Quanex Building Products Q1 2025 Earnings Report

Quanex Building Products EPS Results

• Actual EPS: $0.19
• Consensus EPS: -$0.06
• Beat/Miss: Beat by +$0.25
• One Year Ago EPS: N/A

Quanex Building Products Revenue Results

• Actual Revenue: $400.04 million
• Expected Revenue: $382.02 million
• Beat/Miss: Beat by +$18.03 million
• YoY Revenue Growth: N/A

Quanex Building Products Announcement Details

• Quarter: Q1 2025
• Date: 3/10/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, March 11, 2025
• Conference Call Time: 11:00AM ET

Quanex Building Products (NYSE:NX) engages in the design, manufacture and distribution of components for the window, door and building products industries in North America. The company operates through two primary segments: Window Products and Door & Building Products. Its Window Products segment supplies vinyl window profiles and related accessories, while its Door & Building Products segment offers engineered door skins, panels, siding products, specialty moldings and other exterior building components.

Within its Window Products segment, Quanex produces extrusion profiles used by window fabricators to assemble vinyl casement, double-hung, slider and picture windows. The unit also provides hardware, foam gaskets and other value-added components designed to improve energy efficiency and performance. In its Door & Building Products segment, the company supplies manufacturers of residential and light commercial doors with composite and wood-filled door skins, along with exterior cladding and trim solutions.

Headquartered in Houston, Texas, Quanex maintains a network of manufacturing plants, distribution centers and sales offices across the United States and Canada, supporting building products customers with just-in-time delivery and technical application support. Since its early beginnings as a window component supplier, the company has expanded through strategic acquisitions and internal growth to broaden its product portfolio and geographic reach. Quantitative leadership and executive details are available through the firm’s corporate filings and official communications.

Quanex Building Products Q1 2025 Earnings Call Transcript

Key Takeaways

• Quanix reported Q1 net sales of $400 million (up 67% y-o-y) and adjusted EBITDA of $38.5 million, driven by the August Time acquisition, while legacy volumes declined about 6.2%.
• The integration of Time is on track to deliver $30 million in run-rate synergies by the end of year two, with efforts underway to uncover additional cost savings and accelerate realization.
• Later this year, the company will reorganize into three global segments—Hardware Solutions, Extruded Solutions and Custom Solutions—to streamline operations, foster product innovation and drive margin improvement.
• Despite macro uncertainties from Fed rate fluctuations, potential tariffs and a harsh winter, Quanix’s localized supply chain and pricing mechanisms help mitigate risks, supporting reaffirmed full-year guidance of $1.84–1.86 billion in sales and $270–280 million in adjusted EBITDA.
• Operational highlights include record safety performance, improved service and quality metrics, and a focus on working capital and ROA, with free cash flow prioritized for debt reduction and opportunistic share repurchases.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the first quarter 2025 Quanex Building Products Corporation earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advise your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Scott Zuehlke, Senior Vice President, CFO, and Treasurer. Please go ahead.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

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.

[George Wilson, Chairman, President, and CEO at Quanex]

Thanks, Scott, and good morning to everyone joining the call. Before I begin my commentary, I want to take a moment to acknowledge Curt Stevens for his many years of dedicated service on the Quanex Board of Directors. Curt's expertise in the building product space, combined with his financial background, added immense value to our board. His leadership in chairing the audit committee for many years has been instrumental to our business. On behalf of the entire Quanex team, I want to thank Curt for his service and wish him all the best in his retirement. Turning to the first fiscal quarter of 2025, our results aligned with expectations despite significant macroeconomic uncertainties and a challenging winter weather environment in the U.S. Year-over-year improvements in both revenue and earnings were largely driven by the contributions related to the acquisition of Tyman.

