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SEPTEMBER 2020 HOMELAND ENERGY SOLUTIONS NEWSLETTER FROM THE CEO DESK: INSIDE THIS ISSUE: As quickly as the Pandemic severely cut our busi- corn is readily available. A grain bin is part of our ness, we rebounded and have been running nearly overall strategy to continually improve our corn han- full rate since the middle of May. The US economy dling infrastructure. HIGH QUALITY has rebounded to the point that gasoline demand is ETHANOL PRO- 2 We continue to evaluate the feasibility of the high DUCTION about 90% of the previous year and the ethanol protein processes being offered by ICM and various production for the industry is running about 90% of other technology providers. These technologies S T A N ’ S last year’s rate. Given all these dramatic changes would allow us to divert 10% of our DDGS to a high THOUGHTS 2 in the first 6 months, we have returned to profitable protein product (50+%) that sells for more than margins and are working towards our future en- double the price of DDGS. FINANCIALS deavors. 3 Today, we sell three products (fuel ethanol, DDGS With the Pandemic changing people’s habits and and corn oil) and by the end of the year we will be behaviors towards the use of hand cleaners, sur- offering a fourth product line, industrial ethanol. face cleaners and the like, we have moved forward Next year we are evaluating the addition of a fifth with a capital project to produce industrial ethanol product line, which is high protein. The high protein that can be used in all kind of applications including product is used in pet food, aquaculture and other the hand sanitizer market. The project will produce high-end feed products. 20MMGPY and is scheduled to begin production in New final products are a great way to diversify our December of this year. DISCLOSURE revenue and ultimately reduce our risk with just a Additionally, we have started the construction of a few products. new grain bin. The additional corn storage contin- Thank you for your continued support. ues to improve our ability to receive corn when the This newsletter contains for- ward-looking statements. We undertake no responsibility to update any forward looking statement. When used, the STATE SENATORS VISIT HOMELAND words “believe”, “hope”, “expect”, “anticipate” and On August 6, Homeland had State Senators similar expressions are intended to identify forward-looking Randy Feenstra and Waylon Brown at a round- statements. Readers should not table discussion with Homeland management place undue reliance on any about the pressing topic of ethanol. Mr. forward-looking statements and Feenstra is the Republican nominee running for recognize that the statements US Congress (who defeated US Rep Steve King are not predictions of actual future results, which could and in the June primary). likely will differ materially from There were discussions of COVID and how this those anticipated in the forward has affected Homeland along with how our plant -looking statements due to risks and uncertainties, including is operating and the future of the ethanol indus- those described in our Securi- try. Feenstra acknowledged the impact and con- ties and Exchange Commission tribution the ethanol industry has made to Iowa. filings, copies of which are The visit ended with a tour of the plant. available through our web site or upon request. Pictured from L to R: State Senator Waylon Brown, James Broghammer, CEO, State Senator Randy Feenstra and Kevin Howes, Plant Manager/COO
HOMELAND ENERGY SOLUTIONS NEWSLETTER Page 2 HES INVESTS IN HIGH QUALITY ETHANOL PRODUCTION In June, our Board of Directors approved a capital be allowed to be used in 2021 will be either FCC investment to design and install the necessary or USP spec material. “...the effect equipment to produce 20 million gallons per year of Couple this with the effect COVID-19 had on the COVID-19 had on high-quality ethanol commonly known as USP fuel ethanol market in April, when ethanol prices the fuel ethanol (United States Pharmacopeia) grade. This new pro- dropped to $0.80/gal and 50% of our industry market in April, cess is scheduled to come on-line late December was idled, the importance for product diversifica- when ethanol with shipments ready to go out 1/1/21. tion became very apparent. However, Homeland prices dropped As reported in last quarter’s newsletter, Homeland will not focus solely on hand sanitizer for this to $0.80/gal and began supplying ethanol for hand sanitizer under new product but will also be looking to supply 50% of our in- the FDA’s temporary guidance documents on