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Avalon Holdings Corp (AWX) filed Quarterly Report for the period ended 2010-03-31.
Avalon Holdings Corp has a market cap of $10.5 million; its shares were traded at around $3.28 with and P/S ratio of 0.3.
This is the annual revenues and earnings per share of AWX over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of AWX.
Highlight of Business Operations:
Avalon’s aggregate capital expenditures in 2010 are expected to be in the range of $.3 million to $.8 million. Such expenditures will principally relate to building improvements and equipment purchases for the golf and related operations. During the first three months of 2010, capital expenditures for Avalon totaled approximately $.1 million which was principally related to building improvements.
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 $7.4 million of leasehold improvements as of March 31, 2010. 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 first quarter of 2010 decreased to $8.3 million from $8.8 million in the prior year’s first quarter. The decrease is primarily the result of lower net operating revenues of the waste management services segment, partially offset by a slight increase in the net operating revenues of the golf and related operations segment. Costs of operations decreased to $7.0 million in the first quarter of 2010 compared with $7.3 million in the prior year’s first quarter. The decrease is primarily due to the lower 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 first quarter of 2010 and 2009. Consolidated selling, general and administrative expenses decreased slightly in the first quarter of 2010 compared with the first quarter of 2009 even though Avalon recorded approximately $22,000 of compensation costs associated with the granting of stock options in the first quarter of 2010. Avalon recorded a net loss of $.6 million or $.15 per share, in the first quarter of 2010 compared with a net loss of $.4 million or $.11 per share, in the first quarter of 2009.
Net operating revenues of the waste management services segment decreased approximately 8% to $6.7 million in the first quarter of 2010 compared with $7.2 million in the first quarter of the prior year. For the first quarter of 2010, net operating revenues of the waste brokerage and management services business were $6.1 million compared with $6.6 million in the first quarter of 2009, while the net operating revenues of the captive landfill management operations were $.6 million in both the first quarter of 2010 and 2009. The net operating revenues of the captive landfill are primarily dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility. The decrease in the net operating revenues of the waste brokerage and management services business was primarily due to a decline in continuous or ongoing work. Such decline was primarily the result of the slowdown in the economy which has negatively affected the production and manufacturing of industrial customers, such as steel and chemical plants. In addition, adverse weather conditions in several markets during the months of January and February 2010 had a negative impact on net operating revenues.
Income before taxes for the waste management services segment decreased to $.5 million in the first quarter of 2010 compared with $.6 million in the first quarter of the prior year. Income before taxes of the waste brokerage and management services business was $.4 million for the first quarter of 2010 compared with $.5 million for the first quarter of 2009. The decrease was primarily due to the decrease in net operating revenues and a decline in gross margins. Gross margins decreased to 18.4% in the first quarter of 2010 compared with 19.7% in the prior year quarter. The decrease in gross margins was primarily due to lower gross margins associated with event work. Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time. Such work can fluctuate significantly from year to year. Income before taxes of the captive landfill operations was $.1 million in both the first quarter of 2010 and 2009.
Avalon recorded a net loss of $.6 million in the first quarter of 2010 compared with a net loss of $.4 million in the first quarter of 2009. Excluding the minor effect of the state income tax provisions, Avalon’s overall effective tax rate was 0% in the first quarter of 2010 and 2009. The overall effective tax rate is different than statutory rates primarily due to a change in the valuation allowance. Avalon’s income tax benefit on the loss before taxes was offset by an increase in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.
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