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

Sean Steuart - TD Securities Hamir Patel - CIBC Capital Markets Keith Howlett - Desjardins Securities Paul Quinn - RBC Capital Markets

Thank you, operator. Good morning everyone and thank you for joining our second quarter 2018 financial results conference call.

Our speakers on this morning's call are Mario Plourde, our President and CEO; Allan Hogg, 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 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 first half financial report released on July 31st can be viewed on 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 our accompanying Q2 2018 Investor Presentation for details.

This presentation along with our second quarter press release can be found on the Investor section of our website. 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 contact us after the session. I will now turn the call over to our CEO.

Mario?

Thank you Jennifer good morning everyone. Earlier this morning we release second quarter results that were in line with expectations.

We are pleased with our performance on the consolidated basis will shipments, sales and adjusted EBITDA levels registering increased both sequentially and year-over-year. Driving result was a strong performance from our containerboard segment that was itself driven by lower raw material cost, the rollout of the price increase, and the good market fundamentals.

Boxboard Europe also contributed to the improved results year-over-year and sequentially, reflecting a similar trend in lower recycle fiber costs, favorable pricing, and a sound industry dynamic. The specialty product improved results sequentially as a result of higher selling price in the packaging segment and an improved contribution from the recovery sub-segment following the more stable recycle material prices.

The significant variation in recycled prices year-over-year was the primary reason for the shortfall and this segment result compared to the second quarter of last year. Finally, the tissue segment increased sales both sequentially and year-over-year in spite of the increased level of competition in the market.

Results, however, were impacted in both cases by higher raw material prices, higher transportation costs, negatively impacted result for all our North American operations. On the KPI front, second quarter shipments increased by 3% from Q1.

This reflected higher shipment level in containerboard and tissue driven by favorable seasonal demand and business acquisition and startup in containerboard. These were offset by lower shipment levels in boxboard Europe driven by the more selective sales strategy.

On a year over year basis, Q2 shipments increased 2% driven by 9% increases in containerboard and tissue offset by lower shipments in European boxboard. Our second quarter capacity utilization rate of 97% was 3% above Q1 and 2% above the prior year's levels and was largely driven by our containerboard division.

On the raw materials side, the average Q2 index price for OCC brown grades fell by a significant 52% year-over-year and decreased by 23% compared to Q1. The average price of the sorted office paper white recycle grade which makes up a large part of our raw material use in our tissue business increased 12% year-over-year and 17% compared to Q1.

Tissue segment performance was similarly impacted by virgin pulp pricing, which increased both sequentially and compared to the prior year levels. Specifically, hardwood pulp was up 4% from Q1 and 19% year-over-year while softwood pulp increased 6% and 20%, respectively.

Looking more closely at OCC, prices declined by $5 in April in the northeast US and then decreased by an additional $10 in May. Price action stabilized at an index level approximately $16 in the northeast US, however, while recycled grade continued their upward trend showing an increase of $5 for the northeast U.S.

in the most recent publication. I will now pass the call over to Allan who will provide you the highlights of our second quarter financial performance.

Allan?

Yes, thank you Mario and good morning everyone. So I will begin with sales on slide 10, 11 of our second quarter conference call presentation which can be found in our investor section of the website, along with all reconciliation non-IFRS measures.

On a year-over-year basis, second quarter sales increased by 49 million or 4%, this reflects improvements in pricing and sales mix in all of our segments with the exception of tissue, recent acquisition in containerboard and European boxboard, and also improved volumes in containerboard and tissue. Litigating this was a less favorable fund exchange rate for our North American operations and our lower contribution from our recovery and recycling activities.

Sequentially, Q2 sales increased by 81 million or 7%, better volumes and a more favorable foreign exchange rate for all of our North American operations combined with improved selling prices and sales mix for all our packaging segments and a slight improvement in our recovery and recycling activities all contributed to the sequential improvement. These were partially offset by lower volumes in boxboard Europe and less favorable Canadian dollar and euro exchange rate.

Moving now to our operating income and adjusted EBITDA. As highlighted on slide 12, Q2 operating income was 25 million above last year and adjusted EBITDA of 134 million increased 27 million from prior year levels.

