markets that are growing with tremendous demand, and we're going back to the beginning, back to the seed, to invent better solutions. We're taking those to market with our farmer partners.
We're linking their needs with the needs of the consumer. We're partnering not only just to deliver that across the value chain, but with our farmer partners to do audits. We can examine the environmental footprint related to the creation of these products, along with deforestation practices, biodiversity efforts, and other ESG metrics such as fair labor practices. All of those are included in the rigorous ProTerra standard that we met late last year. The macro trends reinforce this need for innovation. First, ESG principles, which some of which I just mentioned, are really becoming table stakes. As some of the greatest societal and environmental challenges in human history are unfolding, society is expecting more and more that businesses are going beyond the bottom line.
For us, reducing that environmental impact means finding ways that we can reduce water and reduce GHG emissions in the existing food system. Second is the Food is Health movement. While we've built a system that is really great at delivering cheap calories, we have got to focus more on delivering quality, not just quantity. The third, persistent inflation. Not only is food more expensive for the consumer, but it's also more costly to produce. We believe that innovation across this value chain is a really powerful deflationary lever. In fact, it can actually help reorient some of the supply chains. Finally, there's this double-edged sword of supply chain disruption. While that can sometimes create real and significant headwinds, they also offer an opportunity for us to improve further innovation and supply domestically produced solutions.
That's becoming more and more important to our customers who are looking for domestically sourced solutions to avoid global supply chain disruptions. In the face of these really complex and significant challenges, these advantages are creating a competitive advantage for not just us, but for our customers as well. Oops. There we go. As we start to tackle these issues in the food system, we're seeing increased societal pressure to address negative environmental externalities. In other words, we're seeing greater pull across the stakeholder base to address climate change and sustainability, as well as nutrition security in the system. For consumers, there's a growing link between buying patterns and loyalty to ESG claims. Consumers want healthier choices, and they want a better understanding of not just what goes into their food, but where it comes from and how it's produced.
They also need food that is accessible, and it doesn't compromise taste. The rise of the climavore and the flexitarian movement are reflections of how the consumer is thinking about the impact of their dietary choices on their health and on the natural resources of our planet. From food companies, the top 50 food companies are now reporting GHG emissions. They're discovering where they need to adjust their supply chains, especially their ingredient supply chains, in the chain. Consumers are also responding here. Today, 55% of consumers are more likely to buy a packaged good product that comes with a sustainability claim. Thirdly, regulators. The regulatory agencies are really embracing climate actions. We're seeing this in the United States and especially for some of our business in the EU, and that's spurring action throughout the entire food system.
All of these influencing factors means that we're shifting from food security to nutrition security. Even the UN has recognized the importance of nutrition density, not just caloric output. The food system is evolving to not just focus on feeding the world, but nourishing it. At Benson Hill, we're taking a very deliberate approach to value-added markets across this chain. They're fast-growing, and the need to innovate is really critical, and they haven't had enough attention around the genetic lever to drive innovation. So for instance, plant-based protein. That market is expected to broaden and deepen. It's got diverse applications from snacks to cereal, meat extension, alternative meat products even. There's estimates that range anywhere from $40 billion-$140 billion as to what the size of that market opportunity is.
The competitive advantage that we bring here is not just the product specifications, but the versatility that we can tap into in the genetics of soy and yellow pea and other crops, which are already really powerful and adopted plant-based protein sources. With genetic insights and genetic innovation, we can actually reduce processing and improve flavor at the genetic level for the output of the ingredient. The aquaculture market, it's now considered the fastest-growing protein segment in the world, expected to get to $245 billion by 2027. By leveraging genetics, we're not just producing more nutrition density and higher protein for the feed solutions, but we're also reducing antinutrients, complex carbohydrates that cause gastrointestinal issues in fish. We'll talk more about that later today in one of our case studies.
We're continuing to see this as a really exciting market opportunity. It's growing very well. We've already forward-booked the sale for this category for all of our 2023 inventory. Lastly, there's this exploding market of specialty cooking oil. Consumers are demanding heart-healthy oil that are high in omega-9s. We've seen this continue over the past year. We, in fact, shared also on our earnings call recently that we're nearly sold out at this point for our entire 2023 inventory of our Veri brand cooking oil. Its flavor, I'm sorry, its nutrition profile and its high cooking temperature, which gives it a longer fry life, are really only outmatched by the fact that it requires less water and less environmental footprint than canola.
We're positioned here very, very well to supply seed-to-plate innovations and deliver them at scale to meet the demands of these burgeoning markets, affecting really meaningful change and having a lasting impact on people and the planet. Our integrated model can identify and generate sustainability benefits throughout the chain. We generate value at every stage, when typically product development only addresses a single stakeholder in that chain. On the farm, through technologies, we can reduce the environmental impact of the food system, starting with the better seed. We hear from many of our farmer partners that sometimes they feel disconnected from or even villainized by consumers. We work with our farmer partners to incentivize the importance of quality, not just quantity, but importantly, to pull their story through to the consumer by integrating their data and working with them to optimize for nutrition and quality in the field.
At the processor, because our work at the farmer level and the nutrition density of the crops, we're able to skip processing steps, which are not only costly, but they're also very environmentally intensive, using a lot of energy and water. We can meet the needs of the downstream consumer and their desire for products that are traceable back to the farm. We're finding ways to reduce emissions, to de-risk supply chains, and to drive changes that retailers and consumers want. This integrated go-to-market approach is really breaking down a lot of these silos, and it's unlocking opportunities that further our competitive advantage and let us generate benefits and deliver them to our stakeholders across the chain. You're also going to hear today more on how we're quantifying those benefits across this chain.
When our farmers see what you see today, it's a lot easier for them to wrap their arms around the impact that we can make together and the market potential. We announced this morning a commercial license agreement with Corteva and M.S. Technologies for Enlist E3 soybean technology in the United States. That integration is leading to the leading herbicide technology being integrated initially with our flagship ultra-high protein soy products, and that will help deliver more value to the farmer through weed control, stronger yield potential, and greater protein levels. We're very excited to share today that the first commercial plantings of our UHP Enlist E3 varieties will commence in 2025.
Farmers in our network are realizing that the value of what we are bringing to market is not just significant because it's more nutritious and it's better for the system. They want to engage in opportunities that are beyond the farm gate to diversify their operation, to open new markets, to prioritize environmental sustainability, most importantly, to bring more profitability back to the farm and to enhance the prosperity of rural communities. The members of UnCommon Farms, one of our strategic partners, really help embody this mindset. Our farmer partners are truly leaning in. They are increasing their acreage. They're sharing data with us. They're growing new varieties. They're participating in R&D programs to further advance our product development pipeline.
There's a stickiness when you find the right farmer with the right mindset who wants to grow their business alongside our business and into a variety of really diverse markets. For several of these markets, we're really in a winning position, we're setting the pace of innovation in food through really abundant set of diverse opportunities that are all growing. As illustrated here, multiple fast-growing categories from aqua to alt dairy to snacks, cereals, pet, we're already in many of them today. We're seeing SKUs across consumer packaged goods companies that represent a global opportunity to lever the existing soy portfolio and the forthcoming proprietary yellow pea portfolio. Later today, you're also gonna hear from Jason about the incredible value that we're positioned to unlock from this product development pipeline. They're tied to several of these emerging markets.
Furthermore, using CropOS, we really can create with our customers in collaboration with them, new products and see around the corner as to what the markets are demanding. We believe that this collaboration is really part of Benson Hill's differentiation, and it's a major component of our competitive advantage. .heir willingness to tell us what the consumer wants and our ability to nimbly reflect that in our product development pipeline is very meaningful. I think you'll see as you experience the tours and the engagement with the leadership team today, how unique it is to bring interdisciplinary cross-functional approaches to deliver high-value products to the high-value markets. These types of partnerships and collaborations are also embodied in the recent ADM partnership that we disclosed last fall.
They are exclusively processing novel plant-based ingredients derived from our ultra-high protein soybeans for the North American human nutrition market. The collaboration really represents an exciting new frontier in taste, in texture, nutrition, and functionality for the alt protein space in particular. These partnerships can take a lot of different forms. We also have talked about our relationship with Denofa that's allowing us not just in the future to crush beans in Northern Europe, but to also access the really exciting market opportunities that I described in the Northern European aquaculture market. We also have the right team to help in this regard. In a siloed agri-food industry, our advantage really resides at this intersection that you see here. There's a true synergy when you combine the power of data science with plant science and food science.
It's a synergy that reduces friction and is allowing us to bring innovative new products to market faster, more efficiently, for less cost. The linkages that we have with CropOS, our Crop Accelerator, our food innovation team, is a convergence that you just usually don't see. It's rare to visit a company where the genotyping lab is across the hall from the food science lab. When we uncover insights in these areas, we can really nimbly and uniquely unlock and adapt what those new opportunities are. We can pivot and have focused on protein, functionality, flavor, field performance, and we can evaluate millions of data points a day to help further inform CropOS to how we can get more insights and more intelligence and innovate constantly to push harder. This work is driven by a remarkable and very experienced team of R&D professionals.
Talent really is the number one driver of our success, and the diverse experience gives us as well a competitive advantage. It also most directly mitigates our most significant risk, which is execution. Deep experience cross-functionally in fields like genomics, agronomy, AI, data science, food engineering, nutrition, this is powerful, and it's a team that really is winning. Underlying a lot of this value creation is intellectual property. Developing better food ingredients, feed ingredients, and oil products really depends on data and insights of the end user. This ability that we have to parallelize product development of the ingredient with the crop is truly unique. Getting on-farm feedback at the same time that you're validating a new ingredient for a new food formulation unique, powerful, and it further expedites the product development process. How we monetize our innovations depends on reducing risk as we launch new products.
Intellectual property protection gives us much more control of when, how, and how quickly we can act on and monetize these new discoveries. Today, Benson Hill has filed 89 patents for plant varieties, 87 for product-related innovations, processing and food applications, and 62 for enabling technologies around our CropOS platform, our CRISPR gene editing technology, and Crop Accelerator. This will continue to be an area of significant investment for Benson Hill, and the number of patents and patent applications will continue to expand. It's really an important reason why we're positioned so well to win. We're also poised to deliver really significant shareholder value as we grow. Dean will talk through some of these financials a little bit later this morning, and in more detail, but what I want you to know is that we're committed to growth that's responsible.
These are pretty unusual times in agriculture with commodity prices at elevated levels, inflationary pressures, supply chain challenges that are all increasing, actually, the cost to deliver new products. We intend to grow in a way that balances the need of our farmer partners and our customers by expanding margins and appropriately managing our working capital. We announced this morning more details on our plans to refinance our debt and implement a new liquidity improvement plan, which we believe very significantly reduces any future need to form capital. We are executing these initiatives while we're also maintaining our focus on delivering positive adjusted EBITDA and free cash flow in 2025.
With that in mind, we also recently made the decision to employ a more targeted growth strategy that's focused around our highest margin product opportunities, while we will de-emphasize, but not eliminate focus on those that have experienced margin compression. As a result, we now expect proprietary revenues in 2025 to reach $300 million or more as we execute this targeted approach. Proprietary revenue growth is also what's changing the arc of our margin profile over time, and it's the principal driver of the 25% gross margin target that we're also committed to realizing in 2025. We're continuing to explore strategic partnerships and licensing arrangements in various forms, also to scale the innovations that we have developed with partners in an asset-light approach.
