Good morning, ladies and gentlemen. Welcome to the West Fraser Timber Company Limited Fourth Quarter 2014 Results Call. During this conference call, West Fraser representatives will be making certain statements about potential future developments. These forward-looking statements are intended to provide reasonable guidance to investors, but the accuracy of these statements depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes will depend on a number of factors that could affect the ability of the company to execute its business plans, including those matters described under Risks and Uncertainties in the company's annual MD&A, which can be accessed on West Fraser's website or through SEDAR and as supplemented by the company's quarterly MD&As. Accordingly, listeners should exercise caution in relying upon forward-looking statements. I would like to turn the meeting over to Mr. Ted Seraphim, President and CEO. Please go ahead, sir.

Thank you, and good morning, everyone. Joining us today is our CFO, Larry Hughes, and a number of our senior management team. Larry will discuss our fourth quarter earnings shortly. I'd like to focus my comments on our performance in the fourth quarter, some of our key activities during 2014, and our outlook for 2015. West Fraser earned $43 million or $0.51 per share in the quarter. Adjusted earnings for the fourth quarter were $84 million or $1 per share. Adjusted EBITDA in the quarter was $157 million or 16% of sales, down $10 million from the third quarter. Our lumber business generated operating earnings of $90 million, down $11 million from the third quarter. Results were impacted by reduced shipments as well as lower production. Fewer operating days and scheduled downtimes due to capital projects resulted in reduced production. Our panels business generated operating earnings of $22 million, down $3 million from the third quarter, primarily due to lower plywood pricing. Our pulp and paper business generated operating earnings of $3 million, up $5 million from the third quarter. Our results continue to disappoint us and are primarily the result of continued operational and reliability issues that at our Hinton pulp mill. For the year, the company achieved record sales and adjusted EBITDA of $3.856 billion and $621 million respectively. It was a very busy year with respect to our capital spending program. We invested in excess of $400 million in capital expenditures which is also a record for the company. We had a heavy capital spending program for the last few years. This has resulted -- this is -- sorry, this has required significant effort from our employees across the company; and as you can imagine has disrupted operations at these active facilities. 2015 will see us complete a number of large projects. Although our spending will be lower this year, our three-year total from 2013 through to the end of this year will be approximately $1 billion. We are starting to see the benefits of this extensive capital program, and this will position us very well to provide industry-leading margins. We also acquired two sawmills in Arkansas and one in Alberta, which have been well integrated into the company. The housing recovery in the U.S. continues to show positive momentum, housing starts were up by approximately 80,000 units to 1 million for the year. Demand from China continues to remain strong. While we expect some volatility in 2015 lumber markets, our outlook for our building products business continues to be optimistic. Pulp markets are expected to be under continued pressure, as new capacity ramps up this year. With this, I'll turn the call over to Larry Hughes.

Thanks, Ted, and thanks everyone joining us on the call today. We do appreciate your interest in West Fraser. Following Canadian securities disclosure guidelines, we have introduced in our current MD&A, the term adjusted EBITDA. Please refer to the advisory contained in our MD&A concerning the use of various non-IFRS terms. These are described in various tables which begin on page 22 of our MD&A. Also note that all per-share amounts referred to reflect or have been adjusted to reflect the stock divided that was completed in early 2014. As Ted indicated, for the fourth quarter, we reported earnings of $43 million or $0.51 per share on page 10 of our MD&A. We identified various non-operational items which we adjust from earnings in order to more clearly reflect results from operations. The result, which we refer to as adjusted earnings, was $84 million for the fourth quarter or $1 adjusted earnings per share. This compares with $1.12 for the third quarter of 2014 and $0.58 for the fourth quarter of 2013. So, on an adjusted basis, this quarter was similar to the previous quarter and both were much stronger than the fourth quarter of 2013. On a segmented basis, operating earnings from our lumber segment declined compared to the previous quarter due to reduced production and shipments as we completed a major capital project at our 100 Mile post sawmill and had fewer operating days. We also experienced a weakening of prices for some grades and dimensions of lumber and log cost increased, particularly in British, Columbia. We should note that our adjusted EBITDA margin for lumber remains steady at 18% quarter-over-quarter compared to a 15% margin in the fourth quarter of 2013. Operating earnings in lumber improved compared to the fourth quarter of 2013, reflecting improved Southern Yellow Pine…

Thank you, Larry. And now we're pleased to open it up for questions.

