D I S C L O S U R E C E O R E S I G N S : H O M E L A N D E N E R G Y S O L U T I O N S N E W S L E T T E R M A R C H 2 0 2 1 I N S I D E T H I S I S S U E : U S P G R A D E E T H A N O L 2 F I N A N C I A L S 3 Z A C H ’ S T H O U G H T S 4 I R F A U P D A T E 4 B O A R D N O M I N E E S 5 This newsletter contains for- ward-looking statements. We undertake no responsibility to update any forward looking statement. When used, the words “believe”, “hope”, “expect”, “anticipate” and similar expressions are intended to identify forward-looking statements. Readers should not place undue reliance on any forward-looking statements and recognize that the statements are not predictions of actual future results, which could and likely will differ materially from those anticipated in the forward -looking statements due to risks and uncertainties, including those described in our Securi- ties and Exchange Commission filings, copies of which are available through our web site or upon request. F R O M T H E C E O D E S K : In the past several months, we have seen a huge increase in COVID vaccines administrated and the various state economies opening back up. Demand for ethanol is increasing and margins are increasing as well. The inventory of ethanol across the United States is lower than any of the last five years for this time of year. Even with higher corn prices due to the reduced corn crop and increased exports, we are continuing to demonstrate very good profit levels. The industrial ethanol plant has been built and started up successfully. We are now working towards certifying our industrial grade ethanol with new customers and sales will begin in ear- nest in the second quarter. The incredible cold spell across the entire US in February also presented difficulties with our plant. With homes needing natural gas to stay Earlier this week, the Board of Homeland Energy Solu- tions received the resignation of its CEO James Broghammer. James joined the company in December 2015. His extensive background and senior level experi- ence in ethanol enabled Homeland to continue with its strategic plan and growth. While at Homeland, James has led the team to various capital projects including USP grade ethanol, 30 million gallon expansion, addi- tional grain storage capacity & enhanced receiving, steam let-down turbine and yeast props, to name a few. He leaves an exceptionally talented team of employees and management in place and in an excellent position for its continued growth and profit. Homeland shared James’ time with another etha- nol facility. The success and growth of both plants called for more of his time and focus and James felt he was not able to give both plants what they truly needed from a CEO. Homeland’s Board would like to express their appreciation of James and his contributions to the company and wish him every success for his future. Homeland’s interim CEO will be Beth Eiler, CFO, until a new CEO is appointed by the Board of Direc- tors. -HES Board of Directors warm, we were faced with the option of planning to run (and later being curtailed without warning) or sell ahead the natural gas we had bought on the open market and make a scheduled reduction in production. We chose the second option and profited nicely from the sell back of natural gas. I am certain when push comes to shove, the homes were going to have priority on natural gas before the ethanol plant would have been allowed to run. It all worked very well in the end. The new grain bin is built and ¾ full of corn. The grain storage will pay off well as basis levels are dramatically improving as we ap- proach the planting season and the hot summer months. Thank You for all your support. -James Broghammer, CEO
E M P L O Y E E S P O T L I G H T : M I K E P E T E R M A N , P L A N T M A N A G E R Page 2 H O M E L A N D E N E R G Y S O L U T I O N S N E W S L E T T E R The first quarter of 2021 has been very exciting, we have commissioned the equipment to produce USP (United States Pharmacopia) grade ethanol and have produced over 480,000 gallons. At this time, we are working with end us- ers filling sample requests to confirm the quality and com- patibility of our product. All feedback so far has been posi- tive and we are ready to fill the orders as they come in. In addition, HES has also started the process to provide kosher approved USP ethanol. Becoming kosher approved is considered “the price of admission” for many big-name U S P G R A D E E T H A N O L : When asked what do I like most about working at Homeland, I