Quanex Building Products Corporation Q1 FY2026 earnings call

• George Wilson thanked Susan Davis for her service. - Market conditions were soft in Q1, with the first quarter being the most challenging volume-wise due to seasonality, holidays, and winter weather. Broader macroeconomic and market challenges included end consumer confidence issues, though inflation was stabilizing and rate cuts expected. - Hardware solution segment focused on stabilizing operational performance and strengthening the commercial organization, with the Monterrey, Mexico hardware facility issue now stable. - Extruded solution segment focused on new product development, adjacent market evaluation, and relaunching/repositioning Schlegel-Seals product lines. - Custom solution segment advanced initiatives for growth, including driving operational efficiencies in cabinet components, optimizing operating methods in access solutions, and focusing on new products/chemistry in mixing and compounding. - Corporate functions' newly created commercial and operational excellence teams are working on new market development, global pricing strategies, logistics/sourcing, ERP rationalization, and AI-led process improvements. - Capital allocation focus on maintaining a healthy balance sheet via disciplined debt reduction and pursuing organic initiatives and targeted small acquisitions

On a consolidated basis, net sales were $409.1 million in Q1 2026, up ~2.3% from $400 million in Q1 2025. Net loss was $4.1 million ($0.09 per diluted share) in Q1 2026 vs net loss of $14.9 million ($0.32 per diluted share) in Q1 2025. Adjusted net loss was $0.3 million ($0.01 per diluted share) in Q1 2026 vs net income of $9 million ($0.19 per diluted share) in Q1 2025. Adjusted EBITDA was $27.4 million in Q1 2026 vs $38.5 million in Q1 2025. For operating segments: Hardware solution segment had net sales of $189.1 million in Q1 2026, up 2.4% from $184.7 million in Q1 2025. Adjusted EBITDA was $4.5 million in Q1 2026 vs $8.2 million in Q1 2025. Extruded solution segment had revenue of $139.8 million in Q1 2026, essentially flat with $139.6 million in Q1 2025. Adjusted EBITDA was $20.9 million in Q1 2026 vs $24 million in Q1 2025. Custom solution segment had net sales of $89.1 million in Q1 2026, up 4.8% from prior year. Adjusted EBITDA was $4.6 million in Q1 2026 vs $6.3 million in Q1 2025

• Consolidated net sales for fiscal 2026 estimated at $1.84 billion to $1.87 billion, adjusted EBITDA expected ~$240 million to $245 million. - Full-year 2026 assumptions: gross margin 28 - 28.5%, SG&A $295 million to $300 million, DNA $105 million to $110 million, adjusted DNA (excluding intangible amortization) $65 million to $70 million, interest expense $50 million, tax rate ~24%, CapEx $70 million to $75 million, free cash flow ~$100 million. - Q2 2026 consolidated revenue expected up 12 - 14% q-o-q, adjusted EBITDA margin expected up 500 - 550 basis points q-o-q

• Soft market conditions. - Global macroeconomic environment impacts. - End consumer confidence issues. - Inflationary pressures, labor costs, and some raw material costs still have effects, though moderating, with energy prices rising. - Geopolitical tensions, especially in the Middle East, impacting customer demand, raw materials pricing, and shipping rates for international hardware business

• Q: Break out extruded solution segment margin improvement.

A: IG Spacer and Linear vinyl profile in the UK are profitable products. The operating model in the extruded solution segment has larger more levered plants with less sites, driving margin. Resegmenting gives investor clearer view of product line contributions. - Q: Custom solutions segment revenue growth driver.

A: Cabinet components and wood components business secured new market share due to insourcing from overseas, team showing value by providing wide array of products just in time, minimizing customer working capital needs. - Q: Builder Show takeaways.

A: Show was well attended, there's guarded optimism with many moving pieces like geopolitical issues, political climate, but long-term view on housing market optimism exists with pent-up demand. - Q: 2H 2026 margin expansion cadence.

A: The issue at the Monterrey hardware plant impacted EBITDA in 2H 2025 by ~$13 million, now plant is stable so no such impact in 2H 2026, driving margin expansion, mostly in hardware segment. - Q: Cash conversion cycle and debt paydown.

A: Historically, legacy Time had double cash conversion cycle of legacy Quantix. Focus on improving cash conversion cycle over next 2 - 3 years, with multiple projects identified. Debt paydown is priority to get net leverage ratio closer to 2.0 times or below in coming years. - Q: Spacers growth drivers and bundling.

A: Spacers growth driven by energy cost-related demand for higher thermal performing windows as codes change. Bundling slow due to macro backdrop and need to get house in order operationally before offering incentives to customers. - Q: Cabinet wood components strategic value.

A: Happy with segment's performance, every segment is potentially for sale, but focus is on driving segments to perform best for shareholder value