AVALON HOLDINGS CORP

Waste Management Services Segment

The net operating revenues of the waste management services segment increased to $45.9 million in 2024 compared with $44.6 million in 2023. The waste management services segment includes waste disposal brokerage and management services, captive landfill management operations and salt water injection well operations.

The net operating revenues of the waste disposal brokerage and management services business were approximately $42.9 million in 2024 compared to $41.6 million in 2023. Event work net operating revenues related to multiple projects increased by approximately $0.9 million during 2024 when compared to 2023. 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. Event work net operating revenues were approximately $17.1 million in 2024 compared with $16.2 million in 2023. In addition, continuous work of the waste disposal brokerage business increased approximately $0.4 million between years as a result of increased work from multiple customers. Net operating revenues related to continuous work were approximately $25.8 million in 2024 compared with $25.4 million in 2023.

The net operating revenues of the captive landfill management operations were approximately $3.0 million in both 2024 and 2023. The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.

Costs of operations related to the waste management services segment increased to $35.9 million in 2024 compared with $35.6 million in 2023. The increase in the costs of operations between years for the waste management services segment is primarily due to an increase in net operating revenues of both continuous and event work. The overall gross margin percentage of the waste brokerage and management services business was approximately 22% in 2024 compared to 20% in 2023. The higher gross margin percentage during 2024 was attributable to higher gross profit generated from event work during the year.

Income before income taxes for the waste management services segment was approximately $4.8 million in 2024 compared to $4.0 million in 2023. Income before income taxes of the waste brokerage and management services business was approximately $4.5 million in both 2024 compared to $3.7 million in 2023. The increased income before income taxes is a result of an increase in revenue in both event and continuous work compared to 2023. Income before income taxes of the captive landfill operations were approximately $0.4 million in both 2024 and 2023. For both 2024 and 2023, the salt water injection wells incurred a loss before income taxes of approximately $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s appeal and mandamus processes.