The presidents of each of our segments will provide more details regarding performances of their respective groups. On a consolidated basis, results benefited from a stronger performance from our containerboard and European boxboard divisions and lower corporate expenses.

These were partially offset by lower contributions from the tissue and specialty product segments. As were the case in Q1, transportation costs continue to impact all of our North American activities in the current quarter.

The change in depreciation expense reflects business acquisition and new equipment startups during the past year. Sequentially, Q2 adjusted EBITDA increased by 29 million; this was largely driven by consumer board and also from sequential improvements in specialty products, boxboard Europe and corporate activities.

A sequential decrease generated in tissue partially offset these benefits. Slide 14 and 15 of the presentation illustrate the year-over-year and sequential volumes of our Q2 earnings per share and the details of the specific items that affected our quarterly results.

As reported, earnings per share totaled $0.28 in the second quarter compared to reported earnings per share of $2.70 last year which included amongst items a fair value evaluation gain and related tax liability reversal following the cancellation of the Greenpac results in Q2 last year. Our second quarter adjusted EPS increased by $0.05 year-over-year to $0.30 per share.

As we have noted in recent quarters, net earnings attributable to non-controlling interest in Greenpac and Reno De Medici was higher compared to last year, thus reducing our share of the net results. Income tax provision variation is also significant due to the use of tax assets in the second quarter of 2017.

On a sequential basis, second quarter adjusted earnings per share increased by $0.17 during the quarter. Slide 16 and 17 of the presentation illustrated specific items recorded during the quarter impacting operating income and net earnings.

The only specific items recorded are related to financial instruments variation. Cash flow from operations increased by 22 million year-over-year to 111 million.

Adjusted free cash flow decreased by 25 million as a result of higher CapEx level in 2018. Moving now to our debt reconciliation as detailed on slide 19, our net debt increased marginally in Q2 as a stronger cash flow from operations and slightly lower working capital requirements were offset by capital investments, capital lease acquisition related to the new containerboard Piscataway converting facility and a less favorable FX rate on our US denominated debt.

The main CapEx realized in the second quarter is related to the construction of the Piscataway converting plant in New Jersey. Our net debt leverage ratio stood at 3.5 as of the end of the second quarter, a slight improvement from 3.6 at the end of the first quarter, all on the pro forma basis to include our recent business acquisitions.

Also note that we have extended the maturity of our revolving facility by one year to July 2022. For additional details regarding our first quarter performance on a segment basis, please refer to slide 21 through 26 of the presentation where our near-term outlook is detailed on slide 28.

Thank you for your attention; I will now pass the call to Charles who will discuss the second quarter results from our containerboard packaging group.

Thank you Alan and good morning everyone. On a sequential basis, the second quarter shipments reached 385,000 tons in the containerboard group which represents a 9% increase.

Paper shipments to external customers increased by 23,000 tons from the previous quarter which reflects an 11% increase in our operating rate during Q2. Our integration rate remained stable at 56% when including shipments to Greenpac partners.

When including paper sold to our associated companies, our Q2 integration rate totaled 76%, up from 72% in the previous quarter. As a reminder, we experienced some mechanical issues during the first two months of the year which resulted in a production shortfall in the first quarter.

On the coverage side, shipments increased by 6% sequentially which is in line with the 6% increase reported for both the Canadian and the U.S. market.

On the pricing front, our average selling price increased by CAD$39 or 3% on sequential basis. This is a result of US$50 price increase we began implementing during the second quarter.

On a segment basis, our average Canadian selling price for containerboard increased by 7% while our corrugated product average selling price in Canadian dollars increased by 2%. The 2% appreciation of the Canadian dollars similarly had a positive impact on our average selling price during the quarter.

The beneficial impacts just discussed were partially offset by a less favorable product mix in the period. During the second quarter, the containerboard generated EBITDA of $105 million which represent a margin of 22%.

This compared to margin of 18% in the first quarter and 13% in the same quarter of last year. Our improved sequential results were largely driven by higher volumes which contributed in additional 12 million to profitability.

