Golf-course upgrade to bring profits, CEO says

THE VINDICATOR, YOUNGSTOWN
By DON SHILLING
VINDICATOR BUSINESS EDITOR
HOWLAND -- Avalon Holdings Corp., which owns Avalon Lakes Golf Course, expects its finances to improve after upgrading the course, reorganizing its waste consulting subisidiary and improving its trucking operations.
The company doesn't release earnings estimates, but Ronald Klingle, Avalon chairman and chief executive, said the company should make money this year.
Avalon lost $2.4 million last year after earning $1.2 million in 1999.
Klingle said the loss resulted from the closing of the golf course as it was renovated and an accounting charge taken by the struggling waste consulting business.
The course closed in August 1999 for renovations. Over the next year, Avalon spent $5.7 million to change some of the course and $1 million to upgrade other facilities at the course.
The course opened last summer, but Klingle said nearly all of the people who inquired about playing were turned away. He said he wanted them to wait until this year when conditions would be improved.
Annual report: The company's annual report said golf and related operations lost $1.1 million last year and $200,000 in 1999. That part of the company made $400,000 in profits in 1998.
Operating revenues from golf and related activities were $700,000 last year, $1.4 million in 1999 and $2.1 million in 1998.
Klingle is attempting to boost revenues by making the course semiprivate. The course is offering memberships for a one-time $1,000 initiation fee. Members have the choice of free golf for annual dues of $3,000 or reduced golfing rates for annual dues of $1,000.
Klingle said response has been excellent and he expects to have 350 members by midsummer. If a large number of those members are local residents, the membership will be capped at that number because they would probably play more than members from Cleveland or Pittsburgh, he said.
A round of golf has been raised to $150 for nonmembers. Klingle said he isn't sure how many people will play for that amount. He said he isn't worried about generating revenue from the general public because he thinks having 350 members would generate enough revenue to support the course. He is considering turning Avalon Lakes into a private course.
Klingle also has proposed expanding Avalon's golf holdings by acquiring Oak Tree Country Club in West Middlesex. Avalon isn't offering cash but would assume Oak Tree's $1.8 million in debt and obligations for equipment leases and other items.
A nonprofit corporation that runs Oak Tree and its members would have to approve the deal.
Oak Tree members would receive free initiation and the same membership fees as Avalon members, but there would be two courses to play instead of one.
Klingle said there are no discussions under way with other country clubs but he would be willing to consider other deals.
Another company: Earth Sciences Consultants, Avalon's environmental services company near Pittsburgh, lost $1.7 million last year after earning $2 million in 1999. Last year's total included a $1.8 million accounting charge for the declining value of assets.
The annual report said the company suffered from increased competition, increased costs and smaller revenues. Operating revenues were $27.3 million last year, compared with $29 million in 1999.
Klingle said the company has been making money the past two months after reorganizing last year and he is positive about its future.
Earth Sciences closed its Akron office, laid off about 30 people to reduce staff to 60 and got out of businesses such as landfill design, which weren't making money.
The company now is focusing on working with companies that handle radioactive waste disposal and operating a laboratory to test radioactive waste.
Trucking business: DartAmerica, Avalon's trucking company in Canfield, earned $1.1 million last year, compared with $2.3 million in 1999. Operating revenues were $46.3 million last year, compared with $40.1 million in 1999.
Klingle said the first few months of this year also were difficult for Dart because of higher fuel costs, which Dart hasn't been able to pass along to all of its customers.
Financial numbers have improved in recent weeks, however, because the company has become more efficient, he said.
Dart has improved communication equipment in its trucks so it can track trucks better and make route changes easier, he said.
Brokerage: Avalon's waste disposal brokerage business earned $1.1 million on operating revenues of $22 million last year, compared with earnings of $1.4 million on operating revenues of $18.5 million in 1999.
The annual report said earnings fell because of an accounting charge for an account that became uncollectible after a customer filed for bankruptcy protection.