Jennifer Egan - Director of IR Mario Plourde - President & CEO Allan Hogg - VP & CFO Charles Malo - President & COO, Cascades Containerboard Packaging Group Luc Langevin - President & COO, Cascades Specialty Products Group Jean Jobin - President & COO, Cascades Tissue Group

Hamir Patel - CIBC Capital Markets Keith Howlett - Desjardins Securities

Thank you, operator. Good morning, everyone, and thank you for joining our second quarter 2017 financial results conference call.

On today’s call, you will hear from Mario Plourde, our President and CEO; Allan Hogg, our CFO; Charles Malo, President and COO of our Containerboard Packaging Group; Luc Langevin, President and COO of our Specialty Products Group; and Jean Jobin, President and COO of our Tissue Papers Group. After discussion surrounding our North American operations, Mario will then discuss results from our Boxboard Europe, followed by some concluding remarks, after which we will begin the question period.

Before I turn the call over to my colleagues, I would like to highlight that Reno De Medici’s half quarter report released on August 3, can be reviewed on the Reno’s website. I would also note that certain statements made during this call will discuss historical and forward-looking matters.

The accuracy of these statements is subject to risk factors that can have a material impact on actual results. These risks are listed in our public filings.

These statements, the Investor Presentation, and the press release also include data that are not measures of performance under IFRS. Please refer to Slides 2 in our accompanying Q2 2017 Investor Presentation for details.

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

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

Thank you, Jennifer, and good afternoon, everyone. Before commenting on our results, I would like to highlight several recent positive developments.

The first was the sales of our 17.2% equity position in Boralex announced on July 27. The $288 million of proceeds will strengthen our balance sheet and provide us with greater flexibility and the need to improve our position in our core markets.

We also pleased to note our inclusion in the S&P/TSX Composite Index effective June 19. These increases our exposure to a wider base of investors as support our effort to deliver on our commitment to shareholder.

Earlier this morning we reported second quarter results that were below expectations, with our Containerboard segment accounting for the largest share of the shortfall. Charles, we provide you with more details later on in the call.

To this end, our second quarter results benefitted year-over-year from the consolidation of Greenpac and the implementation of price increases. Offsetting these were higher raw material costs, slightly lower volume in tissue and higher operational cost in Containerboard and corporate activities.

Looking at our financial performance, the second quarter sales totaled $1.1 billion up 12% sequentially and 13% year-over-year. Our Q2 adjusted EBITDA of $107 million was a 32% improvement over Q1 levels, but fell short of the $112 million of last year On the KPI front, first quarter shipment increased by 13% year-over-year, driven primarily by the consolidation of Greenpac.

On a sequential basis, Q2 shipments increased 11% for the same reason. Our capacity utilization rate of 95% in the quarter increased by 4% year-over-year reflecting improvement in each of our packaging segment and a stable performance in our tissue segment.

Sequentially, capacity utilization decreased by a slight 1%. This is due to a lower utilization rate in Containerboard as a result of maintenance downtime and a slight decrease to 98% in our European Boxboard segment.

The tissue segment increased capacity utilization by 3% sequentially. On the raw material side, the average Q2 price index for OCC Brown Paper grade was up 4% in Q1 and 68% year-over-year, while the average quarterly price of our basket of white grade fiber was essentially unchanged from Q1.

It was 1.75% higher year-over-year after registering a recent high of I75 in March, OCC prices decreased by a total of $35 per short ton in April and May, then increased by $25 per short ton over June and July. OCC pricing was unchanged in August.

Moving now to the financial position, our total net debt stood at $1,780 million $1.780 million at the end of the second quarter, which represent a 10% increase from the Q1 level of $1.6 billion and our leverage ratio remained stable compared to the previous quarter. At this point, I'll pass the call to Allan, who will provide more detail regarding our quarterly results.

Allan?

Yes. Thank you, Mario, and good morning, everyone.

So, we'll begin with as stated detail on Slide 12 and 13 of our conference call presentation. On a year-over-year basis, second quarter sales increase by $132 million or 13%.

