Capstone Holding (CAPS) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue rose 60% year-over-year to $12.6M, driven by acquisitions of Carolina Stone and Canadian Stone Industries/Fraser Canyon, with legacy operations flat and organic growth contributing.

• Gross profit increased 124% to $3.0M, with gross margin expanding by 6.7 percentage points to 23.5%, the best Q1 margin in four years, despite severe winter conditions.

• Integration of acquired businesses and cost rationalization initiatives are underway, supporting margin improvement and future synergies.

• Net loss was $1.9M, up from $1.7M in the prior year, reflecting higher SG&A and interest expense.

• Management reaffirms FY2026 guidance, expecting 54% revenue growth, 73% gross profit growth, and $3.8M in Adjusted EBITDA.

Financial highlights

• Q1 2026 revenue: $12.6M (up from $7.9M in Q1 2025); gross profit: $3.0M (up from $1.3M); gross margin: 23.5% (up from 16.8%).

• Adjusted EBITDA margin improved to -6.9% from -7.5% year-over-year; positive Adjusted EBITDA expected in Q2 2026.

• SG&A expenses increased 62% to $4.5M, mainly from acquisitions and integration costs.

• Interest expense rose 197% to $892K, primarily due to convertible notes and debt financing.

• Cash used in operations: $2.8M; cash at period end: $419K.

Outlook and guidance

• FY2026 guidance reaffirmed: $72.1M revenue (+54%), $18.7M gross profit (+73%), and $3.8M Adjusted EBITDA (5.2% margin).

• Positive Adjusted EBITDA expected in Q2 2026 as seasonal demand recovers.

• Management expects sufficient liquidity for at least 12 months, supported by an undrawn $19.2M equity line of credit and ongoing cost reductions.

• Full-year guidance update to be provided with Q2 results in August.

• Board may seek a reverse stock split to regain Nasdaq compliance if needed.