Riko Gaudreault - Director, IR and Business Strategy Mario Plourde - President and CEO Allan Hogg - CFO Charles Marlow - COO, Containerboard Group Luc Langevin - President and COO, Specialty Products Group Jean Jobin - President and COO, Tissue Papers Group

Leon Aghazarian - National Bank Financial Hamir Patel - RBC Capital Markets Keith Howlett - Desjardins Securities

Thank you, operator and good morning, everyone. Welcome to our conference call for the 2015 second quarter results.

Members of our management team present today are Mario Plourde, our President and CEO; Allan Hogg, our CFO; Charles Marlow, COO of our Containerboard Group; Luc Langevin, President and COO of our Specialty Products Group; and Jean Jobin, President and COO of our Tissue Papers Group. Mario will begin with his comments, followed by Allan and the group’s representatives.

The review of our Boxboard operations will be covered by Mario, and our President will also be back for the conclusion following the question period. During this call, certain statements will discuss historical and forward-looking matters.

Please note that the accuracy of these statements is subject to a number of risk factors. These factors, which are listed in our public filings, can have a material impact on our actual results.

All these statements, as well as the investor presentation and press release, will be posted on our website after the call. The included data are not measures of performance under IFRS and you should also note that the quarterly results of Reno De Medici were released on July 30 and can be reviewed on Reno’s website.

I would like to remind the media and Internet users that they can only listen to the call. If you have any questions, please feel free to call us after the session.

I will now turn the call over to our CEO, Mario.

Thank you, Riko and good morning everyone. We are pleased to release solid results this morning with EBITDA, excluding specific item now exceeding CAD100 million.

These results represent the best performance for June 30 quarter since 2009, when we exclude discontinued operations. From an operational standpoint, all of our group participate in the sequential improvement.

With CAD55 million of EBITDA during the second quarter, the major contributor was our Containerboard Group. Our Boxboard Europe group improved its result for a second consecutive quarter as seasonal weather and improved productivity contributed to lower cost.

Our Specialty Products group grew significantly compared to Q1 and Q2 2014. The Tissue Paper group also significantly improved sequential performance due to higher shipment and a better performance from a new paper machine in the US, which is ramping up well and according to plan.

This performance translate into net earnings of CAD0.25 per share, excluding specific items for the second quarter and Greenpac contribution to this number was CAD0.03 as the mill continue to operate according to expectations. Looking at our KPIs, we have improved on all fronts, except for utilization rate, essentially due to lower shipment in Europe.

Our working capital ratio is now 1% lower than last year at 11.6% and our return of assets reached 10%. For Q2, brown recycle paper prices continued to be soft and decreased slightly on average.

However, since the end of the quarter, we have seen increases in the OCC Publication Index, prices for white recycle paper weight also decreased slightly during the quarter and they have remained stable ever since, which is a good news in the current low generation season. For pulp, while NBSK prices were lower, NBHK prices have increased to last year’s level.

I will now let my colleagues give you more specific information starting with Allan and I will be back later to cover Europe and our outlook. Allan?

Yes, thank you, Mario and good morning. Compared to last year, sales were up 4% at CAD950 million due to a favorable exchange rate and volume increases in our tissue sector, which were offset in part by lower average selling prices in all segments except for containerboard.

Sequentially, sales also increased 4%, due to volume increases in all segments, except for our Boxboard Europe business. EBITDA for the second quarter was up 14% compared to last year and reached CAD103 million.

The increase is due to higher volume, a favorable exchange rate and lower energy costs. These were offset by lower average selling prices and higher raw material costs in our tissue group.

Sequentially EBITDA was up 21% or CAD18 million. Lower energy and production costs combined with higher volume in all of our North American activities, more than offset higher raw material costs due to a higher proportion of parent roll purchases and unfavorable fiber [ph] mix.

Slide 13 and 14 illustrate the impact of specific items that affected our results during the quarter. The appreciation of the Canadian dollar led to a gain on our long-term debt of CAD13 million, and in May, following the refinancing of our 2020 senior notes, we recorded CAD19 million of financial cuts associated with premiums paid on the redemption of these notes and the write off of past issuance discounts.

