Capstone Holding Corp. — Q3 2026 Earnings Summary

Financial Performance:

• Third-quarter revenue grew 46% year-over-year to $20.0 million, compared to $13.7 million in Q3 2025.
• Revenue for the first nine months of 2026 increased 57% to $54.1 million, compared to $34.4 million in the same period of 2025.
• Gross profit increased 76% year-over-year to $5.7 million in Q3 2026, compared to $3.3 million in Q3 2025.
• Organic gross profit increased 14.4% to $5.7 million in Q3 2026 and 8.3% to $14.7 million for the first nine months.
• Income from operations was $0.4 million in Q3 2026, compared to a loss of $0.8 million in Q3 2025; this figure includes approximately $0.4 million in one-time tariff refunds.
• Net loss narrowed to $0.6 million in Q3 2026, compared to a $2.0 million loss in Q3 2025; for the first nine months, net loss was $0.6 million compared to $4.4 million in 2025.
• Stone Business Adjusted EBITDA for Q3 2026 was $1.5 million (7.7% margin), compared to $0.8 million (6.2% margin) in Q3 2025.
• Stone Business Adjusted EBITDA for the first nine months was $2.8 million.

Guidance and Future Outlook:

• Revised FY2026 revenue guidance is approximately $70 million, down from the prior guidance of $72.1 million.
• Revised FY2026 gross profit guidance is approximately $18.6 million, down slightly from the prior guidance of $18.7 million.
• Revised FY2026 Stone Business Adjusted EBITDA guidance is approximately $3.2 million to $3.3 million, down from the prior guidance of $3.8 million.
• The Company expects full-year revenue growth of approximately 49% from 2025 and gross profit growth of approximately 72% from 2025.
• The Company expects Stone Business Adjusted EBITDA to more than triple its 2025 level of approximately $1.0 million.
• The downward revision in revenue outlook reflects higher interest rates slowing housing activity, with average 30-year fixed mortgage rates rising from 6.30% in April to 7.40% in mid-October before easing to 7.24% in late October.

Business Segments and Product Lines:

• All three operating businesses (Instone, Carolina Stone, and Canadian Stone Industries) outperformed their respective markets in Q3 2026.
• Instone organic revenue grew 4.2% in Q3 2026 and 1.4% for the first nine months.
• Carolina Stone organic revenue grew 18.5% in Q3 2026 and 11.3% for the first nine months.
• Canadian Stone Industries (CSI) organic revenue grew 18.4% in Canadian dollars in Q3 2026 and 3.8% for the first nine months.
• The 2026 results include full-period contributions from Carolina Stone (acquired August 22, 2025) and Canadian Stone Industries (acquired December 1, 2025).
• Q3 organic revenue growth of 7.5% excludes the elimination of $0.79 million in intercompany sales; reported revenue of $19.96 million includes this elimination.

Market and Competitive Landscape:

• Capstone's organic sales grew 2.6% in the first nine months of 2026, contrasting with declines in the broader housing market.
• Instone outperformed the U.S. single-family housing starts market, which declined 4.0%.
• Carolina Stone outperformed the North Carolina single-family permits market, which declined 5.2%.
• CSI outperformed the total Canadian housing starts market, which declined 4%.
• Some other building products distributors reported lower organic sales in the third quarter, while Capstone's organic sales grew.

Risks and Challenges:

• Higher interest rates have weighed on housing activity throughout the year, leading to a downward revision in revenue guidance.
• Forward-looking statements are subject to risks including liquidity and access to capital, ability to comply with financial covenants, refinancing or repayment of indebtedness, and conditions raising doubt about the ability to continue as a going concern.
• Risks also include acquisition timing and integration, macroeconomic conditions, and execution risks.
• The Company has not provided a quantitative reconciliation of forward-looking Stone Business Adjusted EBITDA to forward-looking GAAP net income because reconciling items cannot be predicted with reasonable certainty.

Management Commentary and Tone:

• CEO Matthew Lipman stated the company generated income from operations in a difficult housing market and noted that growth accelerated in the third quarter.
• Management expressed disappointment in lowering the outlook, taking responsibility for the expectations established in April.
• Lipman emphasized that despite higher interest rates affecting the industry, each of the Company's businesses still outperformed its respective market.

Other Key Points:

• The Company acquired Carolina Stone on August 22, 2025, and Canadian Stone Industries on December 1, 2025.
• Results for acquired businesses prior to their acquisition dates are based on sellers' records and have not been audited or reviewed by the Company's independent registered public accounting firm.
• The press release references non-GAAP measures including Stone Business Adjusted EBITDA, organic revenue, and organic gross profit.
• An investor presentation detailing Q3 results and strategic priorities will be posted on the Company's Investor Relations website concurrently with the filing of the Form 10-Q.