This reflects the consolidation of Greenpac and some contribution from our residing activities, improvements in mix and the favorable exchange rates. Lower volume in our tissue business segment were offsetting factors.

Sequentially Q2 sales increased by $124 million or 12% reflecting the same reasons except for the stronger volumes in our [activities]. Moving now to our operating income and adjusted EBITDA, as highlighted on Slide 14, Q2 operating income was 26% over last year, while adjusted EBITDA of $104 million was $5 million below the comparable $112 million from last year.

The presidents of each of our segments will provide more details regarding their respective performance. On a consolidated basis, higher raw materials and production cuts in addition to higher corporate expense was more than offset by a positive impact of selling price increases and the consolidation of Greenpac.

Depreciation expense was also higher due to Greenpac. Sequentially Q2 adjusted EBITDA increased by $32 million.

This reflects again the consolidation of Greenpac and improved pricing in Containerboard and tissue and furthermore seasonal trends in our tissue segment. Higher raw material cost continue to negatively impact our results during the period.

Slide 16 and 17 of the presentation illustrates a sequential and year-over-year volumes of our Q2 earnings per share and the details of their specific items that affected our quarterly results. As we reported, earnings per share totaled $3.41 in the second quarter, which improved the specific item, which I'll detail in a moment.

Compared to reported earnings per share last year of $0.38, our second quarter adjusted earnings per share decreased to $0.25 from $0.38 last year, reflecting lower operating results. On a sequential business, second quarter adjusted earnings per share increased by $0.12 the adjusted earnings per share of $0.13 in the first quarter.

Slide 18 and 19 illustrate the specific items reported during the quarter. We recorded a net amount of $3 million of specific item in Q2 that negatively impacted our operating income.

These were mainly in our Containerboard segment and were related to a decrease in the value of certain assets following the consolidation of Greenpac and a gain related to the sale of real estate. With regards to net earnings, we also recorded an important gain of $219 million on the reevaluation of our investment in Greenpac as a result of the acquisition of Control from an accounting standpoint and also, we recorded an income tax liability reversal of $70 million due to the Greenpac transaction.

Slide 20 is important to understand the accounting impact of the Greenpac consolidation. I will try to be as clear as possible since it's quite complex.

As shown in Note 4 of the consolidated financial statements of the quarter, we performed a preliminary purchase price allocation on the Greenpac business acquisition. Their main impacts on our financial statements were an increase in goodwill of $256 million and an increase in our net debt of $219 million as of April 2017.

In addition, there is one important consideration regarding the accounting treatment of one of the partner's equity participation in Greenpac. Since this partner has a put option on its share of Greenpac, his participation is accounted for as a liability instead of a minority interest under IFRS and is presented under other liabilities on their balance sheet.

The impact of this accounting treatment is that on a consolidated basis, the minority interest of the Greenpac results are calculated at a rate of 21.7% compared to the expected 37.5% based on our equity participation. The purchase price allocation also increased depreciation and interest expense, a portion of which is non-cash.

As illustrated on Slide 21, cash flow from operations decreased by $25 million year-over-year to $91 million. The decrease reflects the soft operating results in the quarter and lower cash tax and dividend inflows.

Free cash flow was stable compared to last year due to lower capital investments during the period. Moving now to our debt reconciliation on Slide 22, in addition to cash flow from operations and the addition of the $219 million from Greenpac debt, which is nonrecourse, working capital reported $22 million of liquidity, which in addition to CapEx payments increased our long-term debt during the quarter.

As Mario mentioned, the debt stood close to $1.8 billion, a 10% increase from the previous quarter. On our leverage ratio, it now stands at 4.2 times flat with the 4.3 times ratio at the end of the first quarter.

This is on a pro forma basis to include Greenpac for its last 12-month results. Removing the $288 million proceeds generated from the sale of Boralex, announced on July 27, it further decreases our leverage ratio to 3.5 times on a pro forma basis.