Lower raw material costs more specifically OCC and higher average selling prices also added $9 million and $6 million respectively to profitability. These benefits more than offset the impact of higher operational costs which subtracted 6 million from profitability and were mostly the results of higher repair and maintenance costs, higher chemical cost due to seasonality, as well as product mix and higher transportation costs.

Before discussing our short-term outlook, let me touch on two elements. The first of these is the progress of our new state of the art corrugated plant in Piscataway, New Jersey.

I'm pleased to report that construction has been completed and the plant is running as expected. The corrugator and 3 converting presses began operating at the end of May and the ramp up is going according to plan.

We continue to expect to complete the project within the US$80 million budgeted. The second regards our acquisition of the White Birch, Bear Island Mill located in Ashville, Virginia announced at the end of July.

I would like to take this opportunity to reiterate the advantages of this transaction. The access to an experience workforce with expertise in paper making is a great advantage.

It would also allow us to better serve our customers and to expand our market share by increasing our capacity to provide clients with high-quality recycle lightweight liner board similar to what we produce at our Greenpac mill. The extensive due diligence that we have completed fully supports our belief that this asset in particular provide an excellent conversion opportunity.

Moreover, the size provides a potential platform for continued growth through downstream converting capacity. As we mentioned at the time of the announcement, we will provide additional details about the project once plans have been finalized and approved.

Finally, our short-term outlook is positive. We expect demand levels to be in line with historical seasonal trends and our results will continue to benefit from the favorable OCC pricing.

In addition, our results will benefit from the full $50 price increase announced for both liner board and medium which was fully implemented throughout manufacturing segment as of the end of May. The corresponding 8% box price increase is currently being rolled out in our converting segment and will be fully implemented by the end of Q3.

Thank you for your attention, and I will now ask Mario to provide you with an overview of our boxboard activities in Europe. Mario?

Thank you, Charles. The European boxboard segment generated strong result in Q2 with sales up 9% and adjusted EBITDA up 43% from prior year levels reflecting the continued solidity of the market.

Much like the first quarter, second quarter results were driven by increases in average selling prices, lower raw material cost and more favorable exchange rate and the consolidation of the recently acquired packed service company. Compared to the prior year levels recycled boxboard shipment decreased by 4% reflecting lower shipments to Western Europe and lower production at several facilities.

While shipment of virgin boxboard decreased by 8% during the period. The average selling price rose by 8% or EUR39 and by 12% in Canadian dollar compared to Q2 last year.

This was driven by 6% or EUR30 increase in the average selling price of the recycle boxboard and a EUR45 or 7% increase in the average selling price of virgin box board during the period. Sequentially, the 6% decrease in sales in Canadian dollar reflect lower volume and the slight appreciation of the Canadian dollar compared to the euro, partially offset by higher average selling prices.

Second quarter adjusted EBITDA increased by 2 million compared to the first quarter resulting in a 13% margin. This is the result of higher selling prices and lower raw material costs, the benefit of which were partially offset by higher energy expenses and the transaction costs related to the acquisition of the Barcelona Cartonboard.

The underlying market dynamics remain solid in Europe with order inflow and other backlog levels both healthy. And internally, the company continues to implement internal initiative focused on production planning, supply chain optimization, and improved sales mix.

That said, this quarter results are expected to be lower than the second quarter largely due to the usual lower level associated with the summer holiday. Furthermore, white grade price in Europe are expected to increase slightly during the quarter.

I will now pass the call over to Luc who will provide you with an overview of the performance of our specialty products. Luc?

Thank you Mario, good morning. The specialty products group generated top-line results of 164 million in the second quarter which represent a slight 3% sequential increase.

The usual favorable seasonality for the consumer product packaging segment resulted in the higher shipments during the quarter. It's also worth mentioning that volumes improved sequentially in our recovery activity following the disruption caused by change restrictions that were implemented at the end of 2017.

In general, we experienced an improved and more stable flow of recovered materials. Price increases have also been implemented in most of our packaging segments in response to higher liner and risen costs.

This positively impacted our top line in the second quarter while the FX variation generated a minimal positive contribution. During Q2, our EBITDA totaled 9 million, which represented a 28% improvement from Q1.

