Good morning, ladies and gentlemen, and welcome to the West Fraser Q3 2017 Results Conference Call. At this time all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator instructions]. This call is being recorded on Tuesday October 24 2017. 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 now like to turn the conference over to Ted Seraphim, President and CEO. Please go ahead.

Thank you very much and thanks to everyone joining us today on the call. I am joined by our CFO, Chris Virostek and a number of our Vice Presidents. This was definitely one of the most challenging yet rewarding] quarters in sometime for our company and our employees. Our employees in the BC Interior face fires that impacted our operations, communities and their families for a significant portion of this summer. I can’t express how proud I am of them and how they selflessly overcame those challenges. I am delighted with our acquisition of Gilman building products and we are excited about how quickly we have been able to integrate them into the West Fraser family. So once again, we are very delighted with the acquisition. We speak a lot about the culture of our employees at West Fraser and I can say as a cultural fit with our new employees is extraordinarily strong. This culture will go a long way in our continued efforts to build on our base as a leading lumber producer in the south. The softer lumber dispute has also been taken significant time and effort from many of our employees, as we were mandatory responded on both CVD and ADD investigations. During our previous quarterly calls this year, we shared our views regarding the fact that CVD and ADDs were completely unwarranted and wholly without merit. We understand the behavior of the U.S. Lumber collision and a seamless playout a number of times before. We shared that in a long run, their efforts are damaging to U.S. home builders and home buyers. Based on the reaction of the U.S. lumber market today this is very clear as strong demand and supply fundamentals have seen the duties passed along to consumers. I want to reiterate that at West Fraser our preference continues to be to find a durable long-term solution. And as such we are prepare to be patient, as we are confident that same arguments from the collation of a rejected in previous rounds of litigation will be rejected again. I can’t stress enough the appreciation we have for the support of our prudential governments in D.C. and Alberta and the Canadian government that work tirelessly to find a solution to this dispute. And with that I’ll pass the call over Chris.

Thanks Ted. Our third quarter was affected by a number of events, starting with the wildfires in BC, which curtailed some firewood and lumber production for a period of time. While we have restored operations at the mills, we are still working on reaching pre-interruption production levels, due to log supply constraints in certain areas. We are working with the province to understand the impact on long-term log supply but as of yet, it is too early to gauge any impacts. Salvage operations to process burnt timber are underway and it is normal for us to be processing some element of burnt timber every year. Towards the end of the quarter, two hurricanes crossed through the vicinity of our operating areas in the US south. Our team has made preparations in advance to secure and protect our mills, and fortunately we did not sustain any significant damage to our operations and have resume normal operations. We undertook a major maintenance shut down at our Hinton and NBSK mill at the end of the quarter and with three years between shutdowns we plan for a significant amount of work. There were some unexpected delays in contractor availability and some additional repairs that we elected to proceed with once we were underway which extended the shutdown by a few days into the fourth quarter. While the period of restart following the shutdown has been longer and more difficult than expected, we are encouraged by the fact that the mill has posted multiple production records over the last 12 months going into the shutdown with new daily, weekly and monthly production records all established over the past 12 months. Since the last shutdown in 2014, through focused efforts of our team, we’ve increased the average daily production at Hinton by nearly 200 tons…

Thanks very much, Chris. I think we will just open it up for questions, so operator we are ready for any questions.

Thank you, ladies and gentlemen, we will now begin the question-and-answer session. [Operator instructions]. And your first question is from Hamir Patel, from CIBC Capital Markets. Hamir please go ahead.

Ted it's been I guess two months now since you acquired Gilman, based on what you have seen so far, how are you feeling about that $10 million synergy target that you initially set?

Well that shows he is down there last week and maybe I’ll just give you some broad comments about Gilman before answer your question. First of all, tremendous workforce, such as very strong saw milling culture and this we believe will be a tremendous fit for us and as I kept walking through the mills I kept thinking you can’t buy culture and I don’t want to overstate how important that’s been the success of our company and I think it's going to be a great fit. In terms of the synergy target, it was a very modest conservative number, we do expect it to be more than that, they are doing a lot of things that we’re going to learn from and obviously there is lots of things that we do well. So, it’s a pretty conservative number and my expectation is it will be larger than that.

Thanks, that’s helpful. And maybe a question for Chris. How should we think about CapEx in 2018 and how much of that would you expect to be associated with Gilman?

So, we are in the process of finalizing our view on 2018 right now, with respect to specific capital projects, but we would anticipate our CapEx for 2018 to be in the range of $300 million to $350 million.

