Good day, and thank you for standing by. Welcome to the Second Quarter 2025 Quanex Building Products Corporation Earnings Conference Call. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Zuehlke, 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 Quanex 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 improved 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 Quanex 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 0 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 Quanex 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've 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 Quanex 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.

Thanks, George. On a consolidated basis, we reported net sales of $452.2 million during the second quarter of 2025, which represents an increase of approximately 70% compared to $266.2 million for the same period of 2024. The increase was primarily driven by the contribution from the acquisition that closed on August 1, 2024. Excluding the contribution, net sales would have declined by 1.4% for the second quarter of 2025, largely due to lower volume in North America. We reported net income of $20.5 million or $0.44 per diluted share during the 3 months ended April 30, 2025, compared to net income of $15.4 million or $0.46 per diluted share during the 3 months ended April 30, 2024. On an adjusted basis, net income was $27.9 million or $0.60 per diluted share during the second quarter of 2025 compared to $24 million or $0.73 per diluted share during the second quarter of 2024. The adjustments being made to EPS are as follows: transaction advisory fees and reorganization costs, restructuring charges related to severance and disposal of software, amortization expense related to intangible assets and a pension settlement refund and other net adjustments related to foreign currency transaction gain or loss and effective tax rates. On an adjusted basis, EBITDA for the quarter increased by 54.7% to $61.9 million compared to $40 million during the same period of last year. The increase in net income and EBITDA for the 3 months ended April 30, 2025, was mostly attributable to the contribution from the acquisition combined with the realization of cost synergies. Now for results by operating segment. We generated net sales of $151 million in our North American Fenestration segment for the second quarter of 2025, a decrease of 5.5% compared to $159.8 million in the second quarter of 2024. We estimate that volumes in this segment declined by approximately 7% year-over-year, with pricing up approximately 1% versus Q2 of 2024. Adjusted EBITDA was $21.3 million in this segment for the second quarter compared to $25.4 million in the second quarter of 2024. Our European Fenestration segment generated revenue of $61.3 million in the second quarter of 2025, which represents an increase of 8.3% compared to $56.5 million in the second quarter of 2024. After adjusting for foreign currency, revenue increased 7.9%. We estimate that volumes for the quarter were up approximately 9% year-over-year in this segment, with pricing down by approximately 1%. Adjusted EBITDA increased slightly to $13.2 million in this segment for the quarter versus $13 million during the same period last year. We reported net sales of $51.2 million in our North American Cabinet Components segment during the second quarter of 2025 compared to $51.1 million for the same period of 2024. We estimate that volumes declined by approximately 3% and price increased by approximately 3% in this segment for the quarter. This price movement was largely related to index pricing tied to hardwood costs. Adjusted EBITDA was $3.1 million in this segment for the quarter, which compared to $3.4 million for the second quarter of 2024. The business reported net sales of $190.1 million for the second quarter of 2025. Since we didn't own this business in the second quarter of 2024, there is no comparison in the earnings release. However, we believe revenue was down approximately 2% in this segment in the second quarter of 2025 compared to the second quarter of 2024, mostly due to soft market demand in North America, which is consistent with what we saw in the legacy business. Adjusted EBITDA came in at $26.8 million for the quarter in this segment. Moving on to cash flow and the balance sheet. Cash provided by operating activities was $28.5 million for the second quarter of 2025, which compares to cash provided by operating activities of $33.1 million for the second quarter of 2024. Similar to Q1 of this year, Q2 was impacted by layering in the acquisition as the legacy business is very much a make-to-stock business and the legacy businesses very much make-to-order. Free cash flow was $13.6 million for the quarter, but keep in mind that one-time items related to integration costs and achieving the cost synergies impact free cash flow. As a reminder, to acquire in August of 2024, we borrowed a total of $770 million through a $500 million term loan and drawing $270 million on our revolver. As of April 30, 2025, our leverage ratio of net debt to last 12 months adjusted EBITDA decreased to 3.2x. The leverage ratio for our quarterly debt covenant compliance was 2.7x. This debt covenant leverage ratio excludes real estate leases that are considered finance leases under U.S. GAAP and is calculated on a pro forma basis to include last 12 months adjusted EBITDA from the acquisition, $30 million of EBITDA for the original cost synergy target related to the acquisition, less cost synergies achieved and cash only from domestic subsidiaries. The debt covenant leverage ratio would be 2.4x if calculated using the full cash and cash equivalent amount on the balance sheet as of April 30, 2025, and adjusting for the cash used to repurchase our stock during the quarter. As noted in our earnings release, based on year-to-date results, combined with our operational execution, cost synergy realization, conversations with our customers and recent demand trends, we are reaffirming net sales guidance of approximately $1.84 billion to $1.86 billion and adjusted EBITDA guidance of $270 million to $280 million for fiscal 2025. From a cadence perspective, on a consolidated basis for the third quarter of this year versus the second quarter of this year, we expect revenue to be up 8% to 10% and we expect adjusted EBITDA margin expansion of 250 to 300 basis points. Lastly, the finance and accounting teams continue to work with our external auditors on resegmenting the business, and our goal is to report in the new operating segments this year, either Q3 or Q4.