Our paper recovery activity generated better results during the period, improving their EBITDA contribution by more than 2 million. A combination of more stable market price commission, improved operational efficiencies [indiscernible] of material and focused team efforts on margin improvement have already led to benefit for this segment.

Regarding the performance of our packaging operations, second quarter results remain fairly stable despite more favorable seasonality. As highlighted during the previous quarter, we completed a major equipment upgrade at our URB mill during the second quarter.

The related downtime and subsequent startup mitigated the benefit of wider spreads in our industrial packaging segment. Consequently, we recorded stable results compared to Q1 in this segment.

Likewise, the consumer product packaging segment EBITDA remained stable. Higher shipments of model pop and plastic products were offset by increased training, labor cost, as well as product development activity related to new equipment installation and startups at our flexible and rigid packaging plants.

Regarding our near-term outlook, we definitely expected to see more stable and predictable market conditions for recovered fiber in both the near term and mid-term. Hence, the recovery segment is expected to continue to improve with results during the third quarter.

OCC remained relatively abundant despite solid domestic demand as China is actively pursuing its objective to control the quality of material entering its territory and is, therefore, strictly enforced accordingly. Moreover, China announced yesterday a potential 25% tariff on recover paper imports effective August 23.

As for white grades, market conditions are mainly driven by tight virgin pulp market condition and the limited and declining offer of office and white [indiscernible] rates. This market will remain under-pressure for the short term, even though we anticipate the price of pulp to stabilize as the year progresses.

For packaging products, demand is currently brisk as the summer season is in full swing and we should also start seeing benefits of the newly installed equipment. We expect higher results from all our segments for the second half of 2018.

Thank you for your attention, and I will now have Jean to present the results of the tissue papers group.

Thank you, Luc. Good morning everyone.

The issue group continues to face very difficult market conditions, while volume increased year-over-year, the cost of white recycled fiber, virgin pulp and transportation costs continue to increase, which is significantly impacting our overall profitability. Let me touch briefly on each of these.

For the second quarter, we delivered adjusted EBITDA of 7 million, which translates into a margin of 2% and compared to the $35 million or 10.4% that we generated in Q2 last year. On a sequential basis, performance was also down from our first quarter adjusted EBITDA of 21 million and margin of 4.2.

On the positive side, total shipment increased by 9% year-over-year, shipments of converted products increased by 5% thanks to the market inroads we continue to make on the West Coast and higher demand in our targeted market segment. In the parent roll segment, shipment increased by 17% which reflect our successful efforts to manage inventory levels combined with an increase in overall market demand levels.

On a sequential basis, overall shipment increased by 10% reflecting both market seasonality and increased demand. Shipments in our parent roll sub-segment increased by 4%, while our converted product shipment increased by 13%.

In terms of pricing, the average selling price decreases by 7% year-over-year. This was in part due to the higher proportion of parent rolls in our overall shipments, the strengthening of the Canadian dollar and less favorable product mix.

On a sequential basis, our quarterly average selling price increased by 2% and is largely due to a lower proportion of parent roll sales and the weaker Canadian dollar. On an operational basis, the overall impact of the white recycled fiber and virgin pulp increases negatively impacted our results by 13 million year-over-year.

This was driven by a year-over-year increase of 19% in our virgin pulp, 20% in softwood pulp, while the recycled fiber - white fiber increased by 14% from last year levels. In addition to the important increase in market prices, a higher amount of virgin fiber is also required in our mix to meet customer requirements.

Sequentially, the higher virgin pulp price and recycled white fiber prices negatively impacted our result by 7 million. On the transportation side, cost has been steadily increasing over the past months and these rising costs negatively impacted our overall results by 8 million year-over-year.

As we mentioned in the past, the combination of the current North American transportation network challenges and increase fuel cost are the driving factor behind this significant increase in cost. On a sequential basis, the increase in this cost impacted our results by more marginal $1 million.

Moving now to our west coast converting plant, I'm pleased to note that we are making good progress in terms of sales and in this new market. As of today, we have secured approximately 50% of the overall capacity.