And in terms of specifics around Gilman and others, it's not something we probably get in at this time, but I would say 40% or more of our spending on CapEx would probably be in the U.S. next year, so somewhere in that range and Gilman will be a part of that.

Great. I think and just final question I had on lumber markets. Just curious what you are seeing in Asia, how your volumes to China have been trending and what sort of are their growth or perhaps declining might be expecting for the year as a whole and into 2018?

Chris McIver is with us so I think he’ll be happy to answer your question.

Good morning Hamir. I would say generally Asia has been surprisingly strong, China in particular is continued along, we’re putting as much volume there as we want to, we are holding them pretty steady right there. Japan is very good, both with pricing and demand and then Korea actually is a growing market for us as well. So, I think our position in Asia, is above where we want to be and its fairly significant but we’re sort of measured as to how much product we put there.

Thank you. Your next question is from Sean Stuart, from TD. Sean please go ahead.

Couple of questions. Just with respect to the Hinton shut and restart. I gather from f your comments the restart has been a little rockier than expected. And I guess I’m just trying to gauge the earnings impact that the shut had in Q3 and what we should expect for a Q4 impact. Just trying to gauge how the spread is across those quarters?

Well, I think the first comment I do want to make is we get a lot of questions about Hinton in every quarter and I’m happy to answer them but we have 47 mills and we’ve got challenges at a number of our mills and it’s unfortunate for our folks at Hinton that one spends at all the time. It was a tough shutdown and as Chris mentioned in his comments, we are still making a lot of progress there. In terms of the impact, the financial impact of the shutdown quarter-on-quarter, I kind of would like to leave that to Chris to answer that, but it’s probably in the area of $10 million or $15 million something like that.

Yeah. I think that’s reasonable. When you consider the maintenance cost and the foregone production.

So that’s $10 million to $15 million in the third quarter or that’s the effect you expect that on fourth quarter?

In the fourth quarter.

Okay. Second question I had was on Canadian plywood markets, huge earnings pricing through the third quarter and I’m wondering Ted if you can give a little context on how much to that you think was tied to the fire season in Western Canada. And how much was just strong demand and then any context you can provide on how markets are trending in the fourth quarter?

Yeah. Good morning, Sean. I think there are a whole bunch of factors, certainly fires and logs supply were a major impetus to get the things going also the hurricanes down sought, brought a lot of demand that was coming up towards Canada was sent down to the US. And then Canadian markets have been very strong, so you put all together and we had a pretty good run. Now, saying that prices have come off substantially as they went up substantially that kind of getting back to what I would say more normalized level through this time a year, still strong but certainly have come off in a fairly big chunk. And we think we’ll start to see them sort of stabilize around where they are now, I mean it’s pretty confusing for bars right now because they around $150 to $200 then come off $100, $125 or so. So, we expected -- you’re going to see more normalized pricing for the next period.

Thank you. Your next question is from Paul Quinn from RBC Capital Markets. Paul, please go ahead.

Hey, yesterday I guess one of your log suppliers announced an acquisition or a merger. Just wondering if that has any effect on the mills that you got down there in terms of supply concerns or any kind of hint starting to see some kind of log inflation on the cost side?

Well, I think it’s a bit too early to tell, but we have a very good relationship with [indiscernible]. And so, one downs were very positive.

Are you buying many logs from Delta?

No. We’ve bought from [indiscernible] and we have a very good relationship with them.

All right. And then maybe Ted you can put on a previous hat, have as a pulp sales guy and explain to what the heck's going on with pulp markets globally here?

Obviously, it’s a lot stronger since I got out of pulp, but in all seriousness, we were surprised by it, Chris McIver would just answered a question on the plywood prices, let's be honest, we were surprised about that, to the upside, but when you look at NBSK prices are basically about $230 in China since July and BCTMP prices are probably in the order of $150 or more. It really is quite -- is really tells you how important China is and we note some of the startups the new capacity have been a little bit slower than I guess people anticipated but it has been very, very strong and we are sold out very far into towards the end of this year and so, I can’t really forecast where markets are going in 2018. I think all analysts, all companies probably if you asked us six months ago, we would have expected a much more challenging second half of the year, but I think since China has, on paper business is strong, but they also have shutdown more pulp mills and then also this move to significantly reducing importation recycle fiber I think has had a huge impact on the demand for virgin fiber. So, not anything that anybody could have predicted but definitely shows you how tight the market is.

Okay, thanks for that, I don’t feel as bad now on my forecast.

We don’t mind being surprised to the upside.

Maybe just a question on softwood lumber. When you asked most companies, if the government to government discussions continue. My question is are they really continuing, is there any progress especially given so what we seen on after?