would have to say that Homeland is a well known leader in the industry. I appreciate the site’s “can-do” attitude but what I admire most is the team’s willingness and drive to “get-it-done.” That is what positions HES out front of the competition. Being part of a team that blends innovation and proven technology to create added value to the custom- ers is very rewarding. Some background on me is that I started in the ethanol in- dustry in 2006 with Hawkeye Renewables Fairbank LLC as a shift leader. In 2007, I joined the start-up team with ICM and had the opportunity to start-up and commission 15 greenfield sites and several expansions. In the fall of 2008, I returned to Hawkeye in Fairbank as the production manager and remained until the FHR acquisition in 2011. During my time with FHR (2011-18) I held several different roles such as Plant Manager (Fairbank, Menlo and Arthur) and Integra- tion leader (Ames) focusing on Training, Procedure develop- ment, New technology Implementation and Process Trouble- shooting. From 2018-20, I joined Butamax (BP and DuPont joint venture) focusing on the full scale pro- duction of chemical grade Iso-butanol. In the fall of 2020, I had the opportunity to lead the start-up and com- missioning of a newly designed ethanol plant in Brazil. My wife Kelly and I have four children (Nicole, J’nae, Chase and Gabe), four grand- children (Finley, Scout, Olive and Max) and two dogs (Odin and Zoey). Some hobbies that I have are riding motorcycles, attending Hawkeye football games (pre-covid) and spending time with our children and grandchildren. brand clients allowing us to expand our customer base. Currently, we are completing the application requirements and will submit our application soon. In the short time I have been with HES, I am very impressed with the culture of the site and its leadership. HES is very nimble, meaning we are quick to identify opportunity, as- sess the level of risk vs. reward and pursue a positive out- come. It is great to be part of a winning culture and I look forward to contributing! -Mike Peterman, Plant Manager
Amid a global pandemic and fol- lowing a challenging 2019 year, Homeland finished 2020 with net income of $6 million, $94 per membership unit. The COVID-19 pandemic brought changes to virtually all aspects of our lives, and the ethanol industry was no exception. Beginning in March 2020, travel was suddenly drasti- cally reduced, which was almost immediately reflected in fuel etha- nol prices. In 2020, we sold 9% fewer gallons of ethanol, but saw a 18% reduc- tion in total revenue from ethanol when compared to 2019. Distill- ers revenue was down 5% as com- pared to 2019 and corn oil reve- nue was up 8%. While total revenue was down 15% in 2020 as compared to 2019, cost of goods only decreased 11%. During 2020, approximately $17 million was spent on capi- tal improvement projects. Pro- jects of note are: grain storage with capacity of nearly 2 mil- lions bushels and additional distillation for the production of industrial alcohol, which can be used in a variety of products. In December, the Homeland Board of Directors voted unanimously for a member distribution of $150/unit, which totaled ap- proximately $9.7 million. Total distribution per unit since HES inception has increased to $2,865. K-1 tax forms were mailed on February 25. Emails with a link to the electronic portal for mem- bers who signed up for the elec- tronic delivery went out also on February 25. For 2020, total R&D credits passed through to our members was just under $4M. Please see a summary of the Company’s financial perfor- mance below or you may find a more detailed version of the annual report available on the HES or SEC website. -Beth Eiler, Chief Financial Officer H O M E L A N D E N E R G Y S O L U T I O N S F I N A N C I A L S — Q 4 2 0 2 0 Page 3 M A R C H 2 0 2 1 “Homeland finished 2020 with net income of $6 million, $94 per membership unit.” BALANCE SHEET 12/31/2020 12/31/2019 Current Assets $ 39,328,153 $ 87,173,152 Property & Equipment 128,534,219 126,554,986 Other Assets 7,676,848 9,231,854 Total Assets $ 175,539,220 $ 222,959,992 Current Liabilities $ 23,693,602 $ 53,902,670 Long-term Liabilities 1,479,063 15,081,767 Total Members' Equity 150,366,555 153,975,555 Total Liabilities and Equity $ 175,539,220 $ 222,959,992 Book Value based on 64,560 Membership Units Outstanding $ 2,329 $ 2,385 INCOME STATEMENT 12/31/2020 12/31/2019 Revenue $ 281,386,439 $ 329,774,685 Cost of Goods Sold 273,607,219 307,650,836 Operating Expenses 3,719,110 3,885,532 Operating Income 4,060,110 18,238,317 Other Income (Loss) 2,014,890 1,238,436 Net Income $ 6,075,000 $ 19,476,753 Net Income per unit (based on 64,560 units) $ 94 $ 302 Distributions per unit $ 150 $ 350
