Capstone revenue jumps 46% to $20 million as it cuts annual outlook

Key Facts

Capstone Holding said on November 12 that third-quarter 2026 revenue rose 46% year over year to $20.0 million, versus $13.7 million in the same period of 2025. The revenue growth was accompanied by an increase in gross profit to $5.7 million from $3.3 million, a gain of 76%. The company also swung to operating income of $0.4 million, compared with an operating loss of $0.8 million a year earlier. Net loss narrowed to $0.6 million from $2.0 million. Chief Executive Matthew Lipman said the company "delivered 46% revenue growth and achieved operating income in a challenging housing market."

However, operating income included about $0.4 million in tariff refunds, which the company classified as a one-time benefit. That means the amount contributed to the quarterly operating result and does not necessarily represent a recurring source of income. At the same time, the company said organic revenue grew 7.5% in the third quarter, with all three businesses it tracks expanding. Instone revenue rose 4.2%, Carolina Stone revenue increased 18.5%, and Canadian Stone Industries revenue grew 18.4% in Canadian dollars. The company reported organic gross profit growth of 14.4% to $5.7 million during the quarter.

Capstone cut its fiscal 2026 outlook, saying it now expects revenue of about $70 million, compared with a previous estimate of $72.1 million. It also lowered its gross profit forecast to about $18.6 million from $18.7 million and its Stone Business Adjusted EBITDA forecast to a range of $3.2–3.3 million from $3.8 million. The revenue forecast adjustment was therefore larger than the change in the gross profit forecast, while the cut also included the estimate for adjusted earnings in the stone business. Lipman said: "We are disappointed to lower our outlook. Higher interest rates have affected housing throughout the year." He added that each of the company's businesses "outperformed its market."

The company attributed its revenue outlook revision to higher interest rates, which it said had slowed housing activity during the year. Citing Freddie Mac data, it said the average 30-year fixed mortgage rate rose from 6.30% on April 16 to 7.40% in mid-October, before falling to 7.24% on October 29, 2026. This trajectory provides context for the company's explanation of pressure on the housing market, while it said its businesses grew in a challenging housing environment. In the first nine months of 2026, organic revenue grew 2.6%, while organic gross profit rose 8.3% to $14.7 million. The broader-period figures show slower organic growth than the reported increase in total quarterly revenue.

Reported revenue for the first nine months of 2026 rose 57% to $54.1 million, from $34.4 million in the same period of 2025. But 2026 results included a full-period contribution from Carolina Stone and Canadian Stone Industries, which the company acquired in 2025. The Carolina Stone acquisition was completed on August 22, 2025, and the Canadian Stone Industries acquisition on December 1, 2025, so the comparison reflects different contribution periods for the two companies. In its organic breakdown, Capstone said Instone grew 1.4% over the nine months, while U.S. single-family housing starts fell 4.0%. Carolina Stone grew 11.3%, compared with a 5.2% decline in related building permits in North Carolina.

In explaining its third-quarter organic growth methodology, the company said the 7.5% figure excludes the elimination of $0.79 million in intercompany sales. Reported revenue was $19.96 million and would have been $20.75 million without that elimination. Including the elimination, the company said third-quarter organic revenue growth was 3.4%. Capstone presented these figures alongside its published organic growth rate, allowing the mathematical effect of the elimination on the comparison to be assessed. The company filed its current report with the U.S. Securities and Exchange Commission on November 12, attaching its results statement and investor presentation.

Capstone shares, listed under the ticker CAPS, closed at $1.760 in the November 12 session, down 12.66% for the day, with 118.46 thousand shares traded, according to historical share data. The close came on the day the company announced its third-quarter results and filed the accompanying report with the commission. Closing data alone do not provide a basis for describing the share's intraday movement as mixed. The revised annual figures remain a complement to the quarterly results, as the company lowered its revenue, gross profit and Stone Business adjusted earnings forecasts. The company said the revision was linked to higher interest rates and slower housing activity during the year.