Capstone Holding (CAPS) Registration Filing summary

Company overview and business model

• Operates a leading building products distribution network, primarily through Instone, serving 31 states and over 400 active customers, focusing on stone veneer, landscape stone, and modular masonry fireplaces.

• Owns or controls five of eight brands it distributes, with a strategy to expand both organically and via acquisitions.

• Targets fragmented U.S. stone distribution market, leveraging technology and operational scale to drive efficiency and growth.

• Recent restructuring will result in 100% ownership of TotalStone, consolidating operations and equity interests.

Financial performance and metrics

• 2023 net sales were $48.4M, down 21% from $61.6M in 2022, reflecting industry slowdown and lower demand.

• Gross profit margin declined from 26.9% in 2022 to 19.9% in 2023 due to higher freight costs and price reductions.

• Net loss attributable to stockholders was $5.7M in 2023, compared to near break-even in 2022.

• As of September 30, 2024, cash was $13K, with $16.5M in current assets and $15.5M in current liabilities.

• Working capital decreased to $1.0M as of September 30, 2024.

Use of proceeds and capital allocation

• Net proceeds of ~$3.56M ($4.24M if over-allotment is exercised) will be used to repay a $745K term loan and for general corporate purposes, including organic and potential acquisition-driven growth.

• No definitive acquisition targets currently identified; proceeds expected to fund operations for at least 12 months.