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HOMELAND ENERGY SOLUTIONS 2012 Year in Review Walter Wendland, CEO HISTORIC U.S. FUEL ETHANOL PRODUCTION 2007 Energy Bill Renewable Fuel Volumes 40 Unspecified Advanced 35 Billions of Gallons 36 33 Cellulosic Ethanol 30 30 Biomass Diesel 25 Conventional Biofuel 28 24 26 22.25 20.5 20 18.15 13.95 15.2 15 10 9 11.1 16.55 12.95 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 0.1 Unspecified Advanced Cellulosic Ethanol Biomass Diesel Conventional Biofuel 0.2 0.3 0.5 1.75 2 2.5 3 3.5 4 4.5 4.5 4.5 5 0.1 0.25 0.5 1 1.75 3 4.25 5.5 7 8.5 10.5 13.5 16 biomass diesel in 2013 and after will be at least as much as 2012 0.52009 0.65 biodiesel 0.8 1 volume Expect to be shifted to 2010 9 10.5 12 12.6 13.2 13.8 14.4 15 15 15 15 15 15 15 15 Conventional biofuel includes ethanol from corn and sugar cane. Advanced biofuels can also be used to meet this portion of the mandate ANNUAL U.S. ETHANOL EXPORTS AND IMPORTS 1200 1000 800 MILLION GALLONS 600 400 200 EXPORTS IMPORTS 0 200 400 600 800 Source: FAS *2012 estimated by RFA using Jan.-Oct. data NET EXPORTS 3/20/13 ETHANOL GROSS MARGIN* MN FOB off PNW Margin** .402 ¢/gal $.38/gal 1.400 * 7/01/09 started computing margin using Midpoint Chicago Ethanol. 1.300 1.200 1.100 1.000 0.900 0.800 0.700 0.600 0.500 0.400 3/25/13 1/4/13 10/16/12 7/28/12 5/9/12 2/19/12 12/1/11 9/12/11 6/24/11 4/5/11 1/15/11 10/27/10 8/8/10 5/20/10 3/1/10 12/11/09 9/22/09 * 7/4/09 1/25/09 11/6/08 8/18/08 5/30/08 3/11/08 12/22/07 0.100 10/3/07 0.200 4/15/09 Estimated expenses including principal & interest, but before depreciation=$.38/gal 0.300 *Gross Margin: Inputs: nearby corn futures/basis and nearby natural gas futures + 20 Outputs: DDGS (95% of cash corn) and ethanol nearby futures with the western corn belt @ -12 Chicago and eastern corn belt @ Chicago price. Margin reflects plants not extracting oil. **FOB MN off PNW or MN Ethanol Plant if markedly different. GROSS MARGIN* MNETHANOL FOB off PNW Margin** .402 ¢/gal 1.400 3/25/13 1/4/13 10/16/12 7/28/12 5/9/12 2/19/12 12/1/11 9/12/11 6/24/11 4/5/11 1/15/11 10/27/10 8/8/10 5/20/10 3/1/10 12/11/09 9/22/09 * 7/4/09 Estimated expenses including principal & interest, but before depreciation=$.38/gal 4/15/09 1/25/09 11/6/08 8/18/08 5/30/08 3/11/08 12/22/07 * 7/01/09 started computing margin using Midpoint Chicago Ethanol. 10/3/07 1.300 1.200 1.100 1.000 0.900 0.800 0.700 0.600 0.500 0.400 0.300 0.200 0.100 3/20/13 $.38/gal *Gross Margin: Inputs: nearby corn futures/basis and nearby natural gas futures + 20 Outputs: DDGS (95% of cash corn) HOMELAND ENERGY SOLUTIONS 2012 Financial Overview Dave Finke, CFO HOMELAND ENERGY SOLUTIONS 12/31/12 Current Assets $ 17,402,396 12/31/11 $ 23,319,876 12/31/10 $ 30,920,597 12/31/09 $ 19,811,778 P, P & E (Net) 121,150,465 131,218,450 138,906,631 149,107,152 Other Assets 3,294,307 2,971,781 2,847,833 13,600,758 Total Assets 141,847,168 157,510,107 172,675,061 182,519,688 Current Liabilities 11,204,758 16,571,192 27,089,841 12,652,511 1,268,793 246,488 33,101,406 62,263,911 129,373,617 140,692,427 112,483,814 107,603,266 $1,430 $1,556 $1,230 $1,177 Long-Term Debt