[George Wilson, Chairman, President, and CEO at Quanex]

Since the acquisition closed last August, our focus has been on integrating the two companies. Our primary objectives are to achieve or exceed the expected financial synergies from the transaction and to establish an organizational structure that both supports our current business and provides a scalable platform for future growth. From a synergy perspective, I'm pleased with the progress our team has made and remain confident we will meet our publicly announced target of $30 million in run rate synergies by the end of year two. We are also working diligently to identify additional synergies and explore opportunities to accelerate their realization. We look forward to providing a more detailed update during our second quarter call. Regarding organizational design, and as outlined in our recent investor presentation, we will be resegmenting our business into three new units: Hardware Solutions, Extruded Solutions, and Custom Solutions.

[George Wilson, Chairman, President, and CEO at Quanex]

Each of these segments will have a global scope and is designed to better serve our existing customers, support new product development, explore adjacent markets, and drive margin improvement through operational excellence in the sharing of best practices. This change will involve significant work from a public reporting perspective, and our team is focused on ensuring that we can report results in these new segments as soon as practical later this year. Looking at the markets, as I mentioned earlier, our first quarter results were in line with expectations. We have returned to our typical seasonal order cadence with a relatively softer Q1 due to holidays and weather. Outside of this normal seasonality, demand has been impacted by uncertainties surrounding future Fed interest rate movements and week-to-week changes regarding potential tariffs. We believe both factors have negatively affected consumer confidence.

[George Wilson, Chairman, President, and CEO at Quanex]

Likewise, conversations with our customers reflect a general sentiment of caution regarding new projects. However, the benefit of Quanex is that we have proven our ability to respond quickly to changes in demand, both up and down. As for tariffs, the situation remains fluid and unpredictable. However, we are confident that the efforts of our supply chain team over the past three years have positioned us to localize supply in most cases, which we believe will minimize the potential impact on Quanex and our customers. Where tariffs do apply, we are actively engaging with customers on pricing mechanisms and exploring continuous operational improvements to offset their impact. These efforts, combined with our synergy progress, give us confidence in reaffirming our full-year earnings guidance. Operationally, I'm very pleased with our performance and the improvements we've already seen as part of the integration process.

[George Wilson, Chairman, President, and CEO at Quanex]

We achieved record safety performance in the first quarter, along with improvements in service and quality metrics. These gains are the results of sharing best practices between the legacy Quanex and Tyman teams, as well as the benefit of migrating to our new operating segments. Moving forward, our operational focus will remain on safety culture, employee engagement, working capital improvements, and optimizing return on net assets to maximize our cash flow generation. Regarding the use of cash flow to generate the best shareholder returns, we will focus on paying down debt and repurchasing our stock in an opportunistic manner. In summary, while short-term market headwinds persist, the Quanex team continues to perform well, and the anticipated benefits of the Tyman acquisition are coming to fruition as we expected. We look forward to continuing our integration efforts and providing updates on our progress throughout the year.

[George Wilson, Chairman, President, and CEO at Quanex]

I'll now turn the call over to Scott, who will discuss our financial results in more detail.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Thanks, George. On a consolidated basis, we reported net sales of $400 million during the first quarter of 2025, which represents an increase of approximately 67% compared to $239.2 million for the same period of 2024. The increase was primarily driven by the contribution from the Tyman acquisition that closed on August 1st, 2024. Excluding the Tyman contribution, net sales would have declined by 6.2% for the first quarter of 2025, largely due to lower volume. We reported a net loss of $14.9 million, or $0.32 per diluted share, during the three months ended January 31st, 2025, compared to net income of $6.2 million, or $0.19 per diluted share, during the three months ended January 31st, 2024.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

On an adjusted basis, net income was $9 million, or $0.19 per diluted share during the first quarter of 2025, compared to $8.4 million, or $0.25 per diluted share during the first quarter of 2024. The adjustments being made to EPS are as follows: amortization of step-up for purchase price adjustments on inventory, transaction advisory fees and reorg 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 loss, and effective tax rates. On an adjusted basis, EBITDA for the quarter essentially doubled to $38.5 million compared to $19.3 million during the same period of last year. This equates to adjusted EBITDA margin expansion of approximately 150 basis points year-over-year.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

