awx20230331_10q.htm

2023

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from _______________ to ________________

Commission file number 1-14105

__________________________________

AVALON HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)


Ohio		34-1863889
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One American Way, Warren, Ohio		44484-5555
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (330) 856-8800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	AWX	NYSE American

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☑ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The registrant had 3,287,647 shares of its Class A Common Stock and 611,784 shares of its Class B Common Stock outstanding as of May 3, 2023.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

INDEX

	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (Unaudited)	1

Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022 (Unaudited)	2

Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2023 and 2022 (Unaudited)	3

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (Unaudited)	4

Notes to Unaudited Condensed Consolidated Financial Statements	5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3. Quantitative and Qualitative Disclosures about Market Risk	32

Item 4. Controls and Procedures	33

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	34

Item 2. Changes in Securities and Use of Proceeds	34

Item 3. Defaults upon Senior Securities	34

Item 4. Mine Safety Disclosures	34

Item 5. Other Information	34

Item 6. Exhibits and Reports on Form 8-K	34

SIGNATURE	35

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

	Three Months Ended
	March 31,
	2023			2022

Net operating revenues:
Waste management services	$	12,652		$	9,339
Food, beverage and merchandise sales		1,974			1,665
Other golf and related operations		3,749			3,305
Total golf and related operations		5,723			4,970
Total net operating revenues		18,375			14,309

Costs and expenses:
Waste management services operating costs		10,380			7,578
Cost of food, beverage and merchandise		1,023			748
Golf and related operations operating costs		4,836			4,055
Depreciation and amortization expense		940			829
Selling, general and administrative expenses		2,530			2,265
Operating loss		(1,334	)		(1,166	)

Other income (expense):
Interest expense		(515	)		(278	)
Other income, net		81			64
Loss before income taxes		(1,768	)		(1,380	)

Provision for income taxes		31			20
Net loss		(1,799	)		(1,400	)

Less net loss attributable to non-controlling interest in subsidiaries		(122	)		(138	)
Net loss attributable to Avalon Holdings Corporation common shareholders	$	(1,677	)	$	(1,262	)

Loss per share attributable to Avalon Holdings Corporation common shareholders:
Basic net loss per share	$	(0.43	)	$	(0.32	)
Diluted net loss per share	$	(0.43	)	$	(0.32	)

Weighted average shares outstanding - basic		3,899			3,899
Weighted average shares outstanding - diluted		3,899			3,899

See accompanying notes to unaudited condensed consolidated financial statements.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share amounts)

	March 31,			December 31,
	2023			2022
Assets
Current Assets:
Cash and cash equivalents	$	1,270		$	1,624
Accounts receivable, less allowance for credit losses		13,427			11,127
Unbilled membership dues receivable		747			599
Inventories		1,731			1,461
Prepaid expenses		1,456			1,172
Other current assets		39			105
Total current assets		18,670			16,088

Property and equipment, net		57,038			56,805
Property and equipment under finance leases, net		5,156			5,001
Operating lease right-of-use assets		1,406			1,386
Restricted cash		10,438			10,426
Noncurrent deferred tax asset		8			8
Other assets, net		35			36
Total assets	$	92,751		$	89,750

Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	511		$	503
Current portion of obligations under finance leases		139			115
Current portion of obligations under operating leases		432			424
Accounts payable		13,202			10,995
Accrued payroll and other compensation		1,381			989
Accrued income taxes		96			103
Other accrued taxes		406			540
Deferred membership dues revenue		4,900			3,643
Other liabilities and accrued expenses		1,934			1,544
Total current liabilities		23,001			18,856

Long-term debt, net of current portion		29,622			29,758
Line of credit		2,200			1,550
Obligations under finance leases, net of current portion		509			381
Obligations under operating leases, net of current portion		974			962
Asset retirement obligation		100			100

