Capstone to acquire Carolina Stone Products in southeast expansion

NEW YORK - Capstone Holding Corp. (NASDAQ:CAPS), currently valued at $6.92 million in market capitalization, announced Monday it has signed a definitive agreement to acquire Carolina Stone Products for $3.9-$4.7 million, with closing expected by August 22, 2025. According to InvestingPro analysis, the stock appears slightly undervalued at its current price of $1.24.

The acquisition, representing approximately 4.7-5.2 times Carolina Stone’s trailing EBITDA of $0.75 million, will mark Capstone’s entry into the Southeast region. Carolina Stone Products generates approximately $11 million in annual revenue, which would represent a significant addition to Capstone’s current trailing twelve-month revenue of $43.38 million.

"With a foothold in the Carolinas, we’ll begin getting Instone products on the ground right away," said Matthew Lipman, CEO of Capstone, in a press release statement.

The transaction is expected to be immediately accretive to Capstone’s revenue and EBITDA upon closing. The North Carolina-based target company will add premium stone brands to Capstone’s portfolio.

Capstone also indicated it plans to close at least one additional acquisition by year-end 2025, with multiple targets under review at 4-6 times EBITDA valuations. The company stated these acquisitions would position it to enter 2026 with a revenue run-rate of approximately $100 million.

The building products distributor reported that its gross margins increased to 24.4% in the second quarter from 21.4% a year earlier, which it attributed to increased sales of owned brands and cost management. InvestingPro data reveals the company maintains a trailing twelve-month gross profit margin of 21.94%, with analysts setting an ambitious price target of $6.00 per share. Get more exclusive insights and detailed financial metrics with InvestingPro’s premium features.

Through its Instone subsidiary, Capstone currently serves 31 U.S. states, offering stone veneer, hardscape materials, and modular masonry systems.

The transaction remains subject to customary closing conditions, according to the company’s Form 8-K filing.

In other recent news, Capstone Holding Corp. announced an amendment to its senior secured convertible note, reducing the conversion price from $1.72 to $1.00 per share. This adjustment was agreed upon with an institutional investor and is effective immediately. Additionally, Capstone has secured a $10 million convertible note facility, with an initial $3 million already drawn to support its acquisition strategy. The funds will primarily finance the acquisition of a Southeast U.S.-based distributor of thin veneer stone and hardscape materials, currently under a non-binding letter of intent.

In a separate development, Capstone’s Instone subsidiary has secured a $1 million order for PangaeaⓇ Natural Stone for a luxury resort in the Mountain States region. The project marks Instone’s first major development in the area, with $200,000 worth of shipments already delivered. The stone will be used in over 30 homes within the resort community, showcasing two of Instone’s newest profiles introduced earlier this year. These recent developments highlight Capstone’s ongoing strategic initiatives and operational progress.

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