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Highlights

  • Gross margin improved to 24.4%, up 310 basis points year-over-year.
  • Executed first acquisition agreement, expanding presence in Southeast U.S. market.
  • Secured flexible funding to pursue multiple acquisitions at 4–6× EBITDA.

Capstone (NASDAQ: CAPS) released its Q2 2025 financial update, reporting a notable improvement in profitability and outlining its acquisition-driven growth strategy. The company achieved a 310 basis-point increase in gross margins, reaching 24.4% compared to 21.4% in the same quarter last year. This margin expansion reflects operational efficiencies and strategic focus on scaling higher-value segments.

A major development during the quarter was the execution of an agreement to acquire a Carolina-based stone company, with closing expected within 10 days. The acquisition is projected to be immediately accretive to both revenue and EBITDA, while strengthening Capstone’s foothold in the Southeast U.S. market.

On the cost side, the company reported selling, general, and administrative (SG&A) expenses at an annualized run rate of USD 8.5 million. Management continues to target a USD 100 million revenue run-rate by year-end 2025 or early Q1 2026.

Capstone also secured funding through an Equity Line of Credit (ELOC) and a convertible note. This financing structure provides flexibility to support acquisitions without the burden of high-interest debt. The company is actively reviewing multiple acquisition opportunities, with targeted valuations of 4–6× EBITDA and plans to structure deals with 20–45% non-cash consideration.

Looking ahead, management expects Q3 order volume to improve as market conditions normalize. The company’s acquisition pipeline and expanded balance sheet flexibility are intended to accelerate growth and consolidate market presence across key regions.

However, potential risks remain. The ELOC and convertible note structure introduces dilution risk for existing shareholders. Additionally, with multiple acquisitions under review, execution risk could emerge if integration challenges arise. Market conditions and competitive dynamics in the stone and materials industry may also influence the company’s near-term performance.