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Avalon Holdings Corp (AWX) filed Quarterly Report for the period ended 2009-09-30.
Avalon Holdings Corporation provides waste management services to industrial, commercial, municipal and governmental customers in selected northeastern and midwestern U.S. markets. The company's waste management services include hazardous and non-hazardous waste brokerage and management, and captive landfill management services. This segment offers its services to industrial, commercial, municipal, and governmental customers primarily in selected northeastern and midwestern markets. Avalon Holdings Corporation also owns the Avalon Golf and Country Club, which operates golf courses and related facilities. The company is headquartered in Warren, Ohio. Avalon Holdings Corp has a market cap of $7.7 million; its shares were traded at around $2.43 with and P/S ratio of 0.2.
Highlight of Business Operations:
Avalon entered into a long-term agreement with Squaw Creek Country Club to lease and operate its golf course and related facilities. The lease, which commenced November 1, 2003, has an initial term of ten (10) years with four (4) consecutive ten (10) year renewal term options unilaterally exercisable by Avalon. Under the lease, Avalon is obligated to pay $15,000 in annual rent and make leasehold improvements of $150,000 per year. Amounts expended by Avalon for leasehold improvements during a given year in excess of $150,000 will be carried forward and applied to future leasehold improvement obligations. Avalon has made approximately $7.3 million of leasehold improvements as of September 30, 2009. Based upon the amount of leasehold improvements already made and leasehold improvements anticipated to be made in the future, Avalon expects to exercise all of its renewal options.
Net operating revenues in the third quarter of 2009 decreased to $9.6 million from $14.3 million in the prior year’s third quarter. The decrease is primarily the result of a significant decrease in the net operating revenues of the waste management services segment. Costs of operations decreased to $7.8 million in the third quarter of 2009 compared with $11.6 million in the prior year’s third quarter. The decrease is primarily due to the decrease in net operating revenues of the waste management services segment, which resulted in lower transportation and disposal costs, as these costs vary directly with the associated net operating revenues. Fixed costs relating to depreciation and amortization expense were $.4 million in both the third quarter of 2009 and 2008. Consolidated selling, general and administrative expenses declined to $1.5 million in the third quarter of 2009 compared with $1.8 million in the third quarter of 2008 primarily due to a decrease in the sales and management incentive bonuses of the waste management services segment and the elimination of the 2008 employer
For the first nine months of 2009, net operating revenues decreased to $26.8 million compared with $36.3 million for the first nine months of 2008. The decrease is primarily the result of a significant decrease in the net operating revenues of the waste management services segment. Costs of operations were $21.8 million for the first nine months of 2009 compared with $29.6 million for the first nine months of 2008. The decrease is primarily due to the decline in net operating revenues of the waste management services segment, which resulted in lower transportation and disposal costs, as these costs vary directly with the associated net operating revenues. Fixed costs relating to depreciation and amortization expense were $1.3 million for the first nine months of 2009 and $1.1 million for the same period in 2008. Consolidated selling, general and administrative expenses declined to $4.5 million for the first nine months of 2009 compared with $5.1 million for the first nine months of 2008 primarily due to a decrease in the sales and management incentive bonuses of the waste management services segment and the elimination of the 2008 employer discretionary contribution to Avalon’s 401k plan, which was scheduled to be made in the third quarter of 2009. Avalon incurred a net loss of $.7 million, or $.18 per share, for the first nine months of 2009 compared with net income of $.7 million, or $.18 per share, for the first nine months of 2008.
Net operating revenues of the waste management services segment decreased approximately 40% to $6.6 million in the third quarter of 2009 compared with $11.0 million in the third quarter of the prior year. For the third quarter of 2009, net operating revenues of the waste brokerage and management services business were $6.0 million compared with $10.5 million in the third quarter of 2008, while the net operating revenues of the captive landfill management operations were $.6 million in the third quarter of 2009 compared with $.5 million in the third quarter of 2008. The decrease in the net operating revenues of the waste brokerage and management services business was primarily due to a decrease of 41% in continuous or ongoing work, and a 45% decrease in event work. The decreased continuous work was primarily a result of the slowdown in the economy which negatively affected the production and manufacturing of many of the industrial customers which generate hazardous and nonhazardous waste at their operating facilities. The decrease in event work was due to a decline in the number of projects won in the third quarter of 2009 compared with the third quarter of 2008. Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time and can fluctuate significantly from quarter to quarter. The increase in net operating revenues of the captive landfill operations was primarily the result of increased sales of construction mats.
with $1.0 million in the third quarter of the prior year. Income before taxes of the waste brokerage and management services business was $.4 million for the third quarter of 2009 compared with $.9 million for the third quarter of 2008. Income before taxes of the captive landfill operations increased to $.2 million in the third quarter of 2009 compared with $.1 million in the third quarter of 2008.
Net operating revenues of the waste management services segment decreased approximately 33% to $19.4 million in the first nine months of 2009 compared with $28.8 million in the first nine months of the prior year. For the first nine months of 2009, net operating revenues of the waste brokerage and management services business were $17.7 million compared with $27.0 million for the first nine months of 2008, while the net operating revenues of the captive landfill management operations were $1.7 million in the for the first nine months of 2009 compared with $1.8 million for the same period in 2008. The decrease in net operating revenues of the waste brokerage and management services business was primarily the result of a 38% decline in continuous or ongoing work and a 28% decline in event work. The decrease in continuous work is primarily the result of a slowdown in the economy which negatively affected the production and manufacturing of many of the industrial customers which generate hazardous and nonhazardous waste at their operating facilities. The decrease in event work was due to a decline in the number of projects won for the first nine months of 2009 compared with the same period in 2008. Net operating revenues of the captive landfill management operations decreased in the first nine months of 2009 compared with the first nine months of 2008 primarily as a result of a decrease in the amount of waste disposed of at the landfill and a decrease in additional work performed on miscellaneous projects, partially offset by an increase in the sale of construction mats. Income from operations before taxes for the waste management services segment decreased to $1.6 million in the first nine months of 2009 compared with $2.7 million in the first nine months of the prior year. The decrease is primarily a result of the significant decrease in net operating revenues of the waste brokerage and management services business. Income before taxes of the waste brokerage and management services business was $1.2 million for the first nine months of 2009 compared with $2.3 million for the first nine months of 2008. Income before taxes of the captive landfill operations was $.4 million for both the first nine months of 2009 and 2008.
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