Avalon Holdings' Q3 Net Income Up, But YTD Revenue Dips 6.2%

TL;DR

**AWX's Q3 looks good, but the year-to-date numbers are a red flag; proceed with caution.**

AI Summary

AVALON HOLDINGS CORP (AWX) reported a mixed financial performance for the nine months ended September 30, 2025. Net income attributable to common shareholders decreased significantly by 62.7% to $677,000 from $1,815,000 in the prior year period. Total net operating revenues also declined by 6.2% to $62,067,000 from $66,150,000, primarily due to a 10.5% decrease in waste management services revenue to $32,338,000. However, for the three months ended September 30, 2025, net income attributable to common shareholders increased slightly by 3.4% to $1,902,000 compared to $1,840,000 in the same period of 2024, and total net operating revenues rose by 6.2% to $25,746,000. Waste management services operating costs decreased by 10.7% for the nine-month period to $25,330,000, while golf and related operations operating costs increased by 2.5% to $19,401,000. The company's cash and cash equivalents increased to $4,551,000 at September 30, 2025, from $2,803,000 at December 31, 2024. A significant risk highlighted is the suspension of salt water injection well operations, which generated no operating revenues for both the three and nine months ended September 30, 2025 and 2024.

Why It Matters

Avalon Holdings' mixed results, with a quarterly net income increase but a year-to-date revenue decline, signal potential volatility for investors. The significant drop in year-to-date net income attributable to common shareholders by 62.7% could raise concerns about long-term profitability and operational efficiency, especially given the competitive landscape in waste management and leisure. The suspension of salt water injection well operations, a segment that previously contributed to revenue, represents a direct hit to the company's diversified income streams and could impact future growth prospects. Employees in the waste management and golf operations may face uncertainty if the revenue trends continue, while customers might see shifts in service offerings or pricing as the company adapts.

Risk Assessment

Risk Level: medium — The company faces medium risk due to a significant 62.7% decrease in net income attributable to common shareholders for the nine months ended September 30, 2025, compared to the prior year. Additionally, total net operating revenues declined by 6.2% year-to-date, primarily driven by a 10.5% reduction in waste management services revenue. The complete suspension of salt water injection well operations, yielding zero revenue for the reported periods, further exacerbates revenue concentration risk.

Analyst Insight

Investors should closely monitor AWX's upcoming earnings reports for sustained improvements in waste management services revenue and a clear strategy for the suspended salt water injection well operations. Consider holding existing positions if the Q3 positive trends continue, but new investments should be approached cautiously given the significant year-to-date decline in net income and overall revenue.

Financial Highlights

debt To Equity

N/A

revenue

$62,067,000

operating Margin

3.1%

total Assets

$90,686,000

total Debt

N/A

net Income

$677,000

eps

$0.17

gross Margin

N/A

cash Position

$4,551,000

revenue Growth

-6.2%

Revenue Breakdown

Key Numbers

• $677,000 — Net income attributable to Avalon Holdings Corporation common shareholders (Decreased by 62.7% for the nine months ended September 30, 2025, from $1,815,000 in 2024.)
• $62,067,000 — Total net operating revenues (Decreased by 6.2% for the nine months ended September 30, 2025, from $66,150,000 in 2024.)
• $32,338,000 — Waste management services revenue (Decreased by 10.5% for the nine months ended September 30, 2025, from $36,151,000 in 2024.)
• $1,902,000 — Net income attributable to Avalon Holdings Corporation common shareholders (Increased by 3.4% for the three months ended September 30, 2025, from $1,840,000 in 2024.)
• $25,746,000 — Total net operating revenues (Increased by 6.2% for the three months ended September 30, 2025, from $24,235,000 in 2024.)
• $4,551,000 — Cash and cash equivalents (Increased at September 30, 2025, from $2,803,000 at December 31, 2024.)
• 0 — Operating revenues from salt water injection wells (For the three and nine months ended September 30, 2025 and 2024, due to suspension.)

Key Players & Entities

• AVALON HOLDINGS CORPORATION (company) — registrant
• NYSE American (regulator) — exchange for Class A Common Stock
• American Waste Services, Inc. (company) — former parent company of Avalon
• Financial Accounting Standards Board (regulator) — standards setting body
• The Grand Resort and Avalon Field Club at New Castle (company) — facility undergoing renovation and expansion
• Chief of the Division of Oil and Gas Resources Management (person) — issued order for suspension of salt water injection wells

FAQ

Risk Factors

• Suspension of Salt Water Injection Well Operations [medium — operational]: The company has suspended operations of its salt water injection wells. This segment generated no operating revenues for the three and nine months ended September 30, 2025 and 2024. The indefinite suspension poses a risk to potential future revenue streams from this segment.
• Declining Waste Management Revenue [medium — operational]: Waste management services revenue decreased by 10.5% to $32,338,000 for the nine months ended September 30, 2025, compared to $36,151,000 in the prior year. This decline, coupled with a 10.7% decrease in operating costs for this segment, indicates potential shifts in demand or operational challenges.
• Rising Golf Operations Costs [low — operational]: Operating costs for golf and related operations increased by 2.5% to $19,401,000 for the nine months ended September 30, 2025, from $18,925,000 in the prior year. This increase in costs, despite relatively flat revenues for the segment, could pressure profitability.

Industry Context

Avalon Holdings Corp operates in the waste management and golf/hospitality sectors. The waste management industry is characterized by consolidation, regulatory oversight, and cyclical demand. The golf and hospitality industry is sensitive to economic conditions, consumer discretionary spending, and weather patterns.