Equity:
Avalon Holdings Corporation Shareholders' Equity:
Class A Common Stock, $.01 par value		33			33
Class B Common Stock, $.01 par value		6			6
Paid-in capital		59,206			59,205
Accumulated deficit		(22,431	)		(20,754	)
Total Avalon Holdings Corporation Shareholders' Equity		36,814			38,490
Non-controlling interest in subsidiaries		(469	)		(347	)
Total equity		36,345			38,143
Total liabilities and equity	$	92,751		$	89,750

See accompanying notes to unaudited condensed consolidated financial statements.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

(in thousands, except for share data)

	For the Three Months Ended March 31, 2023

														Total
	Common Stock													Avalon			Non-controlling
	Shares				Amount				Paid-in		Accumulated			Shareholders'			Interest in
	Class A		Class B		Class A		Class B		Capital		Deficit			Equity			Subsidiaries			Total

Balance at January 1, 2023		3,287,647		611,784	$	33	$	6	$	59,205	$	(20,754	)	$	38,490		$	(347	)	$	38,143

Stock options - compensation costs		-		-		-		-		1		-			1			-			1

Net loss		-		-		-		-		-		(1,677	)		(1,677	)		(122	)		(1,799	)

Balance at March 31, 2023		3,287,647		611,784	$	33	$	6	$	59,206	$	(22,431	)	$	36,814		$	(469	)	$	36,345

	For the Three Months Ended March 31, 2022

														Total
	Common Stock													Avalon			Non-controlling
	Shares				Amount				Paid-in		Accumulated			Shareholders'			Interest in
	Class A		Class B		Class A		Class B		Capital		Deficit			Equity			Subsidiary			Total

Balance at January 1, 2022		3,287,647		611,784	$	33	$	6	$	59,201	$	(20,171	)	$	39,069		$	(92	)	$	38,977

Stock options - compensation costs		-		-		-		-		1		-			1			-			1

Investment in subsidiary from accredited investor		-		-		-		-		-		-			-			142			142

Net loss		-		-		-		-		-		(1,262	)		(1,262	)		(138	)		(1,400	)

Balance at March 31, 2022		3,287,647		611,784	$	33	$	6	$	59,202	$	(21,433	)	$	37,808		$	(88	)	$	37,720

See accompanying notes to unaudited condensed consolidated financial statements.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended March 31,
	2023			2022

Cash flows from operating activities:
Net loss	$	(1,799	)	$	(1,400	)
Reconciliation of net loss to cash used in operating activities:
Depreciation and amortization expense		940			829
Amortization of debt issuance costs		10			11
Compensation costs - stock options		1			1
Provision for losses on accounts receivable		3			2
Change in operating assets and liabilities:
Accounts receivable		(2,303	)		(806	)
Unbilled membership dues receivable		(148	)		(182	)
Inventories		(270	)		(253	)
Prepaid expenses		(284	)		(184	)
Other assets, net		67			62
Accounts payable		2,131			(582	)
Accrued payroll and other compensation		392			464
Accrued income taxes		(7	)		7
Other accrued taxes		(134	)		(67	)
Deferred membership dues revenue		1,257			1,580
Other liabilities and accrued expenses		390			116
Net cash provided by (used in) operating activities		246			(402	)

Cash flows from investing activities:
Capital expenditures		(1,098	)		(1,284	)
Net cash used in investing activities		(1,098	)		(1,284	)

Cash flows from financing activities:
Proceeds from subsidiary private placement offering		-			142
Principal payments on term loan facilities		(138	)		(287	)
Borrowings under line of credit facility		650			-
Principal payments on finance lease obligations		(2	)		(13	)
Net cash provided by (used in) financing activities		510			(158	)

Decrease in cash, cash equivalents and restricted cash		(342	)		(1,844	)
Cash, cash equivalents and restricted cash at beginning of period		12,050			4,950
Cash, cash equivalents and restricted cash at end of period	$	11,708		$	3,106

Supplemental disclosure of cash flow information:

Significant non-cash operating and investing activities:
Capital expenditures included in accounts payable	$	76		$	614
Significant non-cash investing and financing activities:
Operating lease right-of-use assets in exchange for lease obligations	$	35		$	31
Finance lease obligations incurred	$	154		$	-