We're committed to these 2025 objectives. But 2025 is only a point in time on a journey to build a company to last. Our mission is to set the pace of innovation in food. We are deepening and widening our competitive moat by developing new soybean varieties, releasing them, expanding our farmer base, increasing our acreage, and scaling our portfolio of proprietary products. We have what I believe is a winning combination: a cutting-edge technology platform, breakthrough products, a robust and expanding pipeline, an amazing team of people, and like-minded partners. These are all supported by secular tailwinds across a broad, diverse set of market opportunities. They're united by a common purpose to nourish people. Anchored by technology and fueled by talent, Benson Hill is well-positioned for growth and to set the pace of innovation in food. Thank you so much for being here.
In agriculture, I've lived my entire career in data science and genomics. Before coming to Benson Hill, I was at Monsanto Company for just over 20 years. At Benson Hill, we stand alone. We stand alone in the use of genomics as a proven lever to innovate in the food system. We have varieties in market, and we have ingredients in market. We also have a pipeline that's bustling with innovation. We have really five reasons we're winning with technology. The first is our leading varieties. These are high-protein, high-yield varieties that are being advanced based on mountains of data. CropOS, we're gonna spend quite a bit of time unpacking CropOS today. CropOS gives us a higher hit rate and lowers our risk in the product development process. Our pipeline. Our pipeline really is exceptional. We get to value inflection in three to four years. Our business model.
Our business model puts us on the same side of the table as our growers and our customers. Lastly, genetic innovation, our pipeline. We enjoy a multiplier effect on the innovations that we create. I'm gonna go through each of these in detail and unpack each one in turn. We have 12 varieties in market. On the right-hand side there, you see a map of the U.S. with the farms that are growing these varieties last year. Behind these varieties, we have a range of new and improved varieties coming. These varieties bring high yield, higher protein, and a diversity of maturity groups. They also bring the herbicide tolerance that Matt just talked about. That's a game changer. We're using the same proven playbook in yellow pea as we used in soybean, and there we're on track with higher protein, high yield varieties coming through our pipeline.
I love that we have varieties in market, and I love that we have new varieties banging on the door to be released. Let's unpack a little bit of the data behind these advancements because that's really what fuels our success. We have a range of strategic data starting with our field assessments, going to on-farm commercial assessments, genomic data, sequence data, sensory data. We have a range of proprietary data. This data fuels CropOS, and CropOS then gives us recommendations on which varieties to advance, which genes to edit, and allows us to create wholly new product concepts. This exactly mimics kind of our everyday life, right? We have Netflix, Kayak, Waze that are giving us recommendations on which miniseries to watch, which trips to take, and how to get home and avoid traffic, and they're using strategic data layers to drive these recommendations.
In the case of Netflix, they take it one step further and they use AI to create new content. They pick the actors that people most watch, the plots that people most watch, and then create new movies and miniseries around that. Let's unpack our data a little bit more because it's truly advantageous to us. With CropOS, we've got a universe of data, the first galaxy of which is genetics, and here we're looking at expression, gene expression, gene function. What we're really trying to do is target genes to turn them up and bring them down so that we can modulate how they function. In the field and the lab, we're looking at field performance, we're looking at how our varieties perform in the laboratory, and we're driving speed breeding models. With our farmer customers, we're looking at on-farm performance.
We're understanding the agronomics and the production fit, and we're coming up with value share models as we launch our new varieties. If we're a seed company, this is our universe, but you can see there's a quadrant missing. There's some dark matter here that at Benson Hill we want to shine a light on. We believe it's actually the most important quadrant that's missing. It's our customer. Here we're understanding how do these ingredients perform in food? What's the functionality? What's the flavor? What's the composition? We can bring it back to sensory models. This looks a little bit complicated, right? It actually is pretty complicated. The way we use CropOS, though, is really simple, and it's so simple that we're gonna go build a product together. CropOS acts like a GPS. With a GPS, you type in the physical address you wanna go to.
With CropOS, we type in the genetic address. Let's build a breakthrough aqua product, and this could be our dual premium bean, but for demonstration purposes today, we'll choose aqua. We need high protein. We need fairly average oil levels. We need some pretty good yield. We need early to mid-maturity varieties. We want to eliminate the carbohydrates Matt talked about earlier that cause some gut distress. We want nutrition for our fish species. We want plants that stand up in the field and don't fall over, and we want disease resistance. We've just typed in our genetic address. Just like a GPS, we just push go. What it's doing now is accessing all of that information to build the roadmap to create that product. In fact, we just created 1,000 different roadmaps.
Just like a GPS, it gives you alternatives, so I can go this way home, I can go that way home. For a GPS, it has some attributes associated with those choices. I can go on the interstate. I can avoid dirt roads. I can avoid ferries. I can avoid tolls. I wanna get there as fast as possible. It's the same for us. It's just a lot more complicated. The things that we're taking into account are a lot more multifactorial. Well, let's go through them. All these roadmaps are gonna be successful. Some of them are gonna be more successful than others. They're all fairly high success, but let's eliminate the ones that are lower. Overloading our production operations. You've seen our labs, you'll see our Crop Accelerator here in a minute.
We have finite capability. CropOS understands on a daily basis how much of that capability is being used by each of these roadmaps. We don't wanna create bottlenecks. We don't wanna overload what we're doing, so let's just eliminate the ones that don't fit. Cost. Budgets always matter. You know, if we build this thing and it costs too much, we're all gonna go and talk to Dean, and that's a conversation we'd probably all rather avoid. Let's eliminate the ones that don't fit our budget. Time. Time always matters. My default in my car is get me home as fast as possible. My GPS is always set for speed, and that's actually how we set our pipeline too. Let's go as fast as possible. Let's avoid the ones that take a little bit too long. Last one's a little bit more complicated.
Here, for our aqua variety that we're building, we don't wanna come out with just one. Growers want choice, we want a portfolio, we wanna come out with a small handful. If any of these roadmaps zero in too much, let's just eliminate them. We're now down to a small handful. This is where our experts come in. Our experts then interrogate each of these roadmaps and make the choice on the actual one we're gonna go forward with. If we were doing this the old way, we'd have taken 5,000 years to do what we've just done. With CropOS, we do it like that. We have our roadmap. What's next? We need our turn-by-turn instructions, and that's what CropOS does.
Again, it's a little bit more complicated here, because what we're building uses pretty much all of the capability of our company, and it takes about five years to do it, so pretty complicated instruction set. You're gonna see this in a little bit more detail when you do the case studies. To start off, we have to choose what we're gonna start with. We've got a lot to go through here. We've got a lot of options to look at. We don't have time to look at all these options, so CropOS picks the winners to start with. How we do our recombination, how we manage diversity, how we recalculate all the way through this five-year process is also managed by CropOS, as is our testing in the field, in our sensory labs, and in our genotyping capabilities.
As we get to pre-commercial and we're starting to work with growers, CropOS is now optimizing the agronomics and our production for those seeds to launch. We're now launching the small portfolio we pulled together for our aqua product, and we wanna know what's our portfolio mix and how do we share value with our farmer customers. CropOS is doing all this for us. We've got a roadmap, we've got our build instructions. What's next? Next is the fun part. We're gonna go build it. That's where our pipeline comes in. I love our pipeline. Getting the value inflection in three to four years is unheard of, and we do it for three primary reasons. Predictive design. You've just seen our predictive design. We just predicted how we're gonna do this. Prescriptive build. You just saw our turn-by-turn instructions. Next is parallelized testing.
Here, we're doing all of our testing at once in our labs, in the field, in the Crop Accelerator, in our sensory capabilities, all simultaneously. This would normally be done, if it's in fact done anywhere else, in series. We do it in parallel. What this means is our predictive design allows us to look at a huge universe of options. Our prescriptive build then zeros in and optimizes on the winners. Our parallelized testing then identifies the few winners really fast. Now we've built our product. Now we get to go exercise our business model. We're not a seed company. We're not selling seed. We're buying the entire crop so that we can turn it into ingredients. That fundamentally changes the relationship we have with our farmer customers. We're aligned on the same outcomes. We both want high protein yield and high profits.
That means our growers share data with us. It means growers adopt our recommendations. This is not what happens in the seed industry. Likewise, our customers. Our customers have really been starved for innovation for about the last 50 years. Innovation has looked like I've got a more processed ingredient, and now we've taken the lid off that and we get a lot of feedback. Bruce is gonna talk about some of this feedback later, but we can go back to the genetics and change it from the very beginning. The next advantage is around our pipeline, and here we've had some really nice advancements. We've had high-yielding, high-protein varieties coming through that give us a diversity of maturity groups. The weed control that Matt mentioned with Enlist E3 from Corteva, this is an industry-leading herbicide package.
It gives growers choice, it gives growers easier weed control and access to chemicals that aren't as expensive. This is a great option for us and our growers. We're in the third field season of gene edits in field. These are edits that improve protein and improve nutritional outputs. We're super excited about our CRISPR platform, and we're super excited about the progress we're seeing in this platform. Yellow pea, we're on track. We're on track for launching a high-protein, high-yield varieties in the next couple of years. These advances, and a few more that I'll talk about later, give us confidence and reason to expand our market scope. We're expanding into meat extensions, pet foods, poultry, swine, food, oil, and biodiesel. Let's unpack that a little bit more and share some of the value that we see here.
This is similar to the slide Matt showed earlier, and these markets are massive. They're massive even after we've reduced them to be just the soy ingredient that we're creating. Only North America and fairly modest growth rates. They're still massive. This is the canvas we paint on with our genetic innovation. Our genetic innovation, and really our product specs, then create the value that we can capture. Our product specifications give us a path to the superior products that are lower cost. They're lower cost because they're not as processed. They're superior because we've designed them that way to begin with. Once we've created this value, then we have a couple of options on how to go after it. The first is through our closed loop. Here, we enjoy the majority of the value that we're creating, or through partnerships, and here we share that value.
We're doing both. We've done both. Bruce is gonna talk about proprietary ingredients through our closed loop that are in market. Andres is gonna talk about aqua, where we're doing the partnership model. This is exactly our step two and step three that we talked about last year. Product specifications are the unlock. Who's excited to see all of our product specifications? I am, let's go for it. This is what we talked about last year. This is the pipeline that I presented. I'll just orient you quickly. On the left-hand side here are the markets we just talked about. Each row is a different market. The verticals here are where we're at in the pipeline, with the left being in market or close to market and the far right being further back in discovery in our development pipeline. Value inflection here is super important.
Everything on the left-hand side of value inflection, we've largely de-risked. At that point, we're bulking up seed and verifying where we're at. I'm super happy with this. We're on track with everything I talked about last year. It's all working really well. In fact, it's working better than that. We've added a whole bunch more. We've added high yield, we've added higher protein, we've added herbicide tolerance, and we've added oil to attack those markets I just talked about. When I started off, I talked about multiplier effect. Let me tell you how this actually works. We'll take a step back first, and we'll talk a little bit about the seed industry.
