Avalon Holdings Corp. :AWX-US: Earnings Analysis: Q4, 2016 By the Numbers : March 20, 2017

Avalon Holdings Corp. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Avalon Holdings Corp. – US Ecology, Inc., Waste Management, Inc., Republic Services, Inc. and Heritage-Crystal Clean, Inc. (ECOL-US, WM-US, RSG-US and HCCI-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 15.58 million, Net Earnings of USD -0.39 million.
  • Gross margins widened from 12.09% to 12.47% compared to the same period last year, operating (EBITDA) margins now 2.11% from 3.53%.
  • Year-on-year change in operating cash flow of 3.25% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 15.58 19.13 15.64 11 13.86
Revenue Growth (%YOY) 12.41 31.25 12.09 2.79 -1.27
Earnings (mil) -0.39 0.81 0.42 -0.91 -0.2
Earnings Growth (%YOY) -97.96 52.36 8520 12.69 49.87
Net Margin (%) -2.49 4.21 2.69 -8.26 -1.41
EPS -0.1 0.21 0.11 -0.24 -0.05
Return on Equity (%) -3.73 7.77 4.11 -8.8 -1.87
Return on Assets (%) -2.26 4.9 2.68 -5.77 -1.25

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Market Share Versus Profits

Revenues History
Earnings History

AWX-US‘s change in revenue this period compared to the same period last year of 12.41% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that AWX-US is holding onto its market share. Also, for comparison purposes, revenues changed by -18.58% and earnings by -148.14% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from 3.53% to 2.11%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from 12.09% to 12.47%. For comparison, gross margins were 15.28% and EBITDA margins 7.99% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

AWX-US‘s change in operating cash flow of 3.25% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -1.70% to -2.54% and (2) one-time items that contributed to a decrease in pretax margins from -1.92% to -2.81%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Avalon Holdings Corp. engages in the provision of waste management services to industrial, commercial, municipal, and governmental customers. It operates through the Waste Management Services and Golf and Related Operations segments. The Waste Management Services segment includes waste disposal brokerage and management services, captive landfill management operations, and salt water injection well operations. The Golf and Related Operations segment focuses on the operation and management of three golf courses and related clubhouses, a hotel, fitness centers, tennis courts, spa services, dining, banquet and conference facilities, and a travel agency. The company was founded on April 30, 1998 and is headquartered in Warren, OH.

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