Slide 24 through 29 provide details on our second quarter performance on a segment-by-segment basis and our internal outlook is detailed on Slide 31. Thank you for your attention.

I'll now pass the call to Charles, who will discuss the Q2 results from our Containerboard Packaging Group. Charles.

Thank you, Allan and good morning, everyone. The highlights of our second quarter was the consolidation of Greenpac.

This was followed more recently with the announcement of the construction of the new state-of-the-art converting plant in Piscataway, New Jersey. In terms of results, as Mario mentioned in his opening, our second quarter results came in below expectations.

Raw material prices had a negative impact on our quarterly performance, which was also impacted by higher production and SG&A costs, which I will discuss later. Moving now to details about the quarter, the Containerboard Group shipments reached 375,000 short tons in the second quarter, which represented a 31% sequential increase.

The higher Q2 volume is largely due to increased manufacturing activities following the Greenpac consolidation. Our external paper shipments grew by 81,000 short ton or 70% mainly as a result of Greenpac, which was offset by a decrease from some of our other paper mills.

Our operating rate decreased to 94% in Q2. This was a 2% decrease from the previous quarter and was the result of planned maintenance downtime performed in the quarter, which represented a loss of 6,500 short tons compared to the previous quarter.

Our Q2 integration rate remained stable at 51% when including shipments to Greenpac Partners. Including paper sold to our associated companies, our Q2 integration rate totaled 64%.

On the converting side, shipments remained stable sequentially with a slight 1,000 short ton increase. This performance is slightly lower than the shipment trend reported for the Canadian market, but is in line with U.S.

market shipment trends for the period. On the pricing front, our average selling price decreased by $66 per short ton Canadian or 5% on a sequential basis.

This does not reflect carrying business conditions as this variance is due to a less favorable product mix compared to the previous quarter. In fact, the consolidation of Greenpac increased the proportion of sales from our paper mills which are sold at a lower price than our conversion products.

Actually, our average Containerboard selling price containing in dollars increased by $65 per short ton or 10% and our corrugated products, selling price in dollars increased by $26 per short ton or 2%. During the second quarter, the Containerboard Group generated an EBITDA of $56 million representing a margin of 13%.

This was stable on a sequential basis, but was below the 18% realized in the same quarter last year. Our sequentially higher results were mostly driven by the consolidation of Greenpac.

Following the price increase announcement in March, the improvement in average selling price denominated in Canadian dollars for all businesses units excluding Greenpac added $5 million to profitability. The product mix depreciation of the Canadian dollar and lower energy cost each contributed $1 million to quarterly results unprecedently raw material cost continued to negatively impact our results, mainly due to higher OTC prices, which subtracted $8 million from our results.

Higher operation, logistic and business transformation deployment cost also reduced our results by $4 million. Finally, our quarterly results were negatively impacted by $2 million as a result of the nonrecurring contract shipment.

With regards to the short-term outlook, we expect third quarter demand to improve sequentially reflecting normal seasonal demand variation. Also, we expect to benefit from the full $50 per short ton announce price increase in liner board and medium.

On the converting side, some price increases were implemented in the back half of the second quarter. However, a significant number of customers will see their price increase take effect over the next three months.

We will also benefit from the recent $20 per short ton price increase for medium that will be effective July. While this announcement will have minimal impact on prices in our container segment, it will benefit our manufacturing sector as it will be implemented on approximately 25% of our external paper sales.

We remain cautiously optimistic for the third quarter of 2017 in view of the favorable trends in selling prices, despite the continuing pressure on OCC prices, seen in the market over the past several months. In addition to the strengthening of the Canadian dollar and higher logistic and training cost related to the deployment of our transformation initiative.

Finally, a word on the construction of the new state-of-the-art converting plant announced last week. The $8 million project will be located in Piscataway, New Jersey and we will have a corrugated capacity of 2.4 billion square feet a year.

The startup is planned in the second quarter of 2018. During the first year of operation we will focus on rending up 1.5 billion square feet a year, to accommodate business transferred from our other converting plants located in the U.S.

