Capstone Holding (CAPS) Q1 2025 earnings summary

Executive summary

• 2025 guidance reaffirmed with $100M run-rate revenue and $10M adjusted EBITDA targets, supported by anticipated acquisitions and product expansion.

• Acquisition pipeline remains robust, with a focus on closing one or two strategic deals in the near term.

• Instone experienced a slow Q1 due to harsh winter and economic uncertainty, but expects demand to rebound in the second half.

• Capstone completed a public offering in March 2025, raising $3.25 million, and executed significant debt and equity restructuring.

• Equity Line of Credit (ELOC) announced to fund acquisitions, supporting growth while minimizing dilution.

Financial highlights

• Instone Q1 2025 revenue was $7.9M, down from $9.4M in Q1 2024, with gross margin declining to 16.8% from 18.6%.

• Adjusted EBITDA for Instone in Q1 2025 was $(0.6)M, compared to $(0.4)M in Q1 2024.

• Net loss attributable to stockholders was $2.4M in Q1 2025, compared to $2.0M in Q1 2024.

• SG&A costs remained well controlled, benefiting from 2024 cost reductions, but increased 12% year-over-year to $2.8M due to higher investor relations and legal costs.

• Working capital improved to $2.1M as of March 31, 2025, up from $0.25M at year-end 2024.

Outlook and guidance

• 2025 run-rate revenue target of $100M and adjusted EBITDA of $10M reaffirmed, contingent on closing acquisitions.

• Instone 2025 plan projects revenue between $47.5M and $49M, with gross profit margins of 23.5% to 25.5%.

• Management expects sufficient working capital for at least one year, with plans to use public offering proceeds for organic and inorganic growth.

• Anticipating a strong rebound in Q3 as weather and macroeconomic conditions normalize.

• Guidance will be refined quarterly to provide updated performance views.