The increase in adjusted earnings for the three months ended January 31st, 2025, was mostly attributable to the contribution from the Tyman acquisition, combined with the realization of cost synergies. Now for the results by operating segment. We generated net sales of $134.3 million in our North American fenestration segment for the first quarter of 2025, a decrease of 9.2% compared to $148 million in the first quarter of 2024. We estimate the volumes in this segment declined by approximately 8% year-over-year, with pricing up approximately 1% versus Q1 of 2024. Adjusted EBITDA was $11.6 million in this segment for the first quarter compared to $13.7 million in the first quarter of 2024. Our European fenestration segment generated revenue of $48.5 million in the first quarter, which represents a decrease of 2% compared to $49.4 million in the first quarter of 2024.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

However, after adjusting for foreign currency, revenue was basically flat. We estimate the volumes were down approximately 1% year-over-year in this segment for the quarter, with pricing up approximately 1% and a negative foreign exchange translation impact of about 2%. Adjusted EBITDA declined slightly to $9.9 million in this segment for the quarter versus $10 million during the same period of last year. This means that adjusted EBITDA margin improved by 30 basis points year-over-year in this segment. We reported net sales of $43.8 million in our North American cabinet components segment during the quarter, which represented growth of 1.6% compared to prior year. We estimate the volumes declined by approximately 3% and price increased by approximately 5% in this segment for the quarter. This price movement was largely related to index pricing tied to hardwood costs.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Adjusted EBITDA was negative $873,000 in this segment for the quarter, which compared to negative $732,000 for the first quarter of 2024. Decreased operating leverage due to soft volume was the reason for the lower profitability in this segment. Tyman business reported net sales of $175.7 million for the first quarter of 2025. Since we did not own this business in the first quarter of 2024, there is no comp in the earnings release. However, revenue was down approximately 8% in this segment in the first quarter of 2025 compared to the first quarter of 2024, mostly due to soft market demand, which is consistent with what we saw in the legacy Quanex business. Adjusted EBITDA came in at $19 million for the quarter, which yielded margin expansion compared to Q1 of 2024, driven largely by cost synergies related to closing Tyman's legacy home office in London.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Moving on to the cash flow in the balance sheet, cash used for operating activities was $12.5 million for the first quarter of 2025, which compares to cash provided by operating activities of $3.8 million for the first quarter of 2024. The first quarter was impacted by layering in the Tyman acquisition, as the legacy Tyman business is very much make-to-stock versus legacy Quanex business is very much make-to-order. Free cash flow was negative for the quarter, which isn't abnormal due to the seasonality of our business, combined with one-time items related to integration costs and achieving the cost synergies we've targeted. As a reminder, to acquire Tyman in August 2024, we borrowed a total of $770 million through a $500 million term loan A and drawing $270 million on our revolver. Since that time, we've been able to repay $65 million in debt.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

As of January 31st, 2025, the leverage ratio for our quarterly debt compliance was 2.2x. The debt covenant leverage ratio is defined in Amendment Number 1 to our Second Amended and Restated Credit Agreement, which was filed with the SEC on June 12, 2024. 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 Tyman acquisition, $30 million of EBITDA for the synergy target related to the acquisition, and cash only from domestic subsidiaries. The debt covenant leverage ratio would be 2.1x if calculated using the full cash and cash equivalence amount on the balance sheet as of January 31st, 2025.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

As noted in our earnings release, based on year-to-date results combined with our operational execution, conversations with our customers, recent demand trends, and the latest macro data, we are reaffirming net sales guidance of approximately $1.84 billion-$1.86 billion and adjusted EBITDA guidance of $270 million-$280 million for fiscal 2025. From a cadence perspective, on a consolidated basis for the second quarter of this year versus the first quarter of this year, we expect revenue to be up 9%-11%, and we expect adjusted EBITDA margin expansion of 350-400 basis points. Operator, we are now ready to take questions.