In the seed industry, this is a hugely successful industry, hundreds of billions of dollars, and really for the last 25 years, they've done two things, two things really well: genetic innovation and GMOs for input traits. They built a massive business on that. Let's go through how that looks. How that looks is, it's crop specific. You pick a crop like corn. You have an insect pest, corn rootworm. Very specific to that. You have to design a GMO that takes out that insect and no others. You can't have an off-target effect. It's deployed in North America because that's where the insect is, and that's where we're growing corn. Does it create incremental ingredient value? No, it's not supposed to. Creates no value. Does it create incremental application value? Well, it's a commodity. It creates nothing there.
Well, let me show you a much more exciting model. At Benson Hill, we've got a multiplier effect. We start with our genetic innovations, genetic innovations like the ones we talked about in our aqua product, where we're bringing protein, oil or new functionality. These are actually the same genes that exist across the two crops we work in. We get a lot of cross-leverage genomically from the genes we identify because there's analogs that go across species. We can deploy our innovation in food or feed. We can grow the crop in North America and export it all around the world, or we can grow it locally. We get lift through all of our different ingredient paths because we're skipping processing steps, and it flows directly into applications. This is our multiplier effect. Wait, there's more. Our partners give us instant market access and global reach.
This isn't a theoretical model. This is a model we're doing and we've done. You're gonna see that from Bruce talking about ADM in the partner category and Andres in the aqua category. We're doing this. This is everyday life for us. This is a fascinating model that unlocks tremendous value. Our last innovation, number six out of five, is actually hiding in plain sight. It's our people. Our people bring a breadth of experience and a depth every day to work, and they bring a passion. That passion is really fueled by our mission. Our mission is to use the proven lever of genomics to innovate the food system. Thank you.
Good morning. Ruben. Thanks. Good morning. I'm Bruce Bennett. I'm President of the Ingredients Division, It's a pleasure to speak with you again here this year. I joined Benson Hill in 2021 after spending the bulk of my career at ADM running similar businesses in similar roles. When I walked in, we had a well-crafted business plan with the tenets of the strategy in place. We just needed to pivot it out of the CropOS platform and execute against it. In 2022, we built a vertically integrated ag and ingredients company on top of a technology company in less than a year. We built a team, we integrated operations, we launched proprietary portfolio along with the sales and marketing strategies, which is truly, when you think about it, remarkable.
In less than a year, we built a new business on top of a technology company, and it's truly a testament to our team. Now in 2023, for us, it's the year of the customer. It's about accelerating sales and pulling forward our innovation across our end markets to customers and consumers. Today, I want to put particular focus around how well we've executed operationally across our closed loop and with our partnerships. First, let me do a quick recap of our closed loop and the strategic roadmap, which you've heard bits and pieces from both Matt and Jason. The way we look at it is we start smart, we think big, and we scale fast. We talked about this last year. Our start smart approach leverages our seed cutting R&D, our CropOS food innovation engine, as you've heard from Jason.
We then think big by operating our closed loop model. It's this elongated supply chain which historically has been very siloed. It's our job to then incentivize the adoption of our traits from farm gate all the way to the consumer. I look at this really as our incubator for our genetics, as well as for commercializing our ingredients. As we commercialize within the closed loop, we're working with established customers, we're winning business. Along the way, as we then work on new applications, we're cycling these insights back to CropOS to make Jason's platform even smarter, as he mentioned. This leads to scaling fast, where we then take an asset-light approach to scale with a partner. To ensure scalability, we strive for best-in-class operations within our closed loop.
The team has really delivered against the strategic roadmap that we outlined for you last year. Let's take a minute to take a look at that. As Jason mentioned, it all starts with the team. We have built a fantastic team at Benson Hill with deep operational acumen to run both our assets and our businesses. When you think about productivity, it's really amazing. We integrated two assets, two crush facilities last year with Seymour and Creston while simultaneously running our Dakota Ingredients business with strong performance. Those assets, we ran them really well. If you take a look at what we've accomplished in implementing processes and optimizing processes across our supply chain, as well as our focus on debottlenecking to impact capacity utilization, we've delivered. Transitioning to our go-to-market, I mentioned earlier, we launched a proprietary portfolio.
In addition, we've built a robust sales pipeline that will help deliver against our revenue and margin targets in the future. The most important part here is customers. We're working with a very wide purview of them from startups to multinationals to CPGs to even regional leaders in the export markets. Of course, I'd be remiss if I didn't point out today that we have two of our early adopters, Kellogg's and Schnucks, participating in our event, and we thank them for that. That's a lot. As you also look at the result of the team's operational execution, it's led to a review of our capacity footprint within our closed loop. We mentioned on our last earnings call that there was a strategic assessment and review of our Seymour facility.
I wanna point out this is on the heels of tremendous effort, execution, and success with the Seymour team and our farmer partners in the area. Looking at the yield improvements, the debottlenecking efforts, the processes that we've overlaid across not only Seymour, but Creston and Seymour combined, we've in effect increased our capacity by close to 50%. Thinking about that differently, we have an extra half plant of capacity in our closed loop that we don't necessarily need. Additionally, the ADM partnership has offered expanded market access as well. During this strategic review, as Seymour has a lot of optionality in the market, we'll be sure to assess the best opportunity and fit for the Seymour team, for the farmer partners in the area, and of course, the community.
This best-in-class focus also assures that we deliver good quality and value with our portfolio in the markets and customers that we serve. The way we think about it at Benson Hill, it's a very unsiloed approach in our go-to-market, and it encompasses the full range of our ultra-high protein powders and flours, our textured portfolio, specialty oils that include, of course, our high oleic, low linolenic oil. Within animal nutrition, we have our high-protein, low-oligosaccharide meal that Andres will talk about that we're channeling into the aquaculture market. We're also looking at other markets for that product to unlock the value, which I'll talk about in a bit. We also offer our pea protein portfolio that will then be our next channel for the genetics coming out of CropOS.
When thinking about the markets, we talked about last year that we're looking at the established markets with established volumes while shaping the new markets with the growth. We're executing against that. We're gaining a foothold in these established markets across things like meat extension and cereals, where there's established volumes that can generally unlock the value of our offerings. Our innovation continues to shape these growth markets like alternative dairy and alternative meats. It's interesting, but Jason and his team have basically enlisted the bulk of the company now to be pseudosensory scientists as we're trying the next plant-based yogurt or the next frozen dairy application. You know, our goal here is to help them to just understand early in their process how their flavor modification work is succeeding. We certainly enjoy that.
As we're in the market, we're now experiencing and learning about emerging applications and markets, a couple of them being pet food and food service, which I'll talk about in a few minutes, but it's helping drive our pipeline significantly. Across every segment, our portfolio assures that we're hitting across many of the key trends that are impacting consumers and also our customers. Certainly, the concept of the plant-based lifestyle, that's foundational, it's fundamental, and we're certainly positioning ourselves well against it, and it has decades of momentum behind it. We're starting to see this better-for-you trend encompassing and becoming more protein-centric. Consumers are increasingly associating health with protein, and Euromonitor recently pointed out that 26% of consumers are trying to incorporate more protein into their diets.
What I really wanna draw particular attention to you today is this concept of localization, transparency, and that underpinning sustainability initiatives. This is really gaining a lot of steam, and it lines up well with Benson Hill because of our differentiation capabilities here. Our closed loop is deeply connected to our farmer partners, and they support our efforts to impact downstream products that impact the consumer. As we're working with them, and you'll talk with them who are here today, and they can tell you that themselves, we're collecting that data, which then supports real metrics underneath the sustainability initiatives. It's increasingly opening up new and innovative ways to position. This farmer-to-package traceability opportunity like you see here, it's very real.
We have customers who are interested in pursuing that, but it enables them to message the way they want to message, whether it's around transparency, their sustainability initiative, but building more trust in the food that we're eating. As Matt mentioned earlier, this is very important to consumers, and it's impacting the choices that they're making. We're enabling opportunity that hasn't been enabled before because we're the first ones to do it, and I think that's really exciting. Additionally, we're driving better nutrition. We're looking for ways that we can align trends with consumer values. I think that it's a good time to make a few call-outs about how we think about setting the pace of innovation in food with respect to trends. As Matt mentioned earlier, food transcends calories and satiation today.
It's about climate, and we of course, address climate with products that we have developed with our ultra-high protein varieties that avoid downstream processing, reduce greenhouse gas emissions, energy usage, water usage. We check that box. It's about health, higher protein content, high oleic, low linolenic healthy oils. We're impacting amino acid profiles and fatty acid profiles to deliver against the health trend. It's about choice and it's about value. We believe nutrition should be an accessible option. Functionality can really help unlock value, not only for our customers, but for our consumers, and it can create more value across the system. It's about having confidence in the food that we eat, having trust in the calories that we consume. Our pro-portfolio is providing all of that today and more.
Let me walk you through a couple of case studies so that we can go a bit deeper in how we're differentiating our output traits with our markets and our customers. We've mentioned this already, but the global pet food market is large and it's growing. There's this interesting trend that's underfoot, the humanization of pet. Like, what does that really mean? Well, the fact is, pet owners have transitioned to become pet parents. Most of us can identify with that in this room. What's happened then is that these value propositions and these trends that are impacting our human food, they translate to the pet segment. When I walk down the market, when I walk down the aisle in the supermarket, I, of course, think about sustainability and how I'm grabbing the choices of food in my cart.
I don't change when I suddenly walk down the pet food aisle. It stays with you. We're connecting that, and we're excited about that. In a couple of ways that we're doing that, for instance, with premium rations or formulas and treats, it creates opportunities for our ultra-high protein powders and flours, where there's a strong need for both nutritional density and functionality. Standards are highest in these types of products. Semi-wet pet food, cat foods, there's a lot of water, there's a lot of oil. It needs bound up to be able to be presented in visually the way that it should. That's a margin driver for us. When you look at dry cat and dog foods, those are of course, value choices.
One of the challenges that formulators have is that they're limited on the amount of soybean meal that they can put in the ration because of antigens, one of which happens to be oligosaccharides. Well, I think as you've heard today, we grow great soybeans that are low in oligosaccharides. We're working with players in the industry to review that. Because if you can deliver a soybean meal like we're currently doing in aquaculture with low oligosaccharides, you open up that governor on the amount of soybean meal you can use so that you can bring more of that into the formula while simultaneously pushing out more expensive ingredients, and that builds value. That builds value for our customer, and it builds volume for Benson Hill.
Just as nutritional profiles can help with our penetration into the market, we can't forget about this idea about functionality and how it creates value. We've seen this in a number of markets, including food service. I think Matt talked about this already, but our high oleic, low linolenic oil has a number of value generators, including health, taste, functionality, and sustainability. With respect to functionality and oil stability, we've been working with a number of companies in the marketplace who are trialing our oil and also buying our oil. What we've done is that we're validating that our oil can extend fry life against commodity oil. In some cases, almost double the amount of time they can use our oil in their fryers, all while maintaining taste and all while maintaining texture.
Along with the value that is created, there's a sustainability impact that simultaneously occurs with a reduction in food waste, which also is real sustainability benefit. I think that that is what's truly exciting when we can have these dual value propositions. That's exciting for our customers, and it's exciting for Benson Hill. One of those customers happens to be joining us today. That's exciting for you all because we will be serving their signature chicken at our product station that was fried in our Veri Oil. I will tell you, it is fantastic. I know that you'll be looking forward to that as you should.
