Capstone Holding (CAPS) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue was nearly flat year-over-year at $12.9M, but gross profit rose 13.2% and gross margin improved to 24.4%, driven by higher-margin owned brands and cost control.

• Adjusted EBITDA more than doubled to $839,000, and adjusted net income swung from a $129,000 loss to a $308,000 profit.

• Acquisition agreement for a Carolina-based stone company executed, expected to close within 10 days, providing immediate Southeast market entry and margin upside.

• M&A pipeline remains active, with additional transactions expected by year-end and a $100M revenue, $10M adjusted EBITDA run rate targeted for 2026.

• Strategy focuses on organic growth, margin expansion, and earnings-accretive acquisitions.

Financial highlights

• Q2 2025 net sales: $12.9M (down $34K YoY); gross profit: $3.13M (up 13.2% YoY); gross margin: 24.4% (up from 21.4%).

• Adjusted EBITDA rose 124% to $839K; adjusted net income improved to $308K from a loss of $129K.

• SG&A stabilized at an $8.5M annual run rate.

• Instone GAAP net income was $168K, up from a loss of $336K in Q2 2024.

• Cash at June 30, 2025: $773K; working capital (excl. current debt): $2.5M.

Outlook and guidance

• Targeting $100M in run rate revenue and $10M in run rate adjusted EBITDA for 2026, dependent on closing further acquisitions.

• Expecting a 50 basis point rate cut later in 2025, which should support demand.

• Margin expansion and disciplined cost control expected to drive strong 2026 performance.

• Q3 order volume expected to rebound as market conditions normalize.

• Management expects sufficient liquidity for at least one year, supported by the Revolver, equity line, and convertible note.