Quanex Building Products Corporation

hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Zilke, Senior Vice President, CFO, and Treasurer. Please go ahead.

Thanks for joining the call this morning. On the call with me today is George Wilson, our Chairman, President, and CEO. This conference call will contain forward-looking statements and some discussion of non-GAAP measures. Forward-looking statements and guidance discussed on this call and in our earnings release are based on current expectations. Actual results or events may differ materially from such statements and guidance, and Quantx undertakes no obligation to update or revise any forward-looking statement to reflect new information or events. For a more detailed description of our forward-looking statement disclaimer, and a reconciliation of non-GAAP measures to the most directly comparable GAAP measures, please see our earnings release issued yesterday and posted to our website. I'll now turn the call over to George for his prepared remarks.

Thanks, Scott, and good morning to everyone joining the call. Overall, we are pleased with the results from our fiscal second quarter, as we did see the traditional seasonal uptick and volumes were as expected, despite ongoing global macroeconomic uncertainties. I'd like to start my commentary by providing an update on the status of the time and acquisition integration. We have been extremely pleased by both the depth and pace at which the integration has progressed. We have structured new operating segments, finalized and staffed our operational and commercial teams, and are in the process of finalizing the back office support teams that will service both of those groups. As a result of these efforts, and as announced in our earnings release, we now expect to realize cost synergies of approximately $45 million over time, which equates to a 50% increase compared to the original target. In fact, on a run rate basis, we now expect to achieve the original $30 million of cost synergy targets by early fiscal 2026. The newly formed operating segments are functioning well, and we feel that there still is a pathway to additional cost synergies. Operationally, our strength has always been around controlling what we can control, and that cultural trait is core and foundational to what we are building. We're delighted with what the team has accomplished in the 10 months since the deal closed, and we look forward to keeping you updated on our continued operational progress. The second phase of integration is now beginning. and it will be based around four major themes. Go-to-market and geographic expansion strategy, operational footprint optimization, new product and materials development, and finally, current product line portfolio analysis. Each one of these themes are more medium-term focused, but very much aligned to the profitable growth strategy that we outlined at our investor day in February. Our objective is to drive both above-market growth and improve margin profile. Now, turning to the markets we serve in North America and Europe. In North America, volumes increased month over month throughout the second quarter, which gives us continued confidence in the normal seasonality pattern we have historically seen. We did see volume decline year over year in the second quarter. driven by low consumer confidence related to higher interest rates and tariff implications, but this was not surprising. As it relates to tariffs, there remains much uncertainty, which continues to be a headwind to the confidence level of our ultimate end consumers. Specifically, from a Quantix perspective, our team has done a great job of positioning us to minimize any tariff impacts by localizing supply chains where possible to mitigate both supply and cost risks. We also continue to explore alternate supply sources and are constantly evaluating and monitoring potential shifts in demand. In situations where we were unable to avoid tariff impact, we have utilized surcharge pricing mechanisms to pass on most of the cost. Overall, approximately 22% of our total cost of goods sold is exposed to tariff risk, and breaking that down further 13% of total COGS exposure is specific to Mexico and Canada. And since we are USMCA compliant, the tariff rate is essentially zero for those countries at the moment. Overall, we are confident in our ability to minimize any potential margin impact as it relates to tariffs. Looking at market conditions in Europe, consumer confidence continues to be negatively impacted by higher interest rates and conflicts in the Middle East and Ukraine. However, market share gains in both our vinyl extrusion and IG Spacer product lines have helped offset market weakness. Pricing continues to be pressured, but the Quantix team has done a great job of using operational performance to offset any price concessions. From a capital allocation perspective, we made the decision to take advantage of our low share price, and we repurchased approximately $23.5 million of our stock in the second quarter. We remain focused on maintaining a healthy balance sheet that continues to give us flexibility to execute on all of our strategic opportunities. For the remainder of this year, we will continue to prioritize debt repayment and investment in organic projects that enhance our margins, while opportunistically buying back shares when it makes sense to do so. We still have approximately $35.6 million authorized on our share repurchase program. In summary, We are extremely pleased with the progress of the time and acquisition integration. The Quantix team continues to execute at a high level, which has resulted in excellent safety performance, as well as delivering better than anticipated synergies. The integration now begins to shift towards growth-focused and customer value projects, which we believe will drive margin expansion and create opportunities in new markets. The team continues to control the controllable, and we will be well positioned to capitalize on opportunities as they arise. I'll now turn the call over to Scott, who will discuss our financial results in more detail.