Thank you. [Operator Instructions] Our first question is from Mark Wilde from BMO Capital Markets. Please go ahead.

Good morning, Ted. Good morning, Larry.

Good morning, Mark.

Hi, Mark.

Can you give us some sense of what you think the drag from the Hinton was in the fourth quarter? And then, any kind of residual carry over at the first quarter, how much of that will you get back in the first quarter?

Well, yeah. We don't comment on specific results for anyone our mills, Mark. But a fact that we've recognized this as an issue and it's been an issue for us for really the last couple of years. We're definitely not through the woods yet. We have brought in some significant help in that mill. We've moved our key folks from some of our other operations into that mill. It is probably our number one -- it is not probably, it is our number one operational focus for the company this year. So we're still having issues there, but if we -- what I'm feeling better about is we've got the right people in place. And I'm optimistic that we're going to start to see our results improved. I would say that at this point in the first quarter I don't really have much to add in terms of our results over the fourth quarter.

Ted, could you give us a little sense of kind of what the nature of the issues is.

Well, Mark, I've talked about this a few times in the past. Fundamentally, the mill is well capitalized. We have got a number of reliability issues. And part of that has to do with the fact that in Alberta we have seen a significant amount of our employees over the last number of years joining along the other industry. That appears to be turning around for us as you can imagine.

Yeah.

And so, a lot of it really comes down to people. We've got good people there, but just we had turnover and that appears to be coming to an end, and we've been able to attract and bring some good people into the mill. So it's a good mill. And we'd like you and any of the other analysts come visit upon there. But once you see it you'll realize that it's a good mill, we should just be able to operate it better. It really comes down to people.

Yeah. Second issue, can you just talk a little bit about what you're seeing from the Asian markets right now? And I guess I really have kind of two elements to that question. One is just your export volumes into Asia, and then the other is how you see kind of any ripples from weaker west coast log exports going into Asia.

Yeah. I think, first of all, we've been saying this again for quite some time. While overall shipments from Canada to Asia were appear to be down last year for longer hours actually continue to improve, and we continue to have a strong order volume going into this year. So from our perspective, we have been very committed to that market and continue to see good volumes. In terms of our overall volumes, I think Asia accounts for -- if I'm not mistaken -- about 30% of our Canadian lumber shipments. And it continues to -- I mean it's basically been operating on that basis for the last couple of years.

Okay. All right.

In terms of the log exports, I mean that means that there's so many different factors that affect demand out of -- and I think you're probably speaking more about China. There's so many factors that you look at. And then -- but really for us, we have a really strong quarter of customers who seem to be very consistent with us every quarter. So from a West Fraser standpoint, we're quite pleased with our business segment.

Okay. All right. And then the last question I had, Ted. Just any visibility on your log costs as we move into the first quarter, both in Canada and then in the Southern U.S.

Well, I think the only thing specifically is that the BC stumpage was not the $1 dollar on January 1 and $1 per cubic meter. And then just overall I mean we continue to see similar price escalation this year in our key markets for log costs as we did last year. So our expectation for this year is really more the same.

Yeah.

Well, it's still early in the year, but we kind of expect things to be quick from the last year in terms of trend.

Okay. Very good. I'll turn it over.

Thanks Mark.

Thank you. The following question is from Sean Steuart from TD Securities. Please go ahead.

Thanks. Good morning, guys. A couple of questions. On the pulp and paper side, you addressed the Hinton issue. I'm wondering also on the cost side, if you guys can quantify rising chip cost, how much that might have affected margins and the segment quarter-over-quarter, year-over-year; and also the lower power sales in Alberta. Don't know if you can put some numbers around those issues.

Well, you know, Sean, we don't really disclose -- we don't really disclose those numbers. The chip price in -- it's really driven by the price, the NBSK price. In our company our whole life chip percentage is quite low. I don't know the -- I should know the exact amount, but I'm going to say it's 5%, 6%, 7%, so it's quite a low amount. So really comes down to chip price from those which is type of NBSK price.

I guess generally speaking, it's safe to say that the Hinton productivity issues were the bigger drag on margins.

