Capstone Holding (CAPS) investor relations material

Executive summary

• Achieved a profitability inflection in Q2 2026, with revenue up 67% year-over-year to $21.5M and gross profit up 92% to $6.0M, driven by acquisitions, organic growth, and operational leverage.

• Gross margin expanded to 27.9%, aided by a $438K tariff refund and a shift to higher-margin products and services.

• Stone Business Adjusted EBITDA turned positive at $2.0M (9.4% margin), a $2.9M improvement from Q1.

• Integration of Carolina Stone, Canadian Stone Industries, and Fraser Canyon contributed to scale, operational leverage, and margin improvement.

• Net loss for Q2 2026 was $1.4M, compared to $0.7M in Q2 2025, due to higher interest expense and SG&A despite improved gross profit.

Financial highlights

• Q2 2026 revenue grew 67% year-over-year to $21.5M; gross profit rose 92% to $6.0M, with gross margin expanding to 27.9%.

• Adjusted EBITDA for Stone Business increased 126% year-over-year to $2.0M (9.4% margin).

• First half 2026 revenue reached $34.1M, up from $20.8M in H1 2025; gross profit up to $9.0M (26.3% margin).

• Q2 2026 net loss: $1.4M (vs. $0.7M loss YoY); six months net loss: $3.3M (vs. $2.4M loss YoY).

• Standalone Capstone operating expenses fell 21% in Q2 and 34% in H1 as non-recurring costs rolled off.

Outlook and guidance

• FY2026 guidance reaffirmed: revenue of $72.1M, gross profit of $18.7M (26.0% margin), and Adjusted EBITDA of $3.8M (5.2% margin).

• Management targets annual revenue growth toward $100M and EBITDA margin expansion to 10%, funded by operating cash flow.

• Management expects positive operating cash flow in H2 2026 as working capital normalizes.

• Disciplined M&A expected to resume in 2027 or after platform optimization and favorable market conditions.

• Expansion of product offerings and new distribution locations planned for H2 2026.