Quanex Building Products Corporation

Good day and thank you for standing by. Welcome to the Q2 2026 QuantX Building Products Corporation earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to your speaker today, Scott Zilke, Senior Vice President, CFO, and Treasurer.

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 Quantix 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 on the call. In my commentary, I will give our perspective on the current macroeconomic environment, provide an overview of our results, highlight some inflationary challenges and the actions being taken by Quantix, and then discuss go-forward priorities. From a macroeconomic perspective, housing demand in North America and Europe is showing early signs of stabilization, but the recovery will likely proceed gradually. progress remains constrained by persistently weak consumer confidence, which remains below historical norms. Inflation fatigue, affordability challenges, and ongoing geopolitical uncertainty are outweighing an otherwise strong labor market. In the U.S., mortgage rates above 6% further dampen activity, while the lock-in effect where homeowners are reluctant to relinquish previously secured low rates continues to limit mobility. even as rising home equity reflects higher property values. Given these ongoing challenges, we don't expect housing markets to rebound sharply in the near term. We instead anticipate a steady recovery over the medium to longer term, and this will depend on, one, an improvement in affordability, two, a decrease or stabilization of interest rates, and three, an improvement in consumer confidence influenced by a period of geopolitical stability. I will now provide some commentary on our results for the second quarter of 2026. Despite the headwinds I just mentioned, demand for our products came in largely as expected, and we performed well from an operational standpoint. On a consolidated basis, revenue increased modestly year over year. That's pricing actions, tariff-related pass-throughs, and favorable foreign exchange more than offset lower volumes. Looking ahead to Q3, we expect seasonal demand patterns to continue, which should mean sequential volume growth. Notably, volume softened following Memorial Day last year, and although we realize it's still early, we have not observed similar trends to date this year. We will remain vigilant in this regard, closely monitoring order patterns to respond quickly to any changes in demand. Gross margins declined 350 basis points year over year in Q2. primarily due to sharp increases in raw materials and logistics costs. Our hardware solutions segment was impacted the most by inflationary pressures during Q2 of this year due to the legacy nature of the make the stock business model for the window and door hardware product line and the fact that the inventory levels are highest in this segment. Although our North American index pricing mechanisms are designed to adjust for input cost fluctuations, the quarterly timing of these adjustments varying by commodity, customer, and product line, can create temporary earnings pressures during periods of rapid inflation like those we've seen in the past few months. In our European and international markets, where index pricing is less prevalent, price adjustments rely more on customer negotiations and announced increases, often with advanced notice periods that further extend timing impacts. Cost pressures on raw materials were broad-based across segments during Q2 of this year. The hardware solution segment was most affected by rapid cost increases for aluminum, zinc, stainless steel, and plastic resins. The extruded solution segment was most impacted by cost increases for butyl rubber, silicone compounds, carbon black, desiccants, and PVC resins. And our custom solution segment was most impacted by cost increases for EPDM, carbon black, oils, aluminum, plastic resins, and certain hardwoods. Rising costs in packaging, particularly plastic and paper, as well as increases in freight and logistics costs, impacted margins across all segments and product lines. To mitigate these pressures, we have implemented and will continue to implement targeted price increases ranging from mid-single digit to low teens percentages to be phased in throughout Q3 and tailored by product line. Going into Q3, our operational priorities will be on closing the price-cost gap across all product lines, accelerating the transition from make-to-stock to make-to-order for the window-and-door hardware business, executing on our 80-20 initiative in the North American window and door hardware business, improving working capital, and then generating more free cash flow. We believe that by executing on these actions, we will be well positioned to deliver shareholder value as market conditions improve. I will now turn the call over to Scott, who will discuss our financial results in more detail.