As we look at the focus around our pet segment, around our food segment, it demonstrates how we think big. Now we also need to turn to how we're scaling fast, and we've done that through our partnership with ADM. Last year, during our Investor Day, as we mapped out all of these activities and objectives that we accomplished, a big one was that we achieved a partnership with an asset-light model to the market, and we achieved it with a leader in the field. In less than six months, this pivotal moment in our company history occurred with Archer-Daniels-Midland. We did a licensing deal with a leader, and at the same time, we reinforced our commercial model with output trades across ADM's protein portfolio in a value share model.
I just wanna take a second and call out a few key highlights that have occurred with our collaboration. Last year, we successfully piloted our first crush to validate the tech at the Decatur, Illinois facility, which in turn enabled us to lead with our first licensing deal with ADM. We transferred all of our key learnings and incubation around the supply chain built at our Creston, Iowa facility to the Decatur complex successfully. We planted and harvested our second UHP crop at scale. Earlier this year, I'm pleased to announce that we did our first full-scale extended crush across the entire ADM protein complex and their full portfolio across 22 SKUs successfully. Now we're really looking forward to finalizing the marketing plans for this groundbreaking brand that they will be launching in Q2.
Truly a tremendous achievement for our company, and we're very excited. As we think about that monumental achievement with ADM, it does provide the answer to the question of how Benson Hill wins. We win with great technology. We win with best-in-class operations. We win with strong business execution across our closed loop and partnerships. That's how we set the pace of innovation in food, with ingredients that are made better from the beginning for our people and our planet. Thank you very much.
Thank you, Bruce. Good morning to everyone. I am Andres Martin. I'm leading the growth of Benson Hill internationally. Originally from Spain, from Barcelona. The second is different accent that you are hearing today. I've been in this business for 27 years, leading the agribusiness food chain most of my career in Bunge, where I had different roles on the international side. Two years ago, I joined Benson Hill. The main reason why I joined Benson Hill is for the sustainability value proposition and the possibility of scaling it up in a global scale. Let's have a look at what we do in the international side.
We are looking to replicate the success that we are achieving in the U.S., but to make it bigger, more global, where our products, our innovation, and especially our value proposition has the right to win. At this time, we are focusing our innovation in the U.S. and the vast majority of our crops, our growth, our planting is on, in the U.S. We are not discarding the possibility of adapting internationally to the different customers and the different partnerships that we would have. The international scope is big. The opportunities for Benson Hill are very big. We are not limiting also to the announcements that you saw in the last months and the regions that I will be talking about and that have been announced in the past.
Our perspective is much bigger than that in a global scale. Let's have a look at the international playbook. Once we have identified a region, we are following a very methodical process. We are dividing our steps on the analysis and our steps on the growth in three very differentiated steps and sequential. On the first one, we are taking our proven ingredients with proven success in the U.S. and taking it international, where it give us the chance to build partnerships, build awareness on the international markets, get break into new markets and grow with our sales. On the second step, we are looking for a possibility of getting into the assets, direct access to access through partnerships, licensing agreements that we were referring before.
In these first two steps, we have the capital. It's a low capital investment. The third one, we want to go one step further, where we would be planting our varieties in different destination markets, getting closer to the customers in a closed loop system, fully replicating the model that we are having in the U.S. In this third step, we will be increasing the amount of capital to moderate. Let's get a little deeper dive into these three steps. On the first one, it is what I call exporting the U.S. innovation to the world. We are growing the beans, soybeans in the U.S. We are processing them in the U.S. and exporting the ingredients to the rest of the world.
This allows us to control the quality at the very early stage of the growth, controlling all the steps down to the customer. It is important for us because it validates the sustainability proposition that we have, and also we do it with current infrastructure that is existing today in the U.S. and that we are using. To win in this step, it is key that we have a very strong commercial team and very strong logistics to get to the final customer. On the second step, we go one step further. We want to grow in the U.S. and then export the soybeans to be processed somewhere else in the rest of the world. It is a very important step for us for different reasons.
One, because it unlocks capacity that we are using in the U.S. as of today to then feed all the pieces of growth that we have in the plan. Second, it opens up new areas, new farming areas, that are not necessarily tied to our assets that we are utilizing today, but new areas that are more oriented to the export market and close to the export channels. Third, it brings us one step closer to our customers, and it helps us to adapt our product to the reality of the market and the needs that we have in the destination.
What it requires for this is that we find partners that are like-minded to Benson Hill, that they have assets or access to assets that are in the correct locations, and that they have the like-minded mentality as Benson Hill, adopting our core focus on sustainability. On the third step, we go one step further, and in some locations where that's feasible, we are looking to plant our varieties also in those markets to replicate the closed-loop system that we have as of today in the market. Growing Benson Hill varieties and processing them locally, it brings us an additional level of sustainability with less transportation to the final customer.
To succeed on this one, it requires to be located in a place, in a location where the IP laws and the IP protection laws and enforceability is existing and very strong. With varieties that are adapted to that soil and the meteorology, and also with building farmer partnerships as we have in the U.S. That's the process that we are following. Let's get deeper on what are we doing today. The first place that we targeted to grow internationally was Europe. Why Europe? Well, for many different reasons. One of them is Europe is a region with very big protein deficit as of today. It is importing annually between 28-32 million tons of beans and meal combined. That flow already exists.
It's a flow that is dependent of exports from North America and South America getting to the destination markets. That's to cover the deficit of the region. It's a very large, very large market. It's a market that has requirements on non-GMO for plant-based, for food, and for aquaculture. It is a market where the consumer is giving value to the geographic origin of the raw materials or the ingredients. It is a market where the IP laws are protecting, in this case, are protecting the Benson Hill IP. More important for this, because it matches with our value proposition, sustainability is top of mind of the consumers in Europe. It's not only the consumers, but also the companies and also the regulators.
As you will see in the aquaculture business case that my colleague, Hannah Lucas, will be presenting to you, later on, there are many different companies, and actually, I think, Matt was also referring to, many companies in the food chain, aquaculture chain, feed chain, are setting up their objectives on ESG and also reducing the CO2 footprint that they have for the future. They are ambitious objectives, and this is led by the consumers, is backed by the companies with those objectives, and also backed by the regulators that they are increasing the legislation to reduce the CO2 emissions that are not only in the country, but also certifying the ingredients that are coming into the food system in Europe.
Just to give an example, Europe has a regulated carbon permits market, has been on for many years, more than 15 years that it has been active. That market, in terms of where the companies need to buy their permits to cover the deficits against the limits that they have provided by the regulators, the price of those carbon permits have increased 17x in the last 10 years, from EUR 5 per metric ton of CO2 to around EUR 100 per metric ton now. It is a market that is very, very focused on sustainability, so it matches with the value proposition that Benson Hill can provide. It's led by consumer needs and backed by companies and backed by the regulators.
Let's have a look at what we are, what we are doing as of today. The first step that we did to attack the or to get into the market that we were targeting in Europe was actually to open the office of the international department in Barcelona, in Spain, to be close to potential customers, potential partners, to be close to the regulators, to be close to the market. On the European strategy, we prioritize the commercialization of our ultra-high protein meal with low oligosaccharides that we were talking before to get into the very strict aquaculture market. As of today, we are supplying non-GMO, deforestation-free, U.S.-grown, traceable meal with at least 60% protein in a dry basis.
That has equivalent performance to soy protein concentrates, but especially that has a component of sustainability that makes it more attractive or very attractive to the aquaculture industry. This ingredient, this raw material for feed in the aquaculture is being used as of today in the aquaculture system in Europe. This is not part of the future, this is not part of our targets. It exists today and is being used, and we started exporting this as of September last year, and we continue shipping more.
I think it's important to reinforce our meaningful sustainability benefits that is provided by our innovation, by the concentration of the protein in the soybeans in the earlier stages, removing the antinutrients, which is allowing us to bypass or intermediate part of the processing steps that other ingredients that our soybean meal is replacing by saving the concentration steps. This is providing us with a reduction of 85%-90% of CO2 emissions and also 90% of water use. This is very meaningful, and also you will see in the aquaculture business case how this is meaningful into the feed and into the whole food system. How did we did this? How are we doing this? How are we succeeding on this?
We have created, as Bruce was referring to as well, we have created an integrated model where the beans are being grown in the U.S. We are processing them in Creston, Iowa. We have established a system through rail, transshipment points, barges, going down to the Gulf, where we are loading this into boats through partnerships that we have with leading terminals in the U.S. Gulf. We are chartering vessels to transport in bulk this quantity across the ocean through our partnership with Denofa that allows us to scale up. We have set up a system where we are unloading, storing, and reloading smaller boats in Germany, in Brake Port. From there, the coasters are going into the aquaculture industry in Norway or in Scandinavia.
That is happening as of today. We have done that also following the certification of ProTerra that we achieved in December last year, with the highest standards of sustainability. We are doing all this with partnerships with leading companies in the world across the whole chain. It's not by coincidence that we open up the office in Barcelona to be close to all the system and destination and all these customers in the same time zone. Again, how did we do this? Well, you can see the whole process. How did we do this? Well, we started in the U.S. We started with a partnership, a relationship with Riverence, which is a mid-size aquaculture industry focused in trout, but is a leader in sustainability.
It is a company that wanted to learn and grow with us, that gave us the possibilities of growing together, learning when we didn't have the scale to go into the international markets. That success opened up the door to have the relationship and partnership with Denofa, who is actually a leader. He is, they are a leader in importing, processing of proteins, soy in Norway, that it helped us to scale up internationally through logistics and getting into a presence in the sector. With that success and that scale up, it opened up the possibility of getting together into the relationship that BioMar that we announced in January. BioMar is a leading, one of the leaders in aquaculture feed globally. We are talking to more people.
We are not limiting ourselves to this market, and we want to grow more. This is the same slide that you saw from Matt. Once we are already, as of today, in Europe with our ingredients, we want. We have prioritized aqua. We have the access to the rest of the market going through plant-based food ingredients, which we are already supplying through exports. Getting into pet food and ultimately getting into a specialty feed. Going into the third step that I was mentioning about planting our varieties in Europe, this is our consumers, our customers, our end consumers, they are demanding us to be there as well. This is not going to be moving all our grown crops to Europe.
This is gonna be to complement what we are already doing today from the supply in the U.S. As I said, Europe has a very large deficit, so we cannot be thinking about having all the supply from Europe, but this can be complementing what we are doing today. As of today, Benson Hill has already varieties that have been registered, they are grown in Europe, and they are being consumed in Europe. That already exists today. It's a very small scale compared to what we are doing, and we want to make it bigger. Also, we are registering more varieties. It's a process that normally take three years. We are in round two already for the new varieties. You would say, "Well, this is great. What else?
What is the next one? This is what we are doing in Europe. In Europe, we want to make it bigger. Certainly, we wanna get even deeper into aquaculture. We want to get into different sectors in Europe. We want to make it, as I said at the beginning, we are not limiting ourselves into this region. We want to make it bigger. What is next? Well, we are not at the moment to start talking in the specifics into other regions as much as we are talking today about the what we have already done and we continue to do in Europe. Why not Asia? Asia is also a very, obviously is a very large market with a very large deficit of protein that relies on imports from North America and South America.
It's a market that is growing very fast, not only in terms of population, but also in terms of diets that require very, very nutritional solutions, while highly sustainable food is part of our global responsibility. We are finding partners that are very interested in our value proposition that we have and that they want to grow with, grow with us. Ultimately, to finish, why do we win? How do we win internationally? Well, three very important points. First, we have a product that is highly sustainable, that is very well suited for plant-based food, but also for aquaculture and different feed. It's sustainability. Second one is, as we have proven on the aquaculture, we grow through partnerships. We are partnering with key leading companies in the world across the whole supply chain.
