Good morning and welcome to our third quarter 2015 earnings call. Our speakers today will be John Williams, President and Chief Executive Officer, and Daniel Buron, Senior Vice President and Chief Financial Officer.

John and Daniel will begin with prepared remarks, after which they will take questions. During the call, references will be made to supporting slides, and you can find this presentation in the Investor section of the website.

As a reminder, all statements made during the call that are not based historical facts are forward-looking statements subject to a number of risks and uncertainties, many of which are outside our control. I invite you to review Domtar's filings to the Securities Commission for a listing of those.

Finally, certain non-U.S. GAAP financial measures will be presented and discussed, and you can find the reconciliation to the closest GAAP measures in the appendix of this morning's release, as well as on our website.

So with that, I'll turn it over to John.

Thank you, Nick, and good morning, everyone. I'm pleased to report improved third quarter results when compared to quarter two.

EBITDA before items was $171 million, an increase of 8%. We had a solid operating performance considering the annual maintenance outages of some of our mills.

As we take the measures to extract costs and improve manufacturing processes, our assets are operating more efficiently, resulting in stronger productivity and lower costs. In fact, our average cost per ton on slush and dried pulp production was at its lowest level in recent years.

In Paper, our operations ran well, and we have solid productivity. Our volumes trended above forecast, driven by better demand and lower imports, as we continued to position the company to capitalize on opportunities in our key markets.

On raw materials, our fiber costs, which were trending higher through the first half of the year due to weather, were lower. As a result, we took the opportunity to rebuild much needed wood inventory as fiber availability improved and prices continued to trend down.

Freight costs also declined across all sectors of our business, reflecting lower diesel prices, better trucking availability and lower ocean freight rates. In Personal Care, the business continues its earnings progression.

We're making good year-over-year progress on achieving our growth plans, capturing the benefits of our cost savings program, and building out our core capabilities with increasing results to show for our efforts. On liquidity and capital, we cleared up some of our upcoming debt maturities and improved our financial flexibility through the redemption of certain outstanding notes along with new debt financing.

This initiative improved our debt maturity schedule as well as reducing our financing expenses on our outstanding debt going forward. Finally, we further executed on our buyback program, repurchasing approximately $20 million of stock.

Since 2011, we've returned 72% of free cash flow to shareholders through dividends and stock buybacks. We will continue to pursue a balanced approach to the deployment of our capital while maintaining the flexibility to carry out our growth strategy.

In summary, our businesses are executing well from an operational and financial standpoint, and we are delivering strong results. With these brief remarks, let me turn the call over to Daniel for the financial review before I make additional comments on our performance and our outlook for the rest of the year.

Daniel?

Thank you, John, and good morning everyone. Let's start by going over the financial highlights of the quarter on slide 4.

We reported this morning net earnings of $0.17 per share for the third quarter compared to net earnings of $0.60 per share for the second quarter of 2015. Adjusting for items, our earnings were $0.86 per share in the third quarter compared to earnings of $0.61 per share for the prior quarter.

EBITDA before items amounted to $171 million compared to $158 million in the second quarter. Free cash flow totaled $1 million compared to $56 million in the second quarter.

Excluding the premium paid related to the partial redemption of certain notes, free cash flow was $41 million in the quarter. Turning to the sequential variation on the earnings on slide 5, consolidated sales were $18 million lower than the second quarter mostly due to lower volumes and prices in our Pulp and Paper businesses.

Depreciation and amortization was $2 million lower than the second quarter while SG&A was $4 million lower. Our third quarter earnings includes an impairment charge of $20 million related to the accelerated depreciation as part of a paper machine at our Ashdown facility that will be converted into a fluff pulp line in 2016.

I would like to remind you that the similar charge will be recorded every quarter until Q2 2016. Our result also included debt refinancing costs of $42 million and closure and restructuring charges of $1 million.

Interest expense was $64 million, $39 million higher than last quarter, due to the charges related to the refinancing done in the third quarter. We also recorded an income tax benefit of $14 million, consisting of a current income tax expense of $4 million and a deferred income tax benefit of $18 million.

The effective tax rate for the third quarter was impacted by the recognition of additional tax benefits related to the finalization of certain estimate in connection with the filing of our 2014 tax returns, the recognition of benefits related to enacted law changes and by the impairment and write-down of property, plant and equipment and the debt refinancing charges occurring in high tax jurisdiction. Excluding these elements, our effective tax rate would have been close to 26%.