Northeast, and additional new business development. The optimization of our operation in the U.S.

Northeast region will result in the closure of our New York City plant by the end of 2018, a decision that was necessary due to the physical limitation of the site. That to sells the related building has been initiated and the property is currently listed on the market for $72 million U.S.

Once the business consideration is completed and the new plant is solely rent up, our integration rate will increase by 5%. This project will increase our flexibility and allow us to provide more efficient and innovative products to our customer.

Also, it will solidify our presence in the Northeast region market and help us to further tap into the growing market including the e-commerce. Thank you for attention and I will now ask Mario to provide us with an overview of our Boxboard activity in Europe.

Mario?

Thank you, Charles. The European Boxboard segment generated an improved result both year-over-year and sequentially in the second quarter.

This was driven by stronger order intake and order backlog levels and improve pricing, which reflect continued strengthening of market fundamentals. More specifically order backlog stood at 28 days as of the end of June, essentially double the year ago level.

Beginning with the second quarter performance on a year-over-year basis, shipment increased 6% with recycled Boxboard shipment up 6% and Virgin boxboard shipment up 5%. These increases were largely driven by stronger demand in Western Europe.

Average selling price were flat in Euros, but increased 1% in Canadian dollar reflecting the 2% appreciation of the Canadian dollar versus the euro. The average selling price in recycled boxboard increased 1% in euro, driven by price increases that were implemented at the end of the quarter.

This was offset by a 4% decrease in the average selling price of Virgin boxboard during the period. Canadian dollar sales rose 8% reflecting the depreciation of the Canadian dollar and higher volume in both sectors.

Second quarter adjusted EBITDA increased by $4 million to $21 million, reflecting lower energy cost and higher volume, offset by higher raw material costs during the period. Sequentially shipment declined by 4% after a strong first quarter and reflecting the beginning of the summer holiday season in Europe.

Sales however increased by 1% due to the depreciation of the Canadian dollar. Average selling price increased by 5% from first quarter level, which is attributable to a better geographical sales mix, specifically less sales in overseas market and benefits from the recycle grade price increase as of June.

Adjusted EBITDA increased by a notable 50% to $21 million in the second quarter, driven by higher production levels, lower energy cost and price increases, partially offset by higher raw material costs in the current period. Second quarter results similarly benefited from lower maintenance costs and a reversal of accrual.

The short-term outlook remained positive in RDM two sectors of operation, which order inflow and other backlog level stronger in both sector in the first half of 2017 than the prior year level. Macro economically for cash are positive and market related downtime is expected to be lower than last year.

In terms of raw material, recycled fiber costs are expected to remain higher and under pressure due to the additional capacity entering the market and export to the Far East. On the pricing front, two increases supported more favorable pricing trend going forward, that is the ongoing rollout of June €20 metric ton price increase, and the new €40 metric ton price increase announced for delivery beginning in September.

I will now pass the call to Luc, who will provide you with an overview performance of the Specialty Products Group. Luc?

Thank you, Mario. Good morning.

The Specialty Products Group generated better results this quarter. Sales increased in all business segments to reach $188 million, which represented a 9% sequential increase from $173 million in Q1.

We benefited from higher shipments with the majority of our segments, our average selling price increased as well. Our recovery segment being the only exception with slight decrease that is due to product mix.

The FX variation had a minimal impact on our top line. Q2 EBITDA totaled $20 million an 11% improvement from Q1.

Results improved thanks to higher volumes, which were due in large part to the typical favorable seasonality. In addition, we realized better spreads in our Packaging segment as a result of price increases implemented in Q1 and early Q2.

We also pleased with the Group’s 11% EBITDA improvement over last year. Looking more specifically at our sub-segment, EBITDA of our industrial Packaging segment improved by a $1 million.

The implemented price increases on finish business in a favorable product mix, resulting from recently commercialized innovative product, generated better margins for this segment. Benefiting from the same trend, Q2 EBITDA of our consumer product packaging segment increased by more than $1 million sequential.

