Capstone closes Carolina Stone Products acquisition ahead of schedule

NEW YORK - Capstone Holding Corp. (NASDAQ:CAPS), currently trading at $1.10 with a market capitalization of $6.9 million, has completed its acquisition of Carolina Stone Products, the company announced Monday. According to InvestingPro analysis, the company is currently trading below its Fair Value.

The transaction, which closed on August 22, was finalized ahead of the originally anticipated schedule. Capstone acquired the North Carolina-based company for between $3.9 million and $4.7 million, representing approximately 4.7 to 5.2 times Carolina Stone’s trailing twelve-month EBITDA of approximately $0.75 million.

"With Friday’s closing, we’re delivering exactly what we said we would: immediately accretive acquisitions at disciplined valuations," said Matthew Lipman, CEO of Capstone. The acquisition comes at a time when InvestingPro data shows Capstone operating with a weak financial health score of 1.52, though maintaining a solid current ratio of 0.97.

Carolina Stone Products generates annual revenue of approximately $11 million. The acquisition expands Capstone’s presence in the Southeast region and adds premium brands to its portfolio.

Stuart Powell, EVP of Carolina Stone Products, stated, "We’re excited to officially join Capstone. The expanded reach and access to Instone’s distribution platform will allow us to better serve our customers and accelerate growth."

Capstone, which distributes building products through its Instone subsidiary serving 31 U.S. states, reported that its gross margins increased to 24.4% in Q2 from 21.4% a year earlier.

The company indicated it expects to close at least one more acquisition by the end of 2025, maintaining its target of 4-6 times EBITDA for acquisitions with 20-45% non-cash consideration. The stock has faced significant headwinds, down over 75% in the past year, with InvestingPro offering 8 additional key insights about the company’s performance and outlook.

According to the company’s press release statement, the Carolina Stone acquisition is immediately accretive to revenue and EBITDA and positions Capstone for a potential $100 million revenue run-rate entering 2026, representing significant growth from its current trailing twelve-month revenue of $43.4 million.

In other recent news, Capstone Holding Corp. announced its plans to acquire Carolina Stone Products for $3.9-$4.7 million, marking its expansion into the Southeast region. Carolina Stone Products generates approximately $11 million in annual revenue, and the acquisition is expected to close by August 22, 2025. Additionally, Capstone has amended the terms of its senior secured convertible note, reducing the conversion price to $1.00 per share from the previous $1.72, effective until the maturity date of the note. The company also secured a $10 million convertible note facility, with an initial $3 million drawn to support acquisition strategies, particularly targeting a Southeast U.S.-based distributor of thin veneer stone and hardscape materials. Capstone’s Instone subsidiary has made significant strides by securing a $1 million order for PangaeaⓇ Natural Stone for a luxury resort development in the Mountain States region. Shipments worth $200,000 have already been delivered for the project, which involves more than 30 homes. These developments reflect Capstone’s strategic moves in expanding its operations and financial maneuvering to support growth initiatives.

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