Cash paid during the period for interest	$	498		$	264
Cash paid during the period for income taxes	$	38		$	13

See accompanying notes to unaudited condensed consolidated financial statements.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

Note 1. Description of Business

Avalon Holdings Corporation (“Avalon” or the “Company”) was formed on April 30, 1998 as a subsidiary of American Waste Services, Inc. (“AWS”). On June 17, 1998, AWS distributed, as a special dividend, all of the outstanding shares of capital stock of Avalon to the holders of AWS common stock on a pro rata and corresponding basis.

Avalon provides waste management services to industrial, commercial, municipal and governmental customers in selected northeastern and midwestern U.S. markets, captive landfill management services and salt water injection well operations. In addition, Avalon owns Avalon Resorts and Clubs, Inc. (“ARCI”), which includes the operation and management of four golf courses and associated clubhouses, athletic and fitness centers, tennis courts, salon and spa services, dining and banquet facilities. ARCI also owns and operates a hotel and its related resort amenities including dining, banquet and conference facilities, salon and spa services, fitness center, outdoor resort pool, Roman Bath, indoor junior Olympic size swimming pool and tennis courts.

Note 2. Basis of Presentation

The unaudited condensed consolidated financial statements of Avalon and related notes included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted consistent with such rules and regulations. The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in Avalon’s 2022 Annual Report to Shareholders.

The unaudited condensed consolidated financial statements include the accounts of Avalon, its wholly owned subsidiaries and those companies in which Avalon has managerial control. All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position of Avalon as of March 31, 2023, and the results of its operations and cash flows for the interim periods presented.

The operating results for the interim periods are not necessarily indicative of the results to be expected for the full year.

The condensed consolidated financial statements presented herein reflect our current estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the financial statements and reported amounts of revenues and expenses during the reporting periods presented.

Note 3. Recent Accounting Pronouncements

As of March 31, 2023, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s condensed consolidated financial statements.

Note 4. Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents for purposes of the Condensed Consolidated Balance Sheets. Avalon maintains its cash balances in various financial institutions. These balances may, at times, exceed federal insured limits. Avalon has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk relating to its cash and cash equivalents.

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in restricted cash on the Condensed Consolidated Balance Sheets. Restricted cash consists of loan proceeds deposited into a project fund account to fund costs associated with the renovation and expansion of The Grand Resort and Avalon Field Club at New Castle in accordance with the provisions of the loan and security agreement (See Note 9).

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows. Cash, cash equivalents and restricted cash consist of the following at March 31, 2023 and December 31, 2022 (in thousands):

	March 31,		December 31,
	2023		2022
Cash and cash equivalents	$	1,270	$	1,624
Restricted cash		10,438		10,426
Cash, cash equivalents and restricted cash	$	11,708	$	12,050

Note 5. Revenues

Revenue Recognition

The Company identifies a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when obligations under the terms of the contract with our customer are satisfied; generally this occurs with the transfer of control of the good or service to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue as the Company is a pass-through conduit for collecting and remitting sales taxes. The Company does not incur incremental costs to obtain contracts or costs to fulfill contracts that meet the criteria for capitalization. In addition, the Company does not have material significant payment terms as payment is received at or shortly after the point of sale.

Waste Management Services

Avalon’s waste management services provide hazardous and nonhazardous waste brokerage and management services, captive landfill management services and salt water injection well operations. Waste management services are provided to industrial, commercial, municipal and governmental customers primarily in selected northeastern and midwestern United States markets.

Avalon’s waste brokerage and management business assists customers with managing and disposing of wastes at approved treatment and disposal sites based upon a customer’s needs. Avalon provides a service to its customers whereby Avalon, arranges for, and accepts responsibility for the removal, transportation and disposal of waste on behalf of the customer.