Well I know that the of [Minister of Treatment] continues to have discussions with the U.S. I guess the real question at the end of the day here is the collation ultimately is the decision maker at least at this point in time in the U.S. and they haven’t shown a willingness to effectively negotiate. So, I think in terms of getting a settlement I think as all you are seeing I think in the short term I think we would not be optimistic about selling in the short term and I don’t think NAFTA helps at all in that regard at this point. And frankly given that we have been able to pass along most of the duties, I think patience on the Canadian side will be approaching the long run.

Thank you. Your next question is from Mark Wilde from BMO Capital Markets. Mark please go ahead.

Just to start off, we have had a couple of announcements of new Greenfield saw mills, or a perspective Greenfield saw mills down in the Southern U.S. in the last, I don’t know six weeks here. Would you guys have a Greenfield in the south?

Well I think it comes back to our overall strategy in the South and is what we have done over last five years is we acquired I guess now eight saw mills, so that’s one part of our focus, the primary focus that we have had is improving the performance and investing capital, improve the performance of our base. And so that still is going to be our primary focus. I think in terms of looking at Greenfield, I’m not surprise that we’re seeing announcements of a few Greenfield projects, and we may at some point in time look at Greenfield, but fundamentally if we are going to look at a new site not only do we take in account the cost of the building the sawmill we take into account what impact does that have on log cost, can we find a good home for half that log, the chips and the hog and the [indiscernible] can we build a good workforce. And so those are much greater challenges than spending the capital that we spent have been able to increase our production by 400 million feet with our legacy mills. We’ve been able to reduce cost, improve grade, create much better working conditions and that’s going to continue to be our focus, we do want to increase our production and I think I said on a previous call that with our current footprint we probably expect over the next four or five years to increase it around 15%. And so that will be our primary focus, but that discipline we won’t look at Greenfield, we just haven’t seen anything to date that is more compelling than we’re currently doing with our capital program.

Okay. All right. It’s a good answer. I’m also curious. I think you’ve talked about a number of I think like $150 million to $200 million going into Gilman over the next few years. I wonder if that’s still a good ballpark number, and if you can give us some sense of the types of projects that that would go into?

Well, I think that number is a good number over the next few years, it still a bit early here -- I’m not sure some Clarence is on the line, if he is he could probably go into a bit more detail. But ultimately, I won’t go into the projects, but I’ll tell you where our focus will be. I mean our focus will be we see a huge opportunity to improve log recovery there. Log recovery, the tons per thousand board feet at our US mills we get a lot more recovery out of the tunnel wood and the Gilman Mills doing that different surprises because they haven’t been able to spend much capital. So, I think that would be number one, I think number two would be grade, number three would be the lower cost. So, what we have done it was for instance over the last number of years we’ve put in continuous kilns, we’ve done planner upgrades and then we’ve done some optimizations. And I think it will be somewhat like that at Gilman. We’re also going to look at how we expand that footprint as well. I think it still early gauge. The other thing I do want to say though is -- as we walk, as our folks have been through the mills numerous more times than I have been, what you really do see is that you see a business that’s done very well with the capital they have. So, they desire capital and we’re pretty exciting about spending it there, but again I think it’s going to be log recovery which will help our log cost. It will be great improvement, which will be through better driving through planner upgrades and then obviously we’ll be looking at how do we get more production through each of those mills.

Okay. And just two final ones. One, just with the continuing rapid decline in Newsprint, can you talk about how you think about that in the context of Alberta Newsprint, I know that’s very low-cost mill. I’m just curious is to whether you just going to be the last man stand or I think or whether you’re diversifying kind of the portfolio at all?

Look, I think our partner, our [indiscernible] partners they run Alberta Newsprint and they are extremely entrepreneurial in how they run it. First of all, they are low cost producer which is a great place to start from. They are diversifying into other grades of paper, they have got a -- I think you have been to the mill, haven’t you Mark?

I have with --

It’s a beautiful site and so we’re doing transloading, they are doing all types of things in terms of getting more revenue out that, so its continues to be a significant contributor to our results and we’ve seen Newsprint demand shrinking, there is no question about it. I think if there is going to be the last man spending, t will be Alberta Newsprint, not only a low cost producer they probably produce one of the best sheets out there and as I am reiterating, they continue to look at other source of revenue, which are starting to have a material positive impact on the results of that business and they continued to search for more, they have got a number of -- they always had a number of opportunities that they are looking in terms of taking full advantage of that site and so I think we’ll continue to be pleased with the results come out [ANC].

Thank you. [Operator Instructions]. At this time there appear to be no further questions, you may proceed.

Well again, thank you very much for joining us and we’ll look forward to talking to you in 2018.