We are targeting, and actually our partners are embracing our value proposition and is backing all our efforts. The third one is through our innovation. Our partners are joining us not for what we have today, but our capabilities to constantly improve in our innovation and what we are gonna be providing to them in the future. Thank you very much.
Good afternoon, everybody. I'm Dean Freeman. Can everybody hear me okay?
Yeah.
Awesome. Okay. Thanks, Cal. You know, one of the things I wanna start, it's literally been almost about a year, almost to the day that I started here with Benson Hill. I think this time last year, we had an Investor Day. I've been here about three weeks, and, you know, I just barely figured out how to spell protein. Like most of you, I think at the time, I was sort of in awe of the promise of what the future held for Benson Hill. There was a lot of folklore, legend, and, you know, sort of tall tales, so to speak, at least as I was thinking about it. I didn't know anything about the business. I was wondering sort of what would the future hold for the company?
Would it really accomplish what it set out to accomplish? You know, the narratives and the highlights were all about delivering value across the closed loop ecosystem and connecting the consumer to the grower and how CropOS would be the innovation engine and drive the future growth across a broad variety of protein technologies in high value end markets, right? We talked a lot about, at the time, as Bruce mentioned, just acquired those assets. It was all about execution, execution. As I looked at the numbers, I'm like, "How the hell are these guys gonna execute? How are we gonna execute? I'm on the hook here, too." We talked a lot about, you know, we just acquired a lot of those assets.
We were really still in operational and integration phase, we were gonna build a business, you know, a significant business after having just acquired these assets. We talked a lot about our aggressive growth targets, you know, we outlined how we would drive top-line growth and our margin performance in the coming year and beyond, specifically, how we perform in our proprietary revenue growth. We talked an awful lot about the next few years, about the large, and hoping to land a large partnership with a marquee name. It was, you know, it was gonna take us a couple years, it would be a marquee name, it would really sort of be the catalyst for the validation of our product, the validation of our technology, and be the catalyst for growth and margin expansion. A lot of hopeful discussion.
It's interesting, as I sit here a year hence and being a part of everything that's unfolded, I think most of the folks talked about, you know, how did we perform? We tripled our top line growth, admittedly from a base of nothing to something, the amount of execution that went into that, I'm not just talking about sort of plugging it in and turning it on. I'm talking driving and creating a business from these assets. We doubled the revenue in our proprietary business. We had a gross profit profile from the prior year that was basically break even. We grew that to about $9 million, that gross profit is on its way to being triple what it was in 2022 here in 2023. We, you know, we expanded our gross profit, as I mentioned.
We landed one of the most consequential partnerships in the industry for UHP varieties in North America in the human food market. I think as you heard Andres and you heard Jason talk about the acceleration, the acceleration of our strategy, our growth strategy in Europe, and really being on track or ahead of track in almost all of our pipeline development, our Gen2 technology development, and the commercialization of new varieties and high-value impact products across the spectrum of the markets that we serve. As I kind of reflect back, I think it's sort of a time where we do a lot of reflection as we look forward, as you look back.
I look back with a bit of pride, a lot of gratitude, and a ton of inspiration for what we've got on deck for 2023 and beyond. Let's get into it. I have talked about, you've seen this slide. What I wanna talk about, I like to start with the end in mind. We are fully committed to achieving the objectives of our 2025 goals and our overall metric targets, positive EBITDA, positive cash flow, 25% gross profit. The difference from last Investor Day that you might notice is $400 million in revenue, and that's solely a function of the sale of our fresh business and the de-emphasis of our proprietary low-margin product categories.
The effect of this, and we'll talk a lot about there in the following slides, is better cash performance, better quality of earnings, better focus on the high margin, high impact product categories across the markets we serve. I think that all means a better trajectory of performance for the business moving forward. Numbers. Okay. I'm gonna kind of move fast, then I've got some comments. Top line growth, as I mentioned, about 7% year-over-year, exclusively on the basis of 44% growth we expect in the proprietary revenue for the year 2023. Just grounding us, we doubled it the prior year, about 44% increase in the current year, and that's driving virtually all of the top line growth.
Gross profit follows the performance of the higher margin proprietary revenue. You'd expect nearly triple gross profit year-over-year, achieving about a 6% gross margin profile. The added benefit of the partnerships and the licensing revenue is a key contributor to the margin performance in 2023. Our operating expense is about $127 million at the midpoint, which includes about $30 million of non-cash items. We'll talk a little bit more about our actions to improve the cash spend for the year and beyond in the following slides. However, I expect our operating expense and our adjusted EBITDA guidance to improve by approximately $10 million in 2023. We are going to update guidance. Won't be today.
I'll explain and talk through the things that I can and what I expect to see, but we'll likely have a guidance update as we get into the first quarter. Adjusted EBITDA, about 16% improvement. Again, I expect that to improve by about $10 million in 2023 as we execute on our action plan that I'll talk about in a minute. Finally, our free cash flow is driven by the CapEx investment that we'll make in the texturize asset investment in Creston, but also includes the interest penalties associated with the early retirement of our existing credit facility. So let me just say, I think we're really excited about the year. We're certainly already seeing a strong start to the year.
We're anticipating, and I think Bruce committed this to me, but it's gonna be a record top line and potentially a record gross profit quarter as well. We feel really strong that we're building on the momentum that we exited 2022, certainly as we see the first quarter playing out, and that should be a great catalyst for performance for the balance of the year. A little bit more color. Matt talked about this slide earlier. I'll just add, you know, just that the proprietary revenue growth is a key driver of the P&L margin and cash performance, and that's gonna be a repetitive theme throughout the discussion for today, that performance.
Again, you know, to the extent that we have a, we have a proven demonstrable level of performance, certainly as we continue to operationally execute in the commercial initiatives, we feel good about the growth glide slope that we're seeing there. I'll talk a little bit more about that coming up. Do I have the right slide? Yeah. Again, I like to look historically, great glide slope heading northeast. The $300 million target for 2025 really is on the basis of the operational performance keeping up with the commercial demand for the high, high-value UHP food and aqua and non-GMO, high oleic, specialty oil categories.
We've got high confidence in our ability to meet these targets and to be sure, you know, we've not had necessarily, I would say, an absolution, a demand challenge. I think as Bruce pointed out, we're really excited about the commercial initiatives that we have underway and our ability to further expand our offering. So to drill a little bit more into how the value proposition impacts our unit economics, it's a, you know, a question we get often is, you know, the historical profile, certainly for commodity crush margin has been about $1. It's ranging to about $1.75-$2 a bushel. The focus is on the high margin proprietary products with strong differentiated value propositions critical to sustaining the premium in the high margin in the high price commodity environment.
This is again, another proof point where focusing on high margin, high value proprietary products is key to maintaining a strong premium. We create value even in inflationary environments, but we create even more value as that reverts back to the mean, and we go back to sort of historical levels of commodity inflation. Again, a little bit more color. You may have seen this slide in prior presentations, or certainly if you've gone onto our website as we talk about the transition of both the margin performance and the revenue mix as a function of the contribution margin expansion over time.
You know, it again, as we kind of look at the first to the far left, this was the 2022 revenue mix between non-proprietary and proprietary and the corresponding contribution margin for each of the revenue types in the next column. The following column is the forecasted mix we anticipate in 2023, you could already see the 600 basis point decline on the non-proprietary revenue mix with a corresponding 400 basis point improvement on the proprietary side. That's part of the reason why you do see the margin expansion that we anticipate in 2023 amongst other things.
We further transition to the 2025, 2027 time frame, to improving the proprietary mix to 80% of total revenue with 25%-30% contribution margin. Licensing and partnerships being 12% of that revenue at the midpoint with 75% contribution margins. Notably, the non-proprietary mix of about 8% with 25%-30% contribution margin is our yellow pea business. We do retain higher value, higher margin non-proprietary revenue as well. We'll sustain that and continue to support that. Another thing that we looked at last time at our last Investor Day is how the closed loop proprietary, how the contribution margin stack plays out.
What are the sources of the value expansion you anticipate from, you know, from where we started and where we're headed in 2022 and then in 2023. In each of the each stack represents a category driver, the expected contribution margin, with about 60% of that improvement is coming from the far right two stacks driven by commercial drivers and improved volume, price, and mix essentially. 40%, the first two stacks, is represented really by the operational costs and technology improvements. Notably, the only real significant shift we see in how we expand margins from what we discussed last year is pretty much the full reduction of our value is the reduction in the value chain optimization stack, which is being specifically impacted by the acreage acquisition costs and other inflationary costs that we talked about.
I'll talk a little bit more about that, I think, in the following slide. Here you go, the value optimization stack. The key drivers we've achieved largely when you look at the first two items, again, this is versus a UHP, a traditional UHP cost stack as a baseline. We achieved nearly two-thirds of the targeted cost reduction with the investment in the Creston acquisition and the investment that we're making in the texturization capital. What that does is that eliminates a significant amount of tolling costs, third-party tolling costs, that we then enjoy the benefit of. Then the lower cost associated with protein content improvement is partially offset, largely offset by the fact that we have headwinds associated with acreage acquisition and inflationary costs around logistics, supply chain, labor that we've been talking about.
This is sort of how it plays out. We're achieving the value, but we're also recognizing the persistent inflationary factors as well. A little bit more color of the gross margin categorization, and this is more by end market. I think it's pretty clear, you know, end broad market opportunities drive proprietary gross profit expansion. Again, one of the reasons why we're focused on high margin, high value proprietary products in our core. Our approach in scaling the proprietary portfolio is centered around broad market adoption, which you heard about today. Our marquee of food and nutrition category clearly represents a large portion of the performance, but also the partnerships being a significant contributors, and with the ADM partnership being a significant proportion of that.
Emergent, I would say the you know, with with upside potential is the aqua and the specialty oils as drivers of ongoing gross profit expansion. Let's as we sort of transition to a discussion around cash, Adam, this is hopefully I tried to you asked me about our cash conversion cycle, and I tried to keep it as simple as possible so that I would understand it, so that I could explain it to you. This is, you know, if, if you look at our cash conversion cycle, we operate across the food value chain, so the working capital that you see here combines sort of, you know, the attributes of a seed company with that of an ingredient supplier.
You know, when it comes to delivering seed, planting, harvesting, delivering, processing, and then selling, that cycle is about a seven-quarter cycle. The most significant period of the investment begins with the grain harvest, which lasts about three quarters. Which you can see, we have multiple cash conversion cycles over the year. For example, in the first quarter of year two, you can see the slide, we see the proprietary grain from year one being held, manufactured into products while year two proprietary seed is sent off to the farmers. You have this year-over-year cash conversion cycle that we continuously work to optimize. It does require some financing and funding, and, you know, certainly it fluctuates based on the seasonality of our growth and our scale.
We've developed an internal cash council that cross-functionally coordinates from commercial to manufacturing to technology, all of the attributes and aspects and constraints around cash conversion to optimize it to its fullest ability. Our 2022 working capital is about $40 million on average. It goes down by about $10 million. It can go up by about $10 million depending on the seasonality and sort of what's shipping at that particular time. We continuously work to optimize that, and I'll talk more about how we'll do that moving forward.