Avalon’s landfill management business provides technical and operational services to customers owning captive disposal facilities. A captive disposal facility only disposes of waste generated by the owner of such facility. The Company provides turnkey services, including daily operations, facilities management and management reporting for its customers. Currently, Avalon manages one captive disposal facility located in Ohio. 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.

Avalon is a minority owner with managerial control over two salt water injection wells and its associated facility. Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order (See Note 15). Due to the suspension of the salt water injection wells, there were no operating revenues for the three months ended March 31, 2023 and 2022.

For the three months ended March 31, 2023 and 2022, the net operating revenues related to waste management services represented approximately 69% and 65%, respectively, of Avalon’s total consolidated net operating revenues. For the three months ended March 31, 2023, two customers accounted for 32% of the waste management services segment’s net operating revenues to external customers and 22% of the consolidated net operating revenues. For the three months ended March 31, 2022, two customers accounted for 20% of the waste management services segment’s net operating revenues to external customers and 13% of the consolidated net operating revenues.

For our waste management services contracts, the customer contracts with us to provide a series of distinct waste management services over time which integrates a set of tasks (i.e. removal, transportation and disposal of waste) into a single project. Avalon provides substantially the same service over time and the same method is used to measure the Company’s progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer. The series of distinct waste management services, which are the same over time, meets the series provision criteria, and as such, the Company treats that series as a single performance obligation. The Company allocates the transaction price to the single performance obligation and recognizes revenue by applying a single measure of progress to that performance obligation. Avalon transfers control of the service over time and, therefore, satisfies the performance obligation and recognizes the revenue over time as the customer simultaneously receives and consumes the benefits provided by Avalon’s performance as we perform.

In addition, as the promise to provide services qualifies as a series accounted for as a single performance obligation, the Company applied the practical expedient guidance that allows an entity that is recognizing revenue over time by using an output method to recognize revenue equal to the amount that the entity has the right to invoice if the invoiced amount corresponds directly to the value transferred to the customer. The Company applied the standard's practical expedient that permits the omission of disclosures relating to unsatisfied performance obligations as most of the Company’s waste management service contracts (i) have an original expected length of one year or less and (ii) the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed.

Avalon evaluated whether we are the principal (i.e. report revenues on a gross basis) or agent (i.e. report revenues on a net basis). Avalon reports waste management services on a gross basis, that is, amounts billed to our customers are recorded as revenues, and amounts paid to vendors for providing those services are recorded as operating costs. As principal, Avalon is primarily responsible for fulfilling the promise to provide waste management services for the customer. Avalon accepts credit risk in the event of nonpayment by the customer and is obligated to pay vendors who provide the service regardless of whether the customer pays the Company. Avalon does have a level of discretion in establishing the pricing for its service.

Our payment terms vary by the type and location of our customer and the service offered. Avalon does not have any financing arrangements with its customers. The term between invoicing and when payment is due is not significant.

The Company assesses each contract amendment individually. Typically, amendments made to our contracts do not materially change the terms of the agreement or performance obligation of the Company. The Company accounts for such contract amendments as if it were part of the existing contract as the material terms contained in the contract do not change. In cases where Avalon views there is a material change in the terms of the agreement, the Company will reevaluate and determine if the contract should be viewed as an entirely new contract, replacement contract or a continuation of the existing contract.

Consideration promised in our waste management contracts do not typically include material variable amounts such as discounts, rebates, refunds, credits, price concessions, incentives, penalties or other such items, and, as such, no estimate is made by the Company for such items.

Golf and Related Operations

Avalon’s golf and related operations include the operation and management of four golf courses and associated clubhouses, recreation and fitness centers, tennis courts, salon and spa services, dining and banquet facilities. The golf and related operations also include the operation of a hotel and its related amenities including dining, banquet and conference facilities, fitness center, indoor junior Olympic size swimming pool and tennis courts. Revenues for the golf and related operations consists primarily of food, beverage and merchandise sales, membership dues, greens fees and associated cart rentals, room rentals, fitness activities, salon and spa services. Due to adverse weather conditions, net operating revenues relating to the golf courses, which are located in northeast Ohio and western Pennsylvania, were minimal during the first three months of 2023 and 2022.