Yeah. I've to say that is that the primary issue -- when I look at the operations of our other three mills and two other -- other two mills and our two joint venture mills, so the other four mills in total. We're quite pleased with the performance of those mills. So it really comes down to Hinton. That is, as I said earlier, it's our primary focus, not just for our pulp and paper business but for the whole company. So yes, it's had a serious impact, no question.

Okay. And on the top line for pulp and paper, your place realizations came off a little bit this quarter on a sequential basis. And we're bit surprised by that given the weaker Canadian dollar. Can you give us some context on I guess relative discount levels for pulp and participation in spot markets, was that up this quarter? I'm just trying to reconcile some of the weakness towards seeing price realizations in Q4.

You know, it began. It's also -- you've got to recognize. You got our BCTMP business as well. And we also saw lower electricity still as well as for it. So it's a variety of different issues. So nothing materially would have changed in terms of our discounts on NBSK. So it's really punched down to our -- but we did see lower BCTMP processes as well in the fourth quarter. It's really a combination of really slightly weaker BCTMP mark and lower electricity sales.

Okay. So all the electricity sales are in the top line in that segment, is that correct?

Yes, that's correct. Yes.

Okay. That's all I have for now. Thanks guys.

Thanks very much.

Thank you. The following question is from Daryl Swetlishoff from Raymond James. Please go ahead.

Thanks. Good morning, guys. A couple of questions, starting on the capital spend. Ted, you've been running up to double normalized levels for a while now guiding to $300 million in 2015. Can you see a point in the future where you simply run out of projects that meet your hurdle rates? And when will we get back to kind of normalized capital spend?

Well, I think, first of all, I mean, we'd have a lot of catch-up to do. And we -- again, we have a lot of energy projects and a number of other things. We continue to look for opportunities to scope, to spend capital for payback projects. I mean we've got a very strong balance sheet. We continue to want to look at ways of driving and increasing our margins. So for us to say that we'll get back to normalized spending in 2016, I felt that will be the case, but our normalized CapEx, as Rodger and Larry said many times, is $300 million plus or minus $25 million. But we're going to continue to look for some good projects for this company. And again, given our low cost of capital, we're going to potentially look at hurdle rates. In the past we were looking at Q3 for payback on longer projects. We may challenge our guys to look at projects with slightly longer term paybacks, but still high-double-digit returns. So I hope that answers your question.

Yes. That does, Ted. Thank you. Now just looking at the energy projects that you mentioned, are you satisfied with returns on the strategic capital you're deploying there in energy? And secondly, does the drop in energy pricing change in your investment criteria there?

I think that's -- we can both in the short-term and long-term. When we looked at these projects and we really identified about $250 million of projects with, and I think we've said five-year-type paybacks. Over half of those projects are locked in, in terms of BC Hydro grade, so over half the cap -- much more -- over half the capital spending on that. So we're very pleased with those projects, particularly with energy prices going down. Some of the other projects like the ones in Alberta, the Alberta Newsprint plant and the Slave Lake plant, there are benefits of those plants other than the price of energy. There are significant benefits on transmission savings. But I think in the short-term we'll see lower returns on those. But again, those are projects that we built for the long-term, so we're still very pleased with them. And they are a very good hedge for us against energy prices. As we look at future projects, as we look at today, there aren't that many opportunities in British, Columbia to sell power to the province. So we don't see a lot of projects in front of us today, but continue to look for them. But I think the environment is different today for new projects than it was, say, two years ago for sure.

Okay. Thanks Ted. I'll turn it over.

Okay. Thanks. Thanks Daryl.

Thank you. The following question is from Stephen Atkinson from Dundee Capital Markets. Please go ahead.

Thank you. Good morning. Larry or Ted, you spoke about projects that are coming on. Can you give me the status of where you are on your energy projects, like which ones are running full and which ones do we kind of look forward to benefit us.

Sure. So probably Michelin, but our care group bodes in started up a few years ago, that BC Hydro contract. Our two ORCs at [indiscernible] are starting up late first quarter, early second quarter. And then our Slave Lake biogas plant has been commissioned, so we're in the start up phase. So I think we should expect sort of full performance out of that sometimes second half of this year. And finally, Alberta Newsprint Energy plant started up last year. So that's -- so really by the middle of this year will be very much complete.