Higher volumes from favorable seasonal demand, combined with improved spread as a result of previously implemented price increases as well as a favorable product mix in our Consumer Packaging contributed positively to our results. Finally, the recovery and recycling segment continue to generate solid results and or EBITDA was slightly above the Q1 level.

Increased volumes and improved operational efficiency more than offset the temporary spread reduction, which was a result of the fluctuation in the OCC price at the beginning of the quarter. Regarding to the near-term outlook, we remain positive for the near future with stable market cognitions in our industrial and consumer product packaging segment, thanks in part to typical strong seasonal demand.

We will continue to manage resin prices although we don't expect any significant change in the coming months. Looking forward, our recovery segment will obviously take advantage of the July rising published OCC price increase.

The OCC domestic market remained strong due to the solid Containerboard delivery level. The export returned to a more normalized level after a short pause at the end of Q1.

We can to have a good generation from our recovery units and are maintaining our mill inventories at group levels - good levels, as a result of our highly contracted supply. In our opinion, the market is balanced and we haven’t faced any notable challenge with regards to material supply since February.

Pricing level for OCC are more importantly influenced by export activities in regions where we both mature from. Finally, market conditions for white grade have been stable.

Thank you for your attention. And I will now ask Jean to present the results of the Tissue Paper Group.

Thanks, you, Luc. Good morning, everyone.

The Tissue Group delivered a better performance on a sequential basis. Supported by market seasonality, we generated an - an adjusted EBITDA of $35 million or a margin of 10.3%, compared to $23 million and a margin of 7.3% in Q1.

Our solid operational performance enabled us to partly offset the higher recycled and virgin fiber costs compared to Q1. However, if we compare our Q2 results on a year-over-year basis, our overall performance is below prior year Q2 levels, which I will note was one of the strongest second quarter performances in our history.

Four main factors negatively impacted our second quarter performance versus last year. Lower parental volume, the significant increase in recycled and virgin fiber cost.

The strategic investments made in new brand positioning is both the away from home and consumer product market and the start-up of our new state-of-art Oregon converting facility. Let’s discuss each of these key drivers more closely.

In terms of volume, second quarter shipment increased by 9% sequentially, due to the higher seasonal sales of converted product. Shipment also increased by 2% on a year-over-year basis, driven mainly by growth in consumer product segment.

Our key challenge in terms of volume is related to Parent Roll shipments, which are 5% up sequentially, but are 20 - down 20% compared to last year. The lower Parent Roll shipments are mainly related to current overcapacity in the hand towels segment.

We believe that this situation will be addressed in mid-term with the increase of our integration rates are the new Oregon converting volume increase and by future product diversification and strategic investment in additional converting capacity. In terms of pricing, our second quarter average selling price increase by 3% on a sequential basis.

This was mainly driven by a more favorable product mix of a higher percentage of converted product and the strengthening of the Canadian dollar. The two away from home price increase announced at the end of 2016 and in the first quarter of 2017, continue to positively impact our Q2 performance.

On a year-over-year basis, our average selling price increased by 9% reflecting the same factors that I just outlined. Therefore, the higher average selling prices as just discussed, combined with higher shipments result in a 10% sequential increase in sales and a 4% sales increase on a year-over-year basis.

Our spread was negatively impacted by the recycle and Virgin fiber price increases that we had seen in 2016. Recycled fiber prices have increased by approximately 20% for SOP since last year.

We continued to focus on delivering solid operational performance in other areas to help us set the higher raw material pricing and current Parent Roll volume challenges. Both productivity and cost are closely monitored to ensure optimal overall performance.

The startup of the new Oregon facility is progressing well and the official opening on July 18 was very well received. This new state-of-the-art converting facility is key to our strategic plan as it expand our geographical footprint by developing the West Coast market, while increasing our integration rate, which will reduce our vulnerability to Parent Roll market fluctuation.

The brand repositioning for both away from home and consumer product have gone well. Both initiative have been well received by our customer and we had begun to see a beneficial impact in our results.