For the three months ended March 31, 2023 and 2022, the net operating revenues related to the golf and related operations represented approximately 31% and 35%, respectively, of Avalon’s total consolidated net operating revenues. For both the three months ended March 31, 2023 and 2022, no one customer individually accounted for 10% or more of Avalon’s golf and related operations segment revenues.

For Avalon’s golf and related operations, the Avalon Golf and Country Club offers membership packages for use of the country club facilities and its related amenities. Membership agreements are a one year noncancellable commitment and pricing varies based on the membership type selected by the customer. Based on the terms and conditions of the membership contract, resignations received within the membership period do not relieve the member of their annual commitment. Memberships automatically renew on the member’s anniversary date unless the member resigns for the upcoming membership period prior to the renewal date.

Membership for the Avalon Golf and Country Club does not contain up-front initiation fees or require monthly minimum spending at the facilities. Annual membership dues do not cover the cost of food, beverage or any other ancillary paid services which are made available to the member nor do they typically provide for discounts on these goods or services. Members have no obligation to purchase or utilize any of these additional goods or services. Avalon is not required to provide such goods or services unless requested and paid for at the point of sale by the member.

Under the terms of the contract, Avalon will provide unlimited use and access to the country club facilities. Avalon’s performance obligation in the contract is the “stand ready obligation” to provide access to these facilities for the member for the entire membership term. Avalon providing the “stand ready obligation” for use of the facilities to the member over the entire term of the membership agreement represents a single performance obligation of which Avalon expects the member to receive and consume the benefits of its obligation throughout the membership term, and as such, the Company recognizes membership dues on a straight line basis over the term of the contract. The Company applied the standard's practical expedient that permits the omission of disclosures relating to unsatisfied performance obligations for contracts with an original expected length of one year or less as Avalon Golf and Country Club membership agreements are one year in length.

For our hotel operations, Avalon’s performance obligation is to provide lodging facilities. The separate components of providing these services (hotel room, toiletry items, housekeeping, and amenities) are not distinct within the context of the contract as they are all highly dependent and interrelated as part of the obligation to provide the lodging facility. Room sales are driven by a fixed fee charged to a hotel guest to stay at The Grand Resort for an agreed upon period. The Company agrees to provide a room to the hotel guest for a specified time period for that agreed-upon rate. Our hotel room reservations are performance obligations satisfied over time as the hotel guest simultaneously receives and consumes the benefits provided by the hotel. For performance obligations satisfied over time, our hotel operations measure the progress toward complete satisfaction of the performance obligation and recognize revenue proportionately over the course of the customer’s stay.

For food, beverage, and merchandise sales, greens fees and associated cart rental, fitness activities, salon and spa services and other ancillary services, the transaction price is the set price charged by the Company for those goods or services. Upon purchase of the good or service, the Company transfers control of the good or service to the customer and the customer immediately consumes the benefits of the Company’s performance and, as such, we recognize revenue at the point of sale. Amounts paid in advance, such as deposits on overnight lodging or for banquet or conferences facilities, are recorded as a liability until the goods or services are provided to the customer (see Contract Liabilities below).

The following table presents our net operating revenues disaggregated by revenue source for the three months ended March 31, 2023 and 2022 (in thousands). Sales and other taxes are excluded from revenues.

	Three Months Ended
	March 31,
	2023		2022
Waste management and brokerage services	$	11,872	$	8,726
Captive landfill management operations		780		613
Total waste management services revenues		12,652		9,339
Food, beverage and merchandise sales		1,974		1,665
Membership dues revenue		1,847		1,714
Room rental revenue		874		735
Greens fees and cart rental revenue		56		55
Salon and spa services		600		408
Fitness and tennis lesson revenue		154		138
Other revenue		218		255
Total golf and related operations revenue		5,723		4,970
Total net operating revenues	$	18,375	$	14,309

Avalon does not have operations located outside the United States and, accordingly, geographical revenue information is not presented.