The team remains focused on successfully achieving our market development plan. The current reality of rising raw material prices and increasing transport cost has put a lot of pressure on margin.

Therefore, we have announced the following price increase in Q2. Up to 9% in the away from home segment across North America effective July 1, up to 13.8% in the customer business in Canada effective October 21, and finally, effective July 1, we have announced an increase on jumbo rolls for all of our customers.

The increase will affect virgin pulp grade by $50 per short ton, recycled white grade by $25 per short ton and brown recycled jumbo rolls by $20 per short ton. As we previously highlighted in the past, variation in contractor terms mean that the full implementation of these price increase take about six months.

Looking forward, we expect that the current condition will remain a challenge for us. Unfortunately, we anticipate that raw material and transferred cost will remain high.

However, recently announced price increases bring a positive momentum. That begin said, we'll continue to focus on our innovation and strategic initiative in order to add value for our customers.

Some of which we plan to launch at upcoming industry events. We will also continue to dedicate resources to offset these rising cost by working on pulp and transportation optimization, manufacturing productivity levels and continuing to ramp up the west coast market development.

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

Thank you, Jean. We expect our mid-term results to reflect similar trends to those of the second quarter.

Performance is expected to be driven by our containerboard business where stable raw material pricing, the continued rollout of the $50 price increase and healthy market fundamentals are supportive of a positive outlook. With this near-term challenge in our tissue business, market conditions remains difficult as the rate of new capacity continue to outpace growth and demand.

Raw material pricing is similarly having an important impact on profitability levels. However, in spite of these challenges, our mid-term outlook is stable for tissue.

We anticipate volume gain in price increase expected to act as a counterbalance. We continue to be very proactive in our management of se dynamics and our focus on optimizing our operational performance and efficiency.

And importantly, we expect that challenges related to the availability of truck and driver and significant increase in transportation costs will continue to impact the performance of all of our North American operations and for the foreseeable future. These issues are widespread affecting many industries across the US and Canada.

We continue to evaluate and implement strategies to optimize our logistic including working closely with our suppliers and our customers, many of who are also dealing with today's more expensive and challenging transportation environment. Before opening the line for questions, let me highlight some of our recent news beginning with the progress of our new containerboard converting facility in Piscataway, New Jersey.

The team did an excellent job of completing this project and I am pleased to know that the facility began production in May, on schedule and on budget. We look forward to fully realize the operational potential of this state of the art facility.

More recently, we announced the acquisition of the Bear Island, Virginia facility and our intention to convert the machine to a lightweight recycled containerboard asset. We look forward to providing the market with more details about this important project once final plans have been completed and approved.

Last but certainly not least, let me reiterate once again that we remain committed to reducing leverage. This commitment holds true even given our CapEx plan and potential project requiring investment.

We can and will actively manage our leverage by being disciplined in our capital allocation and be flexible with both the timing and magnitude of our investment and the - even there our material change in for cash flow levels and/or market dynamics. We are confident that we will succeed in this regard while carrying out our strategic plan of modernizing our platform, optimizing our geographical footprint and increasing our integration rate.

And to these efforts, long-term sustainable value will be created for our shareholder, our employee, and the company. On that note, I will now be happy to answer your questions.

Operator, open the line please.

Thanks, good morning everyone. Few questions.

I want to start with OCC costs. As you mentioned, they've stabilized since May, I guess on average around $65 a ton.

Given the ongoing import restrictions from China, are you surprised there hasn't been incremental pressure since May. And to that point, can you discuss competitive demand for the product in North America?

This is Luc, Sean, I can answer that. At $65, obviously, the material currently is abundant.

And our focus now is really trying to improve our logistics and reduce line of cost of materials to our mills. This is really where we spend a lot of our efforts these days.

When you have a price at $65, I think we probably approaching floor level under which the cost structure will start impacting the recovery of material. So that's how we see it now.

But obviously, the material was already abundant. These additional potential tariffs and our ban in 2020 are just reinforcing our view that the material will now go out.

Understood. My next question is on Europe, you're seeing or the mid-term anyway more consistent better results from that segment and that's starting to reflect in Reno share price as well.

