Avalon Holdings Q2 2026 Earnings: Lower Golf Costs Lift Operating Income

Avalon Holdings Corporation (NYSE Amex: AWX) reported Q2 2026 net operating revenue of $20.9 million, up approximately 3.2% from $20.3 million a year earlier, while basic EPS increased to $0.23 from $0.07. Operating income rose faster than revenue because lower golf-related operating costs helped keep total operating expenses nearly unchanged. The quarter ended June 30, 2026, and the results were announced on August 7, 2026.

Core financial results

Net operating revenue increased by $646,000 year over year, while disclosed operating costs and expenses rose by only $38,000. That difference drove a $608,000 increase in operating income and expanded the operating margin by approximately 2.8 percentage points.

Income attributable to Avalon common shareholders more than tripled to $884,000. The improvement reflected higher operating income, while quarterly interest expense was nearly unchanged at $504,000.

All figures in the table cover the three months ended June 30.

Business and segment performance

Revenue increased in both waste management and total golf-related operations, but the composition of golf revenue was mixed. Food, beverage and merchandise sales grew, while other golf and related operations recorded a slight decline.

Waste management revenue increased by $371,000, while its operating costs rose by $180,000. The spread between revenue and disclosed operating costs therefore improved by approximately $191,000 before depreciation, amortization and corporate expenses.

Golf-related operations made the larger contribution to the quarter’s earnings improvement. Combined food costs and golf operating costs declined by $254,000 even as total golf-related revenue increased by $275,000. On that basis, the segment’s revenue less disclosed direct costs improved by approximately $529,000, before depreciation, amortization and SG&A.

Interest expense kept first-half earnings negative

For the six months ended June 30, net operating revenue increased approximately 6.2% to $38.557 million. Operating income improved to $622,000 from a $401,000 operating loss in the prior-year period.

The operating recovery was not sufficient to produce a first-half net profit. Interest expense of $1.008 million exceeded operating income, and Avalon recorded a $401,000 pretax loss. The loss attributable to common shareholders narrowed to $351,000, or $0.09 per share, from $1.225 million, or $0.31 per share, a year earlier.

Balance sheet and liquidity

Cash and cash equivalents increased to $4.795 million at June 30 from $4.114 million at the end of 2025. Restricted cash decreased to $8.166 million from $8.730 million over the same period.

Borrowings consisting of current and long-term debt plus the line of credit totaled approximately $31.5 million, down from approximately $31.8 million at year-end. The $3.2 million line of credit was unchanged.

Current assets totaled $18.496 million, compared with current liabilities of $18.116 million. The increase in current liabilities was driven mainly by deferred membership dues revenue, which rose to $5.766 million from $3.529 million, partially offset by accounts payable declining to $6.598 million from $7.984 million.

Risks investors should monitor

• The margin improvement depended heavily on lower golf-related costs. Golf operating costs declined enough to offset higher food costs and SG&A. A reversal in this cost trend could pressure operating income given the company’s modest revenue growth.
• Interest expense remains significant relative to operating profit. First-half interest expense exceeded operating income, keeping pretax results negative despite the operating recovery.
• Golf revenue growth was concentrated in food, beverage and merchandise sales. Other golf and related revenue declined slightly, making the durability of the segment’s overall growth an important point to monitor.
• Balance-sheet flexibility remains limited. Avalon had approximately $4.8 million of unrestricted cash against roughly $31.5 million of debt and credit-line borrowings, while current assets were only modestly above current liabilities.

Summary

Avalon converted modest Q2 revenue growth into a much larger increase in operating income, primarily because golf-related direct costs declined while both major business categories generated higher revenue. The quarterly operating margin improved and basic EPS rose to $0.23, but first-half earnings remained negative because of the interest burden. Future results will depend on whether the company can preserve its golf cost improvements, sustain waste management growth and generate enough operating profit to absorb financing expenses.