Okay. So that can you remind me what's the total payments you were hoping to get from all these projects.

So, in the range of $45 million of EBITDA.

Okay.

Yeah.

Okay. And second question, in terms of your run rate, like when I look at the shipments, let's say, out of BC, they're down in number from 2013. And so, just looking at where you -- what would be your run rate in terms of capacity now versus what you produced in '14.

Yeah. I think what you meant was our run rate on SPF, is that correct?

Yeah, yeah. Sorry, yeah, on the lumber…

In Alberta.

Yeah. Yeah that's what I meant with SPF.

And so, we were down about 100 million feet from 2013 to 2014, a big part of that was the 100 Mile project. We did shut Houston down, but on the other hand, we scrammed up debts we bought High Prairie. So we expect our run rate for SPF shipments overall to be slightly higher than this year than last year.

Okay. So it's your 3.476 was the production of 3.54, say, shipments than I can assume relatively flat, or should I add something for 100 Mile house?

Yeah. I think you can add -- may be what we should do is give Rodger a call in the media who could fix it after the call. But I think we're looking out for our Canadian lumber shipments is probably a 7% or 8% increase over last year, something like that.

Okay. Well, that's good.

5% to 7% -- 5% to 7% increase over the last year.

Okay, okay. And in terms of where you -- in terms of the U.S. dollar play, that is my question one, but you produced $1.8 billion, would your run rate now be higher than that?

We expect to produce about 15% more than that this year. I mean that's where we lost the two mills in Arkansas first quarter and second quarter last year. And we are ramping up production at a number of mills because of lot of our major capital is coming to an end mid this year. So we expect to be up by $250 million plus port fee this year over last year.

Okay. Well, that's good. And then, finally on the continues kilns, I remember I think you have 11 or 12 that you're bringing on-stream. Where are you in that process?

We still have number of continuous kilns that we'll be bringing on this year. I think by the end of the year we'll be close to 20 continues kilns in U.S. and we've got two in Canada as well. And the two kilns in Canada are running quite well; one is at Smithers and the other one is at Hinton. So we're very pleased with our continues kilns.

And I think you're going to be putting them in older mills, will you?

Well, in the U.S. we have. I can't really speak for Canada, but in the U.S. we should with may be one or two exceptions have continuous kilns throughout the company by the end of the year in the U.S.

Yeah. That's great. Thank you.

Okay. Thanks Steven.

Thank you. The following question is from Mark Kennedy from CIBC. Please go ahead.

All right. Good morning, Ted and Larry. First question, just coming back to the CapEx spending this year, the $300 million, is there any sort of major mill rebuilds in that, or is it just finishing off a number of different projects?

Yeah. Its primarily finishing off some kind of two plants in the U.S. may wholesale as we're starting up I think in the second quarter. I think we're planning obviously to starting up right now. And the rest of it is really smaller projects, kilns and other upgrades. So we don't have any major projects that we're starting up this year.

Right. And in terms of all these sawmill rebuild you've done over the last 2.5 years here. Do you have like a tracking mechanism to see if you're getting the productivity of your results out of them, and how that's going so far?

Yeah. Well, first of all, the way our capital program works in this company before we have to get it work capitally we do put -- capitalize of all our projects, all our major projects and so we are very good at identifying the paybacks. And as we said a couple of times, we're quite pleased with what we've been seeing in our projects. We're still early in the ramp up on some projects, some are complete and running well, but we've been very pleased with our -- with the results that we're starting to see out of our capital spending program.

Okay. Thanks for that. And then just in terms of the market outlook here in the U.S., I mean we hear stories that the distribution chain is probably abnormal if not may be just slightly below normal levels of inventories. What are you hearing from your customers, and with this severe weather we're seeing in the Midwest and northeast going to have a bit of a drag on the first quarter here now.

Well, I think we're just starting to see the impact of the weather now. Up until just recently the first quarter was much better than the first quarter of last year. From our perspective, we haven't had any really serious significant issue as we did in the first quarter last year. So I expect that overall this quarter, from a shipping standpoint, will look stronger than the same time in 2014.

Okay. All right. I think that's it for me. Thanks.

Thanks Mark.

Thank you. [Operator Instructions] Following question is from Paul Quinn from RBC Capital Markets. Please go ahead.