Z A C H ’ S T H O U G H T S : Page 4 H O M E L A N D E N E R G Y S O L U T I O N S N E W S L E T T E R ,5)$VXFFHVVIXOO\KRVWHGRXUILUVW-HYHUDOOYLUWXDO,RZD5HQHZDEOH )XHOV6XPPLWRQ-DQXDU\2YHUSHRSOHUHJLVWHUHGIRU WKH 6XPPLWIURPVWDWHVDQGFRXQWULHV$SDFNHGDJHQGDRINH\ QRWHVSHDNHUVDQG URXQGWDEOHGLVFXVVLRQVFRYHUHG WKH LPSRUWDQW WRSLFV IDFLQJ ELRIXHO SURGXFHUV WRGD\ )RU D EULHI RYHUYLHZ RU WR VHHFRPSOHWHYLGHRVRIHDFKVSHDNHUYLVLW,RZD5HQHZDEOH)XHOV 6XPPLWRUJ ,5)$KDVMRLQHGVHYHUDORWKHULQGXVWU\SDUWQHUVWRVXSSRUW*RYHU QRU .LP 5H\QROGV¶ LPSDFWIXO OHJLVODWLYH SURSRVDOFRPPRQO\ FDOOHGWKH,RZD%LRIXHO 6WDQGDUGV 7KLV OHJLVODWLRQ ZRXOGHVWDE OLVK ( DQG % VWDQGDUGV IRU IXHO VROG LQ ,RZD ZLWK OLPLWHG H[FHSWLRQV DQG FRQWDLQ GDWHV WR LQFUHDVH WKHVWDQGDUGV WR( DQG%7KHELOOZRXOGDOVRPRUHWKDQWULSOHUHWDLOHUJUDQWIXQG LQJ WR XSJUDGH LQIUDVWUXFWXUH WR EH UHDG\ WRPRYH WR DQ ( VWDQGDUG&XUUHQWO\ ,5)$LV ILJKWLQJ RIIHIIRUWV WR KROORZ RXW WKHELOODQGPDNHLWDELRIXHOVWDQGDUGLQQDPHRQO\ -,5)$4XDUWHUO\5HSRUW6SULQJ As I am writing this, I am a bit disappointed to see the fresh 5-7 inches of white stuff out my window but nevertheless, spring is around the corner! Markets have been very active on all fronts. The corn market continues to find support from good export demand and a potentially shrinking car- ryout. The USDA will publish its Grain Stocks and Planting Intentions report on March 31. Early estimates are 92 mil- lion acres of corn and 90 million acres of soybeans. The Grain Stocks portion is always good for some surprises as this is used to calculate demand for the year. Producers with inventory they are looking to sell, please have your sell orders in and ready, or give us a call. Ethanol has also per- formed very well this year, reaching four-year highs as we continue to vaccinate and open our economies from the COVID-19 pandemic. Switching gears, we at Homeland con- tinue to try to be more efficient on all fronts, I wanted to highlight a few tools available to our corn suppliers that are mutually beneficial: ACH (Direct Deposit): Producer-Money is deposited directly into producers ac- count, avoiding mail delays and a trip to the bank. Settle- ments can be found on producers online account for review when time allows, can reprint if needed. Homeland- It free’s up valuable employee time by avoiding check printing/signing/envelope stuffing and reduces post- I R F A U P D A T E : “Ethanol has also per- formed very well this year, reaching four- year highs as we continue to vaccinate and open our economies from the COVID-19 pandemic.” age cost. Our ACH Form can be found on our website or on this link below: https://www.homelandenergysolutions.com/wp-content/ uploads/2017/03/Direct-Deposit-Authorization-Grain.pdf Homeland Online Access: Producer- Producers can view their contracts, delivery tick- ets, and settlements when schedule allows. Reports can be generated for crop insurance/yield information and/or tax planning purposes. Homeland-It frees up valuable employee time, avoiding researching past records allowing for more efficient use of time. Please call the grain team for your username and pass- word. Access can also be found on our website or follow the below link: http://pass.verticalsoftware.net/homeland/Default.Aspx Please contact the Homeland grain team and we would be happy to give you some one-on-one training if necessary. As always, if you do not feel comfortable, our traditional services will still be available, but we encourage you to give it a try! Thank you to all the corn suppliers out there we appreciate your business! Thank you! -Zach Nosbisch Commodity Risk Manager A N N U A L M E E T I N G : Homeland’s annual meeting is set to take place Wednesday, April 21, 2021 at 12:30 pm. Once again, we will be hosting the meeting electronically and there will not be an in-person meeting. Proxy cards were mailed out March 22nd along with the annual meeting notice which included the meeting link information needed to attend the meeting. Since this meeting is not a public meeting, the Zoom meeting information will not be available online. We want to stress the importance of filling out the proxy cards completely and returning them to the com- pany by 5 pm, Tuesday, April 20th, to register your votes and to ensure we have a quorum. We have in- cluded a postage paid return envelope with the mail- ings for your convenience.