The marketing investment required to support the brand is still higher than last year, but will gradually decrease during the second part of the year. Looking forward, the current competitive and towel, jumbo roll market and the higher raw material prices present challenges for us.

However, our focus on operational performance, our stronger asset base, favorable reception to our branding initiative, gradual benefit from our new Scappoose plant and the many recent awards that we had received from customer all point to a promising future for the Tissue Group. We also expect to see benefit from the recently announced 2% price increase on most of our jumbo roll category that is effective July 1, and beginning - and benefits beginning of Q4 from the recent price increase in our Canadian consumer product segment of approximately 10%.

Thank you. I will now turn the call back to Mario for the conclusion.

Mario?

Thank you, Jean. With the second quarter now behind us, we are cautiously optimistic for the reminder of the year.

The third quarter is a seasonally favorable for volume in Containerboard and Tissue. Well, it is less strong in Europe due to the summer holiday season.

In terms of raw material, we expect pricing to remain under pressure due to the strong North American and export market demand. Specifically, we expect our average Q3 OCC price to be stable to slightly higher than Q2 in accordance with the publish recycled fiber market price.

While second quarter results were below expectations, we expect our performance to strengthen going forward. A key part of this will be the implementation of the announced price increases which will offset the impact that today's higher raw material prices are currently having on our margin.

Similarly, the new tissue converting in Oregon will be positive in the medium-term. Finally, and was noted in our release, we are focused on finalizing our ERP implementation and internal business processes, reorganization effort by the end of 2017.

This final push will require diligence in both the corporate and operational level for the reminder of the year. Before opening the call for question, I would like to finish by noting that we are pleased with the significant progress we have made toward delivering on our strategic objective.

In addition to the consolidation of Greenpac, the recently announced sales of our equity position in Boralex and plan for the new state-of-the-art Containerboard converting facility in New Jersey, I like not only our commitment, but our ability to follow through our successfully delivered. We are committed to continue to improve our operational, financial and group profile in the future.

And to this end, we will remain strategic in our capital allocation and execution of our strategy to create long-term value and future growth for the company and our shareholders. We will now open the line for questions.

Operator?

Charles in the Containerboard segment, could you quantify, how much the unusual expenses and higher production costs impacted the second quarter. What those costs were exactly and how of much would you expect to recover in Q3?

There is about $3 million of the overall I’d say about $13 million in cost that are going to -- I can call them like a kind of a one timer. And there is also a $3.5 million, so the $2 million will not be there for the future quarters.

There is also $3.5 million that is due to mix, so during this time of the year, we use or we produce in our converting facility, produce and we use wax and other material that increase our cost. So, this will in Q4 not be there.

We also have maintenance that we did during the during, so some of it will also not be there. But there's still some cost up that will be there for the next few quarters to support our initiative in our transformation.

Thanks, that’s helpful. Charles, I wanted to get your thoughts on what do you think is going to happen with mix paper and OCC prices, China actually follows through with their plans to ban mix.

How much do you think you can push your mills further to use fibers other than OCC, and maybe do you make any progress on that front in Q2?

I will let Luc respond for the first part about the -- what we feel is going to happen on the -- maybe Luc you can answer that and then I’ll answer both the…

Good morning, Hamir. Obviously, we all like the rest of the industry.

There is some level of uncertainty about the Chinese future specification and standards about the contaminant on the mix paper and until we have a better understanding of -- this is very difficult to speculate what’s going to be the impact. I guess one thing that is sure is that, there will be tighter specification for contaminant.

So that's going to push for a cleaner mixed material. It’s going to happen one time or is it going to be more evolutive situation with the Chinese Government, we don't know yet.

So, it’s very difficult for us. So, it does bring a little sudden level of uncertainty.

But we all understand also that the China is falling year-after-year, more than 2 million tons of mix paper and it’s an importance supply for them. So, it just can’t -- it cannot be removed.

But again, the specification on the contaminant could have an impact on the -- either on the OCC or on the news print market. But it’s too early to call for the time being.

