Mark Bishop - President & CEO Wyatt Hartley - CFO

Hamir Patel - CIBC Paul Quinn - RBC Capital Markets Bill Garnett - Scotiabank Daryl Swetlishoff - Raymond James

Thank you, Operator and good afternoon everyone. Before we get started, I would like to remind everyone that in responding to question and talking about our third quarter financial and operating performance, as well as our market outlook, we may make forward-looking statements.

These statements are subject to known and unknown risks and future results may differ materially. For further information on known risk factors, I encourage you to review Acadian's annual information form dated March 30, 2016 and other filings of Acadian which are available on SEDAR at sedar.com and on our Web site.

I will start by outlining the financial highlights for the third quarter, then Mark Bishop, Acadian's Chief Executive Officer will provide comments about operations, market conditions, and our outlook for the next 12 months. Our operation performed well for the three month period ending September 24, 2016.

We continue to benefit from strong pricing in New Brunswick which was in line with the same quarter in the prior year and up 3% year-to-date. Log sales volumes declined 12% from the same quarter in the prior year.

This decrease reflected a combination of the planned reduction in hardwood harvest levels under Acadian's forest management plan and reduced softwood sales as regional mill inventories remained at higher than normal levels through the quarter. For the first nine months of 2016, we had distributed $0.75 per share, a payout ratio of 96% which is in line with our long-term target of 95%.

Acadian generated net sales of $19.3 million during the third quarter, a decrease of $3.3 million compared to the same period last year. Strength in log selling prices in the New Brunswick market were more than offset by the aforementioned decrease in sales volume.

In addition, the harvest of other softwood species was impacted by less favorable year-over-year seasonal operating condition. While high levels of biomass sales drove our weighted average realized selling price for the quarter down 14% compared to the last year that selling prices for most of our product were roughly in line with the prior period.

Adjusted EBITDA for the third quarter of $5.2 million was down from $6.5 million in the comparable period as a result of the previously noted decrease in log sales volumes and lower margin sales. Moving into segment results, net sales at our New Brunswick operation for the third quarter totaled $14.3 million compared to $17 million for the same period last year due to a 13% decrease in log sales volume and a 4% decrease in the weighted average log selling price.

Log sales volumes excluding biomass declined 190,000 cubic meters from 218,000 cubic meter in the prior year. This decrease reflects higher than typical regional spruce fir log inventories more favorable prior year harvest conditions for pine and cedar stands and the planned reduction in hardwood harvest volume under Acadian forest management plan.

The weighted average log selling price was $63 per cubic meter in the third quarter of 2016 down from $65 per cubic meter in the same period of 2015. This decrease was due primarily to unfavorable mix from a relative decrease in hardwood sales volume.

Adjusted EBITDA was $4.6 million compared to $6 million in the prior year due to the aforementioned decrease in log sales volumes and lower margin sales mix. This decrease was partially offset by a 3% decrease in variable cost per cubic meter mainly as a result of hauling distances for the softwood products.

At the Maine operation, net sales for the third quarter totaled $5 million compared to $5.6 million for the same period last year. This decrease reflects a 7% decrease in the sales volume due primarily to lower hardwood pulp sales volume.

The weighted average log selling price in Canadian dollar terms was $78 per cubic meter, a 1% decrease from $80 per cubic meter in the same period of 2015. The weighted average log selling price in U.S.

dollar terms was $60 per cubic meter a decrease of 1% year-over-year as continued weakness in softwood pulp pricing was mostly offset by the benefit of favorable sales mix. Adjusted EBITDA for the quarter was $700,000 compared to $1 million in the prior year due primarily to the aforementioned decrease in sales volume.

Variable costs per cubic meter increased 6% in both Canadian and U.S. dollar terms due primarily to greater hauling distances for hardwood products.

Looking at our balance sheet, Acadian cash position continues to be strong with $20 million of cash on hand at the end of the third quarter. This represents a $2 million increase from year-end as our operations generated free cash flows in excess of dividends paid.

Furthermore, our financial position is solid with net liquidity of $96 million including funds available under Acadian's revolving credit facility and our standby equity commitment with Brookfield. During the quarter we declared a dividend of $0.25 per share which is consistent with the prior quarter and up 11% from prior-year.

I'll now turn the call over to Mark.

Thank you, Wyatt. During the quarter Acadian's operations experienced two recordable safety incidents among employees and two among contractors.

All of these incidents did result in lost time, and unfortunately one of the two contractor incidents did result in a serious injury to the individual who is now making a gradual recovery. Acadian take safety in the workplace very seriously and we continue to strive for continuous improvement in our employee and contractor safety performance.

As Wyatt noted the selling prices for most of our products, we are roughly in line with the prior period. Acadian's weighted average realized log selling price during the third quarter decreased marginally about 3% year-over-year, as continued strength in New Brunswick market, were more than offset by weaker prices in the Maine market.