All in all, specific items had a neutral impact on net earnings. You can also see the impact of our results of JV investments, which was mainly driven by the lower contribution of Boralex.

On page 15, cash flow from operations amounted to CAD86 million in the quarter, excluding premiums paid under refinancing. Capital expenditures payments amounted to CAD48 million during the quarter.

Moving to the reconciliation of our debt, it remained stable compared to the first quarter. In addition to free cash flow, the exchange rate slightly decreased our debt.

However, this was essentially offset by working capital investment requirement, which is usual during the first two quarters of the year. In terms of financial ratios, our net debt to EBITDA ratio remained stable at 4.7 times at the end of the quarter.

Further to our notes refinancing in May and the extension of our revolving facility in early July, we had no significant maturities before 2019. Remember that the refinancing of our notes in 2014 and 2015 has reduced our yearly interest expense by over CAD20 million.

As introduced last quarter, we are showing some key figures on a proportionate consolidated basis. These numbers include our share of our respective ownership in Greenpac, Reno de Medici and other joint ventures in the Specialty Products Group.

However, we do not reflect the results of Boralex. You can see the improved EBITDA margin and lower leverage ratio calculated when we annualized EBITDA after six months.

I thank you for your attention and I will ask Charles to discuss the results of our Containerboard Group.

Good morning everyone and thank you Allan. During the second quarter of 2015, the Containerboard Group shipments reached 282,000 short-term, representing a sequential increase of 5%.

The improvement in volume comes from both manufacturing and converting activities. In the converting activity, shipments are sequentially increased by 6%.

This is in line with the performance of both the Canadian and the U.S. industries.

In the manufacturing activities, external paper shipments increased by 4%, resulting in a decrease of 2% of our integration rate. Accordingly, the second quarter operating rate remained stable at 91%.

On the pricing front, average selling price increased by CAD26 per short ton, mainly as a result of price increase for the corrugated product we applied in February to offset the negative impact of the weaker Canadian currency against its U.S. counterpart.

With regard to the profitability, the Containerboard Group realized an EBITDA of CAD55 million in the second quarter of 2015. This performance represent an improvement of 6% compared to the previous quarter and 28% compared to the same quarter last year.

This is the best quarterly results performance of the Containerboard Group since the third quarter of 2006. Our second quarter EBITDA of CAD55 million represents margin of 17% on sales, which is stable compared to the first quarter of 2015.

If we look up the margin of our manufacturing activities separately, it reached 25% for the quarter. The Group’s solid performance was achieved as a consequence of an increase of 14,000 short ton and shipments, higher average selling price and lower energy costs related to better weather conditions.

Combined, these three items positively impacted our results by CAD18 million. On the other hand, our raw material costs were negatively impacted despite stable OCC costs due to an unfavorable mix, which include more external paper rolls bought from Greenpac and other traded partners.

Also, a combination of different customer mix, unfavorable SG&A variation and a stronger Canadian dollar negatively affected our results by CAD8 million compared to the first quarter of 2015. With regards to the short-term outlook, we should continue to benefit from the stable economic environment in the consumable market.

Demand in the U.S. remains good and we should continue to benefit from the weakness of the Canadian dollar.

In the next quarter, we should continue to benefit from normal seasonal demand. Finally, a word on the performance of Greenpac mill.

In the second quarter of 2015, Greenpac produced 110,000 short-terms of linerboard, a decrease of 3% caused by a three-day maintenance downtime in April. Consequently, the contribution to our EPS coming from our share of Greenpac net earnings excluding specific items amounted to CAD3 million or CAD0.03 per share during Q2.

As mentioned on the previous call, we continue to gradually increase the proportion of value-added product from Greenpac as the market receptivity for lightweight grades continue to be very good. On the productivity front, we continue to be pleased with the paper machine, which produces as planned and since the end of the second quarter, we broke a new production record producing 1804 [ph] tons in one day in July 22.

I thank you for the attention and I will now ask Mario to give you an overview of our Boxboard activities in Europe. Mario?

Thank you, Charles, and looking at our performance of our European operations, you can see that shipments were 3% lower than Q1. All of these in France and a slight reduction in shipments by Reno de Medici explain these decrease.