Speaking of liquidity, we announced this morning the implementation of our liquidity improvement actions that are intended to minimize the need for external sources of capital by initiating internal cost reduction and cash optimization actions that we believe will result in targeted liquidity benefit of between $65 million and $75 million through 2024. We achieve the result through a three-pronged approach of reducing the structural operating costs beginning in 2023 and achieving about a $20 million run rate through 2024. Focusing and optimizing our asset base as a result of our de-emphasis of lower margin proprietary and non-proprietary products further and anticipating both cash savings and monetization of certain assets as we consider the strategic alternatives for the Seymour operations and further alignment of our existing capacity, our existing production capacity.
Lastly, continuing our ongoing optimization of acreage targets to further align acquisition costs, core product categories, and aligning our capital in accordance with high value and high impact strategic objectives. I thought it'd be instructive to kind of lay out a cash bridge. This is total cash. You can see cash use stack is represented by the operating cash use over the three-year period. We include the impact of early retirement of the existing credit facility and other debt payments, like payments of our capital leases and the payments under the new credit facility that we anticipate.
Then we add back about $100 million-$120 million of liquidity sourced mainly from the company's costs and operational improvement actions and the balance in equity or other funding sources, leaving us with a positive cash balance in 2025 as we go profitable. Another bridge on targeted positive free cash flow on the final slide. We begin with 2023, we build to 2025, and you can see our gross margin performance and subsequent cash earnings power that delivers the bulk of the benefit that we see over the period. Cash OpEx reduction and CapEx control, coupled with improved interest cash costs round out the bridge to 2025 when we expect to go free cash flow positive. Why Benson Hill wins?
You know, we've demonstrated not just with words or promises, but verifiable performance in our ability to innovate, to grow, and create value through our verifiable end markets across a variety of high-value markets in the human food, animal feed, and specialty oil markets. It takes a lot of execution, as we talked about. We operate in the consumer and the commercial markets that are demanding the value propositions that we offer. We have, and as we speak, we're demonstrating our ability to expand and grow margins. The formula is pretty simple. You drive broad adoption of products that no one else can deliver across a diversity of end markets, continually optimize your cost structure, strengthen your position with your partners and with your customers, and then scale.
Lastly, we win because we have a relentless focus on our cash lifeblood and recognize that our scorecard has many measures of progress and success. Our cash is number one. The successful execution of our strategic plan, our focus on liquidity improvement and cost of capital, I think will enable us to have a very successful next few years into 2025 and beyond. Thank you.
We're gonna take a short break and set up for the Q&A session.
Welcome back. Now we'll do our Q&A sessions. We have a couple of mics on either side. If you please raise your hand. The hands are already up. We'll start with Ben right here up front.
Oh, thank you.
Okay.
Thank you very much. Benjamin Theurer from Barclays. Just one question, maybe if you can help us to understand a little bit better the announcements you made around the new deal with ADM or the advanced deal, if you wanna call it that way, as well as the one with Corteva, how that fits into the strategy and maybe what's been needed on your side to accelerate these type of partnerships and-?
I can take the Corteva side of the equation. With Corteva, we've been actually working on the Enlist E3 trait for two or three years, we're just now getting to a point where we're thinking about, you know, getting into field trials and getting it to commercial scale in the next year or two. For us, that's an unlock because it gives the weed control that our grower customers have been asking for. It gives choice, and it gives flexibility to the ingredient team downstream with GMO and non-GMO actions. It's a perfect fit for us.
Which has a significant impact on the acreage acquisition, assumptions that we're making as well. I think that's a really important value creation opportunity there.
Yeah. The last thing I might add to that is in doing so, because it reduces the unit level acreage acquisition cost, you actually cross the threshold at which some of these much, much larger market applications become feasible and profitable.
Mm-hmm.
In today's environment, if you wanna tackle the 40 million acre opportunity that is poultry for soy production in the United States, the cost to grow a non-GMO crop cannot turn into a profitable opportunity. When you can reduce using a herbicide tolerance technology, the premium that you'd pay in a closed loop system, it unlocks a really significant opportunity for some of these mid and very, very, very large market opportunities. On the ADM side, you wanna talk about that, Bruce?
Sure, absolutely. I think I hit a lot of the key points and highlights around that in my presentation. I mean, there's a fair amount of heavy lifting up front that we actually accomplished with our closed loop model as we were working on the deal. That transitioned, you know, very nicely into their system. We proved it out within their crush facilities, which certainly with our own work within our closed loop, we felt confident with. That was successful. Now it's with ADM opening up their broad infrastructure, which will then have that multiplier effect that I think Jason alluded to across their scaled asset base.
It's exciting. I mean, we did mention this too, but it's exciting that your second quarter is of how many SKUs?
Over 20.
That's a massive leap forward for the development of the partnership. We're really excited about it.
Okay.
Hi. Thank you. Kristen Owen from Oppenheimer. Can I ask you a question about pricing? I wanna ask it in sort of two ways. One, how do you continue to move the needle forward on pricing, whether it's through reduced discounts or pricing for value? Then maybe ask you to put that in the context of one of the examples that you talked about, say for example, with the fry oil extension. What does that do for value unlock for your customer? Then how do you share and make sure that you're pricing to share in that value unlock? Thank you.
Yep. No, I appreciate that. You know, you gotta remember that within our closed loop, we have a very customer intimate approach. We're not looking at transactional relationships across our customer base, and we're hunting for partners who are recognizing the value that we bring across the multiple value propositions. You know, we'll work with a customer to really identify side by side where that value unlock is happening, if it's around sustainability platform, is it around the value per unit of functionality that we're driving, and we'll assess that together, and then that's incorporated into the price.
I can complement that in terms of value as well for what we are doing internationally and especially on the aquaculture. Our ingredients are replacing other ingredients that have some fluctuation in price. Our value proposition is to be affordable as well for the cost savings that we have in the process that have been generated through our innovation. Our main value contribution is on the sustainability. We are positioning ourselves as a specialty into the feed formulation for aqua, less related to the fluctuations of the commodity market.
I think just to add to that, as we're working with customers more deeply across our early wins, they're then bringing to us additional opportunities and challenges that they see that our portfolio can address. That further unlocks more value-generating opportunities because you need to really understand your customer, and you need to understand their applications and business. It's a way that we even leverage Jason's team so that side by side, we're not only working across the commercial tenets, but even deeply within the applications development.
Hi. Cody Ross from UBS. Thank you for taking our questions. I think you did about $73 million in proprietary revenue last year. You had roughly 100,000 acres or just over that for the proprietary part. You guys didn't say exactly how much acreage or the proprietary revenue, it will be $300 million, but that includes licensing and partnerships. For the crop alone, how much acreage do you think you need to have? Related, there was a slide that showed the contribution margin, Dean, I think in your.
Mm-hmm.
Your presentation just for this year. Why is the contribution margin for the proprietary and non-proprietary so close to one another? I would have figured there would be a bigger gap, you know, between them.
From a margin perspective, we're seeing, given the inflationary market environment, on the non-proprietary side, we're actually seeing better value coming through, just as a function of the inflationary environment. That's a part of it. I think the other part of it is we have in our non-proprietary business, we do have some high margin business lines. Our yellow pea business and some discrete, specific customer relationships we have on the non-proprietary side is giving us a lift on that part of the business. On the proprietary, it's a function of scale, right? It's exactly what we talked about. It's a function of scale. It's further penetrating those high-value market categories.
We're still seeing here in early 2023, some incentive pricing as we drive broader adoption that curtails over time as we get into 2025 and 2027.
Dean, if I may, Cody...
One other thing. Yeah, sorry. The once we implement the extruder capacity, that really unlocks a significant amount of the margin as we look forward.
Yeah, I think that internalization is a key point to call out.
Yep.
Just for perspective, Cody, when we announced the Investor Day last year, we said contribution margins for proprietary would be 1%-3% in 2022. We ended 2022 at 7%, then we're doubling it in 2023. We're making progress on that march to get contributions.
Yeah.
to where we want it to be.
Mm-hmm.
Just on the acreage.
Uh-huh.
You guys for your plan to hit in 2025.
Oh, 2025?
Yes.
You're right that it's a, it's a combination. When you talk about the contribution of revenue and the mix being, you know, a double-digit percentage coming from partnerships and licensing, the question in some of those will actually be, do we contract that acreage or do our licensing and partner, you know, organizations contract that acreage? I can't really estimate exactly how that will ultimately work because as you already know, you know, in the case of ADM, as an example, they're carrying a contract, you know, for the offtake and therefore the working capital. As it relates to the closed loop, I would say that there's going to be a relatively linear growth profile of acreage acquisition as it translates into proprietary.
The mix that we talked about will actually make the revenue per acre go up over that period of time slightly. You know, somewhat linear, but you're gonna see an arc up a little bit in the next two to three years because as that mix profile comes through and we see the pricing environment, particularly in the human food market, you'll take a larger and larger share relative to what we're already doing, that's actually the highest price category.
Maybe dovetailing on that a little bit, as we think about the revenue mix and the contribution margin mix in 2025 and 2026 and the shifts that you have with the expanding ADM partnership, aqua being a bigger, longer term opportunity, et cetera.
How much of that do you know the customers already and it's a matter of scaling your supply chain and your acreage versus you have to go and hunt and get actually new adoption of these ingredients? Obviously, that filters back into the seed supply chain. I'm trying to just get a sense of how much you've got visibility to that 2025 $400 million proprietary revenue, who it's coming from, so that you can work backwards a couple of years.
Mm-hmm. Andres, you wanna start on the aqua side, and then we can...
Yeah. On the aqua side, we are expecting to do more customers in the same area. Now we have already proven that that is a valid ingredient into the aquaculture feed, and we are doing it with our partner, with BioMar. We are talking to the rest of the industry. In that growth, we will be also working with other feed companies in the same area.
On the food side, I think I'd also point out there's a 12-18 month kind of, you know, seeding cycle in the value-added space with the food industry. We've really gotten that first, you know, 12 months under our belt, so we're starting to see. We use our sales pipeline as kind of a, you know, a front-running indicator of how that's building. We're really starting to see that catch up and accelerating happening now. It's not only across, you know, a range of food customers, but it's also even downstream processors, which are also seeing value with our raw materials within their systems. You know, Matt mentioned this, but partnerships come in many ways, whether it's through a licensing deal or even in that supplier-customer relationship. That's also helping drive that acceleration.
Mm.
All right. Ben Klieve with Lake Street Capital Markets. Thanks for taking my questions. Congratulations on the Corteva announcement today. It's a big deal. I know it was a lot of work for you guys, so congratulations on that. Question on the aquaculture front and the long-term opportunity there. Are your aquaculture customers expressing a desire to not only ship protein from the fish meal to plant-based meal, also on the oil side? Then the question there is, if so, is that an avenue you could participate in, you know, having omega-3 content baked into your soybean oil?
You will handle the innovation piece of the omega-3. Yes. The answer is yes. When we are talking to the aquaculture industry, in a broad way, but also with BioMar, we are thinking about a full solution. We want. The way that we have expressed it is that it's a real partnership, where we want to improve the whole chain, Probably starting from the fish, and going upstream into the agribusiness and the farming, and then innovating towards the improvement into to improve the fishes. It's a full solution. Yes, the answer is that they are interested in the oil.