Receivables, Net

Receivables, net, include amounts billed and currently due from customers. The amounts due are stated at their net realizable value. At March 31, 2023 and December 31, 2022, accounts receivable, net, related to our waste management services segment were approximately $10.7 million and $10.0 million, respectively. At March 31, 2023, two customers accounted for approximately 37% of the waste management services segment’s receivables and 29% of the consolidated receivables. At December 31, 2022, one customer accounted for approximately 18% of the waste management services segment’s receivables and 16% of the consolidated receivables. Accounts receivable, net, related to our golf and related operations segment were approximately $2.7 million and $1.1 million at March 31, 2023 and December 31, 2022, respectively. No one customer of the golf and related operations segment accounted for 10% or more of Avalon’s golf and related operations segment or consolidated net receivables at March 31, 2023 or December 31, 2022.

The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be collected. Customer accounts that are outstanding longer than the contractual payment terms are considered past due. Avalon determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, Avalon’s previous accounts receivable loss history, the customer’s current ability to pay its obligation to Avalon and the condition of the general economy and the industry as a whole. Avalon writes off accounts receivable when they become uncollectible. Payments subsequently received on such receivables are credited to the allowance for credit losses, or to income, as appropriate under the circumstances. Allowance for credit losses was approximately $0.3 million at both March 31, 2023 and December 31, 2022.

The following table presents changes in our allowance for credit losses during the three months ended March 31, 2023 and 2022 (in thousands):

			Provision		Write-offs
	Balance at		for Credit		less			Balance at
	Beginning of Period		Losses		Recoveries			End of Period
Allowance for credit losses
Three months ended March 31, 2023	$	260	$	3	$	(12	)	$	251
Three months ended March 31, 2022	$	265	$	2	$	(12	)	$	255

Contract Assets

Contract assets include unbilled membership dues receivables related to the Avalon Golf and Country Club for the customers membership commitment which are billed on a monthly basis over the course of the annual agreement. Such amounts are stated at their net realizable value. Contract assets related to unbilled membership dues are classified as current as revenue related to such agreements is recognized within the annual membership period. Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $0.7 million at March 31, 2023 and $0.6 million at December 31, 2022.

The following table presents changes in our contract assets during the three months ended March 31, 2023 and 2022 (in thousands):

			Unbilled
	Balance at		Membership					Balance at
	Beginning of Period		Dues		Billings			End of Period
Contract Assets:
Unbilled membership dues receivable
Three months ended March 31, 2023	$	599	$	620	$	(472	)	$	747
Three months ended March 31, 2022	$	578	$	640	$	(458	)	$	760

Contract Liabilities

Contract liabilities include unrecognized or deferred revenues relating to membership dues and customer advance deposits. We record deferred revenue when cash payments are received in advance of satisfying our performance obligation. We classify deferred membership dues revenue as current based on the timing of when we expect to recognize revenue for the membership commitment based on the Company satisfying the stand ready performance obligation throughout the annual membership period. The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets were approximately $4.9 million at March 31, 2023 and $3.6 million at December 31, 2022, respectively.

Customer advance deposits are recorded as a liability until the goods or services are provided to the customer. Generally, customer advances, and corresponding performance obligation are satisfied within 12 months of the date of receipt of advance payment. The unrecognized revenues related to customer advance deposits are recorded in “Other liabilities and accrued expenses” in our Condensed Consolidated Balance Sheets. Customer advance deposits were approximately $1.1 million at March 31, 2023 and $1.0 million at December 31, 2022.

The following table presents changes in our contract liabilities during the three months ended March 31, 2023 and 2022 (in thousands):

	Balance at				Revenue			Balance at
	Beginning of Period		Billings		Recognized			End of Period
Contract Liabilities:
Deferred membership dues revenue
Three months ended March 31, 2023	$	3,643	$	3,104	$	(1,847	)

SEC Form 10-Q filed by Avalon Holdings Corporation