Now turning to the cash flow statement on slide 6. Cash flows provided from operating activities amounted to $67 million or $107 million if we exclude the debt refinancing costs.

Capital expenditure amounted to $66 million in the quarter. This resulted in free cash flow of $1 million for the third quarter or $41 million if we exclude the debt refinancing costs.

In mid-July, we announced the partial redemption of the 2016 and 2017 notes and a new $300 million 10-year term loan. The redemption and the repayment of the August 2015 notes were funded through a combination of cash on hand, borrowings under our credit facilities and proceeds from the new term loan.

This refinancing improves our debt maturity schedule as well as reduces our financing expenses which would be approximately $17 million per quarter starting in Q4, representing a quarterly saving of $8 million. Under our stock repurchase program, we repurchased share for an amount of $20 million.

From January 2011 to September 2015, we returned a total of $1.3 billion to our shareholders through dividend and share buybacks, representing 72% of our free cash flow. At the end of the quarter, we had 62.8 million common shares outstanding.

Turning to the quarterly waterfall on slide 7. When compared to the second quarter, EBITDA before items increased by $13 million due to lower raw material cost of $11 million, a favorable foreign exchange rate of $6 million, lower freight cost of $5 million, lower maintenance cost of $5 million including $16 million of lower maintenance in our Pulp business partially offset by $11 million of higher maintenance in our Paper business, and finally, lower SG&A cost of $3 million.

These were partially offset by lower selling prices of $7 million, higher other cost of $6 million and lower volume and mix of $4 million. Slide 8.

In the Pulp and Paper segments, sales were 2% lower when compared to the second quarter and down 8% when compared to last year. EBITDA before items was $150 million compared to $135 million in the second quarter of 2015.

Now, our Paper business on slide 9. Sales decreased 1%, while EBITDA before items was $20 million lower when compared to the second quarter.

Manufactured paper shipments decreased 1% when compared to the second quarter, and were flat when compared to the same period last year. Our average transaction prices for all our paper grades were $3 per ton lower than the last quarter.

Our Pulp business on slide 10. EBITDA before items increased by an estimated $35 million when compared to the second quarter.

Pulp shipments were sequentially lower by 3% versus the second quarter and down 9% when compared to the same period last year. Average pulp prices decreased $12 per metric ton versus the second quarter.

Our paper inventory increased by 14,000 tons compared to last quarter, while pulp inventory increased by 36,000 metric tons. Our Personal Care business on slide 12.

Our EBITDA before items decreased by $1 million versus last quarter and increased $3 million versus last year, mostly due to manufacturing cost savings and lower raw material costs. Same currency sales in the division improved 1% year-over-year, while same currency EBITDA improved 16%.

So this concludes the financial review. And with that, I'll turn the call back to John.

John?

Thank you, Daniel. This was a strong quarter in a challenging macro environment.

We're operating the business efficiently while delivering good results. In Paper, our year-over-year volumes continue to outperform the broader uncoated freesheet markets.

This is due in part to lower imports, but also to our customer selection strategy, which focuses on growing with strong channel partners. On the trade case, we reached another milestone.

During the quarter, the Commerce Department imposed preliminary anti-dumping duties against certain uncoated freesheet paper importers from China, Brazil, Portugal, Australia and Indonesia. We believe the duties will help offset unfair trade practices facing the industry and we look forward to the Department's final decision in early 2016.

Turning to our operations, we ran well in the quarter with several mills performing above plan. Our efforts within our continuous improvement and reliability program are beginning to show results in both costs and productivity.

We also believe that having a better informed, more engaged workforce with a higher appreciation for what our business challenges are will benefit our bottom line. We have a number of initiatives underway that will result in improved productivity and even better cost management going forward.

In fact, we realized some of these benefits in the third quarter through a better yield on fiber and reduced chemical usage by optimizing our pulp manufacturing processes. In Pulp, prices were down slightly and we do expect them to remain under pressure in the fourth quarter.

Nonetheless, global inventory levels remain relatively balanced, while demand continues to be strong notably in China. We do have a stable customer base and we are aligned with the right customers globally to weather the cycle.

So while the price pressure is to the downside, we don't expect significant further price erosion. It has been several quarters since we made the announcement on the Ashdown conversion, and we have been preparing for the transition.