That's why it's also so important on the step two to be closer in terms of the supply, to process those beans closer to the customer, not only to supply the protein with the ultra-high protein solution and low oligosaccharides, but also supplying the oil with the same components of sustainability to feed the same formulation.
If I can add on quickly on that. Our dual premium bean, and you'll see this in the case studies, we've got an oil stream that's the high oleic, low linolenic, and a high protein stream coming off the same bean. For one piece of unit economics, we're creating two premiums. We're super excited about that. I think it'll apply in multiple industries, not just the aqua one, but there's multiple areas that we're considering. Awesome.
Need to repeat?
Could you repeat it?
Oh, do I need to?
Does that answer your question? Why don't you go on? You repeat it.
You want me to?
Yeah, why not?
Oh, sure. All right. Is this better?
Be much better.
This thing's died. Yeah. Our dual premium bean, and you'll see it in the case studies when you go to the Crop Accelerator, I think. Our dual premium bean has this oil stream that's enriched for being high oleic, low linolenic, and a protein stream that's enriched for protein, and potentially low oligosaccharides as well. It's a bean that really captures all of our technology in one fell swoop, and that can then go into multiple different application areas. It obviously defrays cost in terms of now we produce that on one acre, not two acres. Allows us to go into multiple markets with a much higher value share.
I might also add that when we think about, and you all see this case study with the dual premium bean, which is, by the way, again, is a real product today that our farmer partners are growing. When you layer furthermore on, you know, an E3 solution to a dual premium bean solution, you're talking about cracking open a really, really terrific market and margin opportunity. So, you know, again, when we think about historically having to use two acres to produce two proprietary product streams and now only having to use one acre to produce two premium proprietary product streams, and on top of that, reducing the premium structure, and enhancing weed protection and yield profile all simultaneously, that's an exciting frontier.
You know, 2025 and 2026 is really the turning point where we see, you know, opportunity for not just, again, unit economic improvement, but cracking open some of those extraordinarily large markets that currently today, we're not accessing.
Thanks. Brian Wright with Roth MKM, wanted to follow up a little bit on the ADM contract and with the further announcement with the co-branding. Last year, it was a new announcement. There wasn't a lot of details on structure of the agreements, and was hoping maybe you could educate us a little bit on kinda how the contracts are currently structured and how to think about the structure of this co-branding additional announcement as well?
Speak to the co-branding?
Sure. We've made, you know, a lot of strides with ADM, you know, working through the co-branding strategy. It's actually taken a fair amount of back and forth as we've been working through how we'll be positioning it and how the logo will look, et cetera. I don't wanna preempt the fact that they're having a full launch in Q2, so they'll really be bringing more of the detail at that time.
A couple other things, Brian. Again, I think, I think in respect of what we did disclose on the partnership, as we've matured through the earliest stages for the first few months, I really wanna highlight that 1Q having run crush through the Decatur complex is an on-track and very meaningful milestone because it supplies the volume that's required in order to be able to take this next step. Of the work streams that are active, within a steering committee that's, you know, equal representation by both companies, all three work streams are getting to that first maturity in the second quarter through the development of this launch.
I'd say the integrity of the partnership as we envisioned it and as we worked to achieve, you know, the signing of an agreement last fall has all been maintained. And now it's really more about, okay, let's get our feet under us from a sales cycle perspective, validate the applications, and ensure that we're delivering the kind of value proposition to these end markets that we envisioned. I will remind everybody that, you know, when we think about the spectra of opportunity in protein ingredients, that number one, I think everyone can understand, you know, ADM is a leader here.
That when we couple the technology that Benson Hill is bringing to bear with its UHP, with the infrastructure that ADM has, you're not just producing something that's similar, you're creating new categories of products that we think are extraordinarily consequential to the protein ingredient space. Again, that validation is something that we're seeing through the earliest work. The results are, of course, very promising, or we wouldn't be positioned, you know, to get into the product launch in the imminent future. I'd say things are moving along quite well.
Two questions. On the animal feed market, which again helps get up the GMO agreement with Corteva unlocks that 2025 and thereafter. In formulations in poultry, for example, is that replacing a corn gluten meal, or what's the key protein ingredient besides just soy meal that's replacing to help frame kind of a pricing benchmark?
Mm-hmm.
Second, it was alluded to in the addressable market slide, didn't come up really a lot elsewhere. On the oil front for biodiesel, renewable diesel, can you just help frame where the real unlock would be from what Benson Hill could offer and how that could reduce carbon intensity scoring for users of that feedstock?
You wanna talk about high oil, and then I'll talk about the market?
The way we're thinking about the oil market is really bringing to bear a high oil variety. There's not a lot of variation in the market today in terms of the commodity oil amounts. We see there's a lot of upside on that, and we're actively working on it. When we do the economics on that there's an unlock in terms of how that flows through that market.
I'd say in terms of the feed side of the, of the coin, I feel comfortable saying that we wouldn't feel so excited about this market opportunity and its scale without having done the appropriate feeding studies. And you know that started really with shadow pricing analyses, and then doing meaningful poultry studies with multiple leading United States poultry producers, which they funded and provided us all the data on. We're grateful now to have seen that, yes, there is a very, very meaningful movement. It's not as though you're supplanting a different protein source, but you're creating a scenario where, you know, you're basically getting more bang for the buck, maintaining or improving the amino acid profile, maintaining or improving feed conversion ratios.
It's due not just to the crude protein content, but also the enhancement of, you know, antinutrient profiles and amino acids. There's a multi-pronged, you know, opportunity there. Again, the unit economic gain doesn't overtake the cost to run the closed loop on a non-GMO solution. We're quite confident that with a GMO solution and then particularly a dual premium GMO solution, that there's a really interesting scope, you know, to move into.
I'd just add to that we currently have, because we are still crushing some commodity, a fair amount of exposure to the renewable, you know, energy sector, and that's a volume driver for us today. Certainly our strategy is to continue our shift into the proprietary varieties, but at this time, we are working directly and indirectly into that space.
If I may just pile on one more because Bruce is making a really important point. When he spoke earlier about pet food and Adam, you asked this question about are we hunting new customers or are we, you know, executing against existing relationships? It's of course, far easier to do the latter. What I'd point out is that this is, I think, part of the beauty of the go-to-market model that we spent a lot of time explaining last year and the year before. When we think about step one as being a non-proprietary outlet with which or through which we can establish these customer relationships, that is a trust that's being gained that is, you know, a repeatable deliverable.
It might not be differentiated or premium in that initial stage. In pet food, out of our Dakota Ingredients business, we deliver to several of the largest and highest value pet food manufacturers already. In the case of the biodiesel market, we already deliver into this market. In the case of poultry, we already deliver into this market. When we come to that customer who's worked with us for years and say, "Well, how about this?" There's a lot less friction in that exchange. I think that's also what Bruce was talking about in respect to some of these, you know, key accounts and even some of our smaller and medium-sized accounts.
When we've established a relationship initially, it might be off of one product for one SKU or one application, but when the success of executing the supply chain has occurred, which we've turned the crank on now in the last 18 months with many of them, they're coming back and going, "Wow, how about these other 11 SKUs? What about these two or three things that we've been thinking about, but your product would uniquely enable?" There's very much a land and expand approach, whether we're initially just doing non-proprietary or just doing a narrow band of proprietary.
You've got the customer build to the market build, and then even the geographic build, right? Because we have multinationals playing across many geographies, and some of them are GM markets, some of them are non-GM markets, and some of them, like the U.S., are blended markets. That will also provide opportunity for us to even penetrate geographically.
Mm-hmm.
Yes.
I have a two-part question. My name is Bob Nemitz, and I'm just a private investor. I have been a private investor for about seven years now. I guess, congratulations on the $85 million PIPE last March, because that's been a very important, you know, investment in the past year and providing some confidence where a number of SPACs have not done so well that didn't make that move. At the same time, in that time period, your market cap's gone from about $2 billion to $200 million. As that $200 million falls further, you're looking at delisting, potential delisting of your stock. What are you gonna do? What is the firewall here that.
I'm hoping today I would learn about a firewall that would say, "Okay, the stock's not going down any further." Congratulations today on the liquidity plan that the board came out with a couple of days ago. That, you know, that might help. What are you doing to make sure that you don't fall into the pink sheets, into the OTC, and therefore kind of accelerate the momentum downward that you've seen over the past 18 months? Thank you.
I'll start and then turn it over to Dean.
Yeah.
You know, the liquidity improvement plan, for which we filed an 8-K yesterday, begins to detail as well as in the press release this morning, some of these actions. I will say, you know, these are very meaningful moves. They're very meaningful moves. They're driven by a need to ensure that the company's priority of having cash to fund the business through profitability is achieved. When we think about, you know, the strategic review at an asset level, largely driven by the success, frankly, that we've had over the last 12 to 18 months, combined with, you know, very, very meaningful OpEx pullbacks, combined furthermore with some working capital initiatives that we believe will free up additional cash.
We're talking about having reduced from up to a $100 million need, which, I think is evident that the market is not reacting well to, particularly in this environment, and saying, "We've gotta take that down in a very meaningful way now and not wait." Because I think we, at least we internally, are planning for this market to persist. The degree to which we close that funding gap could come through, you know, an equity issuance. But you know, obviously, we're all very particularly sensitive to dilution.
That, that intent there is to bring down as far as we reasonably can, as soon as we reasonably can, the company's remaining need for liquidity while still maintaining our commitment to our investors that we're going to achieve positive EBITDA, adjusted EBITDA and free cash flow in 2025 and maintain the strategic integrity of the core business. You know, we don't talk about it a lot, but one of the reasons why I wanted to ensure that we included this intellectual property review today in my opening is that, frankly. You know, we believe there's more than $5 of share value sitting in that intellectual property portfolio. I don't think the market is looking at that and giving us any credit for it at all.
I think that I could hypothesize that that's due to concern about our ability to fund the base operations. That's why today, when we came out with the discussion on this liquidity plan, you know, we really do wanna send a much clearer message to the market that it's not $100 million, but that I think folks might have assumed, in which case you'd see a really, you know, poor dilutive profile. In this case, we estimate that it's probably in the $35 million-$45 million range between now and 2025. So that is a meaningful move. That is a meaningful action.
It's something that, you know, we as a team are very behind, but we're doing it in a manner that doesn't compromise the integrity of the commercial organization or the crown jewels, which is really the intellectual property, the capabilities, the team, and the platforms that, you know, we've invested at this point, over half a billion dollars to develop over the last 10 plus years.
I think you covered a lot of ground there, Matt. you know, from my perspective, I would say, look, the share price is a function of exogenous forces, some of which we can control, some of which we certainly can't control. What we can control is our performance, which implies value, continuing to execute across the spectrum of opportunities and the value creation we talked about today, and that we've historically proven that we can. I think it starts there. I talked about potentially improving our guidance for 2023, continuing to reinforce that, we're not damaged goods. We're actually continuing to perform up the slope of increasing higher levels of value for the company. that's number one, continuing to demonstrate that. Number two, I think Matt hit it spot on.
