Avalon(AWX) - 2021 Q3 - Quarterly Report

Financial Performance - Net operating revenues increased to $21.3 million in Q3 2021, up from $16.6 million in Q3 2020, representing a growth of approximately 28.4%[177] - Waste management services segment revenues were approximately $11.4 million in Q3 2021, compared to $9.3 million in Q3 2020, an increase of about 22.6%[181] - Golf and related operations segment revenues rose to approximately $9.9 million in Q3 2021 from $7.3 million in Q3 2020, reflecting a growth of approximately 35.6%[186] - Net income attributable to common shareholders was $1.0 million, or $0.25 per share, in Q3 2021, compared to $0.8 million, or $0.20 per share, in Q3 2020, marking a 25% increase in net income per share[180] - Net income attributable to Avalon Holdings Corporation common shareholders was $2.4 million, or $0.63 per share, in the first nine months of 2021, compared to a net loss of $0.5 million, or $0.12 per share, in the same period of 2020[199] - Net operating revenues of the waste management services segment were approximately $31.3 million in the first nine months of 2021, compared to $29.5 million in the same period of 2020[201] - Net operating revenues of the waste disposal brokerage and management services business increased to approximately $29.5 million in the first nine months of 2021, up from $27.8 million in the same period of 2020, driven by increased work from multiple customers[202] - Net operating revenues of the golf and related operations segment were approximately $21.5 million in the first nine months of 2021, compared to $14.6 million in the same period of 2020[206] Revenue Sources - Membership dues revenue increased to approximately $1.7 million in Q3 2021 from $1.5 million in Q3 2020, a growth of about 13.3%[188] - Food, beverage, and merchandise sales increased to approximately $4.0 million in Q3 2021 from $2.9 million in Q3 2020, representing a growth of approximately 37.9%[187] - Food, beverage, and merchandise sales increased to approximately $8.6 million in the first nine months of 2021, up from $5.3 million in the same period of 2020, as a result of increased business activity[207] Expenses and Costs - Total cost of operations for the waste management services segment increased to $9.4 million in Q3 2021, up from $7.4 million in Q3 2020, a rise of about 27%[178] - Total cost of operations for the golf and related operations segment increased to $7.3 million in Q3 2021 from $5.4 million in Q3 2020, an increase of approximately 35.2%[189] - General corporate expenses were $1.0 million in Q3 2021, compared to $0.8 million in Q3 2020, reflecting a 25% increase[191] - Consolidated selling, general and administrative expenses increased to approximately $7.6 million in the first nine months of 2021, up from $6.3 million in the same period of 2020, primarily due to higher employee-related costs and legal expenses[198] - General corporate expenses were $3.1 million in the first nine months of 2021, compared to $2.4 million in the same period of 2020, primarily due to higher employee-related costs and legal fees[213] Capital Expenditures and Financing - For the nine months ended September 30, 2021, Avalon incurred capital expenditures of $3.5 million, primarily for the renovation and expansion of The Grand Resort and Avalon Field Club at New Castle[156] - The company plans to incur capital expenditures in 2021 between $4.0 million and $4.5 million, funded from its project fund account[157] - Avalon received approximately $2.8 million in loans under the Paycheck Protection Program, with $0.9 million forgiven in the second quarter of 2021[154][155] - The New Term Loan Agreement has a principal amount of $23.0 million, with a fixed interest rate of 5.00% until the fifth anniversary, after which it may be adjusted[158][160] - The Line of Credit Agreement allows for borrowings up to $5.0 million, with no amounts drawn as of September 30, 2021, and an interest rate of 3.50%[163][164] - Borrowings under the Term Loan Agreement bear a fixed interest rate of 5.00%, with potential adjustments after five years, while the Line of Credit Agreement had an interest rate of 3.50% as of September 30, 2021[248] Regulatory and Operational Risks - Avalon's business is significantly affected by customer payment defaults, which could materially impact future financial performance[226] - A large portion of Avalon's revenue comes from waste brokerage and management services that are not under long-term contracts, posing risks to customer retention[228] - The Avalon Golf and Country Club's revenue is primarily dependent on membership dues, which are renewed annually, making it vulnerable to membership fluctuations[229] - Avalon's loan and security agreement includes covenants that, if not met, could require early repayment of debt, impacting cash flow and financial stability[231] - The company faces increased regulatory scrutiny and potential costs related to saltwater disposal wells, which could adversely affect financial results[232] - Seasonal weather conditions significantly impact Avalon's golf course operations, affecting financial performance during adverse weather[247] - Avalon's operations are seasonal, significantly affected by weather conditions during the golf season, particularly in northeastern and midwestern states[247] Interest Rate and Financial Management - Interest expense remained approximately $0.9 million in both the first nine months of 2021 and 2020, with a weighted average interest rate on outstanding borrowings of 4.91% in 2021 compared to 4.74% in 2020[214] - The company does not have significant exposure to changing interest rates[247] - Avalon does not engage in interest rate risk management transactions or hold derivative financial instruments[248]