Don Demens - President and CEO Steve Williams - SVP, CFO and Corporate Secretary

Sean Steuart - TD Securities Paul Quinn - RBC Capital Markets Hamir Patel - CIBC Capital Markets Robert Winslow - BMO Asset Management Daryl Swetlishoff - Raymond James

Great thank you, Valeria and good morning everyone. I’d like to welcome you to Western’s 2016 third quarter conference call.

Joining me on the call today is Steve Williams, our Senior Vice President and Chief Financial Officer. We issued our third quarter results yesterday so I’ll provide you with some introductory comments and then ask Steve to take you through the summary of our financial results.

I’ll then share our outlook for the next few quarters and provide a review of our capital projects. We’ll open up to the call to your questions.

Before we get started today, I’d like to address a tragic death of a contract faller working Western on the west coast of Vancouver Island on September 11. Our deepest sympathies go to the family, friends and colleagues impacted by this tragedy.

We’ll do everything we can to learn from this incident and when it comes to safety, we remain committed to our goal of achieving zero incident workplace. Returning to our results, pleased to report record third quarter adjusted EBITDA of $35.7 million, 24% higher than the previous third quarter record which we set last year.

Significant higher lumber production from our increasingly modernized sawmill operating platform, supported the highest lumber sales volume since 2007 and our well positioned log inventory supported increase log sales volumes. Our improved sales volumes and continued strong pricing for both our lumber and log products overcame as seasonally weaker product mix to deliver a record quarterly revenue of $323 million.

Operationally we achieve the number of success including 17% increase in lumber production compared to the third quarter last year. As we continue to ramp up volumes in our increasingly modernized operating platform.

We increased lumber shipments by 13% compared to last year and 10% compared to last quarter. And importantly we doubled our saw-log purchases which underscores our increased competitive position in the log market and a success of our first nation joint venture and limited partnerships.

So to summarize, we delivered record third quarter adjusted EBITDA as we grew lumber production and lumber sales from our increasingly modernized sawmill operating platform while at the same time capitalizing on a well position log inventory for log sales volumes. Our operating results allow us to continue our balanced approach to capital allocation as we return $7.9 million to our shareholders through our quarterly dividend program and we’re reducing that debt by $24.3 million.

Subsequent to the third quarter, on October 21, we received compensation of $14 million from the Province of British Columbia a settlement proceeds for the partial tenure extinguishment from the Maa’nulth First Nations Final Agreement Act. The creation of Treaty Settlement Lands, and associated protected area resulted in a permanent reduction of harvesting rights of 104,000 cubic metres in TFL 44.

The settlement proceeds represent the value at the time of the tenure extinguishment which was April 2011. We’ve used the compensation to pay down a revolving term loan further reducing our outstanding debt.

And with that, I’ll turn it over to Steve to review couple key of our financial results.

Thanks Don. Let me start by discussing our Q3 EBITDA results.

As previously mentioned adjusted EBITDA for the quarter was $35.7 million, a 24% increase over the third quarter of 2015 and 17% from the second quarter of 2016. Increased export log and lumber sales volumes improved pricing and strengthen commodity lumber market delivered a company record third quarter adjusted EBITDA.

A normal seasonal decline in log and lumber sales mix contributed to a lower adjusted EBITDA result when compared to the second quarter of 2016. To support cedar production in sales growth we increased the volume of higher cost, purchased cedar logs to 43% of total cedar mill log consumption as compared to 18% in the same quarter last year.

As compared to the third quarter of 2015, lumber revenue increase 16% reflecting strong specialty in commodity lumber markets, a 13% increase in shipments and improved price realizations. Log revenue increased 22% as strong market for our logs drove 7% increase in saw logs sales volumes and a 14% increase in the average realized saw log pricing.

By-product revenue declined by 2% as compared to the third quarter of 2015 as a result of reduced pricing. From a profit and loss perspective, third quarter operating income was $24.2 million in 2016 up 32% from $18.3 million in the same period last year.

Net income was $16.8 million or $0.04 per diluted share as growth in operating income was offset by deferred income tax expense of $6.1 million. This compares to $17.1 million or $0.04 per diluted share in the third quarter of 2015.

Now moving onto cash flow for the third quarter. Cash provided by operating activities excluding non-cash working capital increased to $33.2 million in the third quarter compared to $25 million in the third quarter of 2015.

After taking into account non-cash working capital cash provided by operating activities was $42.2 million compared to $38.4 million in the third quarter of 2015. These increases were primarily driven by higher log and lumber shipments.

Our capital expenditures totaled $9.4 million in the current quarter made up of discretionary maintenance capital $3.7 million. Discretionary investments inroads of $4.1 million and strategic capital spending of $1.6 million.