Market conditions are better than last year and demand for both coated virgin and recycled boxboard grade is still decent. Our productivity improved in Q2 and our backlog was quite satisfactory at the end of the quarter.

On the pricing front, average prices in Canadian dollar were 3% lower than in the previous quarter. In euro, they remained stable as the previously announced price increase for recycled grade was only effective starting in June and we expect a gradual implementation over the next quarters.

These price increases will essentially cover the recent OCC price increase and will allow rental to maintain its spread. For resin grade, the prices are stable despite a high fiber cost.

And the impact of unfavorable exchange rate and selling prices and lower shipment result in sales of CAD202 million, 6% lower than during the first quarter of 2015. Nevertheless, the EBITDA of our Boxboard Europe group improved by 12% despite the decrease in sales and higher raw material costs during the second quarter.

This is mostly due to a significant sequential decrease in energy costs and improved productivity during the quarter. With regards to the outlook in Europe, demand should remain strong and flow of order is expected to be satisfactory.

However, the next quarter is usually a slow period in Europe due to the summer vacation. As usual, almost every mill will pay downtime to balance inventory and proceed with annual maintenance work.

We expect higher prices for the recycled grade, production efficiency and energy saving to counterbalance the impact of the potential increase in fiber costs. I will now ask Luc to follow-up with the overview of the performance of our Specialty Product Group.

Thank you, Mario, good morning. The Specialty Products Group experienced a better quarter overall.

Sales improved in all business segments to reach CAD146 million compared to CAD135 million in Q1, representing an 8% increase. This increase is explained mostly by higher shipments despite an unfavorable exchange rates during the quarter.

We completed our quarter with an EBITDA of CAD14 million, 40% better than our Q1 results. Higher volume, lower labor and energy cost, and the reduction in freight costs more than offset unfavorable exchange rate compared to the first quarter of 2015.

Looking more specifically at our four sub segments. EBITDA of our industrial packaging segment was slightly above the first quarter.

Higher volume was offset by unfavorable exchange rates. EBITDA of our consumer product packaging segment improved by CAD2 million.

Higher seasonal demand and better productivity contributed to improved results during the quarter. As for our order activities, our EBITDA increased by approximately CAD1 million sequentially.

Seasonally, lower energy costs favorably impacted our results during this quarter. Finally, EBITDA of the recovery and recycling segment improved by CAD1 million from previous quarter.

We benefited from higher recycle paper volumes during the quarter. Freight costs also declined following the creation of a new business partnership on the West Coast.

Looking forward, we’ll remain cautiously optimistic for the near future as market conditions are stable in our industrial and consumer product packaging segments, thanks in part to higher seasonal demand. Fluctuation in the price of resin in [ph] the Canadian dollar could also influence some of these results.

Thank you for your attention and I’ll now ask Jean to present the results for the Tissue Papers Group.

Thank you Luc, good morning everyone. As we can see from the results released today, the tissue group improved its performance compared to the first quarter as our EBITDA increased by 53% to reach CAD23 million compared to CAD15 million during the previous quarter.

This significant increase is mainly due to higher shipment and productivity improvements. Overall shipments increased by 11% compared to the previous quarter, parent roll shipment increased by 20% driven by inventory management initiatives, which began in Q1 and the new Oregon paper machine which is now completely sold and in line with the production start-up costs.

On the converted product side, shipment increased by 7% overall, mainly driven by the usual away-from-home seasonality and increased shipments in consumer product Canada. Total sales increased by 9% compared to the previously quarter mainly due to higher shipments.

The increase in volume was partially offset by lower average selling price, largely driven by higher proportion of parent roll shipments combined with an unfavorable product mix in the converted product segment. The increase in EBITDA for the quarter is a result of higher sales volume combined with productivity improvements and lower logistics costs mainly related to our new Wagram facility.

The improvement in sales and productivity was partially offset by an increase in raw material costs due to higher purchases of external parent roll and higher use of virgin fiber. Fewer shutdown during the second quarter increased productivity during the ramp up of our new equipment and overall equipment efficiency improvements were the key driver in the reduction of production costs other than raw materials.

The recent major capital project in the U.S. are all up and running.

The Wagram facility now has more than 80% of plant capacity in operations, this project is on schedule and on budget. Also, the state-of-the-art towel line recently installed in Candiac has been completed as planned as we are now proceeding with the ramp up.

