Avalon Holdings Corp. (AWX) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2026. Avalon Holdings Corporation operates two primary segments: Waste Management Services (hazardous/nonhazardous brokerage, captive landfill management, and suspended saltwater injection wells) and Golf and Related Operations (four golf courses, The Grand Resort hotel, and recreation centers). The company is a smaller reporting company incorporated in Ohio.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Net Operating Revenues | $20,898 | $20,252 | $38,557 | $36,320 |
| Operating Income | $1,358 | $750 | $622 | $(401) |
| Net Income (Loss) Attributable to Avalon | $884 | $274 | $(351) | $(1,225) |
| Diluted EPS (Basic) | $0.23 | $0.07 | $(0.09) | $(0.31) |
| Cash from Operating Activities (YTD) | N/A | $1,753 | $2,052 | |
| Capital Expenditures (YTD) | $(1,165) | $(682) | ||
| Total Debt (Long-term + Current) | N/A | $28,344 | $28,646 | |
| Working Capital | $380 | $132 | $380 | $132 |
Note: Debt figures represent the net carrying amount of the Term Loan Agreement. A $3.2 million Line of Credit is also outstanding.
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 3.2% in Q2 2026 compared to Q2 2025. Waste management revenues rose 3.8% driven by increased continuous and event work. Golf operations revenues increased 2.6% due to higher food and beverage sales.
- Profitability Improvement: Operating income improved significantly to $1.36 million in Q2 2026 from $0.75 million in Q2 2025. This was driven by a 3.5% reduction in golf operating costs despite revenue growth, and improved gross margins in waste brokerage.
- YTD Turnaround: While the company reported a net loss of $0.35 million for the first six months of 2026, this represents a substantial improvement over the $1.23 million loss in the same period of 2025.
- Balance Sheet: Accounts receivable increased to $10.2 million (from $9.8 million year-end 2025), primarily due to timing of golf membership renewals. Deferred membership dues revenue increased to $5.8 million.
Outlook, Risks, and Contingencies
- Capital Expenditures: Management expects 2026 capital expenditures to range between $3.5 million and $4.5 million, primarily funding renovations at The Grand Resort and the Squaw Creek pool expansion.
- Legal Contingency (Saltwater Wells): Operations of two saltwater injection wells remain suspended. On April 29, 2026, the Supreme Court of Ohio ruled against the company in a regulatory "taking" claim, determining no taking occurred. The company is evaluating strategic planning for the site's future.
- Liquidity: The company maintains a $31.0 million term loan (maturing 2032) and a $5.0 million line of credit ($1.8 million available). Management believes cash from operations will be sufficient to meet obligations.
- Risks: Key risks include seasonality and weather dependence for golf operations, customer concentration in waste brokerage, labor availability, and potential regulatory changes affecting waste disposal.
Investor Verification Checklist
- Verify the status of the suspended saltwater injection wells and the financial impact of the recent Supreme Court ruling on the "taking" claim.
- Monitor membership retention rates for the Avalon Golf and Country Club, as this is a primary revenue driver for the resort segment.
- Review the Fixed Charge Coverage Ratio compliance (minimum 1.20) for the Term Loan and Line of Credit covenants.
- Assess the progress and cost overruns of the $1.8 million Squaw Creek pool renovation commitment.
- Confirm the sustainability of the improved gross margins in the waste brokerage segment, specifically regarding "event work" volatility.