Capstone Holding (CAPS) Q3 2025 earnings summary

Executive summary

• Pro forma revenue increased 19% year-over-year to $41.2 million, driven by the Carolina Stone acquisition and organic expansion.

• Adjusted EBITDA grew 46% year-over-year, reflecting acquisition-driven growth and disciplined cost management.

• Gross profit rose 34% year-over-year, with margin expansion from 21.7% to 24.4% due to improved sourcing and product mix.

• Two acquisitions completed in 2025, expanding the platform into the Southeast U.S. and adding $26 million in annualized revenue.

• Integration of Carolina Stone achieved milestones in ERP, logistics, and marketing, positioning for scalable growth in 2026.

Financial highlights

• Pro forma revenue reached $41.2 million YTD 2025, up from $34.6 million in 2024, with Q3 2025 revenue at $15.3 million.

• Gross margin expanded to 24.4% from 21.7% year-over-year.

• Adjusted EBITDA margin increased from 2.9% to 3.6% YTD, with Q3 margin at 5.7%.

• Non-recurring acquisition-related and non-cash financing costs totaled $1.5 million, impacting net income.

• SG&A expenses rose due to integration and acquisition activities, but cost discipline supported margin expansion.

Outlook and guidance

• Targeting a $100 million revenue run-rate by early 2026, supported by organic growth and M&A.

• Expecting to close a major multi-location distributor acquisition by December 2025.

• Planning 3-4 additional accretive acquisitions in 2026, with a robust pipeline.

• Anticipating improved organic growth and earnings in 2026 as macroeconomic conditions and housing demand recover.

• Management expects sufficient liquidity for at least one year, supported by recent capital raises and credit facilities.