USP ethanol for use in other disinfectants, fra- dustry was idled, March 31st. Since then, we have shipped over 2.3 grances, cosmetics, CBD extraction, and other million gallons of ethanol into this market but as markets. the importance for product diver- time went by, the quality requirements continued to For more information on “Ethanol’s Market sification be- get more stringent. USP spec ethanol has always Move,” please refer to the link below to the latest came very appar- been the “top shelf” alcohol for this market and issue of Ethanol Producer Magazine: https:// ent.” with the current FDA guidance document set to ex- bit.ly/32Qfjlk pire at the end of the year, the only alcohol that will -Kevin Howes, Plant Manager/COO STAN’S THOUGHTS It soon will be harvest time. Mother Nature is bringing our corn in the heavy harvest, adding a few Sunday afternoons if necessary. fields along faster than most of us would have liked. The dryness over As always, we will have deferred pricing programs in place for those the last several weeks has lowered some of our yield expectations but that wish to price the corn they are hauling at a later time. Zach, we are thankful we didn’t have the wind in our area that they did Kay, and I will be able to help those that wish to discuss pricing south of us. The damage to crops, homes, buildings and trees is very alternatives. hard to imagine if you haven’t seen it. I am very sympathetic for those In closing, all of us at Homeland would like to wish all our corn cus- people in that area. tomers a safe harvest season. We are very busy at Homeland getting ready for harvest. The crew has “Remember, it all starts with the corn at Homeland” cleaned and swept most of our bins and fresh dry corn has been re- filled in the bottoms. We will be taking some down time the week of -Stan “The man from Homeland” Wubbena, Sept 21 for repairs and maintenance and much of our grain handling Commodity & Risk Manager equipment will be inspected and repaired as needed at that time. The new grain bin is being erected as I write this. We hope to have it ready to fill when our current bins become full. Hopefully the timing works out. Much will depend on the weather and how fast the new crop is harvested. All the improvements that have been done over the last couple years will be evident this fall. The addi- tional grain space, new probing system, new scales, and additional grain dump will make it much faster to dump. There should be no waiting lines and our truck dump hours will be longer and more stable. We plan on running truck dumping hours of 7am- 4pm Monday-Saturday and possibly longer during
SEPTEMBER 2020 Page 3 HOMELAND ENERGY SOLU TIONS FINANCIALS — Q 2 2020 Homeland rebounded nicely in Q2 after Distiller’s Grains and corn oil remained Homeland continues to have strong Bal- a very tough first quarter. Net income fairly steady in terms of both units sold ance Sheet, which allows us to continue of $3.96M in Q2 decreased the YTD net and revenue in Q2 as compared to Q1. to strive for continuous improvement as loss to $1.29M. Negative margins in Corn prices also moved in the right direc- evidenced by the capital projects dis- April resulted in reduced run rates, tion for us in Q2, with the cost of corn cussed in other areas of this newsletter. bringing overall ethanol production per bushel dropping approximately 16% Please see a summary of the Company’s down approximately 5% in Q2 vs Q1. in Q2 vs Q1. Overall revenue decreased financial performance below. You may Fuel ethanol price per gallon rebound- less than 2% in Q2 from Q1, but Cost of find a more detailed version of the annu- ed, which, combined with sales of etha- Goods Sold decreased 14% and Operat- al report available on the HES or SEC nol for use in hand sanitizer, resulted in ing Expenses decreased 17%, both of website. an approximately 9% increase in price which were instrumental in creating a -Beth Eiler, Chief Financial Officer per gallon and a 33% increase in etha- nearly $4M net income for the quarter. nol revenue in Q2 vs Q1 2020. Sales of Despite a YTD net loss as of June 30, “...Cost of Goods Sold decreased 14% and Operating Expenses decreased 17%, both of which were instrumental in creating a nearly $4M net income for the quarter.”
HOMELANDHOMELAND ENERGY ENERGY SOLUTIONS SOLUTIONS NEWSLETTER NEWSLETTER 2779 IA Hwy 24 Lawler, IA 52154 Phone: 563-238-5555 Fax: 563-238-5557 E-mail: info@etoh.us ��������������������������������������������������������� �������� ������������������������������������������ ��������������� � �������� ���������������������������������������-�������������