AVALON HOLDINGS CORP

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $37.5 million in 2025 compared to $37.9 million in 2024. 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 $13.2 million in 2025 and $13.5 million in 2024, respectively. Food, beverages and merchandise sales decreased between periods as a result of a decrease in business activity at the country clubs.

Other net operating revenues related to the golf and related operations were approximately $24.3 million in both 2025 and 2024. Membership dues revenue was approximately $7.2 million in 2025 compared to $7.4 million in 2024. The decrease in membership dues revenue was attributable to lower membership in 2025 compared to 2024. Net operating revenues related to room rental was approximately $7.4 million in 2025 compared to $7.2 million in 2024. 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 both 2025 and 2024. Greens fees and associated cart rentals were approximately $3.3 million in both 2025 and 2024. 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 2025 and 2024.

Total cost of operations for the golf and related operations segment were $31.0 million in 2025 compared with $30.6 million in 2024. Cost of food, beverage and merchandise was approximately $6.1 million in both 2025 and 2024. The cost of food, beverage and merchandise sales was approximately 46% of associated revenue in 2025 compared to 45% in 2024. Golf and related operations operating costs increased to approximately $24.9 million in 2025 compared with $24.5 million in 2024. The increase in operating costs between years were primarily related to higher employee related costs in 2025 compared to 2024.

The golf and related operations recorded income before income taxes of $0.9 million in 2025 compared with income before income taxes of $1.5 million in 2024. The change between periods was primarily a result of a decrease in food, beverage and merchandise revenue along with an increase in employee related and utility costs which decreased income before income taxes compared to the prior year.

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.