The addition of this line will increase our total capacity for high-quality paper towel for the retail and away-from-home markets by approximately 3.5 million cases per year. For the near-term, we are seeing positive trends in volume and productivity, we are also implementing price increases in the consumer product and the parent roll markets.

The third quarter is usually a strong quarter for sales in the away-from-home segment and increased distribution in the U.S. consumer product market will start to positively impact our result during the next quarter.

In addition to these positive trends, we are still working on fixed cost reductions and productivity improvement initiatives, which should continue to reflect positively on our results. The combined effect of all these factors should led to improved results in the third quarter.

Thank you, I will now turn the call back to the operator. Operator?

Hi, good morning, my first question is regarding on the tissue side, I mean we did see a quite pretty big improvement on the EBITDA side and I know you spoke about a little bit about the initiatives, but can we dive a little bit deeper into what some of the initiatives that were take were to help improve first of all the revenue side and the profitability side as well?

Well, on the revenue side, honestly mainly it’s the seasonality, away-from-home shipment, it’s always strong in Q2 versus Q1, and always stronger in Q3 versus Q2, so that’s the main driver there. And also on the jumbo roll side, we are pushing extremely hard right now to make sure that we manage on our inventory properly, so that’s why we sold more jumbo roll as well during this quarter.

You mentioned as well productivity improvements in the quarter, can you give us a little bit more color as to what that entailed?

Yeah, it’s what we call the overall equipment efficiency. Mainly we have, as you know, some of our major investment was to be finalized in Q1 and beginning of Q2 and obviously with the startup curves, the OE of those machines are going higher and higher every day due to ramp up curve normally.

And that’s not the only improvement we have other as well, but the rest is regular focusing more on equipment.

Okay, great. Thanks for that.

And then, you also mentioned certain price increases on the tissue side. I mean, how confident are you?

What gives you the confidence that you will see that stick going forward and if you can give us a little bit more color as to in what space that is? I believe you mentioned retail, but is it on the high quality side of the paper or is it more on the private label side?

Mainly the increase that we have announced is in retail and in the jumbo roll markets. It’s overall price increase in those markets, it’s not related to one category or more in one category.

It’s overall.

Would it see lot of promotional activity, I could say, over the last number of quarters? I just want to get your sense on how confident are you in that being able to stick and how big the price increase was actually?

The activity, the GPR that we call it’s there since couple years now. We don’t know what the future holds, but on the private label we are doing good gain.

So we are able to do well right now.

Thanks. I will jump back in queue.

Hi, good morning. I had a couple questions.

Just following up on that tissue price hike, could you maybe quantify what that percentage increase was on the retail side, also what it was on the parent roll side, the timing for both and then just on the retail one specifically, is that initiative both in Canada and the US?

Thank you for your question, Hamir. But we don’t want to discuss about the details about price increase, so I am sure you will understand.

Okay. I mean, I appreciate that.

I guess, if you are willing to just maybe share whether that initiative is North American as a whole or whether it’s just in one country.

The jumbo roll, it’s North America, for CP as well we have on both side.

Okay, fair enough. And then one of your US peers yesterday was referencing an FX driven price hike in the Canadian away-from-home space.

Are you seeing some pricing momentum on that side as well?

Again, I don’t want to go in that part of details talking about movement in pricing going up or down in Canada. We necessarily did not have same FX effect on our side, so I won’t go further than that.

Okay, fair enough. And then a question for Mario.

You’ve spoken before about wanting to grow you converting assets, I think the figure you’ve mentioned before is 80% to 85% over time. Can you speak to may be what steps you are taking to get there and is there a preference to build or acquire assets?

Obviously we would like to acquire, it’s much easier to integrate the market and then you have customer, you have employees and you have equipment just to take over. So this is the privilege growth we would look at, but if there is no opportunity, obviously we will have to consider building and installing new equipment.

And most of the growth we were considering is mainly in the US.

And maybe the timing of that, was that sort of like to be in 2016 or?

It certainly will be in 2016, because right now we are finalizing the ramp up of two projects, important projects. We are pleased with the results that we have.