In regards of the increase on the overall, it’s probably 2% to 3% that could agree in our mix. But there is two things that we are doing.

First, we're evaluating which mills can increase the mix. So, we know about which one.

I am not going to give u the details. But we know which ones, so we are ready for that.

We’ve done the test to make sure that we keep providing good quality papers and using more mix in our system. The other thing that we are doing also, some of our paper mills are able to use a higher percentage of a Virgin fiber.

And we are doing that as we speak to get to as much as we can.

Thanks. That’s all I have for now.

I’ll get back in the queue.

Can everyone hear me now?

Yes.

Just a few questions. Sorry, I guess I was on mute before.

Just following up on Hamir's question on the non-recurring cost in Containerboard. Did I hear correct, is it $13 million and that’s all-in containerboard?

Yes.

So, when I look at the…

It’s not all the unusual, but for the $10 million -- Charles was explaining the $13 million of other cost variation.

I say so, one when I look, at Slide 25 on the waterfall for Containerboard and you highlighted the $10 million in other which are unusual expense. How much of that $10 million is sequential variation would be tied to the unusual issues?

The $3 million that I mentioned earlier.

$3 million, okay, great. I just wanted to confirm thanking.

And just sticking with the Containerboard, are you able to quantify how much Greenpac contributed to EBITDA this quarter?

No. That’s not an information that we are disclosing.

Okay. Fair enough.

I guess similarly then, would you be willing to give the organic shipment trends for Containerboard in Q2, again, normalized in for Greenpac.

No.

And was any of the February Containerboard price hike reflected in the Q2 results.

Some of it was part of the results in the Q2, but we still have on the converted side, the price increase to happen during Q3.

Oh! I see.

So, the paper side it's been implemented, but then the corrugated side is tough to follow sort of.

Yes. But just to clarify though the increases did to through during the quarter.

So, it was spread during the quarter, but the full impact will be in Q3 and in addition to that on the converting then will happen during Q3 most of the increase.

Great. Okay.

That makes sense. And then the European boxboard segment for Q2, what was the reversal of the provision for electricity materials this quarter?

Yes. It was a product for yield provision for a specific program that was announced by the government, but it did not materialize.

So, we just reversed the provision the quarter.

And just in order of magnitude, was it $1 million, $2 million something like that?

CAD2 million.

Okay. And just last one, for the New York packaging plant, is there a timeline for divesting that asset?

The building is on the market. We put it on the market about a year ago.

So, we do have a lot of interest, but at this point, I can't give you a formal date or closure.

Okay. But you're hoping within maybe the next year or so.

Yes probably, if want to place a date, 18 month, within 18 months would be fair to say.

Got it. Okay.

Thanks very much for all the help. Appreciate it.

Yes, I just wanted to ask on the Oregon converting plant, whether that's a positive contributor as of now or is still in the commissioning phase?

Still in the commissioning phase, yes.

And would you anticipate that to be positive by Q4 or…

No, I would say that my guess would be somewhere like Q1 for away-from-home it's already a bad quarter. So, I'd say that probably Q2 next year would the timing for us the timing for us to cross the line.

And then just on the parent role price increase, I presume it's an industry price increase, but in the context of an oversupplied market, is that -- do you think that price increase will pave?

Oh yes, it's already there. It's on July 1 and it has passed in all categories but in travel and we pushed that and customer realized that with the different price that we pay and the virgin cost that we pay that we need that increase.

So, it passed everywhere, yes.

Okay. Thank you.

And then just a question on the Containerboard waterfall chart on the year-over-year performance. On the $14 million from business acquisitions and other variances, I'm just wondering what the components of that would be other than Greenpac?

As we mentioned, it's other variation outside the production cost?

Other variations outside production costs. Okay.

Is there any other acquisitions in there?

Well, if compared to last year, a small portion of the new facility, but it's not material.

Great. Thank you.

And then just on the sensitivity to the U.S. dollar on Page 33 the $3 million for every $0.01 variation, U.S.

$0.01 variation, does that include Greenpac?