Yeah. Thanks very much. Hi guys, I've got on the call late, so you may have covered this, but I'll ask these questions anyway, and hopefully you can give me some pretty decent answers. But Larry, first question is on Hinton. And I think I asked this last quarter, but it seems like the effect of the operational issues is more than you're sort of experiencing at the end of October on the Q3 call. Is that fair to say? And may be if you could give us only an idea on what the expanded management oversight means and what external expertise you've brought in.

Okay. Thanks Paul. Yes, I've been asked about this by a few folks, but really and certainly there has to be a better imperative, but it is our number one operational focus. We've had reliability issues. I mentioned we had fair amount of turnover there over the last couple of years. That appears to be changing as we look towards the end of the third quarter and the fourth quarter. We've been able to bring a lot of good people on Board and I think the tone on the oil and gas industry in Alberta has really been provided stability. So in terms of what we've done, we've brought in some really strong outsider expertise, but we've also moved somewhere our key folks in some of our other executive roles for example our mill manager [indiscernible] is now the Operations Manager. I don't want to go in too much detail about individuals in the call like this, but we're very pleased with what he is doing there and we've made some other senior level changes there. So all I can say is these have been two very difficult years for us and we know we had good operations in the past. We know we can get it back there. The mill is well capitalized. So it's really about having the right people in the right roles and making sure we meet the turnover.

Okay. And then just on that capital projects, I seem to recall that, that Fraser Lake in Chetwynd biomass projects were supposed to be up I think by the end of last year in Q1 and this year it seems like they've been pushed out a couple of quarters. Is that fair in the mill?

Yes, it's been pushed up really a quarter each. We're in the process of starting up -- actually we are already been producing power at Fraser Lake and we expect that to be fully ramped up late this quarter or early next quarter. So we're already starting to produce power in Chetwynd and will startup I believe early second quarter. So they're each maybe a quarter behind.

Okay. And then I think last year at this time you probably had I seem to recall that Smithers rebuild on the finding process, where is that sitting right now?

We've had a lot of capital behind this company and so we have -- we've been cleared on 100 Mile, sawmill rebuild that's ramping up quite nicely and we're still working on the Smithers project. We haven't finalized that one at this point yet.

Okay. And then just lastly, just the market outlook and what you're seeing in China, are you guys experiencing sort of a shift in mix up to higher grade lumber and what's the outlook in sort of the volume in China for '15?

Okay. I'll answer your second question first and I think we've been saying this quite a while. We're seeing the trend in China, demand overall from China is a little bit lower in 2014 than 2013, but our business was very stable from quarter to quarter and actually improved from 2013 to 2014. As I mentioned on the call, early we got a very strong quarter with customers and in terms of the grade mix and by the way, our outlook is still very positive for our business in China. And in terms of mix, I wouldn't say it's a radical shift. It's more of a gradual shift. We're seeing somewhat more high grade, but we're still -- we still have a significant low grade position there, but as our mix shifts are customers resisting more that I guess.

Okay. And then just lastly, what's your outlook for Japan? Did you go into any detail on that and is that aligned with some more alliance with China as we expect more slowdown there?

I've not spoken about that yet, but I think in terms of Japan, volume is a little bit down from -- was a little bit down last year from the year before we expect it to be down a little bit this year from last year, but still a very -- still a very good market for West Fraser.

Great. That's all I had. Thanks guys.

Yes, thanks Paul.

Thank you. The next question is from Mark Kennedy from CIBC. Please go ahead.

Yes, just one quick follow-up, I don't if Chris is there or not, but just what we're seeing on lumber price here where the cash market is probably off $20 or $25 so far this quarter, would you attribute that all to exchange rate movements as opposed to any demand issues?

Well Chris, are you on the line?

Yes, I am here Ed, yes Mark, I don't think so. I think what we're seeing right now, we look at all the economic indicators in the U.S. and they're pretty positive, but it is a pretty harsh winter there right now and it goes right down into the South. So I think that's really the effect more than FX on the business.

Okay. All right. That was it for me, thanks.

Thank you. We have no further questions. I'll turn the meeting back over to Mr. Ed Seraphim.

Well thanks very much and we'll talk to you at the end of the first quarter. Thanks very much.