Capstone Holding Corp. Reports Q2 2025 Financial Results with Revenue Decline and Improved Gross Profit Margins

Capstone Holding Corp. reported its financial results for the second quarter of 2025, revealing a slight decline in revenue but improvements in gross profit margins. For the three months ended June 30, 2025, the company generated net sales of $12.9 million, a decrease of $34,000 compared to $12.9 million in the same period last year. However, gross profit increased by 13% to $3.1 million, resulting in a gross profit margin of 24.4%, up from 21.4% in the prior year. The company reported a net loss of $700,000 for the quarter, compared to a loss of $381,000 in the same quarter of 2024.

For the first half of 2025, Capstone's net sales totaled $20.8 million, down 7% from $22.2 million in the first half of 2024. The decline was attributed to adverse weather conditions and challenging economic factors, including trade policies and inflation concerns. The company noted a significant drop in revenue from its veneer products, which accounted for a $2.4 million decrease, partially offset by a $760,000 increase in landscaping products. The cost of goods sold also decreased by 8% to $16.3 million, contributing to a gross profit margin increase from 20.3% to 21.5%.

Strategically, Capstone completed a public offering of 1.25 million shares at $4.00 per share in March 2025, raising approximately $3.3 million in net proceeds. The company also entered into a purchase agreement with an equity line investor, allowing for the potential sale of up to $20 million in common stock. Additionally, Capstone secured a convertible note financing agreement with an institutional investor, which could provide up to $10.9 million in funding. These initiatives are aimed at supporting organic growth and potential acquisitions in the building products distribution sector.

Operationally, Capstone reported an increase in working capital, which rose to $2.5 million as of June 30, 2025, compared to $2.1 million at the end of 2024. The company has over 400 active customers across 31 states, and it continues to focus on expanding its product offerings and distribution network. Despite the challenges faced in the first half of 2025, Capstone remains optimistic about its future, citing ongoing efforts to mitigate the impact of tariffs and enhance its supply chain.

Looking ahead, Capstone expects to leverage its recent capital raises to fund growth initiatives and improve operational efficiencies. The company anticipates that its strategic focus on expanding its product lines and geographic reach will position it favorably in the competitive building products market. However, management acknowledges that future results may be influenced by economic conditions and market dynamics, which could impact sales and profitability.