New Brunswick market was stable with hardwood sawlog and pulpwood prices flat compared to the prior year. Softwood sawlog and pulpwood prices saw modest 3% and 1% decreases respectively versus the competitive period.

Weak demand for softwood residuals continues to drive weaker pricing in the Maine market. Hardwood prices in the Maine market declined slightly but remained historically very strong.

While domestic biomass markets remain stable in New Brunswick recent geo-political turmoil has driven a curtailed Acadian European biomass export shipment ultimately for the consumption in the constant panel segment at least the spring of 2017. In Maine, two major biomass power plants remain indefinitely idled while with pulp markets in the Northeast from mild weather and continue to compete with low lower fewer prices.

In summary are most important markets are softwood sawlogs and hardwood pulpwood and regionally both of these markets are in good balance and are expected to remain your current price and volume levels. U.S economy stands out of this amidst a weak global economic backdrop with growth accelerating the third quarter following a disappointing first half of 2016.

Ongoing economic growth reflects firm domestic fundamentals including robust job growth raising wages and low energy prices, consumers are feeling confident in this labor market approaches full employment and solid real wage growth supports rising consumption. These fundamentals continue to support ongoing gradual recovery in U.S housing starts and strong residential improvement activity.

As your where consensus expectations continue to call for steady year-over-year improvement in total housing starts for 2016 and 17 roughly 7% to 10% respectively year-over-year. Industry forecasters predicted U.S sawtimber demand will need to continue to grow at over 5% per year over the next three years to support expanding domestic construction needs.

With the expiry of the one-year moratorium on trade filings in mid-October following the end of the 2006 Softwood Lumber Agreement in 2015, the North American lumber pricing environment is again highly uncertain and you’re all aware of that and the absence of any near settlement which we believe remains unlikely the U.S. Department of Commerce, is widely expected to initiate what will be its fifth countervailing and anti-dumping investigation which could result in an position of duties on Canadian lumber producers as early as the second quarter of 2017.

As you all know during the prior U.S. / Canada softwood lumber dispute.

Canada's Atlantic lumber producers and Québec border Mills experienced lower relative duties than the rest of Canada. This differential treatment is been attributed to the significantly a greater proportion of sawtimber sourced from private timberlands in the Atlantic region, relative to the rest of Canada as well as a long history of active cross border log exports in the Northeast region.

We acknowledge we have little visibility into whether the treatment of these regional producers during the current dispute will be materially the same as in the past but we understand the Atlantic provinces in the state of Maine are acutely focused on achieving this outcome. Acadian benefits from the strong balance sheet all be it with the somewhat higher cash balance and we prefer and we remain focused on landing on the most constructive and creative use of that cash.

We have diverse and resilient markets and highly capable operating team that remains committed to continually focusing on improving our financial and operating performance. We thank you for your continued support of Acadian Timber and now we will open it up for questions.

Operator?

Hi good afternoon. Mark, I was wondering if you could maybe give us an update on what you're seeing in timber markets globally?

In lawn markets or Timberland investing markets?

Investing in terms of maybe any opportunities that may recently come to market that may have not heard about that are sort of widely known in the team of community.

Well there – as you're probably aware and there's certainly various publications that comment both either formally or informally on what's out there in their several I would say smaller to mid-sized transactions that have either been wound up this quarter or expected to in the next quarter and then several, I would say again mid-sized opportunities in the U.S. both U.S.

and Eastern Seaboard markets. Globally there's been I guess Suzano just announced a fairly large transaction from diversified company in Northeast Brazil and I think we just recently heard Weyerhaeuser released publicly that they are likely to but their Uruguay integrated business on the market other than that there's several other smaller transactions or potential estates out there in various markets that we're aware of but nothing that more than we can really comment on this time.

So I would say they're still a very active market but still significant cash seeking investments in Timberlands and again the market continues to be very competitive. We did participate in a process in the third quarter unsuccessfully -- ultimately, but again we do remain active in looking at opportunities for Acadian.

Thanks. It's helpful.

And with respect to that process you mentioned, but can you maybe speak to which continent that was?

It was North America, I can't elaborate much more than that, but it was a North America and certainly would have been an interesting fit for Acadian. But again we do remain active in again pursuing what we think are attractive and appropriate opportunities for Acadian.

Fair enough. And Mark, do you seen any changes in discount rates this year both cross-border between Canada and the U.S.

and then also within some of the regions south versus west?

I mean it's always hard to verify if you will. So we're always backwardly calculating implied discount rates if you will and certainly have a lot of discussions about that with various participants in terms of views and perspectives including annual appraiser surveys on the topic.

But our view is that we're probably seeing another incremental not significant, but incremental creep down in discount rates this year. But again that's all backend calculated, but I still think we're in the now in the low 4% range in the U.S.

on a labor discount rate metric.

