Slide 1 – Cover Page
Welcome to Capstone Holding Corp’s second quarter 2025 earnings presentation.
Capstone, ticker symbol C-A-P-S, is built to deliver, positioned to acquire, and ready to scale.
Slides 2–4 – Preamble & Legal Disclosures
This slide is our preamble and summary of our legal disclosure.
The following content is fully qualified by the legal disclosures on the next two slides.
Our goal is to share with you some of the strategic thinking and financial analysis we’re using to guide the growth of our business.
This content aligns with our principles of being accountable and transparent with shareholders.
We operate in a hyper-dynamic economic environment—
that’s a fancy way of saying, things change quickly.
What we’re telling you today is based on our best estimates and assumptions.
We reserve the right to revise our views as new information becomes available.
Despite uncertainty, we must plan.
We must make operating and investment decisions.
This presentation lays out some of that thinking for your review.
Slide 6 – Executive Summary: Q2 Results
In Q2, Instone delivered significant margin expansion and earnings growth.
Revenue was essentially flat year-over-year, but gross profit increased 13%. Gross margin improved from 21.4% to 24.4%, driven by growth in our owned, higher-margin brands.
EBITDA more than doubled, up 120% from $374,000 in 2024 to $839,000 in 2025.
Adjusted net income swung from a loss of $129,000 last year to a positive $308,000.
This quarter demonstrates the strength of our brand strategy and disciplined SG&A control.
Slide 7 – Acquisition Strategy Update
Today we signed the agreement to acquire Carolina Stone Products, a leading stone veneer installer and distributor in North Carolina. The deal is expected to close within 10 days.
Revenue is approximately $11 million with trailing EBITDA of $750,000. By 2026, we expect Carolina Stone to contribute $1 million in EBITDA.
This is an immediately accretive acquisition.
Carolina Stone provides immediate entry into the Southeast, one of the fastest-growing construction markets in the U.S.
It establishes a platform for brand expansion and creates operating synergies across our business.
This transaction is exactly what we outlined in our strategy: disciplined acquisitions at attractive valuations that build scale and profitability.
Our M&A pipeline remains active.
We expect to close a second transaction within 60 days and are in discussions that could lead to a third acquisition by year-end.
Favorable valuations, flexible deal structures, and disciplined execution keep us on track to achieve $100 million revenue and $10 million EBITDA run-rate for 2026.
Slide 8 – Q2 Outlook & Economic Backdrop
Earlier expectations of 100 basis points of rate cuts have shifted. Our current outlook calls for a 50 basis point cut later this year, which should support demand.
In the meantime, we are delivering margin expansion and stronger profitability through cost discipline.
With Carolina Stone and our growing product portfolio, Capstone is assembling the business needed to hit our 2026 targets.
Slide 9 – Introduction
Capstone’s target remains $100 million in run-rate revenue and $10 million in run-rate adjusted EBITDA for 2026.
We are on track to close our first M&A transaction — Carolina Stone Products — within 10 days.
Our acquisition funnel is active, valuations remain attractive at 4 to 6 times EBITDA
We are staying disciplined, focusing on tuck-ins that expand our platform and add earnings momentum.
Rate cuts expected later in 2025 should improve demand and set up for a strong 2026.
Slide 11 – Acquisition Profile: Carolina Based Stone Company
Carolina Stone is a premier installer and distributor of manufactured and natural stone veneer.
It serves commercial, residential, and multi-family markets with premium brands, expert masonry installation, and strong project management.
With warehouses and showrooms in North Carolina, it provides immediate coverage in the Triangle and Charlotte metros.
This acquisition establishes Capstone’s Southeast platform, expands distribution, and provides margin upside through higher-value products.
Slide 12 – Transaction Profile
The purchase price for Carolina Stone is $3.9 million with potential upside to $4.7 million.
The multiple is 4.7 to 5.2 times EBITDA, in line with our disciplined acquisition criteria.
Carolina Stone generates approximately $11 million of revenue and $750,000 in EBITDA.
We expect this to grow to about $1 million of EBITDA in 2026.
This transaction is a perfect fit with our strategy — disciplined, accretive, and growth-focused.
Slide 13 – Capstone Acquisition Funnel Insight
Our M&A pipeline remains strong.
Market conditions are producing realistic seller expectations and limited competition.
Some of the best targets are waiting, and Capstone is nurturing those relationships.
We expect an additional transaction from our active pipeline by year-end, with the potential to sign a third acquisition before 2025 closes.
We are capitalizing on a favorable deal environment while staying disciplined.
Slide 14 – Acquisition Strategy (Three-Pronged)
Our acquisition strategy remains unchanged.
Tuck-ins to expand our platform and add earnings momentum.
Sister companies with product/channel synergy to unlock cost savings and mutual growth.
New platforms longer-term to drive their own tuck-ins.
Valuations remain attractive at 4–6× EBITDA, typically with 20–45% non-cash consideration.
We remain disciplined on pricing, structure, and fit.
Slide 16 – Instone Performance: Q2 2025
Instone had a stone second quarter.
Gross margin increased from 21.4% to 24.4% year-over-year, reflecting the mix shift to owned, higher-margin brands.
SG&A stabilizing toward an $8.5 million annual run-rate.
Toro and Pangea are gaining traction with dealers and expanding into new geographies.
With rate cuts expected later in 2025, demand should improve. Combined with margin expansion and disciplined cost control, the groundwork is laid for a strong 2026.
Slide 17 – Instone Second Quarter Overview of Results
On this page—and the next—you’ll find a summary of Q2 results.
Refer to the 10-Q for more detail.
Slide 20 – Capstone Corporate Costs
As a public company, Capstone incurs corporate costs beyond those of its subsidiaries, currently Instone.
Fixed costs include leadership, board, legal, and compliance.
Variable costs like IR and marketing can be scaled upwards or downwards as needed.
When valuing our core business,
we believe many corporate costs—including Capstone overhead—are non-essential to our subsidiaries’ s operations.
Slide 21 – Capstone Standalone Second Quarter Overview of Results
Capstone corporate expenses are not expected to scale quickly as we grow, allowing Capstone to expand profitably as it executes its strategy.
The first year includes a number of non-recurring expenses, such as higher investor relations spend.
We expect Capstone expenses to normalize over Q3 and Q4.
Slide 23 – Key Principles of Capstone
These are our key principles—a promise to our investors:
We will be transparent.
We will always tell you how we are doing.
We will be accountable.
We’ll make commitments and share targets—some may be stretch goals—
but we will put our full effort behind them.
And we will be adaptable.
Markets change. Conditions change.
Capstone, ticker C-A-P-S, is executing with discipline—margin expansion, accretive M&A, and a clear path to the $100M revenue / $10M EBITDA run-rate goals.