So we want just to close on those two projects before we launch new projects, but we have things on the drawing board as we speak and it might be more in 2016 than 2015.

Okay, thanks. That’s helpful.

I just had one final question for Alan and then I will turn it over. Just related to your hedging policy, we’ve obviously seen a weaker Canadian dollar.

Just wondering if there has been any change in terms of how you think about hedging and I know you guys provide the disclosure for ‘15 and ‘16 in the slides, but I was just curious if you have any notable hedges in place for 2017 as well.

We have just a small portion for 2017 and remember that following the sale of our fine paper and box volatilities. We sold a lot of US exposure.

So we are - that we will look at it. We are trying to rebalance the portfolio that we have and we could move some position that we have for in 2015 to 2016 or ‘17.

So we are not adding at this time a new position, because a percentage of our exposure is at the 40% to 50% position. So due to the recent sales of assets, we are not adding additional position at this time.

Okay, thanks. I will get back in the queue.

Yeah, hi, this is [indiscernible] filling in for Bill Hoffmann. Most of our questions have been answered.

Just on tissue business, can you give us a better idea of where you see operating rates going and has there been any share gains in that business?

Actually as this point, we have not recalculated our shares, so I cannot answer that, but because the increase is due to seasonality, it’s not a question of share increase. And in terms of managing the inventory yield, the operating rates we have run all of our equipments full time during Q2.

Okay. Thank you.

Yes. I wondered if you could speak to your product mix in the tissue business, are you shifting the mix towards the higher quality Atmos product or are you seeing some consumer response on the sort of 100% recycled product or what's going on in that?

The new project [ph] had a new client that we put in Kazakh, it's the tool that we will use to improve our market share in that segment, but at this point, we have just started production, so no shift at all, we’re stable right now.

And when you speak about the slightly unfavorable mix shift, was that just to parent roles or was that within product categories?

It was for parent roles mainly.

Thank you.

Thanks. I just had two follow-up questions for Charles.

Could you give us a sense of how your box shipments fared in July?

We are seeking, as in the past, seasonal uptake and so with the volume right now and the intake of the orders are, I would consider, good.

Okay, thanks. And just the final question I had was related to that Canadian corrugated box price hike, you mentioned in your prepared remarks that that was, I believe, effective February, in your case, I thought it was April when I read in recent, just wondering how much of that was already realized in Q2 and maybe of that hike, what percent might flow through in Q3?

Okay. As the past, we mentioned that we announced the price increase in February to our customers, but due to contracts and timing, it usually takes between four and five months before we can realize the full impact of our price increase on the converting.

Okay. So if were to sort of break it down between maybe Q2, Q3 and Q4, how much is sort of left?

It's pretty much in place as we speak right now.

Okay, great. That's all I had.

Thanks.

Thank you, operator. While we are pleased with the first half of 2015, we feel positive about our ability to improve going forward in 2015 [ph].

The situation in Canada with the weak dollar, low interest rate and decreased energy costs provide tailwinds. The Canadian dollar weakens even more, however our US business net debt [ph] might increase despite some cash flow management.

Nevertheless, our leverage ratio should continue to improve. Despite the recent uptick of OCC list price, we do not expect major change in recovered paper prices for the remainder of the year as these increases were essentially speculative in our views and do not reflect market condition in the region where we are active.

Unfortunately, some of our contractual sourcing is tied to these list prices. Our two packaging products group in North America should continue to improve their performance, as Q3 is a period of strong seasonal market conditions.

In Europe, the next quarter is usually softer, but it should reflect recent price increases. As recovered paper prices also increase however, it seemed that this will only contribute to maintain our spreads during the second half.

The Greenpac mill is also operating very well and is expected to continue to contribute positively to quarterly earnings per share. Our tissue paper group should also improve its result as our two new sites gradually improve their performance, additional volume is secured.

Also price increases announced in the retail and parent roll segments should be implemented gradually. In addition, we are excited to host an Investor Day on September 25 to be held in Niagara Falls, New York, two of the Greenpac mill is planned and this will be a great opportunity to showcase the state-of-the-art facility and for analysts and investors to meet our management team and learn about their respective sector.

We hope to see you there and we thank you for your support and hope that you continue to enjoy the summer. Have a good day.