Our sales team is engaging with some of the world's largest producers of absorbent hygiene products in addition to working in expanding our position with our other top tier customers. Our project team that will oversee the conversion are currently focused on two major areas, preparing for the physical conversion and training our people.

Extensive preparation took place during the mill's annual outage in September, including the rerouting of hydraulics, the installation of a new conveyor system and early work on a rail extension and warehouse expansion. The training for the new machine will start later this year, and this involves a comprehensive process to ensure a successful startup.

Ensuring that our workforce is prepared and fully trained on the new equipment is critical to our implementation success. Furthermore, our success with the Plymouth conversion will provide the knowhow and the best practices during the process.

We also began to build inventories of both pulp and paper in preparation for the first stage of the project. Once completed, it will be one of the largest, lowest cost fluff pulp machines in the world and Domtar's largest capital investment in pulp and paper.

The conversion is expected to come online by the third quarter of 2016 with the permanent closure of paper machine No. 64 in the spring of next year.

The bale pulp line will also provide flexibility to manufacture softwood pulp and ensure an effective startup. Finally, on the front end of the business, I'm proud to mention that we were the recipients of a number of awards during the quarter.

First, we won the PPI Environmental Strategy of the Year Award for The Paper Trail, our revitalized digital transparency tool. And we also earned three Telly Awards for our short documentary, A Portrait on Paper.

In Personal Care, we had a solid quarter despite the seasonality in Southern Europe, and momentum continues to build in the business. Both North America and Europe performed well, and we won several new bids with expected product delivery in the first half of 2016.

In addition, we're gaining market share in private label baby diapers as we further re-establish ourselves in that business. Year-to-date, our same currency EBITDA is 16% higher, so we're making significant progress with capturing cost savings as well as with our partner brand model.

Our unique partner brand strategy focuses on winning with channel leaders and offering turnkey solutions through our three-step plan. First, in material and design, we focus our R&D on innovation capabilities to deliver distinctive products designed to improve skin health and increase consumer value.

Second, mechanical flexibility gives us the proprietary and flexible manufacturing platform and supply chain to make unique products and solutions for our strategic customers. Third, category management and a digital technology focus on our customers' unique attributes while servicing them through enhanced consumer engagement models and value chain solutions.

I'm pleased with the overall feedback we've received so far and how our strategy is beginning to resonate with our customers. Most of the foundational work has been completed in the business including building the required capabilities and product assortment to support our unique business model.

Our near-term priority now focuses on the execution of rolling out our growth plans and continuing to capture the benefits of our cost savings program. We have plenty yet to do, and our focus on execution must continue as it's vital and I look forward to seeing further results.

Now, to our outlook. The fourth quarter will be impacted by the usual seasonality and mix in paper.

However, we expect to benefit from lower imports. But pulp, we're slightly more cautious on the short-term due to the recent strengthening of the U.S.

dollar, but we remain optimistic on long-term market dynamics. Our input costs, notably energy, are typically higher in the fourth quarter due to cold weather.

But we will benefit from lower maintenance activity in our network. Finally, our Personal Care results are expected to continue to benefit from market growth and cost savings from our new manufacturing platform.

Thank you for your time and support, and I'll turn it back to Nick for questions. Nick?

Thank you, John. So, both John and Daniel will be available for questions.

I'd ask our participants to ask a few questions at a time and return to the queue for follow-ups as we want to get as many people as possible. So, Angel, you can open up the lines for questions.

Thank you. Two things.

It looks like you've shifted some maintenance around which might have helped this quarter, and I'm curious if that's reversing next quarter. It looks like it is versus my numbers.

I wonder if you could give us some clarity on what maintenance is going to look like over the next 12 months, how different it's going to be versus this year.

Actually, if you look at year-to-date, we're more or less in line with the plan in maintenance. In Q4, you have in the slide what we expect for Q4.

There was a – all maintenance went well actually in Q3, and the plan for Q4 is as we were expecting it to be. As for next year, it's rather early for us to share anything.

I will be more than pleased to share actually our detailed schedule and expected spending in the Q4 earnings call.

In Q4, okay. Just one more question.

A number of sources have suggested that if these duties and tariffs go in as proposed that U.S. suppliers will not be able to fill demand, do you agree with that?

And if you do, how long do you think it's going to take for non-targeted suppliers to be able to adjust and fill that gap?