I know the leverage there is low, but do you have any updated thoughts on potentially exiting that investment as a means of building liquidity ahead of other growth initiatives on deck.

On the short term no, we have not changed our strategic approach with Europe. I think there is additional value to be captured in Europe.

So, no, we have not changed our plans going forward with Europe. We think the Barcelona that would be coming online eventually will certainly be a positive for Europe.

All the efforts that are being done in Europe are generating good result when you look at their EBITDA level being up 13% now. It's really interesting and they are moving toward being very close to their competitors.

So, no we have not changed our approach with our position in Europe.

Charles, on the containerboard waterfall chart, I didn't see much quarter over quarter uplift from pricing and a couple of your US containerboard peers seem to be getting their price hike coming through quicker than expected. So just curious, off the $50 per ton what percent was in Q2, where do you think Q3 will be and should we still expect some more flowing through in Q4?

We still have some work to do on the converting side as we mentioned, the full impact of our liner and medium rolls are entering the quarter, but we still have some contracts that are up and dictating that the price increase that we have and like we mentioned by the end of Q3, this will be fully in place.

So, Q4 will be the first full quarter with the pricing in.

With the full impact, yes.

Allan, I just had a question on capital allocation, saw your buybacks of 6 million worth of stock in the quarter, stocks trading below tangible book and for a while Cascades has been trading at an almost two churn discount to some of its peers. How do you view buybacks when you're looking at capital allocation, you talked about debt repayments but just given where the stock is today, where to buy back stock up?

It's always a question of finding the right balance. We have increased our buyback program during the first quarter.

So, now I believe we have over 1 million shares that are possibly being bought back. So that's something we'll monitor and as you see, it's trading below a certain value metrics.

So we will focus on that and I believe with the strong cash flow we have, it's something we can address and it's always on an evaluation mode.

And looking at the corporate line, it is the 17 million sort of the new normal now and what would be the normal corporate number without the ERP and how much unwind is left with that ERP?

There's some benefit from the cost reduction, there's a room to improve - continue to improve, so maybe that 17 million can be lower. However, in that you also have the impact of stock-based compensation.

So with price of our share being lower, so that was a positive variation and that's always something that can move up and down depending on the share price, but I believe that 17 million can be slightly lower going forward in the coming quarters, yes.

I'd like to ask about the New Jersey box plant, I presume that you're taking the customer demand from the Queens plant and putting it in New Jersey. I'm just wondering whether that plant will have sufficient volume to sort of start to close to breakeven or what you anticipate the drag from the plant to be.

Thank you for the question. The plan is from now - from the date it started production to the end of the year, we will maximize the volume that we have not only in the queen's plans but we also have other divisions or plants in the US.

So we want to put the volume where it brings them more value to the company, so this is our first step and that will be done from now till the end of the year. And starting in 2019, we will be having growth in the plant with external or new customers.

We have been working on developing customers having visits in that facility for the last year. So we do have - we're very optimistic about the potential, but from now till the end of the year, we will be moving volume around in our facility.

So it will be a positive contributor based on greater margin?

Starting in 2019.

And what is its capacity sort of relevant, I should know this, but relative to Queens?

The total capacity - the installed capacity of that corrugator is 2.4 billion square feet and Queens the installation that we had is 1 billion square feet but that's for the corrugator, we also have installed converting facilities, so in a box plant you have a combination of sheets and boxes. So on the 2.4 billion square feet, up till now with the installed equipment, we have 1.8 billion square feet that we can produce of converted product.

And then I want to ask about the outlook on the tissue business, with your price increases announced and Procter & Gamble, KP Tissue. I'm just wondering whether you feel that the industry is getting ahead of the cost increases or at least equal with them or is there still more to go there.

It's very difficult to answer that, everybody have their own cost, their own mix. So it's another one to go forward to talk about what others can do so.

[indiscernible].

Just in terms of your own outlook going into say 2019, do you feel we're sort of troughing here in Q2 and Q3.

Well, honestly, at this point, it's pulp price, it's just sizing pricing, it's grade situation that drives it up and how much we will be able to compensate the price increase. So, it's very, very difficult to evaluate, but we certainly hope so.

