AVALON HOLDINGS CORP

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $37.9 million in 2024 compared to $36.3 million in 2023. Avalon’s golf and related operations segment consists of the operation and management of four golf courses and related country clubs which provide dining and banquet facilities, a medical spa, dermatology center, a hotel, The Grand Resort, which provides lodging, dining, banquet and conference facilities and other resort related amenities along with a multipurpose recreation center.

Food, beverage and merchandise sales were approximately $13.5 million in both 2024 and 2023.

Other net operating revenues related to the golf and related operations were approximately $24.3 million in 2024 compared to $22.8 million in 2023. Membership dues revenue was approximately $7.4 million in 2024 compared to $7.3 million in 2023. The increase in membership dues revenue was attributable to an increase in membership dues rates, offset by lower membership number during 2024. Net operating revenues related to room rental was approximately $7.2 million in 2024 compared to $6.4 million in 2023. The increase in room revenue was a result of an increase in average room rates when compared to the prior year. Other revenues consisting of athletic, fitness, salon and spa related activities were approximately $6.4 million in 2024 compared to $5.8 million in 2023. The increase between years was primarily due to an increase in salon and spa revenue of $1.2 million between years. Greens fees and associated cart rentals were approximately $3.3 million in both 2024 and 2023. 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 2024 and 2023.

Total cost of operations for the golf and related operations segment were $30.6 million in 2024 compared with $31.1 million in 2023. Cost of food, beverage and merchandise was approximately $6.1 million in 2024 compared to $6.3 million in 2023. The decrease in total food, beverage and merchandise costs between years was attributable to lower product costs compared to the prior year. The cost of food, beverage and merchandise sales was approximately 45% of associated revenue in 2024 compared to 47% in 2023. Golf and related operations operating costs decreased to approximately $24.5 million in 2024 compared with $24.8 million in 2023. The decrease in operating costs between years were primarily related to lower employee related costs in 2024 compared to 2023.

The golf and related operations recorded income before income taxes of $1.6 million in 2024 compared with a loss before income taxes of $0.2 million in 2023. The change between periods was primarily a result of an increase in room rental revenue, increased revenue at the salon and spa along with cost cutting efforts implemented with a specific focus on reducing employee related costs

The ability to attract new members and retain members is very important to the success of the golf and related operations segment. Avalon is continually using different marketing strategies to attract and retain members, such as local television advertising and/or various membership promotions. A significant decline in members could adversely impact the financial results of the golf and related operations segment.