Well, Mark, I don't think it's for us to talk about the sort of the market in total. I can only say from a Domtar perspective, we have made some assumptions around the volume that we would gain from that process.

I don't want to share them, if you don't mind. And we've taken actions to absolutely ensure that that volume we're capable of supplying.

So I can only speak from a Domtar perspective. I don't see that issue based on our expectations.

Okay. Super.

Thank you.

Thank you.

Hi. Good morning.

This is actually John Babcock speaking for George. Just wanted to quickly touch on a couple of questions.

First of all, it seemed like the Pulp and Paper results were quite solid this quarter and I just wanted to get your sense as far as what while, I think you guys talked about certainly some manufacturing opportunities there that seemed to have panned out pretty well, and also some lower input cost. I just wanted to kind of get your overall sense on what else might be there too.

All right, let me answer that question, so we had a busy maintenance quarter but when we do that maintenance, sometimes you find things you're not expecting. And we didn't find things we weren't expecting, and our startups were good.

Sometimes a startup can take longer than you're expecting it to take. So that meant our maintenance spending was very tight versus our expectations which is obviously a very strong thing.

We talked a bit and I talked in my published remarks about continuous improvement and reliability and we've changed the structure a while back in our Pulp and Paper business. So actually we took two of our very best mill managers and really have them now focused on continuous improvement and engineering improvement.

Really, looking to get pulp output – so slush pulp output up because obviously that's a free run, if you like, in terms of productivity. And that's really starting to pay off.

So that systemic improvement, we're looking to really move through the network over the years to come. And of course on the cost side, we got a nice tailwind from our wood costs which have been very high due to weather.

And as that weather reversed, we were able to rebuild wood inventory, which obviously puts us in a better position when negotiating prices with local wood suppliers if you have some inventory in place. So those things were really the major items that allowed us to have that strong cost position.

All right.

Does that help?

Thanks for that. Yeah.

That's perfect.

Yeah. Okay.

And then quickly here on pulp, it looks like inventories went up, did you say 36,000 tons or so? And it sounds like that might be ahead of essentially the Ashdown conversion that's expected to occur next year?

That's right.

And so in addition to that, I mean, could you give us any sort of color as far as how much more inventory you might have to build over the next couple of quarters if anything?

I don't think anything too substantial. We have – we might have to build a little more fluff pulp, I think, just so that we can sort of seed the marketplace around that conversion, just make sure that we're in pretty good shape.

But I wouldn't look to see it build substantially from where we are.

Okay. Perfect.

And then yesterday there was some news from RISI that it sounds like what they're – obviously, the U.S. DOC put some countervailing duties on retroactively for Indonesia, and I just wanted to get a sense.

Since it sounds like they are temporarily pulling those back into the U.S. International Trade Commission makes their final determination.

I just wanted to get your sense for what the implications are of that.

Certainly. That's a great question.

So, it is an expected development. After 120 days, those temporary countervailing duties come off.

And it's a routine occurrence because the timing doesn't exactly sit between the two pieces of legislation. So what that means is one Indonesian producer may be able to ship without duty because they had no countervailing duties found against them nor did they have any anti-dumping duties.

But of course, the anti-dumping duties stay in place. Now, if you take a look at what that really means, the anti-dumping duties for some of the major Chinese producers are about 200%.

And for the rest of the Indonesian producers, they're around 51%, 52%. And obviously, there's only a window here.

If you assume that the court finds eventually in February, there's about a three month window. To get it from the mill all the way here is about a six-week supply chain, so our view is this really doesn't change the dynamics particularly.

Does that help?

Yeah. That's perfect.

Thanks again. And that's all I had for now.

You're welcome. All righty.

Good morning and congrats on a good quarter.

Thank you, James.

My first question is just touching on the sanctions a little bit more. You've talked recently about the low-end paper market being soft.

Have you seen that market tighten up at all now that duties are taking effect?

You mean in terms of some of the sort of transactional pricing at the lower end, James? Is that what you mean?

Exactly. Yes.

Yeah. So the answer to that question is we're beginning to.

I think you'll have to look at this. It's very hard at the minute.

I'm not trying to sort of not answer a question. It's hard at the minute to say where this would fall.

I think we're going to see clearer in three to six months in terms where the volume shakes out. There's very little visibility in the inventory that's actually sitting in the merchant community and in some of the customers on some of these grades.