I mean, I think the approach we're taking is a function of liquidity. It's a function of making sure we've got ballast for continued growth into 2025. It is about optimizing the portfolio for higher values, greater, you know, greater quality of earnings through the through our revenue and through our margins. Being, you know, prudent and being very hyper-disciplined around the use of cash and around the sources of cash. I think secondarily, I mean, to the extent that, you know, sources of cash, and I think the way we framed it is we do have alternative sources of cash available to us. We're taking a balanced approach here. Today, it's aggressive. I don't wanna sugarcoat it in any way, but I think it's balanced.
To the extent that we have alternative optionality, whether through non-dilutive sources, other asset dispositions, we'll continue to explore those opportunities.
I might also add one other thing. When I want to focus on the intellectual property because again, in our opinion, the innovation pipeline that you're seeing more of today through Jason's presentation and explanations, while it is the most significant asset in the company, the current products and future products, what I'd also point out, this gets to the question about, is there a floor? We're running three operations with a base asset value of over $150 million, possibly way more than $150 million of value that are cash generating. These are in absence of even proprietary, these are cash generating assets on their own accord. You know, again, foundationally, I sometimes refer to this as the software and the hardware, right?
We needed to buy the hardware to commercialize the software. After that, we can start to pull back and create a little bit more of an asset-led approach. I think the ADM relationship is the tip of the spear for how that will ultimately grow and mature and look. I don't wanna lose the fact that you as well have an investment that we've been really deliberate about making on the hardware as well.
I would just say that, and just to that last point, the canary in the coal mine is when you land a $100 million credit facility with a conventional lender who's got a deeper insight, believe me, through their diligence process of not just the credit worthiness of the company as it sits today, but certainly, how it's expected to perform in the future with a fairly significant conservative risk profile.
A lower cost of capital.
Yeah, hence.
Sorry, Cody.
Just another question from me. You guys are scaling your assets faster than, you know, most other peers out there. With that said, you've reduced your proprietary outlook by roughly $50 million. Can you help us understand how much visibility you have right now to your $300 million target as you sit here today? Potentially, what was the EBITDA or cash flow value that was tied to the $50 million reduction in proprietary revenue for helping us understand how you reach your targets in 2025?
I'd say that the $50 million dollar profile or $50 million dollar revenue that we for 2025 have taken off is largely tied to some of those margin compressed products that were on the lower end of the margin spectrum that we had. Simultaneous. What you might say is, "Well, if you drop those off, then why don't you see contribution margin lift for the remainder?" Those other remaining products felt the same and are feeling the same margin compression that these lower value products did, you know, at the outset. It's as much of a mix decision as it really is a margin decision, you know, because once you're in the non-proprietary range. You know, we're not. We see no benefit to paying for a closed loop at all.
In terms of visibility, I mean, similar to a question asked earlier.
Yeah.
in the case of, you know, aquaculture and human food, you know, you're typically talking about a one to two-year sales cycle and then a fairly significant land and expand opportunity. We're seeing that accrete in the cases of customers across all of our market categories right now. They're not coming and saying, "I need 500,000 pounds," and then saying, "I'm just gonna have 500,000 pounds for the next five years." They're coming back and saying, "I'd like a couple million pounds, and here's my plan for 2025." In the case of aqua, where the volumes can be tens of thousands of tons, the questions that we're getting are more along the lines of, "How much can you produce?" Right? meaning, I need a lot more, a lot more.
Our ability to cross the chasm and really get to volume, I think Andres gave a great example. You can't, you know, charter a boat and move it across the Atlantic Ocean unless you've gotten some land and expand scale. There's a fair amount of visibility to the mix. Today, the disclosure you saw in that stacked, pardon me, that stacked chart is our best estimate, but that estimate is not a top-down estimate. That's a bottoms-up estimate.e
Ben.
Maybe just to stay along the lines a little bit of like the 20 25 outlook. One of the things that kind of was interesting to see was how the gross-profit contribution goes really significantly from the nutrition piece, from call it breakeven, slightly negative to positive, but also on the partnerships. Within the partnerships, how much visibility have you? How much is related to you or related to others? How confident are you on the acceleration within human and animal nutrition? That might be for Bruce.
Mm-hmm. Yeah.
Well, we're feeling good with the progress that we're having on the human side. As I mentioned on the animal nutrition side, we're still in development, running trials and validating the proof points. As I mentioned earlier, we've built a robust sales pipeline that's an indicator on the front end of how well the back end will look in 12-18 months. That's continuing to accelerate, you know, every week, right? Because we've got that front end 12 months of development underneath us. I think maybe an example might help reinforce that. About two months ago, we had a major CPG in-house. We had 25 of their team members joining us together to ideate around the future, but also to talk about current projects, half of which were on-site here.
Multiple VPs participating, talking about a range of opportunities from, you know, supply chain to product development to new opportunities across products that they weren't currently buying, including our oils. That's the kind of example where we led with a protein product and then within three to six months, we've got, you know, their key management in a top to top talking about 12 new projects. What also was interesting was that they made a comment, you know, "We, we enjoy your portfolio and how it's performing, but one thing that really is exciting for us is your ability with AI and with data science. As we look at our own digitization strategies, how can we pull something like that forward into our own house?" That's even something that's emerging.
We weren't even thinking about when we walked into the room, was how do we monetize some of the CropOS capability.
The, this phenomena of channel digitization, I think is very real. This is not a line of business for Benson Hill at any level. Not unlike our sustainability unlock that we've talked about continuously, the fact that you have built an integrated chain does enable a visibility into the value chain that we're finding is of extraordinary interest to some of our customers. The degree to which, you know, there's a future opportunity to value up further on that's a TBD. You know, I think what the experience that Bruce has just described, you know, with a major customer is one that we're gonna see develop in a really meaningful way across this industry, and not just for human food.
We have time for a couple more questions.
You, Kristen.
Mike.
I think you guys are due for some softball questions. Mike Weaver, retail investor. You pay your premium out. I've seen where it was $2-$4 a bushel premium. Is that paid on a percentage basis on the commodity price or a dollar value?
Can you describe that?
It's priced on a dollar value. We do, you know, look at CBOT, and we adjust up and down with that before the season, but not during the season. Previously, we've done that on a percentage basis. We changed that this last year to an absolute dollar basis. You know, we're looking at next year and developing our premiums for that as well.
I think you sort of answered question number two. It sounds like you're looking at the board of trade and you're doing some hedging then to protect that premium a little bit then or to know where it's going to fall as the year goes through.
Well, on the hedging, and Dean chime in here, we're hedging the base commodity and essentially saying that if a farmer calls us in the middle of the season and says, "I wanna put my beans to you now at $14." We'll go out and actually sell beans such that we don't experience the volatility of the commodity pricing. The volatility that we're hedging against is CBOT itself. The fixed premium that Jason's describing, let's use $4 as just an example. It's usually some combination of a percentage above whatever CBOT is or, you know, is generally in the market at that time, plus the additional, you know, incentive that the grower might require for, you know, the identity preservation and the non-GMO and what have you.
That's one reason why these fluctuations in commodity prices are a little bit of a double-edged sword. You might see high commodity prices and good crush margins, which we're experiencing today, but simultaneously, if we've got really high commodity prices, that premium is higher, and that eats into the margin profile that comes to the product level. I hope that makes sense. Did you wanna say anything about the hedge?
No, I think you covered it exactly.
Okay.
Okay. Your partnership with ADM. My concern would be a buyout by ADM. I do own ADM stock too, it's not gonna kill me two ways, it'll only kill me one. Right now, they could buy you out at $1.10, basically. My concern is there any protection in the contract to keep a new company like yours to get bought out to where I can protect? I got a lot more upside going from $1.10 to if you realize your dream than I do from ADM at $79 going higher. Can you talk to that a little bit?
I'm happy to answer. I mean, I can't comment on the contract itself. You know, what I can say is that from a value perspective, you know, we've done a lot of valuation analysis to ground ourselves and our Board of Directors, our stakeholders on what we believe the fair value of the company is. It's fair to say, and I just commented on this, that we would concur that we're extraordinarily undervalued at the current share price. From a, you know, but from a fiduciary perspective, the Board, myself included, you know, has an obligation to ensure that maximum shareholder value is created.
I think it's very fair to assume that, while anything's possible, in the market, you know, from, you know, from an acquirers perspective or being a target, I'd say that we would very carefully need to evaluate that.
Mm-hmm.
Put it against, you know, what our needs are as an organization, what a fit or potential fit could be, and any number of other factors that we'd have to consider from a fair value perspective.
Okay, 'cause I tell you I'm gonna go back to my broker this afternoon. I'm gonna say, "I wanna buy more," and he's gonna say, "You're catching a falling knife." I'm gonna have to have an argument, and I think I got plenty today to talk to him about that. That's just my personal argument. This. You talk about proprietary information, and I haven't heard you mention anything about cybersecurity. I've seen too many cases of the Chinese coming in and I sat in a position before I retired where we looked at those intrusions into systems and-
Mm-hmm.
Is your cybersecurity really strong to protect the proprietary information?
It is a key priority in terms of the board discussions from our enterprise risk management framework. It's a cornerstone of that framework. This past year, we have professionalized that security protocol with some additional hires and with some additional professionals. We are currently rated about a NIST level 2.5. Means we've got room for improvement. Targeting a NIST of three to four, which is four is the highest security that you can achieve. Largely financial institutions achieve that level. We've got certainly room for improvement that we're focused on, but we believe at this juncture, we have all the necessary protections, the intrusion pen testing, multi-factor authentications, all of those are very, physical site penetration testing as well.
We believe at this point, we're off to a good start. As you know, threats are ever persistent. They will always be better than you. It's something we have to be vigilant about, and it's a, it's a core tenet of the enterprise risk management framework.
We have time for one more question.
Thank you. The announcement with Corteva today does an important thing in terms of unlocking some of the future market potential for you. I imagine it also helps to ease some of the closed loop system burdens that your farmer partners face. What are some of the other levers that you have to make that an easier process to do business with, whether it's from identity preservation or other practices? How do you make it easier for your farmer partners to work with you?
What we hear from our farmer partners, first and foremost, is, you know, "Help me with weed control," which we're doing, and, "Help me with yield." What, you know, what you saw with the varieties we're bringing to market and mix is not just on the ingredient side, mix is also on what we plant. As we diversify our portfolio, you know, 12 isn't a very big number. It's where we're at, and it's a good number, but it's not where we wanna be. We wanna be at a higher number so we can diversify the portfolio on farm and cover more maturity spread. You know, when you talk to a grower, they don't want one variety that has one maturity. They need a diversity. We hear that, and we're responding to that, and that's what our pipeline's delivering.
That mix on farm allows us to materially change our position. That's an unlock for us as we go forward, and that comes to bear in 2024, starting there. That's a material change for us.
I think above agronomics as well, we do whatever we can to connect our farmer partners to the market.
Right.
To the customers, to the consumer, because they're also very supportive of the purpose of the company and the more that they can see that and the more that they can participate in that's also helpful from a relationship standpoint.
Lastly.
Sorry, go ahead.
Just a quick comment. It's probably obvious. I mean, the Corteva announcement allows us not just to compete in the relatively small and shrinking non-GMO market, but to then branch out into the much larger GMO market. Quite honestly, our premiums are actually much more attractive in the GMO market. We feel like that's gonna be a great position for us.
Mm-hmm. Yeah.
This will conclude the Q&A session and our webcast for today. Thank you very much for participating in the webcast, audience. The group here will have further instructions on what we do for the rest of the day. Thank you.
Thank you.