And then if I just ask on the Oregon converting plant, with that - what would your outlook be as to when that plant would achieve break even.

Well, we said at the last conference call that it won't be before next summer because this is a plan that is on the away from home and in Q4, Q1, volume goes down in the away from home, so it's not before mid-year next year for sure.

And just in terms of the capital budget of the company going forward, can you just update us on the tissue operations and the plans on the capital spending there?

As we see when we had the call in Bear and we expect this year to be within the range we have provided including the purchase of the asset and for next year, we expect a similar level given the project we have in tissue and also some of the investment on the island. So, we'll be in a position to give more detail once the final scope of the project will be completed.

Just one quick follow up. On the slide 22, the sequential EBITDA progression for each of the segments, for tissue, you're showing an $8 million sequential headwind that's in the other segment I suppose and I guess some of that's freight and some of it is price which isn't backed it anywhere else.

Can you give us an idea of what's included in that and just from your previous comments, it sounds like freight pressure has been more pronounced for tissue than some of your other segments and maybe I'm misreading that, but can you give us some context on that difference as well?

Sure, in that bucket of 8 million that you're referencing there's $1 million for freight, there is $2 million for fixed. On the next slide because we have reduced our inventory of jumbo roll, degrade and sell more brown fibers I also another 3 million there.

So, basically that's the big bucket. We are impacted a lot on freight because we ship a lot in the US further away than the rest of the group of Cascades.

So, further away and more trucks go into the US. so we are impacted more than the other group.

Maybe just starting Tissue, just wondering - just trying to figure out the price increase, and I know specifically for you and your mix, is the price increases that you've outlined across your product spectrum, is that going to offset the kind of 20% year-over-year increase you've seen in pulp and freight cost?

No. I want to answer that Paul, we don't want to give guidance signaling around that.

But, no.

As we mentioned, Paul, it is positive momentum along with the great volume. So, it's positive momentum for the business.

Yes. Just tried to forecast it out though.

So if I put in price increases, I got - does that deal with half of the inflation you've seen over the last year?

We won't go into that detail, Paul.

Okay, maybe just switching over the West Coast converting. You mentioned that you're at 50% of capacity now.

When you expect to get to the full ramp? Is that mid-'19?

[Indiscernible] how successful we'll be with the inroad but this year we're doing very good and it's always tougher at beginning, so we're really looking for having a better 2019 and so far we're increasing every month.

But we have the team in place, so everything looks good.

Oh yeah, that's what we said the last time, that's what I said in my comments.

Okay. So maybe switching over to something that's doing really well, Mario.

Boxboard Europe is delivering some pretty strong results, looks pretty good. Is this business segment now more strategic and core to Cascades than it's been in the past?

We have not changed our position basically, Paul. You were pleased with the result and this is what we communicate to the industry that there was value to be added.

And you're seeing evaluation coming up, and I think there is more to come, so, no, we have not changed in terms of the positioning of the group within the rest of the country.

Okay, then lastly, just on - I guess recovered papers, specifically, OCC prices going forward. Now we've got some tariffs in place.

Expectation for the balance of the year in 2019 on OCC pricing?

We don't expect to see any up movement increasing of any type with OCC for the rest of the year.

How much down you expect then?

It will be a small number because as I said earlier, we are approaching the floor level for the cost structure and we don't want to impact the recovery of the fibers. You cannot go much lower than what it is now.

This is our opinion, so maybe this five, ten bucks max could go down, lower than that that would be impacting the supply chain.

So, I just wanted to ask, on the waterfall chart where their tissue papers, I'm wondering where the Oregon converting plant fits in, is it under other variances or?

No, it's everywhere, it's all bucket.

The volume is in volume, but all the costs related to the sales force initiative is in other volumes.

On a year-over-year basis would it be better than last year or do recycle getting improved - does improvement begin in Q3 or are we already - is it already better year-over-year in Q2?

We are better year-over-year.

All right thank you everyone for being part of this call this morning and we're looking forward for the Q3 calls and hope to see you all there. Thank you and have a great weekend.