[Operator]

Thank you. At this time, we'll conduct the question-and-answer session. As a reminder to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Reuben Garner of Benchmark. Your line is now open.

[Reuben Garner, Equity Research Analyst at Benchmark]

Thank you. Good morning, guys.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Morning.

[George Wilson, Chairman, President, and CEO at Quanex]

Good morning.

[Reuben Garner, Equity Research Analyst at Benchmark]

I was hoping you could talk about the progression of margins you're expecting for the rest of the year, and specifically, Scott, on the gross line. The last two quarters kind of in the low to mid-20% range, and the guide for the year is, I believe, closer to 29%. It is a pretty big step-up coming. Is that just seasonality and timing? Can you just kind of walk us through the components to get there?

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Yeah, that has everything to do with the PPA step-up related to the acquisition, which hit in 4Q and ran off in 1Q. The rest of the year, gross margin should be jumping up meaningfully to hit that full-year guidance, improving each quarter.

[Reuben Garner, Equity Research Analyst at Benchmark]

Okay. Can you talk about the divergence you're seeing in the kind of growth rates between the cabinets business and the fenestration business in North America? Kind of went opposite directions in the quarter. Does that tell us how big of a role weather might be playing or any other kind of factors going on?

[George Wilson, Chairman, President, and CEO at Quanex]

I think the weather had a big piece to play, especially with the window and door market. A much harsher winter in most of the country, I think, did have an impact on demand in our fiscal Q1. That is why you saw a little better performance in terms of volumes in the cabinet side of the business. I also think what we had seen is that cabinet segment had been hit harder sooner, and that is kind of been a leading indicator. We always see the cabinets drop faster and sooner than the window and door markets, and they tend to lead on the improvements in those segments as well. Nothing that we have not anticipated or expected.

[Reuben Garner, Equity Research Analyst at Benchmark]

Okay. I'm going to sneak one more in, kind of a big-picture question about your confidence level and your outlook, and I guess just maybe the change in tone now versus a month ago. Are you feeling less confident in the market? And then just remind us how much market really needs to help to get you to those kind of full-year guidance-type numbers because it seems like you would need an improvement in the end market at least to get to the top-line outlook.

[George Wilson, Chairman, President, and CEO at Quanex]

Yeah. I think it goes back to what we said in the fourth quarter. I think some people were surprised on our call or questioned maybe our conservative approach, but I think we've had a realistic view of this year from day one, and nothing has changed to that. For us, yes, the back half of the year shows some improvement, but that's really based off of what we currently see and the normal seasonality of our business. We feel really good about where we're at in terms of our projections. In addition, I feel extremely confident about the work that we're doing with synergy. I think we feel very comfortable with both the revenue and our earnings guidance for the full year based on those items.

[Reuben Garner, Equity Research Analyst at Benchmark]

Great. Thanks, guys. Good luck.

[George Wilson, Chairman, President, and CEO at Quanex]

Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from Steven Ramsey of Thompson Research Group. Your line is now open.

[Steven Ramsey, Deputy Director of Research at Thompson Research Group]

Good morning. I wanted to maybe ask a follow-on question to the guidance outlook and kind of the second-half improvement that's part of that. I guess first off, you need that second-half improvement to get to that full-year level. Is there certain segments maybe that are greater drivers to get there? Then maybe secondly, just high-level, your full-year outlook maybe seems more optimistic on an order of magnitude basis maybe than the window and cabinet producers that have shared their outlook. Maybe I'm curious on those two fronts how you think about those things.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Yeah. I mean, in general, what I would say is the way we forecast the business from a low watermark in 1Q to high in 3Q and 4Q is just typical seasonality. There is nothing different that we are expecting this year than any other normalized seasonality for this year. That is what gives us some confidence that we will see an uptick in the second half just because of seasonality. Anything above that would be in addition to what we have already forecasted.