We are now ready to take questions. Our first question comes from Adam Thalhimer with Thompson Davis.

Nice quarter. Can you give a little more color on raising the synergy target from $30 million to $45 million? And I think you even said there was potential beyond that.

Yes, it's a combination of things that we've seen. Obviously, I'm very pleased about the new segments and I think even as highlighted in previous calls, that we felt once the new segments would be kind of running from an operational perspective that new opportunities for cost takeout and just being more efficient would bubble up and be able to be realized. And that's exactly what we've seen. They've been split between just more efficient in taking out head count being more streamlined in how we've built the organization as well as some additional sourcing and purchasing synergies. As I mentioned in my script, we're still a little early on new revenue synergies that will come as a result of the go-to and geographical strategy refinement. But kind of in summary, Adam, it's really just the new segments identifying and becoming very efficient in creating what we knew was going to be there. So I think that there is still some pathway going forward. Too early to tell because, again, we're fairly new into this. But again, it's just confidence on how well the teams are performing.

Okay. And then I wanted to flip the tariff issue and ask if that's actually, given your domestic manufacturing footprint, if that's actually an opportunity for you guys and if you're seeing bids related to customers looking to increase domestic sourcing?

We have. I do think it is. I think how we've structured our supply chain and all of the work that we've done that really started kind of coming out of COVID and into some of the global supply chain challenges has really benefited us. I think that, that footprint that we have that really capitalizes on serving our customers being geographically diverse. It is starting to show some benefits as it relates to, I guess, supply chain risk mitigation for our customers. We have seen some increases in quoting opportunities and have converted and been able to execute some spot purchases, more so on the cabinet segment, that's where we've seen it first because some of the cabinet market has relied a little heavily on international and Asian sourcing. So we have seen some opportunities, and I think that will continue to present itself.

Our next question comes from Julio Romero with Sidoti & Company.

This is Justin on for Julio. Can you give us a little more meat on the bone as to where in the timing portfolio have you been able to realize cost synergies faster than originally expected?

I think the main bucket for the increase versus the original expectation George mentioned is really on the procurement side. Once you get those two teams together and really start scrubbing all of that data, they just ended up being more opportunity than originally estimated. And then across what we consider the corporate bucket, which is things like finance, internal audit, HR, IT, legal, all of the above. We're seeing higher realized and potentially realized synergies out of those groups than we did originally.

Great. And then on guidance for D&A, is the $6.5 million in intangible asset amortization that was realized in 2Q a good go-forward quarterly run rate? And what do you expect for the full year D&A both on a GAAP basis and an adjusted basis?

Yes. I think so. What happened was for intangible amortization, I think 2Q is a pretty decent run rate. I think we originally guided to around $60 million for adjusted D&A for the year, which excludes intangible amortization, that's still a good number.

I'm showing no further questions at this time. I would now like to turn it back to George Wilson for closing remarks.

Thank you for joining the call today. We look forward to providing you with another update when we report our Q3 earnings in September. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.