Capstone Holding (CAPS) Q2 2025 earnings summary

Executive summary

• Q2 revenue was nearly flat year-over-year, but gross profit rose 13.2% and gross margin improved from 21.4% 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 projected to contribute $1 million in EBITDA by 2026.

• Active M&A pipeline with additional transactions expected by year-end, supporting a $100 million revenue and $10 million adjusted EBITDA run rate target for 2026.

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

Financial highlights

• Q2 2025 revenue: $12.85M–$12.9M (down 0.3% year-over-year); gross profit: $3.1M–$3.13M (up 13%+); gross margin: 24.4% (up from 21.4%).

• Adjusted EBITDA rose 120%+ to $839,000; adjusted net income improved to $308,000 from a $129,000 loss.

• Instone GAAP net income was $168,000, up from a $336,000 loss in Q2 2024.

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

• Cash at June 30, 2025: $773,000; working capital (excluding current debt): $2.5 million.

Outlook and guidance

• Targeting $100 million in run rate revenue and $10 million in run rate adjusted EBITDA for 2026.

• 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.