Okay, that's all I had. Thanks, Mark.

Hi, good afternoon. Regarding the biomass volumes, what has changed in terms of increased in the volumes and did the increase partly due to higher in that gas pricing and also projected colder weather, some guys stockpiling?

You are referring to the increase in particularly New Brunswick year-over-year or?

Yes. In New Brunswick.

A portion of that Paul, probably the most significant portion wasn’t increased in our export volumes. And as we've stated and I think is in some of the industry press.

We've seen a slowdown in those shipments not because of consumption declining in the market in Eastern Europe, but just as the turmoil there and security issues taking some of the shipments off the market likely until the Spring or at least until things settle down. So that the biggest difference was the opportunity to export.

But New Brunswick still see an ability to absorb more of that into it's market, although, I would say incrementally more I wouldn't say we have the ability to fully absorb but we're exporting on a long-term basis.

I guess on the long-term basis part regarding the forest management plan, is there any significant changes to that and should we expect more biomass and less hardwood volumes going forward?

So the long-term management plan and we have continue to publish I think our perspectives and the target harvest operable softwood and hardwood on each of the regions throughout our -term if you will. So I think you've got a very good metric or very good metric there in terms of what our targets are and certainly what our '16, '17,'18 targets would be for those volumes.

I wouldn't expect any significant increase in biomass. I mean clearly what we're targeting and then the major changes we're targeting in our long-term plan is for New Brunswick reflective of really the planting that was in the several culture investments that we made in the late 80s.

We are transitioning to a more significant softwood sawtimber market over time and including that's a taking down some of the hardwood as we transitioned some of those hardwood stands. So over time you'll see a transition, but that transition would be relatively slow.

Okay. Thank you.

Just a question on softwood lumber here, just wondering Mark, would gives you the confidence to say that you think the treatment of you guys with respect to the current dispute is going to be the same as what we’ve seen in the past?

I think Paul, what we try to characterize as we think over time. The conditions and rationale for excluding the region has not changed and particularly the State of Maine and the importance of log exports to the state exporting logs to particular – come back to the border mills is a very important factor we think this data remain in particular will be aggressively pursuing the same kind of outcome.

I mean clearly we’re in the same position is all of you in terms not really know and where this is going to land. But rationally we would think it would land on the same ruling for the region, but we do understand there is other factors at stake and the rationale – and the participants may have a somewhat more protection is focused this time than in the past.

But I guess we’re all waiting to see and clearly I'll take the couple quarters at least to know where this ultimately Lansing and we certainly hope that the quarter that does not exclude the Atlantic province.

What is from your perspective, what’s without knowing the duty – expected duty rate or the level of what – from a theoretical standpoint, what’s better for you guys, a quarter and duty?

I mean if we have to have one or the other?

Yes.

That’s a good question, Paul. Our level of exports depending on how it's measured and if it’s allocated based on historical exports, our level of exports is relatively lower than many of the Western braces for instance and I would say more focused on a lower valued log.

So I already thought this through, but depending on a quarter – I think we could still private equity environment.

Just a quick question on log inventories in the region, you mentioned that they're getting a little bit backed up there in Q3. If you can talk a little bit about which way those are trending, if they’re still thought come at a quarter or if that situation is improved at all?

Thanks.

There were still on site coming out of the quarter and we expect they will start to go by the way down through this quarter into early into the next quarter. And it's particularly on the softwood pulpwood side.

Our sawtimber markets are still moving, but those are a little bit backed up as well. So I first quarter will see a much better situation clearly.

I think generally everybody was hit with the same factors of very good operating condition and somewhat slower demand and most were expecting and then of course we had the impact of the free-trade situation and just ultimately more harvesting going on in the quarter. So I think that will work its way through early, quickly to the next – slightly more than a quarter.

Just a question, a $20 million in cash on hand kind of a little bit wasn’t efficient terribly, but as you look forward, obviously there's some uncertainty, but as those resolved were some the options for deployment cash and also your free cash flow you generating?

I mean as you’re seeing our current level of operations is generating cash or right in our target ratio. As you said, we don't know what is the next couple of quarters will bring us with respect to the softwood outcome and clearly we want to be somewhat cautious on the use of that cash.

But I think the options are fairly well - very clear. We can certainly increase the dividend and we look at pursuing other - and we wouldn’t pursue a special dividend, opportunistically we would certainly consider something like a normal course understanding that we are already liquidity challenged.

And then we continue to look for opportunities for either tuck-ins or other growth opportunities which we could plan to cash too. But any prolonged length of time having that amount of cash is certainly not suitable for us.

Thank Mark, helpful. I’ll turn it over.

Thanks operator. Just want to thank you all for dialing in and look forward to talking to you next quarter.

Thanks again.