[George Wilson, Chairman, President, and CEO at Quanex]

I think to reiterate my answer to Reuben as well, I think we were more conservative when we came out with guidance in the December year-end conference call than most people were. I think our approach in December was to be very realistic about what we thought and we anticipated, and we were probably a little more conservative than others in our view of this year, and I think that is coming to fruition. For us, it is nothing that we did not anticipate. To answer your other question, Steven, I think in terms of the segments, I think we see more seasonality in the window and doors than we do in cabinets.

[George Wilson, Chairman, President, and CEO at Quanex]

I think we will tend to see more of a pickup from the Tyman piece of our business and what we would consider our NAF segment versus the European business, which is less seasonal, and our cabinet business, which has a different seasonality.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Yeah. Just one more couple of data points that we went over in the investor day, but it's probably important to reiterate. If you look at the five-year average for free cash flow and adjusted EBITDA, we typically generate about 10% of our free cash flow in the first half with the remaining 90% in the second half, and then about 40% of adjusted EBITDA in the first half with 60% in the second half. Rough numbers. I mean, it just shows you how seasonal our business really is.

[Steven Ramsey, Deputy Director of Research at Thompson Research Group]

Okay. That's great color. Thanks for sharing all that. Maybe to continue the cash flow and cash flow usage topic, your debt pay down aggressive and working nicely. You repurchased some stock in the quarter as well. I'm curious how you think about putting capital to work on each of those paths through FY25. I get you're opportunistic, but maybe share some of your nuanced perspective on how you're choosing to deploy capital into those two areas.

[George Wilson, Chairman, President, and CEO at Quanex]

Yeah. We obviously analyze it every day, every week as we go on. Just being very direct here, that I would think where we're trading at today, we feel like directing a large portion of our cash flow to repurchasing our stock at these levels absolutely becomes a priority. I think a lot of it depends on the market. We do not have any sort of 10B program, so we have limited time to be in the market. At these levels, I would say the priority will probably be share buyback versus debt repayment. Depending on cash flow, we'll evaluate that each and every week.

[Steven Ramsey, Deputy Director of Research at Thompson Research Group]

All right. Last quick one for me. Good to hear that the synergy target and timeline is intact, and you said that you would have more details on the next call. Maybe just high-level thinking about the three new segments that you will have, is any one of those maybe an outsized beneficiary of the synergies you execute on? Another way of asking, do any of the three new segments have better margin expansion potential over the next couple of years?

[George Wilson, Chairman, President, and CEO at Quanex]

We broke down our synergies really into three buckets. You had the corporate costs, which really do not benefit any sort of segment. That will be applied equally over all the segments on an allocated basis. You had the head counts that was primarily North American. The overlap between our North American businesses between Tyman and Quanex were very similar. That will be probably a little more weighted towards hardware and some to the extruded solutions. Finally, sourcing, which will be equally applied. Maybe a little heavier weighted towards hardware and then to extruded. Probably a pretty good summary would be broken down by how our revenue will be split, which was identified in that investor deck.

[Steven Ramsey, Deputy Director of Research at Thompson Research Group]

Excellent. Thank you for all the color.

[George Wilson, Chairman, President, and CEO at Quanex]

Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from Adam Thalhimer of Thompson Davis. Your line is now open.

[Adam Thalhimer, Director of Research at Thompson Davis]

Hey. Good morning, guys. Nice quarter.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Good morning.

[George Wilson, Chairman, President, and CEO at Quanex]

Good morning.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Thanks.

[George Wilson, Chairman, President, and CEO at Quanex]

Thank you.

[Adam Thalhimer, Director of Research at Thompson Davis]

If you did see an impact from tariffs, which segment would that impact mostly?

[George Wilson, Chairman, President, and CEO at Quanex]

As we look at the commodity breakdown, what I would say in our new segments, it will probably impact the hardware business a little more direct because of their metal buys in the aluminum. Again, we're protected with some of the index pricing mechanisms that we have here in the U.S. and surcharges. The wood, again, hardware index. I think it'll be balanced across all three, but maybe a little more heavily weighted to hardware.