Our third quarter strategic capital expenditures included the completion of latest phase in the modernization of our Duke Point sawmill and our LiDAR forest inventory mapping project. Pending further certainty the replacement of US, Canada Softwood Lumber Agreement, our strategic capital focus is shifted to small scope, high return capital projects.

Completing the outstanding projects and the ramp up of recently completed capital projects. Also during the third quarter we distributed dividend to share $0.02 per common share totaling $7.9 million.

Following quarter end we received $14 million from the Province settlement proceeds for our permanent harvest rates reductions that occurred in April 2011. These funds were applied against our outstanding debt.

The strong cash flow from operations and a strong balance sheet, we continue to be well positioned to execute on our balanced approach to capital allocation. Our strength and approach will help mitigate potential uncertainty in the markets and any outcome to the software trade discussions.

Don, that concludes my comments.

Well, thank you Steve. So I’d like to start off the outlook section by touching on seasonality.

In typical fourth quarter consumption of lumber declines in North America as the onset of winters closed construction. In our Timberland’s harvest volumes decline as we lose delayed operating hours.

In addition, operations could be negatively impacted by severe weather which can limit production. Reduced volumes can put upward on logging costs.

Seasonality aside our mid to long-term global market outlook remains positive. The gradual recovery in United States new home segment discontinuing as is the strength in the repair and renovation segment.

We’re also pleased to see the continued growth and demand for Forest Products from China. Before discussing our near term market expectations, I should comment on the ongoing discussions, our Federal Government is leading, in an effort to reach a new Managed Trade Agreement with United States.

We remain supportive of our government’s efforts and look forward to some positive engagement from United States and reaching a mutually beneficial outcome for our industry and in particular for our customers. The [indiscernible] Agreement and the threat of US Trade Action has led to market uncertainty.

This uncertainty combined with reduced seasonal demand it’s caused market in North America for to pause. We expect the market to remain unsettled until there is some clarity with respect to the dispute.

In export markets, we expect to see continued demand from both China and Japan, while pricing will remain competitive. Let me turn now to our log markets, we anticipate domestic speciality saw log markets will continue to perform well in the fourth quarter, 2016.

Domestic market pricing will be supported by limited supply and consistent demand. In the export market, good demand and balanced inventories should support steady volumes and prices.

We expect the pulp market to remain under pressure due to excess supply. Now let me turn to our capital plan.

As you’re aware we’ve announced - we’ve [indiscernible] $98 million of approved projects as part of our original $125 million strategic capital program and those projects are now in various stages of implementation or have been completed. Through the third quarter, we’d invested $88 million off the $98 million that have been approved.

As indicated last quarter, we have additional projects lined up we’re taking improvement approach to capital investments until there is greater clarity regarding the softwood lumber dispute. In the meantime we’ll continue to focus our efforts on completing the projects already announced and we’ll look to implement smaller quick payback projects that will enhance productivity into these costs.

In the fourth quarter we’ll continue to install additional equipment to support the processing [indiscernible] products that are [indiscernible] and we’ll process the data we’ve collected from our Timberland’s, LiDAR mapping initiative. To-date we’ve captured about 80% of our tenures and the remaining 20% of our tenures will be flown in the spring.

In closing, we remain encouraged by the demand for our products and pleased with our ability to access the log volumes necessary to support our newly capitalized operating platform and business growth strategy. We’ll manage our balance sheet to address the Softwood Lumber Agreement uncertainty while maintaining a balanced approach to capital allocation.

With that, Valerie we can open up to questions.

Couple questions, Don. You addressed the surge in your purchased log volumes that we’ve seen over the last couple of quarters.

I’m just trying to gage should we think about the rate you had for the second and third quarters is being the new normal or is there room for future upside in purchase log volumes from your perspective, how should we think about forecasting that?

Good morning, Sean and great question. I think, our ability to continue to grow our log purchases I think supports and demonstrates the investments we’ve made in our mills, are improving our competitiveness.

We expect to continue to grow our lumber production in the basis of those log purchases until we achieve our capacity. So to answer your question directly, we expect to continue to grow log purchases as we want to grow our business.

Okay, understand and I appreciate you wanted to keep the balance sheet conservative, pending better clarity on Softwood Lumber Trade issues. Are you at a point where you can give us census, CapEx guidance into next year at the stage so you’re planning process at this point?

I think Sean the best way to answer that is to continue to refer back to the guidance we’ve given thus far which is last couple of quarters we tried to guide at about $35 million to $40 million of discretionary maintenance capital and then $35 million to $40 million of strategic per year for the next couple of years. But you’ve highlighted a good point, I think we’re going to be very prudent with our investments.

So on a strategic side, until there’s some clarity with respect to Softwood.

Okay, that’s all I have for now. Thanks very much, Sean.