3 D I R E C T O R S E A T S T O B E F I L L E D : Page 5 H O M E L A N D E N E R G Y S O L U T I O N S N E W S L E T T E R Steven Core, Incumbent Director and Nominee, Age 71. Mr. Core has served as a director since our 2015 annual meeting. Mr. Core serves on the audit, risk management and compensation committees. Mr. Core is retired from Fagen, Inc., which con- structed the Company's ethanol plant. Mr. Core served as a Pro- ject Developer for Fagen, Inc. Currently, Mr. Core serves on the board of directors of Lincolnland Agri-Energy, LLC and Little Sioux Corn Processors, LLC. Mr. Core was selected as a nominee based on his prior experience with the Company, along with his business and agricultural experience. Mr. Core has con- sented to serving on the Board if he is elected. James Erickson, Nominee, Age 68. Mr. Erickson has been a general manager of farm cooper- atives and agribusiness for 42 years. Mr. Erickson is retired from Farmers Win Coop, Freder- icksburg, Iowa, after serving as the general manager from 1998 to 2017. Mr. Erickson has served as a director of Farmers Elevator Association of Minne- sota, the National Grain and Feed Association, and the Iowa Institute for Cooperatives. Mr. Erickson has also served as a chairman of an Arbitration Committee for the National Grain and Feed Association. Mr. Erickson was selected as a nominee based on his business and agricultural experience. Mr. Erickson has consented to serving on the Board if he is elected. Christine Marchand, Incumbent Director and Nominee, Age 43. Ms. Marchand has served as a director since our 2010 annual meeting. Ms. Marchand serves on the audit committee. On December 15, 2008, the Board appointed Ms. Marchand as Treasurer/Chief Financial Officer of the Company pursuant to the Man- agement Services Agreement with Golden Grain Energy, LLC. Ms. Marchand served as the Company's Interim Chief Financial Officer from November 2016 to March 2017. Ms. Marchand served as the Chief Finan- cial Officer for Golden Grain Energy, LLC from 2005 until 2020. Ms. Marchand is now an accountant and outsourced CFO with CFO Systems. Prior to her employment at Golden Grain Energy, LLC, Ms. Marchand was the controller at a manufacturing facility and was an accountant for a public accounting company. Ms. Marchand serves on the board of directors of Marchand Investments, Inc., a privately held company and as a director of the North Iowa Corridor, an Economic Development Corporation. Ms. Marchand was selected as a nominee based on her prior experience with the Company, along with her business and agri- cultural experience. Ms. Marchand has consented to serving on the Board if she is elected. David Lusson, Nominee, Age 56. Mr. Lusson is retired from Dia- mond V, after serving as a senior executive and director. Mr. Lus- son was with Diamond V for 11 years, and retired in 2018. Prior to Diamond V, Mr. Lusson was with RSM, LLP for 20 years, hav- ing served as an audit partner for 8 of those years. Mr. Lusson serves on the board, and as chairman, of Putco Manufactur- ing, Inc., and has served in this role since 2016. Since 2018, Mr. Lusson has served on the Board of Trustees for Coe Col- lege, and chairs the Finance committee for the Board of Trus- tees. Mr. Lusson was selected as a nominee based on his prior business and agricultural experience. Mr. Lusson has consented to serving on the Board if he is elected. At Homeland Energy Solution’s annual meeting April 21st, members will vote to elect directors to three seats on the company’s board. Nominees are: Our mission is to “Produce ethanol and its co-products profitably, enhancing returns to our stakeholders and surrounding communities.”
H O M E L A N D E N E R G Y S O L U T I O N S N E W S L E T T E R H O M E L A N D E N E R G Y S L U T I O N S N E W S L E T T E R ,I\RXZRXOGOLNHWRUHFHLYHIXWXUHQHZVOHWWHUVE\HPDLO LQVWHDGRIPDLOSOHDVHVLJQXSRQOLQHDW ZZZKRPHODQGHQHUJ\VROXWLRQVFRPFRPSDQ\-QHZVOHWWHU 2779 IA Hwy 24 Lawler, IA 52154 Phone: 563-238-5555 Fax: 563-238-5557 E-mail: info@etoh.us 1 0 Y E A R S O F S E R V I C E : d , E K > ͗ Z / s / E ' D Z / ͛ ^ & h d h Z Homeland would like to recognize an employee who has completed her 10 years of service. Please help us con- gratulate Sharon Kipp. Thank you for your dedication to Homeland.