So, my view is we see a little bit of the impact probably right now but hard to tell when that's really going to show through.

Okay. That helps.

And then switching to Personal Care, you saw continued improvement in the quarter. Do you expect that to continue to ramp up through the 2016 timeframe?

Absolutely. So, let's talk about that.

So what you're seeing right now is the impact of us bringing in manufacturing where perhaps we've used third parties and beginning to use and get the full ramp-up on the machine part that we've built. We've probably got a couple of machines left to go.

That ramp-up will have less impact than the old ramp-ups because more of the business, if you like, is now in steady state. In addition to that, our expectation really for the next year on the sort of top line is that we would grow slightly faster than the market because we are having success both in our core customers of growing business and in actually winning some new business.

All right. Thank you.

Thanks. Good morning.

Sean, good morning.

A couple of questions on Ashdown. I guess, your thoughts on how fast the fluff production is going to ramp up once the facility starts up.

And I guess a little bit more detail on how much NBSK you might produce out of the gate there and how that transitions to fluff.

I don't have the detail, but I'll give you sort of what we're planning. So at this moment in time, because of course we own a Personal Care business, our thinking here is that the sort of test customer for Ashdown fluff is ourselves.

So that would mean, on an annualized basis, maybe 80,000 to 90,000 tons from that machine. And then obviously, currently some of that is supplied by Plymouth.

And what we'd be doing there quite obviously is then selling that into sort of the markets where Plymouth is already strong. And then we are already seeding new customers.

So, I think it's going to take some years, I mean certainly a couple of years, before that machine is running full tilt on fluff. The detail of how that's going to fall in, to be honest, Sean, I don't really have at this point in time.

And of course, we do have the baler there specifically to be able to make that balance, but I guess you're aware of that. You're already saying how you're going to move that through over time.

Certainly, as quickly as possible, we'd be making fluff pulp for ourselves at full tilt on that machine. Does that help?

It does. And how much of the capital for that project has been spent to this point?

The project is $160 million. I think there's $140 million left for next year.

So, my answer is more as of year-end than as of Q3. I think in next year budget or next year numbers, you'll see around $140 million that will be linked to the Ashdown conversions.

Okay. Okay.

That's all I had. Thanks.

Thank you.

Yeah. Thanks very much, and good morning, guys.

Just looking for some additional color on the Personal Care wins that you cited for the first half of 2016. I'm wondering how meaningful they are.

Yeah. They are fairly meaningful.

If you don't mind, Paul, because it's wins on private label, we don't really want to give the detail on who it is and what it is and the amount it is because obviously that's proprietary between us and the customer. But they have been substantial.

So, if you are assuming the market is going to grow at a certain level next year, we'd certainly be looking to grow faster than the marketplace. And just on timing as to when they appear, some of them are obviously happening now.

But obviously in Europe, currency is sort of masking that. But really it's from end of quarter one, so March onwards.

That impact will come into the numbers.

Okay. And in terms of geographic growth, is that more in Europe than North America?

I'm sorry, say it again?

In terms of the growth by geography, is that more in North America or...

Actually, it's pretty much 50/50. It's been – we have been very successful in the baby business, positioning ourselves with some major accounts.

If you recall, that was business where we struggled a little bit as we bought it. And, of course, baby is a much bigger marketplace than AI.

So we've had some nice wins in the adult incontinence business, but some very strong wins in baby. That will start to come through second quarter 2016.

Okay. Great.

And then, just on the cost side, you cited, obviously you're going to have lower maintenance in the quarter coming up here. But just on the energy usage side, what's the delta there quarter-over-quarter and is wood – I suspect that the increased inventory woods should come down or...

I think, Paul, there is normally a little bit of seasonality in Q4 because of weather. So, yes, we have – I mean, excluding that weather question, I think, wood – our forecast is for flat, maybe a little bit of benefit in Q4.

Energy is moving up and down. Difficult this one to predict, and weather is really impacting that one.

Normally in Q4 it's a small negative versus Q3, but we'll see what El Niño will do to the weather this fall.

All right. That's all I had.

Best of luck, guys. Thanks.

Thanks, Paul.

Thank you, Angel. As a reminder, we will release our fourth quarter and full-year 2015 results on Friday, February 5, 2016.

Thank you for listening and have a great day.