Regulatory Implications

The waste management sector is subject to stringent environmental regulations. Any changes in environmental laws or permitting requirements could impact operations and costs. The suspension of salt water injection well operations may also be linked to regulatory changes or compliance issues.

What Investors Should Do

1. Monitor the reasons and potential timeline for the resumption of salt water injection well operations.
2. Analyze the drivers behind the decline in waste management services revenue and the corresponding cost reductions.
3. Evaluate the impact of rising operating costs in golf and related operations on segment profitability.
4. Assess the company's strategy for improving profitability given the mixed revenue trends and operational challenges.

Glossary

Net operating revenues

The total revenue generated from the company's primary business operations after deducting any returns, allowances, and discounts. (Represents the top-line performance of Avalon Holdings Corp's core business segments.)

Waste management services

Services related to the collection, transportation, disposal, and recycling of waste materials. (A key revenue-generating segment for Avalon Holdings Corp, showing a significant decline in the reported period.)

Salt water injection well operations

Operations involving the injection of saltwater, often a byproduct of oil and gas extraction, into underground formations. (A segment that has ceased generating revenue for the company, representing a discontinued or suspended operation.)

Operating costs

The direct costs incurred in the normal course of producing goods or providing services. (Key expenses directly tied to revenue generation for each business segment, impacting profitability.)

Cash and cash equivalents

Highly liquid investments with maturities of three months or less from the date of purchase, including currency on hand, bank deposits, and short-term government securities. (Indicates the company's immediate liquidity and ability to meet short-term obligations.)

Year-Over-Year Comparison

Compared to the prior year period, Avalon Holdings Corp experienced a significant 62.7% decrease in net income attributable to common shareholders for the nine months ended September 30, 2025, falling to $677,000 from $1,815,000. Total net operating revenues also declined by 6.2% to $62,067,000. This was primarily driven by a 10.5% drop in waste management services revenue. However, the company saw a positive trend in the most recent quarter (three months ended September 30, 2025), with net income increasing by 3.4% and total net operating revenues rising by 6.2%. Cash and cash equivalents saw a substantial increase, growing to $4,551,000 from $2,803,000 at the end of the previous fiscal year, indicating improved liquidity. A key risk remains the complete absence of revenue from suspended salt water injection well operations.

Key Financial Figures

• $0.01 — hich registered Class A Common Stock, $0.01 par value AWX NYSE American Indic

Filing Documents

• awx20250930_10q.htm (10-Q) — 1396KB
• ex_880772.htm (EX-31.1) — 11KB
• ex_880773.htm (EX-31.2) — 11KB
• ex_880774.htm (EX-32.1) — 4KB
• ex_880775.htm (EX-32.2) — 4KB
• 0001437749-25-033887.txt ( ) — 7101KB
• awx-20250930.xsd (EX-101.SCH) — 61KB
• awx-20250930_def.xml (EX-101.DEF) — 413KB
• awx-20250930_lab.xml (EX-101.LAB) — 349KB
• awx-20250930_pre.xml (EX-101.PRE) — 443KB
• awx-20250930_cal.xml (EX-101.CAL) — 52KB
• awx20250930_10q_htm.xml (XML) — 1312KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 1 Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024 (Unaudited) 2 Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended September 30, 2025 and 2024 (Unaudited) 3 Condensed Consolidated Statements of Shareholders' Equity for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) 5 Notes to Unaudited Condensed Consolidated Financial Statements 6

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 37

Controls and Procedures

Item 4. Controls and Procedures 37

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 38

Changes in Securities and Use of Proceeds

Item 2. Changes in Securities and Use of Proceeds 38

Defaults upon Senior Securities

Item 3. Defaults upon Senior Securities 38

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 38

Other Information

Item 5. Other Information 38

Exhibits and Reports on Form 8-K

Item 6. Exhibits and Reports on Form 8-K 38 SIGNATURE 39 i

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS AVALON HOLDINGS CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Net operating revenues: Waste management services $ 12,918 $ 11,461 $ 32,338 $ 36,151 Food, beverage and merchandise sales 4,553 4,615 10,337 10,622 Other golf and related operations 8,275 8,159 19,392 19,377 Total golf and related operations 12,828 12,774 29,729 29,999 Total net operating revenues 25,746 24,235 62,067 66,150 Costs and expenses: Waste management services operating costs 10,259 8,949 25,330 28,372 Cost of food, beverage and merchandise 1,958 2,010 4,688 4,717 Golf and related operations operating costs 7,425 7,308 19,401 18,925 Depreciation and amortization expense 932 975 2,867 2,957 Selling, general and administrative expenses 2,826 2,719 7,835 7,970 Operating income 2,346 2,274 1,946 3,209 Other income (expense): Interest expense, net ( 512 ) ( 502 ) ( 1,532 ) ( 1,531 ) Other income, net - - - 7 Income before income taxes 1,834 1,772 414 1,685 Provision for income taxes 45 42 100 126 Net income 1,789 1,730 314 1,559 Less net loss attributable to non-controlling interest in subsidiaries ( 113 ) ( 110 ) ( 363 ) ( 256 ) Net income attributable to Avalon Holdings Corporation common shareholders $ 1,902 $ 1,840 $ 677 $ 1,815 Income per share attributable to Avalon Holdings Corporation common shareholders: Basic net income per share $ 0.49 $ 0.47 $ 0.17 $ 0.47 Weighted average shares outstanding - basic 3,899 3,899 3,899 3,899 See accompanying notes to unaudited condensed consolidated financial statements . 1 AVALON HOLDINGS CORPORATION AND SUBSIDIARIES Condensed Consoli

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