[Adam Thalhimer, Director of Research at Thompson Davis]

Okay. George, I was hoping you could give a little more color just on the conversations with customers and kind of their macro outlook.

[George Wilson, Chairman, President, and CEO at Quanex]

Yeah. All the conversations tend to focus around consumer confidence. It goes back to the macro question. There's a lot of noise in the media, the tariff, and that changes on an everyday basis. There are unknowns on what the future costs to the end consumers are going to be in both repair and remodel and new build type of projects. I think our customers are apprehensive because there's not a lot of good visibility in what's going on. There's really no good visibility on what the Fed's going to do, nor is there a strong visibility on where the tariffs will shake out. I think customers are cautious and kind of on hold mode in terms of where they're going to go.

[George Wilson, Chairman, President, and CEO at Quanex]

As we said in our script, and it has been proven over the last few years, from a Quanex perspective, our model is built to ramp up or ramp down fairly quick. We feel good about where we are at and that we will be able to adjust well. Until some of the tariff items and consumer confidence rebounds a little bit, I think it is going to be a bumpy year as we originally anticipated and built into our guidance back in December. We are not seeing anything that we did not anticipate, but it is coming to fruition.

[Adam Thalhimer, Director of Research at Thompson Davis]

Got it. When does the buyback window open?

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Three days after earnings, so I think Thursday this week.

[Adam Thalhimer, Director of Research at Thompson Davis]

Sounds good. Thanks, guys.

[George Wilson, Chairman, President, and CEO at Quanex]

Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from Justin Mechetti of Sidoti & Company. Your line is now open.

[Justin Mechetti, Equity Research Associate at Sidoti]

Good morning. This is Justin on for Julio. Thanks for taking questions.

[George Wilson, Chairman, President, and CEO at Quanex]

Morning, Justin.

[Justin Mechetti, Equity Research Associate at Sidoti]

Sure. Good morning. In the first quarter, the Tyman adjusted EBITDA margin of 10.8% when compared to the strong European segment margin seems a bit low. Anything notable to help us understand the difference between the two? Can you give us a refresher on Tyman's historical seasonality?

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Yeah. Very similar to our historical seasonality. You have to keep in mind that about 60%-70% of Tyman is North American focused, which was one of the appeals of when we acquired them. It is not a direct read-through to our European fenestration segment.

[Justin Mechetti, Equity Research Associate at Sidoti]

Thanks. The Jackson, Georgia facility was highlighted during your investor day. Beyond increasing regional capacity, how does this facility strengthen your competitive position in the Southeast? What unique advantages do you expect it to bring?

[George Wilson, Chairman, President, and CEO at Quanex]

The decision to open the Jackson facility was phase I on being able to serve our regional customers. It absolutely capitalizes and protects our customers from freight costs to be able to serve that region. Two, it gives us an opportunity to add some additional capacity for our mixing and our compounding type of business, which will allow us to continue to grow in adjacent markets such as flashing tapes and solar products. It was a strategic decision on numerous fronts, and we look forward to being able to deliver that. It was a long-term look for that project, and we're excited about what it can potentially deliver.

[Justin Mechetti, Equity Research Associate at Sidoti]

Great. Thanks for the color there. That's all for me.

[Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex]

Thanks.

[Operator]

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

[George Wilson, Chairman, President, and CEO at Quanex]

I'd like to thank everyone for joining today, and we look forward to providing you with another update when we report our Q2 earnings in June.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• George Wilson, Chairman, President, and CEO

Analysts

• Scott Zuehlke, Senior VP, CFO, and Treasurer at Quanex
• Steven Ramsey, Deputy Director of Research at Thompson Research Group
• Adam Thalhimer, Director of Research at Thompson Davis
• Reuben Garner, Equity Research Analyst at Benchmark
• Justin Mechetti, Equity Research Associate at Sidoti