Just question, Softwood Lumber given your specialty mix, are you guys in a different position than some of your other commodity lumber producers with respect to that file i.e. would you be more inclined to agree to quota type deal over a counter bailing anti-dumping export tax regime?

Good question, I think. The components of any agreement will be negotiated by the Federal Government and the government to government negotiations.

It’s probably not a good idea for me to be commenting on the actual make up the agreement. But what we can say is that, absolutely our product mix is different than most of our all of our industry peers.

We have a high quality, high value product mix which is in demand in the market and continues to be in demand in the market and so we feel there is some benefits to that, as you look out no matter which way the agreement is resolved or the dispute is resolved.

Okay and then, just you made the comment that you look forward to positive engagement by the US is that suggest that they’ve been negative engagement to this day?

Well I wouldn’t want to say there’s negative engagement, I’m not sure what that would mean. But I think we just wanted to see.

Well I don’t understand what positive engagement is, so.

Yes, I think what we want to see is just for sure discussions to continue and to see if we can get a resolution. I mean this is, the industry is North American wide industry.

I think is the benefit to all parties to come to some agreement and in particular benefit to the customers, so they understand where their supply is going to come from and what potential pricing they’re going to be seeing going forward.

Okay, then just question on the purchase logs. You mentioned 43% of cedar logs that are purchased up from 18, a year ago.

Just you guys are located in lot of sort of the higher cedar component areas as the BC coast, where are you buying these logs or where the log’s coming from?

I’m not sure we’re actually located in higher cedar components [indiscernible] around the growing stock is what it is, operates around 20% of the forest is cedar. The logs were coming from all over the coast and we’re accessing the logs again.

I think we believe because we’re more competitive in the market than others. So the logs are coming from all over cost Paul and we continue to grow our position in the log market.

Okay and the last question, I had to just in that $14 million settlement for 104,000 meters, is $135 a meter AC and I just haven’t seen a valuation in that range since the lower early 1980s. How do you come up with that valuation and who are your negotiators?

I’ll turn that over to Steve, Paul.

Thanks, Paul. As we discussed it was based on the value of the tenure taking in April, 2011 and that negotiation was with the government it’s based on the logs value of the harvest.

Well it’s just surprisingly high and I guess if I need a new car, I know who to call. Thanks very much guys.

Best of luck.

Don, when I look at some of the trade stats. It just looks to me like US cedar volumes are up, sort of north of 20% year-to-date.

Just curious whether you’re seeing any signs of pre-buying by customers in anticipation to either, whether that 20% is actual, the rate of demand this year.

Good morning, Hamir. So good point, there’s a couple of things I’d like to say about that.

One is, I think it clearly underscores the demand in the United States and across North America for high value products. We continue to see the repairment [ph] of Asian segment growing and therefore there’s good demand for these type of products.

I think I’ve interest if you were to refer to the harvest billing system year-to-date. It has not been nearly that significant amount of increase in harvest and so I think one of the outcomes here is whether it’s pre-buying or just increased demand.

We’re seeing a tightening of the supply chain with less volume out there on the log front because the harvest linked to some - has not increased in the log production.

Right, okay. That’s all I have, thanks guys.

Could you please just remind us how we should think about your affective income tax rate, where tax [indiscernible] straight forwards are? Please, thank you.

Our effective rate is approximately 26%, from our financial statements you see, we started the year and approximately $200 million of loss carry forward, so. Hello?

Don, can you help us understand the competitive dynamics of your speciality products in the US? What are the alternatives for a customer if they want to build an outdoor kitchen in Texas or finish a high-end house?

Well, thanks Daryl, good morning. Very good question.

Alternatives obviously are product-by-product typically in large structures. The alternative procedure would be fur and we make both of those products in timbers.

So there is very few other alternatives. In decking of course, many people are aware that there is plastic composites that are trying to imitate wood and I think in that case, we see quite a price gap still between our decking products and our decking prices and those composites and so I think it provides us some confidence and our ability to push on price increases in that segment.

Thanks, Don. Hard to believe anyone will put a plastic deck on a high-end, house but also can you give us an update now on some of your redundant assets if you will, [indiscernible] how are you thinking about those assets today?

Sure, Don. I’ll pass it on to Steve for that.

Good morning, Daryl. I think as we’ve mentioned in the past, we look at them as additional source of liquidity.

So we continue to examine their value. If we deem it accretive to our shareholders will look at monetizing that.

You know to be clear, there’ll be no fire sale of those assets. So we’ll for an opportunity to maximize the value.

Thanks for that guys. I’ll turn it over.

Great. Thanks Valerie.

Well to close, I’d like to thank all of you for your attention today and your support of Western. Continue to be encouraged by our most recent results and look forward to sharing with you our fourth quarter results in February.

Have a great day.