Members’ Equity Book Value Per Unit HOMELAND ENERGY SOLUTIONS Income Statement Summary 2012 Revenue 2011 2010 2009 $359,242,777 $419,312,560 $254,480,111 $161,855,910 3,178,041 40,146,487 15,168,885 19,636,912 Operating Income 419,143 37,382,118 12,970,571 17,008,450 Net Income 494,765 36,353,768 11,030,809 15,640,375 $5.47 $401.94 $120.63 $171.04 Distributions/unit $133.00 $79.00 $68.00 Taxable Income/unit $- Gross Profit Net Income/unit $139.27 $- $$- HOMELAND ENERGY SOLUTIONS Financial Ratios & Figures 2012 2011 2010 2009 Return on Assets 0.35% 23% 6% 9% Return on Equity 0.38% 26% 10% 16% Return on Investment 0.55% 41% 12% 17% 128.8 M 137.6 M 126.7 M 82.3 M Income per Gallon $0.004 $0.264 $0.087 $0.189 Bushels Ground 44.1 M 48.3 M 45.2 M 30 M Income per Bushel $0.011 $0.753 $0.244 $0.521 335,946 tons 392,245 tons 370,010 tons 235,000 tons 30.3 M 5.8 M Gallons Sold DDGs Sold Corn Oil Sold (in lbs) HOMELAND ENERGY SOLUTIONS Economic Impact Since April 2009 Ethanol Revenues $975 Million DDG Revenues $205 Million Corn Oil Revenues $14 Million Payments for Corn $897.7 Million Wages & Benefits Misc Vendor Payments Distributions to Members $11.4 Million $110.4 Million $25,324,600.00 HOMELAND ENERGY SOLUTIONS Production Update 2012 Calendar Year Kevin Howes, Plant Manager HOMELAND ENERGY SOLUTIONS TODAY is the 4 year anniversary since we ground our first bushel of corn! In that time…… • • • • Produced over 510,000,000 gallons of Denatured Ethanol Produced over 1,354,000 tons of DDGS Produced over 44,000,000 lbs of Distillers Corn Oil Ground over 178,000,000 bushels of corn HOMELAND ENERGY SOLUTIONS Freedom to Operate (EH&S) • 0 Recordable Injuries, 0 Lost Time Accidents 2012 • Surpassed 1000 days without a recordable injury • 2012 Industry Average Incident rate = 1.7 based on HES hours worked • NEVER experienced a Lost Time accident at HES • 0 NOVs received in 2012 • 0 Reportable Spills in 2012 • Recognition • Ranked 5th within the ERI 65+ member plant group in 2012 •Received ERI’s Award of Merit: top 25% of member plant past 2 years •Canadian Pacific Railroad Chemical Shipper Safety Award 3nd year in a row •IISC Gold Safety Award 2nd year in a row – TIR 25% of Industry Average HOMELAND ENERGY SOLUTIONS Thank You for your investment and the opportunity to lead one of the best teams in the industry!!! HOMELAND ENERGY SOLUTIONS 2012 Marketing Report Stan Wubbena, Commodity Manager THANK YOU • TO EVERYONE INVOLVED IN SELLING, HAULING, GROWING THE CORN FOR OUR PLANT • EVERYTHING WE DO AT HOMELAND STARTS WITH THE CORN • OVER 180 MYN BUSHELS DUMPED SINCE WE BEGAN MARCH 24, 2009 • In 2012 44,204,506 bushels were received Unit Train Destinations • • • • • Sewaren, NJ Charlotte, NC Albany, NY Linden, NJ Lawrenceville, GA • • • • • Providence, RI Chesapeake, VA Bridgeport, NJ Denton, NC Doraville, GA U.S. ETHANOL CO-PRODUCTS OUTPUT 40,000 Distillers Grains Corn Gluten Feed Corn Gluten Meal 30,000 25,000 20,000 15,000 10,000 5,000 Source: RFA based on USDA 12-13P 11-12E 10-11 09-10 08-09 07-08 06-07 05-06 04-05 03-04 02-03 01-02 00-01 99-00 98-99 97-98 96-97 95-96 94-95 93-94 92-93 91-92 0 90-91 THOUSAND METRIC TONS 35,000