No, not yet, but we will refine the calculation, but it might go up by $1 million a year or sensitivity, just due to the translation of profitability from the Greenpac mill. But there's no other transactional impact on the purchase and sales.

It's only translation of results. We might -- going forward we might be at $4 million.

Great. Thank you.

Few more follow-ups. Mario with rental share price looks like it's at its highest level in almost a decade.

How do you think about when you may look to monetize that business because it doesn't seem like there is really any synergies with the North American platform?

We have not changed our position. At the moment, we were on the status quo.

Obviously, we are evaluating all the different option as we speak and we are really cautious of the value of the share, but we have not changed our position at the moment Hamir.

Okay. Fair enough.

And Charles, just had a couple more questions on the Containerboard business, we've seen Domtar and Verso, both talk about potentially converting capacity into Containerboard over the over the next couple years and both seem to think they could sell into the open market. Just curious how big do you think that open market actually is and do you think a new entrant could actually fill a machine selling purely to the open market?

There's a lot of discussion about additional capacity or conversion. This one we read a lot about in the last few weeks.

We just look at the growth, the 2% or 3% growth on the market. So, if there is one or two additional capacity like this over every second year or something like this, the market should be able to absorb and including some export.

But to sell on the local market to independents, there is going to be a challenge because as you see, there is a lot more consolidation in the market. So, it will be a challenge for new capacity, especially if there is no integration, it would be a big challenge to find out for the mill.

Okay. And Charles, there has been a lot of discussion about eCommerce and how much of the growth we're seeing box shipments being driven by that.

Curious within your business, you're able to measure how much of your volumes are actually going into eCommerce? How do you think that compares to the industry and how much of a driver do you think eCommerce has been to box shipments this year?

Okay. So, I am going to try to give you -- eCommerce is the buzz right now.

So, the statistics just coming out, there is different source, but we’ve outlaid that the growth of eCommerce is around the 15% in that segment and some people say it's higher. So, we're following this.

We're gathering the information and even for us, there's a lot of our customers that are using their product that goes on eCommerce. So, it's difficult to give a percentage, but the thing that we can say and we know are that the growth on eCommerce is about three times what the standard packaging is.

So, there is a big potential on that.

Great. Thanks Charles.

That's all I had.

Yes, I just had a question on the ERP implementation and the other costs categories I guess in the waterfall charts. How does the ERP spending gets split between corporate and the divisional numbers?

Well, as we mentioned in previous quarters, the corporate, the program costs are all in corporate expenses. What Charles was referring to is when we go into a business and implement the ERP or business process, there is some cost related to that in terms of the training cost or if there's any other related cost, it's at the BU level.

But the program cost, we are mentioning a $7 million and $8 million a quarter are all in corporate expenses. And we did not quantify the amount in the business unit, but as we mentioned, as Mario mentioned, we want to finish by 2017.

So, it's quite intense this year. So, we want to finish by the end of the year.

And then just a question on the lightweight Containerboard segment, when new capacity comes on of lightweight containerboard, does it compete more directly with your product or is it really compete in the overall market for containerboard?

It's both, but we did niche our product and a lot of our output of our new paper mill is lightweight. So of course, when there is new mills coming out that are producing lightweight, it competes on two sides.

First replaces some of the volume that mills are not able to produce on lightweight, but it also competes with our product. But the advantage that we have is we've been doing it for more than two years.

We have a solid product which is well accepted with our customers and then it takes also some time to a customer to adapt to the lightweight. So, you did a lot of good relationship with your customers and then you work with them to teach them how to use it also.

So, makes it kind of niche product.

And do you get more uptake from eCommerce players on the lightweight or does that matter?

It's an advantage, lightweighting is an advantage on eCommerce, because the eCommerce de novo are transportation cost is a big portion of the cost and so for sure the lightweighting is an advantage.

Thanks very much.

You're welcome.

Thank you, everyone. And we'll see you soon.

Enjoy the rest of your summer and we'll see you in the next quarter. Thank you very much.